Stocks and bonds are whipping investors

Bond funds lost an average of 4.2 percent, while long-term funds recorded double-digit declines.

Marco Papic, chief strategist at Clocktower Group, an asset manager, agrees with Mr Thompson that “the more the stock market ignores the Fed Hawkins, the sooner they become tough.” But Mr Papic hopes the Fed will choose to tolerate continued inflation to prevent a recession by the end of the year.

Mr Papic advised manufacturers to “change prices now” by exporting stocks and products to countries such as Brazil and Chile. The dominance of mining in the economies of those countries may explain much of the recent strong performance that Morningstar cited in Latin American funds.

If the Fed does not move forward with an aggressive approach, the yield on inflation-adjusted bonds is “going to be very low, so commodities will be higher,” he said. He acknowledged, however, that it was risky to keep money on the product, adding that “if I make a mistake and go bad, they will be killed.”

In the current environment, he continued, ownership of growing stocks, especially big and expensive technology blue chips like Microsoft and Apple, could be dangerous. They began to adapt even before the epidemic, “and then allowed Covid technology companies to advance a decade of customer growth,” Mr Papik said. “We are on the verge of that outperformance.”

The outlook for tech stocks may depend on the interest rate outlook. Tech stocks react badly to higher rates because these companies are more expensive than others to get started, and higher interest rates generally frustrate stock valuations. Also, higher rates often come when the economy is strong and the growth potential of technology companies when other sectors cannot be less important.

A more aggressive Fed, even if only for a few months, means higher rates, and Mr Brightman highlights a trend driven by higher geopolitical risks, which could keep rates higher for longer: “slowdown”, as he puts it, a fall. , Or even the reverse, free trade system that has created a lot of wealth for investors.

A new urgency to ensure a stable, secure supply chain could force companies to move production closer to home, he said. Capital will be needed to build productivity, raise interest rates and, because it costs more than Shenzhen to build a widget in Sekkas, so will inflation.

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