US stocks could tumble 15% in a rough fall – and the bitcoin bubble could deflate further this year, Guggenheim’s Scott Minerd says

Scott Minerd
Guggenheim Investments Global Chief Investment Officer Scott Minerd.

US equities could drop 15% by the end of October, driven lower by concern over the delta variant of COVID-19 and its impact on global growth, while cryptocurrencies could continue to face pressure, according to Guggenheim’s Scott Minerd.

The chief investment officer told Bloomberg on Wednesday that September and October are likely to be “very rough” months for stocks.

“Maybe a pullback of 15% or slightly more,” he said, adding that investors could get back into buying by the end of autumn.

Stock prices and bond yields recently fell sharply as growth fears sparked by the fast-spreading delta variant dented some of the market optimism. The Dow Jones slumped 2.1% at the start of the week in its biggest one-day drop since October, but stocks have slowly been clawing back gains.

That said, the benchmark US stock indices have all hit record highs this month and are not trading far below those levels. The S&P 500 hit a record 4,393.68 on July 14 and closed about 1% below that level on Tuesday.

Wall Street can expect a rise in volatility over the next few months, as the Federal Reserve could taper its asset purchases sooner than expected if pressure grows for the central bank to start to normalize interest rates, according to Minerd. He expects Treasury yields to decline by as much as 60 basis points if markets believe the economy will weaken. A drop of that size would take the 10-year Treasury note yield to its lowest since October.

For cryptocurrencies, July was the third consecutive month of negative returns. Minerd expects them to stay challenged in the near-term.

Minerd reiterated a $15,000 price prediction for bitcoin, a 53% decline from Thursday’s price of $32,190, and said “a lot of this stuff is just junk.” Still, he called ether a more viable currency than bitcoin.

“I think there’s still more air to come out,” he said. “The standard bear market for bitcoin has been an 80% retracement, and given all the uncertainty and the new competition from new coins, I think there’s more downside to go.”

Buying bitcoin anytime soon isn’t a good idea, according to him. He has previously compared cryptocurrencies to the 17th century tulip bubble. After pulling back significantly, Minerd has said he expects bitcoin to eventually rise to as much as $600,000 per coin.

Read More: The head economist at a blockchain fintech firm names 2 of the most promising crypto SPAC deals on his radar – and explains why blank-check companies can be better alternatives to buying cryptocurrencies

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SIGN UP FOR INSIDER INVESTING: How to mine doge, plus a playbook for trading meme stocks

Hello everyone! Welcome to this weekly roundup of Investing stories from deputy editor Joe Ciolli. Please subscribe here to get this newsletter in your inbox every week.

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Hello and welcome to Insider Investing. I’m Joe Ciolli, and I’m here to guide you through the current market and investing landscape. Here’s what’s on the docket:

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How to mine doge

This photo is of Dason Thomas, a crypto miner. He is wearing a white hoodie standing front of the exterior of a building.

Dason Thomas says he began mining crypto in his garage to earn altcoins like doge and litecoin. He then converts the mined altcoins to cryptocurrencies he prefers like ether, or buys more miners. Thomas breaks down how he got started with a $700 rig, and how he’s set up now.

Read the full story here:

How to mine doge: An 18-year-old TikTok influencer shares his process for earning crypto without directly buying via a $700 rig – and explains how it works for other altcoins including litecoin


A playbook for meme stocks

Reddit WallStreetBets WSB

Morgan Stanley strategist Boris Lerner argues that investors should look at the patterns of retail traders to gain an advantage. He says heavy retail selling is a good predictor that a stock will underperform in the next month, and lays out six popular bets for day traders.

Read the full story here:

Morgan Stanley shares a meme-stock playbook that average investors can use to profit from the Reddit-driven market revolution – including 6 specific areas day traders love


Top 10 shorts ahead of earnings season

New York stock exchange trader

Stocks have been on a hot streak but a variety of factors could stoke volatility heading into the third quarter. Ahead of a hotly anticipated earnings season, the founder of TradeZero America lays out the 10 most-shorted stocks above $10, which could either continue to face pressure, or be squeezed higher by retail traders.

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TradeZero’s co-founder shares the top 10 stocks above $10 traders are shorting on the online brokerage ahead of a potentially volatile earnings season – and explains why they are either primed to become meme stocks or profitable shorts


Stock pick central

Seeking experts who are willing to name names? Look no further:

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US stocks have further to run after 7 straight days of record highs as readings of investor euphoria remain in check

nyse trader
  • The stock market is within striking distance of breaking the record of consecutive closes at all-time-highs.
  • But investors don’t seem fazed, with various sentiment indicators showing no signs of euphoria.
  • Sentiment often follows price, with “greed” readings found near market peaks and “fear” readings found near market bottoms.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The S&P 500 notched its seventh consecutive close at all-time-highs on Friday, putting it within striking distance of breaking the record streak of eight consecutive closes at new highs.

But investors don’t seem to care, based on various sentiment indicators that show no signs of euphoria in the stock market. This dynamic sets stocks up for further gains ahead, as there is plenty of room left for investors to get excited about stocks before hitting levels of greed and euphoria.

“Kinda dull. But you don’t sell a dull market,” Bank of America said in a Friday note, summing up the steady grind higher in markets over the past week.

Investor sentiment often follows price, with readings of “greed” or “euphoria” found near market peaks, and readings of “fear” found near the bottom of a market sell-off. This dynamic is why the indicators are considered contrarian, as it often pays to take the opposite view of the sentiment readings.

No signs of euphoria with the stock market at record highs suggests that there is further upside ahead for equities, as the market continues to climb a wall of worry and win over unconvinced investors.

Read more: RBC: Buy these 19 stocks that should outperform in the 3rd quarter on the way to upside of at least 20% over the next year

Sentiment indicators that have shown no signs of euphoria or greed among investors include the CNN Fear & Greed Index, the Bank of America Bull/Bear indicator, and the AAII Investor Sentiment Survey.

The CNN Fear & Greed Index remains below 50, stuck in the “Neutral” zone over the past month. The index closed at 46 on Friday, and was only slightly higher than its “Fear” reading last week of 44. The index had an “extreme greed” reading of 99 in January 2020, just prior to the fastest bear market in history, and hit an “extreme fear” reading of 1 in March 2020, right around the pandemic bottom, lending credibility to its use as a contrarian indicator.

CNN Fear and Greed Index

Meanwhile, the BofA Bull/Bear indicator has continued to fall in recent weeks to a reading of 6.4 from a cycle-high of 7.7 in February. A contrarian “sell” reading is generated once the indicator crosses eight, suggesting there is plenty of room left for investors to get bullish on the stock market.

BofA sentiment indicator

Finally, bullish readings from the AAII Investor Sentiment Survey rose to 48.6% this week. While the survey shows a rise in bullishness that is well above its historical average of 38%, the reading is still below the April high of 52.7%, signaling there is still room for upside.

AAII Sentiment Indicator

It isn’t the case, though, that investors have nothing to worry about when it comes to stocks. Rising inflation, higher interest rates, and a potential increase in taxes have served as overhangs for the market this year, and uncertainty regarding second quarter earnings results could also be weighing on investors.

But historically, when investors have been this bearish on the market when stocks traded at all-time highs, it’s usually been a solid contrarian indicator to buy stocks.

Read the original article on Business Insider

These are the stocks to own in the second half of 2021 as markets navigate higher interest rates, according to Goldman Sachs

NYSE trader

Investors should not expect another strong six months for stocks after the S&P 500 finished the first half of the year up about 15%, Goldman Sachs said in a note on Friday.

Instead, the stock market is likely to consolidate sideways for the next six months as investors navigate higher interest rates. With the 10-year US Treasury yield currently at 1.43%, Goldman expects it to climb to a cycle-high of 1.9% by the end of the year.

That expected surge in interest rates will likely weigh on high growth stocks and benefit cyclical stocks, the bank said. To benefit from the market setup going into year-end, Goldman recommends investors buy stocks that have short duration, high growth investment ratios, and pricing power, according to the note.

While long duration growth stocks have outperformed their short duration value stock counterparts in recent weeks, Goldman expects this trade to reverse, especially if its forecast for higher interest rates materializes.

Some well-known stocks in Goldman’s short duration basket include Ford, CVS, Intel, and AT&T.

“Companies that have consistently invested for growth have outperformed the S&P 500 year-to-date and are best positioned to continue growing despite the expected slowdown in economic activity,” Goldman said.

Some well-known stocks in Goldman’s high growth investment ratios basket include Facebook, Alphabet, General Motors, and Costco.

“We recommend investors focus on stocks with high pricing power as demonstrated by their high and stable gross margins. High pricing power stocks outperformed in 2018 – 2019 as wage growth accelerated and profit margins declined,” Goldman explained.

Some well-known stocks in Goldman’s high pricing power basket include Activision Blizzard, Etsy, Procter & Gamble, and Adobe.

Goldman outlined its expectations that while the S&P 500 will end the year at 4,300, it will jump 7% to 4,600 by the end of 2022 as the unemployment rate falls to 3.5%.

Read the original article on Business Insider

The Delta variant of COVID-19 does not pose a risk to the stock market and could help boost value and yields, JPMorgan says

NYSE Trader
  • The spread of the Delta variant of COVID-19 poses no risk to the stock market, JPMorgan said in a note.
  • Value stocks and bond yields are poised for a rebound as investors reassess risks of the variant.
  • “The Delta variant should not have significant repercussions for the pandemic situation in developed markets due to the level of population immunity,” JPMorgan explained.
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The spread of COVID-19’s Delta variant does not pose a risk to the stock market, and could in-turn drive a rebound in value stocks and bond yields, JPMorgan said in a note on Wednesday.

The spread of the delta variant has been front of mind for many investors in recent weeks, as data suggests it is now the most common strain of COVID in the US. The fast spreading variant has led to a surge in cases in countries like the UK and Israel, and some governments are responding by reinstituting mask mandates and lockdown initiatives.

But “the Delta variant should not have significant repercussions for the pandemic situation in developed markets due to the level of population immunity,” JPMorgan said, adding that stock market positioning should not be driven by any variant of COVID-19 for which vaccines are effective.

Both Pfizer and Moderna have said that their COVID-19 vaccines are highly effective in preventing infection of the Delta variant.

The bank pointed to market action when the B.1.1.7 variant of COVID-19 which was spreading across the country earlier this year as reason for why value stocks and bond yields should see a rebound going forward.

“When the market properly assessed the risk of B.1.1.7, yields and value staged a strong rally from mid-February to mid-March, while growth stocks (often perceived as beneficiaries of lockdowns) sold off,” JPMorgan explained. “We expect this to repeat now as investors assess the so-called Delta variant,” the bank added.

The current market setup with the Delta variant is similar given that growth stocks have been in favor relative to value stocks amid the spread of the new COVID strain. But if JPMorgan’s analysis proves correct, that trade should unwind soon, and growth stocks should once again underperform value stocks.

“We reiterate our view to go long reflation, cyclical and value trades, and sell growth and defensive positions,” JPMorgan concluded.

Read the original article on Business Insider

Playing the commodity supercycle, plus 10 cheap, disruptive tech stocks

Hello everyone! Welcome to this weekly roundup of Investing stories from deputy editor Joe Ciolli. Please subscribe here to get this newsletter in your inbox every week.

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Hello and welcome to Insider Investing. I’m Joe Ciolli, and I’m here to guide you through the current market and investing landscape. Here’s what’s on the docket:

If you aren’t yet a subscriber to Insider Investing, you can sign up here.

Have thoughts on the newsletter? Just want to talk markets? Feel free to drop me a line at jciolli@insider.com or on Twitter @JoeCiolli.


Playing the commodity supercycle

FILE PHOTO: Farmer Lucas Richard of LFR Grain harvests a crop of soybeans at a farm in Hickory, North Carolina, U.S. November 29, 2018. REUTERS/Charles Mostoller

Tony Greer, an ex-Goldman commodities trader, runs the independent research firm TG Macro. In an interview with Insider, Greer broke down why he believes the bull case for commodities remains intact. He also shared 5 stocks and an ETF to play his highest-conviction subsectors.

Read the full story here:

An ex-Goldman trader breaks down why he is ‘salivating’ to buy the dip in grain stocks – and shares 5 stocks and an ETF to play the commodity supercycle


10 cheap, disruptive tech stocks

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Dave Sekera, the chief US market strategist at Morningstar, says it’s hard to find any real bargains in the market right now. But he still shared with us 10 disruptive tech stocks that also look underpriced relative to peers, as well as the top tech themes worth investing in.

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Morningstar’s chief US market strategist explains how to find tech stocks that can disrupt and triumph long-term, and shares 10 picks that are still underpriced in an increasingly expensive market


5 qualities of a great trader

trader screen

Colin Lancaster is a hedge fund manager and the former head of macro strategies for Citadel. He also authored the book “Fed Up,” which details the fictional journey of a macro trader. He laid out for us the 5 qualities that make a great trader, and provided his current market outlook.

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A former head of macro strategy at legendary hedge fund Citadel lays out the 5 key qualities he believes makes a great trader – and provides a rare outlook on the future of the industry


Stock pick central

Seeking experts who are willing to name names? Look no further:

Read the original article on Business Insider

The S&P 500 could surge 3% by Wednesday amid a trifecta of positive signals, Fundstrat’s Tom Lee says

NYSE trader
  • A trifecta of positive signals could send the S&P 500 soaring 3% by this Wednesday, Fundstrat’s Tom Lee said in a note on Friday.
  • A rally in junk bonds, a collapse in the VIX, and falling treasury yields all point to a higher stock market.
  • “I take this as a risk-on signal, raising the probabilities that the S&P 500 sees 4,400 before month-end,” Lee said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

The S&P 500 is primed for a 3% surge to 4,400 by this Wednesday, Fundstrat’s Tom Lee said in a note on Friday.

Lee sees a “trifecta” of risk-on signals driving the stock market higher, including record highs in junk bonds, a collapse in Wall Street’s fear gauge, and falling treasury yields.

“This is a positive set-up and something not seen for some time,” Lee said, adding that he expects mega-cap tech and energy stocks to drive much of the gains.

The record high in junk bonds on Thursday lends credibility to the recent rally in stocks, Lee said, given that high-yield bonds have historically served as a leading indicator to equities. And according to Lee, the rally in junk bonds is for the right reasons, including a stronger economy and stable interest rates.

Meanwhile, the volatility index collapsed below 16 on Friday, marking its lowest level since the start of the COVID-19 pandemic.

The (falling) Volatility Index

Equity returns have been strong amid similar periods of normalization for the VIX, with the S&P 500 gaining on average 23% over the next 12 months, according to the note. That’s in part because as the VIX falls, systematic hedge funds usually add leverage and buy stocks, pushing asset prices higher.

Finally, a decline in treasury yields from their mid-March peak has fueled gains in mega-cap tech stocks, which should continue to drive the market higher going forward, according to Lee.

A chart of the 10-year US Treasury yield

“While many might fret that interest rates are stabilizing around 1.5%, we think this is a positive risk-on signal,” Lee said, before explaining that valuations for fast growing tech stocks usually drift higher during low interest rate environments.

“2021 [is] tracking to be a +20% year,” Lee said. The S&P 500 is up about 14% year-to-date as of Friday afternoon.

While it “certainly seems to be a tall order for the S&P 500 to rally to 4,400 before month-end…I think it could happen,” Lee concluded.

“OK. Maybe by mid-July,” Lee hedged.

Read the original article on Business Insider

Trading the Fed, plus insights from a 99th-percentile fund manager

Hello everyone! Welcome to this weekly roundup of Investing stories from deputy editor Joe Ciolli. Please subscribe here to get this newsletter in your inbox every week.

Trader NYSE stock market Jerome Powell

Hello and welcome to Insider Investing. I’m Joe Ciolli, and I’m here to guide you through the current market and investing landscape. Here’s what’s on the docket:

If you aren’t yet a subscriber to Insider Investing, you can sign up here.

Have thoughts on the newsletter? Just want to talk markets? Feel free to drop me a line at jciolli@insider.com or on Twitter @JoeCiolli.


Fed-driven portfolio adjustments

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The Federal Reserve left interest rates steady this past week while setting the stage for two hikes by year-end 2023. Traders, who took a wait-and-see approach before the Fed meeting, quickly sprung into action. Insider spoke with Wall Street and crypto investors to gauge how to position for the hawkish shift.

Read the full story here:

The Fed has left rates steady while signaling 2 potential hikes by the end of 2023. Here is what to do with your stocks, bonds, and digital assets, according to top Wall Street and crypto investors.


99th-percentile insights and stock picks

Dave Ellison

Financial-sector stocks have outperformed the rest of the market over the last several months. Hennessy Funds’ Dave Ellison – who’s in the 99th percentile compared to peers over the past year – told Insider he expects their strong performance to continue. He shared 5 financial stocks to buy now in order to take advantage of the remaining upside.

Read the full stories here:

Dave Ellison has beaten 99% of his peers over the last year managing the Hennessy Small-Cap Financial Fund. He breaks down why he thinks financial stocks still have room to run – and shares 5 names to bet on


SPAC shorts

SPACs and hedge funds 2x1

Short interest in SPACs stood at $3.2 billion in mid-June, up from $2.7 billion. The uptick in SPAC shorts comes as the market works to recover from a weeks-long slowdown, and one ETF manager expects recently “de-SPACed” companies to see short activity surge soon. Exclusive data shows the 20 most-shorted blank-check companies right now.

Read the full stories here:

Bets against SPACs are revving back up as the market attempts a comeback. Here are the 20 most-shorted blank-check companies now.


YOU’RE INVITED: A Millennial Guide to Home Ownership

Join us and learn how to navigate the complicated process of buying a home in today’s hot market on Tuesday, June 22 at 12 p.m. ET – during a free, hour-long virtual event presented by Fidelity.

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Stock pick central

Seeking experts who are willing to name names? Look no further:

Read the original article on Business Insider

Stablecoins as the future, plus a dissection of AMC’s options frenzy

Hello and welcome to Insider Investing. I’m Joe Ciolli, and I’m here to guide you through the current market and investing landscape. Here’s what’s on the docket:

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Have thoughts on the newsletter? Just want to talk markets? Feel free to drop me a line at jciolli@insider.com or on Twitter @JoeCiolli.


Stablecoins as the future of money

A volatile Bitcoin chart line with a stable Stablecoin chart line below it on a light green background

Bitcoin, which set out to replace cash and credit cards, has proven far too volatile to work as money in the real world. But a new form of crypto known as stablecoins could become a leading form of currency. Investors are flocking to stablecoins, and governments around the world are creating their own versions.

Read the full story here:

Forget bitcoin and other hypervolatile cryptocurrencies. For everyday transactions, the future of money is stablecoins.


AMC options frenzy

A person rides his bicycle past the closed AMC movie theaters in Times Square on October 22, 2020.

We chatted with Steve Sosnick, an options expert who’s also the chief strategist at Interactive Brokers and the head trader at Timber Hill. He broke down 3 potential drivers of AMC’s almost 2,500% surge this year, and discussed how long the retail-fueled rally might last amid frenetic options activity.

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A veteran options trader breaks down 3 potential drivers of AMC’s 2,500% surge this year – and shares how long the retail-fueled rally might last


A 4-part inflation playbook

Traders in the S&P 500 stock index futures pit signal offers near the close of trading at the Chicago Mercantile Exchange May 23, 2007

Keith Parker at UBS says investors broadly hedging against rising inflation are missing out. He instead recommends a more proactive approach that involves buying stocks with strong pricing power. Parker breaks down the 4 different ways investors can employ a pricing-power investment strategy.

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UBS says this 4-part inflation playbook will help investors profit now and in the market’s next phase – and shares how to track the threat of higher prices in real time


YOU’RE INVITED: A Millennial Guide to Home Ownership

Join us and learn how to navigate the complicated process of buying a home in today’s hot market on Tuesday, June 22 at 12 p.m. ET – during a free, hour-long virtual event presented by Fidelity.

Register here.


Stock pick central

Seeking experts who are willing to name names? Look no further:

Read the original article on Business Insider

Wall Street crypto masterminds, plus an interview with a dogecoin millionaire

Hello everyone! Welcome to this weekly roundup of Investing stories from deputy editor Joe Ciolli. Please subscribe here to get this newsletter in your inbox every week.

Ronit Ghose, Marion Laboure, Yassine Elmandjra, and Lisa Shalett on a blue background with crypto currency logos of Bitcoin, Tether, and Cardano behind them.

Hello and welcome to Insider Investing. I’m Joe Ciolli, and I’m here to guide you through the current market and investing landscape. Here’s what’s on the docket:

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Interviews with Wall Street’s crypto masterminds

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We spoke to 11 of Wall Street’s top crypto experts who are helping investors understand and trade the ongoing mania. They hail from firms including Bank of America, JPMorgan, Morgan Stanley, and Deutsche Bank.

The impressive group of pros told us how they became involved with crypto research, and shared their industry outlooks.

Read the full story here:

Meet the 11 crypto masterminds at Wall Street firms like JPMorgan, Bank of America, and Morgan Stanley who are helping clients understand the mania – and successfully invest in it


DeFi strategies

In this photo illustration of the litecoin, ripple and ethereum cryptocurrency 'altcoins' sit arranged for a photograph

Wave Financial is one of the largest crypto wealth managers and caters to high-net-worth individuals. David Siemer, the firm’s CEO, explains how he helps sophisticated clients find high yield in the DeFi markets. He also shares the areas where he’s investing in now, including 3 tokens to watch.

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The CEO of one of the largest crypto wealth managers shares his tricks for playing the DeFi market – and lays out 3 tokens with surging revenue streams


Meet a dogecoin millionaire

Glauber Contessoto

Glauber Contessoto became a millionaire in April after investing in dogecoin two months prior. In an exclusive interview, he told Insider he believes cryptocurrency is the future and that dogecoin will be used for everyday transactions. Recent market volatility doesn’t bother him. Instead, he uses the dips to buy more doge.

Read the full story here:

A ‘dogecoin millionaire’ explains why the recent drop does not shake his bullishness in the meme coin – and shares his advice for new buyers


JOIN OUR LIVE EVENT: “The Future of Finance: Disrupting the Ordinary”

Join us Tuesday, June 8 at 12 p.m. ET for “The Future of Finance: Disrupting the Ordinary,” a free virtual event presented by Greyscale that breaks down the digital transformation in banking, cryptocurrency and investing.

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Stock pick central

Seeking experts who are willing to name names? Look no further:

Read the original article on Business Insider