What we’re reading (1/27)
“It’s Jerome Powell Time — And One Wall Street Bank Warns The S&P 500 Could Fall Another 20%. Goldman Sachs Says The Bull Market Will Continue.” (MarketWatch). “The Barclays strategists led by Maneesh Deshpande are more pessimistic, saying it’s too early to buy the dip. Granted, the start of a Fed hike cycle historically hasn’t led to a major selloff, but this time, valuations are already too high and there is downside risk to earnings after the binge in consumption goods. Last week, they noted, there was a change in the selloff, which moved from high-valuation stocks and other speculative assets to a broader contagion.”
“Behind The Stock Market Turmoil: A High-Speed Investor U-Turn” (Wall Street Journal). “Girding themselves against the impact of tighter money, investors are shifting to investments that feel safer, such as dividend stocks and gold exchange-traded funds. Indeed, some high-dividend funds have outperformed this year, including the Invesco High Yield Equity Dividend Achievers ETF, which is flat so far in January.”
“It’s Hard To Tell When The Crypto Bubble Will Burst, Or If There Is One” (New York Times). “As stocks were sold off early this week, crypto prices also plunged. Bitcoin dropped nearly 13 percent before rebounding along with stocks. Ethereum’s own coin, Ether, was briefly down 15 percent. Their price declines have dragged down other digital asset prices, too. Analysts attribute the decline to investors who are pulling their money out of higher-growth, risky assets — including technology stocks — as interest rates are set to rise. That has put a dent in the argument, promoted by crypto boosters, that digital assets offer a hedge against losses in other markets.”
“Gold Is Shining Again As Stocks Wobble And Cryptos Melt down” (CNN Business). “‘Investors are starting to realize bitcoin is more of a risky asset. It's less of a portfolio diversification tool and more of an energy drink,’ [Robert] Minter [Director of ETF Investment Strategy at abrdn] said, referring to the big highs and equally epic pullbacks for crypto prices compared to far more stable moves in gold.”
“Why More Americans Than Ever Are Starting Their Own Businesses” (Vox). “The pandemic has, at least for the time being, halted — and perhaps reversed — a decadeslong decline in the pace of entrepreneurship. Americans applied for a record 5.4 million business ID numbers in 2021, according to census data that goes back to 2004. 2022 is already on track to be a record year as well, according to projections from QuickBooks. While data on true business formations is available only through 2019, growth in ID number applications is closely related to actual business formations.”
