What we’re reading (3/27)
“When Will Rate Hikes Really Start Punishing You?” (CNN Business). “Higher interest rates may not just cause an economic downturn. It likely will lead to a slump in profit growth, too. That could be bad for investors who have gotten used to (some might even say spoiled by) interest rates at zero. ‘What has held up the stock market over the past few years is monetary stimulus. Full stop,’ said Mark Yusko, CEO and chief investment officer of Morgan Creek Capital Management.”
“The Riskiest Bets In The Stock Market Are The Most Popular” (Wall Street Journal). “The history of riskier exchange-traded products is dotted with blowups that have left traders with big losses. A product that bet against the VIX, the VelocityShares Daily Inverse VIX Short Term exchange-traded note, abruptly shut down in 2018 after a bout of volatility, spurring havoc in the derivatives market.”
“U.S. Big Cap Stocks Turn Into World’s Top Haven As Risk Rises” (Bloomberg). “The S&P 500 Index is up more than 8% over the past two weeks, recouping all of its losses since the Russian invasion on Feb. 24. Meanwhile, the tech-heavy Nasdaq 100 has gained almost 11% over the same span. With earnings looking strong and corporate outlooks improving, there are reasons to think these gains can hold despite the myriad risks facing global equities.”
“Why High-Yield Bonds Should Outperform In 2022” (Morningstar). “Factors favoring high-yield bonds should be an economy that remains strong even as it cools off from last year’s post-pandemic surge, high yield’s lower sensitivity to rising interest rates, and of course, their yield advantage over higher-quality corporate and government bonds.”
“Who’s Buying Russian Stocks?” (DealBook). “The Russian stock market was never as important to its national economy as its counterparts in the United States, Europe and elsewhere are to theirs. Today, the total value of Russia’s market is about $400 billion, or roughly the same as Walmart. Trading in Moscow is — or was — dominated by foreign investors, who own the majority of shares that are available to trade.”
