The stock market is acting surprisingly calm as economic signals suggest that a recession may be just around the corner. However, according to DataTrek Research, a recession might actually be beneficial for stocks and the economy in the long run. Nicholas Colas, the cofounder of DataTrek, believes that a recession could aid in the resolution of three major issues that have been hindering the stock market’s recovery since the start of the pandemic.
Investors are advised to be proactive in preparing their portfolios for the year ahead. As a volatile week of earnings and economic data looms, tech fund managers are offering insight into how to invest in the increasingly popular artificial intelligence space. Ex-Treasury chief Larry Summers also weighed in on the Federal Reserve’s rate hike, stressing the potential need to combat the risks of stagflation.
Money market funds have been inundated with record inflows in the last month, but that trend reversed dramatically as cash suddenly dipped in the first time since the pandemic’s onset. In other news, the US home-goods retailer Bed Bath & Beyond was forced to file for bankruptcy after struggling with declining sales, so customers are reminded to use their remaining coupons before it’s too late.
Meanwhile, Russia saw an astonishing wealth boom in 2020, with 22 new billionaires created in spite of sanctions imposed by the West. This brings the country’s total number of billionaires up to 105, and their overall combined net worth is approximately $474 billion. Finally, real-estate agents are warned of a potential industry slowdown, as there are now two agents for every home on the market.
Tesla is also in the headlines, with investor Cathie Wood predicting the stock to climb up to $2,000 a share within five years. This prediction is based on the assumption that a robo-taxi boom will push the company’s share value to unprecedented heights.
Microsoft, Alphabet, Meta Platforms, Apple, Coca-Cola, Credit Suisse and First Republic Bank are all set to report their profits this week and no doubt investors still have questions on how best to structure their portfolios amid a variety of market changes. It appears investors must take a proactive approach to manage their investments in the year ahead, with tech fund managers and ex-treasury chief Larry Summers offering advice on investments and the Fed’s rate hike. On the other hand, businesses like Bed Bath & Beyond and real-estate agents may not be so lucky, as the pandemic continues to feed into cash-flow problems, shrinking markets, and heightened competition.
