fbpx

Fund Managers: Bearish on Tech, Grim Holiday Sales

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

In articles presented over the past several months, Bank of America’s monthly Fund Manager Survey has turned out to be prescient and instrumental in understanding the mechanics of market behaviour. In this month’s survey, a majority of respondents indicate that they expect inflation to go down over the course of the next year but they don’t expect lower short-term rates.

Of course, for lower inflation to become prevalent, one means is a recession. Survey respondents show the highest conviction since the COVID-derived highs in April 2020 that a recession is likely with convictions on the possibility of companies improving their balance sheets showing a slight dip.

Therefore, the consensus view among the survey respondents is that there will be «stagflation»: below-trend growth tied with above-trend inflation. 

Cash levels, i.e. the percentage of Assets Under Management held ready to be disposed off for loss reduction remains above 6% but tech stocks. The tech sector – the largest beneficiary of breakneck price growth in an era awash with money – were reported as being the least favourite among the survey respondents, who indicate that November has tech being the most underweight of choice since 2006. 

In a report released by Morgan Stanley in October, surveys analyzing shoppers’ tendencies indicated that most shoppers won’t be buying during the holiday season if prices were to increase. 

However, over 65% of the respondents indicated a willingness to buy if there were discounts over 20%.

As a result, the U.S. National Retail Federation expected a modest rise of 6-8% in sales which, when accounting for inflation, would have meant lower sales by volume. 

While traffic to malls may have been thinner than expected according to Reuters, web traffic remained robust. According to Adobe Analytics, shoppers in the U.S. spent a record $9.12 billion on Black Friday sales online.

However, the analytics indicated that it was steep discounts that drove sales to a year-on-year (YoY) gain. Mostly, electronic goods and toys were scooped up by shoppers after heavy discounts were applied.

This explains why FMS survey respondents were so wary about companies being able to improve their balance sheets: with discounts come lower profit margins. 

Mastercard’s SpendingPulse forecasted a 15% jump in sales on Black Friday overall, led by an 18% rise for in-store retail sales. Net sales were below these estimates at 12% and 14% respectively. Overall, crowds in the malls have been thinner and the driving force of sales have been discounts. A large portion of sales in this holiday season is estimated to be for the purposes of inventory reduction as retail stores and e-commerce companies improve their balance sheets: both Amazon and Shopify have laid off staff in the past couple of months. News reports indicate that Amazon intends to cut a further 10,000 jobs with recent «workplace optimisation» programmes in their India operations attracting the ire of the government for improper termination, i.e. without cause or adequate compensation. Legal notices have been sent; if found guilty, the consequences can be severe. 

This highlights the weakness in the consumer discretionary sector as evident in the Fund Manager Survey. Between the standard defensive sectors – healthcare and consumer – respondents indicated that they were overweight in favour of «healthcare» over «consumer».

For 18 months now, respondents have been overwhelmingly overweight in the energy sector. 

This is evident in net positioning as well: «cash», i.e. a readiness to divest, and healthcare are on top while consumer discretionary and tech are being considered with a heavily bearish outlook.

Overall, the Purchasing Managers’ Index – a key factor in the determination of economic productivity – has a net forward outlook trending downwards with rising wealth levels in Emerging Markets giving their PMI a slight push upwards.

All in all, it sounds like a sound strategy to consider leveraging the bearish outlook on tech and the broad market. 

Exchange-Traded Products (ETPs) offer substantial potential to gain magnified exposure with potential losses limited to only the invested amount and no further. Learn more about Exchange Traded Products providing exposure on either the upside or the downside to the S&P 500, the upside or the downside to the tech-heavy Nasdaq-100 as well as the upside or the downside to Amazon stock.

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

Post correlati

Violeta-540x540-1.jpg
Violeta Todorova
Supply, demand disequilibrium and lower US rates could squeeze the non-precious metal
Supply, demand disequilibrium and lower US rates could squeeze the non-precious metal
Violeta-540x540-1.jpg
Boyan Girginov
Supply, demand disequilibrium and lower US rates could squeeze the non-precious metal
Supply, demand disequilibrium and lower US rates could squeeze the non-precious metal
Supply, demand disequilibrium and lower US rates could squeeze the non-precious metal
Q2 is poised for European stocks’ turnaround and rising interest in energy stocks
Q2 is poised for European stocks’ turnaround and rising interest in energy stocks
Violeta-540x540-1.jpg
Sandeep Rao
Q2 is poised for European stocks’ turnaround and rising interest in energy stocks
Q2 is poised for European stocks’ turnaround and rising interest in energy stocks
Q2 is poised for European stocks’ turnaround and rising interest in energy stocks
Escalation of the conflict in the Middle East threatens to derail the economic recovery.
Escalation of the conflict in the Middle East threatens to derail the economic recovery.
Violeta-540x540-1.jpg
Violeta Todorova
Escalation of the conflict in the Middle East threatens to derail the economic recovery.
Escalation of the conflict in the Middle East threatens to derail the economic recovery.
Escalation of the conflict in the Middle East threatens to derail the economic recovery.
What is an ETF? How does an ETF work? Key characteristics of ETFs.
What is an ETF? How does an ETF work? Key characteristics of ETFs.
Violeta-540x540-1.jpg
Boyan Girginov
What is an ETF? How does an ETF work? Key characteristics of ETFs.
What is an ETF? How does an ETF work? Key characteristics of ETFs.
What is an ETF? How does an ETF work? Key characteristics of ETFs.
Violeta-540x540-1.jpg
Pawel Uchman
A quick primer on leveraged instruments available in markets today.
A quick primer on leveraged instruments available in markets today.
Violeta-540x540-1.jpg
Sandeep Rao
A quick primer on leveraged instruments available in markets today.
A quick primer on leveraged instruments available in markets today.
A quick primer on leveraged instruments available in markets today.

Violeta Todorova

Senior Research

Violeta se unió a Leverage Shares en septiembre de 2022. Ella gestiona la realización de análisis técnicos, investigación macroeconómica y de acciones, y ofrece información valiosa que ayuda a la definición de estrategias de inversión para los clientes.

Antes de unirse a LS, Violeta trabajó en varias empresas de inversión de alto perfil en Australia, como Tollhurst y Morgans Financial, donde pasó los últimos 12 años de su carrera.

Violeta es una técnica de mercado certificada de la Asociación Australiana de Analistas Técnicos y tiene un Diploma de Postgrado en Finanzas e Inversiones Aplicadas de Kaplan Professional (FINSIA), Australia, donde fue profesora durante varios años.

Julian Manoilov

Marketing Lead
Julián se unió a Leverage Shares en 2018 como parte de la principal expansión de la compañía en Europa del Este. Él es responsable de diseñar estrategias de marketing y promover el conocimiento de la marca.

Oktay Kavrak

Head of Communications and Strategy

Oktay se incorporó en Laverage Shares a fines de 2019. Él es responsable de impulsar el crecimiento del negocio al mantener relaciones clave y desarrollar la actividad de ventas en los mercados de habla inglesa.

Él vino de UniCredit, donde fue gerente de relaciones corporativas para empresas multinacionales. Su experiencia previa es en finanzas corporativas y administración de fondos en empresas como IBM Bulgaria y DeGiro / FundShare.

Oktay tiene una licenciatura en Finanzas y Contabilidad y un certificado de posgrado en formación empresarial de Babson College. También es titular de una certificado CFA (Chartered Financial Analyst).

Sandeep Rao

Investigación

Sandeep se unió a Leverage Shares en septiembre de 2020. Está a cargo de la investigación de líneas de productos existentes y nuevas, clases de activos y estrategias, con un enfoque particular en el análisis de eventos y desarrollos recientes.

Sandeep tiene una larga experiencia en los mercados financieros. Comenzó en un hedge fund con sede en Chicago como ingeniero financiero, su carrera abarcó varios dominios y organizaciones durante un período de 8 años, desde la División de Prime Services de Barclays Capital hasta (más recientemente) el Equipo Index Research de Nasdaq.

Sandeep tiene una maestría en Finanzas, así como un MBA del Illinois Institute of Technology de Chicago.

Gold Retreats But Rally is Not Over

Copper Ready to Explode

Q2 2024 Market Outlook: Rocky Road Ahead

What is an ETF? (Exchange Traded Fund)

How Do Leverage Shares ETPs Trade in Multiple Currencies

Currency Impact

Build your own ETP Basket
Leverage Shares: Europe’s top leveraged and inverse ETP provider.
Main ETP benefits
Common investor questions

Get the Newsletter

Never miss out on important announcements. Get premium content ahead of the crowd. Enjoy exclusive insights via the newsletter only.