fbpx

US Economy: Investors Exit, Indicators Worsen

The US goes into midterm elections tomorrow and the current administration is expected to lose ground to a «Red Wave», i.e. the conservative Republican Party (or the «Red» party) is being widely touted to gain control of both houses of parliament. This creates a «gridlock» situation wherein the ruling administration controls the President’s chair while both houses of parliament will be aligned against them, thus leaving any new policy-building potentially in tatters.

As the electioneering for the midterms commenced earlier this year, the ruling administration leaned heavily into social issues such as abortion (which the U.S. Supreme Court effectively abrogated from being a national mandate to a matter that should be determined at the state level) and debate on transgender rights. In surveys conducted by the venerable non-partisan Pew Research Center in May, it was determined that neither of these issues were in Top 10 issues considered to be of concern by the average American voter. The top three issues were, of course, inflation, the high cost of healthcare and violence that had been rippling through many major American cities for almost two years.

By August, perhaps on account of the strident coverage churned since the Supreme Court decision, abortion emerged as No. 8 in another survey carried out by the same institution. The top 4 issues continued to same 3 issues as in May, with gun policy added as increasing number of Americans armed themselves in light of rising crime and lenient laws towards criminals being afforded by prosecutors generally aligned with the current administration.

The opposition had remained consistent in their core issues throughout this time: echoes of «It’s the economy, stupid» – a phrase coined by James Carville, a strategist for the current administration’s party during their successful bid to unseat George Bush from the presidency in 1992 – seemingly buoyed the opposition’s candidates in the lead-up to the midterm elections.

The Republicans’ focus on the economy isn’t exactly misplaced. Earlier this month, more than a third of small businesses surveyed randomly stated that they’re unable to pay October’s rent. This number has been steadily ramping throughout the year with «Blue» states (i.e. states controlled by the current administration’s party) holding all of the Top 5 positions where business owners reported this at levels well above the national average.

As per the the U.S. Small Business Administration Office of Advocacy, small businesses are a key part of the U.S. economy and account for a little under half of all private workers in the U.S.. The National Federation of Independent Business (NFIB), another long-standing advocacy group for small businesses reported that its Small Business Optimism Index – which has been calculated since 1986 – inched up 0.3 points in September to 92.1, making it the ninth straight month below the 48-year average of 98. While small business respondents were generally stating optimism in continuing their business, nearly 30% of owners indicated inflation was a critical problem for their business.

On an «average citizen» basis, personal savings in the U.S. is estimated to be at historical bottoms, with credit card debt soaring to highs:

Cross-sectional analysis made on different data sources by Harvard Professor Jason Furman indicate that nearly half of net savings accrued via pandemic-era financial relief measures have been spent in the past 12 months at a steadily increasing rate. As inflation continues to weigh large, the balance can be estimated to burn off even sooner:

On the topic of credit cards, many major credit card issuers who issue monthly report broadly report that delinquency rates continued to slowly climb toward pre-pandemic levels in September. Although some issuers also report that charge-off rates are falling, October levels can be expected to not be any better when the data is made available.

Mr. Michael Cembalest, Chairman of Market and Investment Strategy at JP Morgan, made a rather interesting observation from data of recessions in the past: equities tend to bottom several months (at least) before the rest of the victims of a recession.

Furthermore, economic indicators in the present day that have a strong relation to market momentum, show a near-unshakeable «downbeat» trend:

Let’s juxtapose this with data from Bank of America near the end of last month. As governments around the world leaned into debt issuances since the end of the Cold War, negatively-yielding debt has seen a precipitous fall in issuances and nearing 10-year lows. This is largely due to waning demand for bonds among investors (which was reported in an earlier article):

This did not translate to, for instance, increasing flows into equity markets. As of last month, the US 2-Year Treasury Bonds yielded more than $S&P 500 dividends:

Now, despite bonds being so unattractive to investors in general, BofA’s private clients have shown a 10-year high in inflows to bonds. The bank’s private investors have historically shown a heavy tendency to own stocks.

This outflow from stocks is not just limited to high net-worth investors. Given the historical falls, it is logical that individual investors would do so as well. According to an October survey by the American Association of Individual Investors which was released at the start of this month, individual investors increased the share of cash in their portfolios to around 25%, the highest level since March 2020, which is when the stock market crashed.

Robinhood, the leading commission-free brokerage app used by small-value individual investors, reported in the latest quarterly update that Monthly Active Users (MAU) are at lows not seen since Q4 2020:

By no means is inflation worries limited to the U.S. Fidelity estimated that, as per end of September data, inflation in the Eurozone will overtake that of the U.S. in 2023, with the United Kingdom already doing so.

Overall, as it turns out, holding cash was comparatively a better choice than holding any instrument: be it leading global stocks, corporate bonds, gold, the S&P 500 or even U.S. Treasury Bonds of any tenor:

However, it is incomplete to say that most investors are cashing out altogether. As an earlier article on Amazon indicated, there have been strong inflows into holding ETFs by investors who have to maintain coverage over equities. It can be estimated that this had some effect on the slight spike seen earlier this month in the S&P 500’s forward equity valuations:

This inflow, rather than strengthening conviction in any single stock or sector or an expectation in economic downturns ending, is likely to be a prime factor in the slight rises seen in markets in recent times. As Mr. Cembalest stated, the current economic scenario may not be the worst yet.

This is also where the Republican contentions that the economic downturn is solely the current administration’s fault. Markets were deemed overvalued by leading fund managers in survey after survey since 2019 and inflation had been creeping throughout previous administration’s tenure as well. While a number of policies by the current administration can arguably have exacerbated the situation to present-day lows and woes, the simple fact is that the US economy has been a ticking time bomb for quite some time now. Only recently has the ticking gotten louder and faster.

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 as well as the upside or the downside to the Nasdaq-100.

Post correlati

The positive impact of the Vision Pro launch had already been reflected in the share price
The positive impact of the Vision Pro launch had already been reflected in the share price
Violeta-540x540-1.jpg
Violeta Todorova
The positive impact of the Vision Pro launch had already been reflected in the share price
The positive impact of the Vision Pro launch had already been reflected in the share price
The positive impact of the Vision Pro launch had already been reflected in the share price
While market performance limited to select stocks, bond markets indicate fatigue.
While market performance limited to select stocks, bond markets indicate fatigue.
Violeta-540x540-1.jpg
Sandeep Rao
While market performance limited to select stocks, bond markets indicate fatigue.
While market performance limited to select stocks, bond markets indicate fatigue.
While market performance limited to select stocks, bond markets indicate fatigue.
Nvidia joins the $1T MC club. Growth expectations are stretching valuations too much.
Nvidia joins the $1T MC club. Growth expectations are stretching valuations too much.
Violeta-540x540-1.jpg
Boyan Girginov
Nvidia joins the $1T MC club. Growth expectations are stretching valuations too much.
Nvidia joins the $1T MC club. Growth expectations are stretching valuations too much.
Nvidia joins the $1T MC club. Growth expectations are stretching valuations too much.
As the U.S. farewells the debt-ceiling crisis, global markets have received a boost.
As the U.S. farewells the debt-ceiling crisis, global markets have received a boost.
Violeta-540x540-1.jpg
Violeta Todorova
As the U.S. farewells the debt-ceiling crisis, global markets have received a boost.
As the U.S. farewells the debt-ceiling crisis, global markets have received a boost.
As the U.S. farewells the debt-ceiling crisis, global markets have received a boost.
Key differences in structured product construction highlight advantages in ETPs
Key differences in structured product construction highlight advantages in ETPs
Violeta-540x540-1.jpg
Sandeep Rao
Key differences in structured product construction highlight advantages in ETPs
Key differences in structured product construction highlight advantages in ETPs
Key differences in structured product construction highlight advantages in ETPs
What it is, how does it work and what are the pros and cons of using it.
What it is, how does it work and what are the pros and cons of using it.
Violeta-540x540-1.jpg
Boyan Girginov
What it is, how does it work and what are the pros and cons of using it.
What it is, how does it work and what are the pros and cons of using it.
What it is, how does it work and what are the pros and cons of using it.
We explore the idea of making «baskets» of ETPs to gain magnified performance
We explore the idea of making «baskets» of ETPs to gain magnified performance
Violeta-540x540-1.jpg
Sandeep Rao
We explore the idea of making «baskets» of ETPs to gain magnified performance
We explore the idea of making «baskets» of ETPs to gain magnified performance
We explore the idea of making «baskets» of ETPs to gain magnified performance
We present to you a cheap and tax-efficient means of investment into popular stocks.
We present to you a cheap and tax-efficient means of investment into popular stocks.
Violeta-540x540-1.jpg
Sandeep Rao
We present to you a cheap and tax-efficient means of investment into popular stocks.
We present to you a cheap and tax-efficient means of investment into popular stocks.
We present to you a cheap and tax-efficient means of investment into popular stocks.
A quick study on the effects of market behaviour on the returns of a 3X ETP vs a 2X ETP.
A quick study on the effects of market behaviour on the returns of a 3X ETP vs a 2X ETP.
Violeta-540x540-1.jpg
Sandeep Rao
A quick study on the effects of market behaviour on the returns of a 3X ETP vs a 2X ETP.
A quick study on the effects of market behaviour on the returns of a 3X ETP vs a 2X ETP.
A quick study on the effects of market behaviour on the returns of a 3X ETP vs a 2X ETP.

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

Senior Analyst
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

Director

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.

Get the Newsletter

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

Bienvenido a Leverage Shares

Términos y condiciones

Aviso

Si Vd. no está clasificado como un inversor institucional, será categorizado como un inversor privado / minorista. En este momento, no podemos enviar comunicaciones directamente a inversores privados / minoristas. Le invitamos a ver el contenido de este sitio web y a registrar sus datos para que tengamos un registro para el futuro, sin embargo, no le enviaremos material alguno directamente.

Si Vd. está clasificado «Inversor institucional», Vd. afirma que es un cliente profesional per se, o que desea ser tratado como un cliente profesional electivo, ambas nociones están definidas en la Directiva de los mercados de instrumentos financieros («MiFID»), o un equivalente en una jurisdicción fuera de El Espacio Económico Europeo.

El mantenimiento de esta web corresponde a Leverage Shares Management Company, una sociedad de responsabilidad limitada constituida en Irlanda, cuya sede social se encuentra en 2 Grand Canal Square, Grand Canal Harbour, Dublín 2. El contenido de este sitio web ha sido aprobado bajo el artículo 21 de la ley «Financial Services and Markets Act 2000» por Resolution Compliance Limited. Resolution Compliance Limited está autorizado y regulado por la Financial Conduct Authority (FRN 574048).

Este sitio web se le proporciona únicamente para su información general y no constituye un consejo de inversión, ni una oferta de venta, ni la solicitud de una oferta para comprar inversión alguna.

Nada en este sitio web es un consejo sobre los méritos de producto o inversión alguna, nada constituye un consejo de inversión, legal, fiscal o de otro tipo, ni se debe confiar en él para tomar una decisión de inversión. Los inversores potenciales deben obtener asesoramiento de inversión independiente e informarse sobre los requisitos legales aplicables, las regulaciones de control de cambio y los impuestos en su jurisdicción.

Este sitio web cumple con los requisitos reglamentarios del Reino Unido. Puede haber leyes en su país de nacionalidad o residencia o en el país desde el cual Vd. accede a este sitio wr disponible para Vd.

Visitantes de los Estados Unidos


La información proporcionada en este sitio no está dirigida a ninguna persona de los Estados Unidos ni a ninguna persona en los Estados Unidos, en ninguno de sus Estados o en ninguna de sus territorios o posesiones.

Personas que acceden a este sitio web en el Espacio Económico Europeo


El acceso a este sitio web está limitado a personas que no son estadounidenses fuera de los Estados Unidos en el sentido de la Regulación S bajo la Ley «U.S. Securities Act of 1933», según enmendada (laeb que limiten el grado en el que el sitio web puede esta Ley «Securities Act»). Cada persona que accede a este sitio, al hacerlo, reconoce que: (1) no es una persona de EE. UU. (En el sentido de la Regulación S de la Ley «Securities Act») y se encuentra fuera de los EE. UU. (en el sentido de la Regulación S de la Ley «Securities Act»); y (2) los valores descritos en este documento (A) no están registrados ni lo estarán en virtud de la Ley «Securities Act» o con ninguna autoridad reguladora de valores de cualquier Estado u otra jurisdicción y (B) no se pueden ofrecer, vender, comprometer ni transferir de otra manera excepto a personas fuera de los EE. UU. de conformidad con la Regulación S de la Ley «Securities Act» de conformidad con los términos de dichos valores. Ninguno de los fondos en este sitio web está registrado bajo la Ley estadounidense «Investment Advisers Act of 1940», según enmendada (la Ley «Advisers Act»).


Exclusión de responsabilidad


Ciertos documentos disponibles en el sitio web han sido preparados y emitidos por personas distintas de Leverage Shares Management Company. Esto incluye cualquier documento del Folleto. Leverage Shares Management Company no es responsable de ninguna manera por el contenido de dicho documento. Excepto en esos casos, la información en el sitio web se ha proporcionado de buena fe y se ha hecho todo lo posible para garantizar su precisión. Sin embargo, Leverage Shares Management Company no será responsable de las pérdidas ocasionadas como resultado de la confianza depositada en cualquier parte del sitio web y no garantiza la exactitud de la información o el contenido del sitio web. La descripción de cualquier ETP de Valor a la que se hace referencia en este sitio web es general. Los términos y condiciones aplicables a los inversores se establecerán en el Folleto (disponible en el sitio web) y deben leerse antes de realizar cualquier inversión.


Advertencias de riesgo


El valor de una inversión en ETP puede disminuir o aumentar, y el rendimiento pasado no es un indicador confiable del rendimiento futuro. El comercio de ETP puede no ser adecuado para todos los tipos de inversores, ya que conllevan un alto grado de riesgo. Vd. puede perder toda su inversión inicial. Solo especule con dinero que pueda permitirse perder. Las variaciones en los tipos de cambio también pueden hacer que su inversión suba o baje de valor. Las leyes tributarias pueden estar sujetas a cambios. Asegúrese de comprender completamente los riesgos. Si tiene alguna duda, solicite asesoramiento financiero independiente. Los inversores deben consultar la sección titulada «Factores de riesgo» en el folleto correspondiente para obtener más detalles sobre estos y otros riesgos asociados con una inversión en los valores ofrecidos por el Emisor.


Inversión apalancada


Los productos cotizados en bolsa (ETPs) ofrecen exposición a riesgo apalancada y solo son adecuados para inversores experimentados con conocimiento de los riesgos y beneficios potenciales de las estrategias de inversión apalancadas.

Cookies

Leverage Shares Management Company puede recoger datos sobre su ordenador, incluyendo, cuando esté disponible, su dirección IP, sistema operativo y tipo de navegador, para la administración del sistema y otros fines similares (haga clic aquí para obtener más información). Estos son datos estadísticos sobre las acciones y patrones de navegación de los usuarios, y no identifican a ningún usuario individual del sitio web. Esto se logra mediante el uso de cookies. Una cookie es un pequeño archivo de letras y números que se crea en su ordenador si está Vd. de acuerdo aceptarlo. Al hacer clic en «Acepto» a continuación, Vd. acepta el uso de cookies aquí descrito. Estas cookies le permiten distinguirse de otros usuarios del sitio web, lo que ayuda a Leverage Shares Company a proporcionarle una mejor experiencia cuando navega por el sitio web y también permite que el sitio web esté mejorado de vez en cuando. Tenga en cuenta que puede ajustar la configuración de su navegador para eliminar o bloquear las cookies, pero es posible que no pueda acceder a partes de nuestro sitio web sin ellas.

Al hacer clic, acepta los Términos y condiciones mostrados.