Stocks are bouncing back again, or so the futures mood is.
It’s a day after Federal Reserve Chairman Jerome Powell confirmed to lawmakers what markets already knew – that a soft economic landing could be tricky while taming the beast of inflation.
Like average investors, hedge funds had a difficult start to the year. Managers were down about -0.56% in May, outperforming the Nasdaq by 1.49%, but lagging the S&P 500 SPX
by 0.57%, according to the Eurekahedge report.
But one manager has clawed back gains this year. They include AQR Capital Management founder Cliff Asness, whose Equity Market Neutral Global Value strategy has risen 48% so far this year, while his absolute return strategy has gained 35%, according to CNBC. who questioned him on Wednesday evening.
In our call of the dayAsness offers some stock picks from its quantitative process and challenges the meme crowd on its AMC Entertainment AMC
short position. First, the featured manager touched on broader markets and what he thinks about hard-hit bonds these days.
“We don’t like them as much as six months ago,” Asness told CNBC. “If you force me I would say we are negative on bonds, also in the trend following world which doesn’t really look at value and in the managed futures world we are definitely short on bonds. “
“I don’t think I can say bonds are a value game,” he said, and that stands in contrast to a few tech names he reluctantly shared. “That doesn’t mean that if we go into a recession there won’t be a big bond rally, but in terms of the things we compare yields to, bonds are considerably less dire. But it’s damning with faint praise.
Would its value games be in trouble if a recession came? Asness said its strategists aren’t that sensitive to macro factors, in part because they don’t take big bets on the industry. “I don’t think we have a very direct bet on recession versus non-recession.”
He said they stick to certain value plays in the portfolio because they always like to have that exposure and especially “when it feels very, very cheap.” Although there was a pullback in value in June, the highs are so high they are tied to the tech bubble when it comes to the relative prices between value and growth, he said.
When it comes to value stocks that fit into its playbook – cheap, profitable, low risk and with good momentum – Asness pointed to tech giants Meta Platforms META
and Amazon AMZN,
down 53% and 34% since the start of the year.
“Meta and Amazon are generally valued by our process now. They’re cheap compared to their peers…we do industry comparisons and they’re not always perfect – Meta is social media and Amazon is selling Internet retail…but they both look good on a combination of value, profitability and low risk investment…Amazon is good on all three,” he said.
In his larger interview with CNBC, Asness also issued a meme challenge, announcing a new AMC Entertainment short stance. “It’s terrible for everything we care about,” Asness reportedly said. “It’s super expensive, super unprofitable, and with super high beta and volatility.”
“I challenge all the meme stock maniacs to try to hurt us,” he said.
Judging by the Twitter reaction so far, it looks like the meme crowd isn’t backing down, while AMC is up 1.5% pre-market.
“Gigantic money furnaces.” This is how Tesla TSLA
CEO Elon Musk describes the electric vehicle maker’s two new factories.
EV Polestar Group to debut on Nasdaq on Friday after deal with special purpose acquisition firm Gores Guggenheim GGPI
has been approved.
Stock at Darden Restaurants DRI
is up after its board approved $1 billion in share buybacks.
Accenture ACN Stock
falls on a shortfall for the consulting company.
Warren Buffett’s Berkshire Hathaway BRK
disclosed purchase of additional 9.6 million shares of Occidental Petroleum OXY.
These stocks are on the rise.
JPMorgan says investors have more cash in reserve now than when the COVID-19 pandemic began.
Powell is heading into his second day of testimony on Capitol Hill, which will begin at 10 a.m. ET. Weekly jobless claims and the US deficit lead the way, followed by S&P Global’s US manufacturing and services purchasing managers’ indices.
ES00 Equity Futures
rose, with bond yields BX:TMUBMUSD10Y
releasing, while the CL oil
continues to fall, a day after stabilizing at a six-week low. BitcoinBTCUSD
continues to hover around the $20,000 mark.
Auto supplier stocks have largely priced in an economic downturn and have “still buoyant tailwinds,” says Baird research analyst Luke Junk. He says investors are looking for “already washed-out sectors.” should feast on companies dealing with electrification, active safety, on-board technology. Gentherm THRM
and Aptiv APTV
are two oversold names that stand out for Junk.
Here are the most searched tickers on MarketWatch as of 6 a.m. EST:
Six of the most livable cities in the world are in Europe.
Parents of transgender children are draining their savings to flee conservative states.
A quick-witted coach saved the life of swimmer Anita Alvarez at an international meet on Wednesday:
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