Get ready for $ 900 billion of stock purchases this year, says Goldman Sachs. Here’s who’s buying.

Stock Market


Wall Street is looking a little less surefooted as a new week begins, with oil sliding as fresh COVID lockdowns in China adding to a hefty worry pile. Bonds continue to slump as well.

But maybe do not bet against stocks, which have been regrouping since an early March pullback. “‘Less bad than feared’ is a valid trading thesis and it has rewarded everyone that had the courage to buy March’s bounce, said Jani Ziedens, blogger at CrackedMarket.

“While bad, our economy appears strong enough to survive rate hikes, inflation, oil prices, and a war in Europe,” he added.

And our call of the day from Goldman Sachs sees retail “diamond hands” and corporate buybacks driving stock purchases from herre.

“Diamond hands” is Reddit message board parlance for those investors who hold on to volatile assets, resisting pressure to sell. Goldman forecasts households will scoop up $ 150 billion in stocks this year, as that asset class still looks better than beaten-down bond yields. The bank’s economists see 10-year Treasury yields hitting 2.7% by year-end from 2.48% currently.

Households had already been rotating away from bonds and cash into year-to-date equities, with Goldman data showing equity funds have attracted $ 85 billion in flows since early 2020, against nearly $ 2 trillion for US money market and bond funds.

The bank expects foreign buyers to scoop up $ 50 billion in US equities, which look like a haven asset given the economic and geographic distance from the brutal conflict in Ukraine.

But the biggest source of stock buying for the rest of the year will come from the corporate side, with high cash balances and solid earnings growth supporting that demand. The bank expects all-time high net corporate equity demand of $ 700 billion for 2022.

Look to mutual and pension funds to supply $ 900 billion of that equity, said the Goldman team.

“Rising interest rates and strong trailing equity returns have likely aided the funding levels of US pension funds,” said Goldman, who expects $ 400 billion in stock sales from that side. Mutual funds are likely to sell $ 500 billion as a shift from active to passive investing continues, Kostin and the team said.

The buzz

Tesla stock TSLA
is surging on a proposed stock split.

Stock in Poly POLY
are surging after HP HPQ
said it would buy the headset maker for $ 3.3 billion. HP shares are down.

Financial hub Shanghai will lock down in two phases this week for citywide mass COVID tests, as cases surge. Among companies affected, Tesla TSLA
is said to be pausing production at its Shanghai “Gigafactory” this week.

The Russian offensive against Ukraine continues, but President Volodymyr Zelensky said his country could declare neutrality and offer security guarantees to Russia. Negotiators head back to the table in Turkey.

Highlights of a busy week for data include the Fed’s favorite inflation indicator and US jobs numbers for March. Ahead of that, the February trade deficit in goods fell for the first time in three months.

Apple AAPL
reportedly may cut iPhone SE and AirPod production due to weaker demand amid war and inflation worries.

“CODA” delivered the first best-picture hit for Apple AAPL,
though overshadowed by that was actor winner Will Smith slapping comedian Chris Rock onstage just before picking up the best actor award. Here’s some of the reaction:

The markets

Stocks DJIA

SPX

COMP
are mixed, while oil CL00

BRN00
is cratering as Shanghai lockdowns spark demand fears. Bond yields BX: TMUBMUSD10Y
are mixed, with the Bank of Japan stepping up with an offer to buy unlimited 10-year JGBs. The dollar DXY
is up and gold GC00
is off at $ 17. Bitcoin BTCUSD
also continues to climb, up around 7% to $ 47,700.

Top tickers

These were the top-searched tickers on MarketWatch as of 6 am Eastern Time:

Ticker

Security name

GME

GameStop

AMC

AMC Entertainment

TSLA

Tesla

NIO

Nine

MULN

Mullen Automotive

HYMC

Hycroft Mining

TLRY

Tilray Brands

AAPL

Apple

SNDL

Sundial Growers

NILE

Bitnile Holdings

Random reads

Haunting, almost intact photos recovered from a 1857 ‘ship of gold’ wreck.

Could those $ 140,000 Oscar swag bags gone to worthier causes this year? Some say yes.

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