iCapital’s Chief Investment Strategist Explains Why She Is Concerned About U.S. Tech Sector Stocks

by

As a crypto investor with a background in traditional finance, I find Anastasia Amoroso’s insights on the market trends and economic conditions highly valuable. Her extensive experience in managing multi-asset portfolios and providing financial advisory services at renowned firms like Merrill Lynch, J.P. Morgan, and iCapital Network makes her a credible voice in the investment community.

On July 9th, Anastasia Amoroso, the Chief Investment Strategist at iCapital, appeared as a guest on CNBC’s “Squawk Box” program. During her appearance, she provided valuable insights regarding current market tendencies, the economy’s condition, and the consumer’s wellbeing.

At iCapital Network, Amoroso serves as both Managing Director and Chief Investment Strategist. In this capacity, she provides guidance on investment opportunities in both private and public markets. Prior to joining iCapital, Amoroso held the position of Head of Cross-Asset Thematic Strategy at J.P. Morgan Private Bank, with a focus on emerging technologies. Her professional background also encompasses positions at Merrill Lynch and J.P. Morgan Funds, during which she managed multi-asset portfolios and offered financial consulting services. Amoroso is a graduate of the University of New Mexico and holds the designation of Chartered Financial Analyst (CFA).

Amoroso initiated the conversation by expressing her belief in an impending market correction and period of stabilization. She expressed, “I believe we’re seeing some key factors lining up for a market correction and consolidation.” She drew attention to the increasing discrepancy between the decelerating economy and inflated profit predictions. Amoroso underlined that economic indicators, including the Citi Surprise Index and Bloomberg Surprise Index, have plunged deeply into negative figures and have been declining consistently for quite some time. She underscored the Atlanta Fed’s GDP projection, which had dropped significantly from an initial 4% in the second quarter to roughly 1.5%.

Amoroso pointed out that despite the economic downturn, there’s been a surprising resilience in earnings expectations. She added, “The contrast is stark when you look at how these expectations have continued to rise.” She went on to explain that although there’s been a minimal decrease in second-quarter earnings forecasts, it’s significantly less than the usual 3-4% adjustment. Amoroso voiced her unease about the “unusually calm market conditions,” expressing concern over the prevailing optimism and high investor participation that leaves her feeling uneasy.

In the realm of technology, Amoruso pointed out a noticeable split in market trends. She explained, “The technology trade remains robust and profitable, with earnings forecasts being revised upward. In contrast, other industries, notably those that are cyclical in nature, have adjusted their expectations downward.”

Amoroso additionally addressed worries regarding the wellbeing of the consumer sector. She admitted that while the consumer landscape as a whole appears stable with low unemployment levels and substantial household wealth, there are developing weaknesses. She highlighted that delinquency rates for businesses providing consumer finance to lower-income demographics have been increasing. Amoroso emphasized, “We can’t ignore the rise in unemployment, as nearly half of this increase is due to job losses, which undeniably impact a segment of the population.”

As an analyst, I’d like to share one of the key risks Amoroso identified: the election-related headline risk. The closer we get to the election, the more pronounced this risk becomes. Amoroso warned that rhetoric is likely to intensify, potentially triggering increased volatility and even market corrections. Notably, she mentioned that the tech sector could be especially susceptible due to its significant exposure to potential alterations in taxes, tariffs, and export controls.

As an analyst, I would recommend considering adjustments to your portfolio strategies to minimize potential risks. One approach is to explore defensive sectors and implement protective measures. In my opinion, you have the ability to safeguard your investments by utilizing derivatives or structured products as downside protection, or even by reducing your tech holdings slightly and increasing your positions in sectors like utilities.

Read More

2024-07-10 11:35