Here’s a possibly completely clear signal. COVID-19 is no longer a ‘tail risk’ for investors for the first time since February 2020, Bank of America said in its latest fund manager survey. A tail risk is an unlikely event that could cause excessive losses or gains.
Scroll down for that diagram.
Meanwhile, the Federal Reserve’s two-day policy meeting kicks off Tuesday, and investors will be on the lookout for any aggressive signals that could give the stocks some steam. The premarket is showing some mixed action, although many are sticking to the idea of a post-pandemic boom, at least in the US as vaccinations roll out.
Read: Value stocks are making a comeback. Don’t get left behind, say these analysts
That has caused the records for the Dow Jones Industrial Average DJIA,
and S&P 500 SPX,
and those stocks that are aimed at recovery. Our call of the day comes from strategists at Bank of America, who are offering 17 stocks to buy for the three Rs they see coming – recovery, reflation, and revaluation.
Strategists Jill Carey, Savita Subramanian and Ohsung Kwon say the economy has entered the mid-cycle stage, where inflation is typically strongest. In earlier such stages, with the exception of the tech bubble, small caps have outperformed larger caps and value has outpaced growth.
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The Bank of America team says there are two reasons to love those stocks: many of the companies they flag are still inexpensive, and active funds are not positioning themselves for that rising inflation, with greater exposure to mega. than to smaller stocks.
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On the shares (almost half are small to medium-sized companies) …
Alcoa AA,
– BofA has a target price of $ 37 for the miner. Aluminum prices can go either way, but global demand growth is a plus for Alcoa.
Axalta Coating Systems AXTA,
– Stock price target £ 37 for the global coatings group. The pace of the auto recovery will be critical, and a stronger dollar and lower commodity costs could provide an incentive.
Broadcom AVGO,
Stock price target $ 550. Risks to the semiconductor company include sensitivity to US-China trade relations and competition in networks, smartphones and other markets.
He is she is
– Stock price target at $ 95. Risks from the energy company include oil and gas prices and slowing drilling developments.
Marriott International MAR,
Share price target $ 150. Economic weakness and worse-than-expected spending by businesses and consumers are among the risks to the hospitality industry.
Walt Disney DIS,
– a $ 223 price target for the entertainment giant that has “best-in-class assets.” Downside risks include slowing ESPN growth from people who decide not to maintain a cable TV subscription, weaker consumer confidence and low attendance at theme parks. Also watch out for possible movie flops.
As for the rest, they like CNH Industrial CNHI,
Comcast CMCSA,
Emerson Electric EMR,
Herc Holdings HRI,
Knight-Swift Transport KNX,
Occidental Petroleum OXY,
Parker Hannifin PH,
Head of Financial PFG,
Robert Half International RHI,
Union Pacific UNP,
and World Fuel Services INT,
The graph
Here’s that “tail risk” diagram from the last monthly BofA survey of fund managers. Greater risks are higher-than-expected inflation and a “tantrum” in the bond market.
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The markets
Stock Futures YM00,
ES00,
NQ00,
wobble a bit, but European stocks are higher SXXP,
It was also a good day for Asian markets. Elsewhere, oil CL.1,
and the dollar DXY,
are softer and bitcoin BTCUSD,
backs further away from the $ 60,000 reached over the weekend.
The buzz
Retail sales and import prices are due before the open market, followed by industrial production and an index from the National Association of Home Builders. Aside from the Fed meeting kick-off, investors will also be looking at the outcome of a 20-year treasury auction.
Ray Dalio, founder of Bridgewater, the world’s largest hedge fund company, declares bond investing “stupid” and investors should stick to a “well-diversified portfolio.”
AstraZeneca AZN,
AZN,
shares are higher after Jefferies upgraded the drug company to buy off hold. AstraZeneca is in the hot seat as several European countries suspend their COVID-19 injections due to reports of blood clots from vaccinations.
Finnish telecom group Nokia NOKIA,
ENOUGH,
cuts up to 10,000 jobs to save $ 716 million in two years.
A team from the US government highway safety agency is heading to Detroit to investigate a “violent” crash following a Tesla TSLA.
vehicle ran under a trailer, seriously injuring two people.
Random reads
Office Nostalgia – Redditers exchange stories of colleagues from hell.
When a hacker gets all your texts for $ 16.
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