Since the US is also experiencing inflationary pressures and possible demand destruction, the Federal Reserve (Fed) could be forced to make another 75-basis-points rate hike for a third, unprecedented time. Facing a difficult investing environment, market participants have seemingly decided to pull out of risky assets, as global stocks lost $3.75 trillion last week, according to Welt’s Holger Zschaepitz. All stocks are now worth 100.6% of global GDP or $96.7 trillion.
Stagflation concerns
On September 15, Indermit Gill, Chief Economist of the World Bank, said that he is worried about a ‘generalized stagflation’ where low growth will be coupled with high inflation across the globe, which is the main reason the world bank cut growth forecasts for one-third of all countries. It is no wonder the Investment Management Index survey for September by S&P Global revealed that investors are anticipating near-term market losses due to various macro worries. Furthermore, the risk appetite index fell from -13% to now -16% indicating that markets are in a risk-off environment.
Pockets of the market
Despite a souring mood on overall markets, there were some pockets of the markets that held up well throughout 2022 so far. The most prominent is energy, where firms like Occidental Petroleum (NYSE: OXY) are up over 107% year-to-date (YTD). IT and technology in general are enjoying a positive sentiment; however, share prices of high growth tech stocks have been bludgeoned in 2022. For investors in the market or those looking to get in, it seems the best bet is firms with high cash flows, strong competitive moats, and possibly a leadership role in their industry. Other more speculative plays, should perhaps be left for a different market environment. Buy stocks now with Interactive Brokers – the most advanced investment platform Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
