Big Tech is over, the ‘old economy’ is on Wall Street: Morning Brief


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Friday, February 24, 2023

Today’s newsletter Alexandra Semenova, Market Reporter for Yahoo Finance. Follow Alexandra on Twitter @alexandraandnycRead this and other market news on the go Yahoo Finance App.

For US equity investors, old may become new again.

The demise of the Zero Interest Rate Policy (ZIRP) could come from the name of the technology that has long dominated the stock market’s popularity, from sectors such as energy, materials and housing, or from what Bank of America strategists call the “old economy.” It may shift towards what it considers part. .”

“Historically, bear markets have resulted in leadership changes, which could mean older economic sectors are the winners of this cycle,” Savita Subramanian, head of U.S. equities and quantitative strategy at BofA, wrote in a note earlier this week. It suggests that the potential is high,” he said.

“The pendulum is expected to swing back in their direction,” Subramanian said, as these components of the market were depleted of capital as big tech was driven by free money over the past decade.

Bank of America recently overweighted Materials and remained overweight Energy.  (Source: BofA Global Research)

Bank of America recently overweighted Materials and remained overweight Energy. (Source: BofA Global Research)

Despite the big January rally in these stocks, which fell throughout 2022, investors are calling this year’s rally a bear market rally rather than the start of a new bull market.

‘I think the stock market is in a prolonged bear market,’ says DoubleLine Capital founder and CEO Jeffrey Gundlach Said Yahoo Finance Live In an interview on Wednesday, he added that it started in the fourth quarter of 2021.

“[It’s] These valuations, especially when interest rates are rising relative to real interest rates, are very negative for the stock market,” Gundlach said, noting that this fall’s pause in real interest rate rises is a sign of risky asset growth. He added that it was a catalyst for his recovery. Real interest rates may start rising again.”

Meanwhile, Morgan Stanley’s Mike Wilson told clients on Sunday that the recent rise was a “speculative frenzy” based on false expectations of a pivot by the Federal Reserve.

The stock market has struggled with a recent shift in the narrative about where interest rates are headed, with Fed officials vowing to raise policy rates above 5% this year and finally taking them at face value.

Bank of America’s analysis of equity risk premiums shows growth stocks do not price in recession risk, with expected rate hikes and longer term expected to put pressure on long-term growth stocks. indicates that there is

Whatever the rest of the year is for US stock markets, there are already signs of an impending change in leadership.

Last year, the Dow Jones Industrial Average, for example, fell by less than 10% in 2022, while the latter index wiped out more than a third of its value.As As Jared Blikre of Yahoo Finance points out:the Dow’s outperformance against the tech index was the widest gap since the dot-com bubble of the early 2000s.

Traders operate in the natural gas futures market on the New York Mercantile Exchange on December 7, 2000. Gas prices settled on Thursday after surging to a record high of $9.539 per million British thermal units (mmBtu) on 6 December. It is expected to continue across the eastern United States over the next few weeks.  MS/ME

Traders at work in the natural gas futures market on the New York Mercantile Exchange on December 7, 2000 (Getty Images)

“Technological exceptionalism is definitely behind our times,” David Kostin, chief U.S. equity strategist at Goldman Sachs, said in November.

Total market capitalization of current ‘largest stock tetrads’ in 2022, as Goldman Sachs says — Apple (AAPL),Amazon(AMZN), Microsoft (MSFTMore), and the alphabet (Google) – decreased to 18% from 22% a year earlier. And these top four stocks lost -25% in total compared to -13% for the rest of the index over the period.

“With the end of ZIRP, we’re seeing the pendulum swing back to the old economy.

Bank of America itself is overweight metals and overweight energy. This is a testament to our confidence in the leadership transition.

what to see today


  • 8:30 AM EST: personal incomem/m, Jan (01.0% forecast, 0.2% m/m)

  • 8:30 AM EST: personal consumptionm/m, Jan (1.4% forecast, -0.2% m/m)

  • 8:30 AM EST: real private consumptionm/m, Jan (1.1% forecast, -0.3% m/m)

  • 8:30 AM EST: PCE deflatorm/m, Jan (0.5% forecast, 0.1% m/m)

  • 8:30 AM EST: PCE deflatory/y, Jan (5.0% forecast, 5.0% in previous month)

  • 8:30 AM EST: PCE core deflatorm/m, Jan (0.4% forecast, 0.3% mm)

  • 8:30 AM EST: PCE core deflatory/y, Jan (4.3% forecast, 4.4% m/m)

  • 10:00 AM EST: new home saleJanuary (forecast 620,000, last month 616,000)

  • 10:00 AM EST: new home salem/m, Jan (0.7% forecast, 2.3% m/m)

  • 10:00 AM EST: University of Michigan Consumer PsychologyFebruary final (forecast 66.4, prior 66.4)


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