ERShares In The News

Unfortunately, the political "hot potato" that has now focused on Detroit and the UAW, follows decades of distrust between Management and Union workers. This will not be resolved easily and will continue to undermine a once proud workforce and industrial powerhouse. The timing couldn't be worse. With rising interest rates, a tight housing market and slowing GDP growth, the US economy is entering a choppy period. Our strong resilient economy and low unemployment should sustain the US economy for the foreseeable future. However, unless real estate prices start to soften (as they have in the second largest economy--China), interest rates will remain high and wreak havoc on Bond portfolios and more speculative investments.

Eva Ados shares her outlook on Arista Networks and Nvidia

Eva Ados on Hewlett Packard, Texas Instruments and Sunrun

For the past 5 months, the labor market has shown signs of cooling coinciding with declining inflation and relatively low unemployment. Shelter costs, that currently comprise 30% of the CPI, have not yet dropped significantly, though with rising mortgage rates and insurance costs we anticipate a strong reversal. We believe that given the clear direction of the macro economic data, there is a strong possibility the Fed will signal a long pause to rate hikes subsequent to their October 31/November 1 Federal Reserve meetings. This announcement, we believe, could provide the next major catalyst to the markets and provide support for a strong year-end finish.

Recorded on August 9th, 2023: Investments to be avoided

Recent Fed rate hikes have led to increases in interest rates, especially at the long-end of the curve. This has increased risk to long-term bond holders, as well as commercial real estate, regional bank and speculative stock investors. Notably, the continuing drop in CPI has helped stabilize market conditions (PPI notwithstanding), with stock price movements hinging primarily on 2nd quarter earnings reports.

Eva Ados on Pinterest and Chipotle

Eva Ados discusses the Fed meeting and CPI results (July 12). Despite a clear downward trend with inflation, the Fed seems bent on raising rates one or two more times in 2023. However, markets have been resilient with many risk indices hitting high levels. We believe the Markets are incorporating forward-looking projections with interest rate declines to periods in 2024.

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There are a few major catalysts in the next few weeks. CPI doesn't emerge until mid-July and the next Fed meetings are toward the end of the month. Meanwhile, Q2 earnings won't start for at least a few weeks, and trading volume will be low. However, this does not mean that markets or stocks will be trading flat for the next few weeks. Given the large run-up among a handful of mega-cap stocks, it would not be surprising if some investors decide to take profits. Consequently, we believe there is a very real possibility that mega-caps (e.g. TSLA, NVDA, FB, AMZN, MSFT, etc.) will underperform the broader market constituents. Long-term interest rates are still relatively low and the economy has been (surprisingly) resilient. If CPI comes in low for June the Fed may pause (again) during their July 26-27 meetings. This could help set the stage for a second-half 2023 Market rally.