Could US stocks be heading for their very own “1980s-style Japanese melt-up”? asks Ian Harnett in the Financial Times. The dovish duo of Janet Yellen at the Treasury and Jerome Powell at the US Federal Reserve are boosting valuations by drenching markets with loose money and state spending.
The market’s current valuation philosophy is “basically to ignore it”, says Eric Savitz in Barron’s. The likes of Zoom Video Communications and Shopify trade on more than 35 times estimated sales – sales, not profits. Yet an end to the pandemic, which will let us spend more time away from the internet, is starting to take the shine off tech stocks.
The tech-heavy Nasdaq 100 is down more than 4% since a recent high on 12 February. The parallels with the dotcom bubble are multiplying, says James Mackintosh in The Wall Street Journal. In the late 1990s any share with “dotcom” in its name could be expected to rally whether it was an internet business or not.
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Today investors pile into “story stocks”: witness the recent jump in biotech firm Signal Advance, which speculators had mistaken for WhatsApp-style messenger service Signal. Yet there is one big difference from the dotcom bubble: this time the Fed “has the market’s back” and remains committed to keeping interest rates low. That means these pricey valuations rest on more than just speculative froth.
“All history’s... speculative bubbles” have been fuelled by “cheap money”, says John Authers on Bloomberg. They usually only pop when monetary conditions are tightened (Japan’s asset-price implosion came after the central bank began hiking interest rates in 1989). With the Fed intent on keeping money ultra-loose for the foreseeable future that reckoning – and the “bubble’s final paroxysm” –may still “be months away”
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UK inflation slowed again in March – but a rate cut could be some months awayThe latest Consumer Price Index (CPI) data came in at 3.2% for March. This was slightly higher than some economists expected, but takes us closer to the Bank of England’s 2% inflation target.
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Pension vs property: which option provides the best income for your retirement?News With the cost of a comfortable retirement on the rise, future retirees need to weigh up which strategy offers the best returns. But is a pension a better bet than property?
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The industry at the heart of global technologyThe semiconductor industry powers key trends such as artificial intelligence, says Rupert Hargreaves
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Three emerging Asian markets to invest inProfessional investor Chetan Sehgal of Templeton Emerging Markets Investment Trust tells us where he’d put his money
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What to consider before investing in small-cap indexesSmall-cap index trackers show why your choice of benchmark can make a large difference to long-term returns
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Why space investments are the way to go for investorsSpace investments will change our world beyond recognition, UK investors should take note
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Time to tap into Africa’s mobile money boomFavourable demographics have put Africa on the path to growth when it comes to mobile money and digital banking
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M&S is back in fashion: but how long can this success last?M&S has exceeded expectations in the past few years, but can it keep up the momentum?
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The end of China’s boomLike the US, China too got fat on fake money. Now, China's doom is not far away.
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Magic mushrooms — an investment boom or doom?Investing in these promising medical developments might see you embark on the trip of a lifetime.
