Jeremy Siegel says he's 'shocked' at what the Fed's overlooked and sees stocks struggling over the next 6 months
Yahoo! Finance: Top Stories / 2023-04-13 20:3251



Jeremy Siegel, professor of finance at the Wharton School of the University of Pennsylvania.Scott Mlyn/CNBC/NBCU Photo Bank/NBCUniversal via Getty Images
Wharton economist Jeremy Siegel says he's shocked the Fed has overlooked the drop in bank lending.

Banking chaos and tighter credit could spur a big fall in US economic activity, he told CNBC.

He expects stocks to struggle in the next 6 months – and lifted odds of a recession this year.

Wharton professor Jeremy Siegel says he's amazed the Federal Reserve has overlooked tighter lending standards,  while warning US stocks could struggle over the next six months.

"What happened to the banking system, and what I see in data on lending falling off the cliff, really portends a much bigger decline in economic activity," the veteran economist said in a CNBC interview Wednesday.

"I am shocked that no one at the Fed has cited the reduction in lending that has occurred — almost the most in 75 years, actually," Siegel added.

Americans are already feeling the pinch of tighter credit conditions after the failure of Silicon Valley Bank, as banks become more cautious about how much they lend and who they lend to. That's sparked worries that a full-blown credit crunch is coming for the US.

Some think it could also spell tough times for the economy, given the higher cost of borrowing, the lower access to credit and the chances of a bump in unemployment.

Siegel is pessimistic about US stocks and the economy because the Fed is set on continuing to jack up interest rates despite the turmoil in the banking industry.

"I believe the Fed has already done too much. ... Their trajectory was way too high," he said.

According to Siegel, any more rate hikes by the Fed could spell pain for US stocks over the next six months and raises the probability of a US recession this year.

"Even though it might be rough over the next three to six months, unless you're very tactical and very short-term, I'm not a seller," he said, adding that he's still a "very bullish" long-term investor.

The US central bank has lifted benchmark interest rates from almost zero to upwards of 4.75% over the past 12 months — the steepest jump in US borrowing costs since the 1980s. It's trying to quell persistently high inflation, which hit a 40-year high of 9.1% last summer and remained above the Fed's 2% target at 5% year-over-year in March.

Traders expect the Fed to bring in another 25 basis-point rate hike at its May meeting, fed funds futures show. They also expect its policymakers to begin cutting interest rates in July.

But Siegel thinks the Fed will cut rates this year lower than those futures signal, once policymakers have seen a slowdown in inflation and economic activity.

Read the original article on Business Insider

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Jeff Bezos, George Soros, Mark Cuban, and Ray Dalio All Have One Thing in Common: They're Making a Big Bet on This Industry
Yahoo! Finance: Top Stories / 2023-04-13 20:3251

When billionaires jump on the same trend, it's important for investors to take notice. The pieces often don't come together immediately, but these investors have millions of dollars in resources dedicated to getting the most up-to-date information as quickly as possible. They might see trends months in advance that others might not notice until it's too late.

Don't Miss: The House-Printing Robot Shaking Up a $7.28 Trillion Industry

Hedge fund manager George Soros is a polarizing figure, but you'd be foolish not to take notice of some of his investing trends. The Soros Fund Management Holdings 13F was recently released, and a new company tops the list as its biggest holding. Soros recently purchased $325 million worth of Horizon Therapeutics PLC (NASDAQ: HZNP), which now makes up 5.54% of his portfolio, despite previously owning none of it.

Horizon is a biotechnology company developing cures for rare and rheumatic diseases. In a vacuum, this may or may not be significant. But a number of other notable billionaires also are making similar headway into the healthcare industry.

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Ray Dalio, founder of Bridgewater Associates, the largest hedge fund in the world, is making similar bets. Two of its largest holdings are in Procter & Gamble Co. (NYSE: PG) and Johnson & Johnson (NYSE: JNJ). Collectively, they make up 7.57% of the entire hedge fund's portfolio. In a recent interview, Dalio noted that biotech is one of the current investment areas he finds interesting.

Jeff Bezos's Amazon.com Inc. also is quickly becoming a healthcare powerhouse. Amazon officially closed its $3.9 billion acquisition of One Medical earlier this week. Earlier this year, Amazon rolled out a low-cost subscription service for generic medications to Prime members. This comes after the full rollout of Amazon Pharmacy, other ventures around telehealth and significant investments in the space.

In competition with Amazon, entrepreneur and TV personality Mark Cuban rolled out his Mark Cuban's Cost Plus Drugs Co. in 2021. This has been one of his biggest focal points of the past two years and likely what the billionaire wants to be his legacy. Cuban's startup being an example of the potential upside in startup investing and private markets.

This means at least four prominent billionaires are using some of the biggest companies in the world to invest in healthcare. Following in the footsteps of these magnates in these holdings are a pretty easy and straightforward option. Mark Cuban's Cost Plus Drugs Co. is a private startup, so investors are out of luck. But investors do have options if they're looking to invest in healthcare startup in general. For example, Aura Health is the world's leading marketplace for mentel wellness and used by more than 7 million people worldwide. For a limited time, anyone can invest in Aura Health.

See more on startup investing from Benzinga.

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This article Jeff Bezos, George Soros, Mark Cuban, and Ray Dalio All Have One Thing in Common: They're Making a Big Bet on This Industry originally appeared on Benzinga.com

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USD/CAD falls to a two-month low. What's next
por Adam Button

Forexlive RSS Breaking news feed / 2023-04-13 21:01

The Canadian dollar is back.

A month ago, the thinking was that the Federal Reserve would continue to hike to levels well-beyond the Bank of Canada's 4.50% overnight rate and that was followed by a crumbling of global growth sentiment on a bank run and oil falling to the lowest levels in a year.

Since the bank run has stabilized but the market is increasingly confident that the Fed is nearly done hiking and OPEC swooped in to reverse the losses in oil.

That's prompted a sharp turnaround in USD/CAD from 1.3862 on March 9 to 1.3338 currently -- a two-month low.

Can USD/CAD continue to fall?

Technically, the pair will soon run into a series of previous lows stretching from 1.3218 to 1.3273. If those don't break, it would reinforce a pattern of higher lows that's been ongoing for nearly two years. If that cracks, it would highlight and confirm a double top below 1.40 with a measured target of 1.26.

To get there, I would need to grow more confident in the outlook for global growth and energy. That could come from a further rise in crude prices due to OPEC cuts but that would need to be matched on strengthening global demand, particularly from China.

On the domestic side, the Canadian housing market is at an inflection point as the spring real estate market ramps up. So far, pricing is holding up ok but I don't have confidence that demand will last. Every day homeowners are hit with rate resetting higher on 5-year mortgages and that could put more homes on the market.

So for now, I'm cautious on further declines in USD/CAD. There's good support nearby so the risk-reward doesn't argue for selling now but I'm open to the idea of selling on a break of 1.3200.

This article was written by Adam Button at www.forexlive.com.

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