Wall Street finished the trading week on a weaker note as investors digested a fresh batch of economic data, including the latest jobs report and Consumer Price Index (CPI) release. The CPI rose 0.2% in January, coming in below the +0.3% consensus estimate putting inflation rate at 2.4%, still above the Fed target of 2%. Meanwhile, the jobs report showed an increase by 130,000 in January, well above the 70,000 consensus forecast and sharply higher than December’s revised gain of 48,000. The unemployment rate inched down to 4.3%. The stronger than expected jobs report for the month of January is likely to cement that the Federal Reserve holds interest rates steady for a while.
For the week, the S&P lost 1.4%, while the Nasdaq dipped 2.1%, and the Dow fell 1.2%.
Future Wealth’s View
The real action on Wall Street this week was the AI Trade permeating to sectors other than technology – destroying stocks in sectors that look vulnerable and buoying stocks that are deemed AI resistant. Logistics companies, Real Estate stocks and Financials felt the pain as investors tried sorting out the winners and the losers of AI.
The bigger shift is being missed by Wall Street, in our view. The “Sell America” trade appears to have gained momentum as the slide in the dollar is prompting investors to put money in international markets instead of US equities. The S&P 500 year to date is down 0.15% while the European ETF is up 6.1% YTD and Emerging markets ETF is up 7.42% YTD. The individual country ETFs are doing even better – Japanese ETF is up 16.4%, Brazil’s ETF is up 18.9% and so on.
In our report from a few weeks ago titled “US Deemed No Longer Dependable”, we had stated “we recommend investors begin to increase their exposure into international and emerging markets. Non-US companies could all begin to see more investments flooding into their coffers as countries reduce their investments in the US companies.” Link to the report is here – https://futurewealthllc.com/
If investors are not inclined to “Sell America”, we would recommend “Hedging America” at a minimum.