This week ahead || Aug 21st - Aug 25th 2023
Here's some news for the week ahead.
Nvidia reports earnings, Fed gathers in Jackson Hole: What to know this week
The final week of August brings two significant events for investors: Nvidia's earnings report and the Federal Reserve's annual Jackson Hole Economic Symposium. Federal Reserve Chair Jay Powell's speech at Jackson Hole will be a key focus, with investors looking for insights into the path of interest rates and the Fed's view on inflation. On the corporate side, Nvidia's earnings report is highly anticipated, given the chipmaker's raised revenue outlook earlier this year. Overall, August has been a challenging month for stocks, and investor sentiment could be influenced by these events as they assess the state of the economy and corporate performance.
Less cash, fewer bears could leave U.S. stocks vulnerable
Indicators that previously pointed to upside potential for U.S. stocks have shifted to a more neutral outlook, raising concerns about potential turbulence in the market. At the beginning of the year, extreme pessimism and bearish positioning among investors provided a strong tailwind for risk assets. However, a resilient economy and cooling inflation have drawn investors back into the market, reducing the amount of cash on the sidelines and leading to a shift from pessimism to optimism. This shift is now being tested as the S&P 500 faces declines and rising Treasury yields. Concerns over China's property crisis have also added to market vulnerability. While optimism has grown, it is still not at extreme levels, and cash levels remain significant, leaving the market's direction uncertain.
Tesla continues waging price war; VinFast makes U.S. debut: This week in EVs
Vietnamese electric vehicle maker VinFast had a tumultuous debut on the U.S. stock exchange, surging 270% on its first trading day before dropping significantly. This followed its merger with special-purpose acquisition company Black Spade, initially valuing it at around $50 billion but later reaching over $85 billion, surpassing Volkswagen and Ford. However, criticism, especially regarding its VF 8 electric SUV, has affected its image in the U.S. Tesla continued its price cuts, reducing prices for Model Y in China and offering insurance subsidies for the Model 3 in the country until September, aiming to counter a 31% drop in July sales in China. Emerging EV maker Mullen initiated a $25 million stock buyback program to meet Nasdaq trading rules after a reverse stock split but faced challenges in maintaining its share price above $1.
Read about it here.
The Case for Investing in Emerging Markets Is Fading in August
Bonds and stocks in emerging markets are facing significant losses in August, with factors such as Nigeria's central bank revealing lower reserves, political shifts in Argentina, and a presidential candidate's assassination in Ecuador contributing to the turbulence. These events, along with rising US Treasury yields and concerning economic data in China, have prompted investors to reevaluate the appeal of riskier assets in emerging markets. The volatility underscores the political risks often associated with emerging markets, highlighting the importance of carefully navigating these investments. Some investors are focusing on countries in Latin America and the Middle East that are embracing market-friendly reforms to mitigate risks.
