Tiger Weekly Insights:2024/06/17—2024/06/23

DerivTiger
06-26

I. Performance of Global Equity Indices (in US dollars)

Source:Bloomberg,2024/06/17-2024/06/23

II. Key Market Themes

i. Wall Street once again revised upward its target prices for US stocks, with the most significant divergence surprisingly revolving around AI?!

  • Recently, major Wall Street firms have once again raised their year-end target for the S&P 500. Goldman Sachs, for instance, raised its target from 5200 points to 5600 points, an increase of approximately 8%, with about 2.5% upside from current levels. This adjustment is mainly due to the substantial earnings surpassing previous expectations in large-cap tech stocks.

  • As of June 13th, Microsoft $微软(MSFT)$ , Nvidia $英伟达(NVDA)$ , Google $谷歌(GOOG)$ , Amazon $亚马逊(AMZN)$ , and Meta $Meta Platforms(META)$ , these five tech giants, contributed to a 60% increase in the S&P 500 this year. Moreover, their Q1 EPS growth of 84% year-on-year far exceeds the market average of 5%. Goldman Sachs expects continued high growth from these "five giants," although the gap is expected to narrow gradually.

  • Meanwhile, analysts at JPMorgan Chase have provided a completely opposite conclusion, forecasting a 20% decline in the S&P 500 by year-end! The main disagreement lies in whether AI can become a broader driver of growth in the short term. While AI currently lacks a clear profit model, we believe that the trend of technological revolution has already formed. Unless uncontrollable external factors occur, tech giants will continue to invest heavily until results are achieved.

Source:Goldman Sachs Global Investment Research

ii. US May retail sales fall short of expectations, consumer momentum weakens, Powell's hints are coming true!

  • Recently, the US released its May retail sales data, showing a month-on-month increase of 0.1%, which is below market expectations. Core retail sales, excluding automobiles, gasoline, and building materials, rose by 0.4% month-on-month, also below expectations. The market has begun to question whether the strong US consumer spending can continue.

  • From the data, on one hand, the US credit delinquency rate (white line in the chart below) is rising significantly. Although it is still far below the levels seen during the 2008 subprime mortgage crisis, it is at a near ten-year high. On the other hand, income growth (blue line in the chart below) is gradually slowing under the pressure of sustained high interest rates, and disposable household income is decreasing.

  • As we previously analyzed, although Powell repeatedly emphasizes that US consumption and the economy are very strong and that the Federal Reserve can handle any problems, the FOMC had already given the market a heads-up by saying, "Economic data may decline in the future." Currently, this logic has been initially verified, and the release of this week's PCE data may further strengthen this hypothesis. On this path, we still maintain our forecast of 2-3 interest rate cuts this year.

Disclaimer

1. The information contained in this document is for reference only and does not constitute any financial advice or a transaction offer, solicitation, suggestion, recommendation or any guarantee for any financial product, strategy or service. You should make your own investment decisions and bear the risk of investment responsibility independently.

2. The content of this document is based on reliable data sources that the staff believed to be reliable at the time of production. The Tiger Investment Research team may adjust without prior notice. The Tiger Investment Research team does not guarantee the accuracy, reliability or completeness of the content of this document, and does not assume any responsibility for any transactions arising from the content of this article and its derivative consequences.

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Turn to AMZN or GOOG as Semi Rally Cools Down?
Amazon's stock rose by about 4% today, pushing its market value above the $2 trillion mark for the first time. Yesterday, both Google and Microsoft reached new highs. Google's stock price hit $185. The semiconductor boom has cooled down, benefiting the big tech companies. --------------------- Among these three stable giants, which one is your pick? Have you made money from this? Will Amazon hit $200 nex week?
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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