Attention bitcoin investors: Top strategist sees a troubling trend amid record market inflows
As a record amount of money flows into the market, Wilmington Trust’s Meghan Shue sees a troubling trend.
Shue, who oversees almost $136 billion in assets, is concerned retail investors are rushing into stocks and cryptocurrencies that are high risk and offer few benefits — if any at all.
“It’s a little bit of chasing returns in the wrong areas. It’s also a little bit of chasing what’s already happened,” the firm’s head of investment strategy told CNBC’s “Trading Nation” on Friday. “One thing we have to be careful of is not to extrapolate what we’ve seen over the recent three months into the future.”
Shue’s warning comes after Bank of America’s latest weekly report found investor inflows hit an all-time high. Its latest data shows $58 billion went into global stocks.
“What we have seen from that Bank of America data are record inflows into U.S. large cap, in the tech sector,” said Shue, a CNBC contributor. “But less attention is being paid to areas that we think offer better potential for future returns.”
Shue’s concerns also apply to speculative assets involved in this year’s Reddit-induced retail trading mania pumping up lower quality stocks — as well as bitcoin. As of Friday’s close, the cryptocurrency is up about 65% since January 1 and 360% over the past 52-weeks.
“Money is coming off the sidelines and is looking more speculative than it has in years,” Shue said in a special note to “Trading Nation.”
Silver under $30 is really cheap as inflation drives commodity prices higher – Crescat Capital
The investment story in silver is so much bigger than the market’s short-lived social media-induced rally. Instead, investors should be focused on the precious metal’s long-term value, according to one portfolio manager.
In a recent telephone interview with Kitco News, Tavi Costa, partner and portfolio manager at Crescat Capital, said that he is extremely bullish on silver as supply is expected to drop while investment demand remains consistent. He explained that the silver market faces the most significant supply and demand mismatch in recent history.
“Silver sub-$30 an ounce is the most attractive macro-economic asset in the world today,” he said.
The comments come as silver prices test the top of their recent consolidation range. March silver futures last traded at $27.665 an ounce, up more than 1% on the day.
Costa added that it is difficult to be bearish on gold and silver as governments and central banks worldwide continue to flood financial markets with unprecedented stimulus measures. He explained that all this liquidity will eventually push inflation pressures higher.
“Investors are already starting to see that inflation is out there and that’s why I like hard-assets so much,” he said. “Gold looks really cheap. Silver looks really, really cheap. Oil looks really cheap as well. It is just ridiculous people that are staying on the sidelines in this environment.”
Looking outside silver’s role as a monetary metal, Costa said that he also sees potential for silver as industrial demand returns to normal levels. He added that because of the 2020 supply disruptions, it won’ take a lot of demand to squeeze physical supply further. He said that he continues to fee further supply issues down the road.
CNN Business/Anneken Tappe
US consumer sentiment takes a hit despite promises of more stimulus
American households making less than $75,000 are feeling especially pessimistic about their financial futures, despite promises of more federal stimulus measures in the coming months, according to the latest University of Michigan’s consumer sentiment survey.
That’s a bad sign for the broader US economy, which runs on consumer spending. And it further underscores the gap between America’s wealthiest, whose fortunes have soared thanks to a booming stock market, and lower-income earners who have bore the brunt of the past year’s layoffs and business closures.
The consumer survey’s early February results were far worse than economists’ had expected, falling to 76.2 points — a major slide from the same period last year, just before the pandemic hit, when the index stood at 101 points.
“Households with incomes in the bottom third reported significant setbacks in their current finances, with fewer of these households mentioning recent income gains than any time since 2014,” said Survey of Consumers chief economist Richard Curtin.
The worse-than-expected data was due almost entirely to worsening sentiment among households earnings less than $75,000 per year and to deteriorating expectations, which make up part of the index. They dropped nearly 6% to 69.8 points. The expectations index is calculated using multiple data points over a 12-month to five-year horizon.
Only 23% of households in the bottom third of incomes said their current financial positions had improved, compared with 54% of those in the top third of income reporting a boost.