Head of Equity Strategy
Summary: Oil and gas services, cruise lines and base metals industries are the three hardest hit industries from the coronavirus. We also show the other hard hit industries in order for investors to prepare and create monitor list for taking advantage of the opportunities when market sentiment changes. We also highlight single stocks.
The coronavirus in China continues to worsen with the death toll rising. For now it’s clear that commodities are where the real price discovery is on the economic impact from the coronavirus. The verdict so far is that the real impact is significant, but outside commodities we are observing pockets of the equity market being under pressure. The industries that have been hit the hardest are cruise lines, oil & gas services and base metals which shows that tourism and the front-end of the global supply chain is being impacted. Other industries that are being impacted are travel & leisure, casinos, steel, airlines and shipping. To put things in perspective US-China air passenger traffic could fall 75% over the coming six months. As we have said the whole week we remain tactically short on equities and demand new all-time highs to get back into positive view on a tactical basis.
But the coronavirus will at one point stabilize and when the time comes there will be a significant rebound trade in the industries that have been hit the hardest. So any investor or trader should create a monitor of stocks in the industries that have been hit the hardest. The table below shows single stock names in the three hardest hit industries.
AI: The good, the bad, and the bubble
While a deep recession may not be iminent thanks to central bank policy, interest rates will have to stay high for longer, and this will be accompanied by volatility risk from the unwinding of bubbles, especially within AI.
Steen Jakobsen,
Chief Investment Officer
The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
Peter Garnry,
Head of Equity Strategy
As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Redmond Wong,
Market Strategist
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
Charu Chanana,
Market Strategist
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
Mads Eberhardt,
Cryptocurrency Analyst
Stocks related to artificial intelligence (AI) have appeared on investors' radars. Expectations are high, but it may be necessary to consider how to get exposure to AI in a diversified way.
Hans Oudshoorn,
Trainer Academy
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
John J. Hardy,
Head of FX Strategy
While commodities, broadly speaking, have faced some tough months, a partial reversal during June could signal that the asset class is getting back on its feet with energy holding up and precious metals with upside potential.
Ole S. Hansen,
Head of Commodity Strategy
As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Althea Spinozzi,
Senior Fixed Income Strategist
