Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Macro Strategy
Access both platforms from your single Saxo account.
Stunning divergence in equities is a short-term opportunity
Peter Garnry
Chief Investment Strategist
Summary: Travel stocks are soaring on good Omicron news and a quicker path to normalisation and the broader commodity sector is still favoured as investors are adding protection against inflation to their portfolios. The flipside is a bloodbath in speculative bubble stocks and themes such as NextGen Medicine and E-commerce. The divergence in just two trading session is stunningly 9.1%-point between the travel and bubble stocks baskets. While there are many arguments for why bubble stocks could fall more, we think the selloff will soon turn into a "buying-the-dip" situation with the market betting on bubble stocks going into the earnings season on the notion that this part of the market will deliver growth surprises.
Speculative growth stocks are continuing their 2021 descent
We are only two full trading sessions into the new year and we are already observing a 9.1%-point difference in performance between the travel basket, helped by the good news on the Omicron variant, and bubble stocks which suffering from the latest move higher in the US 10-year yield and investors continuing their rotating out of speculative growth and adding inflation hedges such as mega caps, financials, energy and mining.
While we think that a better balance between the physical and the online is warranted in the portfolio as inflation will run higher for longer due to physical constraints across energy and metals during the green transformation. But short-term we think a tactical trading opportunity is emerging as many bubble stocks will continue to show high revenue growth, whether they can deliver on operating margin is a different story, and that they will be bought back again by investors. The next couple of weeks could be tough for speculative bubble stocks, but our thinking is that investors will pick them up ahead of the earnings season betting on revenue surprises lifting share price against deteriorating expectations.
Bubble stocks basket
| Name | Mkt Cap (USD mn.) | 12M Fwd EPS | 12M Fwd EV/Sales | Diff to PT (%) | 5yr return (%) | YTD return (%) |
| Kuaishou Technology | 213,499 | -0.85 | 16.2 | 95.5 | NA | -6.2 |
| Sea Ltd | 140,384 | -1.26 | 17.3 | 101.5 | NA | -11.6 |
| Airbnb Inc | 130,635 | -1.31 | 28.1 | 14.0 | NA | 2.6 |
| NIO Inc | 94,795 | -1.59 | 18.0 | 89.8 | NA | -0.3 |
| Snowflake Inc | 84,570 | -0.87 | 71.5 | 25.7 | NA | -6.9 |
| DoorDash Inc | 67,743 | -0.19 | 17.6 | 71.9 | NA | -8.7 |
| Roku Inc | 59,111 | -0.26 | 23.1 | 60.9 | NA | -2.4 |
| Bilibili Inc | 51,601 | -4.76 | 18.2 | 159.8 | NA | -12.9 |
| Teladoc Health Inc | 41,124 | -0.30 | 20.3 | 72.3 | 452.7 | -0.4 |
| XPeng Inc | 37,228 | -2.41 | 15.0 | 32.2 | NA | -5.4 |
| Affirm Holdings Inc | 34,499 | -0.89 | 39.7 | 82.5 | NA | -15.1 |
| BeiGene Ltd | 34,490 | -9.78 | 35.8 | 71.1 | 699.2 | -9.1 |
| Unity Software Inc | 34,299 | -0.35 | 32.7 | 34.5 | NA | -9.3 |
| Plug Power Inc | 32,156 | -0.18 | 68.1 | 75.5 | 2,152.0 | -0.3 |
| Seagen Inc | 31,016 | -0.11 | 15.9 | 23.3 | 165.3 | -1.2 |
| Cloudflare Inc | 28,050 | -0.08 | 46.1 | 87.0 | NA | -12.6 |
| Splunk Inc | 27,486 | -0.21 | 10.8 | 44.5 | 106.2 | 0.1 |
| MongoDB Inc | 25,201 | -0.98 | 34.1 | 20.5 | NA | -12.1 |
| Exact Sciences Corp | 24,752 | -1.14 | 13.3 | 60.7 | 429.9 | 2.8 |
| Gaotu Techedu Inc | 24,455 | -3.34 | 11.8 | NA | NA | NA |
| Farfetch Ltd | 23,465 | -0.66 | 10.3 | 49.1 | NA | -1.1 |
| DraftKings Inc | 23,186 | -1.16 | 26.5 | 118.3 | NA | -3.1 |
| GDS Holdings Ltd | 20,998 | -0.15 | 18.6 | 95.9 | 389.5 | -13.0 |
| 10X Genomics Inc | 20,458 | -0.32 | 38.9 | 41.5 | NA | -5.1 |
| Argenx SE | 19,397 | -10.72 | 105.2 | 7.7 | 1,718.1 | -3.9 |
| Alnylam Pharmaceuticals Inc | 19,214 | -4.77 | 21.0 | 25.3 | 291.3 | -2.6 |
| Ping An Healthcare and Technology Co Ltd | 18,942 | -0.91 | 11.6 | 115.1 | NA | -10.2 |
| Innovent Biologics Inc | 18,305 | -0.61 | 24.0 | 140.5 | NA | -17.2 |
| Guardant Health Inc | 16,826 | -1.50 | 40.5 | 63.9 | NA | -2.0 |
| Zai Lab Ltd | 15,781 | -2.52 | 87.5 | 163.3 | NA | -12.1 |
| Kingsoft Cloud Holdings Ltd | 15,710 | -2.56 | 9.6 | 145.9 | NA | -12.4 |
| Yatsen Holding Ltd | 15,665 | -1.17 | 10.7 | 66.0 | NA | -7.9 |
| Oak Street Health Inc | 15,461 | -0.46 | 11.1 | 67.9 | NA | -3.2 |
| C3.ai Inc | 15,370 | -0.79 | 69.6 | 68.4 | NA | -1.4 |
| Bill.com Holdings Inc | 15,319 | -0.19 | 57.4 | 65.3 | NA | -12.3 |
| Canopy Growth Corp | 15,279 | -0.90 | 24.2 | 34.1 | 16.7 | 3.7 |
| Appian Corp | 15,229 | -0.40 | 43.3 | 57.5 | NA | 1.1 |
| Avalara Inc | 14,770 | -0.16 | 21.3 | 70.7 | NA | -5.9 |
| Elastic NV | 14,429 | -0.44 | 20.6 | 50.1 | NA | -5.5 |
| Wolfspeed Inc | 14,240 | -0.59 | 21.3 | NA | NA | NA |
| Aggregate / median | 1,565,141 | 21.3 | 67.0 | 409.7 | -5.5 |
The market is betting on a totally different car industry
As a follow up to yesterday’s equity note, we extended our commentary on the EV battle in today’s podcast. We failed to cover all our thoughts because we have to be conscious of time, so we expanded further on our thinking in this Twitter thread. At any case, the EV battle this year is one of the most interesting to watch and a defining moment for the car industry. A lot of market value is at risk this year. We forgot in our Twitter thread to elaborate a bit on the car as a platform. The idea for the bulls on Tesla is that 1) the company takes 25% global market share, and 2) cars will become a major digital platform in which you can sell software services on. In that scenario, Tesla could be extremely profitable, but the path to the endpoint is not without risk and while we have seen Volkswagen having difficulties ramping up production to beat Tesla, we do not yet know the dynamics of the remaining large players (Ford, GM, Toyota etc.) entering the EV race at full force.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: The ride just got rougher
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
China Outlook: The choice between retaliation or de-escalation
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
Commodity Outlook: A bumpy road ahead calls for diversification
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX outlook: Tariffs drive USD strength, until...?
John J. Hardy
Global Head of Macro Strategy
-
Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)