Tech
iCapital’s Anastasia Amoroso on the Potential U.S. Stock Market Pullback
On July 9, Anastasia Amoroso, Chief Investment Strategist at iCapital, appeared on CNBC’s “Squawk Box” to share her insights on the latest market trends, the state of the economy, and consumer health.
Amoroso is a Managing Director and Chief Investment Strategist at iCapital Network, where she advises on private and public market investment opportunities. Previously, she was Head of Cross-Asset Thematic Strategy at JP Morgan Private Bank, focusing on emerging technologies. Her career also includes roles at Merrill Lynch and JP Morgan Funds, where she managed multi-asset portfolios and provided financial advisory services. Amoroso holds a bachelor’s degree from the University of New Mexico and is a CFA charterholder.
Amoroso began by discussing the potential for a market pullback and consolidation. Amoroso said, “I think there are some ingredients that are definitely coming together for a market pullback and consolidation.” He highlighted a growing disconnect between the slowing economy and elevated earnings expectations. Amoroso noted that economic indicators, such as the Citi Surprise Index and Bloomberg Surprise Index, are now deep in negative territory and have been trending lower for several months. He noted that the Atlanta Fed’s GDP estimate had fallen from 4% at the start of the second quarter to about 1.5%.
Amoroso noted that despite the economic slowdown, earnings expectations have remained elevated. She noted, “If you compare them and put them up against earnings expectations, they have only gone up.” She explained that while there has been a slight downward revision in earnings expectations for the second quarter, it is much less than the typical 3-4% reduction. Amoroso expressed concern about “the market being so comfortable with this Goldilocks scenario,” noting that low volatility and widespread investor participation have made her uncomfortable.
Speaking about the tech sector, Amoroso highlighted a bifurcation in market performance. He said, “There’s this bifurcation where the tech trade is still very much alive and well, and earnings have been revised higher while everything else has been driven lower.” Amoroso suggested that while the tech sector continues to thrive, other sectors, particularly cyclical ones, have already scaled back their expectations.
Amoroso also addressed concerns about the health of the consumer sector. He acknowledged that while the overall outlook for consumers is not overly worrisome due to low unemployment rates and high household net worth, cracks are appearing. He noted that default rates for consumer finance companies that cater to lower income groups are rising. Amoroso said, “We shouldn’t completely ignore the increase in the unemployment rate because half of the increase can be explained by layoffs, which clearly affect a portion of the consumer base.”
One of the significant risks Amoroso highlighted is headline risk surrounding the upcoming election. He said, “I think the biggest risk is headline risk surrounding the election, and I think that rhetoric is likely to increase.” Amoroso noted that volatility typically increases as elections approach, potentially leading to market pullbacks. He noted that the tech sector could be particularly vulnerable because of its exposure to potential changes in taxes, tariffs and export controls.
To mitigate potential risks, Amoroso recommended adjusting portfolio strategies. He suggested looking at defensive sectors and hedging portfolios through various means. Amoroso said, “You can hedge your portfolio; you can certainly buy downside protection through derivatives or structured investments, or you can cut back on technology a little bit and add things like utilities.”
Italian: https://www.youtube.com/watch?v=AtuK9T2oD10
Featured image via Youtube