The CPI recently posted its highest print since 2008—yet inflation has been in the headlines long enough that many investors are starting to tire of the constant looming potential threat, says Eva Ados, COO and Chief Investment Strategist of ERShares, in a recent interview with Bloomberg.
“We believe investors are fatigued when it comes to inflation. We saw the CPI rise by 5.4% [last week], but the markets yawned,” she said.
Despite a lackluster response on Wall Street, Ados is still keeping a close eye on rising food prices and the associated cost-push inflation, as well as wage growth.
But Ados’s biggest concern right now is cybersecurity.
“We think that’s a global threat, both at a private level but also at the state and the sovereign nation level and I think that’s the biggest risk right now in the financial markets,” she said.
Tech Stocks Gain Ground as Investors Shrug Off Valuations
Investor fatigue should clear up as the year proceeds; Ados anticipates a greater focus on earnings in Q3. “Analysts will be able to recalibrate their estimates when it comes to Q3.”
She also envisions a rise in cyclicals. “Tech companies will have a chance to re-tell their stories,” she said. “We have to remember that in a bull market, cyclicals have more money to fuel back into technology, either infrastructure or security. That’s going to benefit the tech sector and we expect the year to end on a higher note.”
When discussing the risk evaluation of Chinese tech shares, Ados sees opportunity. “We think it’s a paradigm shift when it comes to Chinese ADRs and we have to remember that the percent risk has now become a reality.”
Despite the lower valuations of some Chinese tech companies due to recent regulatory crackdowns, Ados pointed to the underlying reason for success within this particular sector, and the growth stories that they all exhibit.
“Investors will always be interested in exciting growth stories,” Ados said, adding that “once we see that the percent risk is commensurate with their values and their price,” interest could reemerge for Chinese growth opportunities.
Pivoting to look at crypto and Bitcoin, Ados is expecting greater volatility going forward. With such a drastic decrease in value, a large percentage of investors, many of whom are Robinhood users and/or first time investors, got burned by the falling price.
Compounding the volatility are the ESG issues plaguing Bitcoin, and the ransomware attacks that are only increasing and drawing attention to the need for regulations within the space, something Ados believes is on the horizon.
“We think that regulation is imminent and forthcoming,” she added.
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