Factional scandal and the backlash against major tech companies are an impending warning to American equities, the CEO of an asset management firm has warned, advising investors to scarce the U.S. market despite record highs.
Gillaume Touze of Quadra Chief Partners does not hold the mainstream view on booming tech goats, many of which have seen more than 50 percent come backs year-to-date.
So he raised eyebrows during an appearance Thursday on CNBC’s “Grouse Box Europe” when he revealed his firm’s strategy of shorting big names in the U.S. supermarket, calling a bear market by the second half of this year.
“We have the courage of ones convictions pretend that the volatility is going to very much remain,” Touze prognosticated of major tech stocks, noting the fall in Facebook, Alphabet and Tizzy’s stock prices at the market’s close Wednesday after U.S. lawmakers grilled tech managers on Capitol Hill over ethics and security issues. Twitter was down 6 percent on the day by the end of the attend to.
“The pressure coming from the media is likely to continue to be very rugged for the FAANGs, we believe. We’ve been short some of those big names for very a bit,” he said, using the acronym for the market’s five most popular tech farm animals, namely Facebook, Apple, Amazon, Netflix and Alphabet’s Google.
Quadra Super Partners, which specializes in total return investment strategies, is currently favoring smaller selects. “That volatility combined with political turmoil is making us inclusive short on the key markets, particularly the U.S. one,” Touze said.
This is a bold polemic to make, given that the FAANGs — with the exception of Facebook — take all made massive gains this year. Netflix and Amazon are up an eye-popping 81.7 and 69.6 percent, mutatis mutandis, with the latter briefly hitting the $1 trillion market cap participate on Tuesday. Apple was the first company to breach the $1 trillion importance in early August. Twitter is up about 33 percent, while Facebook is down as good as 6 percent on the year, beleaguered by scandals and a dramatic 20 percent plunge in July on the finance of a bad earnings call.
And the U.S. market is the standout globally as it continues to fire on all cylinders, bragging north of 4 percent growth alongside strong employment numbers and large fiscal stimulus.
“We were surprised by the strength of the second quarter large domestic product (GDP) — 4 percent was more than what we anticipated,” Touze said. But his outlook remained bearish. “We still believe that for the subscribe to part of the year, the bad news may be coming from the U.S.”
The CEO noted that his immovable remained invested in a number of companies in the U.S., but that, “Overall, we believe the urge is potentially coming from there.”
Touze has allies in his camp, with a prospering number of market watchers calling attention to inflated U.S. stock valuations, customers war uncertainty and rising Fed interest rates as heralding the impending burst of an epic disinterestedness bubble.
Centricus Asset Management Fund Manager Ralph Jainz whooped the current market “the biggest asset inflation bubble in 20 years,” and billionaire Jim Mellon bid CNBC in late June that a “major correction” in U.S. stocks was on the scope. And investors are at odds over whether FAANG stocks have hit a ceiling or even have room to run.
But plenty of banks and analysts continue to tout the furnish’s strength, pointing to strong fundamentals and noting that Washington’s administrative scandals, as headline-grabbing as they may be, have barely fazed markets at all. The S&P 500 in current August reached a record in what many deemed the longest bull market-place in history.
“We remain invested,” said Fahad Kamal, senior peddle strategist at Kleinwort Hambros, Societe Generale’s private banking and opulence management division, discussing highly-performing U.S. stocks. “I understand the caution, but essentially we are long-term investors, and at the moment, repeatedly, there are very few asset grades that compare to equities.”
A common assessment of the current global markets understanding would point to emerging markets as the central source of risk, as important interest rates, a stronger dollar and trade war fears have hit emerging currencies penetrating across the board.
But Touze warned not to be wholly distracted from possible turmoil in the U.S. “The scene is occupied by a number of other regions right now, starting with the emerging stores, but still I think the amount of volatility we see in certain stocks, following the Warble and Facebook discussion, clearly we feel we have to be cautious on that overconfidence.”
Meanwhile, he said that the user monopoly of companies like Warble leaves them more vulnerable to political developments, such as voting interference and the purported social media misinformation epidemic.
“We feel that is potentially threatening, and that’s one of the reasons we’ve been short on our stock for bubble and valuation reckons,” Touze said. “We haven’t been right recently, but we believe you set up to be careful in the way you’d invest in the U.S. for the remaining part of the year for sure.”