The market expects it to arrive by the end of the year, “but production and distribution could come much later than people think,” he said. “That would be a negative surprise.”
Tech Tonic
Strong returns for a handful of mega-cap stocks, including Apple Inc., Microsoft Corp. and Amazon.com Inc., account for an outsize portion of the S&P 500’s gains this year. Tech giants are thriving as quarantined consumers rely more than ever on mobile devices and delivery services. Apple made history Wednesday when its market value eclipsed $2 trillion, a first for an American company.
But trade tensions with China, antitrust investigations and the potential for more regulation if Democrats sweep to power in November could trigger a tech selloff.
Take, for example, President Donald Trump’s executive orders targeting Chinese-owned messaging app WeChat and social media platform TikTok.
The WeChat broadside was “the biggest attack on a China technology company since Huawei” and could spur retaliation against Apple or Tesla Inc., Graticule Asset Management, a $2.6 billion macro hedge fund, said in a letter to investors this month.
“There is a long-term risk that we’ll see a bifurcation of the global technology industry,” said Russ Koesterich, a portfolio manager and member of BlackRock Inc.’s Global Allocation team. “Any change in the regulatory regime could certainly impact tech companies.”
Inflation Fears
Inflation fears are growing amid unprecedented stimulus from the Federal Reserve, even as policy makers see disinflation as a greater threat from the pandemic, according to the minutes of the Federal Open Market Committee’s July meeting.
David Einhorn’s Greenlight Capital is already wagering on ways to profit from rising inflation by establishing “a new, large macro position” in 2-,5- and 10-year inflation swaps, the hedge fund firm said in a recent letter to investors.
The market isn’t fully pricing in the potential drawn-out effects of an inflationary environment, according to Katy Kaminski, chief research strategist at AlphaSimplex Group.
“Inflation is something we aren’t used to,” Kaminski said in an interview. “Most people are a little tentative about it but those are long-term shocks.”
This article was provided by Bloomberg News.