Cedears: investors recalibrate compass after signals from the Fed and technology balance sheets

On the other hand, in recent days they met corporate balance sheetsseveral of which were from “megacap” companies, such as the so-called “ seven magnificent“. Although there were disappointments and other excellent results, the market has doubts. Thus, for analysts, the shares of these companies (big tech) have already climbed a lot, so maintaining positions in those firms would leave the investor too exposed to a significant declineas happens with teslawhich in the last six months has accumulated a drop of 28%.

Meanwhile, Wall Street’s S&P500, which is made up of the 500 largest companies in the US – measured by market capitalization – is performing very well, but is losing diversity by becoming too concentrated. That’s when it starts to lose dynamism.. Said in market terms: shows worse results. This level of concentration can become a problem for any portfolio that seeks stable returns over time.

However, as a relief for investors, during 2023 the FOMC of the Federal Reserve seems to have achieved the monetary policy of an ideal world, where a significant slowdown in inflation was achieved without affecting the level of activity, the long-awaited “soft landing“of the economy.

In that sense, Ambit consulted analysts about what are the “drivers” to take into account, from now on, to rebuild the portfolio of cedars and how to recalibrate inverter compass.

Cedears: recalculating for the first half of the year

“It is time to be selective and take advantage of the opportunities that appear in the market,” he explains to Ambit Santiago Ruiz Guiñazú, Head of Equity in Adcap Financial Group.

Ruiz Guiñazú exemplifies that teslawhich suddenly had considerable declines of approximately 15-20%can be attractive again after this bad moment he is going through. This is because it is a solid company, with great financial backing and a clear business plan, so it will surely perform well again in the future.

“The context is complicated for the companies because they are having higher expenses and their margins are shrinking,” says Guiñazú, who highlights that, added to this situation, it is not clear when the Fed will lower interest rates. “In fact, before the meeting of this week it was believed that there was some possibility of them being loweredbut they ultimately decided not to.”

“Therefore, we have a scenario where company results begin to be lowerthe margins and the interest rate are not helping to justify higher multiples,” says the analyst, wanting to emphasize that it is a time to be very cautious with investments.

Soledad Lopezof Rava Bursátil, maintains, for its part, that, due to the Argentine economic and political context, which is experiencing strong volatility until political reforms are introduced and pending the liquidation of the field, “it considers it convenient to incorporate Cedears into the portfolio and keep them as a hedge of the Cash exchange rate with Liquidation (CCL)”.

Regarding the international context, the analyst indicates that the US is going through an electoral year and waiting for the Federal Reserve finally decides to lower its rate, “a process that is already underway.” In this sense, the financial sector, emerging countries and real estate could benefit from the decision of the US central bank, with which to add emerging markets ETFs to portfolios through Cedearsit is a good investment option.

Cedears: the investor’s objective is the key

For Pablo ReppetoHead of Research Aurum Values, “it all depends on what kind of investor you are.” The analyst bases this strategy on the fact that to enter a Cedear, in this context, one must take into account “factors that have to do with the international economy, what sector are you going to choose, what company, and well, what is your objective,” he explains.

Reppeto emphasizes that the trend must be taken into account “moderately bullish” of the CCL dollar intrinsically linked to Cedears. The analyst explains that when measuring the US stock indices, a very good performance is observed, “but they are all linked to the package of technological stocks“, a very risky exposure, as indicated in the first lines of this note.

That being the case, Reppeto recommends the approach of improving portfolio productivity through artificial intelligence and other technologies. It is important to consider that those Cedears can offer superior performance. In this context, “technology plays a crucial role”, and he considers companies such as Nvidia or Microsoft.

As for the companies and sectors to watch for the first half, everything will depend on the progress of the US economy. “If a low inflation rate is maintained without a pronounced slowdown, the consumer discretionary sectors could be promising. As these sectors would benefit from a stable economic environment,” adds Reppeto.

However, if there are signs that the economy could face challenges, such as a complicated process related to interest rates, concerns arise about a possible recession. In this scenario, it is recommended to pay attention to sectors less linked to discretionary consumption, such as “utilities” and health.

That said, when adding segments or companies to the portfolio it must be done thinking about diversification, which is essential to protect and enhance heritage. However, the investor must also develop the capacity to adapt because, surely, the long road ahead to 2024 will offer opportunities to rebalance positions, as expectations change or are met.