Despite many analysts’ claims that the Federal Reserve won’t stick the landing with all the interest rate hikes, experts in the field believe that even if we’re in for a bumpy ride, the recession fears aren’t based in reality, at least for the time being.
If we follow this idea, it’s clear that the negative sentiment around stocks is nothing but a clear indicator that there’s never been a better time to invest in the usually volatile asset, only to come out on top mere months later.
With this in mind, AI financial advisors, or Robo-advisors as some may call them, have come up with a compilation of the most favorable stocks at this time, giving you the inside info you need to keep up with battle-hardened investors.
Could the economy be strong enough to fend off a recession?
Wherever you look online, you’ll see „experts” crying about the 1.4% Q1 GDP contraction, despite it being a massively misleading number, as it was caused by a drop in federal spending closely followed by a big increase in the trade deficit.
However, Ed Yardeni of Yardeni Research believes that the global market is strong, as global services and industry managers, save for China, have come in at around 55 for last month, and considering the fact that anything below 55 is considered an economic weakness, the outlook is still somewhat positive.
At the moment, JPMorgan economists believe the global economy is still managing to power through the near-term headwinds fairly well, expecting a global 2% GDP growth in Q2 of 2022.
The private sector is booming
At the same time, cash holdings of small and large businesses have surged through the pandemic, and most notably, this happened with junk bond issuers, which spike alongside the interest rates, spreading their damage to businesses and banks.
Jan Hatzius, an economist from Goldman Sachs, states that most high-yield bond issuers have already refinanced at a more favorable rate, putting refinancing risk and high-interest rate vulnerability at unprecedented lows.
The JPMorgan economists agree with this viewpoint, as they claim that the conditions that could feed into the expansion are yet to be established, assuring that the private sector is demonstrating good performance in this quarter, with balance sheets chock-full of cash.
With all of this in mind, it’s best to focus on the collapsing stocks which, according to Robo-investors, are fated to bounce back in the near future, and the Toggle AI stock selection system looks for stocks that are stretched to the point where the odds are stacked at a move in one direction.
The system finds that homebuilding companies and related retail stores like Lennar, Pulte Group, Home Depot, and Lowe’s are all skewed to move higher in the upcoming period.
These are likely beaten down due to the fact that investors are afraid of a recession that could potentially crumble the housing market given the fact fewer people will qualify for mortgages.
However, the system is set to work with parameters that don’t include a recession in the near future, meaning that even if it’s a machine, it can be wrong, so make sure to take all of this info with a tiny grain of salt.