Global investment bank Goldman Sachs urged investors to buy both commodity stocks and futures and worry about a recession later. The company's analysts believe commodities are the best assets to own in the late cycle when demand remains higher than supply. Meanwhile, economists think stocks could slightly sink in the near term as inflation remains high and the Fed is likely to continue 8implementing its hawkish policy.
"Our economists view the risk of a recession outside Europe in the next 12 months as relatively low", Goldman wrote in a note titled "Buy commodities now, worry about the recession later". "With oil the commodity of last resort in an era of severe energy shortages, we believe the pullback in the entire oil complex provides an attractive entry point for long-term investments", the firm's analysts explained.Notably, US Federal Reserve Chairman Jerome Powell said last week, "We are taking forceful and rapid steps to moderate demand so that it comes into better alignment with supply, and to keep inflation expectations anchored. We will keep it until we are confident the job is done."
The European Central Bank follows a similar strategy. ECB Board member Isabelle Schnabel recently argued that central banks around the world risk losing public trust and must now act forcefully to combat inflation.On the one hand, from a cross-asset perspective, equities could suffer as inflation stays elevated. On the other hand, commodities are the best asset class to own during the late-cycle phase where demand remains above supply. The late-cycle phase typically involves a rise in inflationary pressures and an economy that moves past the peak rate of economic growth, Goldman noted.
Premarket:
First Solar's shares rose by 1.9% in premarket after the company announced that it would spend $1.2 billion to expand production in the United States, including building a new plant in the southeast. Earlier this year, the solar equipment maker said it would unlikely build new facilities in the United States.
Twitter's stocks are almost not reacting to the company's management disagreement with Elon Musk. Twitter fell by 1% in premarket after Musk filed another notice to terminate his deal. The billionaire first announced he had violated the $44 billion deal to buy Twitter in early July. The second notice, detailed in the SEC document, gave additional reasons for the rejection.
Shares of China's Baidu advanced after the company reported better-than-expected earnings and revenue for the latest quarter. The search company noted a recovery of advertising sales and increased demand for its cloud offerings. Baidu's shares added 3.8% in premarket.
The Bed Bath & Beyond continues its positive dynamics. Shares of the home improvement retailer surged by 11.7% in premarket after rising 25% yesterday.
Today, Netflix denied Bloomberg's claims that it was considering introducing a monthly fee from $7 to $9 for its new ad-supported streaming service. That information was released yesterday. Netflix added 1.4% in premarket.
As for the technical picture of the S&P500, buyers may expect an upward correction. However, it is necessary to break through the $4,064 level. In case of strong US statistics, it is recommended to focus on this level. Whether the index will continue growing or return to the weekly lows depends on its breakthrough. In case of a further decline after the Fed policymakers' statements and weak statistics, a breakthrough of $4,038 will bring the index back to $4,003. Then it will have a chance to move to the area of $3,968 and $3,940 where the pressure may ease slightly. The index is likely to rise only after monitoring $4,064 resistance. Thus, it will reach $4,091. Only in this case it is possible to see an active growth in the area of $4,116 where large sellers will return to the market. At least, some market makers wish to fix profits on long positions. The level of $4,150 will be considered a more distant target.