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It was a rough week for the market, with Donald Trump’s decree on Thursday that the US will impose tariffs of 5% on Mexican imports starting June 10, sending stocks into a spin.
Morgan Stanley strategists think the economy looks far worse under the surface than most realize, even before the tariffs, with the Wall Street firm highlighting weak durable goods and capital spending in April and a decline in the Markit Purchasing Managers’ Index.
A proprietary economic indicator maintained by Morgan Stanley has now fallen to its lowest level since the most recent recession more than a decade ago.
"We think this means the US economic slowdown and rising recession risk is happening regardless of the trade outcome," the strategists said.
And the trade outcome isn’t look great right now. There’s little sign of a breakthrough with China, and the latest tariffs have the potential to push Mexico and the US towards a recession, given the inter-connectedness of the two economies post NAFTA, according to experts.
Separately, the Fed just sounded the alarm on companies stockpiling debt and using it for all the wrong reasons, a reminder that the economy’s in a potentially vulnerable position should a slowdown arrive.
Despite the tough environment, there are those investors who continue to prosper. Akin Oyedele talked to five of the top-rated US equity fund managers to learn about their strategies, strongest convictions in the market, and advice for other investors looking to replicate their success.
Here are some other highlights from BI’s investing team this week:
- A senior partner at Baillie Gifford shares what Tesla, Amazon, and the firm’s other wildly successful investments have in common — and how it identifies them early on
- The stock market is facing an "uncommon mix" of circumstances — and UBS says there’s only one strategy for traders looking to take advantage
- Here are 5 books one of Silicon Valley’s best investors recommends for anyone looking to broaden their horizons and think outside the box
- Everyone is asleep on these 17 stocks. One Wall Street firm says you should buy them right now to crush the market.
As a reminder, Business Insider is hosting a finance event at the New York Stock Exchange on Monday, June 10, from 8:00 – 9:30 a.m. IGNITION: Transforming Finance will feature top Wall Street executives and innovators who are disrupting from within. Please complete this form to be considered for our invitation list. As always, you can contact me at firstname.lastname@example.org if you have any ideas or suggestions.
Quote of the week
"Cable has a giant reach in tens of millions of homes, which was quite tantalizing to us, but we all know the world is going towards streaming and so it felt necessary that we be there as well." — Sam Dolnick, the assistant managing editor at the New York Times, explains the publication’s push into TV.
- Callum Burroughs talked to Peter Kraus, chairman and CEO of Aperture Investors, about the firm’s growth plans and shaking up the asset management industry.
- Becky Peterson talked to Eric Ries, the founder of the Long-Term Stock Exchange, about his plan to reinvest Wall Street.
- Lauren Johnson talked to Jim Squires, who’s head of business at Instagram. He said there’s "definitely headroom" for stuffing more ads in the app, showing how vital Stories are to Facebook’s future.
- Ashley Rodriguez talked to Michael Benson, the head of marketing for Amazon Studios, about the studio’s turnaround effort and its plan to become more than a "supermarket of content."
- Shana Lebowitz talked to Laura Sapp about her journey from executive assistant to HR chief at IAC.
- Lucia Moses talked to Rashida Jones, SVP of specials for NBC News/MSNBC and the executive in charge of NBC News Now, a new streaming service aimed at young news junkies. Jones explained how the broadcaster is taking on ABC and CBS to win millennials on streaming services.
- Lucia also talked to Barstool founder Dave Portnoy about the media company’s $1 million incubator program, which is set up to help jump-start the next Casper.
- Lydia Ramsey talked to Jorge Conde, a general partner at the venture-capital firm Andreessen Horowitz, about why the famed VC firms thinks it can do in biotech what it did in tech.
Finance and Investing
JPMorgan says it’s ramping up the electronic revolution at the firm, accelerating the integration of traders and tech with a new global equity-trading bot that is at the forefront of a three-year initiative.
This summer, Apple is launching its much-ballyhooed credit-card, in collaboration with Goldman Sachs. Within a few years, the card could reap as much as $1 billion in annual profits for the tech giant, with little downside risk.
Big banks are spending massive sums of money to up their technology games.
Tech, Media, Telecoms
Mark Zuckerberg’s personal head of security has been accused of sexual harassment and making racist and homophobic comments by two former members of the Facebook CEO’s private staff, Business Insider has learned.
For many, working at a top tech company like Hulu or Twitter would be nothing short of a dream job.
Ask a room full of European investors and founders "Where’s the European Google?" and you’re likely to elicit groans.
Healthcare, Retail, Transportation
UnitedHealth Group is a healthcare giant, and it’s only getting bigger.
In 2015, the world was just starting to get outraged about drug pricing, Jimmy Carter announced a cancer diagnosis, and the latest venture from Groupon cofounder Eric Lefkofsky was just getting off the ground.
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- Oracle billionaire Larry Ellison has an incredible real estate portfolio — take a look at his properties in Silicon Valley, Japan, Hawaii, and more
- Apple is expected to launch 3 new iPhones this year — here’s everything we know so far