Smart Investor: Yellow Flags For Memory Stocks, Bubble Orders, and Morningstar’s Fed Outlook
Want to stay informed with market insights and investing ideas from Morningstar? Sign up for my weekly Smart Investor newsletter here.
This week’s highlights:
Stocks started the week continuing a tech-led pullback triggered by growing expectations of Federal Reserve interest rate hikes later this year. With help from blowout earnings from Micron Technology, some of that lost ground was recouped, but stocks still ended the week down nearly 2%.
Micron’s earnings support the AI trade bulls who point to huge infrastructure orders to dismiss the notion of a market bubble. That notion was front and center when I sat down with GQG fund manager Brian Kersmanc to chat about why the $160 billion money manager remains convinced that the market is very much in bubble mode. In fact, the kind of chip and memory orders that have driven those stocks sky-high “are a feature, not a bug” for a bubble. Check out the story here.
Morningstar analyst Will Kerwin isn’t using the “B” word for the memory stocks he covers, but he’s sounding a warning about valuations. In his note on Micron, Kerwin highlighted the long-term likelihood of an inventory bust, and in this video excerpt with Susan Dziubinski, he discusses the short-term thinking, and why he thinks the industry remains very cyclical despite the AI boom.
Back on the macroeconomic front, Morningstar senior US economist Preston Caldwell has updated his outlook for the US economy. Find out here why he predicts inflation will cool and why he thinks, despite market expectations, the Fed will start cutting rates in 2027.
Lastly, Morningstar Indexes strategist Dan Lefkovitz looks across the pond at the UK stock market on the 10th anniversary of Brexit. UK stocks have struggled along with the UK economy, but Lefkovitz argues that they may be poised for outperformance.
As always, be sure to visit our Markets page for our latest coverage and live stock market updates, along with our full weekly calendar of key upcoming d
The author or authors do not own shares in any securities mentioned in this article.
Find out about Morningstar’s editorial policies.
