Finimize - 🏃‍♂️ Investors are making a run for it

Hi Reader, here's what you need to know for September 12th in 3:05 minutes.

☕️ Finimized with a cup of tea at Blighty Cafe in London, UK (☁️ 24°C / 75°F)

Today's big stories

Investors made a quick dash for the US stock market's exits
The new post-modern investing era is changing everything – Read Now
China saw enviable slowing inflation in August

Investors Are Spooked

What’s Going On Here?

Data out from the Bank of America (BoA) on Friday showed that investors are fleeing US stock markets.

What Does This Mean?

The US has vehemently denied it’s in a recession, but the facts speak for themselves: the country already entered a “technical recession” – when an economy shrinks for two quarters in a row – last quarter. Looks like investors are choosing fact over fiction: BoA said the current mood in stock market circles is “appalling”, with investors scared off by rampant inflation, mounting interest rates, and the prospect of a long slowdown. That probably explains why investors pulled nearly $11 billion out of US stock funds in the first week of September, close to the $15 billion lost by global equity funds in the same period (tweet this). That’s the biggest mass exodus for nearly three months, and it certainly wasn’t helped by the almost $2 billion that was snatched out of particularly interest rate-sensitive tech stocks.

Why Should I Care?

For markets: Hope for the best, brace for the worst.
Deutsche Bank’s settled on two likely outcomes for this whole debacle. The best-case scenario sees inflation slowing down, the market floating back to its previous highs, and the S&P 500 bouncing back 20% before the year’s end. But then there’s the worst case: if the US does fall into an official recession then investors are likely to really bow out, which could send the S&P 500 down by a shudder-inducing 25%.

For you personally: Is this… a good thing?
BoA’s tailor-made “bull and bear indicator” is flashing all the way bearish right now, meaning investors are essentially the most pessimistic toward the stock market as they could be. And while that sure sounds like a bad sign, professional investors have historically seen these signals as “contrarian indicators” that could hint at an incoming rally. So in essence, all this bad news could be a blessing in disguise for you savvy bargain-seeking investors out there.

You might also like: September tends to be bad for stocks. Here’s how this one is shaping up.

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Analyst Take

How To Invest In The New Post-Modern Era

By Theodora Lee Joseph, Analyst

The world has rarely seen so much change in such a short span of time – a pandemic, high inflation, an energy crisis, and a war.

So the things that drove returns over the past decade probably won’t be the things that drive them in the one to come.

Welcome to the new post-modern investing world, where returns will likely be fatter but flatter, with more winners but smaller wins.

So that’s today’s Insight: how to invest in the new post-modern world.

Read or listen to the Insight here

China’s Gentle Inflation

What’s Going On Here?

Data out on Friday showed that China’s inflation slowed in August.

What Does This Mean?

While consumers in the US and Europe have been dealing with dizzying inflation, China’s been sitting pretty with much gentler price increases than those in the West. Sure, the country’s all-important pork prices spiked over 22% last month from the same time last year, and food prices surged 6.1% on the back of that. But locked-down consumers cut back in other areas, meaning August’s consumer prices were up a lower-than-expected 2.5% from the year before, a slowdown on July’s 2.7%. And producer prices – that is, the prices paid by factories and businesses – kept in step: after all, slipping commodity prices mean raw materials are cheaper right now. That might be why August’s producer prices climbed just 2.3% – the slowest rise in a year and a half.

Why Should I Care?

For markets: Stimulation’s incoming.
China’s economy has admittedly seen better days, and while some of the blame lies with the country’s unshakeable loyalty to its own industry-stalling zero-Covid policies, some does lie with lower demand due to the global economic slowdown. But these figures are actually pretty reassuring: they'll allow the government to roll out stimulus measures to support growth without having to worry about spiraling prices. That might explain why eager investors sent the country’s CSI 300 stock index up in the wake of the news.

The bigger picture: Let there be light.
China’s already on its way to fixing the issue of power shortages: the country’s reportedly toying with the idea of building more coal-fired power plants than previously planned. That might run counter to its climate goals, mind you, which are already contending with the fact that China opened more coal plants than the rest of the world combined last year.

You might also like: How to protect your portfolio as China’s tensions with Taiwan rise.

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💬 Quote of the day

“We may hold different points of view, but it is in times of stress and difficulty that we most need to remember that we have much more in common than there is dividing us.”

– Queen Elizabeth II (the longest-serving monarch of the United Kingdom, who died on Thursday)

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🌍 Finimize Live

🎉 Coming Up This Week…

All events in UK time.

⚡️ What’s Driving The European Energy Crisis?: 5pm, September 12th
📚 How To Do Your Due Diligence For Web3 Projects: 4pm, September 16th

👀 And After That…

💰 Building Crypto Wealth In A Bear Market: 12pm, September 20th
😎 Three Industries That Can Thrive During Recessions: 5pm, September 21st
🎨 How To Hedge Against Inflation With Fine Art: 5pm, September 22nd
🇺🇸 What’s Next For The US Economy?: 1pm, September 29th
🚀 Modern Investor Summit: 12pm, December 6th – 7th

🎯 On Our Radar

Maybe we have too many experts. This guy knows everything about potato chips.
Energy bills are mounting up. Time to start pumping heat.
Teachers have stopped teaching. Here’s why.
Panera Bread has gone all high-tech. You won’t see a human there for a while.
Summer’s over. Just take it from Ryan Reynolds’ suit.

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Key phrases

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