On July 9, Anastasia Amoroso, iCapital’s Chief Investment Strategist, joined CNBC’s “Squawk Box” to share her insights on the latest market trends, the state of the economy, and the health of the consumer.
Amoroso is the Managing Director and Chief Investment Strategist at iCapital Network, where she advises on private and public market investment opportunities. Previously, she was the Head of Cross-Asset Thematic Strategy at J.P. Morgan Private Bank, focusing on emerging technologies. Her career also includes roles at Merrill Lynch and J.P. Morgan Funds, where she managed multi-asset portfolios and provided financial advisory services. Amoroso holds a degree from the University of New Mexico and is a CFA charter holder.
Amoroso began by discussing the potential for a market pullback and consolidation. Amoroso stated, “I think there’s some ingredients that are definitely coming together for some market pullback and consolidation.” She highlighted a growing disconnect between the slowing economy and lofty earnings expectations. Amoroso pointed out that economic indicators, such as the Citi Surprise Index and Bloomberg Surprise Index, are now deeply in negative territory and have been trending lower for several months. She emphasized that the Atlanta Fed’s GDP estimate had dropped from 4% at the beginning of the second quarter to around 1.5%.
Amoroso noted that despite the economic slowdown, earnings expectations have remained high. She remarked, “You compare and contrast that to the earnings expectations, and they’ve done nothing but move higher.” She explained that while there has been a slight downward revision in earnings expectations for the second quarter, it is much less than the typical 3-4% reduction. Amoroso expressed concern about the “extreme market comfort with this Goldilocks scenario,” noting that low volatility and widespread investor participation have made her uncomfortable.
Discussing the tech sector, Amoroso highlighted a bifurcation in market performance. She stated, “There’s this bifurcation where the tech trade is still very much alive and well, and the earnings have been revised up while everything else has been guided down.” Amoroso suggested that while the tech sector continues to thrive, other sectors, particularly cyclical, have already reset their expectations lower.
Amoroso also addressed concerns about the health of the consumer sector. She acknowledged that while the overall consumer outlook is not overly worrying due to low unemployment rates and high household net worth, there are emerging cracks. She pointed out that delinquency rates for consumer finance companies catering to lower-income cohorts are rising. Amoroso stated, “We shouldn’t completely dismiss the rise in the unemployment rate because half of the rise can be explained by layoffs, which clearly affect some part of the consumer base.”
One of the significant risks Amoroso highlighted is the headline risk surrounding the upcoming election. She said, “I think the biggest risk is the headline risk around the election, and I think that rhetoric is likely to pick up.” Amoroso noted that volatility typically increases as the election approaches, potentially leading to market pullbacks. She emphasized that the tech sector could be particularly vulnerable due to its exposure to potential changes in taxes, tariffs, and export controls.
To mitigate potential risks, Amoroso recommended adjusting portfolio strategies. She suggested considering defensive sectors and protecting portfolios through various means. Amoroso stated, “You can protect your portfolio; you can certainly buy downside protection through derivatives or structured investments, or you could trim a little bit of tech and add to things like utilities.”
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