“I see stocks going up and I buy them. I just watch until they stop growing and sell them,” says a user known as Chad. “I do it over and over and it pays for our entire lifestyle.”
Yes, Chad discovered momentum trading. And it looks like he did it well. Like the millions who day traded during the pandemic, Chad rode an exciting bull market that ate up super-cheap Federal Reserve money.
It was hard for beginners to go wrong. Pick a stock, any stock, and watch it grow. Now, of course, the fun is coming to an end almost as quickly as it began.
What’s going on: To use a Game of Thrones metaphor, the market is overflowing with summer kids, and winter is definitely coming.
For traders who have only experienced the thrill of a bull market, 2022 has been a sharp reversal. On the WallStreetBets page — the epicenter of the 2021 stock exchange meme mania — the mood is decidedly less party-like. The rallies of “diamond hands” and “HODL” were replaced by humorous memes about bottomless losses.
There are signs that the economic downturn is scaring retailers away. Free trading app Robinhood, which played a major role in the hobbyist investor boom over the past two years, saw monthly active users drop 10% to 15.9 million in the first quarter of this year.
However, Wall Street learned the hard way during GameStop prep what can happen if you ignore the power of the Robinhood crowd. And for those who have downloaded the app in search of thrills in the dark, now is the time to stay, watch and learn.
“I think retail traders are here to stay,” Craig Erlam, senior market analyst at Oanda, told me. “It has never been so easy to trade in the financial markets before… Some will naturally be rejected, but I think there will be many who will not refuse. After all, these are very interesting times in the markets.”
Here is Julia Horowitz, lead author of Before the Bell, with a dispatch from Davos, Switzerland, where she is reporting on the World Economic Forum.
Hello from the Swiss Alps! It’s rainy and warm here – clearly not ski weather.
Politicians and business leaders have swapped out their winter boots and gloves for sneakers and umbrellas as they gather for the first in-person World Economic Forum since the start of the Covid-19 pandemic.
This year’s event, which was postponed due to the Omicron option, will feature fewer executives and heads of state from leading economies and expect the notorious party to be more subdued.
“As politicians and business leaders head to Davos, the global economy is facing perhaps the biggest test since World War II,” warned Georgieva, who will speak at several panel discussions in the coming days.
The global slowdown is one of the main topics on Monday.
The combined output of the G7 countries fell by 0.1% in the first quarter of the year compared to the previous three-month period, according to a new OECD report.
Jason Fuhrman, formerly chief economic adviser to President Barack Obama, told me that the United States “is in the least bad shape of any economy in the world.” Consumers are worried about inflation, but they still have a large savings bank and spending remains high.
But he believes the risk of a recession will increase in 2023 as the Federal Reserve raises interest rates to try to bring down inflation.
“I’m more concerned about the risks of a recession in about a year or so,” he said on the sidelines of the forum. “I think the Fed should try to make a soft landing. I’m not sure they can do it.”
But the focus of the conference remains on the war in Ukraine.
President Volodymyr Zelensky delivered a welcoming speech at the opening of the forum in a packed hall via video link. He thanked the participants for their support for Ukraine but asked them to go further by calling for an embargo on Russian oil exports, sanctions on all Russian banks, and increased funding for the military as well as reconstruction.
“I would only wish you not to lose this sense of unity,” he said. “This creates the blow that the leadership of the Russian Federation is most afraid of.”
One interlocutor: Russian officials and oligarchs, longtime regulars at Davos, are conspicuously absent this year. The most obvious sign of Moscow’s new pariah status? The platform that Russia used to promote itself in past forums has been renamed the Russian War Crimes House. Ukrainian House, meanwhile, has a full list of events, including panels featuring senior Ukrainian officials, cultural figures and actor Liev Schreiber.
Why vaccines don’t save the companies that made them
Companies developing life-saving vaccines are having a hangover on Wall Street this year.
Shares in Pfizer fell about 11%, while shares in its vaccine partner BioNTech fell 36%. Moderna fell over 45%.
There are some more potential benefits ahead. Last week, US health authorities approved booster doses of the Pfizer/BioNTech vaccine for children ages 5 to 11. And Pfizer could get an extra boost from its Covid treatment thanks to its Paxlovid antiviral pill, which was approved late last year.
Pfizer may be in the best position of the three vaccine makers to thrive after Covid. The company has been on a drinking binge lately, most recently announcing plans to acquire migraine drug maker Biohaven for nearly $12 billion.
Modern is a different story. It’s a young company, founded just over a decade ago, and nowhere near as diversified as Pfizer. In other words, he needs to find another big blockbuster. Nearly 97% of the company’s sales in the first quarter came from the Covid vaccine. The company also suffers from a public relations gaffe: The company’s chief financial officer was forced to resign after days on the job following the disclosure of financial irregularities being investigated by his former employer.
BioNTech, like Moderna, is also something of a one-trick pony right now, with almost all of its first-quarter revenue coming from the Covid vaccine. In the first quarter, Pfizer generated only about half of its sales from vaccines.