Welcome back readers. There's little indication that inflation is going away soon, and Wall Street is worried it could linger into next year and bring turmoil to the market. Today we're going over a few top investment themes from big banks as uncertainty looms large.
Let's get started.
If this was forwarded to you, sign up here. Download Insider's app here.
1. It's time to load up on consumer staples, according to Bank of America. The firm just trimmed its S&P 500 forecast and said the market is pricing in a "1 in 3 chance" of a recession, with the greatest risk being prolonged heightened inflation.
But investors can ready themselves by arranging their portfolios defensively, BofA said, by snapping up consumer staple stocks. With increased recession risks on the horizon, the bank raised the sector to overweight from underweight.
"Better-than-expected consumption (especially in the lower income cohort) despite inflation and a big uptick in spending on services (admittedly at the expense of big ticket spend) are positive," BofA noted.
JPMorgan, meanwhile, thinks energy stocks are worth keeping an eye on. The energy space remains the best equity investment as commodity prices continue to rise, the firm said.
"Energy is the only sector that is seeing its quality, growth, and momentum scores improve simultaneously," JPMorgan analysts wrote in a Thursday note.
Even though energy is up roughly 38% this year, analysts predict that upside remains because demand is going to outpace supply leading up to 2030.
"In our view, fundamentals and valuation make a compelling case for the sector," JPMorgan concluded.
In other news:
2. US stock futures are up early Monday, after major indexes notched a steep drop to end April. On Friday, the Dow shed 945 points as the month's sell-off continued. The tech-heavy Nasdaq saw its worst-performing month since 2008.
3. Earnings on deck: American National Group, Spirit Airlines, and BlackRock Capital Investment, all reporting.
4. A 26-year market vet laid out three indicators that show stocks could be set up for another rally. After a big sell-off in April, Lance Roberts said upside could be coming. Plus, he shared seven stocks and two bond ETFs to watch in the months ahead.
5. Europe wants to ban Russian oil, but cutting off supplies is an economic and political nightmare. The bloc has become heavily reliant on Russian energy, and is now directly funding Moscow's war machine. However, if the EU does implement a full embargo, Russia's economy could spiral into a depression.
6. Elite investors discussed Warren Buffett's $23 billion of new bets at Berkshire Hathaway's annual weekend meeting. Mario Gabelli, John Rogers, and others celebrated Berkshire's investments in Occidental Petroleum and HP, as well as its deal to acquire Alleghany. Here are the best insights from some of the top figures in the investment world.
7. Coinbase said it will be implementing a "zero tolerance" policy against the front-running of new crypto listings. Front-running involves using non-public information about upcoming token listings to invest in them before the wider market can. Here's what you want to know.
8. The US economy just took a big step closer to a recession, but the chief economist of Ameriprise Financial isn't concerned. He said that weak growth, high inflation, and war have weighed on the market — but he said investors can play a huge market reversal by buying stocks in these three sectors.
9. This crypto bull and research director said ethereum can eventually rise to $35,000. Geoffrey Kendrick thinks comparing crypto to tech stocks back in 1999 is actually a compliment — and he shared which two altcoins he's eyeing right now.
10. The average American got a real pay cut of almost 4% in the last year. Inflation-adjusted wages fell 3.7% in the year through March as higher prices eroded strong pay gains. Now, inflation throughout the economy is leaving Americans with much weaker buying power.
Event invite: Join us Tuesday, May 10 at 12 p.m. ET for "Creating Broad-based Economic Prosperity," in partnership with Bank of America. Sustainable finance experts, business leaders and ESG professionals will discuss how a company affects the financial well-being of its community. Register here.
Keep up with the latest markets news throughout your day by checking out The Refresh from Insider, a dynamic audio news brief from the Insider newsroom. Listen here.
Curated by Phil Rosen in New York. (Feedback or tips? Email [email protected] or tweet @philrosenn.)