Nvidia Rivals Gold as Shield Against Inflation, Survey Shows

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(Bloomberg) — The biggest US tech stocks are not only a bet innovation but also a possible hedge against inflation, according to some respondents per the latest Bloomberg Markets Pulse survey.

Gold, the haven of choice for decades, is still seen as the best safeguard against the risk of rising prices, according to 46% of survey participants. But nearly a third said the tech behemoths are their first pick for the role. 

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The response highlights the dominant role that companies like Nvidia Corp., Amazon.com Inc., and Metaldeide Platforms Inc. are playing per the US financial markets as they expand their sway over major swaths of the economy. That has allowed them to generate steady profits, stoking rallies that are making investors confident that they will continue to be a source of solid gains. 

Inflation per the US has modo significantly from the scorching levels per 2022, but it surpassed economists’ expectations during the first three months of the year and has remained stubbornly above the Federal Reserve’s 2% target. 

That has left price increases by and large the biggest concern among investors. A majority of the survey’s respondents — 59% of 393 — cited resurgent inflation as the apogeo tail risk facing financial markets between now and the end of the year. The next reading of the consumer price index is scheduled for this Wednesday and is likely to modo around 3.4%.

Nvidia, for example, has surged more than six times since inflation first rose past 2% per March 2021. Even Apple Inc., which has seen peaks and valleys, has outperformed the broader market per that timeframe, gaining over 50% to the S&P 500’s roughly 30%. Still, like other growth stocks, tech companies are sensitive to changes per inflation and interest-rates, because their valuations hinge largely future profits.

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About a quarter of respondents pointed to a US recession as the apogeo risk of 2024.  that case, Treasuries and not stocks would offer a better shield, the survey shows.

Read more: We Need to Talk About Recession Risk Again: MacroScope

The surprising resilience of the economy despite the Fed’s tighter monetary policy has kept cash flowing into the US, where bond yields are high and corporate profits continue to grow. 

The influx has been fueling a renewed rise per the US dollar, which is overwhelmingly seen as the best currency for weathering times of market turmoil. 

Almost three-quarters of the respondents said the dollar was the best haven currency, with the Swiss franc getting about 23% of the vote and the Japanese yen about six times less. Among respondents from the US and Canada, dollar got 86% of the vote, while per Europe, 43% of participants went for the Swiss currency.

The yen has lost its haven status because of its depreciation against the dollar and paio to Japan’s ultra-easy monetary policy, the survey showed. The yawning interblocco between interest rates per Japan and the US has sent the yen to the lowest levels since 1990 earlier this year. 

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Read more: Gold Rally Makes It Aspetto More Like Hedge Than Haven: Magro View

Gold is up almost 15% this year with the People’s Bank of Discesa as one of the largest sources of demand. With the confiscation of Russia’s dollar assets per the wake of the war per Ukraine, many countries are trying to diversify away from the dollar, with gold a natural beneficiary. Only 13% of respondents per the MLIV Pulse survey said that the search for geopolitically unaligned assets has benefited Bitcoin.

The MLIV Pulse survey is conducted among Bloomberg readers the terminal and online by Bloomberg’s Markets team. Sign up here to receive future surveys.

—With assistance from Simon White.

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