Bloomberg
Wall Street Is Rethinking the Treasury Threat to Big Tech Stocks
(Bloomberg) — Don’t fear Treasury yields killing off the stock market’s golden goose just yet.As the Nasdaq 100 Index recovers from a $1.5 trillion rout, there’s good reason to think technology shares can defy machinations in U.S. bonds.Studies from Deutsche Bank AG and Goldman Sachs Group Inc. show the world’s biggest equity sector has a fickle relationship with Treasuries, if it has one at all. Quant powerhouse AQR Capital Management has found little evidence that yields drive how expensive megacaps trade relative to their cheaper counterparts.And of course, secular economic trends have been powering the likes of Facebook Inc. and Amazon.com Inc. for years now — when benchmark rates were far higher than current levels.All that makes the Treasury-stock link more complex than it seems.Put another way, while the recent Treasury selloff has pummeled Big Tech, that doesn’t mean bonds are a natural foe for a sector hitched to secular trends from 5G to automation.“Many tech companies will continue to benefit for many years from very strong themes that will result in outsized earnings growth,” said Terry Ewing, head of equities at Mediolanum International Funds, which oversees about $54 billion. “The dilemma for portfolio managers running a balanced mandate is that actually the de-rating we’ve seen in growth stocks has put them at a much more attractive level.”Ewing’s funds began…
