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14.06.2023 02:44 PM
US hedge funds continue recession preparations

While the stock market remains in limbo, awaiting the Federal Reserve's interest rate decision, Ken Griffin of Citadel is placing increased focus on credit trading in anticipation of a potential recession in the United States. Griffin, whose hedge fund generated a record $16 billion in profits for clients last year, stated that his fund was "much more cautious about 2024", suggesting the world's largest economy is unlikely to escape a downturn this year. "We'll look at the credit markets as a source of opportunity. Credit should be a meaningful contributor later this year," the billionaire founder of Citadel added.

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Griffin highlighted his hedge fund's special focus on the high-yield credit market, using a mix of long and short strategies. He expects the Federal Reserve to raise interest rates once more this year before pausing for a considerable period.

Current baseline forecasts from several economists predict the US recession will begin in the third quarter, while many analysts assess the likelihood of its onset within the next 12 months at 65%.

Premarket movers

Many tech firms have shifted towards AI, fueling NASDAQ's upward trajectory this year.

Shares of Advanced Micro Devices Inc. climbed in the US premarket after the chipmaker showcased its planned lineup of processors for AI systems. AMD stock has increased by 3.07% during the premarket, almost offsetting yesterday's losses of 3.12%.

Tesla Inc. has added $240 billion to its market cap in recent weeks of growth, and it seems demand is far from cooling. Shares of the automakers have gained 5.3% following yesterday's 8.88% surge during the regular session.

Shell Plc stock rose after the oil company announced an increase in dividends. During the premarket, the share price increased by 2.14%, and it appears the upward trend will continue.

Turning to the technical picture of S&P500, demand for the index remains quite high. Bulls still have the chance to continue the uptrend, but they must defend the level of $4,320 from where a surge could be triggered to $4,350. Controlling $4,375 will also be a key task for the bulls, which will strengthen the bull market. In case of a downward movement amidst declining risk appetite ahead of the Fed meeting, buyers must act around $4,320. A breakout could quickly push the trading instrument back to $4,290, paving the way towards $4,175.

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