Apple’s earnings decline again: third time unlucky? | Responsible Investor Weekly Newsletter, August 5th, 2023

Responsible Investor is a weekly newsletter and an Apple/Spotify podcast for those who are interested in investing responsibly. Go to responsibleinvestor.dk for more information and to read our disclaimer. This week’s newsletter is titled “Apple’s earnings decline again: third time unlucky?”, and was written on August 5th, 2023.

Weekly summary in a paragraph

The US stock market indices were lower this week, as all the major indices were spooked by Fitch downgrading to AA+ the US national debt and by mixed labour market data. The European stock market was also weaker on negative sentiment caused by poor Q2 earnings and 2024 forecasts. The 2-10y spread shrunk again and significantly this week, but it is still inverted at -73 basis points. The Bank of England raised interest rates to a new 15-year high, warning that its fight against inflation may require tighter borrowing conditions for a longer period. In corporate news, one third of the S&P500 companies reported Q2 earnings with Amazon beating and Apple underwhelming investors. Next week more S&P500 companies will report Q2 earnings, including Disney, UPS and Novo Nordisk to name a few.

Asset classes weekly performance

This week the Dow finished -1.1% lower (+5.8% year to date) while the S&P500 lost -2.3% (+16.6% year to date), the Nasdaq depreciated -2.9% (+32.9% year to date) and the Russell 2000 was -1.2% weaker (+11.1% year to date). Gold finished -1.5% lower (+2.7% year to date) while Silver slid -5.0% (-4.4% year to date). Crude Oil appreciated +1.0% (+8.4% year to date). The 10-y US treasury yield gained +2.6% (+7.0% year to date). The European stock market tanked -3.8% (+16.7% year to date). The Euro lost -0.1% against the US Dollar (+2.8% year to date).

Weekly pitch

We don’t typically feature individual stocks in the weekly pitch: the comments on Apple that follow are meant to illustrate the link between earnings and stock prices. As a general, well-established trend, stock prices follow earnings and earnings expectations. Last Thursday Apple reported the third consecutive quarterly decline in sales in a row. While the Services income reached an all time high, the decline in overall earnings may put pressure on the stock price, at least until the new lineup of models is presented in September. Responsible Investor has owned Apple on and off over the years (mostly on!), though we are not buyers at these levels. Responsible investors should review their positions during the earnings season, exercise caution and maintain a healthy proportion of their portfolio in cash and hedges as well as a diversified portfolio with some exposure to the European stock market.

Weekly Portfolio Update

Here are this week’s movements: we have taken full profits on our Draftkings (+52.9%), Yelp (+28.4%) and Range Resources (+14.3%) long positions and partial profits on our KWEB (+10.5%) long position. We have accumulated our Zimmer Biomet Holdings long position and initiated long positions on Newmont Mining, Hershey’s and Gilead Sciences as well as a short position on XPO Logistics. Cash, US treasury bills, precious metals and hedges amount to 43.5% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

iPath Series B S&P500 VIX Short-Term Futures +12.8% (Volatility ETN)

ProShares UltraPro Short QQQ +9.5% (3x inverse Nasdaq ETF)

Duerr AG +4.5% (Industrial Machinery)

ACI Worldwide +4.4% (Packaged Software)

Halliburton +3.6% (Oil Services)

Portfolio Asset Allocation

US stocks long positions 48% (increased)

EU stocks long positions 8.5% (unchanged)

US stocks short position 2.5% (unchanged)

Hedges 8.0% (unchanged)

Silver & Gold 2% (unchanged)

US Treasury bills 2% (unchanged)

Cash 29% (reduced)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +11.3% (excl. dividends) vs the S&P500 gain of +7.9%, which corresponds to a 3.4% market beat.

Invest responsibly!!!

Q2 earnings decline: now what? | Responsible Investor Weekly Newsletter, July 29th, 2023

Responsible Investor is a weekly newsletter and an Apple/Spotify podcast for those who are interested in investing responsibly. Go to responsibleinvestor.dk for more information and to read our disclaimer. This week’s newsletter is titled “Q2 earnings decline: now what?”, and was written on July 29th, 2023.

Weekly summary in a paragraph

The US stock market indices were higher this week, with all the major indices advancing on news of generally good earnings and positive economic data. The European stock market was also stronger though this week’s gain was offset by the Euro depreciating relative to the US Dollar. The 2-10y spread shrunk after two weeks of widening and is still inverted at -91 basis points. Economic data this week included the FED’s decision to hike by another 0.25%, as widely expected, and core PCE continuing to decelerate. The Bank of Japan surprised markets by announcing it first shift from a decade-long period of monetary easing. In corporate news, one third of the S&P500 companies reported Q2 earnings season with notable beats from Meta, Google and Intel. On the flipside, Procter & Gamble’s 2024 outlook disappointed and Chipotle’s earnings were mixed. Next week 170 S&P500 companies report Q2 earnings, including Apple, AMD, Amazon and Starbucks to name a few.

Asset classes weekly performance

This week the Dow finished +0.7% higher (+7.0% year to date) while the S&P500 gained +1.0% (+19.3% year to date), the Nasdaq jumped +2.0% (+36.8% year to date) and the Russell 2000 was +1.1% stronger (+12.5% year to date). Gold finished -0.2% lower (+3.7% year to date) while Silver slid -1.4% (-1.4% year to date). Crude Oil appreciated +1.3% (+5.8% year to date). The 10-y US treasury yield gained +1.5% (+4.6% year to date). The European stock market gave up +0.7% (+21.6% year to date). The Euro lost -0.95% against the US Dollar (+2.9% year to date).

Weekly pitch

With 51% of the S&P500 companies having reported Q2 earnings so far, an attempt to draw some preliminary conclusions can be made. Q2 earnings decline is presently -7.3%, lower than expectations of -7.0% at the beginning of the quarter. If this figure is confirmed, it would be the third quarterly earnings decline in a row and the highest since the disastrous Q2 2020 which was due to the pandemic. Even if the forecasted earnings growth in Q3 and Q4 were confirmed, the expected earnings growth for 2023 is a meager +0.4%. Therefore, responsible investors should exercise caution and maintain a healthy proportion of their portfolio in cash and hedges as well as a diversified portfolio with some exposure to the European stock market.

Weekly Portfolio Update

Here are this week’s movements: we have taken partial profits on our Meta (+129%) and Campari (+19.3%) long positions. We have accumulated our Disney, Raytheon and Zimmer Biomet Holdings long positions and initiated a short position on Molson Coors Brewing. Stop losses were triggered on our XPO Logistics, Rivian and Overstock short positions. Cash, US treasury bills, precious metals and hedges amount to 44.5% in our portfolio (unchanged compared to last week).

Top 5 Weekly Portfolio Performers

The Gap +13.4% (Apparel)

KraneShares CSI China Internet +12.7% (Internet services Chinese companies ETF)

Meta +10.6% (Tech)

Google +10.6% (Tech)

Yelp +9.0% (Tech)

Portfolio Asset Allocation

US stocks long positions 47% (unchanged)

EU stocks long positions 8.5% (unchanged)

US stocks short position 2.5% (reduced)

Hedges 8.0% (unchanged)

Silver & Gold 2% (unchanged)

US Treasury bills 2% (unchanged)

Cash 30% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +11.9% (excl. dividends) vs the S&P500 gain of 12.5%.

Invest responsibly!!!

Is the market more worried about inflation or recession? | Responsible Investor Weekly Newsletter, July 8th, 2023

Responsible Investor is a weekly newsletter and an Apple/Spotify podcast for those who are interested in investing responsibly. Go to responsibleinvestor.dk for more information and to read our disclaimer. This week’s newsletter is titled “Is the market more worried about inflation or recession?”, and was written on July 8th, 2023.

Weekly summary in a paragraph

The US stock market indices finished lower this week, with all the major indices giving up most of last week’s gains. Volume was lower as the summer season kicked off with Independence Day.

The European stock market underperformed the US stock market though the Euro appreciated relative to the US Dollar.

The 2-10y spread reduced after weeks of widening but is still inverted at -88 basis points.

Economic data this week included a weaker than expected jobs report which fuelled a rebound in stocks on Friday.

In corporate news, Meta’s new Threads, a competitor of Twitter, beat expectations in terms of initial subscribers while Samsung announced a concerning profit-warning.

Next week Q2 earnings kick off with some of the large US banks reporting, such as JP Morgan Chase, City and Wells Fargo. Delta and Unitedhealth are reporting also.

Asset classes weekly performance

This week the Dow finished -2.0% lower (+2.1% year to date) while the S&P500 lost -1.2% (+15.0% year to date), the Nasdaq gave up -0.9% (+31.3% year to date) and the Russell 2000 was -1.3% weaker (+7.8% year to date). Gold finished +0.2% higher (+4.7% year to date) while Silver gained +1.4% (-3.3% year to date). Oil jumped +4.4% (-4.0% year to date). The 10-y US treasury yield gained +5.8% higher (+6.0% year to date). The European stock market lost -2.8% (+18.8% year to date). The Euro gained +0.5% against the US Dollar (+2.9% year to date).

Weekly pitch

The stock market did not have much data to justify an up week which meant that down was the path of least resistance. This week two main events are expected to shape the market: the all-important CPI report on Wednesday and the first significant group of large US banks reporting their Q2 earning on Friday. Any match or exceedance of the CPI expectation is likely to send the market higher in the short term. Q2 earnings and earnings forecasts for 2024 will govern long term market moves. Until the current Q2 earnings expectations are confirmed, responsible investors should exercise caution and maintain a healthy proportion of their portfolio in cash and hedges as well as a diversified portfolio with some exposure to the European stock market.

Weekly Portfolio Update

Here are this week’s movements: we took profits on our Dish Network (+10%) and our MP long position (+5.2%). We have also initiated a 2% long position on 1 to 3 year US Bonds which seem attractive at near-peak interest rates. Cash, US treasury bills, precious metals and hedges amount to 43% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

Tellurian +17.4% (Energy Minerals)

Halliburton +14.9% (Oilfield Services)

DraftKings +14.9% (Entertainment)

Range Resources +6.7% (Oil)

Marriott International +6.4% (Hotels)

Portfolio Asset Allocation

US stocks long positions 48.5% (reduced)

EU stocks long positions 8.5% (unchanged)

US stocks short position 3% (increased)

Hedges 8.0% (unchanged)

Silver & Gold 2% (unchanged)

US Treasure bills 2% (initiated)

Cash 28% (reduced)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +12.9% (excl. dividends) vs the S&P500 gain of +12.7%, which corresponds to a 0.2% market beat.

Invest responsibly!!!

November 12th, 2022 | Zero earnings growth for 2023: is this week’s rally short-lived? | $META $FTNT $THO $KSS $GLD $SLV $MP $GILD $AIG $GL $USB $ORI $AJRD $NEM $FCX $DIS

Weekly summary in a paragraph

A mildly positive inflation data point on Wednesday was all it took to send the global stock markets higher and induce weakness in the US dollar. I don’t want to be the Cassandra of the situation here, but one month on month data point does not seem enough to justify a reversal of the general trend though technical analysis would suggest further strength ahead at least in the short term.

It was an even stronger week for the European stock market which was further amplified by strength in the Euro.

Asset classes weekly performance

This week the Dow gained +4.1% (-7.2% YTD) while the S&P500 went +5.6% higher (-16.2% YTD, we are 1x short), the Nasdaq skyrocketed +8.0% (-29.0% YTD, we have a 3x inverse position) and the Russell 2000 gained +4.6% (-16.7% YTD, we are 1x short). $Gold rose +5.2% (-4.4% YTD) while silver finished +3.6% higher (-7.2% YTD). $Oil gave up -4.0% (+18.3% YTD). The 20-y recovered +3.9% this week (-33.7% YTD). The European stock market outperformed the US market indices and finished +9.6% higher (-19.2% YTD). The Euro recovered as much as +4.0% relative to the USD (-11.5% YTD).

Weekly pitch

As most of the S&P500 companies have reported Q3 earnings, there is now sufficient data to update earnings forecasts. This week Goldman Sachs revised their S&P500 earnings forecast to the downside ($224 USD) to conclude that they now expect zero earnings growth for 2023. Because stocks follow earnings and earnings expectations, investors will now have to look to 2024 (current estimate is $237 hence +6% compared to ’22 and ‘23) to justify staying invested on the long side.

Weekly Portfolio Update

We initiated three new positions on $NEM, $KSS, and $USB which are already profitable trades. We have also increased our position in gold: if dollar continues its weakness this will send its price higher. Cash, precious metals and hedges were reduced to 37% in our portfolio which rose +2.77% this week.

Top 5 Weekly Portfolio Performers

$META +24.49% (Technology-Social Media)

$FTNT +19.17% (Technology-Software-Security)

$THO +17.38% (Building-Mobile Manufacturing/RV)

$DUE.DE +15.52% (Industrial – Germany)

$KSS +15.24% (Consumer-Dept. Stores)

Portfolio Asset Allocation

– Long stock positions 63% (increased)

– Hedges 9%, though equal to 14% considering leveraged ETFs (unchanged)

– Silver + Gold 4% (increased)

– Cash 24% (decreased)

YTD Portfolio Performance

Our currency-adjusted YTD portfolio performance is -2.2% (excl. dividends) vs the European market loss of -7.7% (+5.5% market beat).

Invest responsibly!!!

October 22nd, 2022 | What do declining 2023 and 2024 earnings estimates mean for your portfolio? | $FCX $FTNT $SAND.ST $TGT $JPM

Weekly summary in a paragraph

The stock market staged a significant rally this week with most indices finishing 3% or more higher, in part fuelled by a rumour that the Fed is going to become less hawkish in December. Is it yet another bear rally? Only time will tell, though something seems to have changed now that the fed funds futures are reaching 5%. Earnings season is now in full swing and 165 S&P500 companies will report next week.

Asset classes weekly performance

This week the Dow gained +4.8% (-16.5% YTD) while the S&P500 did slightly worse +4.7% (-21.3% YTD, we are 1x short) and the Nasdaq outperformed both +5.2% (-32.2% YTD, we have a 3x inverse position). The Russell 2000 recovered +3.5% (-24.1% YTD, we are 1x short). $Gold gained 0.8% (-8.4% YTD) while silver skyrocketed +5.5% (-14.5% YTD). $Oil inched 0.5% higher. The 20-y fell by -5.5% this week (-34.7% YTD). The European stock market staged a +6.0% comeback (-30.3% YTD). The Euro recovered 1.4% against the USD (-13.8% YTD).

Weekly pitch

Stocks follow earnings and earnings expectations. Declining earnings put pressure on stock prices and so do higher interest rates. So far, the ongoing bear market has mainly been caused by higher interest rates but if earnings start rolling over, the downward slope may steepen. For 2024, analysts now expect 250$ in earnings for the S&P500 which corresponds to a 9.9% appreciation relative to the current price assuming a 16.5 multiple. Earnings estimates continue to decline as time goes by, though, which reduces opportunities for appealing returns.

Weekly Portfolio Update

We covered 1/3 of our short position in IWM with a 22% gain, thereby reducing the overall weight of hedges in our portfolio. We also initiated a trade on TLT as there is a potential short-term shift in sentiment. Cash, precious metals and hedges now amount to 40% in our portfolio which finished flat this week while the market fell.

Here are the top 5 performers of our portfolio this week:

$FCX +15.88% (Basic Materials-Metal Ores)

$FTNT +11.68% (Technology-Software-Security)

$JPM +9.93% (Banks-Money Center)

$TGT +9.27% (Consumer-Major Disc. Chains)

$SAND.ST +8.61% (Specialty Industrial Machinery)

This is our asset allocation as things stand:

– Long stock positions 60% (increased)

– Hedges 9%, though equal to 15% considering leveraged ETFs (decreased)

– Silver + Gold 3% (unchanged)

– Cash 28% (decreased)

Our currency-adjusted YTD portfolio performance is -2.3% (excl. dividends) vs the European market loss of -16.5% (+14.2% market beat).

Invest responsibly!!!

Responsible Investor Portfolio Weekly Update, May 8th, 2021 | $TCEHY $NEM $BK $SYF $CLIX $PCG $LVMUY $LRLCY $STLA $IMPJY $TERRF $DSV.CO $DANSKE.CO $BRK $UMC $JD $ADSK $GMAB $ORSTED.CO $NIO $CMG $RH $RBLX $COIN $VIAV $MSFT $TRYG.CO $LOW

The Big Picture

Our weekly blog returns after a week of gains for most stock markets with the notable exception of the Nasdaq which finished 1.5% lower and has now lost ground for the third consecutive week: if you are still holding on to the stocks which made great gains in 2020, chances are that you are in the red so far in 2021. There appear to be greater opportunities for capital appreciation in value stocks which also feature good momentum.

The jobs report unexpectedly disappointed and this fuelled a rally on Friday as retail investors pumped more money in the stock market on the assumption that heavy borrowing and low interest rates will continue indefinitely. Despite some of the indices hitting all time highs the risk for a correction is still there which is why it is important not to be fully invested at this time. Scroll below to see what percentage of our portfolio is in cash.

88% of the S&P500 stocks have reported their Q1 earnings so far: the numbers are impressive such that there are several analysts discussing the possibility of this past quarter coinciding with the peak in earnings which would suggest an impending bearish cycle.

Market Performance

Most of the stock market indices recovered this week following last week’s decline: in the US the Dow was the best performer with a 2.7% gain, followed by the S&P500 which finished 1.2% higher whereas the Nasdaq which finished markedly lower (-1.5%). In Europe, the Stoxx gained 1.8% while the Italian stock market was even stronger and finished 2.0% higher. The Danish OMX20 is on a bullish 9-week streak and was 1.0% higher this week. The US Dollar lost 1.1% on the Euro. Crude $oil gained 2.8% and $Gold showed great strength by appreciating 3.6%. $BTC-USD swung within a 10% range and finished 2.1% higher.

Earnings

Eight of our stocks reported Q1 earnings the week before last:

DSV beat on earnings and revenue

DANSKE beat on net profit

ORSTED missed on revenue

SYF beat on earnings and revenue

UFC beat on earnings and missed on revenue

NEM missed on both the top and the bottom line but the

PCG missed on earnings but beat on revenue and reaffirmed guidance

BRK-B beat on earnings.

$GMAB announced their Q1 earnings on Wednesday with solid gains compared to the same quarter in 2020. The company reported a five-fold increase in operating results and maintained the guidance for 2021 set out earlier in the year. $ELC.MI reported their earnings on the same day and beat consensus as well as raised their guidance: we have a 4.4€ target price on this stock which is already up 41.4% since we bought it.

Next week $JD and $INW.MI will report their Q1 earnings.

Dividends

$OR.PA and $STLA.MI paid their dividend the week before last: our total dividend yield so far is 1.3%. Next week $WBD.MI goes ex-dividend. Our Danish stocks paid their annual dividends earlier this year. Italian stocks traditionally pay an annual dividend in late May. US stocks distribute quarterly dividends.

Portfolio Performance

Our portfolio gained 1.8% this week whereas the weighted average of the relevant market indices finished 1.5% higher, which corresponds to a 0.3% market beat.

This week’s portfolio winners were $STLA.MI which was up 8.1% and mining company $NEM which gained 7.9% (+16.6% since initiation) helped by gold strength.

Our Responsible Investor portfolio is now up 35.1% (36.4% including dividends) in 49 weeks and is beating the market by 3.3% over the same period. We are about 64% in stocks & ETFs and 36% in cash.

The table below summarises the portfolio performance since inception.

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Responsible Investor Portfolio Weekly Update, April 24th, 2021 | $TCEHY $NEM $BK $SYF $CLIX $PCG $LVMUY $LRLCY $STLA $IMPJY $TERRF $DSV.CO $DANSKE.CO $BRK $UMC $JD $ADSK $GMAB $ORSTED.CO $NIO $CMG $RH $RBLX $COIN $VIAV $MSFT $TRYG.CO $LOW

The Big Picture

The month-long rally in US stock markets came to a halt at the end of rather volatile week of trading. While the bullish narrative is still considered intact, there are various headwinds which could affect the markets going forward, including the fear of a third wave, rising inflation, and stretched valuations.

Biden’s announcement of the capital gain tax hike took a toll on the stock markets on Thursday, however analysts and investors started reconsidering its impact as early as on Friday on the basis of the fact that it is actually old news and that it only affects less than 1% of the investors.

Market Performance

Most of the stock market indices were down up this week: in the US the Dow was the worst performer with a 0.5% decline, while the S&P500 was only marginally lower (-0.1%) followed by the Nasdaq which finished 0.2% down. In Europe, the Stoxx lost 0.8% while the Italian finished 1.4% lower. The Danish OMX20 is on a bullish 7-week streak and gained 1.4% this week. The US Dollar retraced relative to the Euro (-1.0%) for the third week in a row. Crude $oil lost 1.0% and $Gold was flat. $BTC-USD had an ugly week and finished 10.5% lower.

Earnings

While none of our stocks reported earnings this week, dozens of Q1 earnings reports were published: notable ones included $NFLX who beat analysts’ expectations, but missed new subscription expectations and $CMG who rallied on record revenue and triple-digit digital sales growth.

Next week many of our stocks will report their Q1 earnings: $DSV.CO, $DANSKE.CO, $ORSTED.CO, $SYF, $NEM, $PCG and $BRK-B.

Dividends

$MC.PA and $STLA.MI went ex-dividend this week: the former has already paid the dividend whereas the latter will do so next week. Our Danish stocks paid their annual dividends earlier this year. Italian stocks traditionally pay an annual dividend in late May. US stocks distribute quarterly dividends.

Portfolio Performance

Our portfolio gained 0.7% this week whereas the weighted average of the relevant market indices finished 0.3% lower, which corresponds to a 1.0% market beat: it is great to finish up on a down week!

This week’s portfolio winners were $UMC which was up 12% and Italian consumer cyclical stock $ELC.MI which gained 4.5% (+31.6% since initiation).

Our Responsible Investor portfolio is now up 33.8% (34.8% including dividends) in 47 weeks and is beating the market by 3.2% over the same period. We are about 63% in stocks & ETFs and 37% in cash.

The table below summarises the portfolio performance since inception.

Responsible Investor Portfolio Weekly Update, April 17th, 2021 | $TCEHY $NEM $BK $SYF $CLIX $PCG $LVMUY $LRLCY $STLA $IMPJY $TERRF $DSV.CO $DANSKE.CO $BRK $UMC $JD $ADSK $GMAB $ORSTED.CO $NIO $CMG $RH $RBLX $COIN $VIAV $MSFT $TRYG.CO $LOW

The Big Picture

The US stock markets delivered the fourth consecutive week of gains with all its indices being up more than 1% this week. The bullish sentiment continues to be driven by positive earnings, the impact of stimulus initiatives and positive vaccine/covid-19 data.

The Q1 2021 earnings season kicked off in earnest this week, with several large banks reporting solid numbers: there is however some concern over these earnings already being priced in the current market valuation which could lead to a short term consolidation phase.

On the vaccine front the freeze on the roll-out of the $JNJ vaccine did not seem to affect the estimate of 200 million doses over the first 100 days of vaccinations.

Market Performance

The stock market indices were all up this week: in the US the Dow had a 1.2% gain, while the S&P500 was the strongest index (+1.4%) followed by the Nasdaq which finished 1.1% higher. In Europe, the Stoxx gained 1.2% while the Italian finished 1.3% higher. The Danish OMX20 continued its bullish ride and gained 1.2% this week. The US Dollar retraced relative to the Euro (-0.6%) for the second week in a row. Crude $oil gained 5.7% and $Gold was 2% firmer. $BTC-USD gained 3.4%.

Earnings

Our luxury company stock $MC.PA reported Q1 earnings on Wednesday which grossly exceeded analysts expectations: revenue was up 30% from the same period in 2019. While sales in Europe continue to lag due to partial lockdowns in French and Italy, revenue figures were boosted by the Asian region.

$BK announced better than expected Q1 earnings on Friday but traded 4.4% lower possibly due to many of the other banks stocks showing stronger recovery data. The New York bank’s revenue is still 5% down from last year and the EPS was reported at 0.97$ vs 1.05$ a year ago. Despite this week’s drop, we have gained 23.5% on $BK on the tailwind of a rising interest environment.

In corporate news $MSFT announced the acquisition of $NUAN, its greatest purchase since LinkedIn, which happens just a few weeks after having disclosed being in talks to acquire Discord. $COIN IPO turned out to be a great success.

Dividends

$MC.PA and $STLA.MI go ex-dividend next week. Our Danish stocks paid their annual dividends earlier this year. Italian stocks traditionally pay an annual dividend in late May. US stocks distribute quarterly dividends.

Portfolio Performance

Our portfolio gained 0.9% this week whereas the weighted average of the relevant market indices finished 1.3% higher.

This week’s portfolio winners were $MC.PA which was up 7.1% thanks to blow-out earnings and $NEM which gained 6.3% benefitting from the raise in the price of gold.

Our Responsible Investor portfolio is now up 33.1% (34.1% including dividends) in 46 weeks and is beating the market by 2.2% over the same period. We are about 63% in stocks & ETFs and 37% in cash.

The table below summarises the portfolio performance since inception.

Responsible Investor Portfolio Weekly Update, April 10th, 2021 | $TCEHY $NEM $BK $SYF $CLIX $PCG $LVMUY $LRLCY $STLA $IMPJY $TERRF $DSV.CO $DANSKE.CO $BRK $UMC $JD $ADSK $GMAB $ORSTED.CO $NIO $CMG $RH $RBLX $AA $VIAV $MSFT $TRYG.CO $LOW

The Big Picture

It was another “more of the same” week in the US stock markets with records continuing to be broken and interest rates lacking clear direction. Negotiations on the corporate tax hike are reportedly bringing the two parties to converge on the 25% mark from the initial value of 28%. This increase would see the 2022 earnings shrink by 3%.

Despite the strong employment numbers from the March reports, the fact that the target unemployment rate and the inflation goals are still unmet suggests that the Fed will continue keeping the interest rates unchanged and printing money for the foreseeable future in order to fuel this bull market.

Vaccine roll-out sees increasing volumes in the US, with 3 million daily doses now being the norm and peaks of 4 million achieved for the first time yesterday.

Market Performance

The stock market indices were generally up this week: in the US the Dow had a 2% gain, while the Nasdaq was the strongest index (+3.1%) followed by the S&P500 which finished 2.7% higher. In Europe, the Stoxx gained 1.2% while the Italian index declined 1.2%. The Danish OMX20 had the fifth consecutive week of gains and finished 2% higher. The US Dollar retraced relative to the Euro (-1.2%). Crude $oil declined 2.3% and $Gold gained 0.9%. $BTC-USD was on a rollercoaster this week and finished 0.3% lower.

Earnings

Notable earnings this week included $LEVI which reported a solid beat and positive guidance driven by faster return to pre-pandemic levels expectations and $STZ which traded lower after announcing a revenue and earnings beat as well as a “conservative” guidance: the markets are forward looking and sometimes beating earnings can be offset by weak guidance. Neither of them makes my watchlist due to their high valuations.

The Q1 2021 earnings season will commence next week for our portfolio with $BK scheduled to announce their earnings on Friday together with a number of other major US banks.

Dividends

Our Danish stocks paid their annual dividends earlier this year. Italian stocks traditionally pay an annual dividend in late May. US stocks distribute quarterly dividends.

Portfolio Performance

Our portfolio gained 0.6% this week whereas the weighted average of the relevant market indices finished 1.5% higher.

This week’s portfolio winners were $ADSK and $OR.PA with a 4.8% and a 4.5% gain, respectively. The banks and financial stocks were also strong and outperformed the market. Our two tech Chinese stocks lagged due to pressure exerted by their government.

Our Responsible Investor portfolio is now up 32.2% (33.2% including dividends) in 45 weeks and is beating the market by 2.5% over the same period. We are about 62% in stocks & ETFs and 38% in cash.

The table below summarises the portfolio performance since inception.

Responsible Investor Portfolio Weekly Update, April 3rd, 2021 | $TCEHY $NEM $BK $SYF $CLIX $PCG $LVMUY $LRLCY $STLA $IMPJY $TERRF $DSV.CO $DANSKE.CO $BRK $UMC $JD $ADSK $GMAB $ORSTED.CO $NIO $CMG $RH $RBLX $AA $VIAV $MSFT $TRYG.CO $LOW

The Big Picture

The US stock markets all traded higher and near all time highs in this short Easter week. The 10-year treasuries finished higher at 1.72%. While fiscal stimulus is still seen as a positive for stocks there are growing concerns about inflation and an overheated economy. The prospect of higher taxes is another potential catalyst to undermine the bullish narrative.

More details were announced on the 2.25T dollar infrastructure plan which will span over 8 years. Many related stocks gapped higher although this package is likely to be more of a slow-burner and will take time and negotiations to pass through Congress.

The US economy added 961,000 jobs in March, way more than expectations with estimates at 675,000. The unemployment rate fell to 6%. While this is seen as a clear sign of a recovering economy there are still 8 million jobs missing compared to pre-pandemic level.

Market Performance

The stock market indices were all up this week: in the US the Dow lagged with just a 0.2% gain, while the Nasdaq strongly rebounded (+2.6%) and the S&P500 finished 1.1% higher. In Europe, the Stoxx gained 1.2% and the Italian index rose by 1.3%. The Danish OMX20 finished 2.6% higher. The US Dollar keeps gaining over the Euro (0.3%). Crude $oil was stronger (2.7%) and $Gold finished marginally lower (-0.1%). $BTC-USD gained 5.8% this week after last week’s decline.

Earnings

Notable earnings included $LULU which reported a rise in comp sales of 21% but guided lower on EPS for FY21, and $MU which beat on both the top and the bottom line and guided higher: I think $LULU is too expensive here whereas I like $MU which seems grossly undervalued and has a forward PE of 8.6 which is very low for a company that is still growing at 18% per year.

All of our stocks have reported Q4 earnings. The Q1 2021 earnings season will commence in two weeks’ time.

Dividends

Our Danish stocks paid their annual dividends earlier this year. Italian stocks traditionally pay an annual dividend in late May. US stocks distribute quarterly dividends.

Portfolio Performance

Our portfolio gained 1.5% this week whereas the weighted average of the relevant market indices finished 1.4% higher, corresponding to a 0.1% market beat.

This week’s portfolio winners were $ADSK and $UMC with a 5.5% and a 4.9% gain, respectively. Some of the tech stocks which gave up gains in February and March seem to be waking up again. The semiconductor sector is still on fire as the industry struggles to keep up with demand.

Our Responsible Investor portfolio is now up 31.6% (32.6% including dividends) in 44 weeks and is beating the market by 3.4% over the same period. We are about 62% in stocks & ETFs and 38% in cash.

The table below summarises the portfolio performance since inception.