Tag: euro

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!!!

Where have all the bears gone? | Responsible Investor Weekly Newsletter, July 22nd, 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 “Where have all the bears gone?”, and was written on July 22nd, 2023.

Weekly summary in a paragraph

The US stock market indices were mixed this week, with all the major indices advancing except the Nasdaq which finished lower. The European stock market was also weaker and move was further affected by the Euro depreciating relative to the US Dollar. The 2-10y spread continues to widen for the second week in a row and is still inverted at -98 basis points. Economic data this week included the aforementioned CPI report on Wednesday as well as the PPI report on Thursday which decelerated to +2.4% year on year. In corporate news, sixty S&P500 companies reported Q2 earnings season with notable misses from TSMC and Netflix. Thus far the earnings have been mixed but it is too early to draw any conclusions. Next week 166 S&P500 companies report Q2 earnings, including Meta, Google, Visa and Hilton to name a few.

Asset classes weekly performance

This week the Dow finished +2.1% higher (+6.3% year to date) while the S&P500 gained +0.7% (+18.2% year to date), the Nasdaq lost -0.6% (+34.1% year to date) and the Russell 2000 was +1.5% stronger (+11.3% year to date). Gold finished -0.9% lower (+3.7% year to date) while Silver slid -1.9% (-0.1% year to date). Crude Oil appreciated +1.6% (+0.8% year to date). The 10-y US treasury yield gained +1.3% (+1.2% year to date). The European stock market gave up -0.6% (+20.8% year to date). The Euro lost +0.9% against the US Dollar (+3.9% year to date).

Weekly pitch

The stock market has had a great run over the past 6+ months. Valuation are very stretched and most indices are overbought. After the Nasdaq100 and the S&P500, the Dow Jones has finally broken out. The situation really does beg the question: where have last years’ bears gone? AI frenzy, near-peak interest rate policy and other factors have sustained the market thus far. Q2 earnings and 2024 earnings expectations will be key to determine the market’s direction from here. Until then, 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 initiated a short position on Thor Industries and Rivian. Stop losses were triggered on our XPO Logistics and JNJ 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

Bank of America +9.9% (Banking)

Yelp +8.0% (Tech)

Centene +7.6% (Healthcare)

Range Resources +5.6% (Oil)

Bristol Myers Squibb +4.4% (Pharma)

Portfolio Asset Allocation

US stocks long positions 47% (unchanged)

EU stocks long positions 8.5% (unchanged)

US stocks short position 3.5% (increased)

Hedges 8.0% (unchanged)

Silver & Gold 2% (unchanged)

US Treasury bills 2% (unchanged)

Cash 29% (decreased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +12.8% (excl. dividends) vs the S&P500 gain of 13.4%.

Invest responsibly!!!

Nasdaq rebalancing: much ado about nothing? | Responsible Investor Weekly Newsletter, July 15th, 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 “Nasdaq rebalancing: much ado about nothing?”, and was written on July 15th, 2023.

Weekly summary in a paragraph

The US stock market indices finished higher this week, with all the major indices reversing previous week’s losses. The better than expected CPI report was largely behind the move. The European stock market outperformed the US stock market and this gain was enhanced by the Euro appreciating relative to the US Dollar. The 2-10y spread resumed is widening after last week’s reversal and is still inverted at -91 basis points. Economic data this week included the aforementioned CPI report on Wednesday as well as the PPI report on Thursday which decelerated to +2.4% year on year. In corporate news, US major banks JP Morgan and Wells Fargo unofficially kicked off the Q2 earnings season and reported a beat on Friday, while Citi disappointed with a weaker-than-expected rebound in investment banking activity. Amazon’s shares leapt 3% after announcing the first 24 hours of its ‘Prime Day’ was their largest sales day ever. Next week 60 S&P500 companies report Q2 earnings, including ASML, Alcoa, Bank of America and Netflix.

Asset classes weekly performance

This week the Dow finished +2.3% lower (+4.1% year to date) while the S&P500 gained +2.4% (+17.3% year to date), the Nasdaq rose +3.3% (+34.9% year to date) and the Russell 2000 was +3.6% stronger (+9.6% year to date). Gold finished +1.2% higher (+3.5% year to date) while Silver jumped +8.1% (+1.4% year to date). Oil appreciated +0.6% (-1.8% year to date). The 10-y US treasury yield slid -4.1% (+0.7% year to date). The European stock market leapt +5.9% (+21.6% year to date). The Euro gained +2.38% against the US Dollar (+4.9% year to date).

Weekly pitch

The Nasdaq100 index has never seen such a high concentration of its top 10 stocks which exceed 60% of its market capitalisation. Earlier this week a ‘special rebalance’ has been announced which will reduce the relative weight of it top 5 stocks: Apple, Nvidia, Amazon, Tesla and Microsoft. Their total weight of 46% will be brought down to 40%. Even considering the 24 ETFs tracking the Nasdaq-100 index who will be forced to sell to match the rebalance, the impact is expected to be quite small based on the on the rebalance alone. The valuations of these tech giants are very high, 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 took profits on our Nvidia (+18.1%) and our Restaurants Brands International long position (+5.9%). We closed the position on Thor’s spin-off Phinia which resulted in 2400-bagger! We have also initiated a short position on XPO Logistics. A stop loss was triggered on our Lennar short position. Cash, US treasury bills, precious metals and hedges amount to 44.5% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

DraftKings +14.4% (Entertainment)

Sibanye Stillwater +12.7% (Precious Metals)

Halliburton +6.6% (Oilfield Services)

The Gap +6.6% (Apparel)

Meta +6.5% (Tech)

Portfolio Asset Allocation

US stocks long positions 47% (reduced)

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 +14.4% (excl. dividends) vs the S&P500 gain of 18.9%.

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!!!

What is ‘window dressing’ and why does it matter? | Responsible Investor Weekly Newsletter, July 1st, 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 “What is ‘window dressing’ and why does it matter?”, and was written on July 1st, 2023.

Weekly summary in a paragraph

The US stock market indices finished higher this week, with all the major indices recovering after last week’s decline. The Nasdaq has had the best first half of the year ever. The European stock market outperformed the US stock market as the Eurozone flash PMI came in lower than expected, and is ahead of the S&P500 for the third quarter in a row. The 2-10y spread continues to widen and has now an inverted value of -106 basis points. Economic data published this week was mostly positive. In speaking at an event in Europe, Powell stated that future hikes are still a possibility. In corporate news, Carnival beat expectations while Nike and Micron missed. No major earnings reports next week. The Q2 earnings seasons kicks off week after next with some of the largest US banks reporting on Friday the 14th of July.

Asset classes weekly performance

This week the Dow finished +2.02% higher (+3.8% year to date) while the S&P500 gained +2.35% (+15.9% year to date), the Nasdaq soared +2.19% (+31.7% year to date) and the Russell 2000 jumped +3.68% (+7.2% year to date). Gold finished +0.2% higher (+1.8% year to date) while Silver gave up -0.7% (-7.4% year to date). Oil gained +4.1% (-8.1% year to date). The 10-y US treasury yield was +1.35% higher (+0.69% year to date). The European stock market gained+3.6% (+18.8% year to date). The Euro lost -0.1% against the US Dollar (+1.8% year to date).

Weekly pitch

There wasn’t enough in the economic data reports to sustain the rally that all major indices experienced this week. The end of Q2, however, meant that fund managers were busy with the so-called ‘window dressing‘, an investment practice whereby money managers sell laggards in their portfolio and buy stocks which have had a good run. That way, their portfolios appear to be full of winners. Fund managers move a lot of money in the markets and window dressing may have masked what would have otherwise been a quiet week. 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 partial profits on our Campari long position (+22%), as well as full profits on our ASX long position (+6.5%) and our UPS short position (+4.4%); a stop loss was triggered on our Thor short position. Cash, precious metals and hedges amount to 42% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

Callon Petroleum +9.6% (Oil)

Dish Network +9.5% (Cable/Satellite TV)

BorgWarner +8.1% (Trucks)

Marriott +7.1% (Hotels)

ACI Worldwide +7.0% (Tech)

Portfolio Asset Allocation

US stocks long positions 49.5% (unchanged)

EU stocks long positions 8.5% (reduced)

US stocks short position 2% (unchanged)

Hedges 8.0% (unchanged)

Silver & Gold 2% (unchanged)

Cash 30% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +14.0% (excl. dividends) vs the S&P500 gain of +16.5%.

Invest responsibly!!!

Can Q2 earnings save the stock market from recession fears? | Responsible Investor Weekly Newsletter, June 24th, 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 “Can Q2 earnings save the stock market from recession fears?”, and was written on June 24th, 2023.

Weekly summary in a paragraph

The US stock market indices finished lower this week, with the S&P500 and the Nasdaq breaking a 5 and an 8-week positive streak, respectively. Recession fears drove the narrative as the yield inversion breached the psychological threshold of 100 basis points intra-session. The European stock market underperformed the US stock market, spooked by the surprise move of both the Bank of England and the Norway’s central bank who hiked interest rates by 0.5%. The 2-10y spread continues to widen and has now an inverted value of -97 basis points. In economic data, the US housing starts data published this week surpassed economists’ expectations as low existing home inventory continues to push buyers into the new home market. In corporate news, Accenture exceeded expectations while Darden Restaurants underwhelmed investors. Next week there are a handful of Q1 earnings left, including Carnival, General Mills, Micron and Nike.

Asset classes weekly performance

This week the Dow finished -1.98% lower (+1.8% year to date) while the S&P500 dropped -1.75% (+13.3% year to date), the Nasdaq lost -2.11% (+28.9% year to date) and the Russell 2000 tanked -3.6% (+3.4% year to date). Gold finished -0.89% lower (+1.9% year to date) while Silver gave up-3.35% (-8.7% year to date). Oil dropped -2.37% (-9.3% year to date). The 10-y US treasury yield was +0.27% higher (-1.4% year to date). The European stock market finished -4.9% lower (+14.7% year to date). The Euro lost -0.4% against the US Dollar (+1.8% year to date).

Weekly pitch

When the return of short-term bonds exceeds that of long-term bonds, economists talk about yield ‘inversion’. Over the years this phenomenon has been a precursor of recessions. After weeks of positive sentiment fuelled by AI frenzy, this week the markets have experienced a reality check and taken a step back. With the next Fed decision not due until late July, investors will now turn to Q2 earnings which will kick off week after next. Earnings and earnings forecasts have consistently been the most important driver of the stock market. 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 partial profits on our Gold ETF long position (+7.2%), as well as full profits on our Plug Power long position (+10.4%); a stop loss was triggered on our Tesla short position. We initiated long positions on a Thailand ETF, a Silver ETF, ACI Worldwide and Dish, as well as a short position on Thor. Cash, precious metals and hedges amount to 40.5% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

ProShares UltraPro Short Russell2000 +8.7% (3x inverse the Russell 2000)

ProShare UltraPro Short Dow30+4.5% (3x inverse the Dow)

Meta +2.8% (Tech)

ProShares UltraPro Short QQQ +2.7% (3x inverse the Nasdaq)

Centene +1.0% (Managed Healthcare)

Portfolio Asset Allocation

US stocks long positions 49.5% (increased)

EU stocks long positions 10% (increased)

US stocks short position 2% (reduced)

Hedges 8.0% (unchanged)

Silver & Gold 2% (reduced)

Cash 28.5% (unchanged)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +10.7% (excl. dividends) vs the S&P500 gain of +14.6%.

Invest responsibly!!!

Is your portfolio protected from liquidity risk? | Responsible Investor Weekly Newsletter, June 17th, 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 your portfolio protected from liquidity risk?”, and was written on June 17th, 2023.

Weekly summary in a paragraph

The US stock market indices finished higher this week, after the Fed opted for a widely expected ‘pause’ which was labelled as “hawkish”. The European stock market was also very strong, though the Euro weakened relative to the US Dollar as the ECB hiked the interest rate by another quarter percentage point. The 2-10y spread continues to widen and has now an inverted value of -93 basis points. In economic data, the May CPI report came in mostly in line. The stock market appeared to ignore the initial jobless claims report which came in weaker than expected. In corporate news, Lennar’s earnings exceeded expectations while Kroger underwhelmed investors. Next week there are a handful of Q1 earnings left, including Fedex, Kb Home and Darden, as well as Accenture’s Q2 earnings report.

Asset classes weekly performance

This week the Dow finished +1.3% higher (+3.5% year to date) while the S&P500 gained +2.6% (+14.9% year to date), the Nasdaq rose +3.3% (+30.8% year to date) and the Russell 2000 gained +0.5% (+6.5% year to date). Gold finished +0.6% higher (+4.1% year to date, we are long) while Silver gained +1.9% (-1.3% year to date). Oil rose +2.9% (-7.2% year to date). The 10-y US treasury yield was -1.8% lower (-0.6% year to date). The European stock market finished +4.1% higher (+20.7% year to date). The Euro lost -1.88% against the US Dollar (-2.3% year to date).

Weekly pitch

The Dow was the third major index to break-out this week, after the S&P500 and the Nasdaq. The macro picture does not support the strong move to the upside seen in recent weeks, however: in fact, the growing divergence between the indices and liquidity is concerning. AI and fear of missing out seems to be fuelling the bulls. When greed is at its peak, 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 partial profits on our Draftkings long position (+31.7%), as well as full profits on our Desktop Metal (+28.7%) and Freeport McMoRan (+10.0%) long positions; a stop loss was triggered on our Coinbase short position as well as on our XPO Logistics short position. We initiated a long position on Zimmet Biomet Holdings and short positions on Tesla, Lennar and UPS. Cash, precious metals and hedges amount to 42% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

Plug Power +15.3% (Electronic Tech)

Duerr +10.5% (Industrial Machinery)

Meta +6.1% (Tech)

BorgWarner +6.0% (Construction Machinery)

BUD +5.5% (Alcoholic Beverages)

Portfolio Asset Allocation

US stocks long positions 48.5% (reduced)

EU stocks long positions 9.5% (unchanged)

US stocks short position 3% (unchanged)

Hedges 8.0% (increased)

Silver & Gold 2.5% (unchanged)

Cash 28.5% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +15.6% (excl. dividends) vs the S&P500 gain of +20.2%.

Invest responsibly!!!

A new bull market is born…or is it? | Responsible Investor Weekly Newsletter, June 10th, 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 “A new bull market is born…or is it?”, and was written on June 10th, 2023.

Weekly summary in a paragraph

The US stock market indices finished higher this week, with the S&P500 breaking out and officially entering in a bull market by rising 20% off its October 2022 lows, and the VIX hitting pre-pandemic levels. The weakness in the European stock market was offset by the Euro strength relative to the US Dollar. The 2-10y spread continues to widen and has now an inverted value of -84 basis points. In economic data, the US jobless claims jumped to a two-year high. In corporate news, DocuSign earnings exceeded expectations while Nio missed. Notable moves to the upside were observed in Netflix, thanks to the new password crack-down policy, and in Tesla who announced a new gigafactory in Spain. Next week all eyes will be on the May CPI report which will be published on Tuesday and on Wednesday’s FOMC meeting.

Asset classes weekly performance

This week the Dow finished +0.34% higher (+2.2% year to date) while the S&P500 gained +0.4% (+12.0% year to date), the Nasdaq rose +0.14% (+26.7% year to date) and the Russell 2000 jumped +1.9% (+5.9% year to date). Gold finished +0.1% higher (+4.3% year to date, we are long) while Silver gained +3.2% (-0.83% year to date). Oil lost -2.5% (-8.6% year to date). The 10-y US treasury yield was +1.41% higher (-1.27% year to date). The European stock market finished -0.6% lower (+16.0% year to date). The Euro gained 0.37% against the US Dollar (+0.37% year to date).

Weekly pitch

The break-out in the Nasdaq last week was replicated by the S&P500 this week, though the latter is sitting on the 61.8% Fibonacci retracement: some say that a new bull market is born…but is it? The S&P500 is now at the same level as 10 months ago, though most of the uncertainties that existed at the time are still around: anemic earnings growth, full employment, lack of clarity in monetary policy, liquidity drying up and the yet-to-be-resolved Russia-Ukraine conflict. Nobody knows where the markets will go from here. Why did many US politicians take profits on their long stock positions last week? Will the Dow also experience a break-out? Until a broader market participation is 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 Lithium ETF long position (+7.6%), our T-Mobile short-term trade (+4.9%) and our Take-two Interactive short position (+5.7%). We initiated a long position on ASE Technology Holding and short positions on Coinbase and H&R Block. Cash, precious metals and hedges amount to 41% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

The Gap +10.5% (Retail)

Desktop Metal +8.9% (Electronic Tech)

Orsted +7.5% (Renewable Energy)

Yelp +5.0% (Tech)

Plug Power +4.6% (Electronic Tech)

Portfolio Asset Allocation

US stocks long positions 49.5% (reduced)

EU stocks long positions 9.5% (unchanged)

US stocks short position 3% (increased)

Hedges 7.5% (unchanged)

Silver & Gold 2.5% (unchanged)

Cash 28% (unchanged)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +11.0% (excl. dividends) vs the S&P500 gain of +7.0%, which corresponds to a +4.0% market beat.

Invest responsibly!!!

Will the US debt ceiling crisis hurt the stock market? | Responsible Investor Weekly Newsletter, May 20th, 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 “Will the US debt ceiling crisis hurt the stock market?”, and was written on May 20th, 2023.

Weekly summary in a paragraph

The US stock market indices finished higher this week, despite Friday’s sell-off triggered by US debt debate stalling, with the Nasdaq showing its strength thanks to AI bullishness. The European stock market also finished higher. The Japanese stock market index rose to levels not seen since August 1990 this week. The 2-10y spread continues to be range-bound and has an inverted value of -58 basis points. It was a slow week for economic data. In corporate news, Home Depot’s earnings disappointed with the biggest miss in 20 years, while Walmart beat expectations. In Europe, Siemens Energy rose on a 22% year-on-year turnover increase. While most S&P500 companies have now reported Q1 2023 earnings, there are still a few to watch next week including Nvidia, Low’s, Kohl’s and Dollar Tree.

Asset classes weekly performance

This week the Dow finished +0.4% higher (+0.8% year to date) while the S&P500 gained +1.65% (+9.2% year to date), the Nasdaq advanced +3.0% (+20.9% year to date) and the Russell 2000 appreciated by +1.9% (+0.7% year to date). Gold finished -2.1% lower (+5.4% year to date, we are long) while Silver lost -1.1% (-2-4% year to date). Oil gained +0.8% (-7.2% year to date). The 10-y US treasury yield rose +5.3% (-2.7% year to date). The European stock market finished +1.5% higher (+19.4% year to date). The Euro lost -0.4% against the US Dollar (+0.9% year to date).

Weekly pitch

Despite the alleged advances in the negotiations on the US debt ceiling this week, the crisis is yet to be resolved. Analysts maintain that a solution will be found but few discuss the drawbacks of this scenario. While the resolution of this crisis is key to ensure that the US administration continues to run smoothly, the risk the stock market faces is the drying up of liquidity as more bonds are issued to replenish the coffers. This risk is particularly significant for riskier assets, for example in the tech sector which has run a lot in 2023. 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 Chipotle Mexican Grill (+23%) long position and the Five Below (+1%) short position; sell stops were triggered on our Newmont Mining long position as well as on the Adobe and Affirm short positions. We initiated a long positions on Foot Locker and a short position on Weight Watchers. Cash, precious metals and hedges amount to 41% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

Range Resources +11.2% (Oil)

Halliburton +5.5% (Oilfield services & equipment)

Callon Petroleum +5.1% (Oil)

Meta +5.1% (Tech)

Google +4.5% (Tech)

Portfolio Asset Allocation

US Long stock positions 49.5% (increased)

EU Long stock positions 9.5% (unchanged)

US Short stock position 3.5% (reduced)

Hedges 7.5% (unchanged)

Silver & Gold 3% (unchanged)

Cash 27% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +9.7% (excl. dividends) vs the S&P500 gain of +7.5%, which corresponds to a +2.2% market beat.

Invest responsibly!!!