Which three factors are putting pressure on the stock market? | Responsible Investor Weekly Newsletter, September 9th, 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 “Which three factors are putting pressure on the stock market?”, and was written on September 9th, 2023.

Weekly summary in a paragraph

The US stock market indices finished lower this week, with the Russell 2000 and the Nasdaq underperforming the other indices in a shorter week of trading. The European stock market dropped significantly on stagflation fears due to weak economic data and rising oil prices. The 2-10y spread widened slightly this week and is still inverted at -72 basis points. In economic data, the ISM non-manufacturing index came in higher than expected: while this is good for the economy it may signal that inflation is picking up again which would be bad news for the stock market. In corporate news, Kroger and DocuSign beat Q2 earnings expectations. The Apple stock is under pressure on news of the Chinese government banning government workers from using iphones for official work. Despite the vast majority of the S&P500 companies having now reported Q2 earnings, there are still notable ones due to be published next week such as Oracle, Adobe and Lennar.

Asset classes weekly performance

This week the Dow finished -0.4% lower (+4.3% year to date) while the S&P500 lost -1.1% (+16.1% year to date), the Nasdaq gave up -2% (+31.5% year to date) and the Russell 2000 tanked -2.5% (+5.1% year to date). Gold finished -0.5% lower (+0.9% year to date) while Silver lost -2.8% (-7.6% year to date). Crude Oil gained +0.6% (+15.1% year to date). The 10-y US treasury yield gave up -0.2% (+12.3% year to date). The European stock market lost -2.8% (+12.0% year to date). The Euro lost -0.69% against the US Dollar (-0.1% year to date).

Weekly pitch

Rising oil, rising yields, and rising dollar are putting downward pressure on the stock markets. Oil prices have had a good run lately mostly due to cuts announced by Russia and Saudi Arabia: this is an inflationary situation. Rising yield are tough for long-duration stocks and negatively impact on investments. A rising dollar puts pressure on the emerging markets and reduces the appeal of US exports. If these weren’t enough, weakness in some of the stocks which have a significant market share in China are also behind this week’s drop in the stock market. 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 and to emerging markets.

Weekly Portfolio Update

Here are this week’s movements: we have closed our long position on Desktop Metal (+8.1%). We have also initiated long positions on STEM, Kenvue and Gilead Sciences as well as short positions on Academy Sports and Outdoors, Ross Stores and H&R Block. Cash, US treasury bills, precious metals and hedges amount to 38.5% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

ProShares UltraPro Short Russell 2000 +11.5% (3x inverse the Russell 2000)

Centene +6.8% (Managed Healthcare)

ProShares UltraPro Short QQQ +4.3% (3x inverse the Nasdaq)

Halliburton +3.7% (Oil Services)

Denbury Resources +2.6% (Oil)

Portfolio Asset Allocation

US stocks long positions 44.5% (increased)

EU stocks long positions 8.5% (unchanged)

Emerging markets long positions 4.5% (unchanged)

US stocks short positions 4.0% (increased)

Hedges 8.0% (unchanged)

Silver & Gold 2% (unchanged)

US Treasury bills 2% (unchanged)

Cash 26.5% (reduced)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +9.0% (excl. dividends) vs the S&P500 gain of +11.3%.

Invest responsibly!!!

Weak income and high spending: how long can this continue? | Responsible Investor Weekly Newsletter, September 2nd, 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 “Weak income and high spending: how long can this continue?”, and was written on September 2nd, 2023.

Weekly summary in a paragraph

The US stock market indices finished higher this week, with the Russell 2000 and the Nasdaq outperforming the other indices. The jump in oil contributed to an overall bullish week. The European stock market finished higher despite news of resuming inflation in some of its member states. The 2-10y spread shrunk significantly this week and is still inverted at -69 basis points. In economic data, the jobs reports were mixed while core PCE came in as expected at 0.2% month-over-month and 4.2% year-over-year. In corporate news, Lululemon beat Q2 earnings expectations while Nio missed. There were also strong earnings from various tech stocks including Salesforce. Despite the vast majority of the S&P500 companies having now reported Q2 earnings, there are still notable ones due to be published next week such as Dave & Buster’s, DocuSign and Kroger.

Asset classes weekly performance

This week the Dow finished +1.4% higher (+5.1% year to date) while the S&P500 gained +2.5% (+17.6% year to date), the Nasdaq advanced +3.3% (+34.1% year to date) and the Russell 2000 was +3.6% stronger (+9.1% year to date). Gold finished +1.0% higher (+2.1% year to date) while Silver lost -1.6% (-3.6% year to date). Crude Oil jumped +7.4% (+13.5% year to date). The 10-y US treasury yield gave up -0.9% (+10.0% year to date). The European stock market gained +0.6% (+14.4% year to date). The Euro lost -0.19% against the US Dollar (+0.6% year to date).

Weekly pitch

Perhaps the most relevant piece of economic data published this week relates to the consumer: personal income came in lower than expected while personal spending was higher than consensus. For how long can this continue? Perhaps it is due to the strong consumer spending that a recession has been averted so far. The Delinquency Rate on Credit Card Loans is at the highest level since late 2012. The US economy is 70% consumer-based: any signs of inversion in spending may spook investors and send the markets lower. 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 and to emerging markets.

Weekly Portfolio Update

No movements this week. Cash, US treasury bills, precious metals and hedges amount to 42.5% in our portfolio (unchanged compared to last week).

Top 5 Weekly Portfolio Performers

Foot Locker +15.5% (Footware retail)

Desktop Metal +14.8% (Electronic Technology)

The Gap +14.1% (Apparel)

Callon Petroleum +10.5% (Oil)

MP Materials +9.6% (Non energy minerals)

Portfolio Asset Allocation

US stocks long positions 44.0% (unchanged)

EU stocks long positions 8.5% (unchanged)

Emerging markets long positions 4.5% (unchanged)

US stocks short positions 0.5% (unchanged)

Hedges 8.0% (unchanged)

Silver & Gold 2% (unchanged)

US Treasury bills 2% (unchanged)

Cash 30.5% (unchanged)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +11.6% (excl. dividends) vs the S&P500 gain of +13.8%.

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!!!

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.

Responsible Investor Portfolio Weekly Update, March 27th, 2021 | $TCEHY $NEM $BK $SYF $CLIX $GRUB $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 $WMT

The Big Picture

The 10-year treasuries experienced a nominal decline this week which may signify a stabilisation after the sharp ascent of recent weeks. No incremental news were published on the fiscal policy and the Fed announced the lifting on capital returns restrictions (dividend and buybacks) from Q3.

The 3 trillion dollar infrastructure plan was announced by Biden on Wednesday although more information is expected next week. This stimulus package may offer great investment opportunities in the construction industry over the coming months.

Vaccine rollout optimism continues in the US although the daily vaccinations are unchanged at 2.5 million doses. Credit card data are already picking up more sales traffic as the re-opening play continues. The situation is more controversial in Europe where lockdowns persist, albeit inconsistently across the various countries, and vaccinations are still affected by pharma companies not being able to meet demand or deliver to the agreements.

Next week’s focus will be on the March US jobs report.

Market Performance

The stock market indices were mixed this week: in the US the Dow gained 1.4%, while the Nasdaq fell for the second week (-0.6%) and the S&P500 finished 1.6% higher. In Europe, the Stoxx and the Italian index rose by 0.8%. The Danish OMX20 finished flat. The US Dollar continues to gain over the Euro (0.8%). Crude $oil finished lower (-5%) despite the Suez canal blockage and so did $Gold (-0.4%). $BTC-USD experienced another decline this week (-5.6%).

Earnings

Three of our stocks reported their Q4 earnings last week. $TCEHY reported an earnings and a revenue beat but is believed to be the next target of Chinese regulators which might trigger more weakness after last month’s decline.

$WBD.MI announced their 2020 results and their intention of completing the purchase of Astaldi. Their better-than-expected debt and dividend increase surprised and pushed the stock price 6% higher on Monday.

$TRN.MI presented their 2020 consolidated results on Wednesday. Italy’s TSO beat on both the top and the bottom line and confirmed its 2021 guidance.

Notable earnings included $ADBE which reported record quarterly sales (+27%) and EPS up 38%, and high-end home improvement company $RH which smashed earnings expectations and is poised for more growth despite having already gained 430% over the last year.

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

Dividends

Our Danish stock 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 1.6% this week whereas the weighted average of the relevant market indices finished 0.9% higher, corresponding to a 0.7% market beat.

This week’s winner was $UMC with a 7.3% gain thanks to renewed strength in the semiconductor sector. Our energy stocks also finished markedly higher and so did the two Italian positions which reported Q4 earnings.

Our Responsible Investor portfolio is now up 30.1% (31.1% including dividends) in 43 weeks and is beating the market by 3.3% over the same period. We are about 60% in stocks & ETFs and 40% in cash.

The table below summarises the portfolio performance since inception.