Was this week’s rally justified? | Responsible Investor Weekly Newsletter, November 11th, 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 “Was this week’s rally justified?”, and was written on November 11th, 2023.

Weekly summary in a paragraph

The US stock market indices were mostly higher this week, despite somewhat hawkish commentary from chair Powell and a weak US bond auction. Small caps lagged and which finished significantly lower. The European stock market managed to stay afloat despite more companies missing earnings estimates and warning about lower full-year profits. The 2-10y spread continues to widen this week after the trend reversal experienced in late October and is still inverted at -41 basis points. There was nothing incremental in terms economic data. In corporate news, Disney and Gilead Sciences published strong earnings reports while The Trade Desk disappointed. Next week more Q3 earnings will come in, as companies such as Home Depot, Target, Palo Alto Networks, Applied Materials and The Gap report.

Asset classes weekly performance

This week the Dow finished +0.7% higher (+3.4% year to date) while the S&P500 gained +1.3% (+15.0% year to date), the Nasdaq rose +2.4% (+31.8% year to date) and the Russell 2000 gave up -3.2% (-3.2% year to date). Gold slid -2.2% (+0.9% year to date) while Silver tanked -4.0% (-11.2% year to date). Crude Oil dropped -4.3% (+3.2% year to date). The 10-y US treasury yield lost -0.7% (+22.0% year to date). The European stock market gained +0.9% (+11.6% year to date). The Euro lost -0.43% against the US Dollar (-0.22% year to date).

Weekly pitch

It was not a very convincing week as the markets rallied with no significant news to justify the move. In fact, hawkish statements by Powell and a poor auction would have suggested a drop from last week’s levels. From a technical perspective, the Dow is very close to a death cross and if the S&P500 and the Nasdaq are not able to keep up the recent momentum, they too will be in a similar position. Next week the all-important CPI and PPI reports will be published: these have the potential to be market movers and are closely watched by the Fed who, together with labour market report, use this data to define their monetary policy. 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: stop losses were triggered on our Denbury Resources long position and on our XPO Logistics short position. Cash, US treasury bills, precious metals and hedges amount to 37% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

ProShares UltraPro Short Russell 2000 +9.6% (3 times inverse the Russell 2000 ETF)

ACI Worldwide +8.3% (Tech)

VanEck Vectors Semiconductor ETF+5.2% (Semiconductors ETF)

Meta +4.5% (Tech)

Rational AG +4.5% (Industrial Machinery)

Portfolio Asset Allocation

US stocks long positions 49.5% (reduced)

EU stocks long positions 8.5% (unchanged)

Emerging markets long positions 5.0% (unchanged)

US stocks short positions 0% (reduced)

Hedges 7.5% (unchanged)

Silver & Gold 2.5% (unchanged)

US Treasury bills 2% (unchanged)

Cash 25.0% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +4.5% (excl. dividends) vs the S&P500 gain of +11.6%.

Invest responsibly!!!

What caused the big rally on Friday? | Responsible Investor Weekly Newsletter, October 7th, 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 caused the big rally on Friday?”, and was written on October 7th, 2023.

Weekly summary in a paragraph

The US stock market indices were mixed this week, as US treasury yields kept rising while the recently strong oil prices fell substantially. The European stock market managed to stay afloat and was helped by the first signs of dollar weakening in weeks. The 2-10y spread tightened significantly this week and is still inverted at -30 basis points. In economic data, there were strong job reports on Tuesday and Friday as well as ISM non-manufacturing data almost in line. In corporate news, McCormick and Levi’s published disappointing earnings reports while Constellation Brands beat expectations. Next week the first significant batch of Q3 earnings will come in, as large US banks such as JP Morgan, Wells Fargo and Citi report.

Asset classes weekly performance

This week the Dow finished -0.3% lower (+0.8% year to date) while the S&P500 gained +0.5% (+12.2% year to date), the Nasdaq rose +1.6% (+28.3% year to date) and the Russell 2000 gave up -2.2% (-0.9% year to date). Gold finished -1.0% lower (flat year to date) while Silver lost -3.0% (-10.4% year to date). Crude Oil tanked -6.8% (+9.8% year to date). The 10-y US treasury yield rose +2.2% (+26.1% year to date). The European stock market was barely higher at +0.1% (+8.7% year to date). The Euro gained +0.26% against the US Dollar (-1.10% year to date).

Weekly pitch

It was a fairly negative week on the stock market as several positive jobs report came in better than expected leaving investors little chances to hope for a shift in monetary policy. Oversold conditions worsened at the start of the week and the S&P500 approached its 200-day moving average. And yet, despite the very strong report on Friday, the US markets staged a significant rally probably due to the average hourly earnings coming in cooler than expected. Investors can be unreasonably selective in terms of which data to base their decisions on. In the medium term, however, yields and inflation data are likely to affect where the markets go from here. In the long term, earnings and earnings expectations drive stocks. 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 taken partial profits on our Halliburton long position (+30.4%). We have accumulated on our Boeing, Newmont Mining, Brazil ETF and silver ETF long position. Sell stops were triggered on our Desktop Metal long position. Cash, US treasury bills, precious metals and hedges amount to 37% in our portfolio (decreased compared to last week).

Top 5 Weekly Portfolio Performers

Foot Locker +14.1% (Apparel)

ProShares UltraPro Short Russell 2000 +6.6% (3x inverse the Russell 2000)

Google +5.2% (Tech)

Meta Platforms +5.1% (Tech)

Walt Disney +2.3% (Entertainment)

Portfolio Asset Allocation

US stocks long positions 49% (unchanged)

EU stocks long positions 8.5% (unchanged)

Emerging markets long positions 5.0% (increased)

US stocks short positions 0.5% (reduced)

Hedges 7.5% (unchanged)

Silver & Gold 2.5% (increased)

US Treasury bills 2% (unchanged)

Cash 25.0% (decreased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +9.2% (excl. dividends) vs the S&P500 gain of +15.1%.

Invest responsibly!!!

Will oversold conditions help the stock market? | Responsible Investor Weekly Newsletter, September 30th, 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 oversold conditions help the stock market?”, and was written on September 30th, 2023.

Weekly summary in a paragraph

The US stock market indices were mixed this week, as US treasury yields rose and portfolio managers increased spending as part of the end of quarter ‘window dressing’. The European stock market fell for the second week in a row despite better thank expected inflation data in the Eurozone. The 2-10y spread tightened significantly this week and is still inverted at -44 basis points. A strong jobs report and cooler than expected PCE data were this week’s highlights in terms of US economic data. In corporate news, Micron and Accenture guided lower while Nike jumped on strong guidance. 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 McCormick, Tilray, Constellation Brands and Levi’s.

Asset classes weekly performance

This week the Dow finished -1.3% lower (+1.1% year to date) while the S&P500 lost -0.7% (+11.7% year to date), the Nasdaq rose +0.1% (+26.3% year to date) and the Russell 2000 gained +0.5% (+1.4% year to date). Gold finished -3.7% lower (-3.2% year to date) while Silver tanked -4.3% (-10.9% year to date). Crude Oil gained +1.2% (+20.4% year to date). The 10-y US treasury yield rose +0.7% (+20.6% year to date). The European stock market gave up -1.3% (+8.6% year to date). The Euro lost -0.68% against the US Dollar (-1.26% year to date).

Weekly pitch

Technical analysis can help assess the market direction from time to time. With the market currently in oversold conditions, there is a fair chance of a bounce. This week’s performance was masked by end of quarter movements. New money pours in at the beginning of the month which might sustain the stock market at the beginning of next week. In the medium term, however, yields are likely to affect where the markets go from here. In the long term, earnings and earnings expectations drive stocks. 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 taken full profits on our Ross Stores short position (+8.5%). We have initiated a long position on Boeing and a consumer staples ETF, and accumulated on our Newmont Mining long position. Cash, US treasury bills, precious metals and hedges amount to 38% in our portfolio (decreased compared to last week).

Top 5 Weekly Portfolio Performers

The Gap +6.9% (Apparel)

Callon Petroleum +5.5% (Oil)

ProShares UltraPro Short Dow 30 +4.4% (3x inverse the Dow)

Denbury Resources +2.2% (Oil)

Hilton Worldwide Holdings +1.8% (Hotels & Leisure)

Portfolio Asset Allocation

US stocks long positions 49% (increased)

EU stocks long positions 8.5% (unchanged)

Emerging markets long positions 4.5% (unchanged)

US stocks short positions 0.5% (reduced)

Hedges 7.5% (unchanged)

Silver & Gold 2% (unchanged)

US Treasury bills 2% (unchanged)

Cash 26.5% (decreased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +12.6% (excl. dividends) vs the S&P500 gain of +17.8%.

Invest responsibly!!!

What does a rising 10-year yield mean for the stock market? | Responsible Investor Weekly Newsletter, September 23rd, 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 does a rising 10-year yield mean for the stock market?”, and was written on September 23rd, 2023.

Weekly summary in a paragraph

The US stock market indices finished markedly lower this week, as the Fed decided to pause interest rate hikes at its September FOMC meeting and the ‘dot plot’ alluded to a ‘higher-for longer’ monetary policy. The European stock market returned to losses on news of economic slowdown within the region and particularly in France. The 2-10y spread tightened slightly this week and is still inverted at -66 basis points. It was a slow news week in terms of economic data. In corporate news, both Stitch Fix and Fedex rose on a Q2 earnings beat while Kb Home slumped. 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 Nike, Carnival, Micron and Costco. Accenture will report its Q3 earnings, also.

Asset classes weekly performance

This week the Dow finished -1.9% lower (+2.5% year to date) while the S&P500 lost -2.9% (+12.5% year to date), the Nasdaq gave up -3.6% (+26.2% year to date) and the Russell 2000 fell -3.8% (+0.9% year to date). Gold finished -0.4% lower (+1.0% year to date) while Silver gained +1.4% (-5.2% year to date). Crude Oil lost -0.3% (+19.8% year to date). The 10-y US treasury yield jumped +2.8% (+17.0% year to date). The European stock market gave up -2.5% (+10.0% year to date). The Euro lost -0.19% against the US Dollar (-0.58% year to date).

Weekly pitch

The risk-off experienced this week was driven by the sell-off in US bonds, particularly in the 10-year which reached the 4.5% yield mark. This is particularly negative for long duration stocks as their price to earnings ratio is harmed by rising yields. Long duration stocks include tech stocks as well as speculative stocks. Should the Fed continue to exert pressure on interest rates for longer this will end up hurting the stock market and reduce valuations. 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 taken full profits on our Academy Sports and Outdoors short position (+9.8%) and partial profits on our Ross Stores short position (+6.1%) as well as our triple inverse Nasdaq ETF long position (+2.4%). Sells stops were trigger on our HRB short position. Cash, US treasury bills, precious metals and hedges amount to 39% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

ProShares UltraPro Short Russell 2000 +11.3% (3x inverse the Russell 2000)

iPath Series B S&P 500 VIX Short-Term Futures TM +10.7% (Volatility ETF)

ProShares UltraPro Short QQQ +8.8% (3x inverse the Nasdaq)

ProShares UltraPro Short Dow 30 +5.1% (3x inverse the Dow)

iShares Silver Trust +2.3% (Silver ETF)

Portfolio Asset Allocation

US stocks long positions 47% (increased)

EU stocks long positions 8.5% (unchanged)

Emerging markets long positions 4.5% (unchanged)

US stocks short positions 1.0% (reduced)

Hedges 7.5% (reduced)

Silver & Gold 2% (unchanged)

US Treasury bills 2% (unchanged)

Cash 27.5% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +13.2% (excl. dividends) vs the S&P500 gain of +15.0%.

Invest responsibly!!!

Did the ECB send a bullish signal to the stock market? | Responsible Investor Weekly Newsletter, September 16th, 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 “Did the ECB send a bullish signal to the stock market?”, and was written on September 16th, 2023.

Weekly summary in a paragraph

The US stock market indices finished mostly lower this week, except the Dow which rose marginally in a week which was affected by a significant sell-off on Friday despite the success of the ARM IPO. The European stock market ended its 6-week negative streak and returned to gains despite the euro continued weakness relative to the dollar. The ECB hiked interest rates by another 0.25%. The 2-10y spread tightened slightly this week and is still inverted at -69 basis points. In economic data, the core inflation (CPI) as well as the inflation at producer level (PPI) are running hotter than expected. Retails sales data were also strong which indicates further borrowing by the consumer. In corporate news, both Adobe and Lennar dipped despite beating Q2 earnings expectations. The launch of the new Apple models and the French ban on the iPhone 12 did not help the stock which fell this week. 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 Stitch Fix, Autozone, General Mills, Fedex and Kb Home.

Asset classes weekly performance

This week the Dow finished +0.1% higher (+4.4% year to date) while the S&P500 lost -0.2% (+15.9% year to date), the Nasdaq gave up -0.4% (+31.0% year to date) and the Russell 2000 fell -0.2% (+4.9% year to date). Gold finished -0.1% lower (+1.0% year to date) while Silver lost -0.3% (-7.2% year to date). Crude Oil gained +4.5% (+20.3% year to date). The 10-y US treasury yield rose +0.8% (+14.0% year to date). The European stock market gained +0.8% (+12.9% year to date). The Euro lost -0.52% against the US Dollar (-0.45% year to date).

Weekly pitch

One of the ways central banks fight inflation is through increasing interest rates. Both the Fed and the ECB have been using this weapon over the past months. Following this week’s inflation data, there is now a 40% chance that the Fed will hike again in November. The ECB just hiked interest rates this week though the significant news is that it suggested it may be done for this cycle. This is a bullish signal for the stock market and also for the bonds of the EU member states. 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 38.5% in our portfolio (unchanged compared to last week). It was a good week for our precious metals stocks.

Top 5 Weekly Portfolio Performers

Sibanye Stillwater +16.7% (Precious metals)

ProShares UltraPro Short QQQ +5.3% (3x inverse the Nasdaq)

MP Materials +4.4% (Rare-earth materials)

Newmont Mining +3.6% (Precious metals)

Denbury Resources +3.3% (Oil)

Portfolio Asset Allocation

US stocks long positions 44.5% (unchanged)

EU stocks long positions 8.5% (unchanged)

Emerging markets long positions 4.5% (unchanged)

US stocks short positions 4.0% (unchanged)

Hedges 8.0% (unchanged)

Silver & Gold 2% (unchanged)

US Treasury bills 2% (unchanged)

Cash 26.5% (unchanged)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +11.8% (excl. dividends) vs the S&P500 gain of +14.1%.

Invest responsibly!!!

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!!!

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!!!

THE BATTLE BETWEEN THE BULLS AND THE BEARS: HERE IS WHAT TO DO | December 10th, 2022 | $LIT $SIG $TSM $NUE $HZNP $PLUG $TELL $DIS $THO $MP $KSS $GL $WMT $TGT $GILD $AIG $ORI $USB $CNC $SH $GLD $SLV $SON $NEM $HLT $NXPI $DEN $GPS $FIVE $JPM $CMG $MSFT

Weekly summary in a paragraph

Sure, everyone is expecting a slowdown in the rates hike next week, but the November headline and core PPI both hotter than expected may indicate that the Fed is not going to pivot any time soon. It was a horrible week on the global stock markets which finished markedly lower with the US indices declining for the first time after 3 weeks.

China was the exception as the reopening narrative gains strength and property support optimism sent Chinese stocks higher. The European stock market did a U-turn and contracted this week as cold weather exerts pressure on its frail energy sector.

Asset classes weekly performance

This week the Dow lost -2.8% (-7.04% YTD) while the S&P500 fell -3.4% (-17.45% YTD, we are 1x short), the Nasdaq retraced -4.0% (-29.17% YTD, we have a 3x inverse position) and the Russell 2000 tanked -5.0%% (-18.715% YTD, we are 1x short). $Gold finished marginally lower -0.1% (-2.63% YTD) and has been overtaken by silver which is the clear winner with its +1.2% gain (-1.39% YTD). $Oil tanked -10.9% and is now in negative territory for the first time this year (-4.99% YTD). The 20-y fell -0.7% this week (-26.33% YTD). The European stock finished -1.5% lower (-14.62% YTD). The Euro finished flat on the USD (-7.17% YTD).

Weekly pitch

While 2022 has clearly seen a bear market, from time to time the battle between the bulls and the bears does not have a clear winner. The bearish narrative is based on sticky inflation, uncertainty in terms of terminal rate, recession risk and the revision of earnings forecasts to the downside. Conversely, the bullish narrative centres around the Fed pivoting on interest rates, disinflation, sustained strength in the labour market and positivity around China’s potential reopening. One may consider not taking sides and using hedges + cash to reduce their exposure to the downside as we are doing in our portfolio.

Weekly Portfolio Update

Here are this week’s movements: we took partial profits on $WMT (+5.1%) and sold our short position on $ISF.L (-9.9%). We initiated short positions on $TSM and $SIG. Cash, precious metals, hedges and short stock positions amount to 43% in our portfolio (unchanged compared to last week).

Top 5 Weekly Portfolio Performers

$SQQQ +11.25% (3x inverse Nasdaq)

$VXX +6.40% (Volatility ETF)

$IWM +5.01% (short position on Russell 2000)

$SH +3.57% (1x inverse S&P500)

$SLV +1.27% (Silver ETF)

Portfolio Asset Allocation

– Long stock positions 57% (unchanged)

– Short stock position 2% (increased)

– Hedges 7%, though equal to 10% considering leveraged ETFs (reduced)

– Silver & Gold 4% (unchanged)

– Cash 30% (reduced)

YTD Portfolio Performance

Our currency-adjusted YTD portfolio performance is -6.6% (excl. dividends) vs the European market loss of -7.5% (+0.9% European market beat, expressed in €) and the S&P500 loss of -17.5% (+3.7% US market beat, expressed in $).

Invest responsibly!!!

Responsible Investor Portfolio Update, August 15th, 2020 | $TCEHY $NEM $BK $SYF $GILD $GRUB $SQQQ $SCO $PCG $LVMUY $LRLCY $PEUGF $ELC.MI $WBD.MI

Another positive week for the global stock markets with Europe over-performing the US. The Italian stock market jumped almost 5% while the Stoxx index gapped 2.77% higher. The Dow and the S&P500 were up 2 and 1%, respectively. The Nasdaq was very quiet and closed marginally higher.

There are increasing calls from investment banks for a potential future over-performance of the Stoxx versus the US Stock Markets which have run a lot: YTD, the S&P500 is up 4.7% while the Stoxx index is down 10% and the FTSE MIB lags behind with a -13,82%. There are exceptions within Europe: for example the Danish stock market being up 15% YTD and currently has a P/E of 31. With our portfolio consisting of European stocks for 68% at present, we are geared to benefit from a possible mid-term rise of the European stocks.

We have had 3 winners this week as $SYF , WeBuild and Elica rose between 5% and 7%. This week’s sell off in gold has negatively impacted on $NEM , down 7%, however this precious metal is expected to rise further in the near future.

$TCEHY continues to be hit by anti-China US policies and, more recently, by the dispute between $AAPL and $GOOG vs Epic Games, the company behind popular video game Fortnite in which Tencent has a stake.

Two of our positions hit the SL price, namely $SCO and $GILD. For the latter it might have just been bad timing as the fundamentals and the valuation remains strong: we might get back in if the earnings continue to grow and the technicals suggest an entry point.

The table below summarises the portfolio performance since inception.

2000814 RIP

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$NEM $LVMUY $LRLCY $BK $SYF $GILD $GRUB $SQQQ $SCO $PCG | Responsible Investor Portfolio Update, June 27th, 2020

This week was a roller-coaster for the global markets which pushed higher in the first two trading days to then loose strength and finish the week down. We still did not manage to have two consecutive negative days though !

In the US markets the #Dow suffered a 3.3% loss, followed by the #S&P500 which closed 2.9% lower than last week and the #Nasdaq which limited the loss to 1.9%. The weekly performance in Europe was no different, however all the three indices we follow more closely fared better than the US markets (#Stoxx -1.1%, #OMXC20 -1.3% and #FTSEMIB -1.6%).

Our RI Portfolio was nominally positive this week (+0,2%) and therefore outperformed these 6 indices by a weighted average of +2.6% thanks to selected stocks and especially to the hedges I had put in place during the preceding week, namely $SQQQ and $SCO.

We now have one full month of track record and I am pleased to see that we are showing a positive total return of 1.4% (+0,4% vs the Market).

There was only one Buy Alert this week, for precious metals stock #Newmont which benefited from the stock markets coming to a screeching halt. We also added to the triple inverse Nasdaq ETF $SQQQ position which proved to be the right move. With reduce and accumulate alerts the relative weight of the open positions change of course.

This week’s winners in our RI Portfolio were $SQQQ (+7,4% gain) and, once again, Grubhub (+8,1% gain).

No relative changes between the three currencies of the RI Portfolio.

We now have 15 open positions, 2 of which are leveraged hedges (inverse ETFs). Even in times of high valuations I keep finding cheap stocks and a possible further drop of the markets next week, especially around the quarter close, may offer an opportunity to initiate new positions.

The table below summarises the portfolio performance since inception.

If you don’t want to miss my alerts, please subscribe to Responsible Investor or follow me on Twitter. I also run an eToro portfolio which currently has 30 positions and can be accessed via this link.