Tag: Target

Is the recent correction just driven by raising interest rates? | Responsible Investor Weekly Newsletter, August 19th, 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 recent correction just driven by raising interest rates”, and was written on August 19th, 2023.

Weekly summary in a paragraph

The US stock market indices tanked this week, with all major indices finishing lower, most of them for the third week in a row. The European stock market’s downward move was even worse and exacerbated by the Euro depreciating relative to the US Dollar: it has been overtaken by the S&P500 (currency adjusted) for the first time this year. The 2-10y spread reduced significantly this week as long duration yields increased and is still inverted at -66 basis points. The minutes of the last FOMC meeting had a bearish slant. Economic data were mixed with Atlanta Fed GDP standing at 5% versus 4.1% prior and NAHB Housing Market Index coming in at 50 versus 56 consensus. In corporate news, Q2 earnings of Applied Materials beat expectations. There was also a number of strong reports from retail stocks such as Walmart, Home Depot and Target. 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 Nvidia, Zoom, Foot Locker and The Gap.

Asset classes weekly performance

This week the Dow finished -2.2% lower (+4.1% year to date) while the S&P500 lost -2.1% (+13.8% year to date), the Nasdaq depreciated -2.6% (+27.0% year to date) and the Russell 2000 was -3.4% weaker (+5.6% year to date). Gold finished -1.3% lower (-0.4% year to date) while Silver gained +0.41% (-8.1% year to date). Crude Oil depreciated -1.4% (+6.8% year to date). The 10-y US treasury yield gained +1.6% (+12.1% year to date). The European stock market fell -3.2% (+13.4% year to date). The Euro lost -0.64% against the US Dollar (+1.5% year to date).

Weekly pitch

When bond yields rise, stocks typically experience a sell-off as investors are lured into putting their savings to work at a relatively low risk. The recent weakness in the stock market may well have been driven by the longer term bond yield rising, but there may be other reasons to justify three consecutive weeks of softness. Last week we warned about the implications of the sharp drop in China’s exports. This week’s focus is on the ailing Chinese housing market which culminated with the news of the country’s largest developer Evergrande filing for bankruptcy on Friday. Chinese bonds have not done well lately and the same applies to Chinese stocks. Until this correction is over, 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 full profits on our Molson Coors Brewing short position (+9.7%). We have also initiated a long position on Desktop Metal and accumulated on our Brazil ETF, Newmont Mining and Hershey’s long positions. Sell stops were triggered on our Zimmer Biomet Holdings long position. Cash, US treasury bills, precious metals and hedges amount to 44% in our portfolio (reduced compared to last week). It is mostly thanks to our hedges that we beat the market by +1.0% this week.

Top 5 Weekly Portfolio Performers

ProShares UltraPro Short Russell 2000 +10.7% (3x inverse Russell 2000 ETF)

iPath Series B S&P 500 VIX Short-Term Futures ETN +8.1% (Volatility ETN)

ProShares UltraPro Short QQQ +7.9% (3x inverse Nasdaq ETF)

ProShares UltraPro Short Dow30 +6.8% (3x inverse Dow Jones ETF)

ProShares Short QQQ +2.4% (1x inverse Nasdaq ETF)

Portfolio Asset Allocation

US stocks long positions 47.5% (increased)

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 29.5% (unchanged)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +8.0% (excl. dividends) vs the S&P500 gain of +2.0%, which corresponds to a 6.0% market beat.

Invest responsibly!!!

Why is Dr. Copper important for a healthy portfolio? | Responsible Investor Weekly Newsletter, May 13th, 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 “Why is Dr. Copper important for a healthy portfolio?”, and was written on May 13th, 2023.

Weekly summary in a paragraph

The US stock market indices finished mostly lower this week, with the exception of the Nasdaq, just like the previous week. The European stock market also finished lower but is still leading year to date, globally. The Bank of England raised interest rates again and stated that a recession is not expected in the UK. The 2-10y spread continues to be range-bound has an inverted value of -52 basis points. In terms of economic data, the CPI and the PPI indices published mid-week came in as expected, supporting the disinflation narrative. In corporate news, Disney disappointed while Li Auto beat expectations with a 66% year-on-year increase in car deliveries . While 92% of the S&P500 companies have now reported earnings, there are still a few to watch next week including Target, Walmart and Applied Materials.

Asset classes weekly performance

This week the Dow finished -1.1% lower (+0.5% year to date) while the S&P500 gave up -0.3% (+7.4% year to date), the Nasdaq advanced +0.4% (+17.4% year to date) and the Russell 2000 lost -1.1% (-1.2% year to date). Gold finished -1.34% lower (+7.34% year to date, we are long) while Silver tanked -6.8% (-1.9% year to date). Oil lost -4.9% (-9.3% year to date). The 10-y US treasury yield gave up -1.65% (-8.7% year to date). The European stock market finished -1.9% lower (+17.6% year to date). The Euro lost -1.5% against the US Dollar (+1.3% year to date).

Weekly pitch

Copper is such a critical metal for global economic growth, that over the years it has earned the title of “Doctor Copper”. Copper futures have been anticipating both bull and bear markets in the past, and many investors look at its price fluctuations with interest. After Covid hit, copper made higher lows and higher highs; this trend was broken in summer 2022 when, after peaking in March, its price made a lower low. The sharp decline this week could signal further pessimism in the global economy. 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. This week we have beaten the market, taken full profits on some long positions and initiated new long and short positions.

Weekly Portfolio Update

Here are this week’s movements: we took profits on our Silver ETF (+14.1%), Palantir Technologies (+9.9%), and AMD (+6.2%) long positions as well as on our Affirm (+7.6%) and Adobe (7.5%) short positions; partial sell stops were triggered on our Nasdaq ETF short position. We initiated a long positions on Tellurian and a short position on Affirm. Cash, precious metals and hedges amount to 41.5% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

Palantir Technologies +28.2% (Tech)

Google +11.0% (Tech)

AMD +6.0% (Semiconductors)

Fortinet +4.9% (Electronic Tech)

Orsted +4.1% (Renewable Energy)

Portfolio Asset Allocation

US Long stock positions 49% (reduced)

EU Long stock positions 9.5% (unchanged)

US Short stock position 4.5% (unchanged)

Hedges 7.5% (reduced)

Silver & Gold 3% (reduced)

Cash 26.5% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +6.1% (excl. dividends) vs the S&P500 gain of +4.9%, which corresponds to a +1.2% market beat.

Invest responsibly!!!