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!!!

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!!!

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!!!

Which key word did Fed Chair Powell not utter? | Responsible Investor Weekly Newsletter, May 6th, 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 key word did Fed Chair Powell not utter?”, and was written on May 6th, 2023.

Weekly summary in a paragraph

The US stock market indices finished mostly lower this week, with the exception of the Nasdaq which managed to gain a meager 0.1%. The week was dominated by the FOMC meeting which confirmed the 0.25% increase in interest rate, as expected. There was one key word which the Fed’s chair Powell did not utter, though: “pause”. In other words, the Fed will keep making decisions on the basis of economic data, and is not prepared to commit to this latest increase being the last in the cycle. The European stock market finished higher and is still leading year to date, globally, despite this week’s ECB rate hike. The 2-10y spread reversed its trend and reduced the gap to an inverted value of -48 basis points. In terms of economic data, the ISM index published on Monday was slightly better than consensus, and the jobs report came in stronger than expected on Friday. In corporate news, Apple beat earnings and saved the market from an even deeper weekly loss, though this is the second quarter in a row that Apple revenue has decreased. Next week more S&P500 companies report earnings, including Paypal, Airbnb and Disney.

Asset classes weekly performance

This week the Dow finished -1.24% lower (+1.6% year to date) while the S&P500 gave up -0.8% (+7.7% year to date), the Nasdaq advanced +0.1% (+16.9% year to date) and the Russell 2000 lost -0.5% (-0.1% year to date). Gold finished +0.1% higher (+7.8% year to date, we are long) while Silver gained +1.21% (+5.4% year to date, we are long). Oil lost -0.5% (-7.7% year to date). The 10-y US treasury yield gave up -0.2% (-9.2% year to date). The European stock market gained +0.2% (+19.9% year to date). The Euro appreciated +0.11% against the US Dollar (+2.92% year to date).

Weekly pitch

Strong economic data and the Fed’s refusal to pivot were responsible for a negative week. While the quarter percentage point rate hike was largely expected, the market was looking for the Fed to confirm that no further hikes were planned, and were therefore disappointed by Powell’s words during the press conference. Despite the proximity of the war in Ukraine, the performance of the European stock market and of the Euro keeps being superior relative to the US indices and the US dollar. 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 long positions and initiated new long positions.

Weekly Portfolio Update

Here are this week’s movements: we took profits on our Arconic Corporation (+17%), Electronic Arts (+10.6%) and Sanofi (+9.1%) long positions; sell stops were triggered on our Capri Holdings and on the US Banks ETF long positions. We initiated long positions on Plug, Restaurants Brands International and AMD. Cash, precious metals and hedges amount to 41% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

Arconic Corporation +17.4% (Aluminum)

Rational +7.8% (Industrial Machinery)

Sibanye Stillwater +7.4% (Precious Metals)

Davide Campari +4.6% (Alcoholic Beverages)

Marriot International +4.3% (Hotels & Leisure)

Portfolio Asset Allocation

US Long stock positions 49.5% (reduced)

EU Long stock positions 9.5% (reduced)

US Short stock position 4.5% (increased)

Hedges 8% (increased)

Silver & Gold 3.5% (unchanged)

Cash 25% (unchanged)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +5.2% (excl. dividends) vs the S&P500 loss of -0.3%, which corresponds to a +5.5% market beat.

Invest responsibly!!!

Earnings surprise! What to do now | Responsible Investor Weekly Newsletter, April 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 “Earnings surprise! What to do now”, and was written on April 29th, 2023.

Weekly summary in a paragraph

The US stock market indices finished higher this week, though the Russell 2000 didn’t participate. Q1 GDP data published this week reported a 1.1% growth in the US while the Europe area stopped at 0.1%, and avoided a recession by a hair. The European stock market saw an end to multi-week gains but is still leading year to date, globally. The 2-10y spread was flat and is still inverted at -60 basis points. Oil now in negative territory after the first four months of 2023. In terms of economic data, March headline and core PCE inflation came in mostly in line. Personal income and spending for March was reported slightly higher than expected. In corporate news, mega cap companies like Microsoft and Meta smashed Q1 2023 earnings, Alphabet reported a beat while Amazon’s guidance underwhelmed. Many other long positions in our portfolio reported an earnings beat this week, Chipotle and Fielmann above all. Next week 126 S&P500 companies report earnings, including AMD, Apple and Novo Nordisk.

Asset classes weekly performance

This week the Dow finished +0.86% higher (+2.9% year to date) while the S&P500 gained +0.87% (+8.6% year to date), the Nasdaq advanced +1.28% (+16.8% year to date) and the Russell 2000 lost -1.26% (+0.4% year to date). Gold finished flat (+6.5% year to date, we are long) while Silver lost -0.74% (+3.0% year to date, we are long). Oil tanked -2.7% (-0.8% year to date). The 10-y US treasury yield gave up -1.79% (-9.0% year to date). The European stock market lost -0.4% (+19.7% year to date). The Euro gained +0.24% against the US Dollar (+2.9% year to date).

Weekly pitch

The earnings estimate for the S&P500 companies in Q1 2023 was just over 50$, in aggregate, at the beginning of the earnings season. After 222 companies reported so far that number has increased by 2.5%. If this increase is representative of the other half which will report in May, the overall figure may increase to 54-55$, ie one of the largest in recent years. It is important to note, however, that the year to date increase on the index is led by very few companies, therefore now more than ever before it is a stock picker’s market. Until more earnings data is available over the next couple of weeks, responsible investors should exercise caution and maintain a healthy proportion of their portfolio in cash and hedges. Analysts now believe that another quarter point rate hike will happen at next week’s FOMC meeting, with an 86% probability. This week we have taken full or partial profits on long and short positions and initiated new long positions.

Weekly Portfolio Update

Here are this week’s movements: we took profits on our Eli Lilly (+13.9%) long position, on our Snapchat (+2.6%) and Pinterest (+16%) short positions and partial profits on our Microsoft (+15.3%), Halliburton (+4.5%), Raytheon Technologies (+4.3%), Sibanye Stillwater (+4.2%) and Capri Holdings (+3.6%) long positions. We initiated long positions on three Chinese ETFs. Cash, precious metals and hedges amount to 40% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

Fielmann +16.43% (Medical Specialties)

Chipotle Mexican Grill +14.87% (Restaurants)

Meta +12.88% (Technology Services)

Microsoft +7.52% (Technology Services)

Centene +4.46% (Managed Healthcare)

Portfolio Asset Allocation

US Long stock positions 50% (reduced)

EU Long stock positions 10% (unchanged)

US Short stock position 4% (reduced)

Hedges 7.5% (unchanged)

Silver & Gold 3.5% (reduced)

Cash 25% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +4.2% (excl. dividends) vs the S&P500 loss of -2.8%, which corresponds to a +7.0% market beat.

Invest responsibly!!!

The Fed’s Beige Book: read or ignore? | Responsible Investor Weekly Newsletter, April 22nd, 2023

$WWE $HAL $EA $SDOW $SNAP $ADBE $FIVE $ACIW $XLV $AAPL $SNY $GOOG $QQQ $RTX $CPR.MI $SAND.ST $AMZN $WSM $NVDA $DEN $LIT $QCOM $BRK.B $NUE $DIS $MP $GL $WMT $TGT $GILD $CNC $SH $GLD $SLV $SON $NEM $HLT $NXPI $DEN $GPS $JPM $CMG $MSFT $META $BWA $LEA $PSQ $SRTY $SQQQ

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 “The Fed’s Beige Book: read or ignore?”, and was written on April 22nd, 2023.

Weekly summary in a paragraph

The US stock market indices finished mildly lower this week, with the exception of the Russell 2000. In the UK, the latest economic data revealed that inflation is still high: this report spooked global markets on Wednesday. The European stock market finished higher again this week, and is now up 20% year to date. The 2-10y spread increased and is still inverted at -60 basis points: this corresponds to a 22 basis points increase in the past month. In corporate news, Tesla tanked on Thursday as more price cuts were announced and Q1 2023 earnings showed a significant reduction in profit margin. Netflix also disappointed reporting weaker-than-expected results. Procter & Gamble, conversely, beat on both the top and the bottom line, thanks to price hikes which meant that the company could pass the impact of inflation on to its customers (we are long). Next week is very busy in terms of earnings as mega cap tech companies report: by the end of the week, more than 40% of the S&P500 companies will have reported, allowing to draw some initial conclusions on the Q1 2023 earnings.

Asset classes weekly performance

This week the Dow finished -0.2% lower (+2.0% year to date) while the S&P500 lost -0.1% (+7.7% year to date), the Nasdaq gave up -0.4% (+15.3% year to date) and the Russell 2000 advanced +0.6% (+1.7% year to date). Gold finished -1.3% lower (+6.2% year to date, we are long) while Silver lost -0.4% (+3.1% year to date, we are long). Oil tanked -3.7% (+0.9% year to date). The 10-y US treasury yield finished flat (-5.9% year to date). The European stock market rose +0.5% (+20.2% year to date). The Euro finished flat against the US Dollar (+2.6% year to date).

Weekly pitch

Perhaps the most significant piece of economic news this week consisted in the Fed’s Beige Book, which was published on Wednesday. The main takeaway message in it was the fact that the loan demand dropped significantly in the US. Its relevance arises from the implicit indication that slower economic activity is expected, therefore. This, in turn, suggests an increased risk of negative impact on earnings and on the stock market. Analysts now believe that another quarter point rate hike will happen at the May FOMC meeting, with an 86% probability. Until more earnings data is available over the next couple of weeks, responsible investors should exercise caution and maintain a healthy proportion of their portfolio in cash and hedges. This week we have beaten the market again and have initiated new long and short positions.

Weekly Portfolio Update

Here are this week’s movements: we took profits on our EOG Resources long position (+10.5%) and partial profits on our Google long position (+7.9%). We initiated long positions on Rational and Fielmann, and added to our Range Resources and Berkshire Hathaway long positions; we also initiated a short position on XPO Logistics and on World Wrestling Entertainment. Cash, precious metals and hedges amount to 39% in our portfolio (unchanged compared to last week).

Top 5 Weekly Portfolio Performers

Essilor Luxottica +5.73% (Medical Specialties)

Sibanye Stillwater +4.75% (Precious Metals)

Mariott International +3.75% (Hotels & Leisure)

Chipotle Mexican Grill +3.55% (Restaurants)

Procter & Gamble +3.36% (Consumer non durables)

Portfolio Asset Allocation

US Long stock positions 51% (reduced)

EU Long stock positions 10% (increased)

US Short stock position 4.5% (unchanged)

Hedges 7.5% (unchanged)

Silver & Gold 5% (unchanged)

Cash 22% (unchanged)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +2.4% (excl. dividends) vs the S&P500 loss of -5.9%, which corresponds to a +8.3% market beat.

Invest responsibly!!!

Is disinflation a precursor of a recession? | Responsible Investor Weekly Newsletter, April 15th, 2023

$WWE $DXCM $HAL $EA $SDOW $SNAP $ADBE $FIVE $ACIW $XLV $AAPL $SNY $GOOG $QQQ $RTX $CPR.MI $SAND.ST $AMZN $WSM $NVDA $DEN $LIT $QCOM $BRK.B $NUE $DIS $MP $GL $WMT $TGT $GILD $CNC $SH $GLD $SLV $SON $NEM $HLT $NXPI $DEN $GPS $JPM $CMG $MSFT $META $BWA $LEA $PSQ $SRTY $SQQQ

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 disinflation a precursor of a recession?”, and was written on April 15th, 2023.

Weekly summary in a paragraph

The US stock market indices finished higher for the week, despite a sell-off on Friday. The main catalyst consisted in the declining PPI data published on Thursday, just a day after the CPI report came in cooler-than-expected. The European stock market continued to show its strength and so did the Euro. The 2-10y spread finished flat and is still inverted at -56 basis points. In corporate news, Tesla announced a series of price cuts in the US and three of the major US banks (JP Morgan, Citigroup and Wells Fargo) were the first to report a Q1 2023 earnings beat this week, with JP Morgan results being the most impressive. The earnings season kicks off in earnest next week: any significant misses may exert pressure on the market.

Asset classes weekly performance

This week the Dow finished +1.2% higher (+2.2% year to date) while the S&P500 gained+0.7% (+7.7% year to date), the Nasdaq rose +0.3% (+15.8% year to date) and the Russell 2000 advanced +1.5% (+1.1% year to date). Gold finished +0.7% higher (+7.5% year to date, we are long) while Silver gained +2.2% (+4.3% year to date, we are long). Oil was +3.7% higher (+6.9% year to date). The 10-y US treasury yield gained +3.1% (-7.1% year to date). The European stock market rose +0.7% (+16.8% year to date). The Euro finished +0.76% higher against the US Dollar (+2.7% year to date).

Weekly pitch

The economic data published this week supports the disinflation narrative and leaves the Fed in the challenging position of timing the pivot correctly, if that’s at all possible: not too early to avoid inflation picking up again, and not too late to risk sending the economy into a deep recession. While a recession in late 2023 or early 2024 seems to be in the cards, the real question is how severe it may be and how long it may last. Thankfully not everything is in the hands of the monetary policy makers: the Q1 2023 earnings and especially the future earnings forecasts will provide an objective read of the state of publicly traded companies. Ultimately, it is the growth in earnings that has pushed the markets higher over the decades. Responsible investors should keep an eye on their positions during the earnings seasons, and adjust their portfolio depending on how the companies they have invested in guide for future quarters. This week we have beaten the market again and have deployed some cash.

Weekly Portfolio Update

Here are this week’s movements: we took partial profits on our Newmont Mining long position (+7.4%) and exited our Coinbase short position with a nominal gain; a sell stop was triggered on our Dexcom short position. Cash, precious metals and hedges amount to 39% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

Palantir +8.90% (Tech)

JP Morgan +8.83% (Banking)

Callon Petroleum +7.57% (Oil)

Freeport McMoRan +7.12% (Non-energy minerals)

BorgWarner +5.80% (Automotive)

Portfolio Asset Allocation

US Long stock positions 52% (increased)

EU Long stock positions 9% (unchanged)

US Short stock position 4.5% (increased)

Hedges 7.5% (unchanged)

Silver & Gold 5% (unchanged)

Cash 22% (reduced)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is +0.1% (excl. dividends) vs the S&P500 loss of -5.8%, which corresponds to a +5.9% market beat.

Invest responsibly!!!