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👉 The Investing Week Ahead: 10/30/23

👉 The Investing Week Ahead: 10/30/23

~50% of publicly traded companies don't turn a profit?...

30 Oct

Welcome to your (spooky) new week.

Before we get started — we want to give a major shoutout to the Fundrise Innovation Fund. Fundrise has officially launched a pre-IPO venture fund that’s available for all of their users, and we’re excited by everything they’ve put together!

The fund mainly focuses on “growth,” which means they’re investing in pre-IPO companies leveraging AI & ML, modern data infrastructure, development operations, financial technology, and property technology.

For example, the company invested $6.2M into the popular graphics development company, Canva, just last month! Yes, the same Canva that raised $200M in venture funding at a $40B valuation last year.

Thanks to Fundrise’s Innovation Fund, my portfolio can gain exposure to incredible, late-stage startups like these.

Here’s a video I posted explaining the fund. I’m excited to continue my investing journey with Fundrise and share the process with each of you.

As a long-time investor on Fundrise for their fractional real estate offerings, I’m thrilled to be able to diversity even further through their platform.

👉 Check out this link for the Fundrise Innovation Fund! 👈

Key Earnings Announcements:

Apple, AMD, Airbnb, and definitely too much of the letter ‘A’.

Monday (10/30): AGNC, Air Canada, Arista, McDonald’s, HSBC, Onsemi, Pinterest, Public Storage, SoFi, Transocean, Western Digital

Tuesday (10/31): AMD, Amgen, Assurant, BP, Caesars, Cameco, Caterpillar, Eaton, First Solar, JetBlue, Lumen, Marathon, Match Group, Paycom, Pfizer

Wednesday (11/1): Airbnb, Builders FirstSource, CVS Health, Estēe Lauder, Etsy, Generac, Humana, Mercado Libre, Norweigian Cruise Line, PayPal, Qualcomm, Roku, Wayfair

Thursday (11/2): Apple, Block, Carvana, Cigna, Cloudflare, Coinbase, ConocoPhillips, Crocs, DraftKings, Eli Lilly, Fortinet, Moderna, Palantir, Shopify, Starbucks

Friday (11/3): Cardinal Health, Cboe Global Markets, Enbridge, EOG Resources, FuboTV, Restaurant Brands International

What We’re Watching:

Apple’s last earnings report (August) beat top and bottom line expectations, fueled by stronger services sales (+8% YoY). Overall sales still fell -1% YoY — including drops across the board in iPhone, iPad, and MacBook sales. Analysts are eager to see projections for the holiday season.

AMD’s last earnings report displayed a -18% revenue drop YoY, as well as sales forecasts that were weaker than expected. Bulls are hoping for improved prospects from the company’s Data Center business segment.

Airbnb’s last earnings release (August) wasn’t well received by the stock market — with shares sliding after the company reported a smaller sum of nights and experiences booked than expected. Analysts will be keeping a close eye on if Airbnb was able to achieve its projected +14-18% YoY revenue growth in Q3.

Investor Events / Global Affairs:

Long-term treasuries are attractive, and debt refinancing could be a big issue for companies after the most aggressive rate hikes in history.

Betting on Long-Term Treasuries

We believe there’s significant opportunity in investing in long-term treasuries. The huge sell-off in bond ETFs (like TLT shown above) has largely been caused by a relentless cycle of rate hikes. With the peak of interest rates not yet here — and inflation not “defeated” — many investors believe that bond yields will continue to rise (and that bond ETFs like TLT will continue to fall).

There’s no way of knowing for sure — but we view there to be a notable risk/reward opportunity here. If there’s any expediting of rate hikes caused by financial stress in throughout the system — it’s very possible that Jerome Powell can’t hold the line and decides to drop rates quickly.

We are currently in the longest period of time that the Treasury yield curve has been inverted — even longer than the Great Financial Crisis or the crippling stagflation of the 1970s.

This is the traditional flight to safety trade — long-term United States treasuries making a comeback.

Even if this play goes poorly by the Fed being “higher for longer”… this is still holding ETFs that are tracking long-term U.S. Treasuries — not the riskiest of things…

TLT is at all-time-lows, and there’s potential opportunity here.

The Dilemma in Debt Refinancing

One of the reasons why we believe rates might be cut sooner than forecasted is the amount of debt that will be maturing in the next few years — specifically for small-cap companies.

And the above images are mostly for U.S.-based companies… when Emerging Markets get the spotlight — things are pretty ugly too:

Jerome Powell and the Fed could be realizing that the American consumer (and inflation) cannot be fully crushed by their interest rate hikes alone — unemployment and faltering financial system can crush them too.

The question remains — are the negative effects of rate hikes still mounting? Nearly half of publicly traded companies aren’t turning a profit (below)… how resilient is the economy if half of the roster isn’t turning a profit because of higher interest payments on debt?

Major Economic Events:

The next round of Fed thoughts, and a Jobs Report that’s getting a lot of anticipation.

Monday (10/30): N/A

Tuesday (10/31): Chicago Business Barometer, Consumer Confidence, Employment Cost Index, S&P Case-Shiller Home Price Index (20 Cities, Delayed)

Wednesday (11/1): ADP Employment, Construction Spending, Federal Reserve Meeting, ISM Manufacturing, Job Openings, S&P Manufacturing PMI

Thursday (11/2): Factory Orders, U.S. Productivity, U.S. Unit-Labor Costs

Friday (11/3): ISM Services PMI, Jobs Report + Unemployment, U.S. Services PMI

What We’re Watching:

The Fed is almost certain to hold steady on the current Fed Funds Rate this week. The world will be watching to see JPow’s reactions to recent data that topped estimates (i.e. consumer spending and GDP).

The U.S. unemployment rate remains an absolute marvel throughout this rate-hiking process. Big banks are quietly cutting thousands of employees, and nearly 179K workers at U.S.-based tech companies have been laid off in 2023… but we believe there’s sadly much more to come in the next few quarters.

We hope we’re wrong.

If you’re starting your investing journey or are interested in buying T-bills yielding 5% or more, consider visiting Public.com.

Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.

Austin Hankwitz is a paid partner of Fundrise, and is personally invested in both their fractional real estate offerings and the Fundrise Innovation Fund.

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