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- 👉 The Investing Week Ahead: 12/18/23
👉 The Investing Week Ahead: 12/18/23
Your final weekly outlook of the year... thank you!
Welcome to your new week.
Whether it’s been bonds, crypto, treasuries, single stocks, or passive-income ETFS — this wacky year has been a major success for the Rate of Return community.
We appreciate you reading our takes throughout 2023 — it means so much to us.
Thousands of you open each & every email and it’s very encouraging for us. We promise to continue grinding on this newsletter in 2024 — and that it will never be replaced with AI or copywriters.
Thank you, and have a great rest of your year! We’ll be back with our normally scheduled programming after New Year’s — and you might be hearing from us with updates from the Rich Habits podcast before then!
And as alluded to in yesterday’s Week in Review, I’ll be sure to pull together a “Year in Review” portfolio update for our paying subscribers to read. This update will also include new names for 2024.
If you’re a free subscriber and you’d like to get portfolio access + weekly insights + portfolio updates sent your way — check out our Holiday Special below!
Key Earnings Announcements:
FedEx and Nike give us some retail insights to end the year.
Monday (12/18): Heico
Tuesday (12/19): Accenture, FactSet, FedEx, FuelCell Energy, Steelcase, Worthington Enterprises
Wednesday (12/20): BlackBerry, General Mills, Micron, MillerKnoll, Toro, Winnebago
Thursday (12/21): AAR, Apogee, CarMax, Carnival Corp., Cintas, Nike, Paychex,
Friday (12/22): N/A
What We’re Watching:
If you remember from 2022 — the FedEx CEO warned of a global recession. When asked during their last earnings call about those past comments, he noted that the global economy is still slowing and that trend doesn’t seem to be changing. Nevertheless, FedEx felt good coming into its peak season and it was comparatively helped by UPS-related strikes and the bankruptcy filing of Yellow Corp.
Investors will be greatly hoping for raised guidance, just like during September’s meeting.
The main story from Nike’s last earnings report was missing on revenue projections for the first time in two years. However, the stock still rose from improved margins and bottom-line outcomes.
While sales fell -2% in North America (Nike’s largest market) — they rose in every other region globally. This led to interesting speculation around if Nike has hit its “peak” domestically, but is still ascending in emerging markets.
Investor Events / Global Affairs:
The Red Sea could be a massive issue…
BP Pauses Oil Tanker Transits in Red Sea
BP has announced a temporary halt to all shipments through the Red Sea due to increased attacks by Houthi militants in Yemen, leading to a surge in oil prices.
Brent crude, the global benchmark, rose +1.1% to $77 a barrel — while U.S. oil increased by +1% to $72 a barrel.
The disruption extended to the energy market, with Europe's benchmark natural gas contract seeing a +5.5% jump, causing concerns about supply chain disruptions and higher freight costs.
Major container shipping companies (including CMA CGM, Hapag-Lloyd, Maersk, and MSC) have also paused transit through the Suez Canal — a crucial trade route between East and West. This could potentially lead to longer transit times and increased freight rates.
“This means that one week of meaningful capacity rerouting could have ripple effects for several months ahead, after a lag of a few weeks.” UBS analysts wrote in a note Sunday, highlighting that around 30% of global container trade passes through the Suez Canal. — CNN Business
Keep an eye on oil shipping / tanker stocks that are currently ripping. For example: ZIM, PANL, TNK, FRO, TNP
Adobe (ADBE), Figma Call it Quits
Adobe has officially cancelled its planned $20 billion acquisition of Figma — the world-renowned collaboration/design software. The two could not see a clear path forward to receiving regulatory approval from the European Commission and UK regulators.
“We entered into this agreement 15 months ago with the goal of accelerating what both Adobe and Figma could do for our respective communities. While we leave that future behind and continue on as an independent company, we are excited to find ways to partner for our users.” — Dylan Field, CEO of Figma
Usually in these types of situations — the buyer (Adobe) would see its stock pop upward as a result of no longer spending billions of dollars.
We’ll find out soon…
A New Era in Japan?
Investors anticipate that the Bank of Japan (BoJ) will maintain its negative interest rates during its upcoming policy meeting. The BoJ is expected to provide clearer signals on its monetary policy plans following the US Federal Reserve's indication of future interest rate cuts.
With Japan's economy contracting more than anticipated and uncertainty about the sustainability of rising wages, the BoJ is unlikely to change interest rates at its final meeting of 2023.
Analysts suggest that the BoJ may end negative interest rates in April 2024 and make small rate hikes later in the year if a trend of rising wages continues.
Japan is stuck between a rock and a hard place. In case you’re unaware — it is NOT normal for there to be currency fluctuations of 25%+ over a period of just 5 years (first picture). The dollar has also hit a four-month low against the Yen after the Fed projected rate cuts (second picture — which is inverted).
The largest non-U.S. holder of U.S. government debt is Japan. We will not stop paying attention to what their central bank has planned for 2024, and this week’s BoJ meeting may give us a clearer understanding!
Major Economic Events:
Consumer Sentiment, Manufacturing, Housing, and more before we all take a break.
Monday (12/18): Home Builder Confidence Index
Tuesday (12/19): Building Permits, Housing Starts
Wednesday (12/20): Existing Home Sales, U.S. Current Account
Thursday (12/21): GDP (Revision), Philadelphia Fed Manufacturing Survey, U.S. Leading Economic Index
Friday (12/22): Consumer Sentiment, Durable Goods, New Home Sales, PCE Index, Personal Income, Personal Spending
What We’re Watching:
Home sales in 2023 are expected to be the lowest since at least 2011. However, the recent decline in mortgage rates — dropping to 6.95% from a two-decade high of 7.79% in October — has led to a six-week increase in mortgage applications.
A quick shoutout to Jaguar Analytics for doing a great job of compiling global economic data that matters. As you can see from the red circles, most major areas of the world are experiencing manufacturing contraction.
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.
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