Macau Casino Stocks Soar As China Readies To Open Up Travel (2 min read)
Casino stocks soared on Monday over the news China is set to ease Covid travel restrictions to Macau. Macau is a special administrative region and the only city where citizens of China can legally gamble. Visitors from mainland China account for the majority of the Casino revenue in Macau but has sharply declined the last two years over Covid restrictions. Casino stocks with Macau exposure such as Wynn Resorts (WYNN), Las Vegas Sands (LVS), and Melco Resorts & Entertainment (MLCO) were up 12%, 11.7%, and 25.5% respectively amid US stock markets falling.
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S&P 500 notches new closing low for 2022, Dow falls into bear market as dollar surges (1 min read)
The dollar and rates continue to soar as the US markets plummet further. The S&P 500 at one point reached close to its 52 week low before bouncing back up slightly. The Dow closed at 20.4% lower than its highest level this year. Bond yields continue to rise with the US 10-Year and 2-Year Treasury reaching its highest level since 2010 and 2007 respectively. The Fed’s aggressive rate hikes along with the continued weakened British pound has caused the dollar to surge. A strong dollar can hurt international businesses and affect global trades as revenues are worth less when converting back to the dollar.
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Why Is AMC Entertainment (AMC) Stock Falling Today? (2 min read)
AMC Entertainment previously wanted to issue more AMC shares to pay down the company’s debt but shareholders were against it. As a result, the issuance of APE, AMC Preferred Equity Units, debuted last month as a loophole to raise more equity. Shares of AMC were down 7% on Monday after the company announced it has filed a distribution agreement to sell up to 425 million of APE with the proceeds used to pay down existing debts. This move will dilute the shares of current AMC and APE shareholders. AMC stocks are down more than 70% year to date.
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Dollar Rare Winner in Global Downturn (2 min read)
The dollar is on the rise and reached a 20 year high as the Fed continues to hike rates at a faster pace than other central banks in the world. This is great news for dollar linked ETFs like the Invesco DB U.S. Dollar Index Bullish Fund (UUP) and the WisdomTree Bloomberg U.S. Dollar Bullish Fund (USDU). Both ETFs long the dollar and short a basket of currencies. USDU specifically, had a major spike in volumes this month. As global recession fear spreads, investors are fleeing into cash equivalent and dollar linked investment vehicles for safe haven.
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These Funds Are Ideal for New Generation of ETF Investing (2 min read)
According to a recent Schwab survey, about 80% of investors see ETFs as the preferred investment vehicle and are usually a third of their portfolios. Common traits investors look for in ETFs are the ability to gain exposure, low cost, and tax efficiency. Millennials investors specifically, showed a greater interest in the area of ESG, thematic investing, and direct indexing. The Invesco NASDAQ 100 ETF (QQQM) and the Invesco ESG Nasdaq 100 ETF (QQMG) may be a good fit as they match some of the traits and areas of focus for some ETF investors. They are both low in fees and track a large cap index with a counterpart that has an ESG filter.
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Bond yields soar as markets weigh threat of a recession. What it means for your investments (3 min read)
Bond yields jumped after the Fed’s recent major rate hike. Both the US 2-Year and 10-Year Treasury climbed up to its highest level in the past decade. The yield curve is currently inverted which means the short-term government bonds have a higher yield than the longer-term bonds. Now is a good time to review the stocks and bonds in your portfolio to see if changes are needed. For bonds, watch out for duration which is a measure of the sensitivity against interest rate movements. Short duration bonds are much less sensitive to rate changes, making them more suitable for a rising rates environment. For stocks, tilt towards value instead of growth. Value companies are based on future projections while growth companies are based on above average returns. High rates will increase the cost for businesses which can hammer the returns on growth companies.
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That's it for today! You can reply to this email if you have any comments or feedback.
Thanks,
Thomas
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