Highlights: Cyclical and energy stocks outperformed the broader index on Tuesday, while tech stocks continued to lag. The markets stayed flat overall as investors await the latest CPI data on Wednesday, which analysts forecast to be 5.1% year-over-year, almost 1% lower than the previous quarter.

IMF cuts GDP forecasts, says global economy heading for weakest growth since 1990 (3 min read)

According to the IMF, the world economy will grow at its slowest pace in over three decades in the medium term. The global growth forecast is 2.8% for 2023 and 3% for 2024. The slowdown came from increasing living standards in countries like China and South Korea, slower global labor force growth and geopolitical fragmentation. The IMF warns that central banks will face a tough challenge to keep inflation under control while maintaining growth momentum. Financial sector instability could also worsen and spread, harming the economy.

The earnings recession is about to begin (4 min read)
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As the first earnings season of 2023 kicks off, several big US banks will report their Q1 financials on Friday. However, the outlooks are bleak. Analysts predict that earnings per share for S&P 500 companies will fall 6.8% year-over-year, which is a 4.6% decline from the previous quarter. This would be the biggest drop in earnings since Q2 2020. Earnings are also expected to decrease another 4.6% in Q2 before recovering in Q3.

Buffett boosts stakes in Japanese trading houses, may invest more (2 min read)
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Warren Buffett increased Berkshire Hathaway's stakes in Japan's top five trading houses to 7.4% and said may invest more in the country going forward. The trading houses are Itochu, Marubeni, Mitsubishi, Mitsui & Co and Sumitomo. Berkshire Hathaway had previously disclosed owning a 5% stake in each company in August 2020 worth over $6 billion. The shares of the trading houses rose by 2.1% to 4.6% on Tuesday after the news. Warren also plans to sell more yen-denominated bonds, perhaps foreshadowing more Japanese stock investments.

Walmart chases higher profits powered by warehouse robots and automated claws (6 min read)
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Walmart is accelerating its use of automation to boost supply chain efficiency and profitability. The company demonstrated an automated distribution center in Florida during an investor day and plans to implement the same automation across its 42 regional distribution centers. The company projects that its profits will increase faster than its sales in the next five years, and more resources are available for higher-margin businesses as a result of automation. Walmart expects its workforce to remain roughly the same, but the structure will change.

How to Cut Your Losses With Defined Outcome ETFs (6 min read)
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Defined outcome ETFs, or “buffer ETFs,” provide index returns with a cushion against losses.  These funds have grown rapidly in recent years, with over $22 billion in assets today from under $200 million in 2018. They use equity options on the index they track, usually the S&P 500, to provide downside protection. Three kinds of options strategies are used by defined outcome ETFs: Upside Cap, Partial Upside Exposure, and Downside Floor. The article explains how these strategies differ and how they can help you safeguard your portfolio.

Best Energy ETFs by Performance (5 min read)
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The energy sector was the most profitable in 2022, and many investors wonder if this trend will continue in 2023.  While there is no way to know for sure, it is important to understand that not all energy ETFs are the same and differs depending on the subsector it's exposed to. The most popular type of energy ETFs are broader-based, but there are also specific ones for oil and gas, renewable energy, and MLPs. This article ranked the best energy ETFs based on their performance this year and showed that renewable energy is currently taking the lead.

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Thanks,
Thomas

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