Warren Buffett discloses $4.1 billion TSMC stake (3 min read)
Buffett's Berkshire Hathaway said it bought more than $4.1 billion worth of stock in Taiwan Semiconductor Manufacturing (TSMC) in the last quarter. TSMC is one of the world’s largest chipmakers, making chips for companies like Apple, Qulacomm, and Nvidia. Shares of TSMC jumped nearly 8% on Tuesday after the news. Berkshire usually does not have a huge stake in technology, but it often prefers companies that it believes to have a competitive advantage through their size.
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Current ad market worse than during the lows of pandemic (2 min read)
The CEO of Warner Bros. Discovery, David Zaslav, said the advertising market is currently weaker than at any point during the 2020 pandemic slowdown. Many advertisers have pulled back from spending as interest rates continue to climb higher. This has impacted companies reliant on advertising where most have lost more than half of its valuation this year, including Warner Bros. Discovery. Zaslav said if the ad market doesn’t improve next year then it will be very difficult to reach their earnings forecast for 2023.
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Wholesale prices rose less than expected as inflation eases (3 min read)
The producer price index (PPI) that measures wholesale prices, was up 0.2% in October. It was below the estimate of 0.4% increase which sparked more hopes that inflation is starting to come down. On a year-to-year basis, PPI rose 8% in October compared to an 8.4% increase last month and the all-time peak of 11.7% in March. The PPI is typically considered a good leading indicator for inflation as it looks at selling prices before entering the marketplace.
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Japan’s economy shrinks for the first time in a year (3 min)
Japan’s GDP dropped an annualized 1.2% in the third quarter while economists estimated a 1.1% growth from the 4.6% rise in the second quarter. This translated into a quarterly decline of 0.3% versus a forecast of 0.3% growth. The unexpected lower GDP came amid Japan’s pressures against global soaring inflation, high interest rates, and the yen sliding to 32-year lows against the dollar which has magnified the country’s cost-of-living. Japan is adding extra spending in the budget and maintaining a negative-rate policy to help revive the economy.
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Investors pump record sums into leveraged ETFs (5 min read)
Leveraged ETFs are often considered risky because it's designed to magnify returns while also deepening the losses. However, recent data shows that investors have poured a record amount into this category despite the market massively selling off this year. Globally, leveraged ETFs had $28.3 billion of inflows in the first nine months of 2022, which is about 5.3% of all purchases of ETFs and more than doubled of the inflows last year. Majority of the inflows were specifically in leveraged long ETFs which shows the increasing bets on a bull market.
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Gold’s performance mixed in year of high inflation (3 min read)
Gold is widely known as an inflation hedge but so far this year, gold ETFs were down 3.6% while inflation was at its highest level in decades. It is still outperforming the overall equity and bond markets this year and the strong dollar has made gold perform better in foreign currencies. But gold ETFs lost more than $3.8 billion this year as some investors question the commodity’s ability to preserve its value against extraordinary years for inflation like 2022.
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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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