Stocks fall after FedEx warns of global recession (3 min read)
Shares of FedEx dropped 22% after the company withdrew its full year guidance and warned a slowing economy will cause them to miss $500 million in revenue target. The weakened global economy has been damaging their business and they expect the demand for packages will be a lot less in this quarter. In a recent interview, FedEx CEO said he believes the slowdown in the business is a sign of the start of a global recession. Transporting companies are often seen as a leading indicator of the market. All three major indexes also fell after FedEx’s announcement.
|
Meta shares plunged 14% this week, falling close to their pandemic low (2 min read)
After plunging another 14%, Meta is trading at their lowest point since March 2020. Year to date it has lost 61% of its value which is the biggest drop among big tech stocks. It has been mostly bad news ever since Facebook changed its name to Meta. Apple’s IOS privacy update made it harder to target ads, losing users to TikTok, and economic slowdown caused advertisers to pull back on spending. Meta had also said in July they expect a second straight period of declining sales after reporting a poor Q2 earnings.
|
Lithium price surge hits automakers as they ramp up EV production (3 min read)
The price of lithium just reached a new high of $71,315 a ton in China. It has tripled in price the past year which made it hard for automakers to build affordable EVs. The high price is driven by the increased demand for EVs globally and a power shortage from a province in China that produces 20% of the country's lithium supplies. Currently China owns more than 50% of the market in the world. The US is pushing for its own lithium production but is likely years away from producing significant quantities. Tesla is also looking to build a lithium refinery in Texas.
|
Actively Managed Funds Mostly Failing to Beat S&P 500 (2 min read)
Although the S&P 500 is having the worst year since 2008, it is still beating 51% of actively managed large cap funds. With stock and bond indexes tanking this year, active funds should be outperforming. However, a recent report shows they are on track for the most underperformance since 2009. Besides large cap, 54% of midcap and 63% of small cap active funds are underperforming their benchmarks. Growth categories got hit the hardest as the market shifted towards value.
|
Has the Market Bottomed? Low P/E ETFs to Bounce Back (1 min read)
Here are four ETFs with a low P/E and have the potential to bounce back faster than their peers. The First Trust Financials AlphaDEX ETF (FXO) - a “soft landing” is still possible as rates go up which might help financial stocks rebound from the drop earlier this year. The Invesco S&P 500 Enhanced Value ETF (SPVU) - tracks value stocks and it does better in a rising rates environment. The First Trust NASDAQ Oil & Gas ETF (FTXN) - OPEC+ announced they will cut oil production to drive the price back up. The SPDR S&P Biotech ETF (XBI) - Biotech had benefited from the pandemic and led a surge in new IPOs and venture capitals.
|
The dollar is up 18%—here’s why that’s actually bad news for investors (3 min read)
As the dollar gets stronger, it also means foreign revenues are worth less when converting back to the dollar. This could affect your returns on investments that are overseas which is greater than you might think. About 30% of revenues in the S&P 500 comes from overseas. If you are holding international funds or stocks, the drag on returns are even more noticeable. There are a few ways to tweak your portfolio to protect against rising dollars. Try to lower the exposure to multinational corporations in your US stock holdings. You can also consider sectors less likely to profit from overseas like utilities or real estates instead of staples or healthcare. If you are investing in funds or ETFs, go for the “currency hedged” version which removes the currency movements from the returns.
|
|
That's it for today! You can reply to this email if you have any comments or feedback.
Thanks,
Thomas
|
|
|
|
