Apple shares slide ahead of holidays over production shortfall (3 min read)
Shares of Apple fell another 2.6% on Monday after Bloomberg reported the company will have 6 million fewer iPhone 14 Pro units produced due to the protests and lockdowns at the factory in China. The Pro units are more expensive and designed with better features to boost the average iPhone selling price. With less consumers getting their hands on it during the coming holiday season, it may put a dent on Apple’s overall revenue for the quarter.
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Disney’s Bob Iger vows to take ‘hard look’ at costs in push for profit (3 min read)
Disney CEO Bob Iger said his first priority after returning is to focus on making the streaming business profitable. Under the leadership of Bob Chapek, the previous CEO, Disney surprised Wall Street in Q4 with a $1.5 billion loss over the chase for new subscribers for its streaming operation. Bob said he will take a hard look at the cost structure across the business to ensure the company will start chasing profitability instead of subscriptions going forward.
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U.S. crude turns positive on OPEC+ cut rumors (3 min read)
The global oil benchmarks pulled back on Monday after dropping to their lowest level in nearly a year. There were rumors that OPEC+ is planning on a deeper oil production cut on top of the output reduction announced in October. The news outweighed the sell-off that was caused by the weak outlook in China where protests are on the rise over the zero-Covid policy. The next OPEC+ meeting will be on Dec 4.
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Stocks could see “firework” through the end of the year (2 min read)
Fundstrat’s Tom Lee reiterated his view that softening inflation will change the Fed’s hawkish stance on rate hikes. The cooling inflation number in October sparkled a rally in stocks and he believes the November number will likely do the same. Tom predicts the last 5 weeks of 2022 will be fireworks with the S&P 500 reaching 4,400 - 4,500, about 10% higher from its current level. However, his bullish view is at odds with many top commentators who recently warned stocks could see a steep fall in the face of looming recession.
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ESG’s Underperformance So Far This Year (4 min read)
This article compared the year-to-date performance of the 10 largest ESG ETFs to its non-ESG counterpart. All 10 ESG ETFs had underperformed so far this year by between 0.71% and 73.68%. Demand for ESG investing seems to have also faded away as inflows in these top 10 ESG ETFs are in the negative while the overall equity ETF inflows are positive during the same time period. The ETFs used for the comparison are available in the article.
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The S&P 500 is Not the Economy (3 min read)
Investing in the S&P 500 was often seen as investing in the US economy. Although they do move in the same direction most of the time, they also diverge on occasion. When you look at the US GDP growth and the US stock returns by decades, you will notice an even greater difference between the two. The reason is because the S&P 500 consists mostly of manufacture and sale of goods while the US GDP is more focused on providing services.
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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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