📈 5 Things You Need to Know to Start Your Week

21st October, 2024

October 21, 2024

Five Things to Start Your Week

Welcome Investors!

Our Alpha Portfolio is at +10.47% YTD.

  • Leading: Silver at +42.4%

  • Lagging: Vipshop Holdings at -18%

Market Snapshot

Notable volatility across tech and commodities.

TSMC leads the rally in the semiconductor sector, up 5.22%, reflecting strong demand for advanced chips. However, ASML plummeted by 13.97%, signalling potential concerns about future demand for semiconductor equipment amidst a broader slowdown in global tech investment.

Chinese tech stocks continue to struggle, with Alibaba down 7.00% and Pinduoduo plunging 13.91%, reflecting persistent regulatory headwinds and weak consumer sentiment in China.

Meanwhile, India’s financial sector remains robust, with ICICI Bank (+3.14%) and Infosys (+5.02%) posting solid gains, suggesting resilience in emerging markets.

In the commodities sector, Australia’s BHP dropped 3.10%, tracking declines in global commodity prices, while South African mining companies, like Gold Fields (+17.01%) and Harmony Gold (+18.27%), surged on strong gold demand, possibly as a safe-haven asset amid economic uncertainty.

Macro Trade Idea:

Long Gold Miners, Short Chinese Tech.

  • Long Gold Miners: Companies like Gold Fields (+17.01%) and Harmony Gold (+18.27%) are benefiting from rising gold prices driven by demand for safe-haven assets. Increased geopolitical tensions and inflationary pressures make gold miners an attractive defensive play.

  • Short Chinese Tech: With ongoing regulatory scrutiny and weak consumer demand, Alibaba (-7.00%) and Pinduoduo (-13.91%) remain under pressure, making them prime candidates for short positions.

This strategy capitalises on strength in precious metals as a hedge against volatility while positioning for continued downside risk in Chinese tech amid regulatory challenges and slowing growth.

The Rally is not Over

The stocks rally isn’t over, even if today doesn’t look great. The S&P 500 Index of the largest US companies is set to grind out more records this year, according to the latest Bloomberg Markets Live Pulse survey. Meanwhile, gold eked out another all-time high as tensions in the Middle East and the increasingly tight US election race drive safe-haven demand. And Bitcoin came close to $70,000 after a $2.4 billion inflow into exchange-traded funds.

But markets take note: While the economics side of the equation is looking up, political hurdles lie ahead.

This Week’s Alpha Picks

You can find more information in My Dashboard by logging in.

Oil Rebound

Oil rebounded as Israeli Prime Minister Benjamin Netanyahu held meetings with top aides to discuss the next attack on Iran, following the explosion of a drone next to his private residence. Israel expanded its bombing campaign in Lebanon to hit financial centres it says helped fund Hezbollah.

Newsworthy

This is what’s caught our eye over the weekend.

And finally, here's what Ali’s interested in this week

The unstoppable American stock market is part of the reason that the US has become a richer country than almost anywhere in the world. But as any fund literature will tell you: past performance is no guarantee of future results.

Indeed, in the view of Goldman Sachs strategists led by David Kostin, the next decade will be drastically different to the current one. The firm published a range of long-run forecasts that would upend a lot of commonly held assumptions if they come true. Here’s a look at what they predict:

  • The S&P 500 returns just 3% a year for the next 10 years. That compares with a long-term average of 11%. After adjusting for inflation, their long-term forecast is just 1% annually— a paltry return for anyone counting on stocks to fund their retirement.

  • Stocks face stiff competition from other assets. Equities have trounced other assets in recent years, but Goldman says that won’t continue. By their math, the S&P 500 has a roughly 72% chance of trailing bonds and a 33% likelihood of lagging inflation through 2034.

Hmm sounds like something we have been saying for at least +5 years. Eventually, that’ll be the mainstream view…when it’s too late.

Roaring 20s followed by Dirty 30s.

Enjoy your week.

Ali is the Editor of The Insider Memo, Follow him on X @ASAInsights

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