Saxo News & Research by Peter Garnryhttp://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnrySaxo News & Research by Peter Garnryen-AUSaxo Group 2018 ©Michael McKennaSaxo Grouphttp://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry60{2D0FDD6C-4F15-47D9-9836-6CC939BACC16}https://www.home.saxo/en-au/content/articles/equities/what-are-the-most-attractive-sectors-for-the-long-term-investor-27032024Peter Garnryproduct-equitiesHighlighted articlesSaxo Strats Core ThemesBuy and holdsector-Health Carecompany-novo nordiskNovo Nordisk B ASsector-Financialsproduct-sectorssector-TechnologyWeekly NewsletterWhat are the most attractive sectors for the long-term investor?<div class="article-excerpt">The most attractive sectors for long-term investors are health care, IT, financials, and energy. In this equity note we explain how investors should think about long-term returns.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Key points:</span></strong></h3> <ul > <li><span>The healthcare sector is expected to have the most attractive long-term returns, driven by high expected real earnings growth.</span><br /> <br /> </li> <li><span>Energy sector, while having a high dividend yield, is expected to have negative real growth due to factors like electrification.</span><br /> <br /> </li> <li><span>Investors can estimate long-term returns by considering factors like dividend yield, buyback yield and real long-term earnings growth.</span></li> </ul> <p><strong><span>&nbsp;</span></strong></p> <h3 class="article-heading--3"><strong><span>Health care is the most attractive sector</span></strong></h3> <p><span>Sectors like themes are a good way to filter the equity market and why ways to diversify a portfolio or get exposure to the right long-term trends. MSCI, the world&rsquo;s leading index provider, has defined 11 sectors (see table below) that all captures different part of the economy and equity market. Four of them (energy, consumer staples, health care, and utilities) are defined as defensive, meaning that they are less sensitive to changes in the economic cycles (changes in economic growth). So which sectors offer the most attractive long-term returns with the data we have today?</span></p> <p><span>As our table below shows, the four most attractive sectors are health care, IT, financials, and energy. Health care is by far the most attractive driven by the highest expected real earnings growth which is even eclipsing the IT sector. The latest growth momentum in obesity drugs by Eli Lilly and Novo Nordisk is definitely helping explaining the power in the health care sector.</span></p> <p><span>It is also worth noting that utilities and real estate are the two worst sectors offering unattractive long-term returns. Their dividend yield might be close to 4% but these two sectors are also the only ones that are issuing capital (negative buyback yield) to shore up their balance sheets. This is not surprising given both sectors heavily use debt to fund their operations and with higher bond yields financial pressure is on the rise.</span></p> <p><span>A final observation is that only five sectors have positive real earnings growth estimates highlighting the &ldquo;grand rotation&rdquo; in the economy from the old and capital intensive sectors to those driven by intangibles.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/27_pg_2.png"/></div><div class="article-additional-rte"><div class="rte--output"><p><em><span>EPS (g) is the long-term expected real earnings growth, LT e(r) is the the long-term expected return, MOM is the 12-month price momentum in the sector, and P/E is the 12-month forward price-to-earnings ratio.</span></em></p> <h3 class="article-heading--3"><strong><span>The long drought in energy</span></strong></h3> <p><span>As our table with long-term returns shows, the energy sector&rsquo;s high capital return yield is dragged down by low expected real growth rates for earnings. To see why take a look at the chart below. It measures revenue per share in USD over the past 10 years. Not exactly a growth venture. In fact, the annualised nominal growth has been -0.2%, but with inflation running at 2.7% annualised over the same period, the real revenue growth has been -2.9% annualised. This reflects a combination of stronger USD, weaker energy prices, and weak volume growth.</span></p> <p><span>Long-term investors should understand that while the energy sector is attractive seen from a high dividend yield and lots of buyback of own shares, the expected real growth rate is expected to be negative. Electrification in the decades to come will likely not make things better. Quite the contrary. So why have energy in the portfolio at all? Because it is a defensive sector, and the sector that provides the most protection should inflation come back to bite.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/27_pg_3.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>How to estimate long-term expected returns?</span></strong></h3> <p><span>Many retail investors are brought up to think that P/E ratios are the answer to everything. Whether something is expensive or not. It is not that simple. The way you build up your long-term expectations are by starting with the dividend yield. Next you add the buyback yield (which is the amount of shares the company buys back over the past year). Buybacks are another way (often tax efficient) to return capital to shareholders. The sum of the two is called the capital return yield. This is the long-term expected real return to shareholders under the assumption that a company or sector can grow earnings with inflation (so zero percent real growth). If a company or sector can grow faster than inflation the expected real earnings growth rate is added and you then have the long-term estimated return. We use historical real revenue growth as the future indicator for real earnings growth as this is more stable, but the underlying assumption is that the profit margin will not change much in the future.</span></p> <p><span>The sum of these three factors (dividend yield, buyback yield, and real long-term earnings growth adds up the expected long-term return. As can be seen by the first table, health care has a better expected return compared to financials despite being valued at a significant P/E premium showing exactly the point that P/E ratio is not a good indicator for long-term returns.</span></p></div></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-19T09:15:00Z" data-instance="time-formatter tooltip__QMRJ9Z">2024-03-19 10:15</time></div> <h4><a href="https://www.saxotrader.com/d/article/592847d2-aa48-4bf2-8559-e31098eac5f6" target="_self">Nvidia&rsquo;s new AI chip, Unilever restructuring, and Nike earnings</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-15T14:00:00Z" data-instance="time-formatter tooltip__EKJGWJ">2024-03-15 15:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/7dc56cea-a201-432c-89eb-9929880c6d30" target="_self">Signs of green metals comeback</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-13T11:00:00Z" data-instance="time-formatter tooltip__KAXDWQ">2024-03-13 12:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/e7b9c3b6-2511-4660-8d11-840b1d24af38" target="_self">Tech rally echoes dot-com boom: Time to reduce exposure?</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-12T13:00:00Z" data-instance="time-formatter tooltip__5JE2BD">2024-03-12 14:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/5a30bbef-fa19-4bd7-8434-7b107fa4d878" target="_self">Why and how to diversify your portfolio</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-08T14:30:00Z" data-instance="time-formatter tooltip__ZB97YG">2024-03-08 15:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/e0843ed1-95dd-4141-a107-1beb924b65e6" target="_self">Three interesting companies with female CEOs</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-06T12:30:00Z" data-instance="time-formatter tooltip__5WW2E3">2024-03-06 13:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/bc6d54cd-fa8d-471b-8c8e-eb3f1414390a" target="_self">CrowdStrike jumps on earnings as Magnificent Seven stocks crack</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-29T13:40:00Z" data-instance="time-formatter tooltip__MGBPGV">2024-02-29 14:40</time></div> <h4><a href="https://www.saxotrader.com/d/article/d9fefa53-564f-4c42-aa60-be5b3152abd8" target="_self">Here we go again, the bubble fever is back!</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-26T14:00:00Z" data-instance="time-formatter tooltip__EDXER7">2024-02-26 15:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/1bd39d7b-80a8-4875-b467-fa88588432f1" target="_self">Earnings Watch: Salesforce, Snowflake, and Leonardo</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-22T13:00:00Z" data-instance="time-formatter tooltip__VJJB3Y">2024-02-22 14:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/64ca6a06-29c9-4a05-b014-6691e23d81e6" target="_self">Nvidia earnings: Generative AI has reached &ldquo;tipping point&rdquo;</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-19T17:40:00Z" data-instance="time-formatter tooltip__8RJ8YJ">2024-02-19 18:40</time></div> <h4><a href="https://www.saxotrader.com/d/article/ae7e31dc-2d10-43a0-b122-cf654d84290e" target="_self">All eyes on Nvidia earnings as AI boom reaches historic proportions</a></h4> </div> </div> </div> </div> </div> </div> </div> </div> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span></span> <span>Buy and hold</span> <span></span> <span>Novo Nordisk</span> <span>Novo Nordisk B A/S</span> <span>Financials</span> <span>Sectors</span> <span>Technology</span> <span>Weekly Newsletter</span></div>Wed, 27 Mar 2024 09:30:00 Z2024-03-27T09:51:19Z{592847D2-AA48-4BF2-8559-E31098EAC5F6}https://www.home.saxo/en-au/content/articles/equities/nvidia-new-ai-chip-unilever-restructuring-and-nike-earnings-19032024Peter Garnryproduct-equitiesHighlighted articlesSaxo Strats Core ThemesEarnings Releasessubject-is/fin.reportsUnileverUnilever Plccompany-nikeNike IncNVIDIA CorporationTheme - Artificial intelligenceBuy and holdNvidia’s new AI chip, Unilever restructuring, and Nike earnings<div class="article-excerpt">Nvidia is in focus today as the leading AI chip maker announced yesterday its new AI chip platform called Blackwell. In today's equity note we also touch on Unilever restructuring and Nike earnings expected on Thursday.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Key points:</span></strong></h3> <ul > <li><span>Nvidia launched Blackwell GPU exceeding expectations with 2.5x better performance than the previous generation and announced new NVLink switches, analysts are positive with a 12-month price target of $932.</span><br /> <br /> </li> <li><span>Unilever is restructuring to save &euro;800mn in costs over the next three years and separating its &euro;7.9bn ice cream business, analysts have a 12-month price target of GBp 4,256.</span><br /> <br /> </li> <li><span>Nike reports earnings on Thursday, analysts expect revenue to be down 0.7% YoY and EPS down 6.1% YoY, analysts have a 12-month price target of $119.</span></li> </ul> <h3 class="article-heading--3"><strong><span>Nvidia launches Blackwell chip to extend edge</span></strong></h3> <p><span>Nvidia&rsquo;s GTC AI conference is in full swing and yesterday the world&rsquo;s leading AI chip maker announced its new Blackwell GPU which is expected to extend the company&rsquo;s lead in AI chips. The Blackwell GPU platform comes with 2.5x greater performance than its H100 platform (Hopper chip) which will likely widen Nvidia&rsquo;s leading position. Nvidia also announced a new NVLink switches supporting the trend of AI networking becoming a new growing business in servers. The conference will continue until Thursday and we expect the news flow to continue to be positive for AI related stocks including Nvidia.</span></p> <p><span>Analysts have a 12-month price target of $932 which around 5% higher than the current price with 90% of analysts covering the stock having a positive view on the stock. Nvidia is expected to report FY25 Q1 (ending 30 April) on 24 May with analysts expecting revenue growth of 234% YoY and EPS of $5.44 up 522% YoY.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/19_pg_1.png"/></div><div class="rte--output">Nvidia shares | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Unilever is trimming the business and offering an ice cream to the market</strong></h3> <p>Unilever, one of Europe&rsquo;s largest fast-moving consumer goods companies, shares are up 5% this morning as the company is announcing a big restructuring programme to find &euro;800mn in cost savings over the next three years. In our view that is not very ambitious as the world can look very different in three years and the risk is that Unilever never end up achieving those costs savings.</p> <span>In addition to the cost savings programme, Unilever is separating its global ice cream business which has annual sales of &euro;7.9bn in 2023 and include brands such as Magnum and Ben &amp; Jerry&rsquo;s. The separation is starting immediately and is expected to be finished by the end of 2025, so again the market may conclude that things are moving too slowly. Analysts have a 12-month price target of GBp 4,256 which is around 6% above the current price.</span></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/19_pg_2.png"/></div><div class="rte--output">Unilever share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Nike earnings: Will more disappointment follow?</span></strong></h3> <p><span>Nike reports FY24 Q3 (ending 28 Feb) earnings on Thursday at 20:15 GMT (21:15 CET). Analysts expect revenue growth down 0.7% YoY and EPS of $0.74 down 6.1% YoY. Nike continues to face tough competition, a sluggish consumer demand, elevated inventory (will likely decline again in the previous quarter), and thus painting a muted picture in the short term. Nike is taking steps to make strategic price hikes and trimming inventory in order to improve operating margins, so this is the key upside potential if management can succeed with this on top of the recent $2bn cost savings programme that was announced. Analysts have a 12-month price target of $119 which is around 20% higher from the current price.</span></p></div></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-15T14:00:00Z" data-instance="time-formatter tooltip__EKJGWJ">2024-03-15 15:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/7dc56cea-a201-432c-89eb-9929880c6d30" target="_self">Signs of green metals comeback</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-13T11:00:00Z" data-instance="time-formatter tooltip__KAXDWQ">2024-03-13 12:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/e7b9c3b6-2511-4660-8d11-840b1d24af38" target="_self">Tech rally echoes dot-com boom: Time to reduce exposure?</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-12T13:00:00Z" data-instance="time-formatter tooltip__5JE2BD">2024-03-12 14:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/5a30bbef-fa19-4bd7-8434-7b107fa4d878" target="_self">Why and how to diversify your portfolio</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-08T14:30:00Z" data-instance="time-formatter tooltip__ZB97YG">2024-03-08 15:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/e0843ed1-95dd-4141-a107-1beb924b65e6" target="_self">Three interesting companies with female CEOs</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-06T12:30:00Z" 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HH:mm" datetime="2024-02-26T14:00:00Z" data-instance="time-formatter tooltip__EDXER7">2024-02-26 15:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/1bd39d7b-80a8-4875-b467-fa88588432f1" target="_self">Earnings Watch: Salesforce, Snowflake, and Leonardo</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-22T13:00:00Z" data-instance="time-formatter tooltip__VJJB3Y">2024-02-22 14:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/64ca6a06-29c9-4a05-b014-6691e23d81e6" target="_self">Nvidia earnings: Generative AI has reached &ldquo;tipping point&rdquo;</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-19T17:40:00Z" data-instance="time-formatter tooltip__8RJ8YJ">2024-02-19 18:40</time></div> <h4><a href="https://www.saxotrader.com/d/article/ae7e31dc-2d10-43a0-b122-cf654d84290e" target="_self">All eyes on Nvidia earnings as AI boom reaches historic proportions</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-15T09:00:00Z" data-instance="time-formatter tooltip__ZAPXD2">2024-02-15 10:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/5a09d77e-cf11-44ad-958d-ef29e9bcd807" target="_self">European top innovators: R&amp;D intensity drives returns</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-14T12:00:00Z" data-instance="time-formatter tooltip__6J72B2">2024-02-14 13:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/a2dd0065-b865-4efd-835d-c9728bb34ea4" target="_self">Recession and not inflation is the real equity killer</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-13T10:30:00Z" data-instance="time-formatter tooltip__GK8VZ6">2024-02-13 11:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/41f5da91-8047-4611-8c7c-2dbed8812249" target="_self">The boom in equities is coming to Japan, Arm sets new record on valuation</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-12T13:45:00Z" data-instance="time-formatter tooltip__MPB3J3">2024-02-12 14:45</time></div> <h4><a href="https://www.saxotrader.com/d/article/a4bafb62-63ab-4a8d-96cc-946d2d782188" target="_self">Airbnb battles headwinds as fee hike may boost profits, can Airbus soar past Boeing?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-09T10:00:00Z" data-instance="time-formatter tooltip__DYXE6R">2024-02-09 11:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/55e3b8d8-6458-4079-b7ab-a2ff430265e5" target="_self">Q4 2023 earnings scorecard and Arm bonanza</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-07T14:50:00Z" data-instance="time-formatter tooltip__KQJ92V">2024-02-07 15:50</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/cc202455-106e-46e4-83eb-c2015c4874cb" target="_self">Have US equities gone too far this time?</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-05T11:30:00Z" data-instance="time-formatter tooltip__2QMXPQ">2024-02-05 12:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-busy-week-with-focus-on-caterpillar-eli-lilly-and-siemens-05022024" target="_blank">Earnings Watch: Busy week with focus on Caterpillar, Eli Lilly, and Siemens</a></h4> </div> </div> </div> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span></span> <span></span> <span>Corporate Earnings</span> <span>Unilever</span> <span>Unilever Plc</span> <span>Nike</span> <span>Nike Inc.</span> <span>NVIDIA Corporation</span> <span>Theme - Artificial intelligence</span> <span>Buy and hold</span></div>Tue, 19 Mar 2024 09:15:00 Z2024-03-19T09:29:37Z{7DC56CEA-A201-432C-89EB-9929880C6D30}https://www.home.saxo/en-au/content/articles/equities/signs-of-green-metals-comeback-15032024Peter Garnryproduct-equitiesHighlighted articlesSaxo Strats Core ThemesTheme - Green metalscompany-freeport-mcmoran copperFreeportMcMoRan IncLithiumcommodity-copperSigns of green metals comeback<div class="article-excerpt">This has been the best week for copper rising 5.3% since early 2023 when hopes were running high after China abandoned its restrictive Covid policies. In lithium, another green metal used in the green transition, green shoots are also appearing although uncertainties persist over EV demand in the short run.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Key points:</span></strong></h3> <ul > <li><span>Copper prices surged 14.3% since late October 2023 and 5.3% this week due to production cuts by major miners, shutdown of Cobre Panama mine (world's largest), and expectations of global economic growth.</span><br /> <br /> </li> <li><span>Lithium carbonate, a key battery compound, prices are rising on tightening supply and showing signs of recovery after a downturn in late 2022. Rising prices reflect a healthier supply-demand balance and lithium demand is expected continue rising as EV market growth is still high in the coming years.</span></li> </ul> <h3 class="article-heading--3"><strong><span>Copper prices rally 5.3% this week</span></strong></h3> <p><span>After months of steady production cuts from miners such as Anglo American, Rio Tinto, Vale, and Teck in addition to the shutdown of Cobre Panama, the world&rsquo;s largest copper mine in Panama, the market has gone from production surplus to a deficit. Expectations are also building in the market that China&rsquo;s economy will continue to be supported by government stimulus and that the global economy is not slowing down. As a result high grade copper futures are 14.3% higher since late October 2023 and 5.3% higher this week alone. </span></p> <p><span>Key risk in the short term is falling iron ore prices sending a mixed signal for industrial metals. Another risk to consider before investing in copper miners is increasing government intervention such as what happened to First Quantum Minerals that had to shut down its Cobre Panama copper mine.</span></p> <p><span>For those that want exposure to copper there are several options ranging from copper futures (E-mini copper contract value is $51,275) or copper CFD (contract value is around minimum $412). There are also copper miners (note no pure copper miner exist in the world; they always mine something else such as gold and silver):</span></p> <ul > <li><span>Antofagasta</span></li> <li><span>Ivanhoe Mines</span></li> <li><span>Southern Copper</span></li> <li><span>Freeport-McMoRan</span></li> <li><span>Zijin Mining Group</span></li> </ul> <p><span></span>Or ETFs covering either underlying copper futures or copper miners such as:</p> <ul > <li><span>WisdomTree Energy Transition Metals</span></li> <li><span>WisdomTree Copper</span></li> <li><span>iShares Copper Miners UCITS ETF</span></li> </ul></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/15_pg_1.png"/></div><div class="rte--output">Copper futures | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><p><strong><span>Lithium carbonate is finally turning higher?</span></strong></p> <p><span>Copper is what we call a green metal because it is used in the green transition. Another green metal is lithium which primary use is for lithium-ion batteries used in electric vehicles (EVs). This market has been in a bear market since late 2022 when Elon Musk said lithium prices were unsustainable and partnered up with China&rsquo;s CATL, the largest battery maker in the world, to lower refinery prices on lithium carbonate (so raw lithium is extracted and then refined to lithium carbonate which is then used to make lithium-ion batteries).</span></p> <p><span>Since the beginning of the year Chinese based lithium carbonate prices have turned higher reflecting a healthier supply and demand situation. With EVs expected to continue growing +25% annualised over the coming decade the market for lithium will continue to expand and it is a different way to get exposure to the growing EV trend without betting on who wins the battle in the end market between Tesla, BYD and Volkswagen.</span></p> <p><span>Lithium and lithium carbonate don&rsquo;t have active futures and thus is a market which investors only can get exposure to through lithium miners and ETFs tracking lithium miners. Below are a selection of lithium instruments:</span></p> <ul > <li><span>Albemarle</span></li> <li><span>Pilbara minerals</span></li> <li><span>SQM</span></li> <li><span>Arcadium Lithium</span></li> <li><span>iShares Lithium &amp; Battery Producers UCITS ETF</span></li> <li><span>Global X Lithium &amp; Battery Tech UCITS ETF</span></li> </ul></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/15_pg_2.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-13T11:00:00Z" data-instance="time-formatter tooltip__KAXDWQ">2024-03-13 12:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/e7b9c3b6-2511-4660-8d11-840b1d24af38" target="_self">Tech rally echoes dot-com boom: Time to reduce exposure?</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-12T13:00:00Z" data-instance="time-formatter tooltip__5JE2BD">2024-03-12 14:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/5a30bbef-fa19-4bd7-8434-7b107fa4d878" target="_self">Why and how to diversify your portfolio</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-08T14:30:00Z" data-instance="time-formatter tooltip__ZB97YG">2024-03-08 15:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/e0843ed1-95dd-4141-a107-1beb924b65e6" target="_self">Three interesting companies with female CEOs</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-06T12:30:00Z" data-instance="time-formatter tooltip__5WW2E3">2024-03-06 13:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/bc6d54cd-fa8d-471b-8c8e-eb3f1414390a" target="_self">CrowdStrike jumps on earnings as Magnificent Seven stocks crack</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-29T13:40:00Z" data-instance="time-formatter tooltip__MGBPGV">2024-02-29 14:40</time></div> <h4><a href="https://www.saxotrader.com/d/article/d9fefa53-564f-4c42-aa60-be5b3152abd8" target="_self">Here we go again, the bubble fever is back!</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-26T14:00:00Z" data-instance="time-formatter tooltip__EDXER7">2024-02-26 15:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/1bd39d7b-80a8-4875-b467-fa88588432f1" target="_self">Earnings Watch: Salesforce, Snowflake, and Leonardo</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-22T13:00:00Z" data-instance="time-formatter tooltip__VJJB3Y">2024-02-22 14:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/64ca6a06-29c9-4a05-b014-6691e23d81e6" target="_self">Nvidia earnings: Generative AI has reached &ldquo;tipping point&rdquo;</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-19T17:40:00Z" data-instance="time-formatter tooltip__8RJ8YJ">2024-02-19 18:40</time></div> <h4><a href="https://www.saxotrader.com/d/article/ae7e31dc-2d10-43a0-b122-cf654d84290e" target="_self">All eyes on Nvidia earnings as AI boom reaches historic proportions</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-15T09:00:00Z" data-instance="time-formatter tooltip__ZAPXD2">2024-02-15 10:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/5a09d77e-cf11-44ad-958d-ef29e9bcd807" target="_self">European top innovators: R&amp;D intensity drives returns</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-14T12:00:00Z" data-instance="time-formatter tooltip__6J72B2">2024-02-14 13:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/a2dd0065-b865-4efd-835d-c9728bb34ea4" target="_self">Recession and not inflation is the real equity killer</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-13T10:30:00Z" data-instance="time-formatter tooltip__GK8VZ6">2024-02-13 11:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/41f5da91-8047-4611-8c7c-2dbed8812249" target="_self">The boom in equities is coming to Japan, Arm sets new record on valuation</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-12T13:45:00Z" data-instance="time-formatter tooltip__MPB3J3">2024-02-12 14:45</time></div> <h4><a href="https://www.saxotrader.com/d/article/a4bafb62-63ab-4a8d-96cc-946d2d782188" target="_self">Airbnb battles headwinds as fee hike may boost profits, can Airbus soar past Boeing?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-09T10:00:00Z" data-instance="time-formatter tooltip__DYXE6R">2024-02-09 11:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/55e3b8d8-6458-4079-b7ab-a2ff430265e5" target="_self">Q4 2023 earnings scorecard and Arm bonanza</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-07T14:50:00Z" data-instance="time-formatter tooltip__KQJ92V">2024-02-07 15:50</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/cc202455-106e-46e4-83eb-c2015c4874cb" target="_self">Have US equities gone too far this time?</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-05T11:30:00Z" data-instance="time-formatter tooltip__2QMXPQ">2024-02-05 12:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-busy-week-with-focus-on-caterpillar-eli-lilly-and-siemens-05022024" target="_blank">Earnings Watch: Busy week with focus on Caterpillar, Eli Lilly, and Siemens</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-02T12:30:00Z" data-instance="time-formatter tooltip__4PD38V">2024-02-02 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-apple-amazon-and-meta-02022024" target="_blank">Earnings review: Apple, Amazon, and Meta</a></h4> </div> </div> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span></span> <span>Theme - Green metals</span> <span>Freeport-mcmoran Copper</span> <span>Freeport-McMoRan Inc.</span> <span>Lithium</span> <span>Copper</span></div>Fri, 15 Mar 2024 14:00:00 Z2024-03-15T14:17:18Z{E7B9C3B6-2511-4660-8D11-840B1D24AF38}https://www.home.saxo/en-au/content/articles/equities/tech-rally-echoes-dot-com-boom-time-to-reduce-exposure-13032024Peter Garnryproduct-equitiesHighlighted articlesSaxo Strats Core ThemesArtificial IntelligenceTheme - Artificial intelligenceNVIDIA CorporationAmazoncompany-amazon.comAmazonsector-TechnologyTech rally echoes dot-com boom: Time to reduce exposure?<div class="article-excerpt">There are increasingly more and more red flags in US technology stocks including erratic behaviour in Nvidia shares, insider selling, excessive valuations, and weakness in Tesla shares. Is it time to rethink US technology stocks?</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Key points:</span></strong></h3> <ul > <li><span>US tech stocks, particularly Nvidia, are surging despite yesterday&rsquo;s rise in bond yields and a hotter-than-expected US inflation report.</span><br /> <br /> </li> <li><span>Insider selling at Meta and Amazon, along with high valuations and erratic price swings in Nvidia, raise red flags in US technology stocks.</span><br /> <br /> </li> <li><span>Retail investor speculation in options and after-hours trading mirrors risky dot-com era behaviour.</span><br /> <br /> </li> <li><span>Investors should consider reducing tech exposure tactically, increasing bond allocation or diversifying into defensive sectors like healthcare and consumer staples through ETFs. Hedging large Nvidia positions with put options (for large portfolios) or diversifying within the AI theme are also key considerations.</span></li> </ul> <h3 class="article-heading--3"><strong><span>Dangerous behaviour in US technology stocks</span></strong></h3> <p><span>On the last day of February <a href="https://www.saxotrader.com/d/article/d9fefa53-564f-4c42-aa60-be5b3152abd8" target="_self">we wrote a note</a> saying that US equities had entered the dangerous bubble-like levels again. Since then Nasdaq 100 is up another 2% and Nvidia shares up 16%, and all of this is despite <a href="https://www.saxotrader.com/d/article/e7340b0e-c4c8-498e-87a5-17853d94fc07" target="_self">yesterday&rsquo;s hotter than expected US inflation report</a> pushing the US 10-year yield higher and removing one more Fed rate cut this year to now only pricing three rate cuts. There are several factors that are beginning to paint a dangerous picture of the US equity market and not least technology stocks:</span></p> <ul > <li><span>Insider selling has recently picked up in Meta (see chart below) and recently Jeff Bezos, the founder of Amazon, sold a large amount of shares in Amazon.</span><br /> <br /> </li> <li><span>Nvidia shares are up every single week since the first week of the year.</span><br /> <br /> </li> <li><span>Nvidia&rsquo;s 12-month EV/Sales (<a rel="noopener noreferrer" href="https://www.investopedia.com/terms/e/enterprisevaluesales.asp#:~:text=Enterprise%20value%2Dto%2Dsales%20is,by%20the%20company's%20annual%20sales" target="_blank">enterprise value to sales</a>) has hit 20.4x. It is not yet at the 2021 bubble peak level, but still the highest in S&amp;P 500 and much higher than Microsoft at 11.6x.</span><br /> <br /> </li> <li><span>Nvidia&rsquo;s 11% intraday move from high to low on no specific news is also a worrying sign as $2trn companies should not move around this much on no news.</span><br /> <br /> </li> <li><span>Sentiment in Tesla is the weakest in a year with sell-side analysts increasingly giving up on the stock.</span><br /> <br /> </li> <li><span>Retail investors are becoming a bigger and bigger force in US options and also speculating ever more in off-hours trading. Our view is that it is not passive ETFs driving this crazy behaviour but too many retail investors not paying any attention to value, but chasing momentum. Feels like dot-com all over again.</span></li> </ul> <h3 class="article-heading--3"><strong><span>What should investors consider?</span></strong></h3> <p><span>As we have repeatedly been saying investors should begin tactically reducing their US technology exposure due to increasing warning signs in the market of toxic speculative behaviour. Strategically for the long-term investor we like the US technology sector, but in the short term things have gone too far. These are some of things an investor could consider:</span></p> <ul > <li><span>Increase exposure to bonds using an ETF on global bonds such as the iShares Core Global Aggregate Bond UCITS ETF (AGGH:xams).</span><br /> <br /> </li> <li><span>Defensive sectors such as health care and consumer staples are also good sources of diversification against a high technology exposure. Again those sectors can easily be accessed through ETFs such as SPDR MSCI World Health Care UCITS ETF (WHEA:xams) and SPDR MSCI World Consumer Staples UCITS ETF (WCOS:xams)</span><br /> <br /> </li> <li>For those with large exposure to Nvidia there are also some options:<span></span> <ul > <li><span>One could consider a put option to protect against a downside move if one wants to preserve the long-term exposure. However, since US options are traded in lot size of 100 this only makes sense for investors with a large position.</span></li> <li><span>Diversifying the AI exposure to other stocks listed in our <a href="https://www.saxotrader.com/d/theme/1e0459c2-0250-4b94-afd0-b41b9f0da219" target="_self">AI theme basket</a>.</span></li> </ul> </li> </ul></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/13_pg_1.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/13_pg_2.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/13_pg_3.png"/></div><div class="rte--output">Tesla vs Nvidia share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-12T13:00:00Z" data-instance="time-formatter tooltip__5JE2BD">2024-03-12 14:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/5a30bbef-fa19-4bd7-8434-7b107fa4d878" target="_self">Why and how to diversify your portfolio</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-08T14:30:00Z" data-instance="time-formatter tooltip__ZB97YG">2024-03-08 15:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/e0843ed1-95dd-4141-a107-1beb924b65e6" target="_self">Three interesting companies with female CEOs</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-06T12:30:00Z" data-instance="time-formatter tooltip__5WW2E3">2024-03-06 13:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/bc6d54cd-fa8d-471b-8c8e-eb3f1414390a" target="_self">CrowdStrike jumps on earnings as Magnificent Seven stocks crack</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-29T13:40:00Z" data-instance="time-formatter tooltip__MGBPGV">2024-02-29 14:40</time></div> <h4><a href="https://www.saxotrader.com/d/article/d9fefa53-564f-4c42-aa60-be5b3152abd8" target="_self">Here we go again, the bubble fever is back!</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-26T14:00:00Z" data-instance="time-formatter tooltip__EDXER7">2024-02-26 15:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/1bd39d7b-80a8-4875-b467-fa88588432f1" target="_self">Earnings Watch: Salesforce, Snowflake, and Leonardo</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-22T13:00:00Z" data-instance="time-formatter tooltip__VJJB3Y">2024-02-22 14:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/64ca6a06-29c9-4a05-b014-6691e23d81e6" target="_self">Nvidia earnings: Generative AI has reached &ldquo;tipping point&rdquo;</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-19T17:40:00Z" data-instance="time-formatter tooltip__8RJ8YJ">2024-02-19 18:40</time></div> <h4><a href="https://www.saxotrader.com/d/article/ae7e31dc-2d10-43a0-b122-cf654d84290e" target="_self">All eyes on Nvidia earnings as AI boom reaches historic proportions</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-15T09:00:00Z" data-instance="time-formatter tooltip__ZAPXD2">2024-02-15 10:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/5a09d77e-cf11-44ad-958d-ef29e9bcd807" target="_self">European top innovators: R&amp;D intensity drives returns</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-14T12:00:00Z" data-instance="time-formatter tooltip__6J72B2">2024-02-14 13:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/a2dd0065-b865-4efd-835d-c9728bb34ea4" target="_self">Recession and not inflation is the real equity killer</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-13T10:30:00Z" data-instance="time-formatter tooltip__GK8VZ6">2024-02-13 11:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/41f5da91-8047-4611-8c7c-2dbed8812249" target="_self">The boom in equities is coming to Japan, Arm sets new record on valuation</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-12T13:45:00Z" data-instance="time-formatter tooltip__MPB3J3">2024-02-12 14:45</time></div> <h4><a href="https://www.saxotrader.com/d/article/a4bafb62-63ab-4a8d-96cc-946d2d782188" target="_self">Airbnb battles headwinds as fee hike may boost profits, can Airbus soar past Boeing?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-09T10:00:00Z" data-instance="time-formatter tooltip__DYXE6R">2024-02-09 11:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/55e3b8d8-6458-4079-b7ab-a2ff430265e5" target="_self">Q4 2023 earnings scorecard and Arm bonanza</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-07T14:50:00Z" data-instance="time-formatter tooltip__KQJ92V">2024-02-07 15:50</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/cc202455-106e-46e4-83eb-c2015c4874cb" target="_self">Have US equities gone too far this time?</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-05T11:30:00Z" data-instance="time-formatter tooltip__2QMXPQ">2024-02-05 12:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-busy-week-with-focus-on-caterpillar-eli-lilly-and-siemens-05022024" target="_blank">Earnings Watch: Busy week with focus on Caterpillar, Eli Lilly, and Siemens</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-02T12:30:00Z" data-instance="time-formatter tooltip__4PD38V">2024-02-02 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-apple-amazon-and-meta-02022024" target="_blank">Earnings review: Apple, Amazon, and Meta</a></h4> </div> </div> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span></span> <span>Artificial Intelligence</span> <span>Theme - Artificial intelligence</span> <span>NVIDIA Corporation</span> <span>Amazon</span> <span>Amazon.com</span> <span>Amazon</span> <span>Technology</span></div>Wed, 13 Mar 2024 11:00:00 Z2024-03-13T11:13:55Z{5A30BBEF-FA19-4BD7-8434-7B107FA4D878}https://www.home.saxo/en-au/content/articles/equities/diversification-12032024Peter Garnryproduct-equitiesEn hurtig tankeWhy and how to diversify your portfolio<div class="article-excerpt">Investors with only one or a few stocks in their portfolio are taking too much risk. This article looks at why and how diversification can maximize your potential for long-term gains by reducing risk. </div><div class="article-rte"><div class="rte--output"><h2 class="article-heading--2"><span>The big risk: owning just a few stocks</span></h2> <p><span>Even the first steps of an investing journey should keep in mind that you are building a portfolio that will be with you for life. Sure, novice investors will often start their investment lives by testing the waters with the purchase of stock or two in companies they have some kind of connection to or feelings about. But this is rarely a setup for long-term success, and a diversified core portfolio is an important first principle of building more stable, long-term success.<br /> <br /> </span><span >When you only invest in a few companies, your entire portfolio depends on the performance of those companies. And while you can always see what happened in the rear-view mirror, no one can know how the future will shape up for a company. Imagine having built a portfolio consisting of Kodak, Blockbuster and Nokia stocks in the late 90&rsquo;s after those three names stood atop years of spectacular gains. By the 2010&rsquo;s all three companies had collapsed, leaving investors with virtually nothing.&nbsp;</span><span >Worse still, investors having chosen individual shares often feel &ldquo;married&rdquo; to the position, hoping the prices will return to their highs and incapable of making the decision to exit the position, fearing the emotion that they will take a loss just at the wrong time, only to see the share prices soar again. That is the definition of &ldquo;decision regret bias&rdquo;</span></p> <p><strong >Diversification to the rescue</strong></p> <p><span></span><span >Diversification is the first tool investors should consider to avoid being caught with a risky portfolio where one event may jeopardize your savings and caught in the cross-fire of emotions that make decisions difficult. Diversification spreads your investments across sectors, countries and industries to lower your portfolio risk, while still maintaining exposure to the upward drift in the market over time. With a diversified portfolio a financial event may be negative for some of your investments but positive for others. Best of all, a broad exposure to the market triggers far fewer of the behavioural risks that choosing individual shares does. It&rsquo;s quite a confidence boost to know that, with a more diverse approach the stock market has historically always come back over a long enough time horizon, even if individual companies may not.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/content-development-and-strategy/soren/diversification/pg-div1.png"/></div><div class="article-additional-rte"><div class="rte--output">The concept is shown in the graph above. As you can see, with a small number of stocks, the stock specific risk in your portfolio is high, but falls the more stocks you add and gets closer to the equity market risk, which is the risk you would have in owning shares in all listed companies in the world.<br /> <br /> <h2 class="article-heading--2">The power-up: Asset Allocation</h2> s you can also see from the graph above, the effect of adding stocks decreases portfolio volatility risk the more stocks you add. If you want to diversify your portfolio further and thus lower the portfolio risk, you can add other asset classes like bonds to your portfolio, which historically usually don&rsquo;t correlate closely with stocks for long periods &ndash; 2022 was a notable exception!<br /> '<br /> <h2 class="article-heading--2">How to start diversifying your portfolio today</h2> <p><span>If you want to prioritise your savings well-being over emotional connection to investments, you&rsquo;ll be happy to learn that it has never been easier to diversify your portfolio than today. That is because of two things: </span></p> <ul> <li><span>Trading costs have fallen sharply (see Saxo&rsquo;s new and very low commissions)</span></li> <li><span>The deep exchange-traded-funds (ETF) market that offers a wide variety of powerful diversification options.</span></li> </ul> <h2 class="article-heading--2"><span>Diversifying your stock portfolio using single stocks</span></h2> <p><span >If you want to diversify your holdings you need a minimum of ten stocks across unrelated sectors. As inspiration, we have highlighted the two largest companies from each major sector in the US and Europe in the table below.</span><span ></span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/content-development-and-strategy/soren/diversification/pg-div2.png"/></div><div class="article-additional-rte"><div class="rte--output"><h2 class="article-heading--2"><span><strong><span>Diversify your stock portfolio using ETFs</span></strong></span></h2> <p><span></span><span >If you want a thoroughly diversified portfolio, the&nbsp;best and most cost-effective way is through a global stock ETF. Simply put, basic ETFs are funds that hold a number of stocks but can be traded like a stock. The most popular ETFs track major stock indices. In Europe, the largest ETF providing exposure to global equities is:</span><span ></span></p> <p><span><strong><span>Global equities: iShares Core MSCI World UCITS ETF</span></strong></span></p> <ul> <li><span>Saxo ticker: IWDA:xams</span></li> <li><span>Contains: 1,500 stocks across 23 developed markets</span></li> <li><span>Total assets: USD 72 billion</span></li> <li><span>Dividends are not paid out but tax-efficiently reinvested into the fund</span></li> <li><span>Annual costs are 0.2%</span></li> </ul> <h2 class="article-heading--2"><span><strong><span>Add bonds to your portfolio to increase diversification</span></strong></span></h2> <p><span></span><span >If you want to diversify your portfolio further, a relatively easy way to do so is by investing in a global bond ETF. In Europe, the largest ETFs providing exposure to global bonds is:</span><span ></span></p> <p><span><strong><span>Global bonds: iShares Core Global Aggregate Bond UCITS ETF</span></strong></span></p> <ul> <li><span>Saxo ticker: AGGH:xams</span></li> <li><span>Contains: around 14,300 bonds across key developed markets within government, corporate, and mortgage bonds</span></li> <li><span>Total assets: USD 8.9bn</span></li> <li><span>Dividends are not paid out but tax-efficiently reinvested into the fund</span></li> <li><span>Annual costs are 0.1%</span></li> </ul> <p>Below you can see a comparison of the performance (in USD) of the stock ETF, bond ETF and a portfolio with 50% in each. While the stock ETF has the best performance, there is less volatility in the 50/50 portfolio. Bonds have had a bad run due to a historic rise in interest rates, but if the next &nbsp;five years would feature worse stock performance but fairly stable interest rates, the bond diversification would improve the outcome.<span ></span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/content-development-and-strategy/soren/diversification/pg-div3.png"/></div><div class="article-additional-rte"><div class="rte--output">The point of diversification is that you should avoid taking company specific risks that you don&rsquo;t have to take and get the most out of your savings while not having to worry.</div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>En hurtig tanke</span></div>Tue, 12 Mar 2024 13:00:00 Z2024-03-14T08:43:54Z{E0843ED1-95DD-4141-A107-1BEB924B65E6}https://www.home.saxo/en-au/content/articles/equities/three-interesting-companies-with-female-ceos-08032024Peter Garnryproduct-equitiesHighlighted articlesESG Investment ThemesESGTheme Category - ESGSaxo Strats Core Themescompany-oracle corpcompany-citigroupCitigroup IncNovozymes ASAdvanced ordersThought StartersThree interesting companies with female CEOs<div class="article-excerpt">Today is the International Women's Day making it is a good opportunity to highlight why more female leaders are important, but also highlight companies with balanced senior leadership and interesting companies with a female CEO.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Key points:</span></strong></h3> <ul > <li><strong><span>Women in leadership </span></strong><span>&ndash; this equity note discusses three companies (Citigroup, Oracle, and Novonesis) with female CEOs.</span><br /> <br /> </li> <li><span></span><strong >Citigroup (Financial Services)</strong><span > - Led by Jane Fraser. Potential for upside due to improved economic conditions, cost-cutting measures, and high interest rates. Risks include potential economic downturn, regulatory scrutiny, and competition.</span><strong ></strong><br /> <br /> </li> <li><strong >Oracle (Technology)</strong><span > - Led by Safra Catz. Potential for future returns due to cloud growth, expansion of autonomous database technology, and strategic acquisitions/partnerships. Risks include competition in the cloud market, dependence on legacy software, and integration challenges.</span><strong ></strong><strong ></strong><br /> <br /> </li> <li><strong >Novonesis (Biotechnology)</strong><span > - Led by Ester Baiget. Potential for positive returns due to growth of the bioeconomy, expansion into new markets, and increasing focus on sustainability. Risks include dependence on a few key markets, competition and technological disruption, and regulation and intellectual property.</span></li> </ul> <h3 class="article-heading--3"><strong><span>Women in leadership</span></strong></h3> <p><span>Today is the International Women&rsquo;s Day which is celebrated every year on 8 March. Ida Kassa Johannesen, our Head of ESG Investments, has written a note explaining women in leadership is important, and not only from an equality perspective but also because it just makes a better company. Ida has helped updating our <a href="https://www.saxotrader.com/d/theme/4ff0ca2a-f8dc-46d8-92f9-8bf8434ab2dc" target="_self">Women in Leadership theme basket</a> with 8 companies that have more than 30% women in their senior leadership and has a low ESG risk score. </span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/8_pg_1.png"/></div><div class="rte--output">Women in leadership theme basket | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Three interesting companies with female CEOs</strong></h3> <p>Some companies are also led by female CEOs, but are still not meeting the criteria of more than 30% of senior leadership being women. Below we are highlighting three interesting companies with powerful female CEOs. We describe the opportunities in each of the three companies including risks to consider.</p> <p><span class="underline; ">Citigroup &ndash; the turnaround case</span></p> <p>Citigroup is a large American financial services company with global operations. The bank was hit hard during the global financial crisis in 2008 and it has had trouble keeping up with its competitors. The CEO Jane Nind Fraser joined in March 2021 and has initiated many great initiatives to first shore up profitability and longer term growth. Under Fraser Citigroup has surprised on earnings many times and the P/E ratio almost doubled underlining the improved sentiment around Citigroup. Below we have listed three factors driving upside potential for Citigroup.</p> <ul start="1" > <li><strong>Improved economic conditions:</strong>&nbsp;A strong economy can benefit large banks like Citigroup by increasing loan demand and boosting fee income from investment banking and wealth management activities.<br /> <br /> </li> <li><strong>Cost-cutting measures:</strong>&nbsp;Citigroup has undertaken cost-cutting initiatives in recent years. If successful, these measures could lead to improved profitability.<br /> <br /> </li> <li><strong>High interest rates:</strong>&nbsp;While high interest rates can hurt green stocks in the short term, they can benefit banks like Citigroup by increasing their net interest margin (NIM), which is the difference between what they pay on deposits and what they earn on loans.</li> </ul> <p>Below are some of the risks factors to consider before investing in Citigroup:</p> <ul start="1" > <li><strong>Exposure to a potential economic downturn:</strong> A recession or significant economic slowdown could lead to increased loan defaults and lower fee income for Citigroup. This could significantly impact their profitability.<br /> <br /> </li> <li><strong>Regulatory scrutiny:</strong> Citigroup has faced regulatory fines in the past for various compliance issues. Continued regulatory scrutiny could limit their ability to grow certain businesses or increase operating costs.<br /> <br /> </li> <li> <strong><span>Competition:</span></strong><span> The financial services industry is highly competitive, with both traditional banks and fintech companies vying for market share. Citigroup needs to effectively compete on price, innovation, and customer service to maintain its position.</span></li> </ul></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/8_pg_2.png"/></div><div class="rte--output">Citigroup share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><p><span class="underline; ">Oracle &ndash; the sleeping giant</span></p> <p><span>Oracle is one of the old giants for the US technology sector coming from a relational database background and software on-premise sales model. The software maker is transitioning into cloud services and other types of software outside its traditional business in databases. The company&rsquo;s CEO is Safra Catz and has been with Oracle since September 2014. As one of the few female CEOs among the big companies in the US technology sector she is an important figure to inspire more women to join the technology sector. Oracle has also done very well under her leadership and below are three potential drivers of future returns for Oracle.</span></p> <ul start="1" > <li><strong><span>Cloud growth:</span></strong><span> Oracle has been aggressively pushing its cloud computing services (Oracle Cloud Infrastructure - OCI) to compete with Amazon Web Services (AWS) and Microsoft Azure. Growth in OCI adoption could be a significant revenue driver. Businesses are increasingly migrating workloads to the cloud, and if Oracle can capture a larger share of this market, it would translate to positive financial results.</span><br /> <br /> </li> <li><strong><span>Expansion of autonomous database technology:</span></strong><span> Oracle's Autonomous Database is a self-driving, self-patching, and self-tuning database platform. This technology can significantly reduce database management costs for businesses. Wider adoption of this technology could attract new customers and solidify Oracle's position in the database management space.</span><br /> <br /> </li> <li><strong><span>Acquisitions and strategic partnerships:</span></strong><span> Oracle has a history of strategic acquisitions that expand its product portfolio and market reach. Similarly, successful partnerships with other tech companies could open new doors for Oracle, allowing them to offer more comprehensive solutions to their customers.</span></li> </ul> <p><span>Below are some of the risks factors to consider before investing in Oracle:</span></p> <ul start="1" > <li><strong><span>Competition in the cloud market:</span></strong><span>&nbsp;Amazon Web Services (AWS) and Microsoft Azure are dominant players in the cloud computing market. Oracle needs to keep pace with their innovation and potentially lower pricing to win over customers.</span><br /> <br /> </li> <li><strong><span>Legacy software dependence:</span></strong><span>&nbsp;A significant portion of Oracle's revenue comes from traditional, on-premise software licenses. The shift towards cloud-based solutions could threaten this revenue stream if Oracle isn't successful in transitioning customers.</span><br /> <br /> </li> <li><strong><span>Integration challenges:</span></strong><span>&nbsp;Migrating to a new cloud platform can be complex and time-consuming. Oracle needs to make it easy for customers to integrate their existing Oracle products with OCI, or they risk losing them to competitors.</span></li> </ul></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/8_pg_3.png"/></div><div class="rte--output">Oracle share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><p><span class="underline; ">Novonesis &ndash; biosolutions for the future</span></p> <p><span>Novonesis, formerly Novonesis, has just finished the integration of Chr Hansen creating a global giant in enzymes, functional proteins, and microbes. The company is transforming itself from previously being perceived as a chemical company to a biosolution company that can underpin a healthier way of how the world produces and consumes. Novonesis is led by CEO Ester Baiget since February 2020 and he leading the big transformation into the future of biosolutions. Performance has been bumpy since Baiget took over just as the pandemic broke out and inflation has cooled demand for many of the end products that uses Novonesis solutions in its manufacturing lowering the growth rate. But as inflation has come down and the world has not slipped into a recession demand is coming back and the repositioning as a biosolution company is changing investor perception. Below we have listed three factors that might led to positive returns in the future:</span></p> <ul start="1" > <li><strong><span>Growth of the bioeconomy:</span></strong><span> The bioeconomy refers to the use of biological resources to produce products and services. As the world strives for a more sustainable future, the bioeconomy is expected to grow significantly. This could lead to increased demand for Novonesis' enzymes and biotechnologies, which are used in various bio-based production processes.</span><br /> <br /> </li> <li><strong><span>Expansion into new markets:</span></strong><span> Novonesis is currently a leader in the enzyme market for bioethanol production. However, the company is actively developing enzymes for other applications, such as bioplastics, advanced biofuels, and next-generation detergents. Success in these new markets could create significant revenue streams for Novonesis.</span><br /> <br /> </li> <li><strong><span>Increasing focus on sustainability:</span></strong><span> Consumers and businesses are becoming increasingly environmentally conscious. Novonesis' products can help companies improve their sustainability profile by reducing their reliance on harsh chemicals and fossil fuels. This trend could drive demand for Novonesis' solutions across various industries.</span></li> </ul> <p><span>Below are some of the risks factors to consider before investing in Novonesis:</span></p> <ul start="1" > <li><strong><span>Dependence on a Few Key Markets:</span></strong><span> Novonesis currently derives a significant portion of its revenue from the bioethanol industry. A slowdown in this sector, due to changes in government policies or competition from alternative fuels, could negatively impact Novonesis&rsquo; financial performance.</span><br /> <br /> </li> <li><strong><span>Competition and Technological Disruption:</span></strong><span> The biotechnology sector is constantly evolving, and new players may emerge with innovative solutions that could threaten Novonesis' market share. The company needs to stay at the forefront of research and development to maintain its competitive edge.</span><br /> <br /> </li> <li><strong><span>Regulation and Intellectual Property:</span></strong><span> Novonesis relies heavily on its intellectual property (IP) for its competitive advantage. Changes in regulations or challenges to their patents could limit their ability to develop and commercialize new products.</span></li> </ul></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/8_pg_4.png"/></div><div class="rte--output">Novonesis share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-06T12:30:00Z" data-instance="time-formatter tooltip__5WW2E3">2024-03-06 13:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/bc6d54cd-fa8d-471b-8c8e-eb3f1414390a" target="_self">CrowdStrike jumps on earnings as Magnificent Seven stocks crack</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-29T13:40:00Z" data-instance="time-formatter tooltip__MGBPGV">2024-02-29 14:40</time></div> <h4><a href="https://www.saxotrader.com/d/article/d9fefa53-564f-4c42-aa60-be5b3152abd8" target="_self">Here we go again, the bubble fever is back!</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-26T14:00:00Z" data-instance="time-formatter tooltip__EDXER7">2024-02-26 15:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/1bd39d7b-80a8-4875-b467-fa88588432f1" target="_self">Earnings Watch: Salesforce, Snowflake, and Leonardo</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-22T13:00:00Z" data-instance="time-formatter tooltip__VJJB3Y">2024-02-22 14:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/64ca6a06-29c9-4a05-b014-6691e23d81e6" target="_self">Nvidia earnings: Generative AI has reached &ldquo;tipping point&rdquo;</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-19T17:40:00Z" data-instance="time-formatter tooltip__8RJ8YJ">2024-02-19 18:40</time></div> <h4><a href="https://www.saxotrader.com/d/article/ae7e31dc-2d10-43a0-b122-cf654d84290e" target="_self">All eyes on Nvidia earnings as AI boom reaches historic proportions</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-15T09:00:00Z" data-instance="time-formatter tooltip__ZAPXD2">2024-02-15 10:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/5a09d77e-cf11-44ad-958d-ef29e9bcd807" target="_self">European top innovators: R&amp;D intensity drives returns</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-14T12:00:00Z" data-instance="time-formatter tooltip__6J72B2">2024-02-14 13:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/a2dd0065-b865-4efd-835d-c9728bb34ea4" target="_self">Recession and not inflation is the real equity killer</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-13T10:30:00Z" data-instance="time-formatter tooltip__GK8VZ6">2024-02-13 11:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/41f5da91-8047-4611-8c7c-2dbed8812249" target="_self">The boom in equities is coming to Japan, Arm sets new record on valuation</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-12T13:45:00Z" data-instance="time-formatter tooltip__MPB3J3">2024-02-12 14:45</time></div> <h4><a href="https://www.saxotrader.com/d/article/a4bafb62-63ab-4a8d-96cc-946d2d782188" target="_self">Airbnb battles headwinds as fee hike may boost profits, can Airbus soar past Boeing?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-09T10:00:00Z" data-instance="time-formatter tooltip__DYXE6R">2024-02-09 11:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/55e3b8d8-6458-4079-b7ab-a2ff430265e5" target="_self">Q4 2023 earnings scorecard and Arm bonanza</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-07T14:50:00Z" data-instance="time-formatter tooltip__KQJ92V">2024-02-07 15:50</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/cc202455-106e-46e4-83eb-c2015c4874cb" target="_self">Have US equities gone too far this time?</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-05T11:30:00Z" data-instance="time-formatter tooltip__2QMXPQ">2024-02-05 12:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-busy-week-with-focus-on-caterpillar-eli-lilly-and-siemens-05022024" target="_blank">Earnings Watch: Busy week with focus on Caterpillar, Eli Lilly, and Siemens</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-02T12:30:00Z" data-instance="time-formatter tooltip__4PD38V">2024-02-02 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-apple-amazon-and-meta-02022024" target="_blank">Earnings review: Apple, Amazon, and Meta</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-01T14:30:00Z" data-instance="time-formatter tooltip__248BDR">2024-02-01 15:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/what-are-the-feds-possible-considerations-on-rate-cuts-01022024" target="_blank">What are the Fed&rsquo;s possible considerations on rate cuts?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-31T12:30:00Z" data-instance="time-formatter tooltip__8N5JW6">2024-01-31 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024" target="_blank">Earnings review: Microsoft, Alphabet, AMD, and Novo Nordisk</a></h4> &nbsp;</div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span></span> <span>ESG</span> <span>Theme Category - ESG</span> <span></span> <span>Oracle Corp</span> <span>Citigroup</span> <span>Citigroup Inc.</span> <span>Novozymes AS</span> <span>Advanced orders</span> <a href="https://www.home.saxo/en-au/insights/news-and-research/thought-starters">Thought Starters</a></div>Fri, 08 Mar 2024 14:30:00 Z2024-03-08T14:44:20Z{BC6D54CD-FA8D-471B-8C8E-EB3F1414390A}https://www.home.saxo/en-au/content/articles/equities/crowdstrike-jumps-on-earnings-as-magnificent-seven-stocks-crack-06032024Peter Garnryproduct-equitiesHighlighted articlesCybersecurityTheme - Cyber securityCrowdStrike Holdings IncTeslaTesla Inccompany-tesla motorscompany-appleApple IncCrowdStrike jumps on earnings as Magnificent Seven stocks crack<div class="article-excerpt">CrowdStrike is up 24% in pre-market as Q4 results beat estimates on revenue and earnings in addition to FY25 guidance coming out ahead of estimates. The Magnificent Seven stocks have long been the winning trade but the last two trading days have seen emerging cracks with Apple and Tesla being the two worst performers.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Key points:</span></strong></h3> <ul > <li><strong><span>CrowdStrike earnings: </span></strong><span>Reported Q4 earnings of $845 million, beating estimates of $840 million. Adjusted EPS was $0.95, beating estimates of $0.83. FY25 revenue guidance is $3.92-$3.99 billion, in line with estimates of $3.94 billion. Demand remains strong due to CrowdStrike's "all on one platform" approach and geopolitical risks related to the war in Ukraine.</span><br /> <br /> </li> <li><strong><span>Magnificent Seven stocks:</span></strong><span> Cracks are emerging, with the group down 2.4% in the past two trading days compared to the S&amp;P 500 down 1.1%. The worst performers have been Apple and Tesla. Apple is suffering from weak iPhone sales and big uncertainties about the next big category. Tesla's decline is likely due to retail investors shifting their focus to AI stocks and increased competition in the EV market.</span></li> </ul> <h3 class="article-heading--3"><strong><span>CrowdStrike gains 24% pre-market on Q4 earnings</span></strong></h3> <p><span>Crowdstrike, the second most valuable cyber security company in the world, reported Q4 earnings yesterday after the US market close. Here are the key take-aways:</span></p> <ul > <li><span>Q4 revenue $845mn vs est. $840mn</span></li> <li><span>Q4 adj. EPS $0.95 vs est. $0.83</span></li> <li><span>FY25 revenue guidance $3.92-3.99bn vs est. $3.94bn</span></li> <li><span>Demand remains strong due to &ldquo;all on one platform&rdquo; approach</span></li> <li><span>Geopolitical risks related to the war in Ukraine keeps demand up</span></li> </ul> <p><span>As the chart below shows, CrowdStrike has outperformed the general cyber security industry over the past five years and especially since the technology rally started in early 2023.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/6_pg_2.png"/></div><div class="rte--output">CrowdStrike vs cyber security ETF | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><p><span>We are still positive on the cyber security industry long-term as it will enjoy a lot of tailwind from geopolitical risks and increased digitalization. Besides CrowdStrike here are some other cyber security instruments to consider:</span></p> <ul > <li><span>L&amp;G Cyber Security UCITS ETF</span></li> <li><span>Palo Alto Networks</span></li> <li><span>Fortinet</span></li> <li><span>Zscaler</span></li> <li><span>Cloudflare</span></li> </ul> <h3 class="article-heading--3"><strong><span>Magnificent Seven stocks are showing cracks</span></strong></h3> <p><span>As we wrote last week, <a href="https://www.saxotrader.com/d/article/d9fefa53-564f-4c42-aa60-be5b3152abd8" target="_self">US equities ended February on a strong note</a> taking US equities to valuation levels not seen since the 2021 technology bubble and the dot-com bubble in 2000.</span></p> <p><span>This month has so far been different for US equities and the last two days cracks have emerged in among the Magnificent Seven stocks (see table). The group is down 2.4% in the past trading days compared to the S&amp;P 500 down 1.1%. The worst performers have been Apple and Tesla. </span></p> <p><span>Apple is suffering from weak iPhone sales (estimated China iPhone sales year-to-date is -24%) and big uncertainties about the next big category as the company shut down its EV project after 10 years of investments and the Vision Pro still has to show that it is a game changer. In addition, the EU two days ago fined Apple &euro;1.8bn over abusive app store rules.</span></p> <p><span>No real news has hit Tesla making the decline even more worrisome, but it seems retail investors that have previously pushed Tesla higher are more interested in AI stocks these days. This combined with intense competition and lower prices in EV are putting pressure on Tesla&rsquo;s profitability.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/6_pg_3.png"/></div><div class="article-additional-rte"><div class="rte--output"><p><span>If volatility comes to life and investors are taking gains in their technology stocks then investors might consider other trades to be shielded from higher volatility such as:</span></p> <ul > <li><span>Minimum volatility stocks: <strong>iShares Edge MSCI Europe Min Volatility UCITS ETF</strong></span></li> <li><span>Dividend growth stocks: <strong>Franklin European Quality Dividend UCITS ETF</strong></span></li> </ul> <h3 class="article-heading--3"><strong><span>Should Tesla be dropped from the Magnificent Seven?</span></strong></h3> <p><span>As with any definition we can just change it if we want. The idea behind the Magnificent Seven was born because those seven stocks delivered the vast majority of gains in the US equity market. As Tesla has declined a lot in market value this year, 27% to be precise, one could argue that Tesla should not be part of the group any longer and that it should be renamed to the Magnificent Six being Microsoft, Apple, Nvidia, Amazon, Meta, and Alphabet (Google). Tesla&rsquo;s weight in the S&amp;P 500 is now less than half of the smallest stock in Magnificent Six which is Meta. Unless Tesla gets back on track it will not make sense to keep the stock in this group.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/6_pg_4.png"/></div><div class="rte--output">Tesla share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>For a Technical Analysis point of view on the Magnificient Seven from our Technical Analyst.&nbsp; Video:&nbsp;<a href="https://www.home.saxo/en-au/content/articles/technical-analysis/cramers-corner-technical-update-global-equities-04032024" target="_self">Some of the magnificent seven are tilting lower. Here are the weakest and strongest</a><br /> <br /> <br /> Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-03-04T13:15:00Z" data-instance="time-formatter tooltip__2QJPXZ">2024-03-04 14:15</time></div> <h4><a href="https://www.saxotrader.com/d/article/f5317ffe-69db-4974-b28c-b936ca6f0f8a" target="_self">More headwinds for green stocks as high interest rates continue to bite</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-29T13:40:00Z" data-instance="time-formatter tooltip__MGBPGV">2024-02-29 14:40</time></div> <h4><a href="https://www.saxotrader.com/d/article/d9fefa53-564f-4c42-aa60-be5b3152abd8" target="_self">Here we go again, the bubble fever is back!</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-26T14:00:00Z" data-instance="time-formatter tooltip__EDXER7">2024-02-26 15:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/1bd39d7b-80a8-4875-b467-fa88588432f1" target="_self">Earnings Watch: Salesforce, Snowflake, and Leonardo</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-22T13:00:00Z" data-instance="time-formatter tooltip__VJJB3Y">2024-02-22 14:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/64ca6a06-29c9-4a05-b014-6691e23d81e6" target="_self">Nvidia earnings: Generative AI has reached &ldquo;tipping point&rdquo;</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-19T17:40:00Z" data-instance="time-formatter tooltip__8RJ8YJ">2024-02-19 18:40</time></div> <h4><a href="https://www.saxotrader.com/d/article/ae7e31dc-2d10-43a0-b122-cf654d84290e" target="_self">All eyes on Nvidia earnings as AI boom reaches historic proportions</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-15T09:00:00Z" data-instance="time-formatter tooltip__ZAPXD2">2024-02-15 10:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/5a09d77e-cf11-44ad-958d-ef29e9bcd807" target="_self">European top innovators: R&amp;D intensity drives returns</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-14T12:00:00Z" data-instance="time-formatter tooltip__6J72B2">2024-02-14 13:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/a2dd0065-b865-4efd-835d-c9728bb34ea4" target="_self">Recession and not inflation is the real equity killer</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-13T10:30:00Z" data-instance="time-formatter tooltip__GK8VZ6">2024-02-13 11:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/41f5da91-8047-4611-8c7c-2dbed8812249" target="_self">The boom in equities is coming to Japan, Arm sets new record on valuation</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-12T13:45:00Z" data-instance="time-formatter tooltip__MPB3J3">2024-02-12 14:45</time></div> <h4><a href="https://www.saxotrader.com/d/article/a4bafb62-63ab-4a8d-96cc-946d2d782188" target="_self">Airbnb battles headwinds as fee hike may boost profits, can Airbus soar past Boeing?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-09T10:00:00Z" data-instance="time-formatter tooltip__DYXE6R">2024-02-09 11:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/55e3b8d8-6458-4079-b7ab-a2ff430265e5" target="_self">Q4 2023 earnings scorecard and Arm bonanza</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-07T14:50:00Z" data-instance="time-formatter tooltip__KQJ92V">2024-02-07 15:50</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/cc202455-106e-46e4-83eb-c2015c4874cb" target="_self">Have US equities gone too far this time?</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-05T11:30:00Z" data-instance="time-formatter tooltip__2QMXPQ">2024-02-05 12:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-busy-week-with-focus-on-caterpillar-eli-lilly-and-siemens-05022024" target="_blank">Earnings Watch: Busy week with focus on Caterpillar, Eli Lilly, and Siemens</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-02T12:30:00Z" data-instance="time-formatter tooltip__4PD38V">2024-02-02 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-apple-amazon-and-meta-02022024" target="_blank">Earnings review: Apple, Amazon, and Meta</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-01T14:30:00Z" data-instance="time-formatter tooltip__248BDR">2024-02-01 15:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/what-are-the-feds-possible-considerations-on-rate-cuts-01022024" target="_blank">What are the Fed&rsquo;s possible considerations on rate cuts?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-31T12:30:00Z" data-instance="time-formatter tooltip__8N5JW6">2024-01-31 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024" target="_blank">Earnings review: Microsoft, Alphabet, AMD, and Novo Nordisk</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-29T12:15:00Z" data-instance="time-formatter tooltip__GJE276">2024-01-29 13:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-big-earnings-week-with-technology-giants-in-focus-29012024" target="_blank">Earnings Watch: Big earnings week with technology giants in focus</a></h4> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Cybersecurity</span> <span>Theme - Cyber security</span> <span>CrowdStrike Holdings Inc.</span> <span>Tesla</span> <span>Tesla Inc.</span> <span>Tesla Motors</span> <span>Apple</span> <span>Apple Inc.</span></div>Wed, 06 Mar 2024 12:30:00 Z2024-03-06T13:28:00Z{F5317FFE-69DB-4974-B28C-B936CA6F0F8A}https://www.home.saxo/en-au/content/articles/equities/more-headwinds-for-green-stocks-as-high-interest-rates-continue-to-bite-04032024Peter Garnryproduct-equitiesHighlighted articlesGreen investingcompany-tesla motorsTeslaTesla IncSaxo Strats Core ThemesNio IncBYD Company LtdVolkswagenVolkswagen AG Pref Sharesector-gics-1010Weekly NewsletterAdvanced ordersMore headwinds for green stocks as high interest rates continue to bite<div class="article-excerpt">Green transition related stocks are among the worst performing stocks this year as higher interest rates continue to weigh down on this theme in addition to investors being more interested in AI and defence stocks. We also discuss the electric vehicles industry including NIO's Q4 earnings result tomorrow. </div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Key points:</span></strong></h3> <ul > <li><strong><span>Green stocks still underperforming:&nbsp;</span></strong><span>Despite expectations of a rebound in 2023, green stocks (including renewable energy and electric vehicles) are down significantly year-to-date.</span><br /> <br /> </li> <li><strong >Higher interest rates: </strong><span >Make green projects less profitable due to their capital-intensive nature.</span><br /> <br /> </li> <li><span ></span><strong >Lower natural gas prices: </strong><span >Reduce the economic incentive for switching to renewable energy.</span><br /> <br /> </li> <li><span ></span><strong >Increased focus on defence spending: </strong><span >Diverts investor attention away from green sectors.</span><br /> <br /> </li> <li><span ></span><strong >Still strong EV growth: </strong><span >EV sales are still growing significantly, with deliveries up 37% YoY in Q4 2023 while challenges remain such as higher interest rates.</span><br /> <br /> </li> <li><span ></span><strong >NIO earnings: </strong><span >Expected to report Q4 earnings tomorrow. Analysts expect revenue growth but continued losses. Lower deliveries than other Chinese EV makers in Q4. Focus will be on operating losses and lack of new models.</span></li> </ul> <h3 class="article-heading--3"><strong><span>This year was supposed to have been the comeback year for green stocks</span></strong></h3> <p><span>Ever since commodities rallied post the Covid vaccines and inflation subsequently rose to the highest levels since the 1970s green stocks have been under pressure. This year should have been the rebound year as the market in the beginning of the year was aggressively pricing in multiple rate cuts (seven at its peak). However, with sticky inflation and a robust economy the market has changed its mind pricing only 3-4 rate cuts and this change of narrative has been negative for greens stocks. A galloping fever in crypto, semiconductors and AI, defence, and cyber security has not helped either. </span></p> <p><span>Our three green equity theme baskets green transformation, renewable energy, and energy storage are all down more than 13% year-to-date compared to semiconductors and defence baskets up 16% and 14% in the same period. Tesla shares are down 18% year-to-date. No wonder that Elon Musk is dreaming about AI and robotics as he has come to the conclusion that EVs will become a red ocean. To make things even worse for the green segments in the equity market, the global energy sector (which is dominated by oil and gas companies) has increased 2% year-to-date.</span></p> <p><span>The main driver of this bad performance is high interest rates and lower prices on natural gas. The green transition is one of the most capital intensive sectors of the economy and high interest rates make many green projects less profitable. While the green transition will still get prioritized, the defence agenda, especially in Europe, has taken the lead position in terms of political attention and with strong momentum in defence stocks the market is showing more interest in Rheinmetall (German military manufacturer) than Orsted (offshore wind developer).</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/4_pg_1.png"/></div><div class="rte--output">Tesla share price | Source: Saxo</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/4_pg_2.png"/></div><div class="rte--output">MSCI World Energy | Source: Saxo</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/4_pg_3.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>EV growth is slowing but still hit 37% YoY in Q4</span></strong></h3> <p><span>One of the key industries in the green transition is the electric vehicles (EV) industry. We are closely monitoring 16 carmakers that are publishing in a transparent way their battery electric vehicles sales (sometimes also called all-electric). These 16 EV makers delivered 2mn BEVs in Q4 2023 up 37% YoY taken the cumulative BEV deliveries among these EV makers to 14.6mn since Q1 2020. The largest BEV maker is now BYD that overtook Tesla for the first time ever and Volkswagen is still maintaining its third position with Li Auto and BMW in a close fight for the fourth spot.</span></p> <p><span>These 14.5mn BEVs have reduced oil demand by 0.4 Mb/d (million barrels per day) which would otherwise have been here today. Compared to a global oil demand of around 100 Mb/d it is still small numbers, but we expect this cumulative oil demand reduction to 1 Mb/d by Q4 2025. By Q4 2026 the EV industry will hit an additional annual oil reduction of 0.5 Mb/d. With Wright&rsquo;s Law at place and also economics of scale production costs will continue to fall for EVs and in a few years from now it will not make sense for consumers in developed countries to buy a gasoline car over BEV unless there are specific needs to consider. Wright&rsquo;s Law alone estimates that by Q4 2026 the production costs of a new BEV will have fallen by 36%. However, with the lithium-ion battery being a big part of the overall costs and lithium carbonate prices still being volatile the estimated cost reduction including the battery costs come with a high uncertainty.</span></p> <p><span>As with the green transition stocks in energy, the EV industry has experienced a demand slowdown from higher interest rates and the intense competition from Chinese EV makers that have finally made it in the car industry due to less complexity of assembling an EV over a traditional combustion engine car. Fisker, an EV upstart, has recently said that it could run out of money and is pursuing a partnership with Nissan. NIO, a Chinese EV maker, has also warned that it will need more capital to push ahead. The car industry, whether its run on gasoline or batteries, is still the same old capital intensive and low margin business it has always been.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/4_pg_4.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/march/4_pg_5.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>NIO earnings: Focus on operating losses and lack of new EV models</span></strong></h3> <p><span>NIO is expected to deliver Q4 earnings tomorrow before the US market open. Analysts expect revenue of CNY 16.8bn up 5% YoY and adjusted EPS of -2.70 improving from -3.61 a year ago. NIO delivered 50,045 BEVs in Q4 2023 falling behind other Chinese EV makers such as XPeng and Li Auto at 60,158 and 131,805 delivered in Q4 2023 respectively.</span></p> <p><span>NIO kept its price steady in Q4 while many others including Tesla and BYD lowered its prices which was likely contributing to the 10% QoQ reduction in deliveres in Q4. Gross margin is expected to improve as battery costs are coming down and the 10% reduction in its workforce should lead to better operating metrics although the EV maker is still losing money. Analysts covering the stock is also nervous about the lack of new EV models and as such the outlook and the company&rsquo;s view on its capital position will be scrutinized.</span></p></div></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-29T13:40:00Z" data-instance="time-formatter tooltip__MGBPGV">2024-02-29 14:40</time></div> <h4><a href="https://www.saxotrader.com/d/article/d9fefa53-564f-4c42-aa60-be5b3152abd8" target="_self">Here we go again, the bubble fever is back!</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-26T14:00:00Z" data-instance="time-formatter tooltip__EDXER7">2024-02-26 15:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/1bd39d7b-80a8-4875-b467-fa88588432f1" target="_self">Earnings Watch: Salesforce, Snowflake, and Leonardo</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-22T13:00:00Z" data-instance="time-formatter tooltip__VJJB3Y">2024-02-22 14:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/64ca6a06-29c9-4a05-b014-6691e23d81e6" target="_self">Nvidia earnings: Generative AI has reached &ldquo;tipping point&rdquo;</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-19T17:40:00Z" data-instance="time-formatter tooltip__8RJ8YJ">2024-02-19 18:40</time></div> <h4><a href="https://www.saxotrader.com/d/article/ae7e31dc-2d10-43a0-b122-cf654d84290e" target="_self">All eyes on Nvidia earnings as AI boom reaches historic proportions</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-15T09:00:00Z" data-instance="time-formatter tooltip__ZAPXD2">2024-02-15 10:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/5a09d77e-cf11-44ad-958d-ef29e9bcd807" target="_self">European top innovators: R&amp;D intensity drives returns</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-14T12:00:00Z" data-instance="time-formatter tooltip__6J72B2">2024-02-14 13:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/a2dd0065-b865-4efd-835d-c9728bb34ea4" target="_self">Recession and not inflation is the real equity killer</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-13T10:30:00Z" data-instance="time-formatter tooltip__GK8VZ6">2024-02-13 11:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/41f5da91-8047-4611-8c7c-2dbed8812249" target="_self">The boom in equities is coming to Japan, Arm sets new record on valuation</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-12T13:45:00Z" data-instance="time-formatter tooltip__MPB3J3">2024-02-12 14:45</time></div> <h4><a href="https://www.saxotrader.com/d/article/a4bafb62-63ab-4a8d-96cc-946d2d782188" target="_self">Airbnb battles headwinds as fee hike may boost profits, can Airbus soar past Boeing?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-09T10:00:00Z" data-instance="time-formatter tooltip__DYXE6R">2024-02-09 11:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/55e3b8d8-6458-4079-b7ab-a2ff430265e5" target="_self">Q4 2023 earnings scorecard and Arm bonanza</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-07T14:50:00Z" data-instance="time-formatter tooltip__KQJ92V">2024-02-07 15:50</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/cc202455-106e-46e4-83eb-c2015c4874cb" target="_self">Have US equities gone too far this time?</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-05T11:30:00Z" data-instance="time-formatter tooltip__2QMXPQ">2024-02-05 12:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-busy-week-with-focus-on-caterpillar-eli-lilly-and-siemens-05022024" target="_blank">Earnings Watch: Busy week with focus on Caterpillar, Eli Lilly, and Siemens</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-02T12:30:00Z" data-instance="time-formatter tooltip__4PD38V">2024-02-02 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-apple-amazon-and-meta-02022024" target="_blank">Earnings review: Apple, Amazon, and Meta</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-01T14:30:00Z" data-instance="time-formatter tooltip__248BDR">2024-02-01 15:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/what-are-the-feds-possible-considerations-on-rate-cuts-01022024" target="_blank">What are the Fed&rsquo;s possible considerations on rate cuts?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-31T12:30:00Z" data-instance="time-formatter tooltip__8N5JW6">2024-01-31 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024" target="_blank">Earnings review: Microsoft, Alphabet, AMD, and Novo Nordisk</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-29T12:15:00Z" data-instance="time-formatter tooltip__GJE276">2024-01-29 13:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-big-earnings-week-with-technology-giants-in-focus-29012024" target="_blank">Earnings Watch: Big earnings week with technology giants in focus</a></h4> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Green investing</span> <span>Tesla Motors</span> <span>Tesla</span> <span>Tesla Inc.</span> <span></span> <span>Nio Inc.</span> <span>BYD Company Ltd</span> <span>Volkswagen</span> <span>Volkswagen AG Pref. Share</span> <span>Energy (Sector)</span> <span>Weekly Newsletter</span> <span>Advanced orders</span></div>Mon, 04 Mar 2024 13:15:00 Z2024-03-04T13:36:38Z{D9FEFA53-564F-4C42-AA60-BE5B3152ABD8}https://www.home.saxo/en-au/content/articles/equities/here-we-go-again-the-bubble-fever-is-back-29022024Peter Garnryproduct-equitiesHighlighted articlessector-Technologyplace-lc/usS P 500 indexNVIDIA CorporationNvidia CorpPrice earnings ratioPrice to earnings ratioHere we go again, the bubble fever is back!<div class="article-excerpt">The momentum in US equities have pushed equity valuations back into dangerous levels not seen since the dot-com bubble and the 2021 technology bubble during the pandemic. Investors should begin thinking about reducing their exposure to US equities and in particularly US technology stocks.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Key Points:</span></strong></h3> <ul > <li><strong><span>Strong start to the year:</span></strong><span> The S&amp;P 500 is up 6.5%, nearly a year's worth of normal returns, driven by optimism and booming AI and obesity themes.</span><br /> <br /> </li> <li><strong><span>Concerns about overvaluation:</span></strong><span> Nvidia's recent success and high valuations in US equities raise concerns of a potential bubble similar to the dot-com era.</span><br /> <br /> </li> <li><strong><span>Negative real returns possible:</span></strong><span> Historically, similar valuation levels have led to negative real returns after accounting for inflation.</span><br /> <br /> </li> <li><strong><span>Recommendations for investors:</span></strong><span> Diversify away from US equities, consider bonds, European stocks, dividend stocks, or hedging strategies.</span></li> </ul> <h3 class="article-heading--3"><strong><span>A year&rsquo;s return in just two months</span></strong></h3> <p><span>The equity market momentum has been incredible driven by the continuous realisation over the past year that a US economic recession was not coming and that <a href="https://www.home.saxo/content/articles/equities/investment-boom-in-technology-and-earnings-review-24012024" target="_self">certain sectors of the economy was in fact booming</a>. This year alone the S&amp;P 500 Index is up 6.5% including reinvestment of dividends, so almost an entire year of normal equity returns has been delivered to investors in just two months.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/29_pg_1.png"/></div><div class="rte--output">S&P 500 | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><p><span>With <a href="https://www.saxotrader.com/d/article/64ca6a06-29c9-4a05-b014-6691e23d81e6?adobe_mc=MCMID%3D75012758176547766852877896392249310448%7CMCORGID%3D173338B35278510F0A490D4C%40AdobeOrg%7CTS%3D1709208006741&amp;_gl=1*t9ut15*_ga*OTcxOTE3MTU5LjE2ODA1MDE5MDY.*_ga_4QV6CHEDG2*MTcwOTIwNzk5OC40NTUuMS4xNzA5MjA4MDA3LjUxLjAuMA.." target="_self">Nvidia&rsquo;s extraordinary results and outlook</a> last week captivating investors and their grandiose statement that generative AI has reached a &ldquo;tipping point&rdquo; might be exactly the signal that confirms that the equity market is getting too hot.</span></p> <p><span>Last year we said that equity valuations were not a concern for global equities but US equities were getting increasingly stretched. However, when you have an AI hype then things can get really stretched and our view is now that we have entered a dangerous level again in US equities. As our valuation chart below shows, US equities are now significantly more expensive compared to the average valuation since 1992. In fact, US equities have now reached levels we have only observed during the dot-com bubble and the 2021 technology bubble during the pandemic.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/29_pg_2.png"/></div><div class="article-additional-rte"><div class="rte--output"><p><span>If we take a look at the seven metrics going into the combined valuation metric then we can see that it is really the price-to-sales, EV-to-EBITDA, price-to-cash-flow, and EV-to-sales that are pushing US equities into overvaluation levels. The price investors are willing to pay for sales has been driven by technology companies increasingly dominating the US equity indices because US technology companies have a higher profit margin. The higher the profit margin the more investors are willing to pay for a dollar of revenue. This naturally leads to the conclusions that a lot of the current price level in US equities hinges on assumptions that US technology companies can maintain their abnormally high profit margin. </span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/29_pg_3.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Could we really have a decade of negative real returns in equities?</span></strong></h3> <p><span>Our discussion about US equity valuations become even more concerning when we take the equity valuation level today and go back in time to see what that level meant for future returns. The future returns we can lean on is those that came after the dot-com bubble, and here the picture is clear, when you get to these equity valuation levels future returns after subtracting inflation become negative. Can investors really expect that again this time?</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/29_pg_4.png"/></div><div class="article-additional-rte"><div class="rte--output"><p><span>The US equity market peaked in terms of equity valuation in December 2021 which was just before the big readjustment of equity valuations as interest rates began to ascent getting the point from the Fed that inflation was more entrenched that initially thought. We are now 26 months into this cycle of investing in US equities from an alarmingly high starting point in terms of valuation. Since December 2021, the S&amp;P 500 Index has returned 2.4% annualised while US inflation has risen 5% annualised over the same period. So already a bit more than 20% into this new period of future returns from levels that even exceeded those during the dot-com bubble, we&nbsp; are seeing equities falling behind delivering a negative annualised real return of 2.6%. It is our fiduciary responsibility as market professionals to warn investors about the current dynamics in US equities.</span></p> <h3 class="article-heading--3"><strong><span>What should investors do?</span></strong></h3> <p><span>For investors it means that it is probably a good idea to act on what we are seeing in the equity market. Our view is that it is always best to be invested so investors should increase their cash position, but instead think about how to diversify their portfolio to mitigate the valuation risk in US equities and in particular US technology stocks. Here are a couple of options to consider:</span></p> <ul > <li><span>Reduce exposure to equities and increase exposure to bonds in order to reduce portfolio risk.</span><br /> <br /> </li> <li><span>Reduce exposure to US equities and Increase exposure to European equities which have a less cyclical profile and lower equity valuation.</span><br /> <br /> </li> <li><span>Increase exposure to dividend stocks as they will likely be less volatile should the equity market begin to reduce lower US equity valuations.</span></li> </ul> <span>For those that have the long-term stocks they want, one could consider temporarily hedge their portfolio by selling a CFD on the S&amp;P 500 or buy a put option on the S&amp;P 500 (the at-the-money puts on S&amp;P 500 with expiry on 20 December 2024 costs roughly 4%).</span></div></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-26T14:00:00Z" data-instance="time-formatter tooltip__EDXER7">2024-02-26 15:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/1bd39d7b-80a8-4875-b467-fa88588432f1" target="_self">Earnings Watch: Salesforce, Snowflake, and Leonardo</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-22T13:00:00Z" data-instance="time-formatter tooltip__VJJB3Y">2024-02-22 14:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/64ca6a06-29c9-4a05-b014-6691e23d81e6" target="_self">Nvidia earnings: Generative AI has reached &ldquo;tipping point&rdquo;</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-19T17:40:00Z" data-instance="time-formatter tooltip__8RJ8YJ">2024-02-19 18:40</time></div> <h4><a href="https://www.saxotrader.com/d/article/ae7e31dc-2d10-43a0-b122-cf654d84290e" target="_self">All eyes on Nvidia earnings as AI boom reaches historic proportions</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-15T09:00:00Z" data-instance="time-formatter tooltip__ZAPXD2">2024-02-15 10:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/5a09d77e-cf11-44ad-958d-ef29e9bcd807" target="_self">European top innovators: R&amp;D intensity drives returns</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-14T12:00:00Z" data-instance="time-formatter tooltip__6J72B2">2024-02-14 13:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/a2dd0065-b865-4efd-835d-c9728bb34ea4" target="_self">Recession and not inflation is the real equity killer</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-13T10:30:00Z" data-instance="time-formatter tooltip__GK8VZ6">2024-02-13 11:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/41f5da91-8047-4611-8c7c-2dbed8812249" target="_self">The boom in equities is coming to Japan, Arm sets new record on valuation</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-12T13:45:00Z" data-instance="time-formatter tooltip__MPB3J3">2024-02-12 14:45</time></div> <h4><a href="https://www.saxotrader.com/d/article/a4bafb62-63ab-4a8d-96cc-946d2d782188" target="_self">Airbnb battles headwinds as fee hike may boost profits, can Airbus soar past Boeing?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-09T10:00:00Z" data-instance="time-formatter tooltip__DYXE6R">2024-02-09 11:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/55e3b8d8-6458-4079-b7ab-a2ff430265e5" target="_self">Q4 2023 earnings scorecard and Arm bonanza</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-07T14:50:00Z" data-instance="time-formatter tooltip__KQJ92V">2024-02-07 15:50</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/cc202455-106e-46e4-83eb-c2015c4874cb" target="_self">Have US equities gone too far this time?</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-05T11:30:00Z" data-instance="time-formatter tooltip__2QMXPQ">2024-02-05 12:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-busy-week-with-focus-on-caterpillar-eli-lilly-and-siemens-05022024" target="_blank">Earnings Watch: Busy week with focus on Caterpillar, Eli Lilly, and Siemens</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-02T12:30:00Z" data-instance="time-formatter tooltip__4PD38V">2024-02-02 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-apple-amazon-and-meta-02022024" target="_blank">Earnings review: Apple, Amazon, and Meta</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-01T14:30:00Z" data-instance="time-formatter tooltip__248BDR">2024-02-01 15:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/what-are-the-feds-possible-considerations-on-rate-cuts-01022024" target="_blank">What are the Fed&rsquo;s possible considerations on rate cuts?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-31T12:30:00Z" data-instance="time-formatter tooltip__8N5JW6">2024-01-31 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024" target="_blank">Earnings review: Microsoft, Alphabet, AMD, and Novo Nordisk</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-29T12:15:00Z" data-instance="time-formatter tooltip__GJE276">2024-01-29 13:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-big-earnings-week-with-technology-giants-in-focus-29012024" target="_blank">Earnings Watch: Big earnings week with technology giants in focus</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-25T10:15:00Z" data-instance="time-formatter tooltip__GAX49Z">2024-01-25 11:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/tesla-earnings-review-between-two-mountain-tops-25012024" target="_blank">Tesla earnings review: Between two mountain tops?</a>&nbsp;</h4></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Technology</span> <span></span> <span>S P 500 index</span> <span>NVIDIA Corporation</span> <span>NVidia Corp.</span> <span>Price earnings ratio</span> <span>Price to earnings ratio</span></div>Thu, 29 Feb 2024 13:40:00 Z2024-02-29T13:47:50Z{1BD39D7B-80A8-4875-B467-FA88588432F1}https://www.home.saxo/en-au/content/articles/equities/earnings-watch-salesforce-snowflake-and-leonardo-26022024Peter Garnryproduct-equitiesHighlighted articlessector-Technologyplace-lc/ussubject-is/fin.reportsEarnings ReleasesSalesforcecomSalesforce IncSnowflakeLeonardoplace-lr/eurEarnings Watch: Salesforce, Snowflake, and Leonardo<div class="article-excerpt">Focus on US technology earnings this week from Salesforce and Snowflake. Earnings from Leonardo will also be watched given the strong momentum in the European defence industry. Finally, we also highlight the materials sector and its performance during the earnings season.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Key points: </span></strong></h3> <ul > <li><strong><span>Focus on US tech earnings this week</span></strong><span>: Salesforce us expected to report 10% YoY revenue growth, focusing on profitability. Guidance for 11% YoY growth in FY25. Snowflake is expected to report 29% YoY revenue growth (down from 54% YoY), potential upside surprise from generative AI.</span><br /> <br /> </li> <li><strong><span>European defence sector: </span></strong><span>Leonardo is expected to report&nbsp;lower revenue growth (5% YoY) compared to peers, share price exceeding analyst expectations.</span><br /> <br /> </li> <li><strong><span>Materials sector:&nbsp;</span></strong><span>Biggest price movements during earnings season, with Corteva leading the way (18% increase in two days).</span></li> </ul> <h3 class="article-heading--3"><strong><span>Can Snowflake and Salesforce ride the AI hype?</span></strong></h3> <p><span>With AI being the new hyped trend in equity markets there will be a lot of focus on Snowflake and Salesforce this week as both companies are part of the booming US technology sector. Both companies report earnings after the US market close on Wednesday. </span></p> <p><span>Analysts expect Salesforce to report FY24 Q4 (ending 31 January) revenue of $9.2bn up 10% YoY and EBITDA of $3.8bn up from $2.5bn a year ago as the business software maker remains focused on improving profitability. Analysts expect Salesforce to guide FY25 11% YoY revenue growth as rebound in cloud application software is still uncertain despite pickup in AI infrastructure spending.</span></p> <p><span>Snowflake has a stronger link to the AI trend and analysts expect revenue growth of 29% YoY down from 54% YoY a year ago. There might be an upside surprise for Snowflake related to generative AI as companies are using their own data on top of foundational LLMs. The recent run-up in Snowflake&rsquo;s share price has pushed it to very close to the consensus price target at $229. </span></p> <h3 class="article-heading--3"><strong><span>Will Leonardo confirm the growth explosion in European defence?</span></strong></h3> <p><span>Just as cocoa&rsquo;s ascent is the only thing that can keep up with Nvidia&rsquo;s share price, so is our defence basket the only theme that has done better this year than semiconductors. Our defence basket is up 11.2% as of Friday&rsquo;s closing prices. As our defence basket table shows, it is the European defence stocks that are driving the return of this theme. One of those stocks is Italian based Leonardo which reports earnings on Thursday. Analysts expect 5% YoY revenue growth and EBITDA at $755mn up from $590mn a year ago. </span></p> <p><span>Compared to expectations for other European defence companies such as German based Rheinmetall, the revenue growth expectations are quite low for Leonardo. Revenue growth is estimated at 6% YoY in 2024, 5% YoY in 2025, and 4% YoY in 2026. Far from the +17% growth rates expected for Rheinmetall. Analysts covering Leonardo have difficulties keeping up with the share price as the consensus price target sits 9% below the current price. So either analysts are too conservative or the market has entered a stage where it blindly buys everything with European defence label.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/26_pg_1.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/26_pg_4.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Materials sector sees biggest price moves during Q4 earnings season</span></strong></h3> <p><span>With a little more than 90% of the companies in the S&amp;P 500 Index having reported earnings the earnings season is coming to its end this week. US technology companies have seen its operating earnings soar to a new record and the AI hype was captivated investors with especially Nvidia&rsquo;s big earnings surprise last week fuelling a rally in AI related stocks. </span></p> <p><span>While technology stocks have been a winner, the sector with the biggest 2-day price change over the earnings release has been materials. Within the materials sector Corteva was the big winner with a 18% price move over two days. Corteva is a seeds and crop protection leader and its FY24 operating EBITDA guidance of $3.5-3.7bn was well above analyst estimates at $3.56bn as farming demand remains robust.</span></p> <p><span>As our US earnings scorecard shows, recent earnings releases from Nvidia and Berkshire Hathaway were significant surprises on revenue. On earnings the biggest surprises among the largest companies in the US are Nvidia, Eli Lilly, GE, Caterpillar, ConocoPhillips, and Freeport-McMoRan.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/26_pg_2.png"/></div><div class="rte--output">Corteva share price | Source: Saxo</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/26_pg_3.png"/></div><div class="article-additional-rte"><div class="rte--output"><p><span>The list below shows all the most important earnings releases this week.</span></p> <ul > <li><strong><span>Monday: </span></strong><span>Workday, ONEOK</span><strong><span></span></strong><br /> <br /> </li> <li><strong><span>Tuesday: </span></strong><span>Bank of Nova Scotia, Bank of Montreal, Sempra, Constellation Energy, Republic Services, Lowe&rsquo;s, Munich Re, AutoZone, American Electric Power, Woodside Energy, ASM International, Alcon, Coupang, Splunk, eBay, First Solar</span><strong><span></span></strong><br /> <br /> </li> <li><strong><span>Wednesday: </span></strong><span>Oversea-Chinese Banking, Holcim, Royal Bank of Canada, TJX, Salesforce, Snowflake, Monster Beverage, Universal Music, Reckitt Benckiser, Moncler, Amadeus IT, Baidu, HP, Pure Storage</span><strong><span></span></strong><br /> <br /> </li> <li><strong><span>Thursday: </span></strong><span>Alimentation Couche-Tard, Anheuser-Busch InBev, CRH, NetEase, Canadian Imperial Bank, Dell Technologies, Autodesk, London Stock Exchange, Argenx, Saint Gobain, Beierdorf, Leonardo, Haleon, Zscaler, Elastic</span><strong><span></span></strong><br /> <br /> </li> <li><strong><span>Friday: </span></strong><span>Canadian Natural Resources, Kuehne + Nagel</span><strong><span></span></strong></li> </ul></div></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-22T13:00:00Z" data-instance="time-formatter tooltip__VJJB3Y">2024-02-22 14:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/64ca6a06-29c9-4a05-b014-6691e23d81e6" target="_self">Nvidia earnings: Generative AI has reached &ldquo;tipping point&rdquo;</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-19T17:40:00Z" data-instance="time-formatter tooltip__8RJ8YJ">2024-02-19 18:40</time></div> <h4><a href="https://www.saxotrader.com/d/article/ae7e31dc-2d10-43a0-b122-cf654d84290e" target="_self">All eyes on Nvidia earnings as AI boom reaches historic proportions</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-15T09:00:00Z" data-instance="time-formatter tooltip__ZAPXD2">2024-02-15 10:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/5a09d77e-cf11-44ad-958d-ef29e9bcd807" target="_self">European top innovators: R&amp;D intensity drives returns</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-14T12:00:00Z" data-instance="time-formatter tooltip__6J72B2">2024-02-14 13:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/a2dd0065-b865-4efd-835d-c9728bb34ea4" target="_self">Recession and not inflation is the real equity killer</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-13T10:30:00Z" data-instance="time-formatter tooltip__GK8VZ6">2024-02-13 11:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/41f5da91-8047-4611-8c7c-2dbed8812249" target="_self">The boom in equities is coming to Japan, Arm sets new record on valuation</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-12T13:45:00Z" data-instance="time-formatter tooltip__MPB3J3">2024-02-12 14:45</time></div> <h4><a href="https://www.saxotrader.com/d/article/a4bafb62-63ab-4a8d-96cc-946d2d782188" target="_self">Airbnb battles headwinds as fee hike may boost profits, can Airbus soar past Boeing?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-09T10:00:00Z" data-instance="time-formatter tooltip__DYXE6R">2024-02-09 11:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/55e3b8d8-6458-4079-b7ab-a2ff430265e5" target="_self">Q4 2023 earnings scorecard and Arm bonanza</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-07T14:50:00Z" data-instance="time-formatter tooltip__KQJ92V">2024-02-07 15:50</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/cc202455-106e-46e4-83eb-c2015c4874cb" target="_self">Have US equities gone too far this time?</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-05T11:30:00Z" data-instance="time-formatter tooltip__2QMXPQ">2024-02-05 12:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-busy-week-with-focus-on-caterpillar-eli-lilly-and-siemens-05022024" target="_blank">Earnings Watch: Busy week with focus on Caterpillar, Eli Lilly, and Siemens</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-02T12:30:00Z" data-instance="time-formatter tooltip__4PD38V">2024-02-02 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-apple-amazon-and-meta-02022024" target="_blank">Earnings review: Apple, Amazon, and Meta</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-01T14:30:00Z" data-instance="time-formatter tooltip__248BDR">2024-02-01 15:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/what-are-the-feds-possible-considerations-on-rate-cuts-01022024" target="_blank">What are the Fed&rsquo;s possible considerations on rate cuts?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-31T12:30:00Z" data-instance="time-formatter tooltip__8N5JW6">2024-01-31 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024" target="_blank">Earnings review: Microsoft, Alphabet, AMD, and Novo Nordisk</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-29T12:15:00Z" data-instance="time-formatter tooltip__GJE276">2024-01-29 13:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-big-earnings-week-with-technology-giants-in-focus-29012024" target="_blank">Earnings Watch: Big earnings week with technology giants in focus</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-25T10:15:00Z" data-instance="time-formatter tooltip__GAX49Z">2024-01-25 11:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/tesla-earnings-review-between-two-mountain-tops-25012024" target="_blank">Tesla earnings review: Between two mountain tops?</a>&nbsp;</h4> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-24T15:45:00Z" data-instance="time-formatter tooltip__2BGW9N">2024-01-24 16:45</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/investment-boom-in-technology-and-earnings-review-24012024" target="_blank">Investment boom in technology and earnings review</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-22T12:30:00Z" data-instance="time-formatter tooltip__X7QR5W">2024-01-22 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024" target="_blank">Earnings Watch: Can Tesla convince the market about growth?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-11T10:40:00Z" data-instance="time-formatter tooltip__2KWPVN">2024-01-11 11:40</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/first-us-listed-etfs-holding-spot-bitcoin-start-trading-today-11012024" target="_blank">First US listed ETFs holding spot Bitcoin start trading today</a></h4> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Technology</span> <span></span> <span>Corporate Earnings</span> <span></span> <span>Salesforcecom</span> <span>Salesforce Inc</span> <span>Snowflake</span> <span>Leonardo</span> <span>Europe</span></div>Mon, 26 Feb 2024 14:00:00 Z2024-02-26T14:06:53Z{621B5391-61C7-4DA4-B632-E3ED0CAF5A24}https://www.home.saxo/en-au/content/articles/us-election-2024/the-connection-between-us-elections-and-market-performance-26022024Peter GarnryUS Election 2024product-equitiesThought StartersAdvanced ordersWeekly NewsletterThe connection between US elections and market performance<div class="article-rte"><div class="rte--output"><div> <p>As we warm up to the US election in November, we wanted to have a look at how presidential elections and equity markets hang together. Do markets affect the election, does the president affect the market, or are the two things completely unrelated? The answer lies somewhere in between.</p> </div> <div> <p> <br /> For this article, we&rsquo;ve looked at the 13 presidential elections since 1972. This period follows the break of the so-called Bretton Woods system in 1971, which meant unpegging the US dollar from gold, as this fundamentally changed market dynamics. Thirteen elections aren&rsquo;t enough to establish statistical significance, so any conclusions should be taken with a grain of salt. Further, it is fair to question how much outlier years such as 1980, 1996, and 2008 de- or inflate results, which adds to the point of viewing these conclusions as suggestive at best.&nbsp;<span >Over those 13 elections, 7 have been won by Republicans and 6 by Democrats. Five elections have been won by the incumbent president, 7 have meant a change of the party in power, while one election has seen a new president from the incumbent party in power.</span></p> </div></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/content-development-and-strategy/soren/us-election/market-performance-article/us-presidential-election-results.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3">Does the election year impact market performance? </h3> <p>The first question we set out to answer was whether markets perform differently in election years compared to any other year. One could reasonably think the incumbent president would do his best to prop up the economy to look good.<br /> <br /> <span >On the surface, this hypothesis does indeed appear true, as the average return for the S&amp;P 500 (not including the reinvestment of dividends) in election years yields 8.7% on average, compared to 7.7% in other years. But, as always, the devil is in the detail. Because due to the concepts of maths, it isn&rsquo;t feasible to take the average return of election years and compare it with other years. To correct this, we stitch together these 13 years of return data and calculate the combined compounded return during these election years. The annualised return for election years then comes out at 7.8% annualised, which is very close to the compounded return during non-election years, meaning that there isn&rsquo;t any significant difference.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/content-development-and-strategy/soren/us-election/market-performance-article/sp-500-return-1year-prior-to-election-date-in.png"/></div><div class="article-additional-rte"><div class="rte--output"><div> <h3 class="article-heading--3">Does the equity market impact election results? </h3> The next question we could drum up was whether equity performance could say anything about who would win the election. After all, the equity market is one of the best barometers we have on economic sentiment and the outlook for the economy. It sums up the aggregate opinion about the future, and thus a rallying equity market into election day indicates an improving outlook, which in theory should be positive for the party controlling the White House. Here, we looked at the annual return of the S&amp;P 500 in election years with and without a change of the guard.</div></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/content-development-and-strategy/soren/us-election/market-performance-article/new-party-in-white-house--sp-500-return-1year-period-prior-to-election-date-in.png"/></div><div class="article-additional-rte"><div class="rte--output"><p>Based on the above graph, one could make the weak claim that a strong US equity market adds tailwind for the party controlling the White House. However, we cannot conclude that there is any causation between equity market performance and election winners.<br /> <br /> <span >Does the equity market favour a party in power?<br /> <br /> </span><span >The final thing we wanted to investigate was whether markets prefer a Republican or Democratic president. To do so, we looked at S&amp;P 500 returns in the year following the election date.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/content-development-and-strategy/soren/us-election/market-performance-article/us-equity-market-favourite--sp-500-return-1year-period-post-election.png"/></div><div class="article-additional-rte"><div class="rte--output">Interestingly, we observe significantly higher returns one year after the election if a Democratic president was elected. However, as for the general premise of this article, it is important not to view this in a vacuum, as these results are to a certain extent the result of outlier years such as 1976, 1996, and 2020.<br /> <br /> <h3 class="article-heading--3">In conclusion</h3> <span >Based on this analysis, the strongest conclusion is that we haven&rsquo;t had enough elections since the break of Bretton Woods to conclude anything definitively. Although the data at hand shows that there isn&rsquo;t any significant difference in stock market performance in election years compared to other years, there is a tendency for the incumbent party to stay in power in years with strong equity performance. Finally, the year after elections, markets have performed better with a Democratic president than with a Republican over this 13-year period, although it seems to be skewed by events unrelated to party politics.</span></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <span>US Election 2024</span> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <a href="https://www.home.saxo/en-au/insights/news-and-research/thought-starters">Thought Starters</a> <span>Advanced orders</span> <span>Weekly Newsletter</span></div>Mon, 26 Feb 2024 07:00:00 Z2024-02-29T07:52:25Z{281425CD-3684-4B7C-81C1-FF6761F7A303}https://www.home.saxo/en-au/content/articles/podcast/podcast-22-feb-2024---what-the-us-election-may-mean-for-financial-markets-23022024Peter Garnrysaxostrats-podcastMacro-FXCurrencyproduct-macroproduct-forexforex-eurusdforex-usdjpyplace-lc/usplace-lc/cneditorial-nonfarm payrollsSpecial edition: Why traders and investors should care about the US election<div class="article-excerpt">In this special episode of the Saxo Market Call podcast, Peter Garnry, Head of SaxoStrats and Equity Strategy and our host, John J. Hardy, dive into the turbulent seas of the 2024 U.S. Presidential election and its potential impact on the financial markets. Their discussion revolves around several key points that are relevant for investors and traders alike to get a better understanding of the effects of what promises to be a highly contentious electoral battle on global economic dynamics. The podcast was recorded on February 14, 2024.</div><div class="article-rte"><div class="rte--output"><p> <strong> An election for the ages?<br /> </strong><span >As it gets increasingly likely that the 2024 election will be a rematch between former President Donald Trump and incumbent President Joe Biden, Hardy and Garnry discuss the big lines of what kind of election we could be experiencing. Here, they mention that it will be a battle between two of the most unpopular candidates in history. Simultaneously, the election may also feature a relevant independent candidate, Robert F. Kennedy Jr., for the first time since Ross Perot grabbed over 18% of the popular vote in 1992, underscoring the potential for significant electoral disruption.</span></p> <p><strong>How financials impact elections<br /> </strong><span >The pair ponder whether there&rsquo;s any connection between the financial status of the country in an election year and the electoral result. Using equity market performance and inflation rates as proxies for the economy, Garnry notes that there is a historical tendency that a weak economy means trouble for an incumbent president in terms of getting re-elected, although he notes that the data foundation is quite thin.&nbsp;</span><span >As a non-exact science and with a US economy that still could go either way in 2024, it remains to be seen whether this will be in favour of either Trump or Biden, but financial figures like inflation, job openings, and GDP growth are identified as key indicators to watch both in terms of presidential popularity and market performance.</span></p> <p><strong>Will the Fed steer clear of politics?<br /> </strong><span >Garnry and Hardy discuss what role the Fed will play in the election if any. After the extension of the Fed&rsquo;s rate hiking cycle in early 2023, the discussion on the prospects for rate cuts from the US central bank has been one of the most prominent in early 2024. As an American recession was almost expected going into the year, rate cuts were expected to follow.&nbsp;</span><span >But with an economy that&rsquo;s holding up, the easing cycle has been postponed. The idea of a so-called no landing scenario where inflation reignites, bringing rate hike considerations back to the table, has even heated up, although rate cuts are still more likely. But in this difficult landscape for the Fed to navigate, the election only makes it more challenging. If the Fed is to cut rates, one argument goes that they would probably like to cut early to avoid any impression of political bias around election time. A conspiratorial second theory argues that the Powell Fed favours the more mainstream, &ldquo;Washington-friendly&rdquo; Biden, and will tilt as dovishly as it dares to increase his odds of winning.</span></p> <p><strong>What a new president will mean for the financial markets<br /> </strong><span >In judging what the US president election will mean for financial markets, Hardy and Garnry state that it may be a bit early days as we need to know the party program for either candidate, which in theory won&rsquo;t be known until the candidates are officially nominated at the conventions during summer.</span><span >But what is clear is that one point where the two most likely candidates differ is in terms of the US&rsquo; involvement in geopolitical stability, particularly in relation to NATO and defense spending. Here, Biden&rsquo;s line will be more internationally focused on collaboration with allies, whereas Trump most likely will rein in the country&rsquo;s involvement in global conflicts. This will e.g. have implications for European defense stocks.</span></p> <p class="v2-p-l"><strong><iframe title="Special edition: Why traders and investors should care about the US election" height="150" src="https://www.podbean.com/player-v2/?i=mpsse-1581286-pb&amp;from=pb6admin&amp;share=1&amp;download=1&amp;rtl=0&amp;fonts=Arial&amp;skin=60a0c8&amp;font-color=auto&amp;logo_link=episode_page&amp;btn-skin=ff6d00"></iframe></strong></p> <p><span ><a href="https://saxostrats.podbean.com/e/special-edition-what-the-us-election-may-mean-for-financial-markets/?token=b885333565af3dadb313a4d5e64f95b1">Listen to the full episode now</a> or follow&nbsp;Saxo Market Call on your favorite podcast app:</span></p> <p> <a rel="noopener noreferrer" href="https://podcasts.apple.com/gb/podcast/saxo-bank-market-call/id1475783610?l=en" target="_blank"><img alt="Apple" src="https://www.home.saxo/-/media/images/logos/podcasts/apple.png" /></a> &nbsp; <a rel="noopener noreferrer" href="https://open.spotify.com/show/0TQCo0xVyovEigewCbc9uo" target="_blank"><img alt="Spotify" src="https://www.home.saxo/-/media/images/logos/podcasts/spotify.png" /></a> &nbsp; <a rel="noopener noreferrer" href="https://saxostrats.podbean.com/" target="_blank"><img alt="Podbean" src="https://www.home.saxo/-/media/images/logos/podcasts/podbean.png" /></a> &nbsp; &nbsp;</p> <div class="v2-mab50" > <div class="rte--output">If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at <em>marketcall@saxobank.com</em> and we'll look into it.</div> <div class="rte--output">&nbsp;</div> <div class="rte--output"><strong >Questions and comments, please!</strong></div> <div class="rte--output"><strong ></strong><span >We invite you to send any questions and comments you might have for the podca</span><span >s</span><span >t team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at <em>marketcall@saxobank.com</em>.</span></div> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/podcast">Podcast</a> <span>Macro FX</span> <span>Currency</span> <a href="https://www.home.saxo/en-au/insights/news-and-research/macro">Macro</a> <a href="https://www.home.saxo/en-au/insights/news-and-research/forex">Forex</a> <span>EURUSD</span> <span>USDJPY</span> <span></span> <span>China</span> <span>Nonfarm Payrolls</span></div>Fri, 23 Feb 2024 07:22:00 Z2024-02-26T12:20:11Z{64CA6A06-29C9-4A05-B014-6691E23D81E6}https://www.home.saxo/en-au/content/articles/equities/nvidia-earnings-generative-ai-has-reached-tipping-point-22022024Peter Garnryproduct-equitiesHighlighted articlessector-Technologyplace-lc/usNvidia CorpNVIDIA CorporationEarnings Releasessubject-is/fin.reportsPrice earnings ratioEarnings beatEarnings per shareArtificial IntelligenceAdvanced ordersThought StartersWeekly NewsletterNvidia earnings: Generative AI has reached “tipping point”<div class="article-excerpt">Nvidia beat expectations last night with revenue up 265% YoY in Q4 FY24 exceeding analyst estimates. Q1 FY25 guidance is also 10% above consensus and CFO says generative AI has reached 'tipping point'. Shares are up 13% in pre-market trading.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Key points:</span></strong></h3> <ul > <li><strong><span>Nvidia beat expectations:&nbsp;</span></strong><span>Revenue grew 265% YoY in Q4 FY24,&nbsp;exceeding analyst estimates.&nbsp;Q1 FY25 guidance is also 10% above consensus.</span><br /> <br /> </li> <li><strong><span>Generative AI seen as key driver:&nbsp;</span></strong><span>Nvidia's CFO highlighted generative AI as a major growth factor,&nbsp;potentially leading to continued model upgrades and higher returns.</span><br /> <br /> </li> <li><strong><span>High concentration and profitability:&nbsp;</span></strong><span>One customer accounted for 13% of Nvidia's revenue,&nbsp;and the company boasts a net profit margin of 55.6%,&nbsp;the highest among large tech companies.</span><br /> <br /> </li> <li><strong><span>Market implications:&nbsp;</span></strong><span>Nvidia's strong results could fuel a rally in AI stocks and the broader tech sector,&nbsp;but also raise concerns about future earnings beats and potential bubble formation.</span><br /> <br /> </li> <li><strong><span>Investment strategies:&nbsp;</span></strong><span>Investors seeking to reduce exposure to US technology and Nvidia can consider sectors like energy,&nbsp;utilities,&nbsp;and consumer staples,&nbsp;which have low correlation with Nvidia.</span></li> </ul> <h3 class="article-heading--3"><strong><span>Nvidia is almost defying the laws of financial markets</span></strong></h3> <p><span>Nvidia earnings last night was this week&rsquo;s most important event and one we highlighted in our <a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/ae7e31dc-2d10-43a0-b122-cf654d84290e" target="_blank">earnings preview</a> on Monday. Despite excessive expectations going into the earnings release Nvidia delivered incredible earnings results. We have never seen anything like this before in the equity market in terms of 265% YoY revenue growth rate for a company expected to report around $100bn in revenue over the next four quarters. It should almost not be possible.</span></p> <p><span>Here are our key takeaways:</span></p> <ul > <li><span>Solid beat in FY24 Q4 with revenue growing 265% YoY and FY25 Q1 revenue guidance at $24bn is 10% above consensus estimate.</span> <p ><span>&nbsp;</span></p> </li> <li><span>The <a rel="noopener noreferrer" href="https://investor.nvidia.com/files/doc_financials/2024/Q4FY24/Q4FY24-CFO-Commentary.pdf" target="_blank">CFO comment</a> that generative AI has reached a "tipping point" is the most firm long-term prediction on demand we have got from Nvidia since the generative AI era started. This is the key driver of model upgrades on Nvidia and what drives the higher returns. Nvidia shares are up 13% in pre-market trading.</span> <p><span>&nbsp;</span></p> </li> <li><span>One customer represented 13% of revenue in FY24. That is $7.9bn worth of computer chips from a single customer in just one year. Based on Microsoft&rsquo;s aggressive ramp-up of capital expenditures in the previous quarters our best guess is that it is Microsoft.</span> <p><span>&nbsp;</span></p> </li> <li><span>Net profit margin was 55.6% for the quarter. No other company in the technology sector with a market value above $100bn has this kind of net profit margin. It seems that OpenAI co-founder Sam Altman has taken Amazon founder Jeff Bezos&rsquo; famous words &ldquo;your margin is my opportunity&rdquo; at face value as he is planning to start a chip venture to compete with Nvidia in AI chips.</span> <p><span>&nbsp;</span></p> </li> <li><span>Equity sentiment will thrive on this result for weeks to come and we cannot rule out a melt-up scenario in AI related stocks. The broader US technology sector will likely extend its momentum. </span> <p><span>&nbsp;</span></p> </li> <li><span>This was the 8 straight earnings beat from Nvidia. It creates a positive feedback loop in expectations which will make it increasingly difficult for Nvidia continuously beat estimates.</span></li> </ul> <p><span>As the technology momentum continues investors should begin thinking about reducing exposure to US technology more broadly. Investors that want to be fully invested in equities but taking advantage of recent exceptionally strong gains in US technology can reduce their portfolio risk in an easy way. There are three sectors that have shown a low correlation with Nvidia and those are energy, utilities, and consumer staples. Investors can easily diversify their US technology risk exposure by using ETFs providing exposure to those three sectors.</span></p> <p><span>Out of the 20 stocks in our AI theme list 15 companies have now reported earnings. The last company to report earnings is Adobe which is scheduled to release earnings results on 14 March. The generative AI growth wave and generally business investments coming back in all part of the technology supply chain are showing up in revenue growth rates. As the chart below shows the average revenue growth rate is rebounding for these AI related stocks.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/22_pg_1.png"/></div><div class="rte--output">Source: Nvidia</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/22_pg_2.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/22_pg_3.png"/></div><div class="rte--output">Nvidia share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-19T17:40:00Z" data-instance="time-formatter tooltip__8RJ8YJ">2024-02-19 18:40</time></div> <h4><a href="https://www.saxotrader.com/d/article/ae7e31dc-2d10-43a0-b122-cf654d84290e" target="_self">All eyes on Nvidia earnings as AI boom reaches historic proportions</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-15T09:00:00Z" data-instance="time-formatter tooltip__ZAPXD2">2024-02-15 10:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/5a09d77e-cf11-44ad-958d-ef29e9bcd807" target="_self">European top innovators: R&amp;D intensity drives returns</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-14T12:00:00Z" data-instance="time-formatter tooltip__6J72B2">2024-02-14 13:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/a2dd0065-b865-4efd-835d-c9728bb34ea4" target="_self">Recession and not inflation is the real equity killer</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-13T10:30:00Z" data-instance="time-formatter tooltip__GK8VZ6">2024-02-13 11:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/41f5da91-8047-4611-8c7c-2dbed8812249" target="_self">The boom in equities is coming to Japan, Arm sets new record on valuation</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-12T13:45:00Z" data-instance="time-formatter tooltip__MPB3J3">2024-02-12 14:45</time></div> <h4><a href="https://www.saxotrader.com/d/article/a4bafb62-63ab-4a8d-96cc-946d2d782188" target="_self">Airbnb battles headwinds as fee hike may boost profits, can Airbus soar past Boeing?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-09T10:00:00Z" data-instance="time-formatter tooltip__DYXE6R">2024-02-09 11:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/55e3b8d8-6458-4079-b7ab-a2ff430265e5" target="_self">Q4 2023 earnings scorecard and Arm bonanza</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-07T14:50:00Z" data-instance="time-formatter tooltip__KQJ92V">2024-02-07 15:50</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/cc202455-106e-46e4-83eb-c2015c4874cb" target="_self">Have US equities gone too far this time?</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-05T11:30:00Z" data-instance="time-formatter tooltip__2QMXPQ">2024-02-05 12:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-busy-week-with-focus-on-caterpillar-eli-lilly-and-siemens-05022024" target="_blank">Earnings Watch: Busy week with focus on Caterpillar, Eli Lilly, and Siemens</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-02T12:30:00Z" data-instance="time-formatter tooltip__4PD38V">2024-02-02 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-apple-amazon-and-meta-02022024" target="_blank">Earnings review: Apple, Amazon, and Meta</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-01T14:30:00Z" data-instance="time-formatter tooltip__248BDR">2024-02-01 15:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/what-are-the-feds-possible-considerations-on-rate-cuts-01022024" target="_blank">What are the Fed&rsquo;s possible considerations on rate cuts?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-31T12:30:00Z" data-instance="time-formatter tooltip__8N5JW6">2024-01-31 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024" target="_blank">Earnings review: Microsoft, Alphabet, AMD, and Novo Nordisk</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-29T12:15:00Z" data-instance="time-formatter tooltip__GJE276">2024-01-29 13:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-big-earnings-week-with-technology-giants-in-focus-29012024" target="_blank">Earnings Watch: Big earnings week with technology giants in focus</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-25T10:15:00Z" data-instance="time-formatter tooltip__GAX49Z">2024-01-25 11:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/tesla-earnings-review-between-two-mountain-tops-25012024" target="_blank">Tesla earnings review: Between two mountain tops?</a>&nbsp;</h4> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-24T15:45:00Z" data-instance="time-formatter tooltip__2BGW9N">2024-01-24 16:45</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/investment-boom-in-technology-and-earnings-review-24012024" target="_blank">Investment boom in technology and earnings review</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-22T12:30:00Z" data-instance="time-formatter tooltip__X7QR5W">2024-01-22 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024" target="_blank">Earnings Watch: Can Tesla convince the market about growth?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-11T10:40:00Z" data-instance="time-formatter tooltip__2KWPVN">2024-01-11 11:40</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/first-us-listed-etfs-holding-spot-bitcoin-start-trading-today-11012024" target="_blank">First US listed ETFs holding spot Bitcoin start trading today</a></h4> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Technology</span> <span></span> <span>NVidia Corp.</span> <span>NVIDIA Corporation</span> <span></span> <span>Corporate Earnings</span> <span>Price earnings ratio</span> <span>Earnings beat</span> <span>Earnings per share</span> <span>Artificial Intelligence</span> <span>Advanced orders</span> <a href="https://www.home.saxo/en-au/insights/news-and-research/thought-starters">Thought Starters</a> <span>Weekly Newsletter</span></div>Thu, 22 Feb 2024 13:00:00 Z2024-02-22T13:41:32Z{AE7E31DC-2D10-43A0-B122-CF654D84290E}https://www.home.saxo/en-au/content/articles/equities/all-eyes-on-nvidia-earnings-as-ai-boom-reaches-historic-proportions-19022024Peter Garnryproduct-equitiesHighlighted articlessector-Technologyplace-lc/usNvidia CorpNVIDIA CorporationAdvanced Micro DevicesEarnings Releasessubject-is/fin.reportsPrice earnings ratioEarnings beatEarnings per shareArtificial IntelligenceFokusaktieWeekly NewsletterAll eyes on Nvidia earnings as AI boom reaches historic proportions<div class="article-excerpt">Nvidia's Q4 earnings Wednesday night are highly anticipated with analysts expecting record-breaking revenue and EPS growth due to the strong AI demand.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Key points:</span></strong></h3> <ul > <li><strong><span>Nvidia's Q4 earnings are highly anticipated:</span></strong><span>&nbsp;Analysts expect record-breaking revenue and EPS growth due to the strong AI demand.</span><br /> <br /> </li> <li><strong><span>Uncertainty surrounds the report:</span></strong><span>&nbsp;While Nvidia usually beats estimates,&nbsp;geopolitical risks and potential overvaluation raise concerns.</span><br /> <br /> </li> <li><strong><span>AI theme drives markets:</span></strong><span>&nbsp;The AI sector is experiencing explosive growth,&nbsp;reflected in Nvidia's success and a basket of related stocks.</span><br /> <br /> </li> <li><strong><span>Bubble-like tendencies observed:&nbsp;</span></strong><span>Similar<strong> </strong>to past tech booms,&nbsp;there's a sense of FOMO and potentially inflated valuations in AI stocks.</span></li> </ul> <h3 class="article-heading--3"><strong><span>Will Nvidia finally indicate the AI boom is cooling?</span></strong></h3> <p><span>There is probably not an earnings release more important for equity market sentiment right now than Nvidia&rsquo;s FY24 Q4 earnings (ending 31 January 2024) out Wednesday night after the US equity market close. With the AI boom being stronger than ever and spreading to more and more stocks all eyes will be fixated on this earnings release. Analysts expect revenue of $20.4bn up 238% y/y and EPS of $4.60 up 613% y/y in what is probably the most extraordinary increase in a mega cap business ever recorded. We have never seen a $1trn market value company with 12-month revenue of $45bn and a net profit margin of 55% grow at these blistering growth rates.</span></p> <p><span>The chart below shows Nvidia&rsquo;s quarterly revenue and analyst estimates projecting quarterly revenue to hit more than $25bn within the next year. This level of revenue is around four times the level in late 2022 when Nvidia was hit by a collapsing demand from Bitcoin mining due to falling Bitcoin prices and generally lower technology spending as Silicon Valley was adjusting to higher interest rates. </span></p> <p><span>If we take a look at the geographical revenue split we can see that it is really the US segment that has taken off in the previous two quarters followed by strong growth in Chinese and Taiwanese sales. Singapore was once again separately split out in the previous quarter accounting for 15% of revenue. This is naturally odd and it is clear Singapore is used as a legitimate hub for re-exporting of Nvidia chips to countries were export controls may apply. As we have highlighted in the past a significant amount of Nvidia revenue comes from China and Singapore (37% of revenue) which given the ongoing trade frictions and potential Trump election win later this year could become a key geopolitical risk for Nvidia.</span></p> <p><span>Will Nvidia beat estimates and how is the market positioned? Nvidia has beat on revenue and EPS in the past 7 of 8 earnings releases and the recent signals from Arm and other companies in the AI ecosystem are not suggesting growth is slowing down in the short term. We are leaning towards the view that analysts will once again underestimate Nvidia&rsquo;s growth, but uncertainty is 2.5x larger than normal around this earnings release. The normal average 1-day move around Nvidia earnings is 4.3% but equity options are pricing 10.5% this time. To get a sense of the explosive growth in cumulative AI performance we are highlighting a slide from Nvidia&rsquo;s recent investor slide deck (see below).</span></p> <p><span>What about Nvidia&rsquo;s valuation. Can the outlook justify it? As we pointed out in a recent equity note on Arm shares, both <a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/55e3b8d8-6458-4079-b7ab-a2ff430265e5" target="_blank">Arm and Nvidia are valued significantly above the market</a>, which is not strange given the underlying growth in AI chips. But is it too much? It depends of course on the underlying assumptions for the future. NYU professor Aswath Damodaran, one of best on equity valuations, <a rel="noopener noreferrer" href="https://aswathdamodaran.blogspot.com/2024/02/the-seven-samurai-how-big-tech-rescued.html" target="_blank">recently wrote about the magnificent seven</a> and said this about Nvidia:</span></p> <p ><span>&ldquo;&hellip;<em>Nvidia and Tesla, where questions remain about what the end game will look like, in terms of market share. Historically, neither the chip nor car businesses have been winner-take-all businesses, but investors are clearly pricing in the possibility that the changing economics of AI chips and electric cars could alter these businesses.</em>&rdquo;</span></p> <p><span>Later in the article, Damodaran says explicitly that Nvidia looks overvalued despite factoring significant AI growth into his valuation models before serving a contradiction as he owns shares in Nvidia.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/19_pg_1.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/19_pg_2.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/19_pg_6.png"/></div><div class="rte--output">Source: Nvidia investor presentation</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>The AI theme is a key engine for equity markets</span></strong></h3> <p><span>The past year has been all about the evolving AI theme powering equity markets higher. Our AI theme basket consists of 20 stocks that have a high degree of exposure to the AI boom representing $10trn of market value which is around 16% of the MSCI World Index market value. As the table below shows, it is a group companies enjoying close to double digit growth rates and strong profit margins. Analysts also remain bullish overall on AI related stocks and the average 5-year total return is significantly above the market.</span></p> <p><span>If we take a look at revenue growth for this group of AI related stocks then we can see why the market is getting excited over this theme. Median revenue growth excluding Nvidia bottomed out in Q2 2023 at 2% y/y and has so far rebounded to 8.4% y/y in Q4. If Nvidia is included in the calculation then revenue growth rose to 15.3% y/y in Q3 and will undoubtedly rise again in Q4. </span></p> <p><span>The AI sentiment also seems to have reached proportions not seen since the 2021 tech bubble and the dot-com period. Two stocks, Arm and Super Micro Computer, have increased 102% and 197% respectively since 14 September 2023 with the big jump coming this year. There is really a sense of fear of missing out (FOMO) in AI related stocks. But with all important long-term technologies the beginning has its bubble-like tendencies as we get too excited in the short-term and extrapolates too much. The recent news flow from OpenAI&rsquo;s latest AI programme called <a rel="noopener noreferrer" href="https://openai.com/sora" target="_blank">Sora</a>, that can render detailed videos of greater length than ever from text input, is an example of the incredible hype and excitement over AI technology. This AI boom will likely not be any different from previous cycles.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/19_pg_3.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/19_pg_4.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/19_pg_5.png"/></div><div class="rte--output">Super Micro Computer and Arm share price indexed | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Key earnings this week</span></strong></h3> <p><span>Besides the important earnings release from Nvidia the market will also get earnings from Walmart (Tue, bef-mkt) and Home Depot (Tue, bef-mkt). Analysts estimates 4% revenue growth for Walmart and EPS of $1.65 down 4% y/y as cost pressures continue to weigh on Walmart&rsquo;s results. Home Depot is expected by analysts to report another quarter with negative revenue growth (consensus is looking for -3% y/y) as higher interest rates continue to subdue demand in the US home improvement industry. Home Depot is also expected to report EPS of $2.77 down 16% y/y.</span></p> <p><span>This week is also a major week for global mining giants such as BHP, Rio Tinto, and Glencore. Iron ore prices were on average 19% higher in USD terms in 2H 2023 compared to the same period a year before and thus analysts expect positive growth rates for both BHP and Rio Tinto. The Bloomberg Industrial Metals Index, which is a broader measure of industrial metals prices, is down on average in 2H 2023 compared to the same period last year and as a result analysts expect Glencore to report revenue down 6% in 2H 2023.</span></p> <p><span>The list below highlights all the major earnings releases this week:</span></p> <ul > <li><strong><span>Tuesday:</span></strong><span> BHP, Air Liquide, Medtronic, Walmart, Palo Alto Networks, Home Depot, Barclays, Antofagasta</span></li> <li><strong><span>Wednesday:</span></strong><span> HSBC, Rio Tinto, Glencore, Analog Devices, Nvidia, Synopsys, BAE Systems, Nutrien, Rivian</span></li> <li><strong><span>Thursday:</span></strong><span> Fortesque, Zurich Insurance, Nestle, AXA, Booking, Copart, Intuit, MercadoLibre, EOG Resources, NU Holdings, Mercedes-Benz, Iberdrola, Pioneer Natural Resources, Danone, Anglo American, Wolters Kluwer, Rolls-Royce</span></li> <li><strong><span>Friday:</span></strong><span> Allianz, Deutsche Telekom, BASF</span></li> <li><strong><span>Saturday:</span></strong><span> Berkshire Hathaway</span></li> </ul></div></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-15T09:00:00Z" data-instance="time-formatter tooltip__ZAPXD2">2024-02-15 10:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/5a09d77e-cf11-44ad-958d-ef29e9bcd807" target="_self">European top innovators: R&amp;D intensity drives returns</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-14T12:00:00Z" data-instance="time-formatter tooltip__6J72B2">2024-02-14 13:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/a2dd0065-b865-4efd-835d-c9728bb34ea4" target="_self">Recession and not inflation is the real equity killer</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-13T10:30:00Z" data-instance="time-formatter tooltip__GK8VZ6">2024-02-13 11:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/41f5da91-8047-4611-8c7c-2dbed8812249" target="_self">The boom in equities is coming to Japan, Arm sets new record on valuation</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-12T13:45:00Z" data-instance="time-formatter tooltip__MPB3J3">2024-02-12 14:45</time></div> <h4><a href="https://www.saxotrader.com/d/article/a4bafb62-63ab-4a8d-96cc-946d2d782188" target="_self">Airbnb battles headwinds as fee hike may boost profits, can Airbus soar past Boeing?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-09T10:00:00Z" data-instance="time-formatter tooltip__DYXE6R">2024-02-09 11:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/55e3b8d8-6458-4079-b7ab-a2ff430265e5" target="_self">Q4 2023 earnings scorecard and Arm bonanza</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-07T14:50:00Z" data-instance="time-formatter tooltip__KQJ92V">2024-02-07 15:50</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/cc202455-106e-46e4-83eb-c2015c4874cb" target="_self">Have US equities gone too far this time?</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-05T11:30:00Z" data-instance="time-formatter tooltip__2QMXPQ">2024-02-05 12:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-busy-week-with-focus-on-caterpillar-eli-lilly-and-siemens-05022024" target="_blank">Earnings Watch: Busy week with focus on Caterpillar, Eli Lilly, and Siemens</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-02T12:30:00Z" data-instance="time-formatter tooltip__4PD38V">2024-02-02 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-apple-amazon-and-meta-02022024" target="_blank">Earnings review: Apple, Amazon, and Meta</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-01T14:30:00Z" data-instance="time-formatter tooltip__248BDR">2024-02-01 15:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/what-are-the-feds-possible-considerations-on-rate-cuts-01022024" target="_blank">What are the Fed&rsquo;s possible considerations on rate cuts?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-31T12:30:00Z" data-instance="time-formatter tooltip__8N5JW6">2024-01-31 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024" target="_blank">Earnings review: Microsoft, Alphabet, AMD, and Novo Nordisk</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-29T12:15:00Z" data-instance="time-formatter tooltip__GJE276">2024-01-29 13:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-big-earnings-week-with-technology-giants-in-focus-29012024" target="_blank">Earnings Watch: Big earnings week with technology giants in focus</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-25T10:15:00Z" data-instance="time-formatter tooltip__GAX49Z">2024-01-25 11:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/tesla-earnings-review-between-two-mountain-tops-25012024" target="_blank">Tesla earnings review: Between two mountain tops?</a>&nbsp;</h4> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-24T15:45:00Z" data-instance="time-formatter tooltip__2BGW9N">2024-01-24 16:45</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/investment-boom-in-technology-and-earnings-review-24012024" target="_blank">Investment boom in technology and earnings review</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-22T12:30:00Z" data-instance="time-formatter tooltip__X7QR5W">2024-01-22 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024" target="_blank">Earnings Watch: Can Tesla convince the market about growth?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-11T10:40:00Z" data-instance="time-formatter tooltip__2KWPVN">2024-01-11 11:40</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/first-us-listed-etfs-holding-spot-bitcoin-start-trading-today-11012024" target="_blank">First US listed ETFs holding spot Bitcoin start trading today</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T14:00:00Z" data-instance="time-formatter tooltip__4KWP8R">2024-01-09 15:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/nvidia-rides-ai-hype-to-new-all-time-high-as-q4-earnings-season-nears-09012024" target="_blank">Nvidia rides AI hype to new all-time high as Q4 earnings season nears</a></h4> <p>&nbsp;</p> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Technology</span> <span></span> <span>NVidia Corp.</span> <span>NVIDIA Corporation</span> <span>Advanced Micro Devices</span> <span></span> <span>Corporate Earnings</span> <span>Price earnings ratio</span> <span>Earnings beat</span> <span>Earnings per share</span> <span>Artificial Intelligence</span> <span>Fokusaktie</span> <span>Weekly Newsletter</span></div>Mon, 19 Feb 2024 17:40:00 Z2024-02-20T10:32:55Z{5A09D77E-CF11-44AD-958D-EF29E9BCD807}https://www.home.saxo/en-au/content/articles/equities/european-top-innovators-research-and-development-intensity-drives-returns-15022024Peter Garnryproduct-equitiesHighlighted articlessector-Technologyplace-lr/eurInnovationArtificial Intelligencecompany-novo nordiskNovo Nordisk B ASsector-Health CareAsmlASML HoldingAdvanced ordersThought StartersEuropean top innovators: R&D intensity drives returns<div class="article-excerpt">R&D is key for long-term shareholder returns and generally understanding the drivers of increasing returns. One key driver is Wright's Law (cost reduction with cumulative output) and Economies of Scale. High ROIC is a hallmark of competitive edge for generating superior returns and high ROIC often reflects industry or technology shifts.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>R&amp;D is an important factor to consider for the long-term investor</span></strong></h3> <p><span>In a recent research note <a href="https://www.morganstanley.com/im/publication/insights/articles/article_increasingreturns.pdf?1706635653816">Increasing Returns &ndash; Identifying Returns and What Drives Them</a> by Michael Mauboussin and Dan Callahan the authors talk about what drives equity returns. The table from their note (see below) shows the five main drivers of increasing returns for companies and their shareholders. It worth reflecting on as an investor as it can help you identify whether a company that you are considering investing in has one of more of these drivers of long-term increasing returns. For Tesla Wright&rsquo;s Law is at play which is the <em>Learning by Doing</em> factor as cost per unit (EVs) drops by about 20% for every doubling of cumulative output. The force often goes hand in hand with the <em>Economies of Scale</em> factor as increasing cumulative output also increase volume of production up to a certain point.</span></p> <p><span>The hallmark of competitiveness and these increasing returns are a high return on invested capital (ROIC) which reflects that a company has a structure and offers a product that yield a return on capital surpassing the cost of capital. High ROIC figures for an industry are often a sign of significant industry or technology changes. Historical data suggests that abnormal ROIC does tend to revert to the long-term average but that the time period is different across industries and technologies.</span></p> <p><span>One of the findings around companies with increasing returns is that superstar firms substantially outspend their competitors on intangible assets. Increasingly those investments are going into proprietary software and those investments are now growing faster than traditional R&amp;D, acquisitions, advertising, and lobbying. In other words, software is key driver of future moats for many companies. In the old economy advertising was important but today software is more important. High R&amp;D spending is generally associated with companies innovating faster than competitors and winning long-term.</span></p> <p><span>We are used to talk about US exceptionalism because the US won the digitalization with Europe&rsquo;s technology sector sleeping at the steering wheel. But what about Europe, does the continent offer any superstars when it comes to R&amp;D and innovation? The list below highlights 20 European publicly listed companies. We have filtered on those with a market cap above &euro;10bn, ROIC above 12%, and then selected those companies with the highest R&amp;D spending to revenue. We have also chosen companies across a wide range of industries as the list would otherwise be concentrated too much around pharmaceuticals and semiconductors.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/14_pg_1.png"/></div><div class="rte--output">Source: Counterpoint Global</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/14_pg_2.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Three European superstars: Novo Nordisk, ABB, and ASML</span></strong></h3> <p><span>As we cannot highlight all the companies in the list we have chosen three companies that are innovators in different industries.</span></p> <p><span class="underline; ">Novo Nordisk: Leading the obesity treatment boom</span></p> <p><span>Novo Nordisk is one of the leading insulin manufacturers in the world together with US based Eli Lilly. The Danish pharmaceutical company has recently made key breakthroughs in obesity treatment using the same active ingredient used in its insulin. This has unlocked an almost infinite demand for its obesity&nbsp; drug called Wegovy and catapulted revenue growth to its <a href="https://www.home.saxo/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024">highest level in the firm&rsquo;s entire history</a>. The pharmaceutical industry of Europe is significant industry and important value driver of European equity markets as the list also shows.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/14_pg_6.png"/></div><div class="rte--output">Source: Novo Nordisk investor presentation</div><br/><div class="article-additional-rte"><div class="rte--output"><p><span class="underline; ">ABB: Industrial and automation powerhouse </span></p> <p><span>ABB is an industrial giant of Europe and a leader in robotics, automation technology, and power solutions. The new wave of electrification ushering over the world with electrification of transportation, heating, and running data centres for digitalization is benefitting ABB. The company&rsquo;s largest segment is called Electrification which is engaged in everything related to the electrification from power solution, EV charging networks, grid technology and power generation technologies. This segment has been the key driver of the company&rsquo;s record margin expansion.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/14_pg_7.png"/></div><div class="rte--output">Source: ABB investor presentation</div><br/><div class="article-additional-rte"><div class="rte--output"><p><span class="underline; ">ASML: Monopoly in equipment used for advanced AI chips</span></p> <span>The crown jewel of Europe&rsquo;s technology sector manufacturing advanced lithography machines used for advanced chip production. The most advanced AI chips in the world powering the boom in AI are manufactured using extreme ultraviolet lithography machines (EUV). ASML basically holds a close to monopoly in this industry and EUV accounted for 42% of net system sales in 2023. No matter who wins the chip battle (Nvidia vs AMD vs Intel) or who wins the foundry battle (TSMC vs Intel), the industry must use ASML machines and thus the company is well-positioned for the AI boom and general Internet of Things trend over the coming decades.</span></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/14_pg_8.png"/></div><div class="rte--output">Source: ASML investor presentation</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-14T12:00:00Z" data-instance="time-formatter tooltip__6J72B2">2024-02-14 13:00</time></div> <h4><a href="https://www.saxotrader.com/d/article/a2dd0065-b865-4efd-835d-c9728bb34ea4" target="_self">Recession and not inflation is the real equity killer</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-13T10:30:00Z" data-instance="time-formatter tooltip__GK8VZ6">2024-02-13 11:30</time></div> <h4><a href="https://www.saxotrader.com/d/article/41f5da91-8047-4611-8c7c-2dbed8812249" target="_self">The boom in equities is coming to Japan, Arm sets new record on valuation</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-12T13:45:00Z" data-instance="time-formatter tooltip__MPB3J3">2024-02-12 14:45</time></div> <h4><a href="https://www.saxotrader.com/d/article/a4bafb62-63ab-4a8d-96cc-946d2d782188" target="_self">Airbnb battles headwinds as fee hike may boost profits, can Airbus soar past Boeing?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-09T10:00:00Z" data-instance="time-formatter tooltip__DYXE6R">2024-02-09 11:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/55e3b8d8-6458-4079-b7ab-a2ff430265e5" target="_self">Q4 2023 earnings scorecard and Arm bonanza</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-07T14:50:00Z" data-instance="time-formatter tooltip__KQJ92V">2024-02-07 15:50</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/cc202455-106e-46e4-83eb-c2015c4874cb" target="_self">Have US equities gone too far this time?</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-05T11:30:00Z" data-instance="time-formatter tooltip__2QMXPQ">2024-02-05 12:30</time></div> <h4><a rel="noopener noreferrer" 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tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-01T14:30:00Z" data-instance="time-formatter tooltip__248BDR">2024-02-01 15:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/what-are-the-feds-possible-considerations-on-rate-cuts-01022024" target="_blank">What are the Fed&rsquo;s possible considerations on rate cuts?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-31T12:30:00Z" data-instance="time-formatter tooltip__8N5JW6">2024-01-31 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024" target="_blank">Earnings review: Microsoft, Alphabet, AMD, and Novo Nordisk</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-29T12:15:00Z" data-instance="time-formatter tooltip__GJE276">2024-01-29 13:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-big-earnings-week-with-technology-giants-in-focus-29012024" target="_blank">Earnings Watch: Big earnings week with technology giants in focus</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-25T10:15:00Z" data-instance="time-formatter tooltip__GAX49Z">2024-01-25 11:15</time></div> <h4><a rel="noopener noreferrer" 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data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-22T12:30:00Z" data-instance="time-formatter tooltip__X7QR5W">2024-01-22 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024" target="_blank">Earnings Watch: Can Tesla convince the market about growth?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-11T10:40:00Z" data-instance="time-formatter tooltip__2KWPVN">2024-01-11 11:40</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/first-us-listed-etfs-holding-spot-bitcoin-start-trading-today-11012024" target="_blank">First US listed ETFs holding spot Bitcoin start trading today</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T14:00:00Z" data-instance="time-formatter tooltip__4KWP8R">2024-01-09 15:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/nvidia-rides-ai-hype-to-new-all-time-high-as-q4-earnings-season-nears-09012024" target="_blank">Nvidia rides AI hype to new all-time high as Q4 earnings season nears</a></h4> <p>&nbsp;</p> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Technology</span> <span>Europe</span> <span>Innovation</span> <span>Artificial Intelligence</span> <span>Novo Nordisk</span> <span>Novo Nordisk B A/S</span> <span></span> <span>Asml</span> <span>ASML Holding</span> <span>Advanced orders</span> <a href="https://www.home.saxo/en-au/insights/news-and-research/thought-starters">Thought Starters</a></div>Thu, 15 Feb 2024 09:00:00 Z2024-02-16T14:34:55Z{A2DD0065-B865-4EFD-835D-C9728BB34EA4}https://www.home.saxo/en-au/content/articles/equities/recession-and-not-inflation-is-the-real-equity-killer-14022024Peter Garnryproduct-equitiesHighlighted articlesInflationFederal ReserveRecession and not inflation is the real equity killer<div class="article-excerpt">Yesterday's US inflation report was a surprise, pushing equity markets, especially Nasdaq, lower. This hotter-than-expected inflation pushed rate cut expectations further down the calendar. A March rate cut is off the table, with first cut either in May or June, and by December we might see four cuts. This is a drastic change from the seven cuts envisioned earlier this year. </div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Inflation dynamics are delaying the market&rsquo;s rate cut hopes</span></strong></h3> <p><span>Yesterday&rsquo;s surprise upside in the US January inflation report showing CPI YoY of 3.1% vs est. 2.9% and core CPI YoY of 3.9% vs est. 3.7% pushed equities lower with Nasdaq 100 futures leading the declines down 1.6%. However, the leading technology index futures are already up 0.6% today reflecting that this inflation surprise is going to derail the equity rally for now. Before go deeper into what yesterday&rsquo;s inflation report means for equities it worth observing the market change in pricing Fed rate cuts.</span></p> <p><span>The table below shows that the current Fed effective rate of 5.33% with the 3-month SOFR Mar-24 futures closing at an estimated Fed funds rate of 5.28 yesterday reflecting that a March rate cut is completely priced out. The table also shows the estimated Fed fund rates at different date points in the future from those SOFR futures from one week ago and the difference. As we can see that compared to just one week ago, the market has removed an entire rate cut (25 bps.) by the July FOMC meeting. The current estimated Fed funds rate at the July meeting is now 39 bps. below the current effective rate suggesting the market is leaning towards two rate cuts by the July FOMC meeting but that it is close to 50/50. The table also show that the market is pricing four rate cuts (Dec-24 contract is estimating Fed funds rate 91 bps. below current effective rate) by the December FOMC meeting which is drastic change from early this year where is market was at seven rate cuts. So what has changed?</span></p> <p><span>As we wrote in our <a href="https://www.home.saxo/content/articles/equities/what-are-the-feds-possible-considerations-on-rate-cuts-01022024">What are the Fed&rsquo;s possible considerations on rate cuts?</a> Equity note back on 1 February there were several factors that were pointing towards that the Fed would hold back. Some of those were sticky core services inflation, loose financial conditions, trend growth in the US economy, and tighter labour market is the recent monthly observations. Yesterday&rsquo;s inflation report showed exactly what we have been talking about that the wage dynamics are creating sticky core services inflation which yesterday gained 0.66% MoM and annualizing the 6-month average MoM figures hit 5.6% annualized. The upside case now on inflation is this. Base effects from lower energy prices are diminishing now and the global manufacturing sector is showing green shoots with PMI figures showing highest activity levels since August 2022. Imagine the goods economy kicks into gear again on top of the current sticky services inflation?</span></p> <p><span>Should equity investors be worried about these inflation dynamics and that the path to the Fed&rsquo;s estimated terminal Fed Funds Rate is now presumably going to be longer? As long as headline inflation remains below 4% we are not worried for equity returns from the inflation angle. A recession or not means much more for equity returns, so as long as we are not seeing clear signs that a recession is incoming we believe equity sentiment will remain positive. But as we have also discussed in several recent equity notes the high equity valuation levels are quite high and thus pose a risk should companies suddenly not be able to deliver on those high expectations.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/14_pg_3.png"/></div><div class="rte--output">Nasdaq 100 futures | Source: Saxo</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/14_pg_4.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/14_pg_5.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong>Equities&nbsp;</strong><time 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boost profits, can Airbus soar past Boeing?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-09T10:00:00Z" data-instance="time-formatter tooltip__DYXE6R">2024-02-09 11:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/55e3b8d8-6458-4079-b7ab-a2ff430265e5" target="_self">Q4 2023 earnings scorecard and Arm bonanza</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-07T14:50:00Z" data-instance="time-formatter tooltip__KQJ92V">2024-02-07 15:50</time></div> <h4><a rel="noopener noreferrer" 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data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-24T15:45:00Z" data-instance="time-formatter tooltip__2BGW9N">2024-01-24 16:45</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/investment-boom-in-technology-and-earnings-review-24012024" target="_blank">Investment boom in technology and earnings review</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-22T12:30:00Z" data-instance="time-formatter tooltip__X7QR5W">2024-01-22 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024" target="_blank">Earnings Watch: Can Tesla convince the market about growth?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-11T10:40:00Z" data-instance="time-formatter tooltip__2KWPVN">2024-01-11 11:40</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/first-us-listed-etfs-holding-spot-bitcoin-start-trading-today-11012024" target="_blank">First US listed ETFs holding spot Bitcoin start trading today</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T14:00:00Z" data-instance="time-formatter tooltip__4KWP8R">2024-01-09 15:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/nvidia-rides-ai-hype-to-new-all-time-high-as-q4-earnings-season-nears-09012024" target="_blank">Nvidia rides AI hype to new all-time high as Q4 earnings season nears</a></h4> <div><strong>Quarterly Outlook</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T07:00:00Z" data-instance="time-formatter tooltip__GAJZW8">2024-01-09 08:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/quarterly-outlook/new-extremes-and-a-challenging-opportunity-set-09012024" target="_blank">Equities: New extremes and challenging opportunities</a></h4> <p>&nbsp;</p> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Inflation</span> <span>Federal Reserve</span></div>Wed, 14 Feb 2024 12:00:00 Z2024-02-16T14:34:55Z{41F5DA91-8047-4611-8C7C-2DBED8812249}https://www.home.saxo/en-au/content/articles/equities/the-boom-in-equities-is-coming-to-japan-arm-sets-new-record-on-valuation-13022024Peter Garnryproduct-equitiesHighlighted articlesplace-lc/jpJapan 225Bank of Japancompany-arm holdingssector-TechnologyNvidia CorpNVIDIA CorporationThe boom in equities is coming to Japan, Arm sets new record on valuation<div class="article-excerpt">Japanese equities are booming with strong gains in tech stocks and specifically Tokyo Electron up 13.3% due to strong semiconductor equipment demand in China. Overall, while Japanese equities look impressive in JPY, but their return is more modest compared to US and Europe in USD terms.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>A Japanese equities boom in JPY, not so much in USD</span></strong></h3> <p><span>Sometimes you are right and sometimes you are wrong. We were clearly wrong on Japanese equities as we highlighted in our recent <a href="https://www.home.saxo/content/articles/quarterly-outlook/new-extremes-and-a-challenging-opportunity-set-09012024">Quarterly Outlook</a> that we liked UK and European equities over Japanese due to JPY appreciation risks. The idea was based on BOJ closing some of the gap to other central banks as continuously weaker JPY is unsustainable longer term. Was has in fact happened is the exact opposite with the JPY weakening this year against the USD. The flipside of this trend in JPY has been a continuation of the momentum in Japanese equities.</span></p> <p><span>In today&rsquo;s session, Nikkei 225 futures gained 3.4% led by strong gains across technology stocks with the information technology and communication services sectors up 5.7% and 3.6% respectively. Japanese banking stocks were also leading the gains up 4.3%. The strongest single stock gainer was Tokyo Electron up 13.3% as the company hiked its fiscal year guidance on strong demand from China with the country accounting for almost 50% of revenue in the quarter than ended in December. Demand for Tokyo Electron semiconductor machines are coming back as memory chip demand is rebounding as consumer electronics have turned a corner as inflation is no longer suppressing consumer demand. Tokyo Electron is also benefiting from various US semiconductor sanctions against China.</span></p> <p><span>Japanese equities have returned 11.6% annualized since August 2012 when <a href="https://en.wikipedia.org/wiki/Abenomics#:~:text=Abenomics%20(%E3%82%A2%E3%83%99%E3%83%8E%E3%83%9F%E3%82%AF%E3%82%B9%2C%20%E5%AE%89%E5%80%8D%E3%83%8E%E3%83%9F%E3%82%AF%E3%82%B9%2C,Japan%20from%202012%20to%202020.#:~:text=Abenomics%20(%E3%82%A2%E3%83%99%E3%83%8E%E3%83%9F%E3%82%AF%E3%82%B9%2C%20%E5%AE%89%E5%80%8D%E3%83%8E%E3%83%9F%E3%82%AF%E3%82%B9%2C,Japan%20from%202012%20to%202020.">Abenomics</a> was introduced which have created a sense of more optimism and strong wealth creation in Japan. While Abenomics have changed Japan lifting nominal GDP growth and increase women labour market participation, it is has also come with a structural weaker JPY. In fact, if one compared Japanese equity returns against US and Europe in USD terms then the Japanese total return falls to 7.7% annualized, only a bit better than Europe at 6.6%. The US equity return is still impressive at 12.9% annualized since August 2012.</span></p> <p><span>When you look at the total return index of Japanese equities in JPY it looks like a bubble, but it is important to take a step back and look at valuation. The current dividend yield is 2.1% and the buyback yield is 1%, so Japanese companies are returning 3.1% of capital to investors. The long-term real GDP annual growth for Japan is estimated to be around 0.5-0.6%. Adding GDP growth takes the long-term real return expectations for Japanese equities to 3.7%. Adding back 1.5% annual inflation means that Japanese equities are expected long-term to deliver 5.2% annualized nominal return. Given that the JPY has depreciated annually by around 4% against the EUR since Abenomics, the future path of the JPY is key to take into account before foreign investors pile into Japanese equities.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/13_pg_1.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/13_pg_2.png"/></div><div class="rte--output">Tokyo Electron share price | Source: Saxo</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/13_pg_3.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Arm continues to defy gravity in financial markets</span></strong></h3> <p><span>We wrote about the <a href="https://www.home.saxo/content/articles/equities/q4-2023-earnings-scorecard-and-arm-bonanza-09022024">bonanza in Arm shares</a> last week flagging the risks and basically warning investors to not be carried away. While Arm is an incredible company with strong IP rights and a deep moat against the competition the increased guidance is not high enough to justify such a big repricing of Arm. Investors are clearly not reading our warnings and Arm shares rose another 29.3% in yesterday&rsquo;s session. It is clear that Arm is driven by a fear of missing out on another AI boom because objectively Arm is now valued at levels we have never seen before. </span></p> <p><span>Arm&rsquo;s current 12-month forward EV/sales* is 39.5x which is around twice the S&amp;P 500 stock with the highest 12-month forward EV/sales which is Prologis at 19.8x. However, since this is a real estate company the ratio is not comparable. Let us compare it to some of the most richly valued technology companies in the S&amp;P 500 Index. Nvidia is at 18.7x, ServiceNow is at 14.2x, and VeriSign is at 13x. In other words, Arm is valued at levels that we have never seen before since the raging bull market during the dot-com bubble.</span></p> <p><em><span>EV means the enterprise value which is the market value of the company plus the net debt which is outstanding interest-bearing debt minus cash equivalents. The measure is used because it makes it possible to compare companies with different capital structure (the mix of equity and debt on the balance sheet)</span></em><span>.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/13_pg_4.png"/></div><div class="rte--output">Arm share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-12T13:45:00Z" data-instance="time-formatter tooltip__MPB3J3">2024-02-12 14:45</time></div> <h4><a href="https://www.saxotrader.com/d/article/a4bafb62-63ab-4a8d-96cc-946d2d782188" target="_self">Airbnb battles headwinds as fee hike may boost profits, can Airbus soar past Boeing?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-09T10:00:00Z" data-instance="time-formatter tooltip__DYXE6R">2024-02-09 11:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/55e3b8d8-6458-4079-b7ab-a2ff430265e5" target="_self">Q4 2023 earnings scorecard and Arm bonanza</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-07T14:50:00Z" data-instance="time-formatter tooltip__KQJ92V">2024-02-07 15:50</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/cc202455-106e-46e4-83eb-c2015c4874cb" target="_self">Have US equities gone too far this time?</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-05T11:30:00Z" data-instance="time-formatter tooltip__2QMXPQ">2024-02-05 12:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-busy-week-with-focus-on-caterpillar-eli-lilly-and-siemens-05022024" target="_blank">Earnings Watch: Busy week with focus on Caterpillar, Eli Lilly, and Siemens</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-02T12:30:00Z" data-instance="time-formatter tooltip__4PD38V">2024-02-02 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-apple-amazon-and-meta-02022024" target="_blank">Earnings review: Apple, Amazon, and Meta</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-01T14:30:00Z" data-instance="time-formatter tooltip__248BDR">2024-02-01 15:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/what-are-the-feds-possible-considerations-on-rate-cuts-01022024" target="_blank">What are the Fed&rsquo;s possible considerations on rate cuts?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-31T12:30:00Z" data-instance="time-formatter tooltip__8N5JW6">2024-01-31 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024" target="_blank">Earnings review: Microsoft, Alphabet, AMD, and Novo Nordisk</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-29T12:15:00Z" data-instance="time-formatter tooltip__GJE276">2024-01-29 13:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-big-earnings-week-with-technology-giants-in-focus-29012024" target="_blank">Earnings Watch: Big earnings week with technology giants in focus</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-25T10:15:00Z" data-instance="time-formatter tooltip__GAX49Z">2024-01-25 11:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/tesla-earnings-review-between-two-mountain-tops-25012024" target="_blank">Tesla earnings review: Between two mountain tops?</a>&nbsp;</h4> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-24T15:45:00Z" data-instance="time-formatter tooltip__2BGW9N">2024-01-24 16:45</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/investment-boom-in-technology-and-earnings-review-24012024" target="_blank">Investment boom in technology and earnings review</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-22T12:30:00Z" data-instance="time-formatter tooltip__X7QR5W">2024-01-22 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024" target="_blank">Earnings Watch: Can Tesla convince the market about growth?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-11T10:40:00Z" data-instance="time-formatter tooltip__2KWPVN">2024-01-11 11:40</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/first-us-listed-etfs-holding-spot-bitcoin-start-trading-today-11012024" target="_blank">First US listed ETFs holding spot Bitcoin start trading today</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T14:00:00Z" data-instance="time-formatter tooltip__4KWP8R">2024-01-09 15:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/nvidia-rides-ai-hype-to-new-all-time-high-as-q4-earnings-season-nears-09012024" target="_blank">Nvidia rides AI hype to new all-time high as Q4 earnings season nears</a></h4> <div><strong>Quarterly Outlook</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T07:00:00Z" data-instance="time-formatter tooltip__GAJZW8">2024-01-09 08:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/quarterly-outlook/new-extremes-and-a-challenging-opportunity-set-09012024" target="_blank">Equities: New extremes and challenging opportunities</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-04T13:15:00Z" data-instance="time-formatter tooltip__PEDV8M">2024-01-04 14:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/the-optimist-vs-pessimist-04012024" target="_blank">Are you optimistic or pessimistic on equities?</a>&nbsp;</h4> <p>&nbsp;</p> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Japan</span> <span>Japan 225</span> <span>Bank of Japan</span> <span>Arm Holdings</span> <span>Technology</span> <span>NVidia Corp.</span> <span>NVIDIA Corporation</span></div>Tue, 13 Feb 2024 10:30:00 Z2024-02-13T10:34:36Z{A4BAFB62-63AB-4A8D-96CC-946D2D782188}https://www.home.saxo/en-au/content/articles/equities/airbnb-battles-headwinds-as-fee-hike-may-boost-profits-can-airbus-soar-past-boeing-12022024Peter Garnryproduct-equitiesHighlighted articlesEarnings Releasessubject-is/fin.reportsAirbnbAirbnb IncAirbus SEGenmab ASSchneider ElectricAirbnb battles headwinds as fee hike may boost profits, can Airbus soar past Boeing?<div class="article-excerpt">Airbnb heads into earnings with declining growth, war-related demand concerns, and oversupply worries. However, a recent fee hike and lower marketing expenses offer hope for improved margins. Investors also await news on geographical revenue split and the company's future growth trajectory.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Airbnb: troubles brewing but fee hike helps</span></strong></h3> <p><span>Airbnb reports FY23 Q4 earnings tomorrow after the US market close with analysts expecting revenue growth of 14% y/y and EPS of $0.68 up 45% y/y. While Q4 revenue growth is still double digit it will be the eight straight quarter of declining revenue growth has the post pandemic opening wave is adjusting the long-term structural growth rates. The concerns going into the earnings release are around demand hit from the war between Hamas and Israel, oversupply of overnight rooms and increased costs related to payments and insurance. Airbnb&rsquo;s 2% guest fee hike for cross-border travel may offset these headwinds and expected lower marketing expenses are also expected to improve operating margin. </span></p> <span>Another key focus for investors is on geographical split on revenue as the North America segment has dominated in the past but in Q3 last year the EMEA took over as the largest segment, but Asia Pacific and Latin America segments are still small and not growing. Airbnb was previously a darling stock and seen as one of the more successful consumer technology companies coming out of Silicon Valley, but sell-side analysts following the company are split on their ratings with 54% on hold and the consensus price target is actually 7% below the recent closing price. Based on expected free cash flow of &euro;4.4bn this year Airbnb is valued at around 5% free cash flow yield.</span></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/12_pg_1.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Airbus: taking over the throne in aerospace?</span></strong></h3> <p><span>Boeing was getting its mojo back late last year as the stock was back to the early 2021 levels on a total return basis, but then came another accident in January with an Alaska Airlines aircraft losing a fuselage panel in mid-air cruising. The accident added to investors uncertainty over Boeing&rsquo;s lack of operational and production excellence that previously was its hallmark. As the chart below shows, the European aerospace giant Airbus has come through the pandemic in the best shape returning 17.7% since 1 January 2020 whereas Boeing shareholders are sitting on a 35.4% loss. For now investors like Airbus shares more than Boeing, and Airbus is close to overtake Boeing on market value, but in terms of revenue Boeing is still sitting on the aerospace throne.</span></p> <span>Airbus reports FY23 Q4 earnings on Thursday after the European market close. Analysts expect revenue of &euro;22.5bn up 9% y/y and EPS of &euro;2.00 down 10% y/y. Airbus is still suffering from supply-chain bottlenecks and inflation pressures on materials, but the bright spot should be commercial aircraft revenue due to a strong December on deliveries. A key focus for analysts will be on a potential guidance lift on deliveries in FY24 and more colour on the potential acquisition of Atos BDS which will bring expanded cybersecurity capabilities into the company. Analysts are predominantly positive on Airbus with 74% of analysts having a buy recommendation with the current price target being 10% above the last price. It is also worth noting that the market is valuing Boeing at 24-month forward EV/EBITDA of 16.1x vs only 9.2x for Airbus.</span></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/12_pg_2.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Earnings this week</span></strong></h3> <p><span>With almost 75% of the S&amp;P 500 Index having reported the impact on equities from earnings is fast disappearing with macro increasingly taking over as the driver of market direction and volatility. This week will still deliver a lot of earnings releases and besides the highlighted earnings from Airbnb and Airbus, other key earning releases to watch are Shopify, Genmab, Schneider Electric, Applied Materials, and Deere.</span></p> <ul > <li><span><strong>Today:</strong></span><span> CSL, Arista Networks, Cadence, Waste Management</span><br /> <br /> </li> <li><span><strong>Tuesday:</strong></span><span> Japan Tobacco, Marriott, Airbnb, AIG, Coca-Cola, Shopify, Zoetis, Moody&rsquo;s Ecolab</span><br /> <br /> </li> <li><span><strong>Wednesday:</strong></span><span> CBA, Sony, Heineken, Tokio, CME, EssilorLuxottica, Cisco, Occidental Petroleum, Barrick Gold, Genmab, Norsk Hydro, Kraft Heinz</span><br /> <br /> </li> <li><span><strong>Thursday:</strong></span><span> Schneider Electric, Stellantis, Southern Co, Applied Materials, Airbus, Deere, Safran, RELX, Pernod Ricard, Renault, Commerzbank</span><br /> <br /> </li> <li><span><strong>Friday:</strong></span><span> Eni, Sika, Swiss Re</span></li> </ul></div></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-09T10:00:00Z" data-instance="time-formatter tooltip__DYXE6R">2024-02-09 11:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/55e3b8d8-6458-4079-b7ab-a2ff430265e5" target="_self">Q4 2023 earnings scorecard and Arm bonanza</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-07T14:50:00Z" data-instance="time-formatter tooltip__KQJ92V">2024-02-07 15:50</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/cc202455-106e-46e4-83eb-c2015c4874cb" target="_self">Have US equities gone too far this time?</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-05T11:30:00Z" data-instance="time-formatter tooltip__2QMXPQ">2024-02-05 12:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-busy-week-with-focus-on-caterpillar-eli-lilly-and-siemens-05022024" target="_blank">Earnings Watch: Busy week with focus on Caterpillar, Eli Lilly, and Siemens</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-02T12:30:00Z" data-instance="time-formatter tooltip__4PD38V">2024-02-02 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-apple-amazon-and-meta-02022024" target="_blank">Earnings review: Apple, Amazon, and Meta</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-01T14:30:00Z" data-instance="time-formatter tooltip__248BDR">2024-02-01 15:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/what-are-the-feds-possible-considerations-on-rate-cuts-01022024" target="_blank">What are the Fed&rsquo;s possible considerations on rate cuts?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-31T12:30:00Z" data-instance="time-formatter tooltip__8N5JW6">2024-01-31 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024" target="_blank">Earnings review: Microsoft, Alphabet, AMD, and Novo Nordisk</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-29T12:15:00Z" data-instance="time-formatter tooltip__GJE276">2024-01-29 13:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-big-earnings-week-with-technology-giants-in-focus-29012024" target="_blank">Earnings Watch: Big earnings week with technology giants in focus</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-25T10:15:00Z" data-instance="time-formatter tooltip__GAX49Z">2024-01-25 11:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/tesla-earnings-review-between-two-mountain-tops-25012024" target="_blank">Tesla earnings review: Between two mountain tops?</a>&nbsp;</h4> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-24T15:45:00Z" data-instance="time-formatter tooltip__2BGW9N">2024-01-24 16:45</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/investment-boom-in-technology-and-earnings-review-24012024" target="_blank">Investment boom in technology and earnings review</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-22T12:30:00Z" data-instance="time-formatter tooltip__X7QR5W">2024-01-22 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024" target="_blank">Earnings Watch: Can Tesla convince the market about growth?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-11T10:40:00Z" data-instance="time-formatter tooltip__2KWPVN">2024-01-11 11:40</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/first-us-listed-etfs-holding-spot-bitcoin-start-trading-today-11012024" target="_blank">First US listed ETFs holding spot Bitcoin start trading today</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T14:00:00Z" data-instance="time-formatter tooltip__4KWP8R">2024-01-09 15:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/nvidia-rides-ai-hype-to-new-all-time-high-as-q4-earnings-season-nears-09012024" target="_blank">Nvidia rides AI hype to new all-time high as Q4 earnings season nears</a></h4> <div><strong>Quarterly Outlook</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T07:00:00Z" data-instance="time-formatter tooltip__GAJZW8">2024-01-09 08:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/quarterly-outlook/new-extremes-and-a-challenging-opportunity-set-09012024" target="_blank">Equities: New extremes and challenging opportunities</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-04T13:15:00Z" data-instance="time-formatter tooltip__PEDV8M">2024-01-04 14:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/the-optimist-vs-pessimist-04012024" target="_blank">Are you optimistic or pessimistic on equities?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-03T12:30:00Z" data-instance="time-formatter tooltip__VMQ9M3">2024-01-03 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/byd-is-the-new-leader-in-electric-vehicles-03012024" target="_blank">BYD is the new leader in electric vehicles</a>&nbsp;</h4> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span></span> <span>Corporate Earnings</span> <span>Airbnb</span> <span>Airbnb Inc.</span> <span>Airbus SE</span> <span>Genmab AS</span> <span>Schneider Electric</span></div>Mon, 12 Feb 2024 13:45:00 Z2024-02-12T15:28:19Z{55E3B8D8-6458-4079-B7AB-A2FF430265E5}https://www.home.saxo/en-au/content/articles/equities/q4-2023-earnings-scorecard-and-arm-bonanza-09022024Peter Garnryproduct-equitiesHighlighted articlesS P 500 indexsector-TechnologyBuy and holdcompany-microsoftMicrosoft CorpArtificial IntelligenceNVIDIA CorporationAmazoncompany-arm holdingsRenewable energyQ4 2023 earnings scorecard and Arm bonanza<div class="article-excerpt">With most S&P 500 companies having reported, the Q4 2023 earnings season is nearing its end. We can observe various winners and losers based on different metrics.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>The winners and losers in Q4</span></strong></h3> <p><span>With around 70% of S&amp;P 500 companies having reported earnings we are getting closer to the end of the Q4 2023 earnings season. The table below shows the winners and losers of the earnings season. Positive revenue surprises are often key indicators of future sentiment and here the top 5 surprises among the largest US stocks are NextEra Energy, General Electric, Eli Lilly, Linde, and Meta. In terms of revenue growth, the fastest growing companies are Eli Lilly, Meta, Microsoft, General Electric, and Uber.</span></p> <p><span>NextEra Energy is the most valuable US utility company and is spearheading the transformation towards renewable energy developing and operating renewable energy assets, selling battery solutions, and EV charging stations. Many investors may not know the company, but it has grown to $28bn in revenue from just $18bn in 2020 delivering net income of $6.9bn in 2023. The company reiterated in its Q4 earnings release its commitment to deliver EPS growth of 6-8% annualized through 2026.</span></p> <p><span>Sometimes analyst estimates do not reflect the true underlying estimates priced in the market and thus often the share price performance around earnings release can be a good way to gauge the winners and losers. Based on share price performance the three best earnings and guidance came from Meta, Netflix, and Amazon. On the negative side, the market was the most disappointed about earnings and outlook from Tesla, Alphabet, and McDonald&rsquo;s.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/9_pg_1.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/9_pg_2.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Arm shares are defying financial gravity</span></strong></h3> <p><span>The big winner yesterday was the chip design company Arm that went public last year. Arm reported better than expected earnings and listed its earnings guidance driven by huge demand for AI and smartphone makers putting more cores into phones. The company guides fiscal Q4 (ending 31 March) revenue of $850-900mn against estimated of $778mn. According to Arm management the AI boom is not hype and the cycle has just begun and is the most transformational technology of our lifetime. One of the key drivers going forward is that a lot of its customers are shifting to a new technology version called V9 which comes with almost double royalty rate. Arm&rsquo;s IP is used in electric vehicles, smartphones, TVs and cameras. While Arm is naturally talking their book, which any investor should take with a grain of salt, the strong guidance was strong and instrumental in lifting sentiment.</span></p> <p><span>However, it is important to recognize as an investor that the expected growth rate is &ldquo;only 22%&rdquo; in the fiscal year that ends in March 2025 and that the company is already at around 40% net profit margin. Investors are right willing to pay more than 2x forward operating earnings of that Nvidia which is one of the most hyped large cap stocks in the world. Arm is an impressive company but when valuations reaches these levels investors should be cautious. The 2021 technology hype cycle is a stark reminder of this.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/9_pg_3.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/9_pg_4.png"/></div><div class="rte--output">Arm share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong><br /> </strong> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-07T14:50:00Z" data-instance="time-formatter tooltip__KQJ92V">2024-02-07 15:50</time></div> <h4><a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/cc202455-106e-46e4-83eb-c2015c4874cb" target="_blank">Have US equities gone too far this time?</a></h4> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-05T11:30:00Z" data-instance="time-formatter tooltip__2QMXPQ">2024-02-05 12:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-busy-week-with-focus-on-caterpillar-eli-lilly-and-siemens-05022024" target="_blank">Earnings Watch: Busy week with focus on Caterpillar, Eli Lilly, and Siemens</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-02T12:30:00Z" data-instance="time-formatter tooltip__4PD38V">2024-02-02 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-apple-amazon-and-meta-02022024" target="_blank">Earnings review: Apple, Amazon, and Meta</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-01T14:30:00Z" data-instance="time-formatter tooltip__248BDR">2024-02-01 15:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/what-are-the-feds-possible-considerations-on-rate-cuts-01022024" target="_blank">What are the Fed&rsquo;s possible considerations on rate cuts?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-31T12:30:00Z" data-instance="time-formatter tooltip__8N5JW6">2024-01-31 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024" target="_blank">Earnings review: Microsoft, Alphabet, AMD, and Novo Nordisk</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-29T12:15:00Z" data-instance="time-formatter tooltip__GJE276">2024-01-29 13:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-big-earnings-week-with-technology-giants-in-focus-29012024" target="_blank">Earnings Watch: Big earnings week with technology giants in focus</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-25T10:15:00Z" data-instance="time-formatter tooltip__GAX49Z">2024-01-25 11:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/tesla-earnings-review-between-two-mountain-tops-25012024" target="_blank">Tesla earnings review: Between two mountain tops?</a>&nbsp;</h4> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-24T15:45:00Z" data-instance="time-formatter tooltip__2BGW9N">2024-01-24 16:45</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/investment-boom-in-technology-and-earnings-review-24012024" target="_blank">Investment boom in technology and earnings review</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-22T12:30:00Z" data-instance="time-formatter tooltip__X7QR5W">2024-01-22 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024" target="_blank">Earnings Watch: Can Tesla convince the market about growth?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-11T10:40:00Z" data-instance="time-formatter tooltip__2KWPVN">2024-01-11 11:40</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/first-us-listed-etfs-holding-spot-bitcoin-start-trading-today-11012024" target="_blank">First US listed ETFs holding spot Bitcoin start trading today</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T14:00:00Z" data-instance="time-formatter tooltip__4KWP8R">2024-01-09 15:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/nvidia-rides-ai-hype-to-new-all-time-high-as-q4-earnings-season-nears-09012024" target="_blank">Nvidia rides AI hype to new all-time high as Q4 earnings season nears</a></h4> <div><strong>Quarterly Outlook</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T07:00:00Z" data-instance="time-formatter tooltip__GAJZW8">2024-01-09 08:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/quarterly-outlook/new-extremes-and-a-challenging-opportunity-set-09012024" target="_blank">Equities: New extremes and challenging opportunities</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-04T13:15:00Z" data-instance="time-formatter tooltip__PEDV8M">2024-01-04 14:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/the-optimist-vs-pessimist-04012024" target="_blank">Are you optimistic or pessimistic on equities?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-03T12:30:00Z" data-instance="time-formatter tooltip__VMQ9M3">2024-01-03 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/byd-is-the-new-leader-in-electric-vehicles-03012024" target="_blank">BYD is the new leader in electric vehicles</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2023-12-27T06:00:00Z" data-instance="time-formatter tooltip__JDW9BD">2023-12-27 07:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/year-end-thoughts-and-what-to-expect-in-2024-27122023" target="_blank">Year-end thoughts and what to expect in 2024</a></h4> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>S P 500 index</span> <span>Technology</span> <span>Buy and hold</span> <span>Microsoft</span> <span>Microsoft Corp.</span> <span>Artificial Intelligence</span> <span>NVIDIA Corporation</span> <span>Amazon</span> <span>Arm Holdings</span> <span>Renewable energy</span></div>Fri, 09 Feb 2024 10:00:00 Z2024-02-09T13:08:38Z{CC202455-106E-46E4-83EB-C2015C4874CB}https://www.home.saxo/en-au/content/articles/equities/have-us-equities-gone-too-far-this-time-07022024Peter Garnryproduct-equitiesHighlighted articlesS P 500 indexsector-TechnologyBuy and holdHave US equities gone too far this time?<div class="article-excerpt">While US equity valuations are high, equities still offer a better long-term return than government bonds when considering the "real" return after accounting for inflation.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Equity valuations are back to risky heights</span></strong></h3> <p><span>Since the bottom around September 2022 US equities have staged an extraordinary comeback which has pushed equity valuations from below the historical average to levels seen during the 2000 dot-com bubble and pandemic technology rally in 2021. Traditional equity valuation models like our model incorporating several different valuation metrics are good for identifying stretched sentiment in equities but not good to capture long-run return expectations. More importantly, equities are impacted by bond markets because the bond market sets the cost of capital, and thus judging equities in isolation when forming long-run return expectations is not a good idea.</span></p> <p><span>However, if we start our analysis about US equities and whether a storm is brewing because sentiment has been stretched to levels that US companies can hardly deliver on, then let us start with looking at how equity valuations in isolation translate into future returns. As the second chart shows, the higher the equity valuation is the lower the future 10-year annualised real rate return becomes. Of course, it is not an exact science as the prediction interval lines suggest. At the current equity valuation, the predicted 10-year annualised real rate return is expected to be negative, but as the upper prediction line suggests, the return could be positive after all.</span></p> <p><span>One of the shortcomings of this approach is that the combined valuation metric will have a bias related to the chosen metrics and underlying shifts in equity sectors may not be captured well in this model. It is also not the preferred way to form long-run equity return expectations. Let us move to the more proper method and also incorporate those expectations relative to the bond market.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/7_pg_1.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/7_pg_2.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Less attractive but still preferable over bonds in the long run</span></strong></h3> <p><span>The preferred method to form long run equity return expectations are done by adding the current dividend yield and estimated buyback yield. For the S&amp;P 500 the current dividend yield is 1.5% and the 2-year average buyback yield is 2.2%. For many multinational companies it is more tax efficient to return capital to shareholders through buybacks than dividends. These two figures equate to a combined capital return yield of 3.7%. Assuming these capital return estimates can be held over a 10-year period the capital return yield should grow with long run expected real GDP growth. This is estimated to be around 2.2%. Adding the long run real GDP growth and the capital return yield equates to an annualised real expected return of 5.9% at the current level and under the assumptions described.</span></p> <p><span>In the bond market things are a bit easier because the return is known in advance. The current 10-year yield by the end of January was 3.91% and US 10-year zero coupon inflation swap was 2.46%. The inflation swap market is a hedging market in which market participants can swap cash flows based on the CPI Index and subtracting the swap rate from the US 10-year yield gives the investor a real return on bonds. In January, the market priced real return on US 7-10 year treasuries was 1.46%. Compared to 5.9% in equities investors are not offered the better deal in the long run in government bonds. The difference is called the real equity risk premium. In other words, how much are you as an investor compensated for taking equity risk (uncertainty about economic outlook, productivity, innovation, bankruptcy, and balance sheet).</span></p> <p><span>As the chart below shows, the real equity risk premium has shrunk to low levels for the period since 2006 and it is arguably lower than the historical average. But if you as an investor care about long run returns and accumulating wealth then the US equity market is still offering a better deal than government bonds. When we look at the chart it also become clear why the equity valuation chart in isolation is difficult to use. In late 2021, equity valuations were very high and one could have made the conclusion that equities were bad in the long run from those levels However, in real equity risk premium terms equities offered a spread of 6%. How is that possible? At the time the US 10-year yield was as low as 1.4% and the 10-year inflation swap was at 2.7% translating into a negative real return of negative 1.3%. Yes, equities were overextended and there was a bubble in certain technology segments, but the biggest bubble was in government bonds because it did not adequately price inflation risks.</span></p> <p><span>When interest rates started rising in 2022 on the back of the Fed&rsquo;s aggressive move on policy rates, bonds plummeted pushing up the cost of capital. The only natural reaction in equities was lower equity valuations, but also because higher interest rates were expected to push the economy into a recession. That did not happen, and US equities have since moved to new all-time highs in total return terms while US 10-year government bonds are still in a drawdown confirming where the real bubble was.</span></p> <p><span>For the long-term investor a final observation is important to understand. The US equity market has returned 9.1% annualised since December 2004 and US 7-10 year government bonds have in the same period only delivered 3.4% translating into an equity risk premium of 5.7% annualised. Compounding in equities is magic for wealth creation. Bonds still play a role in asset allocation and in private investor portfolios. Especially, as the investor ages and has less time to recoup large drawdowns which are part of the risk you assume as an investor in equities.</span></p> <em><span>Explainer of inflation swaps: If the current 10-year inflation swap rate is 2.5% and you go the swap then get a return stream if the realized CPI Index ends up higher than 2.5% annualized over the 10-year period. In other words, if inflation ends up at 3% over this 10-year period then your real rate return on your bonds would have been 0.5%-point lower compared to the prevailing expectations when you invested but by going long the inflation swap you get the lost 0.5%-point back from the hedge. In normal language, an investor can lock in the 10-year forward real return in US treasuries.</span></em></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/7_pg_3.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/7_pg_4.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong><br /> </strong> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-05T11:30:00Z" data-instance="time-formatter tooltip__2QMXPQ">2024-02-05 12:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-busy-week-with-focus-on-caterpillar-eli-lilly-and-siemens-05022024" target="_blank">Earnings Watch: Busy week with focus on Caterpillar, Eli Lilly, and Siemens</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-02T12:30:00Z" data-instance="time-formatter tooltip__4PD38V">2024-02-02 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-apple-amazon-and-meta-02022024" target="_blank">Earnings review: Apple, Amazon, and Meta</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-01T14:30:00Z" data-instance="time-formatter tooltip__248BDR">2024-02-01 15:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/what-are-the-feds-possible-considerations-on-rate-cuts-01022024" target="_blank">What are the Fed&rsquo;s possible considerations on rate cuts?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-31T12:30:00Z" data-instance="time-formatter tooltip__8N5JW6">2024-01-31 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024" target="_blank">Earnings review: Microsoft, Alphabet, AMD, and Novo Nordisk</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-29T12:15:00Z" data-instance="time-formatter tooltip__GJE276">2024-01-29 13:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-big-earnings-week-with-technology-giants-in-focus-29012024" target="_blank">Earnings Watch: Big earnings week with technology giants in focus</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-25T10:15:00Z" data-instance="time-formatter tooltip__GAX49Z">2024-01-25 11:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/tesla-earnings-review-between-two-mountain-tops-25012024" target="_blank">Tesla earnings review: Between two mountain tops?</a>&nbsp;</h4> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-24T15:45:00Z" data-instance="time-formatter tooltip__2BGW9N">2024-01-24 16:45</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/investment-boom-in-technology-and-earnings-review-24012024" target="_blank">Investment boom in technology and earnings review</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-22T12:30:00Z" data-instance="time-formatter tooltip__X7QR5W">2024-01-22 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024" target="_blank">Earnings Watch: Can Tesla convince the market about growth?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-11T10:40:00Z" data-instance="time-formatter tooltip__2KWPVN">2024-01-11 11:40</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/first-us-listed-etfs-holding-spot-bitcoin-start-trading-today-11012024" target="_blank">First US listed ETFs holding spot Bitcoin start trading today</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T14:00:00Z" data-instance="time-formatter tooltip__4KWP8R">2024-01-09 15:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/nvidia-rides-ai-hype-to-new-all-time-high-as-q4-earnings-season-nears-09012024" target="_blank">Nvidia rides AI hype to new all-time high as Q4 earnings season nears</a></h4> <div><strong>Quarterly Outlook</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T07:00:00Z" data-instance="time-formatter tooltip__GAJZW8">2024-01-09 08:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/quarterly-outlook/new-extremes-and-a-challenging-opportunity-set-09012024" target="_blank">Equities: New extremes and challenging opportunities</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-04T13:15:00Z" data-instance="time-formatter tooltip__PEDV8M">2024-01-04 14:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/the-optimist-vs-pessimist-04012024" target="_blank">Are you optimistic or pessimistic on equities?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-03T12:30:00Z" data-instance="time-formatter tooltip__VMQ9M3">2024-01-03 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/byd-is-the-new-leader-in-electric-vehicles-03012024" target="_blank">BYD is the new leader in electric vehicles</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2023-12-27T06:00:00Z" data-instance="time-formatter tooltip__JDW9BD">2023-12-27 07:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/year-end-thoughts-and-what-to-expect-in-2024-27122023" target="_blank">Year-end thoughts and what to expect in 2024</a></h4> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>S P 500 index</span> <span>Technology</span> <span>Buy and hold</span></div>Wed, 07 Feb 2024 14:50:00 Z2024-02-07T15:02:10Z{1E099C77-63BD-476C-BA8D-2CAFE74453FB}https://www.home.saxo/en-au/content/articles/equities/earnings-watch-busy-week-with-focus-on-caterpillar-eli-lilly-and-siemens-05022024Peter Garnryproduct-equitiesHighlighted articlessubject-is/fin.reportsEarnings Releasescompany-caterpillar inccompany-siemensSiemens Energy AGSiemens AGsector-Health CareEarnings Watch: Busy week with focus on Caterpillar, Eli Lilly, and Siemens<div class="article-excerpt">The upcoming week promises a packed schedule of earnings releases, with companies across various sectors in Europe and the US reporting their Q4 results with the three most important earnings coming from Caterpillar, Eli Lilly, and Siemens.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Another big week on earnings</span></strong></h3> <p><span>Last week, US technology companies stole the show on earnings with generally strong results to show, while this week will keep the pace on earnings but from a wider range of companies in both Europe and the US. While Q4 earnings have overall been strong and in particular in the technology and communication services sectors, stocks have rallied much more the past six months than earnings have improved. This has expanded our valuation measure on the MSCI World Index (see chart below) which means that expectations might be running a bit too high setting the bar too high for companies in the Q1 earnings season which starts in mid-April.</span></p> <p><span>The list below highlights the most important earnings to track this week for equity investors, and our key focus is in particular on earnings from Caterpillar, Eli Lilly, and Siemens. </span></p> <ul > <li><span class="underline; ">Monday:</span><span> Mitsubishi UFJ Financial, Caterpillar, Vertex Pharmaceuticals, McDonald&rsquo;s, Palantir</span><br /> <br /> </li> <li><span class="underline; ">Tuesday:</span><span> Toyota Motor, UBS Group, Linde, Amgen, Gilead Sciences, Eli Lilly, BP, Fiserv, KKR, Infineon Technologies, Spotify, Intesa Sanpaolo</span><br /> <br /> </li> <li><span class="underline; ">Wednesday:</span><span> Equinor, Walt Disney, Alibaba, TotalEnergies, Uber Technologies, CVS Health, Siemens Energy, Vestas Wind Systems, Orsted, Carlsberg, ARM, PayPal</span><br /> <br /> </li> <li><span class="underline; ">Thursday:</span><span> NTT, Siemens, AstraZeneca, Unilever, Philip Morris, S&amp;P Global, L&rsquo;Oreal, ConocoPhillips, Adyen, ArcelorMittal, Maersk</span><br /> <br /> </li> <li><span class="underline; ">Friday:</span><span> Toyota Electron, Hermes International, PepsiCo, Coloplast&nbsp;</span></li> </ul></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/5_pg_1.png"/></div><div class="article-additional-rte"><div class="rte--output"><p><span class="underline; ">Caterpillar: Headwinds to materialize in 2024 on impact from higher interest rates</span></p> <p><span>Caterpillar reports Q4 earnings today at 11:30 GMT with analysts expecting revenue of $16.5bn flat compared to a year ago, and EBITDA of $3.6bn up from $3.4bn a year ago. The world&rsquo;s largest machinery equipment company is likely facing a transition year in 2024 as the impact from higher interest rates is finally hitting the global construction industry with orders and the backlog expected to decline in 2024. So why is it worth to watch Caterpillar earnings? The reason is that global construction and mining are important cyclical parts of the economy and any pickup will be seen in Caterpillar&rsquo;s orders and thus the company&rsquo;s outlook gives clues to economic growth.</span></p> <p><span class="underline; ">Eli Lilly: Riding the wave in obesity drug boom</span></p> <p><span>Eli Lilly reports Q4 earnings tomorrow before the US market open with analysts expecting revenue of $9bn up 23% y/y and EBITDA of $2.5bn unchanged from a year ago. While Mounjaro, the GLP-1 approved for treating diabetes, will dominate the figures for Eli Lilly, investors will focus on Zepbound, the GLP-1 drug approved for obesity treatment, because this is where the future growth will come from. Especially, guidance on Zepbound revenue for 2024 will be key for investors in order to compare equity valuations against that of Novo Nordisk which is so far leading the initial growth wave in obesity drugs. Analysts expect FY24 revenue growth of 17% for Eli Lilly and 22% for Novo Nordisk.</span></p> <p><span class="underline; ">Siemens: Is the global industrial sector turning a corner?</span></p> <p><span>Siemens reports FY24 Q1 (ending 31 Dec) earnings on Thursday before the market open in Europe with analysts expecting revenue &euro;18.8bn up 4% y/y and EBITDA of &euro;3.2bn unchanged compared to a year ago. The key question for investors is whether the headwinds in orders and destocking ended in the previous fiscal quarter and the quarters ahead would see improving growth figures. Siemens&rsquo; operating margin may also be under pressure for some quarter due to wage pressures until productivity initiatives flow through the business group.</span></p> <h3 class="article-heading--3"><strong><span>A key test of the wind turbine industry</span></strong></h3> <p><span>Since the pandemic broke out impacting global supply chains and commodity markets for the key materials used in wind turbines the wind turbine industry has been plagued by lower growth compared to the growth years 2012-2019. Higher project installation costs have negatively impacted the competitiveness of wind power relative to solar. Recently the lower natural gas prices in the US, and less so in Europe, have further eroded the competitiveness in the short-term. Last year, Siemens Energy also revealed design errors on its newest onshore turbine models which further painted a picture of an industry in a deep crisis. Finally, cheaper Chinese manufacturers are pressuring wind turbine manufacturers in the US and Europe, and industrial policies of slapping tariffs on imported Chinese turbines might come in the future.</span></p> <p><span>On Wednesday, the three giants in the wind industry, Siemens Energy, Vestas, and Orsted, will report earnings and while sentiment has shifted for the better for Siemens Energy and Vestas, investors are super nervous about Orsted&rsquo;s results and especially business outlook. For investors interested in renewable energy earnings releases from these three companies are a must watch.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/5_pg_3.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong></strong> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-02T12:30:00Z" data-instance="time-formatter tooltip__4PD38V">2024-02-02 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-apple-amazon-and-meta-02022024" target="_blank">Earnings review: Apple, Amazon, and Meta</a></h4> <strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-01T14:30:00Z" data-instance="time-formatter tooltip__248BDR">2024-02-01 15:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/what-are-the-feds-possible-considerations-on-rate-cuts-01022024" target="_blank">What are the Fed&rsquo;s possible considerations on rate cuts?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-31T12:30:00Z" data-instance="time-formatter tooltip__8N5JW6">2024-01-31 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024" target="_blank">Earnings review: Microsoft, Alphabet, AMD, and Novo Nordisk</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-29T12:15:00Z" data-instance="time-formatter tooltip__GJE276">2024-01-29 13:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-big-earnings-week-with-technology-giants-in-focus-29012024" target="_blank">Earnings Watch: Big earnings week with technology giants in focus</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-25T10:15:00Z" data-instance="time-formatter tooltip__GAX49Z">2024-01-25 11:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/tesla-earnings-review-between-two-mountain-tops-25012024" target="_blank">Tesla earnings review: Between two mountain tops?</a>&nbsp;</h4> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-24T15:45:00Z" data-instance="time-formatter tooltip__2BGW9N">2024-01-24 16:45</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/investment-boom-in-technology-and-earnings-review-24012024" target="_blank">Investment boom in technology and earnings review</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-22T12:30:00Z" data-instance="time-formatter tooltip__X7QR5W">2024-01-22 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024" target="_blank">Earnings Watch: Can Tesla convince the market about growth?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-11T10:40:00Z" data-instance="time-formatter tooltip__2KWPVN">2024-01-11 11:40</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/first-us-listed-etfs-holding-spot-bitcoin-start-trading-today-11012024" target="_blank">First US listed ETFs holding spot Bitcoin start trading today</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T14:00:00Z" data-instance="time-formatter tooltip__4KWP8R">2024-01-09 15:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/nvidia-rides-ai-hype-to-new-all-time-high-as-q4-earnings-season-nears-09012024" target="_blank">Nvidia rides AI hype to new all-time high as Q4 earnings season nears</a></h4> <div><strong>Quarterly Outlook</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T07:00:00Z" data-instance="time-formatter tooltip__GAJZW8">2024-01-09 08:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/quarterly-outlook/new-extremes-and-a-challenging-opportunity-set-09012024" target="_blank">Equities: New extremes and challenging opportunities</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-04T13:15:00Z" data-instance="time-formatter tooltip__PEDV8M">2024-01-04 14:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/the-optimist-vs-pessimist-04012024" target="_blank">Are you optimistic or pessimistic on equities?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-03T12:30:00Z" data-instance="time-formatter tooltip__VMQ9M3">2024-01-03 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/byd-is-the-new-leader-in-electric-vehicles-03012024" target="_blank">BYD is the new leader in electric vehicles</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2023-12-27T06:00:00Z" data-instance="time-formatter tooltip__JDW9BD">2023-12-27 07:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/year-end-thoughts-and-what-to-expect-in-2024-27122023" target="_blank">Year-end thoughts and what to expect in 2024</a></h4> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Corporate Earnings</span> <span></span> <span>Caterpillar Inc</span> <span>Siemens</span> <span>Siemens Energy AG</span> <span>Siemens AG</span> <span></span></div>Mon, 05 Feb 2024 11:30:00 Z2024-02-05T11:33:14Z{9A8F9B18-0865-4F6E-9ADA-0774B749954E}https://www.home.saxo/en-au/content/articles/equities/earnings-review-apple-amazon-and-meta-02022024Peter Garnryproduct-equitiesHighlighted articlessector-Technologyindexcfd-nas100.icompany-appleApple Inccompany-amazon.comAmazonMeta Platforms Incsubject-is/fin.reportsEarnings ReleasesEarnings review: Apple, Amazon, and Meta<div class="article-excerpt">Tech giants ended 2023 strong, confirming solid growth and profitability despite some cautious notes from Apple. Amazon bounced back with cost-cutting and cloud success, while Meta emerged as the big winner with strong earnings, first-ever dividend, and bullish guidance. </div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Job done as technology companies leave 2023 behind on a high</span></strong></h3> <p><span>With the most important earnings week almost done we can definitely conclude that Q4 earnings have not changed the overall picture that growth is looking good and profitability has increased. While some technology companies disappointed investors such as Alphabet and Apple (more on that below) the overall bird&rsquo;s view of technology earnings is that it is job done. Revenue growth is looking good and profitability has improved due cost focus. Sequoia Capital toured Silicon Valley with its famous presentation about a &ldquo;crucial moment&rdquo; and &ldquo;focus on profitability&rdquo; or face extinction. Technology companies listened and many are benefitting from their focus on profitability. As the chart below shows, Nasdaq 100 operating earnings have soared to a new all-time high supporting the strong rally we have seen in technology stocks. Apple, Amazon, and Meta reported earnings last night and below we go through the key takeaways.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/2_pg_1.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Apple is playing conservative on guidance</span></strong></h3> <p><span>Apple beat on both revenue and EPS in its FY24 Q1 results (ending 31 Dec) with only China disappointing in the quarter. FY24 Q1 revenue was $119.6bn vs est. $118bn and EPS was $2.18 vs est. $2.11. Nevertheless, investors were not pleased with the results as management&rsquo;s guidance on iPhone revenue to be flat in the current quarter compared to a year ago. In our view, Apple is play it conservatively as they have low visibility on the Chinese economy and the pace of the upgrade cycle on its iPhones. As the charts below show on iPhone and Services revenue, the iPhone business is quite volatile (orange colour indicates Apple&rsquo;s own guidance) while the Services segment offers stable growth. Unless Apple reinvents a new platform experience with its Vision Pro AR/VR headset then the hardware business will over time mean less and less for profits compared to the Services segment that has a higher profit margin. It similar to Amazon where the more profitable business unit AWS over time took over as the most important segment for its valuation.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/2_pg_2.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/2_pg_3.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Amazon profits expand on cost cuts</strong></h3> <p>Amazon overspent during the pandemic mis-reading the long-term in its e-commerce business. After a year of focus on costs the e-commerce and cloud giant has got its mojo back with its operating margin expanding to a new all-time high in 2023 and revenue growth has also come back ending Q4 at 13.9% y/y as the US holiday shopping proved better than expected. Q4 revenue was $170bn vs est. $166.2bn and EPS was $1.00 vs est. $0.78. Despite a Q1 revenue guidance below consensus estimates investors are cheering as Amazon&rsquo;s cost focus is paying off for shareholders. The Q1 outlook is also confirming another quarter of more than 10% revenue growth suggesting the economy is not showing recession signs just yet.</p> <h3 class="article-heading--3"><strong>Meta is the big technology winner in Q4</strong></h3> <span>Meta shares rose 14% in extended trading making it the best major technology stock in the Q4 earnings season. Q4 revenue was $40.1bn vs est. $39bn and EPS was $5.33 vs est. $4.91 as the employees reduction helped Meta expand their operating margin. The social media company is also announcing its first quarterly dividend of $0.50 per share translating into a dividend yield of around 0.5%. But the big positive share price reaction pushing Meta shares to a new all-time high in today&rsquo;s session is because of the company&rsquo;s Q1 revenue guidance of $34.5-37bn vs est. $33.6bn indicating that the online advertising industry is seeing a strong demand. This is another important macro indicator suggesting companies have hive confidence in future demand. In addition to the newly declared dividend, Meta is also boosting its buyback programme by $50bn.</span></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/2_pg_4.png"/></div><div class="rte--output">Meta share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong></strong> <div><strong>Equities&nbsp;</strong><time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-02-01T14:30:00Z" data-instance="time-formatter tooltip__248BDR">2024-02-01 15:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/what-are-the-feds-possible-considerations-on-rate-cuts-01022024" target="_blank">What are the Fed&rsquo;s possible considerations on rate cuts?</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-31T12:30:00Z" data-instance="time-formatter tooltip__8N5JW6">2024-01-31 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024" target="_blank">Earnings review: Microsoft, Alphabet, AMD, and Novo Nordisk</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-29T12:15:00Z" data-instance="time-formatter tooltip__GJE276">2024-01-29 13:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-big-earnings-week-with-technology-giants-in-focus-29012024" target="_blank">Earnings Watch: Big earnings week with technology giants in focus</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-25T10:15:00Z" data-instance="time-formatter tooltip__GAX49Z">2024-01-25 11:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/tesla-earnings-review-between-two-mountain-tops-25012024" target="_blank">Tesla earnings review: Between two mountain tops?</a>&nbsp;</h4> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-24T15:45:00Z" data-instance="time-formatter tooltip__2BGW9N">2024-01-24 16:45</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/investment-boom-in-technology-and-earnings-review-24012024" target="_blank">Investment boom in technology and earnings review</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-22T12:30:00Z" data-instance="time-formatter tooltip__X7QR5W">2024-01-22 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024" target="_blank">Earnings Watch: Can Tesla convince the market about growth?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-11T10:40:00Z" data-instance="time-formatter tooltip__2KWPVN">2024-01-11 11:40</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/first-us-listed-etfs-holding-spot-bitcoin-start-trading-today-11012024" target="_blank">First US listed ETFs holding spot Bitcoin start trading today</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T14:00:00Z" data-instance="time-formatter tooltip__4KWP8R">2024-01-09 15:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/nvidia-rides-ai-hype-to-new-all-time-high-as-q4-earnings-season-nears-09012024" target="_blank">Nvidia rides AI hype to new all-time high as Q4 earnings season nears</a></h4> <div><strong>Quarterly Outlook</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T07:00:00Z" data-instance="time-formatter tooltip__GAJZW8">2024-01-09 08:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/quarterly-outlook/new-extremes-and-a-challenging-opportunity-set-09012024" target="_blank">Equities: New extremes and challenging opportunities</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-04T13:15:00Z" data-instance="time-formatter tooltip__PEDV8M">2024-01-04 14:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/the-optimist-vs-pessimist-04012024" target="_blank">Are you optimistic or pessimistic on equities?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-03T12:30:00Z" data-instance="time-formatter tooltip__VMQ9M3">2024-01-03 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/byd-is-the-new-leader-in-electric-vehicles-03012024" target="_blank">BYD is the new leader in electric vehicles</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2023-12-27T06:00:00Z" data-instance="time-formatter tooltip__JDW9BD">2023-12-27 07:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/year-end-thoughts-and-what-to-expect-in-2024-27122023" target="_blank">Year-end thoughts and what to expect in 2024</a></h4> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Technology</span> <span>USNAS100.I</span> <span>Apple</span> <span>Apple Inc.</span> <span>Amazon.com</span> <span>Amazon</span> <span>Meta Platforms Inc.</span> <span>Corporate Earnings</span> <span></span></div>Fri, 02 Feb 2024 12:30:00 Z2024-02-02T12:42:55Z{23E7A44E-E652-40FE-9309-353648FD8AF1}https://www.home.saxo/en-au/content/articles/equities/what-are-the-feds-possible-considerations-on-rate-cuts-01022024Peter Garnryproduct-equitiesHighlighted articlesFederal Reservesector-Technologyindexcfd-nas100.iWhat are the Fed’s possible considerations on rate cuts?<div class="article-excerpt">The FOMC language yesterday pushing back at the market’s pricing on a rate cut coming in March was a bit of surprise to the market. We go through the various arguments for why the Fed is hesitating on cutting the policy rate and also the key reasons why the Fed should cut the policy rate and continue over the next 12-18 months.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Why is the Fed hesitating on rate cuts?</span></strong></h3> <p><span>Did the Fed provide a hawkish or dovish message yesterday in its <a href="https://www.federalreserve.gov/monetarypolicy/files/monetary20240131a1.pdf">FOMC statement</a> and subsequent press conference? Some are arguing that it could be both depending on how you look at the message. Judging purely from the reaction in equities the interpretation was hawkish and the market is interpreting Powell&rsquo;s words that a rate cut is most likely not coming in March. In other words, if the market is right the cutting cycle starts in May. Some are surprised about this development, but there are plenty of indicators suggesting that the Fed should remain cautious and not do a victory lap too early (see below). When we mean cautious, it is not about starting the cutting cycle but at what pace the Fed will go with. Some suggests 250 bps of cuts in the 12 months post the first rate cut in May, but that may be too aggressive if the economy is humming along.</span></p> <ul > <li><span>The US consumer is doing okay under the current interest rate regime with the Redbook Sales Index hovering around 5% implying real growth in consumption.</span><br /> <br /> </li> <li><span>The weekly indicators on the US economy suggest that the economy is operating close to trend growth.</span><br /> <br /> </li> <li><span>The Atlanta Fed wage growth tracker (median) has steadied now around 5.2% for several months implying an expanding real wage growth which is likely to be a positive forward looking indicator on consumption.</span><br /> <br /> </li> <li><span>Companies have generally in the Q4 earnings season been painting a positive outlook in terms of demand.</span><br /> <br /> </li> <li><span>Core services inflation (60% of inflation basket) is stilling too high and has increased from 4.5% annualised in August 2023 to 5.2% in December. The slightest comeback to goods inflation could push overall inflation higher again.</span><br /> <br /> </li> <li><span>The cooling of the inflation rate is a natural wave effect stemming from more orderly supply chains and base effects making the comparable easier. This means that the next year will begin to finally paint the true denoised picture of underlying inflation.</span><br /> <br /> </li> <li><span>The Fed&rsquo;s own financial conditions index adjusted to the strength of the economy is at levels seen in the years before the pandemic. In other words, credit markets are yet to show stress.</span><br /> <br /> </li> <li><span>The policy tightening has only reduced slack in the labour market measured on the job openings / unemployed ratio (this metric has in fact showed labour market tightness in November and December) and not caused a persistent increase in the unemployment rate.</span><br /> <br /> </li> <li><span>The US nominal GDP growth is still at 5.8%</span></li> </ul></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/february/1_pg_1.png"/></div><div class="article-additional-rte"><div class="rte--output"><p><span>When you take all the observations above into account, and combine it with Powell&rsquo;s previous comments when inflation erupted that the Fed&rsquo;s models were broken on forecasting inflation, then it is reasonable that the Fed is hesitating to cut the policy rate.</span></p> <h3 class="article-heading--3"><strong><span>It is all about real rates</span></strong></h3> <p><span>What are some of the considerations that the Fed should weight in relation to cutting the policy rate?</span></p> <ul > <li><span>Banks are indicating beginning cracks in the commercial real estate market and easing the policy rate would pre-empt the negative impact. It is important to note that yesterday&rsquo;s NYCB announcement was related to their rent-regulated multi-family apartments.</span><br /> <br /> </li> <li><span>The inflation rate seems to generally coming down and the forward-looking inflation swaps are pricing 2.1% inflation over the next year. Keep in mind though that these markets are not very good at predicting anything.</span><br /> <br /> </li> <li><span>But taking the above point on inflation at face value the Fed is significantly restrictive in its policy rate indicated by a real rate of over 300 bps which increases the risk of an abrupt recession.</span><br /> <br /> </li> <li><span>With the US government running a 6.5% fiscal deficit over the past year the deficit will for sure come down towards the historical average around 3% causing a negative impulse from government spending over time. Rate cuts will mitigate this negative impulse.</span><br /> <br /> </li> <li><span>Monetary policy and credit conditions come with a lag and already now we observe the longest lag in monetary policy since the early 1970s due to the excessive fiscal policies. Acknowledging those lags means that the Fed should prepare for downside risks to the economy in the coming quarters.</span><br /> <br /> </li> <li><span>The estimated neutral policy rate according to the Fed is around the 2.5%, so if that estimate is correct the longer the Fed stays above 5% the more pain will follow.</span><br /> <br /> </li> <li><span>The long period with low bond yields means that it takes a quite a bit of time for refinancing of debt to kick in, but the refinancing wave is beginning to meaningfully impact credit for companies.</span><br /> <br /> </li> <li><span>Geopolitical risks are a downside risk to the economy and are on the rise.</span></li> </ul> <p><strong><span>What are some the ways to express your views on the Fed?</span></strong></p> <p><span>If you believe the Fed will start the cutting cycle in May and then go aggressively towards the neural rate then technology, car, renewable energy stocks should be the segments within equities with the highest positive response function to lower policy rates because of their high equity valuations (technology and renewable energy) and high capital requirements (car industry). If one wants to express the view that the economy will cool down fast and that the market is wrong on rate cuts (too few rate cuts priced in) then this is done in SOFR futures. One would be long the SOFR Mar-2025 contract if one believes the Fed must be more aggressive on monetary policy than what is priced in.</span></p></div></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong></strong> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-31T12:30:00Z" data-instance="time-formatter tooltip__8N5JW6">2024-01-31 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024" target="_blank">Earnings review: Microsoft, Alphabet, AMD, and Novo Nordisk</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-29T12:15:00Z" data-instance="time-formatter tooltip__GJE276">2024-01-29 13:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-big-earnings-week-with-technology-giants-in-focus-29012024" target="_blank">Earnings Watch: Big earnings week with technology giants in focus</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-25T10:15:00Z" data-instance="time-formatter tooltip__GAX49Z">2024-01-25 11:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/tesla-earnings-review-between-two-mountain-tops-25012024" target="_blank">Tesla earnings review: Between two mountain tops?</a>&nbsp;</h4> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-24T15:45:00Z" data-instance="time-formatter tooltip__2BGW9N">2024-01-24 16:45</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/investment-boom-in-technology-and-earnings-review-24012024" target="_blank">Investment boom in technology and earnings review</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-22T12:30:00Z" data-instance="time-formatter tooltip__X7QR5W">2024-01-22 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024" target="_blank">Earnings Watch: Can Tesla convince the market about growth?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-11T10:40:00Z" data-instance="time-formatter tooltip__2KWPVN">2024-01-11 11:40</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/first-us-listed-etfs-holding-spot-bitcoin-start-trading-today-11012024" target="_blank">First US listed ETFs holding spot Bitcoin start trading today</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T14:00:00Z" data-instance="time-formatter tooltip__4KWP8R">2024-01-09 15:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/nvidia-rides-ai-hype-to-new-all-time-high-as-q4-earnings-season-nears-09012024" target="_blank">Nvidia rides AI hype to new all-time high as Q4 earnings season nears</a></h4> <div><strong>Quarterly Outlook</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T07:00:00Z" data-instance="time-formatter tooltip__GAJZW8">2024-01-09 08:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/quarterly-outlook/new-extremes-and-a-challenging-opportunity-set-09012024" target="_blank">Equities: New extremes and challenging opportunities</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-04T13:15:00Z" data-instance="time-formatter tooltip__PEDV8M">2024-01-04 14:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/the-optimist-vs-pessimist-04012024" target="_blank">Are you optimistic or pessimistic on equities?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-03T12:30:00Z" data-instance="time-formatter tooltip__VMQ9M3">2024-01-03 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/byd-is-the-new-leader-in-electric-vehicles-03012024" target="_blank">BYD is the new leader in electric vehicles</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2023-12-27T06:00:00Z" data-instance="time-formatter tooltip__JDW9BD">2023-12-27 07:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/year-end-thoughts-and-what-to-expect-in-2024-27122023" target="_blank">Year-end thoughts and what to expect in 2024</a></h4> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Federal Reserve</span> <span>Technology</span> <span>USNAS100.I</span></div>Thu, 01 Feb 2024 14:30:00 Z2024-02-01T14:45:38Z{BF5D3668-C465-4A01-AC58-DE9393C600DE}https://www.home.saxo/en-au/content/articles/equities/earnings-review-microsoft-alphabet-amd-and-novo-nordisk-31012024Peter Garnryproduct-equitiesHighlighted articlesEarnings Releasessubject-is/fin.reportssector-Technologycompany-microsoftMicrosoft Corpcompany-googleAlphabetcompany-novo nordiskNovo Nordisk B ASAdvanced Micro Devicescompany-amdEarnings review: Microsoft, Alphabet, AMD, and Novo Nordisk<div class="article-excerpt">Microsoft, Alphabet and Novo Nordisk all delivered strong quarterly results. Microsoft's cloud business is growing rapidly, Alphabet's advertising revenue is strong, and Novo Nordisk's weight loss drugs are in high demand.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Microsoft is in a leading position on AI application execution</span></strong></h3> <p><span>The world&rsquo;s most valuable company delivered a strong quarterly result with revenue increasing 18% y/y and EPS of $2.97 up 28% y/y as its global distribution with the corporate sector continues to give Microsoft an edge in execution on generative AI on the application side. Cloud revenue was $33.7bn vs est. $32.2bn and the company said that AI boosted revenue growth by 6%. From a broader macro perspective Microsoft hinted that capital expenditures will increase materially in the current quarter from the previous quarter as demand for AI related services drives a lot of investments in datacentres. While investors were generally a bit disappointed on growth from Microsoft, but also Alphabet and AMD (see below), the overall conclusion is that growth remains robust and that the outlook is positive which should bode well for equity sentiment going forward.</span></p> <h3 class="article-heading--3"><strong><span>Strong result from Alphabet bodes well for the economic outlook</span></strong></h3> <p><span>Although investors were negative last night after Alphabet announced its Q4 earnings result the company delivered its fourth straight quarter of increasing revenue growth hitting 13.5% y/y in Q4. The EBIT margin expanded for the third straight quarter. The combination of rising revenue growth and expanding EBIT margin are powerful for equity sentiment. The increased focus on raising profitability at Alphabet is paying off and the company is now consistently delivering around 27% EBIT margin up from around 20% before the pandemic.</span></p> <p><span>While Alphabet missed a bit on its advertising revenue relative to estimates the absolute numbers are good and from a macro perspective they suggest companies have a positive outlook for global demand. Advertising is a pro-cyclical indicator. One of the positive surprises were the cloud business revenue coming in at $9.1bn vs est. $9bn as the generative AI push by companies bolstered demand in Google&rsquo;s cloud services. </span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/31_pg_1.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/31_pg_2.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Novo Nordisk records highest growth rate in more than 20 years</span></strong></h3> <p><span>Novo Nordisk <a href="https://ml-eu.globenewswire.com/Resource/Download/b4ae7c0b-df06-49cd-a1b9-50d5d566e6bc">smashed all records in Q4 2023</a> beating estimates for FY2023 revenue and EBIT. The revenue growth rate in Q4 2023 was 37% y/y the highest recorded growth rate since 2003. This is a big achievement since the company has grown considerable in size over the past 20 years. It highlights the insatiable demand for weight loss drugs and that the growth is not demand constrained but production capacity constrained. This is also seen in the revenue mix with the obesity care segment seeing declining revenue q/q in Q4. The sales mix has shifted from Wegocy, the FDA approved weight loss drug, to Ozempic which is FDA approved for treating type 2 diabetes but contains the same active ingredient, semaglutide, which is a GLP-1 receptor, which causes weight loss. </span></p> <p><span>The revenue guidance for FY2024 is 18-26% which means that the mid-point is a bit below consensus estimate of 23.3%, but given the shares are almost 2% higher it indicates that the market believes that upside surprises could occur this year. The CEO comment that growth can be sustained despite competition is strong forward-looking statement by Novo Nordisk that cement its position as the most valuable company Europe. Novo Nordisk&rsquo;s results also confirms <a href="https://www.home.saxo/content/articles/equities/investment-boom-in-technology-and-earnings-review-24012024">the investment boom that is currently ongoing in the global technology and health care sectors.</a></span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/31_pg_3.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Is AMD guidance a warning for Nvidia?</strong></h3> <span>AMD is playing catchup with Nvidia in delivering advanced AI chips for training of generative AI models. Q4 revenue at $6.2bn was slightly above estimates and adjusted operating income was in line with estimates. The Q1 revenue guidance of $5.1-5.7bn vs est. $5.8bn was a big disappointment for investors sending its shares down 6%. Despite this weaker than estimated outlook AMD did everything it could to paint a picture growth acceleration in AI chips during the FY2024 as the company will roll out new products. Nvidia shares are indicated down in the US pre-market session, suggesting the market is nervous that AMD&rsquo;s results are a warning of a potential slowdown for Nvidia which reports earnings on 21 February.</span></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/31_pg_4.png"/></div><div class="rte--output">AMD share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <div><strong><br /> </strong> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-29T12:15:00Z" data-instance="time-formatter tooltip__GJE276">2024-01-29 13:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-big-earnings-week-with-technology-giants-in-focus-29012024" target="_blank">Earnings Watch: Big earnings week with technology giants in focus</a></h4> <strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-25T10:15:00Z" data-instance="time-formatter tooltip__GAX49Z">2024-01-25 11:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/tesla-earnings-review-between-two-mountain-tops-25012024" target="_blank">Tesla earnings review: Between two mountain tops?</a>&nbsp;</h4> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-24T15:45:00Z" data-instance="time-formatter tooltip__2BGW9N">2024-01-24 16:45</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/investment-boom-in-technology-and-earnings-review-24012024" target="_blank">Investment boom in technology and earnings review</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-22T12:30:00Z" data-instance="time-formatter tooltip__X7QR5W">2024-01-22 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024" target="_blank">Earnings Watch: Can Tesla convince the market about growth?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-11T10:40:00Z" data-instance="time-formatter tooltip__2KWPVN">2024-01-11 11:40</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/first-us-listed-etfs-holding-spot-bitcoin-start-trading-today-11012024" target="_blank">First US listed ETFs holding spot Bitcoin start trading today</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T14:00:00Z" data-instance="time-formatter tooltip__4KWP8R">2024-01-09 15:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/nvidia-rides-ai-hype-to-new-all-time-high-as-q4-earnings-season-nears-09012024" target="_blank">Nvidia rides AI hype to new all-time high as Q4 earnings season nears</a></h4> <div><strong>Quarterly Outlook</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T07:00:00Z" data-instance="time-formatter tooltip__GAJZW8">2024-01-09 08:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/quarterly-outlook/new-extremes-and-a-challenging-opportunity-set-09012024" target="_blank">Equities: New extremes and challenging opportunities</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-04T13:15:00Z" data-instance="time-formatter tooltip__PEDV8M">2024-01-04 14:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/the-optimist-vs-pessimist-04012024" target="_blank">Are you optimistic or pessimistic on equities?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-03T12:30:00Z" data-instance="time-formatter tooltip__VMQ9M3">2024-01-03 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/byd-is-the-new-leader-in-electric-vehicles-03012024" target="_blank">BYD is the new leader in electric vehicles</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2023-12-27T06:00:00Z" data-instance="time-formatter tooltip__JDW9BD">2023-12-27 07:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/year-end-thoughts-and-what-to-expect-in-2024-27122023" target="_blank">Year-end thoughts and what to expect in 2024</a></h4> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span></span> <span>Corporate Earnings</span> <span>Technology</span> <span>Microsoft</span> <span>Microsoft Corp.</span> <span>Google</span> <span>Alphabet</span> <span>Novo Nordisk</span> <span>Novo Nordisk B A/S</span> <span>Advanced Micro Devices</span> <span>Amd</span></div>Wed, 31 Jan 2024 12:30:00 Z2024-01-31T12:39:15Z{4593350E-BA44-455F-A50A-DFA72CA1CEF2}https://www.home.saxo/en-au/content/articles/equities/earnings-watch-big-earnings-week-with-technology-giants-in-focus-29012024Peter Garnryproduct-equitiesHighlighted articlesEarnings Releasessubject-is/fin.reportssector-Technologycompany-microsoftMicrosoft Corpcompany-applecompany-amazon.comAmazonMeta Platforms Inccompany-googleAlphabetcompany-novo nordiskNovo Nordisk B ASEarnings Watch: Big earnings week with technology giants in focus<div class="article-excerpt">The performance of the US technology sector will be closely watched this week as the largest companies in the S&P 500 report their earnings. Investors will be looking for signs that the sector is still strong, despite the recent economic downturn. Companies like Microsoft, Alphabet, Amazon, Apple, and Meta are expected to report strong earnings growth, but the focus will be on their outlook for the future.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Sentiment hinges on technology earnings deliver on high expectations</span></strong></h3> <p><span>The Q4 earnings season is well under way with 25% of the companies in the S&amp;P 500 Index having reporting earnings. The preliminary conclusion so far is that companies are delivering earnings growth high enough to satisfy market expectations. S&amp;P 500 earnings growth is so far 8.2% y/y against arguably a weak comparable as Q4 2022 became a kitchen-sink quarter with excessive cost-cutting charges and weak banking. Nasdaq 100 companies have done even better with earnings growth currently estimated at 31.7% y/y in Q4, but with the largest US technology earnings on tap this week that earnings growth could change dramatically. In other words, when this week is over we have a much better understanding of the underlying growth and more importantly the outlook for these technology companies.</span></p> <p><span>Given the S&amp;P 500 Index is back to all-time highs expectations have also risen and as such this earnings season and especially this week is important for sustaining the current momentum. Overall, we remain positive on earnings growth and that the probability is low for the global economy slipping into a recession, and our view is that the Q4 earnings season will support this view.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/29_pg_1.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/29_pg_2.png"/></div><div class="rte--output">S&P 500 continuous futures | Source: Saxo </div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Key US earnings this week: Microsoft, Alphabet, Amazon, Apple, and Meta</span></strong></h3> <p><span>The list below shows the top 30 market cap companies reporting earnings this week and thus are the most important earnings releases in terms of how they can impact sentiment in the broader equity indices.</span></p> <ul > <li><span class="underline; ">Tuesday:</span><span> Volvo, Stryker, Mondelez, Microsoft, Alphabet (Google), AMD, Starbucks, Chubb, Danaher, Pfizer, UPS</span><br /> <br /> </li> <li><span class="underline; ">Wednesday:</span><span> Novo Nordisk, Qualcomm, Mastercard, Novartis, Thermo Fisher Scientific, Boeing</span><br /> <br /> </li> <li><span class="underline; ">Thursday:</span><span> Apple, Roche, Amazon, Meta, Merck, Shell, Honeywell, Sanofi</span><br /> <br /> </li> <li><span class="underline; ">Friday:</span><span> Keyence, ExxonMobil, AbbVie, Chevron, Regeneron Pharmaceuticals, Bristol-Myers Squibb</span></li> </ul> <p><span>Microsoft is the stock with the highest index weight in S&amp;P 500 and thus the most important earnings release to watch this week. Analysts expect revenue of $61.1bn up 16% y/y and EBITDA of $30.7bn up from $25.9bn a year ago. Microsoft is riding the investment boom in technology, something we wrote in our equity note <a href="https://www.home.saxo/content/articles/equities/investment-boom-in-technology-and-earnings-review-24012024">Investment boom in technology and earnings review</a> last week. Key things to watch in Microsoft&rsquo;s result is Azure revenue growth (consensus is 27% in constant currency), outlook and comments on AI-workloads growth, and more colour on the closed Activision Blizzard acquisition that closed on 13 October.</span></p> <p><span>Alphabet (Google) has increased net revenue growth for three straight quarters hitting revenue growth of 11% y/y in Q3. We expect Alphabet to maintain momentum and a broader market perspective their outlook on the global advertising market is a key information for investors as online advertising a pro-cyclical forward looking indicator on the economy as it says a lot about companies&rsquo; forecasts for future demand. Cost reductions and higher net revenue growth are expected to boost EBITDA to $33.8bn up from $23.4bn a year ago translating into 44.4% growth. Alphabet is likely going to see positive dynamics around its YouTube business and investors will anxiously await the cloud and AI figures as the sense is that Google is losing a bit of momentum to Microsoft.</span></p> <p><span>Apple is expected to report revenue growth of 1% y/y and EBITDA of $42.3bn up from $38.9bn as the Services segment will bolster the business amid persisting headwinds in its hardware business (mostly iPhones) with Chinese figures likely to be weak. While the Services segment has been the bright spot for Apple for many years the recent changes due to EU regulation could create headwinds going forward. Investors will also carefully scrutinize any mentioning of the outlook for the Vision Pro AR/VR headset.</span></p> <p><span>Amazon seems to have found its steady growth rate in the post pandemic period at around 11% which is also the expected revenue growth rate by analysts with EBITDA expected to hit $29.1bn up from $17.8bn a year ago helped by cost-cutting and a demand boom for its AWS computing power due to generative AI. Its advertising business is also expected to grow around 20%.</span></p> <p><span>Meta has like Alphabet seen its revenue growth rate improving for three straight quarters although estimates indicate revenue growth could slow a bit in Q4 to 21.5% y/y. EBITDA is expected at $22.4bn up from $16.7bn as layoffs and the rebound in global advertising markets are paying off. However, everything is not bright skies for Meta with potentially advertising headwinds brewing in 2024 from Chinese based Shein and Temu as tensions continue between the US and China. Declining engagement on Meta&rsquo;s Facebook platform might also begin painting a negative narrative.</span></p> <h3 class="article-heading--3"><strong><span>Can Novo Nordisk keep pace with expectations?</span></strong></h3> <p><span>Saxo has many clients in key markets such as Denmark and the Netherlands. The list below shows the key earnings to watch in those two markets.</span></p> <ul > <li><span class="underline; ">Wednesday:</span><span> Novo Nordisk, KPN</span><br /> <br /> </li> <li><span class="underline; ">Thursday:</span><span> DSV, Novozymes, ING Groep</span><br /> <br /> </li> <li><span class="underline; ">Friday:</span><span> Danske Bank</span></li> </ul> <p><span>Novo Nordisk is expected to Q4 revenue of DKK 63.2bn up 31% y/y and EBITDA of DKK 28.3bn up from DKK 19.2bn driven by the boom in its obesity care segment. As the chart below shows, the obesity drugs are seeing an insatiable demand boom with Q3 2023 segment revenue hitting DKK 12.3bn up from DKK 2.4bn in Q3 2021. Investors will focus on Novo Nordisk&rsquo;s ability to ramp up production of GLP-1s, but also indications of future demand of obesity drugs given its positive impact on co-morbidities (heart disease). In the medium-term the market for obesity drugs is expanding so fast that obesity drugs from Eli Lilly are not seen as a headwind for growth at Novo Nordisk. Expectations are high and with the recent positive sentiment in ASML shares, Novo Nordisk is close to lose its position as the most valuable company in Europe, so the Q4 result on Wednesday is important for Novo Nordisk shares.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/29_pg_3.png"/></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span></span> <span>Corporate Earnings</span> <span>Technology</span> <span>Microsoft</span> <span>Microsoft Corp.</span> <span>Apple</span> <span>Amazon.com</span> <span>Amazon</span> <span>Meta Platforms Inc.</span> <span>Google</span> <span>Alphabet</span> <span>Novo Nordisk</span> <span>Novo Nordisk B A/S</span></div>Mon, 29 Jan 2024 12:15:00 Z2024-01-29T12:19:49Z{3302BB66-45EC-43EC-BF4A-05AE79C3E6A4}https://www.home.saxo/en-au/content/articles/equities/tesla-earnings-review-between-two-mountain-tops-25012024Peter Garnryproduct-equitiesHighlighted articlesEarnings Releasessubject-is/fin.reportsTeslasector-Technologyindexcfd-nas100.ieditorial-nasdaqNio IncVolkswagenVolkswagen AG Pref ShareBYD Company LtdTesla earnings review: Between two mountain tops?<div class="article-excerpt">Tesla is in a transition year, with growth slowing down and gross margins under pressure. The company is facing a number of risks, including rising interest rates, slowing EV demand, Elon Musk's fight for more control, wage pressures, and increasing competition. Tesla shareholders should prepare for more volatility and potential disappointments in 2024.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>2024 is transition year for Tesla</strong></h3> <p>In our <a href="https://www.home.saxo/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024">earnings preview</a> this Monday we highlighted that Tesla had come to a point where the growth narrative is key for maintain a positive sentiment on its shares. The reason is that the gross margin is under pressure. Equities are quite simple sometimes. If the margin is under pressure the revenue growth figures matter more for investors. So how did Tesla do in Q4? Here are the key highlights:</p> <ul > <li>Gross margin at 17.6% vs est. 18.1% on lower average selling prices as competition has increased from especially Chinese EV-makers.<br /> <br /> </li> <li>Revenue of $25.2bn vs est. $25.9bn translating into growth of just 3.5% y/y the lowest growth rate since Q2 2020 which was the maximum pain quarter for the world during the early days of the pandemic.<br /> <br /> </li> <li>Tesla says that &ldquo;2024 volume growth may be notably lower than 2023&rdquo; supporting our argument in our earnings preview that Musk&rsquo;s previously stated growth target of 50% annualized volume growth over an entire decade is too optimistic.<br /> <br /> </li> <li>Musk said on the analyst call that Tesla is between &ldquo;two growth waves&rdquo; meaning that growth rates have come down a lot and that 2024 is a transition year before the next growth wave.<br /> <br /> </li> <li>The company said that it ramping up Cybertruck production and that it has capacity to produce up to 125,000 annually, but that production ramp-up will take time as the design is more complicated than other models.<br /> <br /> </li> <li>In addition, Tesla mentioned that it is working on its next-generation low-cost models which are scheduled for production in mid-2025. The rumours are that one of the new models will be a compact crossover.<br /> <br /> </li> <li>Finally, Elon Musk did everything he could to paint an optimistic future around self-driving cars and robotics saying that there is a &ldquo;good chance&rdquo; that Tesla can ship the first models of its Optimus robot next year. He also said that the expensive Dojo supercomputer project is a long shot by it is working.</li> </ul> <p>Overall, Tesla ended 2023 with 19% revenue growth but adjusted net income declining by 29% as pricing pressures hit margin. Last year will still go down in history as the year that transformed the EV industry and Tesla is likely going to be among the winning group of EV-makers in the future. But one thing is the company&rsquo;s performance, another thing is the stock price. Expectations have been so high and there is clearly a &ldquo;Musk premium&rdquo; baked into the share price that when there are growth hiccups it will hurt the share price. This year will undoubtedly be a transition year for Tesla and shareholders should prepare themselves for more volatility and potential disappointments.</p> <span>A small beacon of potential upside surprise is the energy storage business which more than doubled installations in 2023 to 14.7 GWh and booked revenue of $1.4bn. It is too early to say, but maybe the energy storage business could be the &ldquo;AWS of Tesla&rdquo; meaning that Amazon&rsquo;s AWS cloud business for many years were growing fast but was overshadowed by Amazon&rsquo;s e-commerce business before it suddenly became clear that this was where all the profit was. Tesla&rsquo;s energy storage business could be a repeat of Amazon&rsquo;s AWS surprise. But it is still early days.</span></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/25_pg_1.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/25_pg_2.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Musk wants more control. Should shareholders give him that?</span></strong></h3> <p><span>Another key aspect of Tesla that has come about is Elon Musk openly arguing, or some would say demanding, that he should have a stronger influence on Tesla. He has specifically said on X that he wants 25% of the voting rights, and that he supports a dual-class stock structure to give him this control with less economic impact for existing shareholders. The reason is that if he does not get more control he will go do AI and robotics outside Tesla. Is that a good idea to give him more control?</span></p> <p><span>Our view is that a company that is as mature as Tesla should have processes in place and a great management team that whether Elon Musk is CEO or not, Tesla should be able to compete and become a top three EV-maker in the future. The question is whether the competitive landscape has changed to a point where it is more important than ever to be laser-focused on EV production instead of all these side projects. Winning the AI race is tough and robotics is an even more challenging task. Should Tesla shareholders really gamble ressources on these projects over focusing on beating BYD?</span></p> <h3 class="article-heading--3"><strong><span>Shares are down 8.5% as risks loom this year</span></strong></h3> <p><span>What are some of the key risks to consider as a Tesla shareholder over the coming year?</span></p> <ul > <li><span>If interest rates do not come down as fast as the market is currently pricing in then demand will disappoint against expectations.</span><br /> <br /> </li> <li><span>There are signs in China and Europe that EV demand is cooling down fast.</span><br /> <br /> </li> <li><span>The Elon Musk fight for more control could become a ill-looking fight and public relations disaster.</span><br /> <br /> </li> <li><span>Wage pressures and labour union pressures in the US and Europe could continue to put downward pressure on gross margin.</span><br /> <br /> </li> <li><span>Competition will increase even further this year with more EV models than ever available to the consumer making it more and more difficult for Tesla to shine.</span><br /> <br /> </li> <li><span>A lot of Tesla&rsquo;s market value is driven by the long-term expected global market share of the EV market. Tesla&rsquo;s market share has steadily been falling and if it continues in 2024 then it could become a big negative factor for the share price.</span></li> </ul> <p><span>Tesla shares were down 6% in US extended trading hours last night, but the shares listed on German exchanges are down 8.5% in today&rsquo;s session reflecting the failure of Elon Musk convincing the market about the near-term future.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/25_pg_3.png"/></div><div class="rte--output">Tesla share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Recent notes on equities</strong></h3> <br /> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a> <div><a href="https://www.home.saxo/insights/news-and-research/equities"></a><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-24T15:45:00Z" data-instance="time-formatter tooltip__2BGW9N">2024-01-24 16:45</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/insights/news-and-research/equities" target="_blank">Investment boom in technology and earnings review</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-22T12:30:00Z" data-instance="time-formatter tooltip__X7QR5W">2024-01-22 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024" target="_blank">Earnings Watch: Can Tesla convince the market about growth?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-11T10:40:00Z" data-instance="time-formatter tooltip__2KWPVN">2024-01-11 11:40</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/first-us-listed-etfs-holding-spot-bitcoin-start-trading-today-11012024" target="_blank">First US listed ETFs holding spot Bitcoin start trading today</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T14:00:00Z" data-instance="time-formatter tooltip__4KWP8R">2024-01-09 15:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/nvidia-rides-ai-hype-to-new-all-time-high-as-q4-earnings-season-nears-09012024" target="_blank">Nvidia rides AI hype to new all-time high as Q4 earnings season nears</a></h4> <div><strong>Quarterly Outlook</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-09T07:00:00Z" data-instance="time-formatter tooltip__GAJZW8">2024-01-09 08:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/quarterly-outlook/new-extremes-and-a-challenging-opportunity-set-09012024" target="_blank">Equities: New extremes and challenging opportunities</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-04T13:15:00Z" data-instance="time-formatter tooltip__PEDV8M">2024-01-04 14:15</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/the-optimist-vs-pessimist-04012024" target="_blank">Are you optimistic or pessimistic on equities?</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2024-01-03T12:30:00Z" data-instance="time-formatter tooltip__VMQ9M3">2024-01-03 13:30</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/byd-is-the-new-leader-in-electric-vehicles-03012024" target="_blank">BYD is the new leader in electric vehicles</a></h4> <div><strong>Equities</strong>&nbsp;<time data-styles="tooltip" data-tooltip="Displayed in your local timezone (UTC+01)" data-tooltip-length="medium" data-tooltip-position="up" data-behavior="time-formatter tooltip" data-template="YYYY-MM-DD HH:mm" datetime="2023-12-27T06:00:00Z" data-instance="time-formatter tooltip__JDW9BD">2023-12-27 07:00</time></div> <h4><a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/year-end-thoughts-and-what-to-expect-in-2024-27122023" target="_blank">Year-end thoughts and what to expect in 2024</a></h4> </div></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span></span> <span>Corporate Earnings</span> <span>Tesla</span> <span>Technology</span> <span>USNAS100.I</span> <span>Nasdaq</span> <span>Nio Inc.</span> <span>Volkswagen</span> <span>Volkswagen AG Pref. Share</span> <span>BYD Company Ltd</span></div>Thu, 25 Jan 2024 10:15:00 Z2024-01-25T10:33:26Z{7BCD3729-DF4F-4747-B926-6302977D5F19}https://www.home.saxo/en-au/content/articles/equities/investment-boom-in-technology-and-earnings-review-24012024Peter Garnryproduct-equitiesHighlighted articlesEarnings Releasessubject-is/fin.reportsTeslaAsmlASML Holdingcompany-netflixNetflix IncArtificial Intelligencesector-Technologyindexcfd-nas100.ieditorial-nasdaqEn hurtig tankeThought StartersAdvanced ordersInvestment boom in technology and earnings review<div class="article-excerpt">The technology sector is booming, with companies in health care, IT, and communication services investing heavily in capital expenditures and R&D. This is a sign of improving growth prospects and a potential productivity boost.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>The technology boom is real</span></strong></h3> <p><span>As we explained in our <a href="https://www.home.saxo/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024">earnings week preview note</a> from this Monday, the Nasdaq 100 companies have seen a significant rebound in operating earnings over the past two quarters supporting the rally we have seen in technology stocks. That does not mean that risks are not building in system. The rally in technology stocks have outstripped recent gains in operating income and thus expectations have per se risen, so it is critical that technology companies deliver on earnings next week.</span></p> <p><span>But one supporting evidence that we do experience a very different environment is that capital expenditures and R&amp;D expenses in the health care, IT, and communication services sectors are growing faster since early 2021 than in the preceding 10 years before the pandemic. This significant increase is showing that growth prospects are improving and that maybe the much talked about productivity boost is for real and will be coming in the years ahead. If this is the case then that is an upward force on real interest rates and something that will prevent interest rates from falling back to unusually low levels seen in the recent past.</span></p> <p><span>Many are pointing towards lack of capital expenditures in the overall US economy, but there are two considerations to make around these arguments. For one, what matters for equity markets are the underlying dynamics of those companies and sectors that are dominating the equity indices. Secondly, economists only focusing on capital expenditures are stuck in the old world of manufacturing. The global economy, and especially value creation among companies, is much more driven today by intangibles and as such you should not ignore R&amp;D spending. In fact, if one wanted to go one step further marketing expenses should be added into this measure as they build brands and reflect confidence in the future, but these expenses are not easily teased out.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/24_pg_1.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Earnings recap: Netflix and ASML</span></strong></h3> <p><span>In our earnings week preview we highlighted the three most important earnings releases this week being Netflix, ASML, and Tesla. With the first two having reported we will quickly assess the quality of their earnings results, and tomorrow we will follow up with our view on Tesla earnings</span></p> <p><span>In our preview of Netflix earnings we said &ldquo;<em>Given the momentum in Netflix business our view is that the company is poised to exceed estimates for Q4 boosting sentiment in technology stocks this week.</em>&rdquo;</span></p> <p><span>Netflix reported Q4 results after the US market close yesterday and it did indeed exceed estimates by reporting Q4 net change in paying subscribers of 13.1mn vs est. 8.9mn, while beating a bit on revenue and missing a bit on EPS. But the real driver behind the 13.2% gain in today&rsquo;s session is the Q1 outlook with Netflix expecting Q1 EPS of $4.49 vs est. $4.09 as the price hikes and subscriber momentum kicks in. The only negative thing to say about the Q4 results is that Netflix has still not nailed gaming on its platform despite its massive distribution platform. For the long-term investors this opportunity remains a key potential catalyst for the future.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/24_pg_2.png"/></div><div class="rte--output">Netflix share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><p><span>ASML reported Q4 results showing strong orders intake with bookings at &euro;9.2bn vs est. &euro;3.6bn and the CEO saying that the overall semiconductor industry has bottomed and is entering the rebound phase. Despite these encouraging signs ASML remains conservative on its FY24 outlook reiterating their from three months ago that revenue will be flat in 2024. The CEO had other interesting comments such as 2025 is shaping up to become a significant year for ASML, China&rsquo;s share of revenue will decline, and that the generative AI boom cannot happen without ASML. As we wrote in our preview advanced AI chips require EUV (extreme ultraviolet) machines and ASML has currently a 100% market share in those machines so the outlook for the company looks bright. Shares are up 9.3% in today&rsquo;s session.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/24_pg_3.png"/></div><div class="rte--output">ASML share price | Source: Saxo</div><br/><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span></span> <span>Corporate Earnings</span> <span>Tesla</span> <span>Asml</span> <span>ASML Holding</span> <span>Netflix</span> <span>Netflix Inc.</span> <span>Artificial Intelligence</span> <span>Technology</span> <span>USNAS100.I</span> <span>Nasdaq</span> <span>En hurtig tanke</span> <a href="https://www.home.saxo/en-au/insights/news-and-research/thought-starters">Thought Starters</a> <span>Advanced orders</span></div>Wed, 24 Jan 2024 15:45:00 Z2024-01-24T15:57:44Z{FFBEA5C9-0713-4FD1-9A5F-6F847EB52E04}https://www.home.saxo/en-au/content/articles/equities/earnings-watch-can-tesla-convince-the-market-about-growth-22012024Peter Garnryproduct-equitiesHighlighted articlesEarnings Releasessubject-is/fin.reportsTeslaAsmlASML Holdingcompany-netflixNetflix IncArtificial Intelligencecompany-jpmorgan chaseJPMorgan Chase and Cosector-Technologyindexcfd-nas100.ieditorial-nasdaqEn hurtig tankeEarnings Watch: Can Tesla convince the market about growth?<div class="article-excerpt">This week, a large number of companies will report earnings, including Netflix, Tesla, and ASML. Investors will be watching these earnings reports closely to see how they impact the market. We believe Netflix can exceed estimates for Q4, boosting sentiment in technology stocks. Tesla is facing increased competition and may have to abandon its growth targets in the near-term future.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Key earnings week ahead</span></strong></h3> <p><span>The Q4 earnings season has been dominated so far by US financials, but this week the earnings season broadens out to industrials, technology and health care. The list below highlights the 30 largest market cap companies reporting earnings this week.</span></p> <ul > <li><strong><span>Tuesday:</span></strong><span> Verizon Communications, Netflix, Texas Instruments, Intuitive Surgical, Johnson &amp; Johnson, Procter &amp; Gamble, General Electric, RTX, Lockheed Martin</span><br /> <br /> </li> <li><strong><span>Wednesday:</span></strong><span> SAP, ASML, Elevance Health, Tesla, IBM, ServiceNow, Lam Research, Abbott Laboratories, AT&amp;T, Progressive</span><br /> <br /> </li> <li><strong><span>Thursday:</span></strong><span> Union Pacific, T-Mobile US, Visa, LVMH, Intel, Comcast, Blackstone, NextEra Energy, Marsh &amp; McLennan</span><br /> <br /> </li> <li><strong><span>Friday:</span></strong><span> Christian Dior, American Express</span></li> </ul> <p><span>Based on retail investor exposure the three most important earnings releases this week will be Netflix, Tesla, and ASML setting the sentiment for US equities during the week. Next week the earnings season gets into its most important week with earnings releases from the largest US technology companies.</span></p> <h3 class="article-heading--3"><strong><span>Earnings preview: Netflix, Tesla, and ASML</span></strong></h3> <p><span class="underline; ">Netflix: Full speed on margin expansion and growth</span></p> <ul > <li><span>Reports FY23 Q4 earnings tomorrow (aft-mkt). Analysts expect revenue growth of 10.9% y/y and EPS growth of 142% y/y due to compounding effects of momentum in advertising revenue, higher subscriber growth and subscription price increases.</span><br /> <br /> </li> <li><span>Given the momentum in Netflix business our view is that the company is poised to exceed estimates for Q4 boosting sentiment in technology stocks this week.</span><br /> <br /> </li> <li><span>Netflix is on track to deliver $6bn in free cash flow in FY24 which equates to a free cash flow yield of around 3%.</span><br /> <br /> </li> <li><span>Key focus for investors is the outlook for revenue growth in FY24 which is estimated at 13.8% y/y.</span></li> </ul></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/22_pg_1.png"/></div><div class="article-additional-rte"><div class="rte--output"><p><span class="underline; ">Tesla: Growth delusions and gross margin fight</span></p> <ul > <li><span>Reports FY23 Q3 earnings Wednesday (aft-mkt). Analysts expect revenue growth of 6.3% y/y, the lowest since the -4.9% y/y growth in FY20 Q2 during the pandemic. EPS is expected at $0.53 down 44% y/y as competition has increased and especially on pricing.</span><br /> <br /> </li> <li><span>BYD has overtaken Tesla on deliveries becoming the world&rsquo;s largest battery EV maker and is also beginning to make <a href="https://www.wsj.com/business/autos/a-lamborghini-style-ev-byd-goes-upmarket-to-outmaneuver-tesla-2b698578?mod=hp_lead_pos7">inroads in the higher priced segment</a> that Tesla has dominated.</span><br /> <br /> </li> <li><span>Tesla has previously promised investors 50% annualised growth for 10 years, but with revenue growth expected in FY23 at 19.8% and 20.7% in FY24, the question is whether Tesla will soon be forced to abandon its growth targets.</span><br /> <br /> </li> <li><span>Tesla must convince investors that growth will resume from the current low levels to levels above +20% growth while preserving gross margin which has slipped below 20% down from 25.6% in FY22.</span><br /> <br /> </li> <li><span>Lower prices on lithium carbonate is helping on sustaining gross margin while cutting prices to keep up with Chinese competitors, but any further flip in gross margin outlook could become toxic for Tesla&rsquo;s stock price.</span></li> </ul></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/22_pg_2.png"/></div><div class="article-additional-rte"><div class="rte--output"><p><span class="underline; ">ASML: Surfing the boom in AI investments</span></p> <ul > <li><span>Reports FY23 Q4 earnings on Wednesday (European pre-mkt). Analysts expect revenue growth of 7.6% y/y and EPS of &euro;4.80 up 5% y/y.</span><br /> <br /> </li> <li><span>Key focus for investors is the FY24 revenue growth outlook. Analysts are quite bearish with only 0.4% revenue growth projected setting a low bar for the Dutch semiconductor equipment maker. However, the sluggish revenue growth projections come on the back on a weak ASML guidance in October of unchanged revenue in 2024.</span><br /> <br /> </li> <li><span>Looking beyond 2024 analysts expect revenue growth to increase to 22.3% in FY25 and EBITDA hitting &euro;13.3bn.</span><br /> <br /> </li> <li><span>The key driver for ASML beyond 2024 is the CapEx signals from TSMC, the world's largest foundry chip maker, indicating strong focus on 3 and 2 nanometer chips which will boost demand for ASML&rsquo;s extreme ultraviolet machines which the company controls with a 100% market share.</span></li> </ul> <h3 class="article-heading--3"><strong><span>Q4 earnings are off to a good start as technology earnings soar</span></strong></h3> <p><span>The Q4 earnings have so far delivered a net positive surprise on both revenue and earnings with especially financials and consumer discretionary companies delivering the biggest positive surprises. The message from US banks also leaned on the positive side for 2024 although acknowledging the key risks to the economy. JPMorgan Chase is expected to expand the business this year and the net charge-offs (bad debt written off) in percentage of loans are still running at very low levels approaching the average level from the years before the pandemic.</span></p> <p><span>There have been a lot of talk about the rising technology stocks pushing equities to new all-time highs. Some argue that it is crazy and animal spirits are too wild and not backed by reality, but in fact the reality is actually that operating income (EBITDA) has massively rebounded for Nasdaq 100 companies in the previous two fiscal quarters supporting the ongoing rally in technology stocks.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/22_pg_3.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/22_pg_4.png"/></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span></span> <span>Corporate Earnings</span> <span>Tesla</span> <span>Asml</span> <span>ASML Holding</span> <span>Netflix</span> <span>Netflix Inc.</span> <span>Artificial Intelligence</span> <span>Jpmorgan Chase</span> <span>JPMorgan Chase and Co.</span> <span>Technology</span> <span>USNAS100.I</span> <span>Nasdaq</span> <span>En hurtig tanke</span></div>Mon, 22 Jan 2024 12:30:00 Z2024-01-24T08:12:31Z{C29ADAE9-6043-4781-BBBF-1F0D5E1FA583}https://www.home.saxo/en-au/content/articles/equities/first-us-listed-etfs-holding-spot-bitcoin-start-trading-today-11012024Peter Garnryproduct-equitiesHighlighted articlesPrimary-CryptocurrenciesCryptocurrencies - 3 Intro articlesCryptocurrencySecondary-BitcoinFirst US listed ETFs holding spot Bitcoin start trading today<div class="article-excerpt">The US regulator SEC has approved the first US ETFs holding spot Bitcoin opening up Bitcoin exposure to a much wider global audience. There will be 11 new ETFs staring trading today all with low expense ratios as the arms race has begun to become the world’s largest spot Bitcoin fund.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>SEC approves Bitcoin spot ETFs</strong></h3> <span>Yesterday, in a landmark decision, the US financial regulator the SEC approved the first spot Bitcoin ETFs for public listing. The cryptocurrency industry has been waiting for this moment for years and been fighting US regulators in court to get to this point. There are right now 11 ETFs planned to list with all of them approved yesterday, so the race is now on to become the biggest spot Bitcoin ETF. These 11 ETFs will start trading today and the list below highlights the ETFs, ticker code and primary exchange. The BlackRock iShares Bitcoin Trust will launch with a total expense as low as 12 bps.</span></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/11_pg_1.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>What will it mean for the Bitcoin price?</span></strong></h3> <p><span>After a horrible 2022 for cryptocurrencies the market bottomed out in November 2022 and since then spot Bitcoin is up 185% with the trade in 2023 increasingly being about anticipating the upcoming SEC decision on US ETFs tracking spot Bitcoin. Following the SEC decision, we have not seen much price movements with spot Bitcoin trading around the 46,250 level up less than a percent in today&rsquo;s trading session.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/11_pg_2.png"/></div><div class="rte--output">XBTUSD weekly price | Source: Bloomberg </div><br/><div class="article-additional-rte"><div class="rte--output"><p><span>The big question is now whether this Bitcoin trade was a buy the rumour sell the facts like we saw back in 2017 when CME Group and Cboe Global Markets launched the first Bitcoin futures. ETFs holding underlying physical assets have in other markets such as gold and uranium been a positive factor for price developments and especially in the case of uranium, the new physical ETFs have tighten the market causing uranium prices to rally. The question is whether we will see the same developments over time with these 11 new ETFs holding spot Bitcoin as it opens the door for many more investors in the world&rsquo;s largest financial market. It is important to note that SEC Chair Gary Gensler that specifically that while the SEC has approved these ETFs the regulator are by no means endorsing the underlying market, saying that retail investors should still be very cautious on investing into cryptocurrencies.</span></p> <h3 class="article-heading--3"><strong><span>It does not change much for European investors</span></strong></h3> <p><span>While the SEC approval is a big thing in the US, ETFs holding spot Bitcoin and other cryptocurrencies have been available to investors outside the US for a long time. For European investors the launch of US ETFs on spot Bitcoin mean little as these ETFs will not be available for retail investors in the EU as these ETFs will not be compliant with UCITS regulation. As such, the new spot Bitcoin ETFs will only be available to professional investors in Europe.</span></p> <p><span>For jurisdictions outside ESMA regulation such as Switzerland, UAE, and APAC the launch of US spot Bitcoin ETFs will open up new opportunities for investing more cheaply into Bitcoin. There are jurisdictions such as United Kingdom where crypto derivatives are banned for UK investors and Hong Kong were cryptocurrencies are illegal. For those two jurisdiction none of these new ETFs will make any difference.</span></p> <p><span>So for many European retail investors the access to spot Bitcoin will not change the largest ETF is the Bitcoin Tracker EUR incorporated and listed in Sweden with &euro;828mn in total assets and total expense ratio of 2.5%. So for this particular ETF in Europe the new US ETFs could put on some pricing pressure as it is 20 times more expensive than the iShares Bitcoin Trust and thus any professional investor in the EU that has exposure to Bitcoin through the Bitcoin Tracker EUR ETF would ideally switch fund exposure.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/11_pg_3.png"/></div><div class="rte--output">Bitcoin Tracker EUR ETF| Source: Saxo</div><br/><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <a href="https://www.home.saxo/en-au/insights/news-and-research/cryptocurrencies">Cryptocurrencies</a> <span>Cryptocurrencies - Learn more</span> <span>Cryptocurrency</span> <span>Bitcoin</span></div>Thu, 11 Jan 2024 10:40:00 Z2024-01-24T08:12:52Z{9963D18D-B8B7-40D1-AD44-6E4951BF8004}https://www.home.saxo/en-au/content/articles/equities/nvidia-rides-ai-hype-to-new-all-time-high-as-q4-earnings-season-nears-09012024Peter Garnryproduct-equitiesHighlighted articlesEarnings Releasessubject-is/fin.reportsPrice earnings ratioEarnings per shareNVIDIA CorporationNvidia CorpAdvanced Micro DevicesArtificial Intelligencecompany-jpmorgan chaseJPMorgan Chase and CoBanksS P 500 indexEn hurtig tankeNvidia rides AI hype to new all-time high as Q4 earnings season nears<div class="article-excerpt">Nvidia's share price surged 6.5% to a new record high driven by the announcement of new AI chips for personal computers. The move highlights the growing investment opportunities in AI and the potential for the technology to expand into consumer markets.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>AI hype catapults Nvidia to new all-time high</span></strong></h3> <p><span>Nvidia shares jumped 6.5% yesterday to a new all-time high keeping the AI hype alive and increasing bets that 2024 will be another year of massive technology investments into AI. The positive sentiment yesterday was due to Nvidia announcing a new AI chips for personal computers that will allow AI capabilities to potentially expand closer to consumer. One of the key arguments for putting AI chips into personal computers compared to the current model with massive AI chips sitting in gigantic datacentres is that it increases security running AI applications more decentralized. The share price increase yesterday constituted an increase in market value of $79bn. This corresponds to adding the market value of Equinix (the world&rsquo;s largest operator of datacentres) or Schlumberger (one of the world's largest oil and gas services providers).</span></p> <p><span>Nvidia remains the hottest trade in the US technology sector seen as the most direct and potent exposures to the initial investment boom in AI as Nvidia is leading the industry of AI chips. The high expectations are clearly reflected in the company&rsquo;s equity valuation which measured on 12-month EV/EBITDA is 23x which is significantly above the MSCI World Index at 12x. The sell-side consensus price target is currently $648 around 24% above yesterday&rsquo;s closing price. Despite a year of galloping expectations for Nvidia the chipmaker&rsquo;s astounding results exceeding expectations have created a powerful feedback loop. This is also the biggest danger this year as Nvidia is estimated to increase revenue by a whopping 57% in FY25 (ending 31 January 2025) to reach $92.6bn. One of the key outstanding questions about Nvidia revenue is how much of revenue to China was frontloaded due to upcoming sanctions and thus could pose a hangover risk over the coming year.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/9_pg_1.png"/></div><div class="rte--output">Nvidia share price | Source: Saxo</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/9_pg_2.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>The Q4 earnings are a key test of technology earnings</span></strong></h3> <p><span>On Friday the market enters its first big earnings release day with the four major US banks JPMorgan Chase, Wells Fargo, Bank of America, and Citigroup reporting Q4 earnings. Analysts expect net revenue growth to begin normalizing as interest rates have stopped rising and also expect credit provisions to rise reflecting a deterioration in credit quality and future losses on loans. Higher credit provisions were the big surprise factor in Q3 for US banks as they across the board reported lower than estimated credit provisions as the resilient US economy shielded the corporate and household sector. JPMorgan Chase is the largest US bank and is projected to increase net revenue by 16% y/y in Q4 and deliver EPS of $3.57 down 1% y/y. The stock price is up&nbsp; 27.6% since the lows in October 2023.</span></p> <p><span>As the chart below shows the operating income (EBITDA) rose 13.2% for Nasdaq 100 in 2023 up until Q3 outpacing the S&amp;P 500 and STOXX 600 due to aggressive cost cutting and accelerating revenue growth. However, technology stocks much more expanding equity valuations as investors believe the growth and good times will continue into 2024. This is exactly why technology earnings are more important than ever to this market. One because they set sentiment but also because US equity market index concentration is extremely high.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/9_pg_3.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/9_pg_4.png"/></div><div class="rte--output">JPMorgan Chase share price | Source: Saxo</div><br/><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span></span> <span>Corporate Earnings</span> <span>Price earnings ratio</span> <span>Earnings per share</span> <span>NVIDIA Corporation</span> <span>NVidia Corp.</span> <span>Advanced Micro Devices</span> <span>Artificial Intelligence</span> <span>Jpmorgan Chase</span> <span>JPMorgan Chase and Co.</span> <span>Banks</span> <span>S P 500 index</span> <span>En hurtig tanke</span></div>Tue, 09 Jan 2024 14:00:00 Z2024-01-09T14:06:11Z{559C11EC-4149-4A8A-9481-9D4B00CEA9A6}https://www.home.saxo/en-au/content/articles/quarterly-outlook/new-extremes-and-a-challenging-opportunity-set-09012024Peter GarnryPrimary-Quarterly OutlookEquities: New extremes and challenging opportunities <div class="article-excerpt">The key question for equity markets in 2024 is whether there will be a recession. Investors should overweight commodity, cybersecurity, and defence stocks, as well as UK and European equities. They should underweight US mega caps. </div><div class="article-rte"><div class="rte--output"><h4 class="article-heading--4">It&rsquo;s all about recession</h4> <p class="text--body">The keyword for equities in 2023 was economic resilience. Everything was set for a recession amid the steepest policy rate increase in many decades. However, unprecedented US fiscal policy, and animal spirits unleashed by the mesmerizing proficiency of ChatGPT&nbsp; helped the US economy avoid a recession and propelled technology stocks to new all-time highs. With the second-longest lag in US economic history since 1978, measured by the recession-free period since the leading index peak, the main concern in 2024 is the possibility of a recession.</p> <p class="text--body">Economists predict a 50% likelihood of a US recession, underscoring the challenges for investors as 2024 is not clear cut. China&rsquo;s policy resolve is also still a big unknown. If history is any indicator, then equity markets have been mostly positive in the months around the first Fed rate cut, so for now, the market&rsquo;s current pricing of rate cuts is not alarming.</p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/qo1-2024/pg-01.jpg"/></div><div class="article-additional-rte"><div class="rte--output"><h4 class="article-heading--4">Key equity themes to watch in 2024</h4> <p class="text--body">Last year was another year of disappointment for Chinese equities, especially in comparison to countries winning in the fragmentation game as supply chains are increasingly avoiding China. These countries are India, Mexico, Brazil, and Vietnam, and we expect the equity market to continue favouring these emerging equity markets over China. It&rsquo;s remarkable to observe that Chinese equities have underperformed in other key emerging markets by almost 44% in USD terms since early 2018.</p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/qo1-2024/pg-02.jpg"/></div><div class="article-additional-rte"><div class="rte--output"><p class="text--body">Across equity themes we&rsquo;re overweight in the commodity sector as the super cycle is still ongoing and is driven by strong global urbanization, green transformation investments, and constrained supply. Cyber security and defence stocks are also likely to continue benefiting from the ongoing geopolitical tensions in the world.&nbsp;</p> <p class="text--body">If the market accelerates its bets on more policy cuts in 2024, then the battered green transformation stocks across wind, solar, energy storage, EVs and hydrogen could see a short-term boost.</p> <h4 class="article-heading--4">Underweight mega caps as new extreme is reached</h4> <p class="text--body">Last year will, undoubtedly, go down in the history books as the year of market extremes. The so-called &ldquo;the Magnificent 7&rdquo; (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla) gained 104% for the year, as of 15 December 2023, as hype over generative AI went into hyperdrive mode. In comparison, Nasdaq 100, S&amp;P 500 and S&amp;P 500 Equal Weight gained 53%, 25%, and 12% respectively. The Russell 2000 Index was actually down year-to-date in late October 2023 before the market aggressively repriced central bank policy rates for 2024.</p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/qo1-2024/pg-03.jpg"/></div><div class="article-additional-rte"><div class="rte--output"><p class="text--body">As a result, the US equity market is at, or close to being at, the most concentrated it has ever been in the past 100 years. A frightening truth lies behind this fact. The outperformance cannot continue unless this small group of US technology companies take over the entire economy and continue to outperform steep growth expectations in 2024. The high index concentration also makes the US equity market riskier as returns are increasingly driven by a narrow set of risk factors with sentiment on technology stocks being one of them. Our key idea in 2024 is to be underweight US mega caps.</p> <h4 class="article-heading--4">Value is found in UK and European equities</h4> <p class="text--body">In UK and European equity markets, we find the exact opposite of &ldquo;the Magnificent 7&rdquo; with equity market valuations at 56%, and a 28% discount on US equity markets. As we don&rsquo;t subscribe to US earnings being much better than Europe in the long-term, we believe expected returns will be higher in UK and European equities. So, if sentiment changes or economic activity slows down, these two equity markets also offer a higher exposure to defensive sectors.</p></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/thought-leadership/quarterly-outlook">Quarterly Outlook</a></div>Tue, 09 Jan 2024 07:00:00 Z2024-01-15T08:30:40Z{C919627C-EDC5-4E1C-8B54-D691DBF9E1A8}https://www.home.saxo/en-au/content/articles/equities/the-optimist-vs-pessimist-04012024Peter Garnryproduct-equitiesHighlighted articlesEarnings Releasessubject-is/fin.reportsPrice earnings ratioEarnings per sharesector-Technologyplace-lc/usplace-lr/eurInflationEn hurtig tankeAre you optimistic or pessimistic on equities?<div class="article-excerpt">The outlook for global equities in 2024 is uncertain, with both optimists and pessimists holding strong views. The optimists believe that the US economy is on a solid footing, inflation is slowly coming down, and the consumer is not dead. They also believe that generative AI has the potential to significantly boost economic growth and remain overweight cyclical sectors in the equity market.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Low visibility due to unusual circumstances</span></strong></h3> <p><span>Everything in financial markets and the global economy have been unusual since the pandemic broke out in 2020 ushering extraordinary policy moves, supply chain chocks never seen before, and the first full scale conventional war on the European continent since WWII. With sticky inflation reappearing like a bad horror movie from the 1970s central banks slammed the brakes on financial conditions launching in 2022 the most aggressive policy rate cycle since 1971. </span></p> <p><span>The Fed&rsquo;s move was a time bomb waiting to explode but the Biden administration&rsquo;s aggressive fiscal moves in 2022 offset the pain from the Fed policy hikes and the extended period of low interest rates had also locked in households and corporates at very low interest rates. In effect long lags were operating in the economy and did not slip into a recession in 2023 as expected. As long lags from monetary and fiscal policies are still working their way through the economy the visibility and understanding of the underlying dynamics are very difficult to get right for investors and traders. We are in a situation where investors can pick and choose whatever indicator they want to support their outlook for 2024. </span></p> <p><span>Below we have set up the case for the optimist and the pessimist highlighting the factors that support each views.</span></p> <h3 class="article-heading--3"><strong><span>The optimist: The good times will continue sending equities higher</span></strong></h3> <p><span>After having dodged the recession bullet in 2023 and inflation slowly coming down, the optimist feels the outlook is more stable and less worried about the AI hype and boom in technology stocks. What are some of the key factors that support a positive view on global equities in 2024?</span></p> <ul > <li><span>US economic growth accelerated in December and is setting a bit below the long-term trend. Although Europe is in a mild recession the situation is stable and lower energy prices should begin improving conditions going forward.</span><br /> <br /> </li> <li><span>The US consumer is not dead with the US weekly Redbook Index (same store sales) having rebounded from negative growth in July 2023 to slightly below 5% growth in December suggesting the combination of lower inflation and median wage growth just above 5% is expanding household budgets.</span><span></span><span></span><br /> <br /> </li> <li><span>US financial conditions have eased to levels below the 2018-2019 average suggesting financial conditions are easy supporting economic growth.</span><br /> <br /> </li> <li><span>Earnings growth expectations in S&amp;P 500 the next 12 months at 8% are not high in a historical context and unless the economy slips into a recession it should be possible to deliver this growth in 2024.</span><br /> <br /> </li> <li><span>Generative AI is a significant productivity enhancement technology that has the ability to lift real economic growth in the coming decade. Next to generative AI companies such as Google is doing significant progress on quantum computing with a breakthrough seemingly closer than ever which would unleash enormous potential in scientific discovery.</span><br /> <br /> </li> <li><span>The US equity market looks a bit overstretched and even dangerous with the high index concentration in technology stocks, but the MSCI World is valued a bit cheaper than the historical average since 1995, so the return prospects are solid for 2024 if companies can deliver on earnings.</span></li> </ul> <p><span>How to position the portfolio?</span></p> <ul > <li><span>Overweight cyclical sectors such as IT, financials, consumer discretionary, industrials, materials, real estate, and communication services</span><br /> <br /> </li> <li><span>Sell volatility capturing the roll yield because of hedging flows</span><br /> <br /> </li> <li><span>Overweight EM equities as lower financial conditions will keep the economy going and ease refinancing pressures in emerging market countries</span><br /> <br /> </li> <li><span>Long duration trades such as long 10-30yr bonds, high yield bonds, utilities and telecommunication</span><br /> <br /> </li> <li><span>Long equity themes such as AI/semiconductors, cyber security, commodities, renewable energy, and green transformation</span></li> </ul></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/4_pg_1.png"/></div><div class="rte--output">US Financial Conditions Index | Source: Bloomberg</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>The pessimist: Chickens are coming home to roost</span></strong></h3> <p><span>The global luckily avoided a recession in 2023 although Europe could not escape it as the pain from higher energy prices and a weak Chinese economy became too much for the European economy. Equity markets went too far last year on the hopes of generative AI and the pain of higher interest rates will come to haunt consumers and companies in 2024. Below we list some of the factors that drive a pessimistic view on equities in 2024.</span></p> <ul > <li><span>The US government cannot continue its large fiscal impulse and the lower fiscal deficit hits economic growth like a hammer during 2024 pushing the US economy into a recession.</span><br /> <br /> </li> <li><span>Europe is already in a recession with high inflation (stagflation) and China is slowing down without any hope of finding a solution to its ugly balance sheet problem which eventually drags the entire global economy into a recession.</span><br /> <br /> </li> <li><span>Consumers have used up the majority of their savings from during the pandemic years and will begin reining in consumption.</span><br /> <br /> </li> <li><span>Geopolitical risks will not ease in 2024 and just add to uncertainty, inflation, and volatility.</span><br /> <br /> </li> <li><span>Refinancing of debt will increasingly begin to bite lowering sentiment among consumers but also corporates.</span><br /> <br /> </li> <li><span>Earnings expectations are too high and continued wage pressures will continue to compress profit margin hitting sentiment at one point.</span><br /> <span></span></li> <li><span>1-year inflation swaps are already 2% which is the central bank target so against expectations inflation can surely only surprise to the upside forcing the Fed to lower the policy rate less than expected.</span><br /> <br /> </li> <li><span>Animal spirits were unleashed in 2023 due to the hype over generative AI. The technology will likely prove to be a game changer long-term but in the short-term it will fail to live to expectations cause a deeper correction in technology stocks.</span></li> </ul> <p><span>How to position the portfolio?</span></p> <ul > <li><span>Overweight defensive sectors such as energy, utilities, consumer staples and health care.</span><br /> <br /> </li> <li><span>Long volatility through puts on technology stocks</span><br /> <br /> </li> <li><span></span><span>Long gold and overweight short-term duration bonds</span><br /> <br /> </li> <li><span>Overweight equity themes such as nuclear, defense, and high quality companies</span></li> </ul></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span></span> <span>Corporate Earnings</span> <span>Price earnings ratio</span> <span>Earnings per share</span> <span>Technology</span> <span></span> <span>Europe</span> <span>Inflation</span> <span>En hurtig tanke</span></div>Thu, 04 Jan 2024 13:15:00 Z2024-01-04T13:39:43Z{8DDD0536-6529-4C16-AC0D-5BF39A99CA8C}https://www.home.saxo/en-au/content/articles/equities/byd-is-the-new-leader-in-electric-vehicles-03012024Peter Garnryproduct-equitiesHighlighted articlesTeslacompany-tesla motorsTesla IncBYD Company Ltdsector-TechnologyAsmlASML HoldingAP Moller Maersk B AScompany-ap moller-maerskBYD is the new leader in electric vehicles<div class="article-excerpt">Tesla lost its leading position in the EV market to BYD in Q4 2023 and the overall EV market is expected to grow significantly in 2024. Lithium carbonate prices have also fallen significantly, which will allow EV makers to lower prices and accelerate adoption.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Tesla loses EV throne to BYD</span></strong></h3> <p><span>What has been the obvious trajectory for over a year became a reality in Q4 2023 with Tesla losing its leading position in the fast expanding EV market. BYD delivered 526,409 battery electric vehicles (BEVs) compared to Tesla at 484,507 which exceeded estimates by a small margin. Given the strong ending to 2023 from Tesla and BYD, the 15 largest EV makers that we are tracking will likely have delivered more than 2mn BEVs in Q4 20233 for the first time in Q4 2023. This means that in 2024 those 15 EV makers will likely deliver more than 10mn BEVs which would equate to roughly 10% of all new passenger vehicles globally. </span></p> <p><span>If this becomes reality 12 months from now then those 15 EV makers will have cumulatively delivered around 25mn BEVs since Q1 2020 which roughly is 0.65Mb/d reduction in oil demand that would otherwise have in the oil market.</span></p> <p><span>The highest penetrated EV market is the world is Norway with around 22% of the outstanding passenger cars being EVs. This has so far led to an oil demand reduction of 5%. In 10 years from now and if batteries become cheaper and more powerful so they can be used for trucking then oil demand will begin to be drastically reduced.</span></p> <p><span>In the meantime, we could have a situation where demand for gasoline drops way faster than diesel which in the future could force oil refineries to increase the price of diesel to make up for the losses in gasoline thereby increasing the cost of heavy transportation.</span></p> <p><span>With a new year in front of us, it also worth looking at the key input factor for BEVs which is lithium carbonate used in the lithium-ion batteries. After a significant rally in lithium carbonate prices in 2021 and 2022, peaking out at prices up 1,400% higher than the lowest prices in 2020, lithium carbonate prices are down 83% from their peak. This will allow EV makers to lower prices without eating too much into gross margins and accelerate the adoption of BEVs.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/3_pg_1.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/3_pg_2.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>ASML is caught in the technology fight between the US and China</span></strong></h3> <p><span>ASML, a Dutch semiconductor equipment maker of lithography machines used for advanced chip manufacturing, has started the year down 4.4% over the first two trading sessions on news that the US government has pushed ASML to block Chinese deliveries before the January deadline for the export ban. ASML has said that the blocking has only impacted a few Chinese customers and revenue to mainland China is around 14% of total revenue. Chinese import data suggest that Chinese companies were busy taking delivery of ASML&rsquo;s machines in the second half of 2023 before the new stricter export rules would go into effect.</span></p> <p><span>How should investors think about ASML and the risks related to revenue in China given the ongoing technology fight between the US and China? For long-term investors it is really about their long-term expectations for growth. ASML is returning roughly 2.9% in dividends and buybacks which is a bit below the MSCI World Index at 3.2%. The long-term expected real rate return is 2.2% which means that global equities have a long-term expected real rate return of 5.5% annualised at current valuation. As ASML is returning less capital to shareholders than MSCI World any performance above global equities must come from higher real rate growth. Given the underlying drivers of growth for semiconductors in datacenters, EVs and general digitalization of the economy it is not unreasonable to think ASML will continue to deliver significantly higher growth rates than the overall economy over the next decade.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/3_pg_3.png"/></div><div class="rte--output">ASML share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Shipping stocks are soaring on Red Sea escalation and rerouting</span></strong></h3> <p><span>Maersk, one of the world&rsquo;s largest shipping companies, has seen its shares rally 11.2% in the first two trading days of 2024 as the escalating situation in the Red Sea has rerouted almost all container ships from Asia to Europe south of Africa instead of through the Suez canal. The extra time spent on the seas and longer travel routes means higher freight rates and higher profit margins for shipping companies such as Maersk.</span></p> <p><span>While in the short-term the events in the Red Sea is positive for Maersk and other shipping companies the longer term dynamics in the global shipping industry are negative. There are overcapacity and freight rates are back to normal levels. &ldquo;Slowbalization&rdquo; as IMF has recently coined the current period in terms of global trade volume will continue in the years ahead meaning that Maersk will experience low normal freight rates with low volume growth. Sell-side analysts remain sceptical of Maersk shares with a consensus price target 15% below the current price. </span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2024/january/3_pg_4.png"/></div><div class="rte--output">Maersk share price | Source: Saxo</div><br/><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Tesla</span> <span>Tesla Motors</span> <span>Tesla Inc.</span> <span>BYD Company Ltd</span> <span>Technology</span> <span>Asml</span> <span>ASML Holding</span> <span>A.P. Moller - Maersk B A/S</span> <span>Ap Moller-maersk</span></div>Wed, 03 Jan 2024 12:30:00 Z2024-01-03T12:32:02Z{7A0BEA9C-1695-4947-B7AF-2EED8AD1244F}https://www.home.saxo/en-au/content/articles/equities/year-end-thoughts-and-what-to-expect-in-2024-27122023Peter Garnryproduct-equitiesHighlighted articlesplace-lc/cnEmerging Marketssubject-is/fin.reportsEarnings ReleasesGrowth stocksplace-lc/usplace-lr/eurInflationproduct-bondscommodity-crude oilYear-end thoughts and what to expect in 2024<div class="article-excerpt">The year 2023 was a year of extremes and divergences. The global economy was resilient against aggressive monetary policy hikes, but China faced serious structural growth issues. The US equity markets were pushed to new highs by the technology hype cycle, but the green transformation stocks were the biggest losing theme.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>The year of extremes and divergences</span></strong></h3> <p><span>Just as one could not imagine equities to be crazier it did happen in 2023. It is always difficult to summarize a year in all its details but below are some of the key events to reflect on.</span></p> <ul > <li><span>Consensus was clearly in the recession camp but the global economy proved to be resilient against aggressive monetary policy hikes.</span><br /> <br /> </li> <li>Monetary policy lags have turned out to be historical long this time most likely due to the extended period the economy was in an ultra-low interest rate environment.<br /> <br /> </li> <li>There were great hopes for China, but the year proved to be the year of many false starts and the once unbeatable country is facing serious structural growth issues.<br /> <br /> </li> <li>The rapidly rising interest rates caused for a brief period a banking crisis that was quickly contained and isolated to a few weak banks. Silicon Valley Bank went bankrupt and UBS took over Credit Suisse.<br /> <br /> </li> <li>The market was convinced that the central bank would cave in during 2023 but instead central banks were steadfast and bolstered the &ldquo;higher for longer&rdquo; narrative pushing the US 10-year yield to 5% before aggressively falling back to the levels where they started the year.<br /> <br /> </li> <li>Generative AI became the talk on Wall Street and investors rushed to get in on the action as Nvidia delivered two monster earnings releases on a level never seen before in history.<br /> <br /> </li> <li>The technology hype cycle over generative AI pushed US equity markets to new historical highs in terms of index concentration with the &ldquo;magnificent seven&rdquo; stocks outperforming the S&amp;P 500 by a factor of four.<br /> <br /> </li> <li>Hopes were high for a geopolitical breakthrough in Ukraine that could force Russia to negotiate peace but instead the war transcended into a WWI style war of attrition with no end in sight.<br /> <br /> </li> <li>To make matters worse in geopolitics a new hot spot emerged in the Middle East with Hamas attack on Israeli civilians and subsequent brutal invasion of Gaza by Israeli forces. Recently the conflict has led to attacks on ships in the Red Sea forcing ships from Asia to Europe to reroute around Africa at increased costs.<br /> <br /> </li> <li>As much as technology was the winner in the global equity market, so was the green transformation stocks the biggest losing theme driven by an industry crisis in wind turbines and inventory glut in solar panels.<br /> <br /> </li> <li>COP28 ended with the promise to start the era of declining consumption of fossil fuels. The rapid adoption of energy efficient solutions and in particular fast adoption of electric vehicles is already causing significant impact on oil markets. This trend will be hugely important for Saudi Arabia and Russia in the years to come shaping geopolitics.<br /> <br /> </li> <li>While central bank policy was more or less synchronized Bank of Japan held on to its negative policy rates and yield-curve-control of the 10-year maturities government bonds. The divergent policy with the rest of the world left JPY to absorb all pressures leaving the financial market wondering when Bank of Japan will come back to the real world.<br /> <br /> </li> <li>The strong USD and high interest rates had a negative impact on emerging market equities which once again underperformed and has moved to the dustbin of history, at least for now. Global investors seem increasingly uninterested in emerging markets.<br /> <br /> </li> </ul></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/22_pg_1.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Embrace for surprises in 2024</strong></h3> <p>As 2023 is coming to an end investors will be wondering whether 2024 can once again surprise everyone. Consensus is increasingly betting on a mild recession in the US economy somewhere around mid-year. Under the assumption that consensus is always wrong this leads to two paths in 2024, 1) a hard landing scenario as high interest rates finally bite, or 2) a reacceleration of growth in the global economy. Growth remains ugly in Europe albeit stabilizing in a mild recession dynamic while the US economy remains resilient.</p> <p>Next year will evolve around the following key topics:</p> <ul > <li>Will inflation and wages prove stickier than expected and thus forcing central banks to keep policy rates higher for longer?<br /> <br /> </li> <li>If Bank of Japan comes back to the normal world of interest rates will set in motion deleveraging dynamics as JPY has been used as key funding currency for carry trades?<br /> <br /> </li> <li>General elections in Taiwan (Jan), India (Apr), US (Nov) and potentially UK (latest call in Dec) all have the ingredients to surprise markets and add to geopolitical risks.<br /> <br /> </li> <li>Can US technology live up to the extreme expectations for earnings growth all will 2024 make it painfully clear that investors got carried away again.<br /> <br /> </li> <li>Will the world get another upside surprise from generative AI that will unleash animal spirits once again?<br /> <br /> </li> <li>Will the global economy fall into a recession or reaccelerate? Here China plays a crucial role. The key risk to the economy is the expected lower fiscal impulse in Europe and the US.<br /> <br /> </li> <li>Will technology adoption in electric vehicles be another year of extreme growth marking the beginning of the end for crude oil market as we have come to know it? Will it force Saudi Arabia to make hasty decisions?<br /> <br /> </li> <li>Will emerging markets stage a comeback in financial markets or disappoint once more?<br /> <br /> </li> <li>If interest rates continue lower will green transformation stocks maybe become the biggest winner of 2024?<br /> <br /> </li> <li>Can peace be achieved in the Middle East and will Ukraine muster enough support from the EU and US to avoid losing more territory to Russia as the war drags into its third year in 2024?</li> </ul> <span>One thing is for sure, financial markets and geopolitical events will never stop surprising us and investors must be ready to embrace uncertainty as a new year is set to begin.</span></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>China</span> <span>Emerging Markets</span> <span>Corporate Earnings</span> <span></span> <span>Growth stocks</span> <span></span> <span>Europe</span> <span>Inflation</span> <a href="https://www.home.saxo/en-au/insights/news-and-research/bonds">Bonds</a> <span>Crude Oil</span></div>Wed, 27 Dec 2023 06:00:00 Z2024-01-30T15:18:54Z{9E349BB6-9D81-4FF2-B256-024699D8965C}https://www.home.saxo/en-au/content/articles/equities/nike-outlook-suggests-looming-threats-to-growth-22122023Peter Garnryproduct-equitiesHighlighted articlesplace-lc/cnEmerging Marketssubject-is/fin.reportsEarnings ReleasesGrowth stocksplace-lc/usplace-lr/eurcompany-nikeNike IncNike outlook suggests looming threats to growth<div class="article-excerpt">Nike's revenue outlook for the next two quarters is weaker than expected, due to weak demand in China and North America. This is despite positive growth in other consumer markets such as retail and consumer electronics.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Are ANTA Sports and Lululemon upending Nike&rsquo;s future growth?</span></strong></h3> <p><span>Nike, the world&rsquo;s largest sports apparel maker, surprised investors last night lowering its revenue outlook for the next two quarters, which means Nike expects demand to be soft until May 2024. FY24 Q2 results (ending 30 November) were in line with estimates on revenue and higher on EPS at $1.03 vs est. $0.85. Beneath the headline figures the Greater China segment disappointed with revenue at $1.86bn vs est. $1.97bn. Nike is responding to the weaker outlook by initiating a cost savings plan looking to deliver $2bn in savings with severance charges likely be booked in the current quarter ending February 2024 with charges seen at $400-450mn. Nike shares were down 12% in extended trading and both Adidas and Puma shares are trading softer in today&rsquo;s European session.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/22_pg_2.png"/></div><div class="rte--output">Nike share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><p><span>Nike&rsquo;s demand outlook is interesting as it is at odds with recent trends in other consumer markets. The Johnson Redbook Index for same-store sales is hovering around 4% annualised suggesting positive volume growth and FedEx reported this week that peak holiday volume was at par with last season. The recent indications from Micron Technology are also suggesting that consumer electronics have turned a corner and is expected to grow again in the coming quarters. So something is not right at Nike.</span></p> <p><span>If we look at the geographical segments we observe little growth in China while its biggest competitor in that market, Chinese based ANTA Sports, grew 14% y/y in the first-half of 2023 with revenue growth expected at 17% y/y in the second half. So both Nike and Adidas are losing out in China as domestic consumers are clearly preferring domestic brands. Greater China is only around 13% of total revenue for Nike, down from 22% three years ago, so this clearly not a bigger problem going forward. Its EMEA segment revenue was up y/y so it was a decline in revenue in its North America segment that is hurting the company. As Adidas also has seen declining revenue in their recent quarter ending in September it is not Adidas that is posing a problem for Nike. </span></p> <p><span>The question is, whether it is the newcomer Lululemon that is pressuring Nike as the company has expanded into new categories in 2023 such as shoes. Lululemon grew its North America revenue by 12.5% in the quarter that ended in October to $1.73bn surpassing Adidas in North America revenue. The emerging threat from Lululemon is definitely something Nike shareholders should think about in 2024.</span></p></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>China</span> <span>Emerging Markets</span> <span>Corporate Earnings</span> <span></span> <span>Growth stocks</span> <span></span> <span>Europe</span> <span>Nike</span> <span>Nike Inc.</span></div>Fri, 22 Dec 2023 10:30:00 Z2023-12-22T10:42:48Z{9D438148-F77C-4F4A-AF50-73DE60D4C3ED}https://www.home.saxo/en-au/content/articles/equities/will-emerging-markets-stage-a-comeback-in-2024-20122023Peter Garnryproduct-equitiesHighlighted articlesplace-lc/inplace-lc/cnEmerging Marketssubject-is/fin.reportsEarnings ReleasesPrice to earnings ratioGrowth stocksplace-lc/usplace-lr/eurWill emerging markets stage a comeback in 2024?<div class="article-excerpt">Global equities have had a strong year in 2023, with Indian equities being one of the best performers. China has been a disappointment for investors, with its equities underperforming other markets.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>A strong 2023 for India and global equities</span></strong></h3> <p><span>This year has been remarkable in many ways with year-end 2022 predictions not coming true. China did not deliver the growth rebound expected by the market. The global economy did not slip into a recession as expected. Inflation remained stickier than expected lifting policy rates under the narrative &ldquo;higher for longer&rdquo;. A banking crisis was close to fulfil many negative predictions but proved to be isolated among a few bank banks with poor risk controls. The generative AI technology also proved to be a game changer for technology stocks and more broadly sentiment.</span></p> <p><span>We wrote extensively from the <em>fragmentation game </em>in 2023 which is concept that describes the current geopolitical dynamic under a self-reliant principles. This dynamic is bad for China and good for other countries such as Mexico, India, Vietnam, Indonesia, South Korea and Japan. This underlying trend is understood by the market and Indian equities have also been one of the best performing markets this year up 19.3% in USD terms. For comparison, Chinese equities are down 12.8%, developed markets up 23.1%, US equities up 26.5% and European equities up 18.7%. Most of the rise this has been due to P/E ratios rising as earnings growth has been miniscule which sets 2024 up for a year where companies must deliver on earnings growth to justify their market values.</span></p> <p><span>An important to note on India is that economic growth is now projected to outstrip China for the foreseeable future and many more companies will follow Apple setting up manufacturing in the country. India is also having an election in April next year and this could become a positive factor for sentiment and growth as the new government will likely initiate new growth initiatives. But the future growth of India does not come cheap as we explain further down.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/20_pg_1.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>China is the big unknown in 2024</span></strong></h3> <p><span>For many global investors China has increasingly become uninvestable due to trade frictions between the US and China, the war in Ukraine, increased regulations, capital controls, declining population, and lately an obvious broken economic model. As the figure above shows, Chinese equities have delivered -31% cumulative return in USD terms since 1 January 2018 compared to 66% for global equities and 92% for US equities over the same period.</span></p> <p><span>After the strict lockdowns in China were lifted in late 2022 the market was betting hard on China to deliver a strong rebound in 2023, but the recurring troubles in the real estate sector derailed your dreams. Instead China from weakness to more weakness ending this year with communicated intentions by the government to stimulate the economy even more. While those intentions are good the question is how you stimulate an economy with a lot of slack when it is export driven and losing market share to other countries. Stimulus cannot be directed to real estate because this is an unproductive use of capital at this point. There are no easy solutions for China in 2024.</span></p> <h3 class="article-heading--3"><strong><span>Return expectations are not kind to emerging markets</span></strong></h3> <p><span>Emerging markets have been a disappointment for over a decade now and with strong US equity market returns global investors have increasingly ignored the emerging market story betting on the US technology sector. The main question for 2024 is whether emerging markets can finally get back on track. There are two ways to look at this.</span></p> <ol> <li><span>In the very short-term EM equity market outperformance is directly linked to the rebound case in Chinese equities. If it does not arrive, then EM equities will underperform again.</span></li> <li><span>In the longer run (10 years), EM equities do not look as attractive as DM equities because of capital consumption and low transmission of GDP growth to earnings growth.</span></li> </ol> <p><span>Let us look at Indian equities, EM and DM equities and their 10-year real return expectations in USD. As the figure below shows, the dividend yield is very low in India and much higher in EM. The dividend yield is the starting point for setting long-term return expectations in equities. Companies can return capital through dividends but also buybacks. If we look at Indian and EM equities then we observe that since early 2015 companies have consumed capital (issued more common stock capital than decreased common stock through buybacks), which is not necessarily bad if that issued equity capital is used for enabling higher growth rates. In DM equities excess return on capital has on average delivered 1.5% annualised buyback yield. </span></p> <p><span>Finally, and this is the important point, Indian equities are not expected to deliver a significant real earnings growth in USD as Indian publicly listed companies have only grown earnings in USD by around 4.7% per year. If we subtract the 10-year inflation rate expectation in the US of 2.4% annualised then the real earnings growth in USD is only 2.3% annualised. How can it be so low when annual real GDP growth has been around 6.9%. There are several factors behind this such as 1) the Indian Rupee declines on average around 3.5% annualised due to the inflation differential between INR and USD and 2) low transmission between GDP growth and earnings growth. It </span></p> <p><span>Earnings growth in EM in USD terms has been even more disappointing because of Chinese earnings. The real earnings growth in USD has been close to zero since early 2015. There are several factors behind this such as weak commodity markets, stronger USD, weak Chinese corporate sector earnings, and structural growth difficulties. Given we expect the USD to weaken over the next 10 years and commodities will continue to rise we expect real earnings growth in USD can be higher than what it has been over the past 8 years and thus we set expectations below DM at 1.6% annualised.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/20_pg_2.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/20_pg_3.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/20_pg_4.png"/></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>India</span> <span>China</span> <span>Emerging Markets</span> <span>Corporate Earnings</span> <span></span> <span>Price to earnings ratio</span> <span>Growth stocks</span> <span></span> <span>Europe</span></div>Wed, 20 Dec 2023 13:30:00 Z2023-12-20T13:38:57Z{344BCBE1-981A-4E55-85E3-39F533BFD23B}https://www.home.saxo/en-au/content/articles/equities/powell-delivers-early-fireworks-to-markets-14122023Peter Garnryproduct-equitiesHighlighted articlesFederal ReserveS P 500 indexEarnings Releasessubject-is/fin.reportssector-Technologyeditorial-nasdaqindexcfd-nas100.iPfizer IncPfizersector-Health CarePowell delivers early fireworks to markets<div class="article-excerpt">Yesterday's US inflation report did nothing to stop the strong sentiment in equities setting markets up for a potential disappointment at tonight's FOMC press conference. US core services inflation has accelerated the past three months which might have spooked the Fed into doubling down on its message of higher for longer. </div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>The Fed buys into market narrative</span></strong></h3> <p><span>Last night the FOMC bought into the recent market narrative pricing in rate cuts next year as inflation continues to cool, although in the short term <a href="https://www.home.saxo/content/articles/equities/is-the-market-blind-to-inflation-and-can-adobe-finally-deliver-on-ai-13122023">US core services inflation remains high</a>, forecasting three rate cuts next year compared to five cuts priced by the market (see price chart of SOFR Dec 2024 below). The message extended the rally in equities pushing Nasdaq 100 futures to a new all-time high on the close and the move has extended today with the index futures trading around the 16,850 level. It is not unrealistic to think that the S&amp;P 500 could hit 5,000 in a complete melt-up scenario by yearend.</span></p> <p><span>From a strategic perspective the Fed is happy with its policy forecast spread to market pricing on rate cuts as any error will force the market to correct first creating a buffer for policymakers. As such the Fed will likely continue to update its forecasts for rate cuts in tandem with market pricing keeping a certain spread in place with two rate cuts being the current spread. Some say that the market is getting too aggressive in its pricing but history is on the side of markets because when a rate cycle begins the policy rate trajectory often accelerates faster than most anticipate. This could easily happen again.</span></p> <p><span>The logical narrative in the market is that the policy rate repricing drives the market through valuation expansion, but as our chart below shows there has been little logical connection between the market&rsquo;s pricing of Fed policy rate Dec 2024 and the forward equity valuation of the S&amp;P 500. In other words, if the repricing matters for equities is a local phenomenon and not a generalized dynamic. As we have been writing for quite some time, the market&rsquo;s logic is this. As long as the policy rate is only projected to fall less than 200 bps then the interpretation is a soft landing meaning lowering discount rate on cash flow with stable nominal growth of 4-6%. This will support the positive momentum in equities, but if the policy rate pricing exceed the 200 bps then the equity market will begin realising that policy rate cuts are suddenly an expression of an incoming recession and then the market dynamic will flip upside down.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/14_pg_1.png"/></div><div class="rte--output">SOFR Dec 2024 futures | Source: Saxo</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/14_pg_2.png"/></div><div class="rte--output">Nasdaq 100 futures | Source: Saxo</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/14_pg_3.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>ECB cools market pricing on rate cuts</span></strong></h3> <p><span>Today&rsquo;s ECB rate decision was no surprise in the sense of policy rates remaining unchanged but the central bank reiterated its higher for longer message despite lowering its inflation forecasts for next year on core inflation to 2.7% from previously 2.9% in addition to lowering its Eurozone GDP forecast for 2024 to 0.8% from previously 1%. These new forecasts underscore the fragility of the Eurozone economy but also supports rate cuts next year although the market is today lowering the change in policy rate a bit. However, if the economy continues to be slow paced the market will likely resume its pricing of more aggressive rate cuts for next year. The current ECB policy rate pricing in Dec 2024 is 2.36% vs 4% deposit facility rate.</span></p> <h3 class="article-heading--3"><strong><span>Pfizer shares are down 45% in 2023 as 2024 outlook disappoints</span></strong></h3> <p><span>A terrible year for Pfizer got worse yesterday with shares falling another 7% extending this year&rsquo;s decline to 45.6% as the company updated the market on its 2024 outlook. Pfizer is guiding revenue of $58.5-61.5bn vs est. $62.9bn. In addition, the company said it expects $4bn in cost savings next year, but the market was clearly weighing growth over profitability in the update. Pfizer&rsquo;s lower market value has pushed its equity valuation to around 6.2% on the FY24 free cash flow yield and 7x on FY24 EV/EBITDA which is a significant discount to the S&amp;P 500 which valued at 12x on EV/EBITDA. In that sense, Pfizer is now truly a value company, but it has likely also become the case for the patient investor as there are no near-term catalysts that can change sentiment except for falling bond yields.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/14_pg_4.png"/></div><div class="rte--output">Pfizer share price | Source: Saxo</div><br/><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Federal Reserve</span> <span>S P 500 index</span> <span></span> <span>Corporate Earnings</span> <span>Technology</span> <span>Nasdaq</span> <span>USNAS100.I</span> <span>Pfizer Inc.</span> <span>Pfizer</span> <span></span></div>Thu, 14 Dec 2023 14:30:00 Z2023-12-14T14:29:52Z{11D2C747-6937-4C0D-A810-44E3A737957D}https://www.home.saxo/en-au/content/articles/equities/is-the-market-blind-to-inflation-and-can-adobe-finally-deliver-on-ai-13122023Peter Garnryproduct-equitiesHighlighted articlesFederal ReserveS P 500 indexAdobeAdobe IncEarnings Releasessubject-is/fin.reportssector-TechnologyIs the market blind to inflation and can Adobe finally deliver on AI?<div class="article-excerpt">Yesterday's US inflation report did nothing to stop the strong sentiment in equities setting markets up for a potential disappointment at tonight's FOMC press conference. US core services inflation has accelerated the past three months which might have spooked the Fed into doubling down on its message of higher for longer. </div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>The market feels dangerous</span></strong></h3> <p><span>Yesterday&rsquo;s US November inflation report showed that headline inflation fell as estimated to 3.1% y/y from 3.2% y/y in October driven by lower energy and food prices. On the surface, the inflation report delivered on the market&rsquo;s narrative of policy rate cuts coming sooner rather than later. However, US services inflation less energy services rose 0.4% m/m with the 6-month annualised rate rising to 4.9% which is the third straight month with rising core services inflation which bottom at 4.5% in August. This suggests that overall inflation is sensitive to a change in energy cost and that inflation might be more entrenched than expected. Surprisingly, the market has not paid attention to this fact and equities continue to push higher.</span></p> <p><span>As we alluded to in our FX update <a href="https://www.home.saxo/content/articles/forex/fed-has-a-final-chance-to-pushback-on-rate-cut-expectations-13122023">Fed has a final chance to push back on rate cut expectations</a> the core services inflation might have spooked the Fed into a position of pushing back on market expectations. This would align with the supposed Fed strategy of rather be too late than too early on rate cuts in order to avoid repeating the mistakes done by the Fed back in the 1970s. With sentiment in equities remaining strong tonight&rsquo;s FOMC decision at 1900 GMT and subsequent press conference could turn out to be far more interesting than initially thought.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/13_pg_1.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Adobe earnings: Is AI a productivity booster, cost reduction technology, or a growth enhancer?</span></strong></h3> <p><span>So far this year the AI hype has mostly generated a lot of growth for the early stages of the AI value chain with Nvidia being the biggest winner. On the application side, Microsoft is so far the company that has gained the most from AI seen in the previous earnings release with the cloud business Azure delivering the upside surprise on growth as customers are venturing into AI products and services from Microsoft. The software maker&rsquo;s revenue growth rose to 12.8% y/y in the previous quarter up from 2% y/y in the last quarter of 2022.</span></p> <p><span>In the content creation industry, many thought Adobe would benefit a lot from AI, but so far the revenue growth rate has not shifted gear but remained stable around 10% y/y. Adobe&rsquo;s price gains this year of 85.5% has been driven by slowly expanding profit margin due to cost cutting and revenue growth that stabilised. As tonight&rsquo;s earnings release is the last quarter of the fiscal year (ending 30 November) it will naturally be a springboard for Adobe to post its outlook for the current fiscal year ending 30 November 2024. Analysts expect revenue growth of 12% y/y which is not bad in an economy growing around 6-7% in nominal terms but with the valuation hitting 3% on the free cash flow yield investors will likely demand more than 12%. </span></p> <p><span>As the market is expecting AI to be a growth enhancer for many of these companies investors will focus a lot on Adobe&rsquo;s generative AI product Firefly on the earnings call tonight. For all those interested in AI technology, then tonight&rsquo;s earnings from Adobe are worth watching.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/13_pg_2.png"/></div><div class="rte--output">Adobe share price | Source: Saxo</div><br/><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Federal Reserve</span> <span>S P 500 index</span> <span>Adobe</span> <span>Adobe Inc.</span> <span></span> <span>Corporate Earnings</span> <span>Technology</span></div>Wed, 13 Dec 2023 16:30:00 Z2023-12-13T16:33:09Z{DA315583-1798-41C9-8339-BD27FCCB2F28}https://www.home.saxo/en-au/content/articles/equities/a-look-at-previous-fed-rate-cuts-and-what-it-means-for-equities-07122023Peter Garnryproduct-equitiesHighlighted articlesFederal ReserveECBInflationplace-lc/cnS P 500 indexEn hurtig tankeA look at previous Fed rate cuts and what it means for equities<div class="article-excerpt">The market is increasing its confidence that the Fed will cut its policy rate at the March meeting starting a rate cut cycle. We take a look at previous initial rate cut cycles and how the US equity market responded to in the first 90 trading days to such a rate cut.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Initial rate cuts are rarely seen as negative</span></strong></h3> <p><span>Since 19 October the market has drastically altered its view on inflation and more importantly policy rates set by the Fed and ECB. As the US SOFR (Secured Overnight Financing Rate) Dec 2024 contract is showing the market has moved the 2024 terminal Fed Funds rate lower by almost 100 bps. This repricing has fuelled sentiment in equities delivering one of the <a href="https://www.home.saxo/content/articles/equities/one-of-the-strongest-months-in-us-equities-in-20-years-01122023">strongest months in 20 years in equities</a>. The SOFR futures forward curve is now pricing in 5 rate cuts by December 2024 with the Fed rate cut coming at the Fed meeting on 20 March.</span></p> <p><span>There have been 9 initial Fed rate cuts starting a rate cut cycle (shorter or longer) since 1 January 1985 and if we look at the S&amp;P 500 performance during these periods then the US equity market tends to rise in the subsequent 3 months after a rate cut cycle has begun. Remember that with only 9 rate cut cycles the statistics here come with small confidence and investors should take note of the current situation instead of blindly trust history. The average S&amp;P 500 gain during the 90 trading days after an initial Fed rate cut is 5.1% which is significantly above the normal 3-month S&amp;P 500 return which is in the 2-2.5% range.</span></p> <p><span>History gives us the clue that an initial rate cut by the Fed is often interpreted by the market as a natural initial adjustment of policy rates to changing circumstances. But the market is rarely coupling the initial rate hike with an incoming recession. If that was the case history would a more clear downward direction in equities post an initial rate hike. This is also likely the reason why equities have rallied since mid-October. The equity market sees the current priced in rate cuts as a natural adjustment to lower inflation and not a sign of a recession. Should SOFR futures suddenly rally a lot higher from here then it would be a sign that rates traders are seeing a recession coming and then the interpretation by equities will flip on dime.</span></p> <p><span>Another striking difference in the market is the median recession probability by economists tracking the US economy. The probability is at 50% which is a huge divergence from equity markets which are closer to all-time highs and thus signalling less than a 10% probability of a recession.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/7_pg_1.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/7_pg_2.png"/></div><div class="rte--output">SOFR futures Dec 2024 | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Financial conditions vs inflation</span></strong></h3> <p><span>The prevailing narrative driving the repricing in policy rates is that central banks won over inflation. Although premature and we have little data to base our understanding of the new structural inflation level in the economy, that is nevertheless what the market is running with. Now, one thing is inflation coming down, another is financial conditions which the Fed is also paying close attention to. If look at the Fed&rsquo;s own adjusted financial conditions index then it now the loosest since the rate hike cycle began back in early 2022 and financial conditions have ease substantially in the past two months.</span></p> <p><span>Looser financial conditions will help underpin financial markets and more importantly the economy. There are no signs that financial conditions are getting too tight and thus if the Fed followed their own methodology they would sit tight for longer avoiding a repeat of the 1970s where they cut the interest rate too quickly. </span></p> <p><span>There is final unknown in all of this and that is China. The false starts in 2023 and the widening cracks in the economy is forcing the Chinese leadership to act in their own self-interest. The CCP&rsquo;s Politburo is about to set the date for the third plenum which will gather extra attention this time around because China&rsquo;s economy is seen as weakening. If China goes bold regardless of the obvious weakened fiscal transmission due to the old economic model is currently broken (real estate and infrastructure spending) then that could be a surprise factor for the global economy and inflation. The Fed and ECB are well aware of this. So 2024 will start with a high stake poker game in world of policy rates.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/7_pg_3.png"/></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Federal Reserve</span> <span>ECB</span> <span>Inflation</span> <span>China</span> <span>S P 500 index</span> <span>En hurtig tanke</span></div>Thu, 07 Dec 2023 10:30:00 Z2023-12-07T10:31:31Z{9622780C-13BD-4E4C-A7DA-489DF9403DE3}https://www.home.saxo/en-au/content/articles/outrageous-predictions/generative-ai-deepfake-triggers-a-national-security-crisis-05122023Peter Garnryeditorial-outrageous predictionsRow 1 OP 2024Generative AI deepfake triggers a national security crisis<div class="article-excerpt">Generative AI, hailed as a productivity boon, becomes a national security threat after a daring AI deepfake heist against a high-ranking official in a developed country. Governments crack down on AI with new regulations, puncturing the AI hype as VCs flee the industry. Public distrust in AI-generated news soars and governments impose new laws, allowing only a small group of entities to disseminate public news.</div><div class="article-rte"><div class="rte--output"><p>While everyone from McKinsey to the corporate sector and leading economists see generative AI as a great productivity-enhancing tool that will lift growth in decades to come, others see it as a potential new weapon. In a high-stakes game, a criminal group deploys the most deceptive generative AI deepfake the world has ever seen, phishing a high-ranking government official to hand over top-secret state information from a developed country. The daring move and success triggers the biggest national security crisis since WWII, ushering in a new era of far-reaching AI regulation.&nbsp;</p> <p>In a historic move to deal with the catastrophic side effects of generative AI, the US and EU declare that all content produced by a generative AI should have the label &lsquo;Made by AI&rsquo; and failure to comply will lead to a harsh penalty. In an even bigger blow to the generative AI hype, the government forces OpenAI and Google to reign in third-party access to their foundational large language models on national security grounds, meaning that only government-approved entities are allowed to use these new generative AI systems. The new regulation kills the generative AI hype, as VC investments dry up on concerns that generative AI will be more difficult to commercialise.&nbsp;</p> <p><span>The generative AI deepfake incident goes from national security crisis to full-blown public distrust in information delivered on the Internet, as AI-produced content swells to 90% of all information. In all developed countries, governments make harsh laws that only news organisations approved by the government are allowed to disseminate news to the public in a big blow to social media platforms and &lsquo;non-compliant&rsquo; news organisations. Know-your-customers regulation, well known in the banking sector to avoid money laundering, is forced on technology companies delivering generative AI applications to avoid certain countries and entities accessing the technology.&nbsp;</span></p> <p><span><strong>Market impact</strong></span>: Traditional media companies approved by their governments for disseminating public news soar in value, with shares in The New York Times Company doubling. Adobe shares plunge as government penalises the company, as the catastrophic deepfake was made using its software.&nbsp;</p></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/thought-leadership/outrageous-predictions">Outrageous Predictions</a> <span>Row 1 OP 2024</span></div>Tue, 05 Dec 2023 07:00:00 Z2023-12-05T06:21:43Z{96816447-6206-42EF-96C0-7F18AD00D8DF}https://www.home.saxo/en-au/content/articles/outrageous-predictions/luxury-plunges-as-eu-goes-robin-hood-introducing-wealth-tax-05122023Peter Garnryeditorial-outrageous predictionsRow 2 OP 2024Luxury plunges as EU goes Robin Hood, introducing wealth tax<div class="article-excerpt">As the EU needs more funding for various policy goals, including climate change mitigation, health care and education, and the population realises how little in tax billionaires are actually paying, the EU Commission implements a law that annually taxes 2% of wealth. The law sends shockwaves through Europe’s luxury industry, with the luxury behemoth LVMH plunging 40%.</div><div class="article-rte"><div class="rte--output"><p>It is a great irony that the EU, which is the world&rsquo;s biggest welfare system, has created 499 USD billionaires who are paying the lowest amount of personal tax in percentage of wealth compared to billionaires from North America and East Asia, according to the Global Tax Evasion Report 2024. Billionaires in France have a pre-tax income rate on par with US billionaires despite the fact that the entire population is paying between 46-50% in average tax, violating the core principle of reciprocity. In the Netherlands, it is even better to be a billionaire, as the average tax rate is below what US billionaires pay.&nbsp;&nbsp;</p> <p>As social unrest in Europe is constantly at the edge of eruption, and as costs associated with the green transformation, the war in Ukraine and general inflation rise, the EU Commission commits to the July 2023 European Citizens&rsquo; Initiative (ECI) entitled &lsquo;Taxing great wealth to finance the ecological and social transition&rsquo;. The EU Commission implement a law that annually taxes 2% of wealth on billionaires in the EU, acknowledging the reality stated in Thomas Piketty&rsquo;s book &lsquo;Capital in the Twenty-First Century&rsquo; that wealth is growing faster than income. The 2% wealth tax on EU billionaires raises EUR 42 billion in additional tax revenue, which goes into funding of climate change mitigating projects, health care, education and public infrastructure. In 2021, the total financial assets of households in the EU in equity and investment funds were around EUR 10 trillion, so a wider 2% wealth tax on multi-millionaires could lift tax revenue to around EUR 100-150 billion.&nbsp;</p> <p><span>The EU&rsquo;s modern version of Robin Hood sends shockwaves through the European luxury industry. Recent studies have shown a strong correlation between the pursuit of luxury items and levels of income and wealth inequality. The EU Commission&rsquo;s new wealth tax immediately lowers market expectations for luxury goods demand in the future and investors dump European luxury stocks.&nbsp;</span></p> <p><span><strong>Market impact</strong></span>: LVMH shares plunge 40% on the EU Commission's new wealth tax and other parts of the luxury segment including Porsche and Ferrari see their share price suffering badly.</p></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/thought-leadership/outrageous-predictions">Outrageous Predictions</a> <span>Row 2 OP 2024</span></div>Tue, 05 Dec 2023 07:00:00 Z2023-12-05T06:21:45Z{C4587096-9CE8-48B8-B951-B04C192BF63B}https://www.home.saxo/en-au/content/articles/equities/one-of-the-strongest-months-in-us-equities-in-20-years-01122023Peter Garnryproduct-equitiesHighlighted articlessector-TechnologyS P 500 indexsubject-is/fin.stpbondAdyenBlock IncOne of the strongest months in US equities in 20 years<div class="article-excerpt">US equities ended November on a strong note delivering one of the strongest monthly gains in 20 years as US bond yields came lower and investors doubled down on Fed interest rate cuts for next year. </div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>The land of milk and honey</span></strong></h3> <p><span>Last month became the sixth strongest month for S&amp;P 500 in the past 20 years. The key drivers were 1) strong earnings releases from technology companies not at least Nvidia, 2) lower than estimated inflation readings in the US and Europe, 3) a 60m bps decline in the US 10-year yield, 4) two additional Fed rate cuts priced into SOFR futures, 5) and 6) collapsing implied volatility in options markets. It was almost the perfect set of conditions for an equity rally. However, underneath the calm surface of this rally lies an inconvenient truth which is that <a href="https://www.home.saxo/content/articles/equities/mega-cap-stocks-are-hitting-a-2020-moment-28112023">S&amp;P 500 index weight concentration has reached a new all-time high</a>. This is a sign that the US equity market is being carried higher by an increasingly narrower set of stocks which from a risk perspective is not good.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/1_pg_1.png"/></div><div class="rte--output">S&P 500 futures | Source: Saxo</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/1_pg_2.png"/></div><div class="rte--output">US 10-year yield | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>The rebounds in payments and new biotech themes</span></strong></h3> <p><span>Falling bond yields have lifted themes that previously were hit by rising bond yields, except for the theme baskets related to the green transformation. The two best performing theme baskets in November were <a href="https://www.saxotrader.com/d/theme/6777f463-6eca-4c1d-a9bc-93a95cb499df">Payments</a> and <a href="https://www.saxotrader.com/d/theme/dcb5c550-ab3d-462e-aa75-7cdedae9a630">New biotech</a> up 28.9% and 18.2% respectively. The payments industry has hard some tough years in public markets but in November sentiment improved dramatically with Dutch payments firm Adyen revealing an outlook at their Investor Day presentation that was better than expected. Another strong performer was Block up 57.6% in November on better earnings results and surprise upside revision to its guidance.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/1_pg_3.png"/></div><div class="rte--output">Tesla share price | Source: Saxo</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/1_pg_6.png"/></div><div class="rte--output">Block share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>US equities keep defying gravity on valuation</span></strong></h3> <p><span>The strong rally in US equities has also pushed US equity valuations back into high territory with one of the valuation metrics, free cash flow yield, falling to just 3.65% compared to the long-term average around 4.9%. The current valuation level has historically delivered mixed future returns after adjusting for inflation (-3% to +3% annualized) so the long-term risk-reward ratio is not super attractive in equities at this point. Investors sitting on strong gains this year should consider reducing the exposure a bit and increasing the exposure to the short-term bonds in case the economy begins surprising to the downside.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/1_pg_4.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/december/1_pg_5.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Previous equity notes:</strong></h3> <ul> <li>30 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/c4587096-9ce8-48b8-b951-b04c192bf63b" target="_blank">Earnings take on Salesforce and Pure Storage; Tesla&rsquo;s growing risks</a></li> <li>28 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/e1b60c99-fd55-4bce-a1a1-668499f7f6f7" target="_blank">CrowdStrike earnings and the never ending growth in cyber security</a></li> <li>27 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/eaf495c2-ba48-4232-beaa-075e102a2127" target="_blank">Mega cap stocks are hitting a &lsquo;2020 moment&rsquo;</a></li> <li>22 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/ca425cb0-f225-47aa-b7a9-c0c6271861e3" target="_blank">Nvidia trades lower are blasting estimates as China risks loom</a></li> <li>21 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/9febb345-02c0-403d-b1ca-ac52688ccd74" target="_blank">Bayer has become a case for the patient investor</a></li> <li>17 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/e68c50c3-28f1-471c-95e4-a6d91fda10c2" target="_blank">Earnings preview: Is the &rsquo;Intel moment&rsquo; coming for Nvidia?</a></li> <li>15 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/76eee41e-aba4-4c04-bfe0-bada621ed84b" target="_blank">Green stocks rally on lower inflation; earnings update</a></li> <li>13 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/1973c3b1-1675-48a1-b456-400af8c6b691" target="_blank">NIO squeeze, Tesla valuation, and Renault EV IPO</a></li> <li>10 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/plug-power-plunges-37-percent-on-potential-cash-crunch-10112023" target="_blank">Plug Power plunges 37% on potential cash crunch</a></li> <li>9 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/adyen-outlook-disney-surprise-and-india-steel-demand-09112023" target="_blank">Adyen outlook, Disney surprise, and India&rsquo;s steel demand</a></li> </ul></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Technology</span> <span>S P 500 index</span> <span>Government Bonds</span> <span>Adyen</span> <span>Block Inc.</span></div>Fri, 01 Dec 2023 13:00:00 Z2023-12-01T13:33:21Z{CFD96C18-EEC6-46CC-B3EA-33EC9242F745}https://www.home.saxo/en-au/content/articles/equities/earnings-take-on-salesforce-and-pure-storage-tesla-growing-risks-30112023Peter Garnryproduct-equitiesHighlighted articlessector-Technologysubject-is/fin.reportsEarnings ReleasesSalesforcecomSalesforce IncSnowflakecompany-tesla motorsTeslaTesla IncEarnings take on Salesforce and Pure Storage; Tesla’s growing risks<div class="article-excerpt">While Salesforce and Snowflake guidance yesterday bolstered investor sentiment, Pure Storage provided a worse than expected fiscal Q4 outlook on revenue and operating income. Overall, companies in our AI theme basket are seeing a turnaround in revenue growth in Q3 which is a positive sign that corporate technology spending remains robust.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Salesforce guidance is stronger than expected</span></strong></h3> <p><span>Salesforce, the world&rsquo;s second-largest software application maker (after Microsoft), reported better than expected operating margin in Q3 and thus Q3 EPS of $2.11 up from $1.40 a year ago, and its Q4 earnings guidance was above consensus. The company&rsquo;s new focus on profitable growth is paying off and meanwhile revenue growth is stabilising at around 12% y/y in constant currencies. This growth rate is quite impressive given the economic slowdown and cost-cutting in corporate technology spending. As Salesforce&rsquo;s earnings slide (see below) shows the data related business is where growth has picked up. Analysts&rsquo; price target is at $266 vs yesterday&rsquo;s close of $230.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/30_pg_1.png"/></div><div class="rte--output">Source: Salesforce</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Pure Storage guidance disappoints, AI related growth is picking up</span></strong></h3> <p><span>Pure Storage, a manufacturer of all-flash data storage hardware, disappointed investors yesterday with its Q4 guidance on revenue at $782mn vs est. $924mn indicating that estimates were too optimistic on the back of AI sentiment. Operating income guidance in Q4 was $150mn vs est. $197mn. Pure Storage is part of our <a href="https://www.saxotrader.com/d/theme/1e0459c2-0250-4b94-afd0-b41b9f0da219">AI theme basket</a>. Another company in our AI theme basket that reported last night was Snowflake and unlike Pure Storage it guided Q4 revenue above expectations and the operating margin guidance was 200 bps above consensus.</span></p> <p><span>Out of the 20 stocks in our AI theme basket, Marvell Technology and UiPath that are missing on earnings results, but both companies actually reporting earnings tonight. But if look at the revenue growth figures for the remaining 18 companies in our AI basket then revenue growth (excluding Nvidia) has actually rebounded in Q3 signalling spending is turning around.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/30_pg_2.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>The three risks confronting Tesla</strong></h3> <p>Tesla shares touched $250 yesterday before closing around $244 staging an impressive rebound this month up 21.6%. While sentiment remains bullish on Tesla there are growing risks that shareholders should think about.</p> <ul> <li>The &lsquo;Morocco risk&rsquo; &ndash; competition is heating up in every market, but the production of EVs is simpler that ICEs and as a result even a country such as Morocco now has its own local EV manufacturer. This opens up the competitive landscape to a whole new dimension and in the potential new age of nationalism is could lower Tesla&rsquo;s long-term market share trajectory. </li> <li>The &lsquo;Unionization risk&rsquo; &ndash; the recent strikes in Sweden and looing unionization among its German workers are indicative that Tesla has reached a size now where society and its workers will demand different things from Tesla. Long-term that could be a headwind for operating margin. European labour markets are very different from China&rsquo;s labour market that has so far been producing most of the EVs for the European market. But even in the US, the UAW union is targeting 12 carmakers including Tesla for unionization. </li> <li>The &lsquo;Musk risk&rsquo; &ndash; the CEO is both the company&rsquo;s biggest strength but also its biggest risk. Musk&rsquo;s comments and actions have become more volatile over the years and the question is whether at one point these actions could begin harming Tesla&rsquo;s brand. His latest comments to an antisemitic post on X have yet again showed the risks his personality brings to the Tesla brand.</li> </ul> <span>Next key event for Tesla is the November delivery figures and ultimately Q4 delivery figures vs those of Chinese based BYD which is poised to take over as the largest EV maker in the world (measured on deliveries of battery EVs). It is also worth nothing that analysts are no longer categorical positive on the stock with ratings becoming more diverged with the current rating being neutral and a price target around $240.</span></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/30_pg_3.png"/></div><div class="rte--output">Tesla share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Previous equity notes:</strong></h3> <ul> <li>30 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/c4587096-9ce8-48b8-b951-b04c192bf63b" target="_blank">Earnings take on Salesforce and Pure Storage; Tesla&rsquo;s growing risks</a></li> <li>28 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/e1b60c99-fd55-4bce-a1a1-668499f7f6f7" target="_blank">CrowdStrike earnings and the never ending growth in cyber security</a></li> <li>27 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/eaf495c2-ba48-4232-beaa-075e102a2127" target="_blank">Mega cap stocks are hitting a &lsquo;2020 moment&rsquo;</a></li> <li>22 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/ca425cb0-f225-47aa-b7a9-c0c6271861e3" target="_blank">Nvidia trades lower are blasting estimates as China risks loom</a></li> <li>21 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/9febb345-02c0-403d-b1ca-ac52688ccd74" target="_blank">Bayer has become a case for the patient investor</a></li> <li>17 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/e68c50c3-28f1-471c-95e4-a6d91fda10c2" target="_blank">Earnings preview: Is the &rsquo;Intel moment&rsquo; coming for Nvidia?</a></li> <li>15 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/76eee41e-aba4-4c04-bfe0-bada621ed84b" target="_blank">Green stocks rally on lower inflation; earnings update</a></li> <li>13 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.saxotrader.com/d/article/1973c3b1-1675-48a1-b456-400af8c6b691" target="_blank">NIO squeeze, Tesla valuation, and Renault EV IPO</a></li> <li>10 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/plug-power-plunges-37-percent-on-potential-cash-crunch-10112023" target="_blank">Plug Power plunges 37% on potential cash crunch</a></li> <li>9 Nov 2023 -&nbsp;<a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/equities/adyen-outlook-disney-surprise-and-india-steel-demand-09112023" target="_blank">Adyen outlook, Disney surprise, and India&rsquo;s steel demand</a></li> </ul></div></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Technology</span> <span>Corporate Earnings</span> <span></span> <span>Salesforcecom</span> <span>Salesforce Inc</span> <span>Snowflake</span> <span>Tesla Motors</span> <span>Tesla</span> <span>Tesla Inc.</span></div>Thu, 30 Nov 2023 10:30:00 Z2023-12-01T13:15:42Z{E1B60C99-FD55-4BCE-A1A1-668499F7F6F7}https://www.home.saxo/en-au/content/articles/equities/crowdstrike-earnings-and-the-never-ending-growth-in-cyber-security-28112023Peter Garnryproduct-equitiesHighlighted articlessector-Technologysubject-is/fin.reportsEarnings ReleasesCrowdStrike Holdings IncCybersecuritySaxo Strats Core ThemesCrowdStrike earnings and the never ending growth in cyber security<div class="article-excerpt">The cyber security industry has been the second best performing theme in equity markets this year driven by strong demand and higher profitability. CrowdStrike reports earnings today with analysts remaining bullish expecting revenue growth of 34% and new record on free cash flow. </div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>CrowdStrike is well positioned for growth</span></strong></h3> <p><span>CrowdStrike is the fifth largest cyber security company in the world measured on revenue and reports FY24 Q3 (ending 31 October) earnings tonight after the US market close. Analysts remain bullish on the company with revenue growth expected at 34% y/y and EBITDA rising to $184mn from a loss of $31mn a year ago. The company is also expected to deliver a new all-time high on free cash flow underscoring that the company has hit an inflection point in terms of profitability which has been rewarded by the market with the share price up 99.5% this year. </span></p> <p><span>CrowdStrike is the category leader in what is called corporate endpoint security which have served them well with their Falcon Platform. CrowdStrike has delivered 37% annualised revenue growth since Q1 2018. One risk for CrowdStrike is their lack of SASE exposure which is this new delivery model in cyber security &ndash; see the explainer below for the difference in traditional cyber security and the new SASE model where companies such as Zscaler and Palo Alto Networks (the largest cyber security firm on revenue) are dominating. </span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/28_pg_3.png"/></div><div class="rte--output">CrowdStrike share price | Source: Saxo</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/28_pg_4.png"/></div><div class="rte--output">Source: CrowdStrike</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/28_pg_5.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Higher growth for longer and consolidation</strong></h3> <span>The cyber security industry continues to be one of our favourite themes and it is also the second best performing theme basket this year up 38%. Revenue growth among the stocks in our <a href="https://www.saxotrader.com/d/theme/d3868c72-9e84-4e54-b0c4-679821449cab">cyber security basket</a> is 24% over the past year which is impressive given the slowing economy hit to consumption due to high inflation. It shows that cyber security growth has little correlation to the overall economy and has become a necessity for companies and governments. The increase in cyber security attacks and the extended damage if breached drive the demand for cyber security products and services. Another feature of the industry is that it is still fragmented and the consensus believes that there will be a bigger consolidation over the coming decades benefitting the largest players in the industry.</span></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/28_pg_6.png"/></div><div class="rte--output">Source: Fortinet</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/28_pg_7.png"/></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Technology</span> <span>Corporate Earnings</span> <span></span> <span>CrowdStrike Holdings Inc.</span> <span>Cybersecurity</span> <span></span></div>Tue, 28 Nov 2023 14:15:00 Z2023-11-28T14:22:52Z{EAF495C2-BA48-4232-BEAA-075E102A2127}https://www.home.saxo/en-au/content/articles/equities/mega-cap-stocks-are-hitting-a-2020-moment-28112023Peter Garnryproduct-equitiesHighlighted articlessector-Technologysubject-is/fin.reportsEarnings ReleasesS P 500 indexMega Capscompany-appleApple Inccompany-microsoftMicrosoft CorpMega cap stocks are hitting a ‘2020 moment’<div class="article-excerpt">The strong gains this year in US equities have been driven by mainly three sectors related to technology and the generative AI hype. The equity rally has pushed mega caps to relative performance of S&P 500 to S&P 500 Equal Weight to highs not seen since 2020.</div><div class="article-rte"><div class="rte--output"><p><strong><span>Is the technology sector a blessing or curse for US equity market?</span></strong></p> <p><span>The generative AI hype cycle in 2023 has had elements of tangible success in the case of Nvidia and then also a lot of hope for the future that is yet to materialize. The combination of generative AI hype and no recession in the US have made equity markets shrugging off any concerns related to the brewing banking crisis in March, a weak Chinese economy, and a recent rally in interest rates. The result is S&amp;P 500 up 18.8% this year driven mainly by three sectors (communication services +50.7%, information technology +50.4%, and consumer discretionary +32.7%). In those three sectors we find most of the mega caps (companies with market value above $200bn) and as a result of this year&rsquo;s rally, the &lsquo;Magnificent Seven&rsquo; (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla) has increased their relative index weight in the S&amp;P 500 Index. </span></p> <p><span>The information technology sector has now reached a 29% index weight in the S&amp;P 500. On the one hand, it has been a blessing for equity returns and flows into US equities, but on the other hand it is also a curse, as it makes the US equity market more fragile. As the chart below shows, the S&amp;P 500 has reached a relative level to the S&amp;P 500 Equal Weight not seen since 2020 reflecting strong sentiment in technology stocks and more generally mega caps. The relative outperformance has also been stronger than in the past. As a result it makes sense to begin moderating expectations for these mega caps relative to the rest of the market. </span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/27_pg_1.png"/></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Technology</span> <span>Corporate Earnings</span> <span></span> <span>S P 500 index</span> <span>Mega Caps</span> <span>Apple</span> <span>Apple Inc.</span> <span>Microsoft</span> <span>Microsoft Corp.</span></div>Mon, 27 Nov 2023 15:15:00 Z2023-11-27T15:18:41Z{CA425CB0-F225-47AA-B7A9-C0C6271861E3}https://www.home.saxo/en-au/content/articles/equities/nvidia-trades-lower-are-blasting-estimates-as-china-risks-loom-22112023Peter Garnryproduct-equitiesHighlighted articlesNVIDIA CorporationNvidia Corpsector-Technologysubject-is/fin.reportsEarnings ReleasesNvidia trades lower are blasting estimates as China risks loom<div class="article-excerpt">Nvidia FY24 Q3 earnings results blasted estimates as demand for its AI chips remains very strong. However, shares are indicated down 1% in US pre-market as Nvidia's comments about US export controls severely impacting its China business indicating that growth could slow down faster than expected in the short term.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong>Key takeaways from Nvidia&rsquo;s earnings release</strong></h3> <p>Yesterday&rsquo;s Nvidia earnings results were the most anticipated event in equity markets as Nvidia and the generative AI growth story have been the key drivers behind the equity market rally. As we previewed in our equity note <a href="https://www.home.saxo/content/articles/equities/earnings-preview-is-the-intel-moment-coming-for-nvidia-17112023">Earnings Preview: Is the &lsquo;Intel moment&rsquo; coming for Nvidia?</a> there are two risk building for Nvidia&rsquo;s business; 1) Microsoft is rolling out its own bespoke AI chip in order to lower dependence on Nvidia and cut costs, 2) Tencent comments suggest that Chinese technology companies have significantly front-loaded orders to have enough inventory of AI chips in case the US government restricts exports in the future.</p> <p>Below are the key takeaways from Nvidia&rsquo;s earnings results</p> <ol> <li><a href="https://nvidianews.nvidia.com/news/nvidia-announces-financial-results-for-third-quarter-fiscal-2024">Nvidia delivered FY24 Q3</a> (ending 29 October) revenue of $18.1bn translating into 206% y/y growth compared to analyst estimates of 171% y/y revenue growth. In other words, a significant beat. EBITDA was $11bn vs est. $10bn. FY24 Q4 revenue guidance was $20bn +/- 2% compared to analyst estimates of $17.9bn. The revenue guidance shows that while growth is still high the growth rate is coming down fast to whatever the stable growth rate might be after the initial demand wave. Nvidia is a bit more daring this time extending its soft revenue guidance to say that it believes data center segment can grow through 2025.<br /> <br /> </li> <li>How can Nvidia shares trade 1% lower in US pre-market when earnings results were so strong. One explanation is that the market had expectations that were even higher than sell-side analyst. Another explanation, and likely the culprit, is the warnings on its China business. US export restrictions have severely impacted its China business (the foresight of Chinese technology companies resulting in the hoarding effect by Tencent) and Nvidia says that it has low visibility on the hit to its Chinese business other than revenue will come down sharply.<br /> <br /> </li> <li>Nvidia remains the purest exposure an investor can get to the generative AI push and many of the underlying trends in technology will require advanced AI chips that Nvidia provides. It might be that there will be a slump in Nvidia&rsquo;s business on the other side of the initial wave of AI enthusiasm but longer term Nvidia is well positioned for long-term growth. Another positive for Nvidia is that the business is getting more revenue streams making the company more diversified compared to the past of only selling GPUs for the personal gaming market.</li> </ol></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/22_pg_1.png"/></div><div class="rte--output">Nvidia share price | Source: Saxo</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/22_pg_2.png"/></div><div class="rte--output">Nvidia quarterly revenue per segment | Source: Nvidia</div><br/><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>NVIDIA Corporation</span> <span>NVidia Corp.</span> <span>Technology</span> <span>Corporate Earnings</span> <span></span></div>Wed, 22 Nov 2023 10:30:00 Z2023-11-22T10:32:14Z{9FEBB345-02C0-403D-B1CA-AC52688CCD74}https://www.home.saxo/en-au/content/articles/equities/bayer-has-become-a-case-for-the-patient-investor-21112023Peter Garnryproduct-equitiesHighlighted articlescompany-bayer agBayer AGplace-lc/deGermany 40sector-gics-151010Bayer has become a case for the patient investor<div class="article-excerpt">Bayer shares plunged 18% yesterday as the German conglomerate was hit by a double whammy. On Friday, a US courtroom verdict opened the door for litigation costs related to its famous weed killer product Roundup to extend beyond the USD 16bn already set aside.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Double whammy hits Bayer</span></strong></h3> <p><span>Bayer shares plunged 18% yesterday on two bad news. The nightmare related to the Monsanto acquisition five years ago continues to haunt Bayer as a late verdict on Friday on Monsanto&rsquo;s famous product Roundup opened up more risks for Bayer. In a worst case scenario, Bayer might have to pay up in litigation more than the $16bn already set a side on the balance sheet.</span></p> <p><span>To make matters worse for Bayer, the company has been forced to halt a primary study on an experimental drug as it was not efficient enough relative to the benchmarks set forth in the study. In the pharma division, pressures are also going to increase over time as two of the division&rsquo;s high revenue generating drugs are facing a patent expiry.</span></p> <h3 class="article-heading--3"><strong><span>Can Bayer find a way out of its troubles? </span></strong></h3> <p><span>As a result of all the uncertainty Bayer&rsquo;s share price is down 68% from its high back in 2015 and is trading at levels not seen since 2012. This backdrop is obviously difficult for shareholders in Bayer and the question is whether there is a path to a more positive future?</span></p> <p><span>The Monsanto litigation costs might go beyond $16bn, but it is an one-off item and thus not the going concern of Bayer. The failed phase 3 study of the drug asundexian is a significant setback for the equity case, because analysts were modelling the value of the pharma division on this drug to offset the expected decline in revenue and profitability from the patent expiries explained above. With Bayer&rsquo;s 2-year forward EV/EBITDA multiple hovering just above 6x the company is valued at a deep discount (~33%) to the overall equity market, so there is a natural low level of expectations making it an obvious value case, but one has to be clear about the catalysts. Another key thing, or risk if you will, is that the market value has declined to $33.5bn which is below the net debt of the balance sheet which is dangerous territory to walk for any company. So what is the case and outlook for investors in Bayer?</span></p> <p><span>The next year is likely another transition year with dark clouds hanging over the business so investors should be patient. Bayer still has a top notch crops science unit although the unit is expected to face headwinds in 2024, and is still very profitable. Analysts expect FY23 revenue of &euro;47.9bn and EBITDA of &euro;10.8bn and EBITDA has hovered steadily around the &euro;11-13.5bn for six years in a testimony to the low variance in its operations. The potential catalysts from here is a potential split of the group to unlock value like we have seen from Siemens and GE in recent years. The next capital markets day is on 5 March 2024 and will likely be the key event where such an announcement might be provided to the market.</span></p> <p><span>Analysts expect the dividend to be reduced to &euro;2.15 for the FY23 which on a forward basis equates to an expected dividend yield of 6.3%. If we assume that Bayer does not need to issue equity capital and assume that Bayer can track average economic growth rates over the next 10 years then the real rate return expectation is 6.3% + 2% so roughly 8.3% annualised real rate return. That is roughly a 3%-point positive spread to the over equity market reflecting the uncertainty and risks related to investing in Bayer, and the risk that dividends could decline further in the future. </span></p> <p><span>While it is a challenging time for Bayer the company has shown its ability to grow over many decades and build business value. A long-term investor in Bayer is betting on the company to settle the Monsanto litigation once and for all, maybe separating the businesses, and crops protection prices to stabilize and rise in the future. It will all require a lot of patience.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/21_pg_1.png"/></div><div class="rte--output">Bayer share price | Source: Saxo</div><br/><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/21_pg_2.png"/></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Bayer Ag</span> <span>Bayer AG</span> <span>Germany</span> <span>Germany 40</span> <span>Chemicals (Sector)</span></div>Tue, 21 Nov 2023 12:00:00 Z2023-11-22T10:42:14Z{E68C50C3-28F1-471C-95E4-A6D91FDA10C2}https://www.home.saxo/en-au/content/articles/equities/earnings-preview-is-the-intel-moment-coming-for-nvidia-17112023Peter Garnryproduct-equitiesHighlighted articlessubject-is/fin.reportsEarnings ReleasesNVIDIA CorporationNvidia CorpAdvanced Micro DevicesArtificial IntelligenceEarnings preview: Is the ’Intel moment’ coming for Nvidia?<div class="article-excerpt">Nvidia reports earnings results on Tuesday after the US market close and will be the defining for sentiment not only on AI-related stocks but also the entire US technology sector. </div><div class="article-rte"><div class="rte--output"><p><strong><span>Updated (17 November 2023):&nbsp;</span></strong><span>Read our option strategist's take on Nvidia <a rel="noopener noreferrer" href="https://www.home.saxo/content/articles/options/investing-with-options---nvidia---pre-earnings-17112023" target="_blank">Investing with options: Nvidia - 3 long term scenarios</a></span></p> <h3 class="article-heading--3"><strong><span>Is Microsoft doing to Nvidia what Apple did to Intel?</span></strong></h3> <p><span>Nvidia has been this year&rsquo;s hottest stock as generative AI has fuelled fever like sentiment not at least because of Nvidia&rsquo;s phenomenal revenue guidance to the market in the previous two earnings releases. Nvidia reports FY24 Q3 results on Tuesday after the US market close with analysts expecting revenue of $16bn up 171% y/y and EBITDA of $10bn up from $1.07bn a year ago. It does not take much imagination to understand why investors are so excited about Nvidia and why there is so high anticipation of Nvidia&rsquo;s earnings release. Never has there been a more important earnings releases defining an entire industry and setting the overall sentiment direction for a whole sector (US technology). Listen to yesterday&rsquo;s <a href="https://saxostrats.podbean.com/e/equities-year-end-rally-inflation-thematic-winners-us-consumer-and-nvidia-monster-earnings/">Saxo Market Call podcast</a> for more context about Nvidia earnings.</span></p> <p><span>Everything is not rosy though. Yesterday, Microsoft confirmed that it is <a href="https://www.ft.com/content/f9721f50-6dc8-4604-b164-aed592bd2152">building its own bespoke AI chips</a> specifically designed for generative AI model training. These new chips will be deployed in Azure data centres already next year which underpin the R&amp;D and deployment of OpenAI&rsquo;s ChatGPT and Microsoft&rsquo;s Copilot. With Nvidia&rsquo;s operating profit hitting an expected 57.1% in FY24 (ending 31 Jan 2024) it seems there is a lot to be saved for Microsoft if it can produce its own chips. The move feels a bit like the move Apple did against Intel on its iPhone and it is potential a key warning to Nvidia shareholders that na&iuml;ve extrapolation cannot be done. Regardless of what happens it seems like semiconductor foundry businesses such as TSMC are the winners of the AI push.</span></p> <p><span>Another worry for Nvidia shareholders should be the comment yesterday from Chinese internet giant Tencent saying that they have bought enough Nvidia chips to last &lsquo;a couple of generations&rsquo; which means that Tencent now has the largest inventory of AI chips in China. In other words, there is a risk that a lot of the demand has been front-loaded which means that there will be a glut and maybe lower demand on the other side. It is interesting to note that Nvidia does not dare to put out an outlook more than 1-2 quarters out while sell-side analysts are willing to extrapolate current demand aggressively higher into FY27 (see chart below). What shareholders should consider is whether the generative AI industry really means 4x in Nvidia revenue in FY27 compared to FY23 or front-loading of demand is blurring the true normal demand?</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/16_pg_2.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/16_pg_3.png"/></div><div class="rte--output">Nvidia share price | Source: Saxo</div><br/><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Corporate Earnings</span> <span></span> <span>NVIDIA Corporation</span> <span>NVidia Corp.</span> <span>Advanced Micro Devices</span> <span>Artificial Intelligence</span></div>Fri, 17 Nov 2023 10:30:00 Z2024-03-27T04:41:25Z{76EEE41E-ABA4-4C04-BFE0-BADA621ED84B}https://www.home.saxo/en-au/content/articles/equities/green-stocks-rally-on-lower-inflation-earnings-update-15112023Peter Garnryproduct-equitiesHighlighted articlessubject-is/fin.reportsEarnings ReleasesPlug PowerSaxo Strats Core ThemesGreen stocks rally on lower inflation; earnings update<div class="article-excerpt">Today's equity update focus on yesterday's better than expected inflation print setting in motion big moves in bonds and equities, the big rally in funding sensitive equity segments such as green stocks, bubble stocks, biotechnology, and finally we touch on some of the latest earnings results.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>A hypersensitive market</span></strong></h3> <p><span>US October inflation m/m came in lower than estimated on both headline and core measures setting in motion a 20 basis point move lower in the US 10-year yield. This pushed Nasdaq 100 futures higher by 2.1% with the momentum extending this morning. There is likely a high probability that the Nasdaq 100 futures could push to a new closing high for this year unless sentiment reverses.</span></p> <p><span>A strong technical setup and animal spirits are never something to lean against so in the short-term momentum is positive and equities could extend higher. But the strong reaction function yesterday to a small beat on inflation is telling about what hypersensitive state the market is in. It is also telling that the earnings outlook has not changed much and the US 10-year yield remain still 70 basis point higher than the level in July, and still equity markets are back to their highs from July. It tells you two things, 1) the move is a clear valuation multiple expansion, and 2) the relative forward looking risk-premium to bonds has declined.</span></p> <p><span>On inflation it worth noting that the US services inflation less energy (roughly 60% of overall inflation) is still running at an annualized rate of 4.7% for the third straight month. So inflation pressures are still here and the supply side of the global economy means that a small acceleration in economic activity could quickly reignite inflation. We should be careful at claiming victory to early.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/15_pg_1.png"/></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/15_pg_2.png"/></div><div class="rte--output">Nasdaq 100 continuous futures | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Biotechnology, bubble stocks, and green transformation in huge relief rally</span></strong></h3> <p><span>If we take a look at the theme basket overview sorted on yesterday&rsquo;s performance it is clear where the market was stretched. Every segment in the equity market which is relying on cheap and accessible funding was underperforming this year. So yesterday was a huge day for our New biotech, Bubble stocks, Energy Storage, and Renewable energy baskets up between 6.8% and 8.1%. Lower inflation and lower interest rates are obviously key drivers of value for these segments.</span></p> <p><span>Some of the biggest movers yesterday across these themes were Denali Therapeutics (+18.1%), Plug Power (+21.9%), Fuelcell Energy (+18.1%), and Sunrun (+19%). It should be noted that these pockets of the market have likely been shorted heavily and thus we are likely seeing covering of those shorts amplifying the moves because the buying activity is suddenly driven by both new buyers and short sellers covering positions.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/15_pg_3.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Earnings update: Home Depot, Tencent, JD.com, Infineon, and Siemens Energy</span></strong></h3> <p><span>Earnings results are still being released over the past two days we have got some interesting results. Home Depot raised their guidance yesterday as the home improvement market seems to finally be hitting a turning point. Tencent has just reported Q3 results beating estimates underscoring that the Chinese consumer is coming back and the online advertising market seems to be improving. JD.com&rsquo;s Q3 results showed similar strength as Tencent beating estimates. In Europe, Infineon Technologies which is one of the largest semiconductor suppliers to the global car market has reported slightly better than expected fiscal Q4 results and more importantly an improved sales outlook despite margins came in a bit lower than expected. </span></p> <p><span>Finally, Siemens Energy announced yesterday that it got a deal with its parent company Siemens and the German government worth &euro;15bn in guarantees to support the fast growing order book in grid technology and gas turbines as the company is working through its problems in its wind turbine designs. Siemens Energy has capital markets day next week where the company will update the market on its wind turbine business which has hit massive difficulties with a faulty design costing the company a lot of money.</span></p> <p><span>It is worth noting that 12-month forward earnings estimates have not moved higher since the Q3 earnings season started except for Nasdaq 100 companies highlighting once again that the big winner and driver this year has been US technology stocks.</span></p> <p><span>Key earnings for the rest of the week are:</span></p> <ul > <li><strong><span>Today:</span></strong><span> TJX, Cisco, Palo Alto Networks, Target</span></li> <li><strong><span>Thursday:</span></strong><span> Siemens, Copart, NetEase, Walmart, Ross Stores, Applied Materials, Alibaba </span></li> <li><strong><span>Friday:</span></strong><span> Johnson Controls, Generali</span></li> </ul></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/15_pg_4.png"/></div><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Corporate Earnings</span> <span></span> <span>Plug Power</span> <span></span></div>Wed, 15 Nov 2023 10:20:00 Z2023-11-15T10:28:30Z{1973C3B1-1675-48A1-B456-400AF8C6B691}https://www.home.saxo/en-au/content/articles/equities/nio-squeeze-tesla-valuation-and-renault-ev-ipo-15112023Peter Garnryproduct-equitiesHighlighted articlessubject-is/fin.reportsEarnings ReleasesPlug PowerSaxo Strats Core ThemesNIO squeeze, Tesla valuation, and Renault EV IPO<div class="article-excerpt">In today's equity note, we zoom in on the battery electric vehicles industry as the news flow is heating up. NIO is increasingly under pressure and the Q3 earnings report will be a key event for Chinese EV-maker. Tesla continues to lose market share among the 15 carmakers we track.</div><div class="article-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Is NIO being squeezed in the EV market?</span></strong></h3> <p><span>Problems are growing at the Chinese EV-maker NIO down 55% from its intraday peak back in early August as EV-maker has indicated that it is considering raising equity capital and also laying off 10% of its staff. Even a spin-off of several units is on the table. NIO has never been profitable and the lower entry barriers into the car industry because of electric vehicles technology has increased competition to insane levels making it increasingly difficult to grow fast in a profitable way. </span></p> <p><span>NIO is expected to deliver FY23 revenue of $8.6bn and FY24 revenue of $13.1bn, but still losing money on its operations. In Q1 2021, NIO delivered 20,060 battery electric vehicles (BEVs) compared to BMW&rsquo;s 14,161 deliveries of BEVs. Fast forward to Q3 2023, BMW delivered 93,931 and NIO delivered only 55,432 highlighting that NIO is falling behind relatively.</span></p> <p><span>Investors that want to get exposure to the EV adoption should seriously think about whether betting on an EV-maker is the most sensible decision or whether investing in other parts of the value chain makes better sense. Our equity note <a href="https://www.home.saxo/content/articles/equities/the-growing-ecosystem-around-electric-vehicles-07092023">The growing ecosystem around electric vehicles</a> goes a bit deeper into this argument.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/13_pg_1.png"/></div><div class="rte--output">NIO share price | Source: Saxo</div><br/><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><span><strong>Why Tesla investors must understand terminal market share</strong></span></h3> <p><span>Based on the 15 carmakers we track in our BEV model the Q3 delivery figure of BEVs hit 1.7mn up 55% y/y and 2023 is going to be known as the year when BEVs finally hit an inflection point for the overall market including the talk about BEVs impact on oil demand. For Tesla, the Q3 delivery figures also extended the reality that competition is heating up and that its global market share among these 15 carmakers fell to 25.6% down from 31.4% a year ago. This market share is still impressive and Tesla is still more than twice as big as Volkswagen in terms of production, but Tesla is highly likely to lose its top spot in Q4 to Chinese BYD.</span></p> <p><span>Why is this market share trajectory so important? Because the terminal market share in the global BEV market in 2035 is a key input parameter in any Tesla valuation. Tesla&rsquo;s market value is currently $682bn compared to Toyota&rsquo;s $303bn. Toyota&rsquo;s current global market share in ICE (internal combustion engine) is around 10%, so Tesla&rsquo;s market value reflects potentially different scenarios:</span></p> <ol> <li><span>At least twice Toyota&rsquo;s current market share in the long run and no positive change to profitability in the overall car industry</span><br /> <br /> </li> <li><span>Same market share as Toyota in the future, so 10%, but cars produced with much higher margin that the car industry has produced in the past</span><br /> <br /> </li> <li><span>A top 3 carmaker in the 2035 or 2040, but with significant market value derived from other businesses such as supercharging network, energy storage, and residential solar module installation.</span></li> </ol></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/13_pg_2.png"/></div><div class="article-additional-rte"><div class="rte--output"><h3 class="article-heading--3"><strong><span>Renault update on Ampere IPO</span></strong></h3> <p><span>Renault&rsquo;s CEO said today that on Wednesday, at its capital markets day, the carmaker will announce its plans to IPO its electric division (including hybrid and battery) called Ampere. The group is aiming to get a valuation of around &euro;8-10bn and trying to spin the IPO as an European alternative to Tesla. Renault is one of the most successful carmakers in Europe in terms of the EV adoption but the French carmaker is notoriously bad in breaking out separate BEV figures which are the ones the market cares about, so we are still not including Renault in our model over the BEV market. That will hopefully change with the IPO of Ampere which is expected to launch around April or May next year. </span></p> <p><span>Some analysts already think that an IPO is the wrong choice and that it should be a spin-off because an IPO is dilutive for existing shareholders. But in any case, a rapidly growing Ampere needing a lot of capital to grow fast will be dilutive, but the market will be much wiser on Wednesday about what an IPO means for Renault shareholders. If Renault succeeds with the Ampere IPO and it becomes a success it could force other legacy carmakers such as Volkswagen and Stellantis to IPO their BEV divisions.</span></p></div></div><div class="article-image"><img alt="" src="https://www.home.saxo/-/media/content-hub/images/2023/november/13_pg_3.png"/></div><div class="rte--output">Renault investor presentation | Source: Renault</div><br/><div><a href="https://www.home.saxo/en-au/insights/news-and-research/authors/peter-garnry"><img style="float: left; margin-right: 12px;" src="https://www.home.saxo/-/media/content-hub/images/general/author-profile-pictures/peter-garnry-400x400.png?mw=48" alt="Peter Garnry" /><div>Peter Garnry</div><div>Head of Equity Strategy</div><div>Saxo Bank</div></a></div><div ><b>Topics:</b> <a href="https://www.home.saxo/en-au/insights/news-and-research/equities">Equities</a> <span>Highlighted articles</span> <span>Corporate Earnings</span> <span></span> <span>Plug Power</span> <span></span></div>Mon, 13 Nov 2023 12:40:00 Z2023-11-13T12:48:10Z