Nvidia (+10.5%) soars despite mixed catalysts with Geopolitics still dictating market sentiment

Another eventful week in the markets! Well most days were fairly quiet… but when the news hit, it felt like a brick (looking at you Houthis). And with earnings season having started off on Friday (next week in Europe) - expect some turbulent market conditions in the weeks ahead!
I hope everyone got some value out of my Bitcoin ETF approval preview (and my vastly unpopular opinion that Bitcoin would shoot up before eventually selling off). *pats myself on the back*

This week I am covering; (1) Nvidia huge surge which dragged the Nasdaq higher. (2) Geopolitics, (3) Luxury / Burberry, (4) US CPI

STOCK SPECIFICS:
Nvidia, Maersk, Boeing, Burberry

NVDA (WTD +10.5%): Shares in Nvidia saw gains upwards of 10% after a slew of mixed news, ultimately lifted by one final positive catalyst. At the start of the week, (1) reports suggested that the chip-maker were looking to introduce new AI chips to comply with US restrictions, in China. (2) Though the WSJ reported that there was slower demand for its newly-introduced chips from Chinese buyers. (3) Later, Nvidia announced a new set of graphics chips for AI PC’s. My opinion? Gains in Wall Street were led by Nvidia, no doubt. But the positive news, coupled with a relatively lower yield environment most definitely gave a helping hand for the chip-maker.

Maersk (WTD -1.40%) / Shipping / Red Sea: Less stock specific, more-so geopolitical. In my last newsletter, I mentioned that the Red Sea tensions is to be a key theme for 2024. (1) On Tuesday 11th, the CEO warned it could “take months“ to reopen the Red Sea - risking inflationary pressures on the global economy. (2) Since then, industry peer Hapag-Lloyd also echoed the same sentiment as Maersk - the Red Sea is too “dangerous“. (3) Since, the US/UK launched military strikes Houthi targets. This raised fears of further flare-ups in the region, and led Crude prices to jump around 7%. My opinion? With Houthis continuing to launch strikes in the region, and to “hit back“ against the UK/US - expect more turbulence in the Crude complex. As such, it can be argued that yields may march higher, which may lead to some underperformance in Tech in the next week(s).

Boeing (WTD -4.5%): This story has been run into the ground - so I will keep it brief. (1) On Friday 5th Alaska Airlines grounded all of its Boeing 737-9 aircrafts after one of its planes lost a door mid-flight. My opinion? This is the USA’s baby - they will not let it fail. It is entirely possible for the blame to be shifted onto its manufacturer Spirit Aerosystems (WTD -1.9%). And with the likes of the Ryanair CEO saying he has full confidence in Boeing and its management - there is little to shift the dial for the outlook of the company.

Burberry (WTD -7.5%): British Luxury brand, Burberry, saw it shares plummet after it announced its Q3 earnings - which all in all, was not horrible. The real kicker for the name was that it cut its guidance, citing “a slowdown in Luxury demand”. What the experts are saying: Analysts are now looking towards Richemont earnings this Thursday, as any early indications to see if this is a company specific issue, or a wider slowdown throughout the Luxury sector. Personally, I do not see Richemont and Burberry as direct peers - but its important to know the talk on the street - so you are not caught by surprise if you hold any Luxury names.

KEY DATA:
US CPI, Chinese CPI

US CPI - Hotter than expected CPI - which initially sparked a hawkish reaction before then entirely paring the move (as if nothing happened). Ultimately, the data was deemed as in-line with the Fed’s expectations. Bulls will point towards a fairly “in-line“ print, cite the fairly unreactive bond price action, and upside in stocks. Bears will say this adds onto the hawkish narrative, following US jobs and EZ CPI.

Chinese CPI - Little to change the narrative. CPI fell less than than expected, though still remained in deflationary territory. Unwelcome news for companies looking to expand/operate within the economy - Luxury names and Auto names particularly.

WHATS OUT NEXT?
UK Employment Data, China GDP

UK Employment - Looking out for further slowdown in the wages metrics as opposed to solely the employment components. Whilst this is unlikely to have an impact on the BoE in the next meeting, the Bank will still be cognizant of the print.

China GDP - Like the Chinese CPI last week, analysts are looking out for the health of the economy - particularly for any signs of a resurgence in activity within the economy. Again, a beat on expectations, will likely have a positive impact on the China-exposed Luxury names, listed in Europe; LVMH, Kering, Hermes etc.

What a reader thinks - A big thank you to the readers who are writing in and providing me with useful feedback and their own personal opinions on the markets. Coray said: “The Apple meltdown was less so a rotation out of the big 2023 winners, and more-so investors pricing in a slowing in demand for iPhone and Mac sales. Long term, I see shares dropping towards the $150 mark“. - in response to my prior email re. Apple.

I want to hear from you! If you would like to be featured in the next email, reply to this email and let me know your thoughts on the markets!