😭 Stocks are crashing

Good morning investors! The situation is rapidly changing as money flows from popular names to growing companies and BTC continues to flirt with new highs.

Today we cover:

• No rate cuts anytime soon, reminds Powell.

• Stocks are crashing.

• BTC vs S&P 500.

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📊 Economy and News 

The Fed is not ready to start cutting interest rates

In prepared statements for his appearances on Capitol Hill, Fed Chair Jerome Powell emphasized that policymakers are closely monitoring the risks posed by inflation and are in no hurry to cut rates.

“The Committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the central bank leader said.

Powell noted again that lowering rates too quickly risks losing the battle against inflation and likely having to raise rates further, while waiting too long poses a danger to economic growth.

U.S. Treasury yields inched lower on Wednesday as traders digested the news while assessing the latest collapse in the shares of New York Community Bancorp, which reignited concerns about the health of regional lenders.

Global hits:

• Egypt hikes interest rates by 600 basis points, pound crumbles to record low.

• Biden says Medicare should negotiate prices for at least 50 drugs each year, up from a target of 20.

• The UK government will abolish the non-domiciled tax status.

Interesting news: Meta is building a giant AI model to power its ‘entire video ecosystem,’ exec says.

📈 Stocks

S&P 500 5,104.76 (+0.51%)
DJIA 38,661.05 (+0.20%)
NASDAQ 18,017.57 (+0.67%)
BRENT CRUDE 82.28 (-0.82%)
* Prices as of Mar 7th, 12:20 AM UTC

JD.com reports earnings

JD.com stock surged +17% on Wednesday after the Chinese e-commerce company reported fourth-quarter results that beat Wall Street’s expectations.

Here are the numbers:

• JD.com reported earnings per share of 75 cents. This was above the analyst estimate for EPS of 63 cents.

• The company reported revenue of $43.11 billion.

• This was 2.25% better than the analyst estimate for revenue of $42.16 billion.

In addition, the company is planning a major buyback.

But these names plunged:

• Victoria's Secret fell nearly -30% after reporting weak quarterly results. The company posted earnings of $2.58 per share that topped the $2.47 expected by analysts polled by LSEG, but revenues came in at $2.08 billion and shy of the $2.09 billion anticipated. For the full year, Victoria's Secret forecasted revenues to fall in the low single digits, versus an estimate of a 0.4% decline.

• Hugo Boss plunged -18% on pessimistic sales outlook in its worst day since 2016. CEO Daniel Grieder said that 2023 was a “record year,” with sales up 18%. But he pointed to more modest growth of 3% to 6% in 2024.

• Foot Locker shares plunge nearly -30% as retailer posts holiday loss, delays key financial target. The sneaker retailer has been in the midst of a turnaround under former Ulta boss Mary Dillon.

Reminder: India’s booming tech sector suffers a big blow as Byju’s and Paytm plunge into crisis. Also, Tesla is now down about -30% since the beginning of the year.

🔐 Crypto

Bitcoin $66,812 (-0.01%)
Ethereum $3,793 (-0.99%)
Total market cap $2.49T (-0.54%)
* Prices as of Mar 7th, 12:20 AM UTC

Bitcoin vs S&P 500 – A Comparison

Now that Bitcoin has surged to new heights, it’s attracting a lot of attention and is being compared to alternatives, such as the S&P 500.

Bitcoin is not as big as the S&P in terms of market capitalization, yet it has been more rewarding.

Since you can invest in both, a comparison is inevitable.

Investing in Bitcoin is like investing in a single stock. Your wealth potential is tied to the price of this single asset.

On the other hand, putting your money into the S&P 500 means higher diversification as it consists of 500 companies, including some top names that have performed well over the years.

But, if you look at returns, BTC impresses more as seen in this chart:

This chart does not take into consideration the situation in 2024, where BTC is above $65,000.

In the past five years, Bitcoin has experienced a CAGR of about 68%, i..e: offering 5x higher returns than the S&P 500 over the past five years.

But, investing in BTC is riskier. You could generate some promising returns by putting your money into a single stock in its beginning phase of a bull run, but you could also lose a lot of your money if things don’t go in your desired direction.

As seen above, BTC has typically given higher returns than the S&P, but in negative years, it also caused bigger losses.

Note: You’d be surprised to know that Bitcoin isn’t the best performing asset of the last five yeas. Many, including Nvidia, have outperformed it:

Nvidia is up 3000% in 5 years, BTC is up 1,500%!

Nvidia is up 84% YTD, BTC is up 50%.

Nvidia is up 250% in 12 months, BTC is up 200%.

Is Nvidia better? We can’t tell. But will BTC outgrow it? Some say it will.

💵 Personal Finance

Foreign ETFs and getting exposure to non US markets

You asked for it… here are some ways to invest in foreign ETFs:

• You can choose a country specific ETF to get exposure to companies operating in a specific country. For example, EWG, the iShares MSCI Germany Index ETF, tracks the MSCI Germany Index. You will have to open an account with an online broker that offers these services.

• You can try a broad foreign market ETF that consists of companies from different markets. For example, a BRIC investment will include securities deriving from Brazil, Russia, India, or China. Examples include BKF iShares MSCI BRIC Index ETF.

• Currency ETFs track foreign currencies and are known to be risky. The best way to reduce the risk is to own a large share in your currency or a currency that's less likely to fall.

• You can get access to emerging markets with an Emerging Market ETF. Examples include the Global X MSCI Colombia ETF (GXG) and the iShares Core MSCI Emerging Markets ETF (IEMG).

• International bond ETFs also exist. Known for offering a regular flow of income, they can be safe and an easy way to diversify.

• This might come as a surprise, but commodity ETFs also exist and they greatly vary in prices. You can invest in coal ETFs, solar energy ETFs, and more. However, understanding commodity ETFs can be a little tricky.

You can own foreign stocks even through US ETFs as a large number of them, including the Vanguard Total World Stock ETF own a mix of American and foreign stocks. Some such as the iShares MSCI ACWI ex U.S. ETF only own foreign stocks. However, returns might not always be phenomenal.

The former has had an annualized return of 8.07%, slightly lower than its benchmark of 8.17%, whereas the latter has had annualized return of 3.70%.

You will even find country-specific ETFs in the US, such as the WisdomTree Japan Hedged Equity Fund (DXJ) that concentrates on the Japanese market with an ROI of 9.97% over the past ten years.

Check this video for more:

💰 Be a Better Investor

👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.

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