💻 Keep an eye on chip stocks

Together with Mode Mobile

Good morning investors! Fear is ruling the market, but investors also seem excited.

Today we cover:

• US factory output dips.

• Chips stock soar.

• Foreign ETFs.

📊 Economy and News 

U.S. Factory Orders Dip Amid Aircraft and Business Investment Weakness

U.S. factory orders fell in November, signaling weaker demand for commercial aircraft and slower business spending on equipment. Key highlights from the Commerce Department's report include:

• Factory Orders Decline: Orders dropped 0.4% in November following a revised 0.5% increase in October. Economists had predicted a smaller 0.3% decrease. Year-on-year, orders rose just 0.1%.

• Commercial Aircraft Orders Plunge: Orders for aircraft and parts fell 7.0% after a sharp 16.4% rebound in October. Issues at Boeing, including strikes and safety concerns, have contributed to the decline.

• Mixed Sector Performance:

  • Decreases: Computers, electronic products, and fabricated metal goods.

  • Increases: Machinery, primary metals, and electrical equipment.

• Business Investment Slows: Orders for non-defense capital goods excluding aircraft, a proxy for business spending, rose 0.4%—lower than earlier estimates. Shipments of these goods advanced 0.3%.

• Inventory and Shipment Trends: Manufactured goods shipments increased slightly by 0.1%, while inventories and unfilled orders both rose 0.3%.

Manufacturing, which makes up 10.3% of the economy, has struggled under the Federal Reserve's aggressive interest rate hikes aimed at curbing inflation. However, optimism grows as interest rate cuts are expected in 2024, and a recent ISM survey reported manufacturing activity rebounding to a nine-month high in December.

Global hits:

• .Shares of Tencent fall over 5% in Hong Kong after U.S. designates it as a Chinese military company.

• Bank of Israel holds rates on high inflation, economic uncertainty.

• Musk turns on UK's Farage and says he should quit as Reform party leader as Musk’s involvement in global politics worries Norway PM.

Good to know: U.S. Steel, Nippon sue against Biden blocking $14.9 billion deal. Elsewhere, Elon Musk’s Starlink to launch on United Airlines flights by spring. Lastly, Part of Warren Buffett’s empire just got sued by the US government.

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📈 Stocks

S&P 500 4, (+%)
DJIA 34, (+%)
NASDAQ 13, (+%)
BRENT CRUDE 13 (-%)
* Prices as of Mar 3rd, 12:20 AM UTC

Chip stocks make a come back

The semiconductor sector is on a roll, with chip stocks rebounding sharply and Nvidia leading the rally. The company is poised to potentially surpass Apple as the largest stock by market value, bolstered by strong investor confidence and anticipation for CEO Jensen Huang’s keynote at the 2025 Consumer Electronics Show (CES) in Las Vegas.

Nvidia is expected to make major announcements, including more on Blackwell GPUs for data centers.

On the other hand, chip manufacturer Foxconn reported a record $63.9 billion in Q4 2024 revenue, a 15% year-over-year increase driven by demand for cloud and networking products, including AI servers.

Exciting: Also, Disney’s Hulu + Live TV service and Fubo to merge in surprise deal ending Venu lawsuit. Both Hulu+ Live TV and Fubo are streaming services that mimic the traditional cable TV bundle, offering linear TV networks. The deal doesn’t include the streamer Hulu, known for creating original content like “Only Murders in the Building” and “The Handmaid’s Tale.” The news helped Fubo jump +250%.

💵 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:

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Nothing in this newsletter is financial advice. Always do your own research and think for yourself.

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