Welcome to another edition of Capnote Weekly Spotlight for 20th November 2023 – a newsletter dedicated to improving financial performance for all. Below is a quick summary of this edition’s contents.
- Will the US-China presidential summit inspire cross border investment?
- Top gaining and losing trends including all time highs for orange juice.
- Key events to watch for this week particularly related to AI and monetary policy.
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Tip Of The Week: Quickly Reassess Your Exposure To China
In recent times, corporations and investors have never been more fearful about their exposure to China. In September, the net outflow of funds from China hit a 7 year high, according to Nikkei reports. The presidents of America and China held a summit last week which appeared to mark the slight easing of tensions between the world’s two largest economies.
Some key notes below:
- Military: Resumption of open military communications between the countries certainly is a step in the right direction though neither side will take their foot off the pedal. Easing of military tensions is timely as Taiwan’s presidential elections will be held in January 2024 before US elections in November.
- Artificial Intelligence & Semiconductors: Talks focused on preventing improper use of AI in military or nuclear applications. However, with the US restricting access to advanced chips for AI, China has committed to boosting domestic capabilities creating a surge in local chipmakers. The top 10 domestic equipment manufacturers’ revenue grew 39% year-on-year, according to Shanghai-based CINNO Research.
- Trade Tariffs: This summit did not appear to address the issue of trade tariffs. CNBC reports that as at November 2023, 66.4% of U.S. imports from China are under tariff. The average U.S. tariff on Chinese exports is set at 19.3%. That is more than six times higher than before the trade war began. Chinese tariffs cover 58.3% of U.S. exports at an average of 21.1%.
If tensions ease and cooperation returns, this could potentially indicate opportunities for risk reduction or growth. Amidst better than expected inflation numbers, US stocks have rallied in the second half of the year. As investors chase returns, will risk-on sentiment extend to China? However, with significant tariffs and unchartered technological developments, there does appear to be some way to go before investor confidence fully returns. Renowned investor Ray Dalio gave his thoughts on CNBC.
Meanwhile use the Maps Smart Tool on Capnote to do this quickly and easily. Below is a sample visualization with data highlighting Tesla’s subsidiaries and reported geographic revenue exposure.
In addition to the above, Capnote also shows the names of each subsidiary and can aggregate a number of companies in a portfolio onto a single map. It’s quite handy for seeing high concentrations levels to particular geographies. Try it now on Capnote for free.
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Sentiment Markers
Over the last week, yields on US Treasuries fell as the Us Treasury indicated that the government would issue less debt than previously expected given higher tax receipt forecasts. This contributed to risk on sentiment and a rally in stocks. View select key indicator weekly movements below.
- US 10 year treasury -4.40%
- S&P 500 +2.24%
- Hang Seng +1.46%
- Crude Oil (Brent) -1.02%
- US dollar index (DXY) -1.93%
- Gold +2.56%
- Bitcoin -1.92%
Top Gainers
Capnote regularly tracks industry, company and indicator performance in moving windows.
- Household Retail: Following earnings last week, stocks of Target and Williams-Sonoma gained +20% and 21% respectively. With recent inflation numbers showing declines, perhaps shoppers may feel more inclined to spend over the holiday season.
- Orange Juice: Last week, orange juice futures gained +10% to breach all time highs. Over the last couple of years, adverse weather and a bacterial disease have reduced production in the three main growers – Mexico, U.S. and Brazil. Analysts do not expect relief soon. Below is a 10 year price chart from Trading Economics highlighting its staggering run.
Also Read: Capnote’s Weekly Spotlight: Is Palladium In A Death Spiral?
Top Losers
- Vaccine Makers: Regarded as Wall Street favorites during the pandemic, Moderna and Pfizer stocks are down -57% and -49% this year. It remains to be seen if this is only due to lower coronavirus vaccine sales or a broader push back by consumers on frequently misunderstood mRNA vaccinations.
- Government Bonds: Yields on 10 year governments bonds for a number of countries fell last week including the US, Switzerland, Japan, Sweden, Chile and others. Investors and Consumers will be hoping this is the start of a return to normalcy as inflation eases.
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Events & Notifications 
Economic Events:
- FOMC Minutes: On Tuesday 21 November, the minutes from the Fed’s meeting of October 31-November 1 will be released. The market will be looking for any signs pointing to easing monetary policy amid lower inflation and jobs numbers last week.
- Thanksgiving: US markets will be closed on Thursday 23 November for Thanksgiving.According to Benzinga, over the last 50 years, the S&P 500 has experienced an average gain of 0.54% during Thanksgiving week, higher than the typical average weekly gain of 0.16%.
- Inflation data: This week, inflation information will be released in countries including Germany (20 November), South Korea (20 November) and Canada (21 November). Inflation numbers across the world will feed into global supply chains.
Earnings: In the coming week, earnings for Nvidia will provide more insight into the AI boom.
- 2023-11-20 Earnings – Zoom Video Communications, Inc.
- 2023-11-20 Earnings – Vmware, Inc.
- 2023-11-21 Earnings – Best Buy Co., Inc.
- 2023-11-21 Earnings – Nvidia Corporation
- 2023-11-21 Earnings – Baidu, Inc.
- 2023-11-21 Earnings – Dick’s Sporting Goods, Inc.
- 2023-11-21 Earnings – Medtronic Plc
- 2023-11-22 Earnings – Deere & Company
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Written by Ikenna Ene