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FutureStarrUS Stocks End Sharply Higher on Monday
On Monday, the US stock market surged higher on optimism about inflation data. The S&P 500 gained 1.6% while the tech-heavy Nasdaq closed with a gain of 2.3%.
On Tuesday, stocks surged after Fed Chair Jerome Powell reiterated the Fed's plan to keep raising interest rates. Additionally, he promised to take "necessary steps" to curb inflationary pressures.
Apple is one of the largest and most influential companies in the world, with iPhone sales accounting for much of its revenue. But Apple faces numerous obstacles to maintaining its growth trajectory. These include legal actions against App Store fees as well as increasing competition from rivals like Samsung and Huawei.
On Friday, shares finished sharply higher, continuing a rally that began the day before as soft inflation data raised hopes the Federal Reserve may ease up on interest rate hikes. Amazon rose 4.3% while Apple and Microsoft both gained more than 1%, contributing to the Nasdaq's gains.
Analysts have been debating whether to reduce their price targets on Apple, with some calling it too expensive given the stock's long-term prospects. On the other hand, other investors have praised the company, noting its free cash flow should accelerate and strong technical pattern.
Meanwhile, investor uncertainty about whether the Federal Reserve's aggressive rate hiking campaign will push the economy into recession has caused some to question if Apple can weather that storm. Nonetheless, Apple stock remains a reliable investment for long-term investors.
Investors are eagerly awaiting a series of economic reports that could offer clues about future Fed policy. That includes China's industrial production and retail sales data, along with Philly Fed and New York Fed regional surveys for December. These numbers could determine if or not the Fed's intentions to raise interest rates another time this year will be enough to tip the economy into recession.
Tesla, whose shares have been severely battered by rising interest rates and an overall market selloff this year, ended sharply higher than other U.S. stocks Wednesday even though news broke that it had temporarily suspended production at its Shanghai factory earlier than planned.
Established in 2003 by engineers Martin Eberhard and Marc Tarpenning and named for Serbian-American inventor Nikola Tesla, Tesla is a manufacturer of electric vehicles (EVs), batteries for home or utility power storage, solar panels and roof tiles. Elon Musk - co-founder of PayPal and one of the world's wealthiest people - owns most of Tesla and has built it into an innovative clean energy giant.
Tesla Motors has overcome many challenges to reach where they are today, such as high initial vehicle prices that kept many potential buyers out of their first electric cars. But thanks to falling component costs, Tesla can now build more affordable electric vehicles.
That makes buying Teslas less costly and increases the likelihood that people can finance their vehicle quickly. Furthermore, Tesla will have more electric vehicles for sale to meet its long-term growth objectives.
Yet the company is yet to achieve its ambitious targets. Last year, Tesla Motors reported sales of 1.3 million, falling short both of their growth targets and analysts' expectations.
A major issue was high prices, but the company also struggled to source parts fast enough. So this month, they reduced prices in China and other markets in an attempt to boost demand. While that helped them qualify for more federal EV tax credits, many people were left disappointed by what they ultimately received.
Microsoft is one of the world's largest software companies and a dominant force in computer technology. Its flagship products include Windows operating system and Office suite, plus gaming consoles and tablet computers are produced by them too. Microsoft also provides software development services and cloud computing solutions to its customers.
The company is headquartered in Redmond, Washington and is a member of the Fortune 500 list of America's largest companies by revenue. With sales offices around the world, this multinational conglomerate boasts impressive reach.
Established in 1975 by Bill Gates and Paul Allen, this company develops software applications and products. Since then, it has become a global leader in computer software with an impressive market share of more than 40%.
Major products of the company include Windows operating system, Microsoft Office suite of software and Internet Explorer web browser. Furthermore, it produces the Xbox video game console and related software.
Additionally, Microsoft produces the Surface line of hybrid tablets. They operate a public cloud computing service called Azure and have recently entered the mixed reality space with HoloLens.
Microsoft has achieved remarkable success in the computer industry, becoming one of the most renowned brands worldwide. Its fame stems from both its quality software and customer service, as well as innovative marketing strategies.
But the company has also come under fire for its business practices. It was accused of being a "velvet sweatshop," overworking employees and leading them to burnout.
Despite these obstacles, the company has continued to post impressive profits over time. Its stock has appreciated 151,000% since 1986 and its shares could potentially rise even further in 2019.
Jeff Bezos was an early Amazon executive who felt the urge to answer his team members' questions. However, he soon discovered that people at the company had their own theories on running the business, and leaders were supposed to let them solve their problems on their own.
Bezos instructed his employees that instead of outlining a comprehensive strategy, they should "be firm in your vision but flexible on the details." This approach has proven highly successful at Amazon; Bezos credits this philosophy as one of his key success factors.
Bezos' leadership has been the catalyst for some of the stock market's biggest gains, but he also faces numerous obstacles that are making his job even tougher. Aside from scandals he and his team are working to contain, Amazon's growth is under strain from multiple sources.
Amazon has come under fire for its monopolistic and anticompetitive practices, which are causing a massive disruption in the retail industry. Despite this, Amazon continues to generate significant profits and outpace competitors such as Walmart.
Amazon's earnings have seen a meteoric rise due to the massive expansion of their Prime subscription services, which now account for most of their profits. With this service, customers are treated to free two-day shipping, music streaming, video storage and discounts on other products - as well as many other advantages like discounts on other items.
Amazon's stock price has seen a meteoric rise this year due to the company's other profitable services and money-making opportunities. While it may not be at its high, investors remain bullish on its long-term success. Investors should take note that earnings growth is expected to continue in the coming quarters.
Biogen is the world's leading developer of medicines for neurological diseases. Its portfolio includes TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, TYSABRI and FAMPYRA for multiple sclerosis; SPINRAZA for spinal muscular atrophy; and ADUHELM to treat Alzheimer's disease.
But its biggest recent victory is a drug for Friedreich's ataxia that regulators approved this week. After-hours trading on Thursday saw shares soar more than 150% after the Food and Drug Administration gave its approval for treating patients 16 or older with this degenerative disorder.
Leqembi, developed in collaboration with Eisai, could add billions to Biogen's revenue in the coming years if it proves successful. The drug reduces amyloid beta plaque accumulation in patients' brains, believed to slow down Alzheimer's disease progression.
Other late-stage clinical programs being pursued by the company include those for Parkinson's disease and amyotrophic lateral sclerosis, or ALS. These projects could potentially generate sales within a few years as well.
Biogen is a major pharmaceutical manufacturer and distributor based in the United States, producing more than 12 drugs under various names for international distribution.
Biogen's share price has had an inconsistent three year run, yet the company remains a reliable buy-and-hold investment for future growth. With their recent stock repurchase and the impending launch of their own interferon-b1A therapy, Biogen should see increased profitability this year.
The company has an impressive dividend history, having more than doubled its dividend since 2011. It has also been one of the best-performing stocks on the S&P 500 over the past decade due to its large and talented team and culture of inclusivity and diversity that empowers employees to make a positive impact in their communities.
Latin American stocks have been the best performers among emerging markets this year, and Morgan Stanley expects some names to post strong gains in the near future.
The region appears to have recovered from both the pandemic and Russia-Ukraine war, with economic growth remaining above long-term averages and profitability improving.
Brazil's stock market, the Bovespa, surged on Friday as investors welcomed a rebound in China. The index was up 0.9% at midday, positioning it for modest weekly gains as the real declined, undermining regional currencies.
The Bovespa index, which tracks 84 companies, is one of the world's largest emerging markets. With low valuations and strong commodity prices, Brazilian stocks remain an attractive option for investors looking for alpha in an increasingly volatile world.
However, Jair Bolsonaro - a right-wing nationalist - has caused alarm in some quarters. Analysts believe he will less likely support progressive policies than his predecessor Lula da Silva did.
Bolsonaro has promised to reopen state-owned companies and increase social programs, but he also wants to reduce taxes and impose tougher regulations on foreign firms. Investors may be worried whether Bolsonaro's conservative approach will damage the country's economy.
However, Bolsonaro's conservative economic policies could potentially strengthen the Brazilian economy if he succeeds in reforming some of the nation's labor laws. His proposal to cut corporate tax rates by half will encourage business investment and expansion.
Furthermore, Bolsonaro has pledged to combat inequality and hunger. This should contribute to economic growth - a major driver of the Bovespa - as well as increase investor confidence in Brazilian stocks.
Though the Bovespa index has gained more than 4% this year, it should be remembered that it has been rising steadily since mid-2015. This has been the longest bull market in Brazilian history and appears likely to continue.
The Mexican peso, a major exporter to the US, has become one of Latin America's most reliable currencies due to its close relationship with the United States and dependence on strong economic growth. Recently, however, its stability has waned due to currency depreciation due to globalization pressures.
According to BNamericas, other emerging market currencies like the South African rand and Turkish lira have experienced substantial depreciation over the past few years, prompting some investors to sell off. This has ultimately caused Mexico's currency to appreciate in value.
Thus, some have pondered if it would be worthwhile to bring back any leftover pesos from their travels. While you can get decent conversion rates from some of the larger banks, this might prove challenging for those planning a longer journey.
The peso is an attractive currency to use while in Mexico, boasting one of the world's most liquid currencies that trades 24 hours a day and five days a week - making it a popular choice among international investors.
Another advantage of the peso is its capacity to adjust according to oil prices. Being a major oil producer, Venezuela boasts substantial reserves that make it an ideal currency in times of high energy costs.
Furthermore, the peso is one of the few countries in the region to successfully control inflation through higher interest rates and increased government spending on social programs.
International investors have relied on its currency as a key hedge against market volatility that often plagues emerging markets. Particularly, the peso has proven resilient in the face of political and geopolitical upheaval in Latin America.
The peso has several advantages over other emerging market currencies, making it a wise idea to bring some with you when visiting Mexico. You can use your currency for purchases like cars or food while there, or exchange it at the bank for other countries' coins.
Chile's stock market closed up 2.20 percent, with most of Chile's major indexes closing higher. Materials, industrial and energy companies led the gains with Sociedad Quimica y Minera de Chile (SQM) up 5.95%; Compania Sudamericana de Vapores (VAPORES) increasing 5.3%; Empresas CMPC (CMPC) adding 4.53%.
Chile's stock market has outperformed other emerging markets this year due to a surge in commodity prices that has benefited Chilean companies. For instance, lithium prices are up 123% this year alone.
However, Chile may not be a secure investment for all investors. Its currency, the peso, has been declining recently, and there remains an imminent risk of recession in 2023.
But the country boasts a long-standing record of strong economic growth, low unemployment rates, and an appealing valuation. Its banking sector is one of the strongest in Latin America.
Investment opportunities abound in Chile, making it an attractive location to build a diversified portfolio. Banco Santander Chile provides investors with an opportunity to benefit from the country's expanding economy.
Banco Santander Chile's coverage ratio is near an all-time high, and nonperforming loans (NPLs) are not a major concern at present. However, as the economy slows, Banco Santander Chile may see loan growth decline and NPLs increase.
Meanwhile, inflation in Venezuela has moderated due to monetary tightening measures taken by central bank official Miguel Angel Romero. Nonetheless, inflation remains a key medium-term risk.
Another area to monitor is private consumption, as it could decrease due to higher household debt and record-high inflation experienced this past year.
At present, China's household debt as a percentage of GDP has dropped slightly below the peak reached in June 2020. Meanwhile, its government deficit stands at 7.7 percent of gross domestic product and public debt at 37 percent - the highest level seen in three decades.
The iShares MSCI Chile ETF (ECH) is a popular way for investors to gain exposure to Chile's equity market. Unfortunately, it's heavily weighted towards materials stocks which have seen an uptick in commodity prices.
Argentina has become one of the leading stock markets in Latin America as investors take advantage of China's recovery and anticipate that currencies will weaken. On Thursday, Argentina's MERVAL index rose more than 7%, led by shares of Byma (BYMA), Pampa Energia (PAMP), Banco Bbva Argentina (BBAR), Transportadora de Gas del Sur (TGSU2) and Cresud (CRES).
The country's stock market has been on the rise since May 28 when MSCI upgraded it to emerging markets status, potentially opening the door for more investment and capital inflows. Unfortunately, this index upgrade comes at a difficult time with an ongoing recession, uncontrolled inflation, and elections scheduled for October.
Analysts anticipate a positive effect from the index upgrade, though its success depends on how the government maintains policy continuity after October. Political uncertainty and inconsistent initiatives by previous governments have long been obstacles to economic revival.
To gain insight into Argentina's economy, we spent two weeks there speaking to economists, farmers, politicians, restaurateurs, realtors, barbers, taxi drivers, money changers and street performers. While economic issues were always at the forefront of discussions, it became increasingly evident that this topic is deeply personal for many in Argentina.
Many Argentineans are facing difficulties with their local currency, the peso. It has lost value against the dollar and faces inflation of over 50% annually. As a result, people who would typically have extra cash in their bank accounts to purchase foreign currency or pay for food and goods are unable to do so.
For the poor, it's a vicious cycle. The peso's value against the dollar hurts their savings and wages, making it even harder for them to survive in an economic crisis that has left the economy on the brink of collapse.
The government is trying to alleviate the monetary crisis and curb inflation by raising wages and cutting some taxes. However, a government default would undermine all that work. The Argentine currency has already lost 26 percent in two months, potentially leading to further declines in the country's economy.