# 665 – 🌎 Investors, ready your passports – The Average Joe
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    # 665 – 🌎 Investors, ready your passports

    victorlei

    April 3, 2024

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    Good morning. If you’re trying to stay hip, you might want to switch up your beer choice from IPA. Otherwise, you’re setting yourself up to get roasted by TikTokers, who claim craft beer is cringe. They’re not dissing the brew itself — their side-eyes are directed at people (mostly men) who make liking craft beer their whole personality.

    It doesn’t help that some craft beers taste like — as one TikTok user says — “a scented trashbag that has a cigarette in it.” But hey, if that’s your thing, we won’t judge.

    Before you scroll: If you missed our monthly survey results on market sentiment yesterday, catch up here.


    GLOBAL

    With US Stocks At Record Highs, Investors Are Selling and Chasing Overseas Stocks At Big Discounts

    Stonks only go up, right? While that mostly rings true for US markets over the long run, it hasn’t been an easy last few years for global stocks, which have been left in the dust by fast-growing US names. However, as US stocks reach record highs, analysts are weighing whether the rally will continue — and some are eyeing opportunities overseas.

    It’s a family affair: Recent weeks have seen all-time highs in European, Japanese, and Indian markets, with even previously neglected Chinese and Russian stocks staging a comeback. Until recently, perceived risks from inflation, wars, and elections have kept investors away from global names — but with many international markets offering lower valuations than US stocks, investors are increasingly looking abroad for deals.

    • According to World PE Ratio, only three stock markets — Nigeria, New Zealand, and India — are pricier than American stocks, which currently boast a price-to-earnings (P/E) ratio of 23.6x.

    • Meanwhile, Chinese (9.4x P/E), Mexican (13.1x), and European markets (14x) are cheaper than US stocks and trade below historical levels.

    Buying the international dip

    The Bank of America’s March fund manager survey reveals that institutional investors are currently underweight on Eurozone and emerging market stocks compared to historical levels — and their newfound risk appetite could start to close that gap. Capitalizing on that boom could be surprisingly easy.

    • To gain exposure to a diverse range of countries, investors can consider buying the Vanguard FTSE Emerging Markets ETF ($VWO) or the Vanguard FTSE Developed Markets ETF ($VEA).

    • For those interested in investing in a specific country, market-specific funds like the Vanguard FTSE Europe ETF ($VGK), which comes with Europe’s Mag7, or the Franklin FTSE South Korea ETF ($FLKR) for South Korean stocks could be viable options.

    But investors beware: Despite the potential for international growth, the upside may be limited. US stocks have outperformed their international counterparts in eight out of the ten years between 2013 and 2022, according to Morningstar. Over the last five years, none of the aforementioned ETFs have beaten the S&P 500. Complicating matters, the correlation between US and non-US stocks has increased in recent decades, particularly in the EU and UK, which rely heavily on US sales. Those looking to diversify globally might not like what they find.

    Read: Investors turn their attention to Europe’s most valuable stocks (and there’s more than just Novo Nordisk).


    PARTNERED WITH HARTFORD GOLD

    Protect Your Freedom & Finances From a Digital Dollar

    Your privacy and financial freedom were attacked last year when the Digital Dollar program launched — moving one step closer to controlling your savings. Here's what a digital dollar can mean to you:

    • Cash is over — Everything will need to be bought and sold electronically.

    • Privacy is over — the government will know exactly how much you spend and on what.

    • Freedom is over — If you support the wrong cause, you can be penalized, or simply lose all your funds with the click of a button.

    • Retirement funds are over — You could be forced to spend your savings to pump up the economy with negative interest rates.

    Learn how to protect your freedom and your finances.

    Get your FREE copy of this Digital Dollar guide.


    LARGECAP RECAP

    🛢️ Oil eclipses its highest point since October 2023

    Cocoa and gold aren’t the only commodities roaring to new highs — turns out, oil is, too. On Tuesday, US oil prices climbed above $85 amid renewed concerns about geopolitical uncertainty. It’s the highest price since October 2023, during the Israel-Gaza conflict.

    • American drivers are facing an average price of $3.53 per gallon at the pump right now — and much more in states like California ($5.08) and Hawaii ($4.70).

    • Oil prices are expected to keep rising until May, according to GasBuddy’s Patrick De Haan, with gas prices predicted to return to $2.99 by the last quarter of 2024.

    What comes first: inflation or higher commodity prices? The latter, according to the Bureau of Labor Statistics, which attributed the sharp pandemic jump in inflation to energy and food prices. This raises the stakes for next week’s March inflation report, when analysts expect a 3.3% year-over-year (YoY) increase — the third consecutive monthly rise.

    🏍️ Liberty races ahead with $4.5B MotoGP purchase

    After turning Formula 1 into a global phenomenon, Liberty Media ($LSXMA) is acquiring MotoGP, aiming to elevate another racing sport into a worldwide champ. Liberty is investing $4.5B in this Euro-centric sport, which features motorcyclists taking tight turns around a track at over 200MPH.

    • MotoGP’s revenue has grown in each of the past three years, reaching $523M last year — and Liberty likes the sport’s low capital expenses of ~$5.4M.

    • It also boasts a big fanbase, attracting an average of 143K spectators to its races last year — with attendance up 21.5% from 2022.

    Drive to thrive: While MotoGP is much smaller than Formulae, which generated $3.2B in revenue last year (a 25% year-over-year increase), Liberty’s done a masterful job accelerating growth. They’ve secured lucrative media rights deals with major networks like ESPN and Fox Sports. But despite Netflix’s docuseries Drive to Survive minting new F1 fans, viewership saw a modest decline last year — can MotoGP pick up the slack?


    JOE’S MARKET PULSE

    🔗 UBS / Humana

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    Markets & Economy

    Walgreens ($WBA) hits lowest price since 1998: The pharmacy’s stock slid 8.2% on Monday, dropping below $20. High drug prices, overburdened workers, and Amazon’s expanding drug delivery services contribute to the pharmacy’s struggles. [Read]

    Disney ($DIS) leads proxy battle with half of votes cast: As we near the season finale of the Succession-style boardroom drama gripping the House of Mouse, it looks like Iger has gained the backing of BlackRock ($BLK), Disney’s second-largest shareholder. But can he win over individual investors who own 40% of Disney’s stock? [Read]

    Goldman’s ($GS) CIO skeptical of crypto despite recent gains: Famously blunt (and often right), Sharmin Mossavar-Rahmani compares crypto to the tulip mania of the 1600s. Amid Bitcoin’s 64% YTD rise, she maintains assigning value to digital assets is impossible due to a lack of earnings, dividends, and cash flow. [Read]

    Business & Wealth

    Does it take $1.46M to retire comfortably? A survey shows Americans’ rising anxiety about retirement savings, particularly among Millennials, given the uncertainty surrounding Social Security’s future. [Read]

    Google ($GOOG) to delete “billions” of incognito data records: If you were paranoid that Google was tracking your incognito browsing… you might have been right. Amid a new lawsuit settlement, Google says they’re “happy” to delete old technical data that they maintain was never tracked to specific users. [Read]

    DraftKings ($DKNG) shares sink as NCAA pushes to ban prop betting: The NCAA warns against “side wagers” — like betting on, say, one player’s rebound total in a game — fearing disruption to game integrity. It hints at possibly higher regulation of sports gambling amid growing concerns. [Read]

    *Thanks to our sponsors for keeping the newsletter free.


    CHART


    DIGIT OF THE DAY

    Tesla In Freefall After Delivering Just 387K Vehicles In Q1 2024

    Yesterday’s news was no joke for Tesla investors — those dismal delivery numbers are real. Tesla ($TSLA) reported that first-quarter delivery numbers fell 20% from the previous quarter, significantly below the 449K analysts expected. Despite Tesla’s warning in January of “notably lower” deliveries compared to 2023, the extent of the decline surprised many. After its latest blow, Tesla’s value dropped by a third this year.

    • Deepwater Asset Management’s managing partner described the situation to Bloomberg as “ugly,” questioning whether Elon’s brand is hurting Tesla.

    • Tesla faced disruptions at several manufacturing plants, and declining electric vehicle (EV) demand worsened as interest rates rose and consumer spending tightened.

    Low battery warning: Even Chinese EV maker BYD ($BYDDF), which briefly surpassed Tesla as the world’s largest EV seller last year, reported a 43% drop in sales in its first quarter. Last month, BYD slashed prices on over 100 models, intensifying the competition in the global EV market — a battle that Tesla started and is losing as sales struggle to keep pace with analysts’ expectations.


    EXTRA JOE

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