Seven Samurai v Magnificent Seven

INSIGHT WEEKLY : March 3, 2024

An easy to read economic and financial summary. If the images do not load, click to download external images in your email to see the newsletter in full, or click the link above to read online.

🌐 Major indexes and overview

Another five records set this week :

Japan’s Nikkei 225 added another 2% to set a new record, though earlier in the week there was profit taking by some overseas investors, but the interest in Japan is undimmed !

Nasdaq Composite/S&P 500 set new records on Friday, driven by the current buying of tech and AI stock.

India’s Nifty 50 set another record, reflecting growing confidence in the Indian economy. Growth numbers released last week show a growth of 8.4% in the last quarter of 2023. India is the fastest growing economy in the world and is forecast to overtake Germany and Japan in the next few years to become the third biggest economy. See earlier spotlight on India - an emerging economic power

France’s CAC 40 set a new record before pulling back a little on Friday.

🇬🇧 UK

UK National Budget is due to be presented next week by the Chancellor of the Exchequer. It appears that from a government point of view, the pressing need is to deliver tax cuts that may help the government electorally in the election due to be held this year. But it is not expected to be a budget with radical changes.

Budget rumour 1 : “non doms” tax status removal is a tempting populist measure for the government. The current tax regime allows overseas citizens to live in the UK and pay tax on income on UK earnings only and not on earnings outside the UK. The government may abolish the non dom concession which may have the consequence of overseas investors choosing to live and invest in another country. Many other countries have non dom provisions in their tax regimes. There may be votes to be gained, but there may not be a gain in tax revenues.

Budget rumour 2: various pensions reforms to remove tax breaks that currently exist.

Budget rumour 3: cuts in personal taxation, though the IMF has warned that cuts in taxation may leave spending plans on public services and investment underfunded.

Budget rumour 4: investment zones may be increased.

UK property continues to show increases in property prices according to research by Nationwide. Prices in the UK increased by 0.7% in February and 1.2% since January 2023. Mortgage approvals have increased to the highest levels since the October 2022 bond market crisis triggered by the mini budget.

FTSE100 is -0.5% since the start of the year.

🇺🇸 US

S&P500 at 5,137 is up over 8.3% this year, and up nearly 1% this week due to news that inflation was as expected.

The forecasts below shows what it might be at the end of the year. These institutions may further revise their forecasts in view of the recent strong run. Barclays even have a “bull case” of the S&P 500 getting to 6,050. There are little signs of a tech bubble bursting, but there could be a correction at some point during the year.

Tech stocks performance so far this year Will the Magnificent Seven become the Fab 5 by dropping Apple and Tesla ?

Inflation in the form of PCE (preferred inflation index of the Federal Reserve) was released this week showing inflation in line with expectations. Headline was 2.4% and core was 2.8%. No interest rate cuts in the next few months !

Treasury yields showed a slight decrease at the long end (10 year).

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🇯🇵 Japan

Nikkei 225 was up over 2% in the week. It is now up over 19% so far this year. It is quite sobering to look back at a 34 year bear market which has just ended. Now there is a renewed confidence in Japan. Despite some profit taking by overseas investors earlier in the week, the index rebounded strongly on Friday.

Yen has weakened in the last 5 years, making investing in Japanese stock attractive for overseas investors. This chart shows the US dollar versus the Japanese Yen over the last five years :

Seven Samurai stocks performance this year :

See previous spotlight on Japan.

🏅5️⃣ Billionaire Leaderboard

Change in week :

1. Bernard Arnault and family (LVMH) $231bn flat

2. Elon Musk (Tesla, SpaceX)$210bn  ⬆️ $6bn

3. Jeff Bezos (Amazon) $199bn ⬆️ $3bn

4. Mark Zuckerberg  (Facebook/Meta) $176bn ⬆️ $6bn

5. Larry Ellison (Oracle)  $142bn ⬆️ $3bn

and

20. Jensen Huang (Nvidia) $72bn. Some commentators are speculating that he could become the wealthiest billionaire. That is possible, if the stock price gets to over 3X current levels. In early January 2023, Nvidia was around $148. Now it is $822. Possible in 2025 ?

SPOTLIGHTS

Earlier :

Residential property

Japan

India - an emerging economic power

Recession

Next week : AI

Coming soon : National debt, future growth sectors, Gold and more !