Welcome to the Enhanced Value Fund (EVF) newsletter! With Charts of the Month, we’ll be providing you with occasional updates on EVF and sharing interesting charts that have caught our attention in recent weeks.
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Market insights - Global markets
We tend to forget that not long ago Emerging Markets were massively outperforming US equities.
Don’t get me wrong, S&P500 companies keep going strong lately.
And US GDP 2024 Growth forecast? Quite a reversal from mid 2023. Looking good!
Still, a gentle reminder that much of the GDP growth is outside the Developed Markets.
And APAC companies Free Cash Flow Yield is 10y high…
Within Developed Markets, The US and Canada outperformed the group.
The level of unfunded liabilities is likely to prove a drag for the west, Europe included.
This not to say that all Emerging Markets are necessary great: look at the spec level in Indian equities, it is like a casino!
Are small cap the new Emerging Markets?
Market insights - Tech (NVIDIA)
We noticed an increase in the number of pushbacks against NVIDIA valuation, let’s have a look.
First off, if the 5y chart has a name it would probably be FOMO (Fear Of Missing Out). NVIDIA is up a cool 30X since 2019!
For sure the quality of the business is “wow”. I mean, a 57% margin (after cost of revenue, opex, and tax).. it should be illegal!
And look at that growth.
Zoom in…
And cloud capex looks like they are inflecting too.
That’s probably why this is what analyst say:
But guys a word of warning: Druckenmiller, who bough in early and in size, sold massively (and he’s probably out by now)
Market insights - Commodities Land
China slowly but surely keeps buying Gold…
(… while ETF holders are selling.)
(PS Gold equities are historically cheap by the way.)
China is also buying Copper despite lackluster demand, hence stockpile are skyrocketing.
And oil of course, China is buying cheap (sanctioned) oil.
See a China-pattern here?
Nat gas might have bottomed in the US. Setup is very gloomy for Natural gas, but market bottom before there is light at the end of the tunnel…
Robusta coffee is a Vietnamese game (Arabica is another story by the way.)
And coffee is headed all time high…
… Just like cocoa was last month, until a several standard deviation move down -15% in one day!
Market insights - the shipping corner
The container shipping industry is expanding at breaking neck speed, which *in theory* is bearish.
Still, global disruptions are keeping rates healthy
Oil tanker on the other side look much safer as a bet: orderbook is low and rates are still within normal range.
Miscellaneous from friends around the world
Hopefully voters won’t adjust for inflation
At least students debt has been taken care of. Don't look anywhere else!
You don’t make money in the US if you price 15 bucks for a Salad, apparently.
On the entertainment front, comedy is going strong in the US.
And finally, if you ever wonder how a snapping turtle would look like coming out of hibernation.. Here you go:
Thank you for making it so far, hope you enjoyed it!
The Enhanced Value Fund (EVF) Team
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