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- It Girl Identity: Issue 4
It Girl Identity: Issue 4
Renata Bayazitova & Kristina Nasteva
July 01, 2024
It Girl Identity Newsletter
Grab your dirty chai latte and read what's moving markets this week, a beginner’s guide to creating a portfolio, and enjoy our curated It Girl Identity recommendations!
What's Moving Markets
July is officially the It Girl month of stock performance, historically the best month for stocks since 1928, with the S&P 500 finishing higher 60% of the time.
What’s Up:
Treasury Yields: 10-year note yield closed at 4.342%.
Stock Futures: Futures went up following the Fed’s positive PCE report suggesting moderating price pressures.
Oil Prices: Wrapped up a fantastic month with a third straight week of rising prices due to higher demand and geopolitical turmoil.
Oliveda International (OLVI): Rose 38.33% without a clear reason, possibly due to popularity of olive oil-based beauty products.
Infinera (INFN): Popped 16.38% after Nokia announced a $2.3 billion acquisition.
Synchrony Financial (SYF): Rose 6.17% after a Baird analyst gave an outperform rating.
Regions Financial (RF): Rose 3.83% on hopes of Fed rate cuts.
Citizens Financial Group (CFG): Rose 3.16% on hopes of Fed rate cuts.
What’s Down:
Nike (NKE): Shares dropped to its biggest one-day decline (-19.98%) after sales drop and gloomy outlook, causing losses for the Dow (-0.1%), S&P 500 (-0.4%), and Nasdaq (-0.7%).
Gap (GPS): Dropped lower than broader market (-0.71%). Forecasted earnings per share of $0.41 and a 2.43% positive change in revenue.
First Solar (FSLR): Fell 8.81% due to a Supreme Court ruling impacting federal regulation.
Foot Locker (FL): Fell 2.96% following Nike’s poor earnings report.
Accolade (ACCD): Dropped 44.29% after revealing lower guidance for the year ahead.
Kura Sushi USA (KRUS): Plummeted 24.04% due to worse-than-expected earnings and poor full-year guidance.
Tractor Supply (TSCO): Facing backlash, pulling back policies on DEI roles, carbon emission goals, and non-business activities. Focusing on ag education, animal welfare, veteran causes, and land/water conservation.
This Week's Major U.S. Economic Reports & Fed Speakers
Here is a quick breakdown of this week’s Fed Speaker events and economic indicators, what they mean, and their forecasted results!
Monday, July 1
June ISM Manufacturing Index: Key indicator of U.S. economic activity - indicates the level of demand for products, influencing investor and business confidence. Forecast: 49.2% (Previous: 48.7%).
May Construction Spending: Key economic indicator of infrastructure activity, as construction spending makes up a big portion of GDP. Forecast: 0.2% (Previous: -0.1%).
Multivariate Core Trend Inflation: Measures inflation’s persistence in the 17 core inflation items in PCE prices. (Previous: 2.8%).
Tuesday, July 2
Speakers: Federal Reserve Chair Jerome Powell's speech in Portugal
JOLTS (Job Openings and Labor Turnover Survey): Produces data on job openings, hires, and separations. Forecast: 7.9 million (Previous: 8.1 million).
Wednesday, July 3
Speakers: New York Fed President John Williams’s speech in Portugal.
Initial Jobless Claims (June 29): Number of people filing for unemployment benefits for the first time. Forecast: 235,000 claims (Previous: 233,000).
May Trade Balance: Measures U.S. trade deficit. Forecast: $76 billion (Previous: -74.6 billion).
June Auto Sales: Important indicator for U.S. economic growth. Measures consumers’ willingness to spend on more expensive goods. (Previous: 15.9 million).
June ISM Non-Manufacturing Index: Assesses the performance of services companies in the U.S. Forecast: 52.5% (Previous: 53.8%).
May Manufacturing, Shipments, and Orders (M3) Survey: Measures current industrial activity and evaluates future business trends. Forecast: 0.3% (Previous: 0.7%).
Friday, July 5
Speakers: New York Fed President John Williams’s speech in India
June Employment Situation: Captures U.S. employment, nonfarm employment, and wages.
U.S. Jobs Report: Forecast: 195,000 (Previous: 272,000).
U.S. Unemployment Rate: Forecast: 4.0% (Previous: 4.0%).
U.S. Hourly Wages: Forecast: 0.3% (Previous: 0.4%).
Global Supply Chain Pressure Index (GSCPI): Examines transportation cost and manufacturing indicators to gauge global supply chain conditions. (Previous: -0.48).
Weekly Economic Index (July 5): Signals state of the U.S. economy based on consumer behavior, labor market, and production. (Previous: 2.53%).
Q2 New York Fed Staff Nowcast: Estimates current GDP growth based on real-time flow of information. (Previous: 1.93).
Beginner Portfolio Composition
In last week’s newsletter, we provided a step-by-step guide on how to analyze stocks. In this issue, we challenge you to go one step further with your analysis and create your beginner portfolio.
Disclaimer: Information shared here is for educational purposes only. Consult a financial advisor for personalized advice.
What is an Investment Portfolio? A collection of assets (stocks, bonds, mutual funds, ETFs).
Why Have a Portfolio? Portfolios are a passive way to generate return, compared to direct investments. By creating a diversified portfolio, you can minimize risk and maximize return. If one asset drops, the others will not be affected as much, therefore overall portfolio return will not suffer significantly, compared to investing in one firm and risking losing everything.
What is the Risk Level? Depending on your risk appetite (how much risk you are willing to take), you can choose different types of assets. Keep in mind that a higher-risk portfolio can generate higher returns, but also higher losses.
How to Create a Portfolio:
Identify personal goals and risk appetite: Depending on your financial goals and risk tolerance, you can choose to compose your portfolio of only safe assets or a combination of safe and riskier assets. With riskier assets, you have the opportunity to grow your initial investment more quickly.
Select Investments:
Low risk appetite: Those who would like to preserve their accumulated capital could benefit from a portfolio composed of safe assets, such as US Treasuries and AAA-rated corporate bonds.
Bonus tip #1: As the USD is expected to continue appreciating in the future, invest in only dollar-denominated bonds.
Moderate risk appetite: For achieving a balanced combination of taking on moderate risk for a steady return, you could create a diversified portfolio with both stocks and dollar-denominated bonds.
Bonus tip #2: Instead of handpicking each stock, you could opt for exchange-traded funds (ETFs) which already basket equities or mutual funds.
High risk appetite: For high-return seekers, there are a few options: concentrate on stocks in a single sector/industry, invest in stocks that are already showing signs of price momentum, invest in venture capital, and even penny stocks.
Bonus tip #3: Good beginner-friendly funds include Vanguard S&P 500 ETF (VOO), Invesco Information Technology ETF (QQQ), and Invesco Nasdaq 100 ETF.
Note: There are many more types of assets not covered in this guide as it is made to be beginner-friendly. Such include alternative investments, cash and cash equivalents, currency, futures, and options. Keep an eye out for our upcoming issues which will include an intermediate guide to investing!
Select Asset Allocation and Diversify: Asset allocation is crucial for making sure your investments minimize losses. Depending on your risk profile and other goals, you might choose a different allocation for different portfolios. Examples include:
Low risk appetite: 100% government and corporate bonds
Moderate risk appetite: 65% stocks and 35% bonds is an example of a good start. You can further diversify by choosing different regions, sectors, industries, and company sizes. The stocks you choose could be from anywhere around the world - the main markets being the US, Europe, and Asia. Beware of current global and local economic conditions when making your choice. Diversification is key to hedge risk.
High risk appetite: Depending on your financial timeline and other considerations, a large portion of the portfolio could be stocks, and you could include a small share of bonds to minimize risk.
Key Terms:
Bond rating: Measure of a bond’s creditworthiness. It is indicated with letters (ex: AAA, Baa, C, D), depending on the credit rating agency, and has a grade (investment/junk) and risk profile.
Mutual Fund: Mutual funds include stocks, bonds, or other securities in a bundle. They combine money from many investors to buy a diverse pool of investments.
ETF: Exchange-traded funds are similar to mutual funds, but they trade on exchanges. They help lower portfolio risk and promote diversification of assets.
Venture Capital: Form of private equity that finances startups and small businesses that have high growth potential.
Penny Stocks: Small company’s stock that usually trades for less than $5 per share.
It Girl Recommendations
Shop Our Other Recommendations Here: health, fashion, fitness, education, beauty, and skincare...
Dirty Chai Latte Recipe:
Ingredients:
2 tbsp chai (brewed or concentrate)
1oz shot of espresso
Milk of your choice (hot or cold)
Cinnamon
1 tsp vanilla extract (optional)
Instructions:
Mix the chai, espresso, and milk of choice into your favorite mug
Stir well and finish with an optional vanilla extract and a sprinkle of cinnamon
Enjoy sipping your dirty chai latte while reading It Girl Identity’s markets overview, tips, and recommendations!
Shop the ingredients here:
Financial Fashion
To wrap up, here are some office outfit ideas from Katimy, Reformation, JCrew, Banana Republic, and Zara. Shop these looks below
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See you next Monday It Girls!
With Love,
It Girl Identity