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Sony stalled | Surprise, surprise: oil companies made a lot of money |

Hi Reader, here's what you need to know for August 1st in 3:15 minutes.

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Today's big stories

  1. Sony cut its profit outlook because its games business was buffering… buffering…
  2. The next few years could throw various economic scenarios at you, but you can build one portfolio that’ll see you through it all – Read Now
  3. US oil giants Chevron and Exxon Mobil posted record quarterly profits

Glitch, Please

Glitch, Please

What’s Going On Here?

Japanese entertainment giant Sony cut its full-year profit outlook on Friday.

What Does This Mean?

First, the good news: Sony’s operating profit grew by a better-than-expected 10% last quarter from the same time last year. That was partly thanks to strong results from its movie and music segments, and partly down to a weak yen that meant international profits were worth more when converted back. But Sony’s gaming business was a shambles: the company sold 26% fewer games, and barely sold any more PS5s because it’s still not producing enough of them. No surprises, then, that the segment’s profit was down 37% from the same time last year. Sony slashed its annual profit outlook for the segment by 16% too, potentially because it doesn’t have enough high-profile titles in the works or that – ew – gamers are spending more time outdoors. And since its gaming segment makes up around a quarter of its overall business, the company slashed its overall profit outlook by 4% too.

Why Should I Care?

Zooming in: Optimism only goes so far.
Sony isn’t giving up on its target of selling 18 million PS5s this financial year, promising to bring shipments forward so there’s plenty to go around by Christmas. But it’s setting its sights lower elsewhere in its business: it cut its revenue forecast for its camera image sensors, as the war and Covid continue to impact shipping, production, and costs. Sony’s not the only one: South Korean giant Samsung Electronics warned late last week that it was adjusting its forecasts almost daily because of all the uncertainty.

Zooming out: An investment in the future.
Some of Sony’s production struggles can be put down to the chip shortage, which is something the US has been dealing with too. That’s why the US government finally passed a long-awaited bill late last week that should boost its chipmaking industry, with around $52 billion in subsidies for production and $200 billion to boost research over the next decade.

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Analyst Take

How To Build The Dream Portfolio For Every Nightmare Scenario

How To Build The Dream Portfolio For Every Nightmare Scenario
Photo of Stéphane Renevier

Stéphane Renevier, Analyst

If there’s one thing that will have the single biggest impact on your performance in the next few years, it’s asset allocation.

Because with so many of the trends that have supported stocks at risk of reversal, only a truly balanced portfolio will help you deal with whatever the next few years might throw at you.

Nightmare scenarios including – but by no means limited to – strong growth with high inflation, weak growth with low inflation, or a deep but prolonged recession.

Well, if that’s the case, you want one portfolio so well-diversified that it’ll hold up no matter what.

So that’s today’s Insight: how to build one portfolio to rule them all.

Read or listen to the Insight here

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Power Trip

Power Trip

What’s Going On Here?

US oil giants Chevron and Exxon Mobil both posted record quarterly profits on Friday.

What Does This Mean?

The average price of one of Chevron’s barrels of oil was up 65% last quarter from the same time last year, while its natural gas was up nearly 200%. That helped the firm bring in a quarterly profit of nearly $12 billion – around 50% more than its previous quarterly record. Exxon didn’t do too shabbily either, with the rival oil giant’s profit coming in at record $17.9 billion – around four times more than it managed this time last year.

If you’re thinking those are big ol’ profits at a time when so many people are being crippled by their energy bills, you’re not alone: the US has previously called on companies to raise output to bring prices down, and this will only reinforce their concerns. And sure, Chevron and Exxon have both said they’re boosting supply, but the numbers don’t lie: they’re investing less in production than they are on share buybacks and dividends.

Why Should I Care?

The bigger picture: What goes up…
This comes hot on the heels of Shell and TotalEnergies’ updates last week, in which they broke records and tripled profits respectively. That means the four oil giants – plus BP, which reports next week – are on track to have made well over $50 billion in profit last quarter. But with the prospect of a recession looming, analysts think it could be downhill from here. That’s certainly plausible: the oil price fell 20% from its 14-year high last quarter.

For markets: Energy is your king.
That potential for recession has weighed down the energy sector’s stocks, with a key index tracking some of its biggest US companies down around 20% since June. But so dominant has the sector been that it’s still by far the best-performing of the year: it’s up 35% since the start of January, while the second-best performer – utilities – has risen a measly 2%.

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💬 Quote of the day

“Don’t worry about the world coming to an end today. It is already tomorrow in Australia.”

– Charles M. Schulz (an American cartoonist)
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Capital at risk. The value of your investments may go down as well as up, so you could get less than you originally invested. Investments are not protected by the UK Financial Services Compensation Scheme (FSCS)

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🌍 Finimize Live

🎉 Coming Up In The Week…

All events in UK time.

♻️ Building A Crypto ESG Framework: 6pm, August 2nd
🚀 The Next Six Months For Stocks And Crypto: 5pm, August 3rd
🎉 What’s Next For NFTs: Innovations, Utility, And Trends: 5pm, August 4th

🥳 And After That…

📈 A Case For DAO Treasury Diversification: 6pm, August 9th
💰 The Secret To Making Money During High Inflation: 1pm, August 16th
🤑 How To Protect Your Crypto Portfolio During A Recession: 5pm, August 15th
💻 How To Spot The Best Tech Stocks: 6pm, August 16th
🤯 Inflation Strategies For Savvy Investors: 12pm, August 18th
🏈 Crypto And The Sports Community: 5pm, August 23rd
👑 How To Invest In Gold On The Blockchain: 5pm, August 25th
😎 How To Spot The Next Ethereum Killer: 1pm, August 30th
🎉 How To Build Wealth In Your 20s: 5pm, September 1st

🎯 On Our Radar

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  5. A six hour documentary? This one’s worth the time investment.
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