Finimize - 💴 SoftBank's soft underbelly

SoftBank’s not as strong as it looks | The British economy shrank last quarter |

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Today's big stories

  1. SoftBank finally made a profit again last quarter, but its Vision Fund wasn't so successful
  2. Here's why the FTX debacle might've made one stock look even better – Read Now
  3. The British economy shrank last quarter, and this might just be the start

SoftBank, Hard Times

SoftBank, Hard Times

What’s Going On Here?

Japanese conglomerate SoftBank reported its first quarterly profit in nearly a year on Friday, but the result papered over some deeper issues.

What Does This Mean?

Firms and folk alike saw their investment portfolios take a pummeling last quarter, and SoftBank’s Vision Fund business – which oversees the world’s biggest tech-focused investment funds – was no exception. In fact, the Japanese firm admitted nearly $10 billion in investment losses last quarter, after being burned by tear-inducing stock dips from the likes of DoorDash, Chinese AI firm SenseTime, and Indonesian e-commerce company GoTo. But SoftBank had an ace up its sleeve: the firm auctioned off a big chunk of its stake in Alibaba, which brought in enough cash to turn a $20-billion profit – that’s a pretty nifty cheat code, and it prompted a quick turnaround from its record loss the quarter before.

Why Should I Care?

For markets: ARM’s dealer.
Scratch the Alibaba sale from the ledger, and you’ll find that last quarter was another tough one for SoftBank. That might be why the firm’s doubling down on plans to polish up chip designer ARM and take it public next year. See, after a deal to sell the firm fell apart earlier this year, SoftBank’s determined to make a success of this latest gambit – so much so that SoftBank’s founder announced he’s soon going to focus solely on the project.

The bigger picture: Private browsing.
SoftBank’s been using some of that sweet Alibaba cash to fund share buybacks, which have helped push its share price up 40% since the start of this quarter. In fact, the speed of the buybacks has sparked rumors that the founder might be leading a management buyout of the firm. That could be a savvy move too: taking the firm private would let SoftBank sidestep the limelight and focus all its energies on boosting performance.

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Analyst Take

After The FTX Mayhem, Coinbase Is Looking Better And Better

After The FTX Mayhem, Coinbase Is Looking Better And Better

By Jonathan Hobbs, Analyst

With FTX being swept away in its own solvency hurricane, buying shares in a crypto exchange is probably the last thing on anyone’s mind.

But Cathie Wood’s Ark Innovation Fund scooped up $21.4 million of Coinbase stock this week – right in the eye of the FTX storm.

So let’s find out whether she’s onto something here, and whether you might want to follow her lead by picking up some Coinbase stocks yourself.

That’s today’s Insight: why Coinbase might be the surprise winner in this whole FTX fiasco.

Read or listen to the Insight here

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Britain Sees A Shrink

Britain Sees A Shrink

What’s Going On Here?

Data out on Friday showed that the UK economy shrank last quarter.

What Does This Mean?

A dastardly duo of wicked prices and rising interest rates is playing havoc with the UK, with the gruesome twosome tanking the economy by 0.2% last quarter. That wince-inducing shrinkage isn’t just down to the extra day off for the Queen’s funeral in September, either: that month’s 0.6% shrink didn’t help matters, sure, but the contraction was already setting in back in August.

The freeze is probably down to a few factors, like feeble manufacturing, dwindling household spending, and underpowered retail sales – those last two are biggies, since consumer spending makes up a burly chunk of Britain’s economy. Put it all together, and you get the first quarterly fall since the locked-down days of early 2021 – leaving the UK the only G7 country yet to fully recover from the pandemic (tweet this).

Why Should I Care?

Zooming in: Downhill from here.
Things aren’t likely to improve anytime soon: the Bank of England forecast that last quarter would ring in a recession that could take up to two years to shake, and all signs suggest they’re on the money. Just look at manufacturing firms' inventories: those handy litmus tests of corporate confidence are being cut across the board, amid fears that the cost of living crisis will further gut spending.

The bigger picture: Tightening belts.
How deep this recession goes will probably be decided by whether Brits start spending the £200 billion ($235 billion) in savings they’ve put aside since the pandemic began – assuming they actually have a choice. See, with Brits’ take-home pay reportedly poised for a hit in next week’s budget, folk might have to start dipping into their savings whether they like it or not. The government’s rumored to be gearing up for a whole raft of tax increases and spending cuts, and the budget’s already being called the biggest tightening in government policy since 2010.

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💬 Quote of the day

“One should count each day a separate life.”

– Seneca (an ancient Roman philosopher)
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CHART OF THE WEEK

Apple’s stock took to the skies last week after the release of weaker-than-expected inflation data. In fact, the tech giant’s market value got a nearly $200-billion bump in just one day – the most ever for a US-listed company. That only cemented its spot as the biggest of the S&P 500 firms, with a jaw-dropping market value of over $2.2 trillion. That leaves it well clear of the next contender Microsoft, with a buffer of roughly $600 billion between the two.

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🥳 Coming Up This Week…

All events in UK time.

♻️ How To Build An Eco-Friendly Crypto Portfolio: 1pm, November 14th
💥 How To Diversify During High Inflation: 6pm, November 14th
🐻 How To Survive A Crypto Bear Market: 7pm, November 15th

👀 And After That…

How To Successfully Invest In Dividend Stocks: 6pm, November 22nd
🚀 2023 Outlook: What’s Next For Crypto?: 6.30pm, November 23rd (in person, London)
🇬🇧 Making Smart Portfolio Moves During A Cost-Of-Living Crisis: 5pm, November 29th
🌍 Finding Opportunities In A Challenging Market With BlackRock: 1pm, December 2nd
🇦🇪 The Modern Investor Opening Party In Dubai: 6pm, December 6th
🎉 Modern Investor Summit: 12pm, December 6th and 7th

🎯 On Our Radar

  1. House on Mars. The age of Martian real estate is coming.
  2. Goldman Sachs is chiming in. The big bank’s checked out the housing market’s foundations.
  3. Je ne regrette rien. Here’s how to overcome those nagging regrets.
  4. Deepfakes and disinformation. TikTok could be the new online den of doctored videos.
  5. Ummmm. Filler words are conversational lifesavers.
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