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Today's big stories

An upbeat update from Apple microchip supplier TSMC suggested coronavirus won’t be too hard on the iPhone-maker
One of the most influential (and successful) activist investors is warning that US stocks could fall another 40% – Read Now
Investment bank Morgan Stanley and investment manager BlackRock reported their first-quarter results

1/3

An Apple A Day

What’s Going On Here?

Strong first-quarter results from leading microchip-maker TSMC on Thursday hinted that Apple – one of its biggest customers – might be able to keep already-stretched doctors away for the rest of the year.

What Does This Mean?

TSMC lowered its revenue forecast for 2020, but said it expected 30% growth this quarter compared to the same time last year. That’s pretty revealing: the chipmaker’s two biggest customers represent around 40% of its revenues, and Apple – which uses its high-end microchips in iPhones – is probably one of them. So if TSMC expects to grow sales despite the rapidly weakening economic environment, it stands to reason Apple should too.

TSMC leads the way in selling chips for everything from datacenters to video streaming, which means it’s seen as a bellwether for other chipmakers globally. Those chipmakers have good reason to feel more optimistic about the months ahead, then – especially if Apple’s rivals start rolling out their own new chip-laden smartphones.

Why Should I Care?

For markets: Buy the chip.
Investors – buoyed by the potential good news for chipmakers tucked away in TSMC’s update – set about buying their stocks. Dutch-American ASML saw its shares rise by about 2%, about the same as AMS’s stock over in Europe. Some investors bought up Apple’s stock too: they may be hoping the smartphone giant’s newly announced cheaper iPhones will tempt consumers who previously couldn’t afford one, and that the company’s 5G iPhone will generate strong sales this fall.

The bigger picture: Nike’s off the pace.
Official data showed iPhone shipments within China rose 19% last month, which could mean demand for Apple’s products has picked back up even faster than it did for Nike. That would make sense: folks in China – who might still be hesitant about going to the gym – are less likely to want new workout gear than they are a new phone that they can enjoy indoors.

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2/3 Premium

It Ain’t Over Yet

Elliott Management reckons the fat lady is still waiting in the wings: the $40 billion hedge fund thinks a rapid recovery from coronavirus is wishful thinking, and that US stocks could fall 40% below current levels.

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3/3

Easy Does It

What’s Going On Here?

Steady… steaaaaady… investment bank Morgan Stanley and the world’s largest investment manager BlackRock reported earnings on Thursday that showed investors were calmer under pressure than it seemed last quarter.

What Does This Mean?

Like its competitors, Morgan Stanley benefited from a bump in first-quarter trading activity that gave the segment’s revenue a boost. But the bank makes most of its profit from “wealth management” – i.e. looking after rich people’s cash – and that business didn’t do as well as expected. That’s likely in part because some of those investors took their money out of fee-generating investments and opted to sit on cash instead.

It was a different story for BlackRock: the near-$7 trillion it manages for investors shrank versus the quarter before, which matters because the firm makes most of its revenue from the percentage of the pot it takes as a fee. After last month’s market selloff, the drop was largely unavoidable – even though more investors put cash into BlackRock’s funds than took it out.

Why Should I Care?

For you personally: The jungle is passive.
Unlike “active funds” where a manager makes decisions for you, popularized “passive funds” track the performance of stock market indexes – often via exchange-traded funds (ETFs). So while “retail investors” did take cash out of certain BlackRock funds last quarter, that was more than offset by the amount they put into the firm’s ETFs instead – whose lower fees might’ve saved them money (tweet this). Institutional investors, meanwhile, took more money out of passive funds than active funds – suggesting they were willing to pay a premium for hands-on money management in uncertain times.

The bigger picture: $13 billion well spent?
Morgan Stanley may have disappointed investors, but the bank will likely be hoping its typically predictable and highly profitable wealth management business will drive future growth. Its $13 billion purchase of online broker E*TRADE, for one, should help boost its customer base and the amount of cash it manages.

Get invested: The three key signs of any good wealth manager.

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💬 Quote of the day

“I love people who make me laugh. I honestly think it’s the thing I like most, to laugh. It cures a multitude of ills. It’s probably the most important thing in a person.”

– Audrey Hepburn (a British actress and humanitarian)

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📈 All’s well that trends well

Here’s some of the most popular Finimize Premium content this week…

Insights:
💰 How one fund made a 4,144% return last quarter
🐛 Why Morgan Stanley is all in on small stocks
💪 The other investment opportunities you might’ve missed

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🎙 Our analysts answer your questions about coronavirus
🗞 Why earnings updates won’t move markets like you’d expect

📚 What we're reading

What did the Hubble telescope see on your birthday? (NASA)
So a Viking walks into a mountain pass… (Smithsonian Magazine)
What you’ve missed about streaming (MatthewBall.vc)

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Finimize - 👨‍⚕️ Stay home, save Apple

Today's big stories

An Apple A Day

What’s Going On Here?

What Does This Mean?

Why Should I Care?

It Ain’t Over Yet

⌚️ Express yourself with Vincero

Easy Does It

What’s Going On Here?

What Does This Mean?

Why Should I Care?

🙊 What a conversation-starter

🏋️‍♀️ I wanna get virtual, virtual

📈 All’s well that trends well

👋 A message from our founder

Older messages

🏦 Earnings from Goldman, Citi, and Bank of America

🤕 JPMorgan beat the virus

🇺🇸 US jobs get worse and worse

💰 Airbnb's 1 billion richer

☠️ Dividends are doomed

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