🛢 Oil giants paid shareholders billions

The yen reached its lowest level since the '90s | Oil giants Exxon and Chevron showed off their stuff |
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Hi Reader, here's what you need to know for April 27th in 3:14 minutes.

☕️ Finimized over an espresso at Dalston Coffee in Barcelona, Spain (🌤 18°C / 64°F)

Today's big stories

  1. The Japanese yen reached a 34-year low, which might entice vacationers, but not investors
  2. Record-high markets are forcing investors to decide: take profits, hold, or keep on buying – Read Now
  3. Exxon and Chevron made less profit than the same time last year, but they were hardly low on cash

The Low-Down

The Low-Down

What’s going on here?

The Japanese yen has fallen 10% this year to reach a 34-year low.

What does this mean?

A weaker yen does have an upside. Many of Japan’s biggest companies are manufacturers, and a weaker yen attracts bargain-hunting foreign buyers to them, while also increasing the value of their overseas takings when they’re converted back into yen. That’s helped push stocks to record highs. Problem is, if the yen falls too low, it could shake investors’ confidence, weigh on small local firms that rely on imports, and even fire up inflation which, in turn, could squash consumer spending. So the Bank of Japan (BoJ) wants a weak yen, but not too weak. Striking that balance is easier said than done, though, which is probably why the central bank hasn’t meddled yet.

Why should I care?

For markets: Japan needs a favor.

The higher a country’s interest rates, the more attractive its currency looks to foreign investors. And right now, rates in the US are sitting at 5.5%, while Japan’s are at a flat zero. So the yen’s recovery doesn’t just hinge on the Japanese economy, but also – and arguably, even more so – on the American one. It’s hard to imagine the yen making up some of the difference between it and the US dollar unless the Federal Reserve can bring rates down a notch – and that will only happen if US inflation and economic growth both head south.

The bigger picture: The US dollar is on a tear.

The US dollar might just be the best hedge for your stock and bond portfolio. The greenback is seen by many as a safe-haven investment, so it could hold its value if financial markets throw a fit. Plus, if inflation picks up and wipes out stocks and bonds, that would likely encourage the Fed to increase interest rates, and that would nudge the US dollar even higher.

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Analyst Take

The Pros Weigh Up Stocks In The US And Japan, With Markets Hitting New Highs

The Pros Weigh Up Stocks In The US And Japan, With Markets Hitting New Highs

Investors may be fretting about global economic and geopolitical uncertainty, but US and Japanese stock markets have been powering forward.

The S&P 500 has hit record new levels this year, and Japan’s Nikkei 225 index has soared to three-decade highs.

Now, uncharted territory can be thrilling when the move is upward. But every new high brings a decision: take profits, hold, or keep on buying.

And that’s today’s Insight: what the finance pros say about investing in record-high markets.

Read or listen to the Insight here

Your free guide to investing with AI

Artificial intelligence is slowly but surely becoming ingrained into our lives.

Condensing articles, checking out medical symptoms, writing tricky break-up texts: we’ve all been flocking to chatbots without a second thought, for better or for worse.

So it’s no surprise that AI investing tools have taken off in a big way. After all, they can tap into the insights of every resource imaginable to create tailor-made suggestions and solutions.

The only problem: AI can go rogue, and it doesn’t always understand the nuances of human thinking and communication. (Yet.)

So before you use the super-smart tech to sharpen up your strategy, read this free guide to find out how to invest with AI the right way.

Check Out The Guide

See Streetbeat's disclosures.

A Problem Shared

A Problem Shared

What’s going on here?

Exxon and Chevron announced their quarterly results, and it turns out that even slight problems with profit couldn’t stop them from doling out billions to their shareholders.

What does this mean?

Both Exxon and Chevron revealed that their sales from last quarter were lower than the same time last year. In Exxon’s case, that meant its profit came in at $8.2 billion, 6% below analysts’ forecasts. Meanwhile, Chevron’s profit fell 16% to $5.5 billion – but that was actually slightly better than expected. The declines were partly caused by natural gas prices falling 37% this year, while at the same time, higher costs and tighter margins on refined oil meant the duo made less from the pumps. Mind you, neither company was exactly strapped for cash: Chevron and Exxon’s bank balances still meant they could both pay shareholders around $6 billion in dividends and share buybacks.

Why should I care?

For markets: Buffett’s buying.

Energy has been the standout sector in the S&P 500 index this year, notching a 16% increase on the back of rising oil prices. And because energy – along with other commodities – can hedge against inflation, rather than being dragged down like bonds, the sector should be able to hold onto its momentum. That explains why Morgan Stanley and Goldman Sachs have upgraded their outlooks for energy stocks recently, and the resilience may also have factored into Warren Buffett’s decision to increase his holdings in Chevron and Occidental Petroleum at the end of last year.

The bigger picture: Oil’s life expectancy grows by the day.

Some investors have grown wary of the energy sector, concerned that the transition from fossil fuels to cleaner alternatives will be too unpredictable or turbulent for their portfolios to handle. But analysts keep pushing out the expected timing of oil’s peak demand, cautious that cleaner energy projects aren’t being built fast enough to fill the world’s appetite for energy anytime soon.

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💬 Quote of the day

"Honest disagreement is often a good sign of progress."

– Mahatma Gandhi (an Indian lawyer, anti-colonial nationalist, and political ethicist)
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Bye bye, 2% inflation target

Last June, it looked like the battle against inflation was almost won.

A heavy barrage of interest rate increases had stomped consumer price rises down to a yearly pace of just 3%, compared to 9.1% at the same time the year before.

But now, inflation rates have started to creep up again – and that doesn't bode well for wallets or markets.

Read The Quicktake

🎯 On Our Radar

1. See you later, alligators. Australia’s crocodile cull is controversial.

2. Only investing in stocks is like only ever eating tomato pasta for dinner. Multi-asset investing can help you craft a portfolio that truly suits your tastes.*

3. Architects marvel at the wonders of the world. For interior designers, Regina George’s bedroom is the pinnacle.

4. Staking crypto could help your returns. Here's how it works and the potential risks to watch out for.**

5. From national parks to Disney parks. Your outdoor gear can help you climb peaks and conquer roller coasters.

*See important disclosures here.

**Stocks is a derivative product offered by Change Securities B.V. that replicates the performance of your favourite companies’ shares - full or fractional.

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