Americans are sitting on boxes | BP's cleaning up its act |

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Today's big stories

  1. US retail sales fell for the first time in five months in May
  2. There’s actually a very good reason to hold some hope for growth stocks’ comeback – Read Now
  3. BP has acquired a stake in one of the world's largest clean energy projects

Birthday Blues

Birthday Blues

What’s Going On Here?

Data out on Wednesday showed that US retail sales fell for the first time in five months in May.

What Does This Mean?

You have to spare a thought for the kids who expected to open a PS5 at their birthday parties last month, only to smile stiffly as they unwrapped an Etch-A-Sketch instead. After all, Americans have been scaling back their big-ticket electronics buys, as well as their spending on furniture, cars, and a handful of other categories. And even those where sales grew – like grocery stores and gas stations – were in a worse position than it first seemed: the figures aren’t adjusted for inflation, meaning consumers were probably just paying more and buying less. All in all, US retail sales fell by 0.3% in May from the month before – less than the already grim 0.1% uptick economists were expecting, and well down on April’s 0.7% growth.

Why Should I Care?

For markets: Encore, encore.
It’s obvious what happened here: Americans are responding to the highest inflation rate in over 40 years. That was as good a reason as any for the Federal Reserve (the Fed) to raise interest rates by 0.75% on Wednesday – the first time it’s implemented such a big hike since 1994, and taking rates to their highest since just before the pandemic. And there might be more where that came from: the Fed indicated that rates could now hit 3.4% by the end of the year – up from its previous forecast of 1.9%.

Zooming out: This is going to hurt.
The European Central Bank (ECB) has been in damage control mode of its own, after having announced last week that it would start hiking interest rates in the region next month. The ECB met for an emergency session on Wednesday to discuss how it could help protect some of the eurozone’s more indebted members from higher rates, and pledged to tackle surging borrowing costs to prevent the same debt crisis it experienced a decade ago.

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Analyst Take

All These Rate Hikes Are Bad For Growth Stocks – Until They’re Not

All These Rate Hikes Are Bad For Growth Stocks – Until They’re Not
Photo of Reda Farran

Reda Farran, Analyst

Most stocks have fallen this year, but growth stocks’ collapse is especially noticeable.

The fast-growing companies have been investor darlings for years, only to see their value wiped away as the Fed embarks on its most aggressive rate hiking campaign in decades.

And since the Fed itself has pointed out that it’s only going to continue, you should probably steer clear, right?

Except, maybe you shouldn’t.

Because if all these rate hikes push the US economy into a recession, that’s a backdrop that could actually work out very well for growth stocks – if you know which ones.

So that’s today’s Insight: why a recession is good for certain growth stocks, and how to identify which growth stocks will come out on top.

Read or listen to the Insight here


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Clean Living

Clean Living

What’s Going On Here?

Oil major BP announced this week that it’s bought a stake in one of the world’s biggest green energy projects.

What Does This Mean?

BP knows full well that it needs to diversify away from traditional oil and gas projects if it wants to keep investors on side. So that’s exactly what it’s been doing, both by expanding its solar and wind businesses and by targeting a 10% share of the hydrogen market by 2030. But this latest move really sets out its stall: the company said this week that it’s acquired a 41% stake in a solar, wind, and green hydrogen project in Australia – one that’ll cost over $30 billion to develop. The project’s stakeholders are hoping it’ll produce the equivalent of a third of Australia’s entire generating capacity, along with 1.6 million tons of green hydrogen – a renewable alternative to gas-generated “blue” hydrogen – every year.

Why Should I Care?

Zooming in: “When they go low, we go with hydrogen.”
This is part of a wider trend where governments and companies are investing billions into zero-emissions fuels. Take French oil and gas major TotalEnergies, which said on Tuesday that it’s planning to buy a 25% stake in green hydrogen business Adani New Industries. This sudden push might be why analysts are expecting the global output of green hydrogen to jump 18-fold to about 12 million tons a year by 2030 (tweet this).

The bigger picture: Little brother syndrome.
BP also said this week that it’s sold its stake in one of the biggest oil reserves in the world – the Canadian oil sands – for around $1 billion. It’s the latest in a string of producers to have sold heavily polluting projects in the region, and analysts don’t think it’ll be the last: smaller local producers are flush with cash as the oil price continues to boom, and they’re more than happy to buy the majors’ hand-me-downs.

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💬 Quote of the day

“I have never in my life learned anything from any man who agreed with me.”

– Dudley Field Malone (an American attorney, politician, and actor)
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🌎 Finimize Live

🎉 Coming Up This Week

All events are in UK time.

🌿 Is The Grass Greener For Cannabis Investors?: 5pm, June 16th
📉 What To Do In A Declining Market?: 7pm, June 16th
😎 The Impact Of Web3 On Music, Culture, And Community: 12pm, June 17th
👉 Mining Crypto With IoT Devices: 6pm, June 17th
♻️ The Pros And Cons Of Investing In Green Energy Today: 12pm, June 21st
⛔️ How Not To Invest In The Next Luna: 1pm, June 22nd
🥕 Investing In The Rise Of Plant-Based Food: 1pm, June 23rd
🤗 Investing In Metaverse Opportunities: 5pm, June 23rd

💪 And Then After That…

♻️ Analysing Emerging Trends In Green Stocks: 5pm, June 27th
🇺🇸 How To Prepare For A Recession: 1pm, June 29th
🏠 Blockchain And Real Estate: What’s Next?: 6pm, June 29th
🏘 How To Diversify Your Crypto Investments Through Commercial Real Estate: 6pm, August 3rd
🏡 Tokenizing Real Estate: 6pm, September 13th

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