The next round's on Heineken | HSBC's back on track |

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Hi John, here's what you need to know for August 2nd in 3:06 minutes.

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Today's big stories

  1. Heineken earned a celebratory pint after it reported better-than-expected results
  2. There’s one asset you could add to Ray Dalio’s all-weather portfolio to make it perform even better – Read Now
  3. HSBC reported a booming half-year profit

Hard Liquor

Hard Liquor

What’s Going On Here?

Heineken, the world’s second-biggest brewer, reported booming half-year results on Monday.

What Does This Mean?

The world’s boozehounds are doing what they do best when confronted with a cost-of-living crisis: flocking to bars across Europe and America to pretend it’s not happening. Heineken has sold more beers in the last six months than during the same time in the pre-pandemic glory days of 2019, with premium beers like Heineken Silver accounting for nearly half of the company’s organic growth (tweet this). This, even though a night out is costing drinkers more than just a bad hangover: the average price of a pint of Heineken is now 9% higher than it was this time last year. Put it all together, then, and Heineken’s revenue and profit came in ahead of analysts’ expectations.

Why Should I Care?

The bigger picture: Heineken walks a tightrope.
Heineken admitted it would be hiking prices again in the near future, which it recognizes is a ballsy move: just because it hasn’t put drinkers off yet doesn’t mean it won’t. It also said it might be forced to scale back production going forward, with European gas prices now 10 times higher than the last decade’s average. Those two factors might be why Heineken gave a cautious outlook, and cut its operating profit target for 2023 too.

Zooming out: Pass Germany the liquor.
Heineken is right to be wary about demand going forward: data out on Monday showed that retail sales in Germany – Europe’s biggest beer market – fell by 8.8% in June from the same time last year. That’s the biggest annual drop since records began in 1994. Consider too that consumer confidence is at its lowest since the start of the pandemic and that the German economy didn’t grow at all last quarter, and it’s no surprise that economists think the country is bound to slip into a recession.

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Analyst Take

Ray Dalio’s All-Weather Portfolio Might Do Even Better With A Bit Of Bitcoin

Ray Dalio’s All-Weather Portfolio Might Do Even Better With A Bit Of Bitcoin

By Jonathan Hobbs, Analyst

You’re probably familiar with Ray Dalio – the billionaire fund manager behind the famed “all-weather portfolio”.

The all-weather is designed to perform no matter what’s going on in the economy. It rarely shoots the lights out, but it certainly holds its own in times like these.

Thing is, there’s one notable asset missing from the portfolio: bitcoin.

That shouldn’t necessarily come as a surprise: Ray’s long been skeptical of the cryptocurrency, even as he’s acknowledged that the asset would probably have “some value in the future”.

Still, the numbers don’t lie: add bitcoin to the portfolio, and it would historically have performed even better.

So that’s today’s Insight: why you might want to add bitcoin to your all-weather portfolio.

Read or listen to the Insight here

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Lendgame

Lendgame

What’s Going On Here?

HSBC – the biggest bank in Europe – announced impressive quarterly results on Monday.

What Does This Mean?

After a bumpy few months, things are finally getting back on track for HSBC: the bank made more from loans last quarter on the back of rising interest rates, while market volatility helped its trading division bring in 27% more than the same time last year. So even though it had to put aside $400 million in case recession-afflicted customers can’t pay off their loans, it still earned $5 billion in pre-tax profit last quarter – over $1 billion more than analysts were expecting. And with rates only set to climb, things are looking good going forward: HSBC said that every 1% rise in rates will add $4.7 billion to its net interest income. That sounded great to investors, who sent its shares up 7%.

Why Should I Care?

The bigger picture: Ping An is very persuasive.
HSBC has been under pressure from China’s Ping An Insurance Group – which owns nearly 10% of its shares – to separate its Asian business from its Western operations, giving investors a more “pure-play” investment in the region’s growth. Still, one of the main reasons for Ping An’s beef was HSBC’s decision to stop regular dividend payments during the pandemic. But now that things seem to be on the up, HSBC has pledged to restore quarterly dividends by next year – something it's hoping will keep Ping An at bay.

Zooming out: HSBC’s all in on the East.
To be fair to Ping An, HSBC’s Asian business is a compelling investment, with the bank making over two-thirds of its profit from the region last quarter. Then again, HSBC has been quite deliberate about shifting its focus from elsewhere in the world: it’s sold off units in France, Greece, and the US, and warned on Monday that it could be cutting even more jobs soon to keep costs down.

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💬 Quote of the day

“All human wisdom is summed up in two words: wait and hope.”

– Alexandre Dumas (a French writer)
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🎯 On Our Radar

  1. Time to return to nature. Standing on some grass could be really good for you.
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  3. Economic growth isn’t everything. Take a look at the bigger picture.
  4. The internet loves househusbands. Cooking and cleaning is making men famous.
  5. Vegetables are back. They’re ready to take on fake meat.

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