Post by Admin/YBB on Aug 14, 2021 7:45:33 GMT -6
Pg 10-11. Fed Chair POWELL’s virtual town hall meeting with educators and students on TUESDAY. FOMC Minutes on WEDNESDAY.
REVIEW. What about Covid-19-Delta? Look elsewhere for patterns. In the UK, new daily cases spiked, but are now falling sharply (similar was in the case India earlier). So, the US may also see a spike from the current daily average of 124,000 new cases to 300,000, and then a sharp drop off by Labor Day. This may be the last Covid-19 wave in the US and after than the pandemic may become endemic/epidemic.
PREVIEW. Cathie WOOD’s ARK Investment has sold most of its Chinese stocks due to government crackdowns there, but still has several holdings in digitized-healthcare (tele-doc, tele-medicine). This is among the few push areas by the Chinese government and the idea is to be aligned with the interests of Chinese government (a similar argument was made last week for clean/green energy and EVs).
DATA THIS WEEK. NY Fed Empire State manufacturing survey on MONDAY; capacity utilization, housing market index, retail sales, industrial production, business inventories on TUESDAY; housing starts on WEDNESDAY; LEI on THURSDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Small/mid-cap growth stocks with high potential for compounding earnings (AMED, AMRS, BAH, JBHT, VAC, SITE, STAA, SFIX, TREX, UPWK; pg 14).
BEARISH. Moderna (MRNA; skyrocketed +300% YTD but then stumbled badly; analysts had valuation concerns based on its Q2 report in spite of the spectacular success of its very first commercial product, mRNA vaccine for Covid-19; joined SP500 in late-July; pg 9).
Pg 13: ECONOMY. If there were any doubt about INFLATION, the new INFRASTRUCTURE bills should take care of that. The economic benefits of these bills in trillions of dollars won’t be realized for decades. TAX increases may also result in stock market correction. Too much monetary and fiscal STIMULUS may lead to OUTPUT-GAP (= actual GDP – potential GDP). Even without the new infrastructure stimulus, the output-gap is expected to go from -0.5% (it was -5% in 2020) to +2.4% in 2022. That will be inflationary, and inflation may stabilize at +3% (not just temporarily), well above FED’s +2% average target. The Fed then may be forced to take drastic actions on monetary tightening with adverse impacts on economy and markets.
Pg 17: Bernie MADOFF. In his last days, this biggest Ponzi fraudster was confused, angry, ill and died in prison at 82 from renal failure on 4/14/21.
Pg 23: SHORT-SELLER Fraser PERRING (Viceroy Research) who unraveled German payment processor Wirecard/WCAGY (went bankrupt in June 2020) has moved on to other companies: Grenke Bank (Germany), MiMedx/MDXG, and others (undisclosed until his report is published). In Europe, regulations on short-selling are much tougher than those in the US. There are accusations that big hedge funds secretly back former social-worker Perring’s research and then benefit when his negative reports come out. Viceroy gets paid a fee for research or splits profits from trades. Perring doesn’t see those arrangements as unusual as such research is expensive, time-consuming, and often there are lawsuits back and forth.
Pg 25: FUNDS. Pramod ATLURI of core bond fund ABNDX is prepared to deal with inflation (by reducing duration, defensive positioning). Fund makes opportunistic buys during bond selloffs and also bets on potential credit upgrades.
Pg 26: CARBON-CREDITS ETF KRBN should benefit from climate-change regulations related to carbon cap-and-trade. It holds carbon-credits futures that will rise as we approach the zero-carbon goal date of 2050. These may also act as hedges for energy transition risks.
Pg 27: TECH TRADER. METAVERSE? It is the next step in virtual universe and computing. All of the big techs are involved (FB, AMZN, AAPL, MSFT, GOOGL; can you see FAAMG?) and also several smaller ones (NVDA, RBLX, U). There is an ETF META.
Pg 28: Ed YARDENI, Yardeni Research, has been bullish since 2009 and remains so on his good outlook for EARNINGS ($230 in 2023 for SP500). Fwd P/E for SP500 fell to 12.7 in March 2020 and is now around 22, so SP500 of 5,000 is achievable by 2023. Many are concerned about earnings peaking this year, but they will still keep growing to higher levels. There is lot of LIQUIDITY around and RATES will remain relatively low, so fwd P/E in 20s seem reasonable. INFLATION with economic growth is fine and it will be transitory (i.e. the prices will stabilize at higher levels). The LABOR market will remain tight – that seems strange with high unemployment now but there is mismatch between workers’ capabilities and job requirements. It may be worthwhile to retain and retrain existing workers and boost their pay. Covid-19-Delta is a threat but there are vaccines available, so the REOPENING will continue. Environment will be favorable for tech-oriented companies; reshoring plays as the moves out of China will continue; disruptive technologies. The US small/mid-caps are relatively undervalued if there is no recession. He doesn’t like cryptos or meme stocks (he needs fundamentals and earnings for investments). His new BOOK “In Praise of Profits” focuses on entrepreneurship in the US (S corporations, proprietorships, partnerships that generate half of the US profits).
Pg 30: OTHER VOICES. Sheila BAIR, former Chair of FDIC. Government is very efficient in protecting the WALL STREET but is much slower in protecting CONSUMERS (the Main Street). Take a look at $47 billion Emergency Rental Assistance Program (ERAP). Barely $3 billion of $47 billion has been distributed to 630,000 households. But there are 7+ million households that are DELINQUENT in rent payments, and almost 3.6 million may be facing EVICTIONS. The eviction moratoriums have been extended again but that also hurts the landlords. One problem was the BLOCK-GRANT type model administered through 450 state and local agencies unprepared to handle the task. This type of model doesn’t work well for short and temporary programs. These agencies required mountains of paperwork fearing Treasury audits of their programs. Small amounts of relief ($2.5K-5.0K) meant that households with serious financial needs didn’t bother to apply, while fraudsters jumped into the game big time. Initially, participation of landlords in the process was also problematic. As problems surfaced, rules kept changing. On the other hand, millions/billions of aid to companies, direct or via PPP, were disbursed quickly. Government seemed more willing to tolerate potential fraud at large scale by big companies but put burdensome, complex and ineffective requirements on the consumers. Lessons from the financial crisis (2008-09) were not learned when there were similar issues with HAMP (mortgage assistance for consumers) vs TARP (assistance to big companies).
Pg 31: INCOME. Gambling REIT VICI Properties/VICI is acquiring another gambling REIT MGM Growth Properties/MGP. Most of its leases are triple-net and it gets rent increases tied to CPI or 2%. Credit rating is BB with positive outlook. It is also expanding beyond gambling and is investing in a new Great Wolf Resorts facility under construction in Maryland.
(EXTRAS from online Friday that didn’t make the weekend paper version)
None
REVIEW. What about Covid-19-Delta? Look elsewhere for patterns. In the UK, new daily cases spiked, but are now falling sharply (similar was in the case India earlier). So, the US may also see a spike from the current daily average of 124,000 new cases to 300,000, and then a sharp drop off by Labor Day. This may be the last Covid-19 wave in the US and after than the pandemic may become endemic/epidemic.
PREVIEW. Cathie WOOD’s ARK Investment has sold most of its Chinese stocks due to government crackdowns there, but still has several holdings in digitized-healthcare (tele-doc, tele-medicine). This is among the few push areas by the Chinese government and the idea is to be aligned with the interests of Chinese government (a similar argument was made last week for clean/green energy and EVs).
DATA THIS WEEK. NY Fed Empire State manufacturing survey on MONDAY; capacity utilization, housing market index, retail sales, industrial production, business inventories on TUESDAY; housing starts on WEDNESDAY; LEI on THURSDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Small/mid-cap growth stocks with high potential for compounding earnings (AMED, AMRS, BAH, JBHT, VAC, SITE, STAA, SFIX, TREX, UPWK; pg 14).
BEARISH. Moderna (MRNA; skyrocketed +300% YTD but then stumbled badly; analysts had valuation concerns based on its Q2 report in spite of the spectacular success of its very first commercial product, mRNA vaccine for Covid-19; joined SP500 in late-July; pg 9).
Pg 13: ECONOMY. If there were any doubt about INFLATION, the new INFRASTRUCTURE bills should take care of that. The economic benefits of these bills in trillions of dollars won’t be realized for decades. TAX increases may also result in stock market correction. Too much monetary and fiscal STIMULUS may lead to OUTPUT-GAP (= actual GDP – potential GDP). Even without the new infrastructure stimulus, the output-gap is expected to go from -0.5% (it was -5% in 2020) to +2.4% in 2022. That will be inflationary, and inflation may stabilize at +3% (not just temporarily), well above FED’s +2% average target. The Fed then may be forced to take drastic actions on monetary tightening with adverse impacts on economy and markets.
Pg 17: Bernie MADOFF. In his last days, this biggest Ponzi fraudster was confused, angry, ill and died in prison at 82 from renal failure on 4/14/21.
Pg 23: SHORT-SELLER Fraser PERRING (Viceroy Research) who unraveled German payment processor Wirecard/WCAGY (went bankrupt in June 2020) has moved on to other companies: Grenke Bank (Germany), MiMedx/MDXG, and others (undisclosed until his report is published). In Europe, regulations on short-selling are much tougher than those in the US. There are accusations that big hedge funds secretly back former social-worker Perring’s research and then benefit when his negative reports come out. Viceroy gets paid a fee for research or splits profits from trades. Perring doesn’t see those arrangements as unusual as such research is expensive, time-consuming, and often there are lawsuits back and forth.
Pg 25: FUNDS. Pramod ATLURI of core bond fund ABNDX is prepared to deal with inflation (by reducing duration, defensive positioning). Fund makes opportunistic buys during bond selloffs and also bets on potential credit upgrades.
Pg 26: CARBON-CREDITS ETF KRBN should benefit from climate-change regulations related to carbon cap-and-trade. It holds carbon-credits futures that will rise as we approach the zero-carbon goal date of 2050. These may also act as hedges for energy transition risks.
Pg 27: TECH TRADER. METAVERSE? It is the next step in virtual universe and computing. All of the big techs are involved (FB, AMZN, AAPL, MSFT, GOOGL; can you see FAAMG?) and also several smaller ones (NVDA, RBLX, U). There is an ETF META.
Pg 28: Ed YARDENI, Yardeni Research, has been bullish since 2009 and remains so on his good outlook for EARNINGS ($230 in 2023 for SP500). Fwd P/E for SP500 fell to 12.7 in March 2020 and is now around 22, so SP500 of 5,000 is achievable by 2023. Many are concerned about earnings peaking this year, but they will still keep growing to higher levels. There is lot of LIQUIDITY around and RATES will remain relatively low, so fwd P/E in 20s seem reasonable. INFLATION with economic growth is fine and it will be transitory (i.e. the prices will stabilize at higher levels). The LABOR market will remain tight – that seems strange with high unemployment now but there is mismatch between workers’ capabilities and job requirements. It may be worthwhile to retain and retrain existing workers and boost their pay. Covid-19-Delta is a threat but there are vaccines available, so the REOPENING will continue. Environment will be favorable for tech-oriented companies; reshoring plays as the moves out of China will continue; disruptive technologies. The US small/mid-caps are relatively undervalued if there is no recession. He doesn’t like cryptos or meme stocks (he needs fundamentals and earnings for investments). His new BOOK “In Praise of Profits” focuses on entrepreneurship in the US (S corporations, proprietorships, partnerships that generate half of the US profits).
Pg 30: OTHER VOICES. Sheila BAIR, former Chair of FDIC. Government is very efficient in protecting the WALL STREET but is much slower in protecting CONSUMERS (the Main Street). Take a look at $47 billion Emergency Rental Assistance Program (ERAP). Barely $3 billion of $47 billion has been distributed to 630,000 households. But there are 7+ million households that are DELINQUENT in rent payments, and almost 3.6 million may be facing EVICTIONS. The eviction moratoriums have been extended again but that also hurts the landlords. One problem was the BLOCK-GRANT type model administered through 450 state and local agencies unprepared to handle the task. This type of model doesn’t work well for short and temporary programs. These agencies required mountains of paperwork fearing Treasury audits of their programs. Small amounts of relief ($2.5K-5.0K) meant that households with serious financial needs didn’t bother to apply, while fraudsters jumped into the game big time. Initially, participation of landlords in the process was also problematic. As problems surfaced, rules kept changing. On the other hand, millions/billions of aid to companies, direct or via PPP, were disbursed quickly. Government seemed more willing to tolerate potential fraud at large scale by big companies but put burdensome, complex and ineffective requirements on the consumers. Lessons from the financial crisis (2008-09) were not learned when there were similar issues with HAMP (mortgage assistance for consumers) vs TARP (assistance to big companies).
Pg 31: INCOME. Gambling REIT VICI Properties/VICI is acquiring another gambling REIT MGM Growth Properties/MGP. Most of its leases are triple-net and it gets rent increases tied to CPI or 2%. Credit rating is BB with positive outlook. It is also expanding beyond gambling and is investing in a new Great Wolf Resorts facility under construction in Maryland.
(EXTRAS from online Friday that didn’t make the weekend paper version)
None