Post by Admin/YBB on Sept 11, 2021 8:11:27 GMT -6
Pg 10-11.
REVIEW. Disney’s/DIS movie “Shang-Chi and the Legend of the Ten Rings” had a record weekend release in theaters breaking the previous record from 2013. AMC stock jumped. Next from Disney is “Venom: Let There be Carnage” on October 1.
PREVIEW. Global automakers (Tesla, Toyota, VW + partner?, GM + Honda, Ford + SK Innovation) are rushing to build their own EV BATTERIES at huge costs. The IC engine market share may drop from 79.5% in 2020 to 50% in 2030 as EVs, hybrids and fuel-cell powered autos grow to 50%.
DATA THIS WEEK. Treasury monthly budget (estimate for 2021 budget deficit is 14.9% of GDP and the debt-ceiling issue is still pending) on MONDAY; CPI (+5.3% y-o-y, core +4.3%), small business optimism index on TUESDAY; import/export prices, industrial production, capacity utilization on WEDNESDAY; retail sales, business inventories on THURSDAY; UM consumer sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. SVB Financial Group (SIVB; yield 0%; fwd P/E 20.6: outperformed banking index and SP500; no buybacks, instead has issued stock to fund growth; lender to Silicon Valley startups, private-equity, venture-capital; recent acquisition Boston Private; pg 13);
small-cap Mayville Engineering Company (MEC; fwd EV/EBITDA 4 only; 05/2019 IPO; benefitting from reshoring of manufacturing; products includes metal components and subassemblies for auto and truck OEMs; industrial and military businesses; 20 manufacturing facilities in 7 states that are close to its customers; recent new business from a fitness company (PTON?); growing by M&A; cyclical business was hurt by Covid-19 (sales declined -31% and had loss in 2020) but is now rebounding strongly; pg 14).
BEARISH. See other stories.
Pg 12: President Biden’s new mandate (to be enforced via OSHA/DOL) that firms with 100+ employees must require vaccinations or weekly Covid-19 testing may survive court challenges. Opponents may argue that that this issue belongs to the states and is not within the federal powers. Previous court cases have ruled in favor of the federal government when interstate commerce was involved but that angle may be a stretch here. The Government will also cite public safety as an issue.
Pg 21: FUNDS. Chris RETZLER of small-cap growth NESGX (ER 1.9%; no-load/NTF at Fidelity and Schwab; NESIX ER 1.18%) uses the GARP approach; some holdings are mispriced stocks due to temporary factors including restructuring, broken IPOs, etc. Digital transformation is a dominant theme. Fund is concentrated with 50 holdings and 47.5% in top 10; cash 10.7% (high as policy). (Performance spurt in 2020-21)
Pg 22: The SEC Chair GENSLER seems to favor FUTURES-BASED-based crypto ETFs, but not those holding physical cryptos. New filings for crypto ETFs reflect this. This may be a safer action by the SEC as crypto futures have been trading for a while. Related issues will be liquidity; futures rolls; contango and backwardation (all factors similar for, say, futures-based crude oil ETFs). Grayscale thinks that the SEC will/should approve both types of crypto ETFs and let the investors decide (let us hope that it doesn’t go into full battle tweet mode like Coinbase/COIN did on another matter).
Pg 23: TECH TRADER. This will be a big week for techs (ORCL, ZM, AAPL, CSCO). Lagging CSCO looks attractive on rising IT capex during recovery. New CFO HERREN started in Fall 2020 and has background in software (CSCO business is 70% hardware, 30% software). Dividend and buybacks have good support from cash flow.
Pg 24: Lawrence KOTLIKOFF (70), Boston U. His company sells financial planning software including optimizing Social Security and he has a new book coming out on financial planning. Plan for smooth/gradual spending changes during work and through retirement (vs cliff changes). In general (i.e., without using his software), delay taking Social Security (and consider it as insurance for living too long) and spend other assets if necessary; delay retirement as long as possible/practical; payoff the mortgage (paying off high-rate mortgage has guaranteed returns) and downsize in retirement. Do Roth Conversions sensibly, without paying too much in taxes and in the low-income years. Watch for Social Security taxes and Medicare premium jumps due to IRMMA. Investment on education is good but not so good if one doesn’t finish, or studies something that isn’t useful for employment, and worse if one also borrows a ton. Take emotions out of financial decisions – one of his mistakes was to rebuild a vacation cottage when it would have been better to tear it down. He thinks that stocks are overvalued now and artificially inflated due to Fed policies. He has kept 50% of his own investments in cash since the pandemic started but he doesn’t regret missing the rebound. He remembers the time when his father’s department store in Camden, NJ failed and shut down due to neighborhood changes and the family was almost broke (his father and 2 uncles had all their money in that store and for a while he became the only breadwinner in the family). (All may not agree with his views, but he says upfront that everybody else is wrong)
Pg 26: Remote working also makes PHASED RETIREMENT possible/plausible. Scenarios may include reduced workloads with reduced salary but group health benefits or post-retirement rehiring. Many universities and federal agencies have been offering this option for years but now companies are also getting on board. A few cautions: Be serious before exploring this with the employer (as it may irreversibly affect the future relationship); consider financial implications; future buyouts may be excluded; evaluate Social Security options (early, at FRA or late); deal should be win-win for employee and employer.
Pg 28: INCOME from utilities: EIX, ED, DUK, NI, ETR; ETF XLU. Relative performance has lagged SP500, but absolute and risk-adjusted performance have been decent.
Pg 29: ECONOMY. Covid-19-Delta is not the only reason for recent economic SLOWDOWN (Q3 and Q4 GDP growth projections have been slashed). Other factors include expiring federal unemployment benefits; diminishing effects of past stimuli; supply-chain disruptions; slower recovery in service sector after an initial bump; workers still remaining on sidelines.
Pg 30: OTHER VOICES. Raphael BOSTIC, President and CEO of Atlanta Fed, FOMC Member (voting in 2021). FED’s dual mandate includes stable prices and maximum employment. The Fed should focus on people and communities that lack appropriate job opportunities. Steps are needed beyond keeping rates lower longer. He then cites things that the Atlanta Fed is doing (and other Fed Banks may also be doing): Assisting grass-root organizations with jobs and job training programs; new job skill training; matching job requirements with skills needed; identifying skills with persistent high demand; addressing income and benefit cliffs during job transitions personal finance education; using the CRA.
(EXTRAS from online Friday that didn’t make the weekend paper version)
AI-based active equity ETF AMOM (05/2019- ; 50 stocks) is now overweight in tech and retail, and underweight in Covid-19 related at-home themes. While AMOM has outperformed SP500, it has not met its earlier high expectations.
A new muni ESG ETF is SMI; an older muni ETF with ESG emphasis is HMOP. There are several muni ESG mutual funds.
REVIEW. Disney’s/DIS movie “Shang-Chi and the Legend of the Ten Rings” had a record weekend release in theaters breaking the previous record from 2013. AMC stock jumped. Next from Disney is “Venom: Let There be Carnage” on October 1.
PREVIEW. Global automakers (Tesla, Toyota, VW + partner?, GM + Honda, Ford + SK Innovation) are rushing to build their own EV BATTERIES at huge costs. The IC engine market share may drop from 79.5% in 2020 to 50% in 2030 as EVs, hybrids and fuel-cell powered autos grow to 50%.
DATA THIS WEEK. Treasury monthly budget (estimate for 2021 budget deficit is 14.9% of GDP and the debt-ceiling issue is still pending) on MONDAY; CPI (+5.3% y-o-y, core +4.3%), small business optimism index on TUESDAY; import/export prices, industrial production, capacity utilization on WEDNESDAY; retail sales, business inventories on THURSDAY; UM consumer sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. SVB Financial Group (SIVB; yield 0%; fwd P/E 20.6: outperformed banking index and SP500; no buybacks, instead has issued stock to fund growth; lender to Silicon Valley startups, private-equity, venture-capital; recent acquisition Boston Private; pg 13);
small-cap Mayville Engineering Company (MEC; fwd EV/EBITDA 4 only; 05/2019 IPO; benefitting from reshoring of manufacturing; products includes metal components and subassemblies for auto and truck OEMs; industrial and military businesses; 20 manufacturing facilities in 7 states that are close to its customers; recent new business from a fitness company (PTON?); growing by M&A; cyclical business was hurt by Covid-19 (sales declined -31% and had loss in 2020) but is now rebounding strongly; pg 14).
BEARISH. See other stories.
Pg 12: President Biden’s new mandate (to be enforced via OSHA/DOL) that firms with 100+ employees must require vaccinations or weekly Covid-19 testing may survive court challenges. Opponents may argue that that this issue belongs to the states and is not within the federal powers. Previous court cases have ruled in favor of the federal government when interstate commerce was involved but that angle may be a stretch here. The Government will also cite public safety as an issue.
Pg 21: FUNDS. Chris RETZLER of small-cap growth NESGX (ER 1.9%; no-load/NTF at Fidelity and Schwab; NESIX ER 1.18%) uses the GARP approach; some holdings are mispriced stocks due to temporary factors including restructuring, broken IPOs, etc. Digital transformation is a dominant theme. Fund is concentrated with 50 holdings and 47.5% in top 10; cash 10.7% (high as policy). (Performance spurt in 2020-21)
Pg 22: The SEC Chair GENSLER seems to favor FUTURES-BASED-based crypto ETFs, but not those holding physical cryptos. New filings for crypto ETFs reflect this. This may be a safer action by the SEC as crypto futures have been trading for a while. Related issues will be liquidity; futures rolls; contango and backwardation (all factors similar for, say, futures-based crude oil ETFs). Grayscale thinks that the SEC will/should approve both types of crypto ETFs and let the investors decide (let us hope that it doesn’t go into full battle tweet mode like Coinbase/COIN did on another matter).
Pg 23: TECH TRADER. This will be a big week for techs (ORCL, ZM, AAPL, CSCO). Lagging CSCO looks attractive on rising IT capex during recovery. New CFO HERREN started in Fall 2020 and has background in software (CSCO business is 70% hardware, 30% software). Dividend and buybacks have good support from cash flow.
Pg 24: Lawrence KOTLIKOFF (70), Boston U. His company sells financial planning software including optimizing Social Security and he has a new book coming out on financial planning. Plan for smooth/gradual spending changes during work and through retirement (vs cliff changes). In general (i.e., without using his software), delay taking Social Security (and consider it as insurance for living too long) and spend other assets if necessary; delay retirement as long as possible/practical; payoff the mortgage (paying off high-rate mortgage has guaranteed returns) and downsize in retirement. Do Roth Conversions sensibly, without paying too much in taxes and in the low-income years. Watch for Social Security taxes and Medicare premium jumps due to IRMMA. Investment on education is good but not so good if one doesn’t finish, or studies something that isn’t useful for employment, and worse if one also borrows a ton. Take emotions out of financial decisions – one of his mistakes was to rebuild a vacation cottage when it would have been better to tear it down. He thinks that stocks are overvalued now and artificially inflated due to Fed policies. He has kept 50% of his own investments in cash since the pandemic started but he doesn’t regret missing the rebound. He remembers the time when his father’s department store in Camden, NJ failed and shut down due to neighborhood changes and the family was almost broke (his father and 2 uncles had all their money in that store and for a while he became the only breadwinner in the family). (All may not agree with his views, but he says upfront that everybody else is wrong)
Pg 26: Remote working also makes PHASED RETIREMENT possible/plausible. Scenarios may include reduced workloads with reduced salary but group health benefits or post-retirement rehiring. Many universities and federal agencies have been offering this option for years but now companies are also getting on board. A few cautions: Be serious before exploring this with the employer (as it may irreversibly affect the future relationship); consider financial implications; future buyouts may be excluded; evaluate Social Security options (early, at FRA or late); deal should be win-win for employee and employer.
Pg 28: INCOME from utilities: EIX, ED, DUK, NI, ETR; ETF XLU. Relative performance has lagged SP500, but absolute and risk-adjusted performance have been decent.
Pg 29: ECONOMY. Covid-19-Delta is not the only reason for recent economic SLOWDOWN (Q3 and Q4 GDP growth projections have been slashed). Other factors include expiring federal unemployment benefits; diminishing effects of past stimuli; supply-chain disruptions; slower recovery in service sector after an initial bump; workers still remaining on sidelines.
Pg 30: OTHER VOICES. Raphael BOSTIC, President and CEO of Atlanta Fed, FOMC Member (voting in 2021). FED’s dual mandate includes stable prices and maximum employment. The Fed should focus on people and communities that lack appropriate job opportunities. Steps are needed beyond keeping rates lower longer. He then cites things that the Atlanta Fed is doing (and other Fed Banks may also be doing): Assisting grass-root organizations with jobs and job training programs; new job skill training; matching job requirements with skills needed; identifying skills with persistent high demand; addressing income and benefit cliffs during job transitions personal finance education; using the CRA.
(EXTRAS from online Friday that didn’t make the weekend paper version)
AI-based active equity ETF AMOM (05/2019- ; 50 stocks) is now overweight in tech and retail, and underweight in Covid-19 related at-home themes. While AMOM has outperformed SP500, it has not met its earlier high expectations.
A new muni ESG ETF is SMI; an older muni ETF with ESG emphasis is HMOP. There are several muni ESG mutual funds.