Post by Admin/YBB on Oct 9, 2021 10:01:15 GMT -6
Pg 16-17. Annual meetings of the IMF and World Bank, MONDAY-Sunday. Q3 earnings season kicks off on WEDNESDAY with several big banks reporting. FOMC Minutes on WEDNESDAY.
REVIEW. In a survey, teens liked Snapchat/SNAP, TikTok, and only the Instagram part of Facebook/FB (but not Facebook, WhatsApp). Among streaming, Netflix/NFLX, YouTube/GOOGL, Hulu & Disney+ (both part of Disney/DIS). Among videoconferencing, Zoom Video/ZM; among smartphones, iPhones; among online shopping sites, Amazon/AMZN; among restaurants, Chick-fil-A.
PREVIEW. High ENERGY prices (oil, natural gas) may also hurt producers. Say what? Too high prices may cause demand destruction as “energy tax” becomes a drag on the global economy. Imports and exports may be disrupted in the name of national policies. Inflation caused by high energy prices may not be transitory and may cause central banks to tighten monetary policies sooner.
DATA THIS WEEK. JOLTS report, small business optimism index on TUESDAY; CPI (+5.3%, core +4.0, y-o-y) on WEDNESDAY; PPI on THURSDAY; retail sales, business inventories, UM consumer sentiment on FRIDAY.
CLOSED: US bond market (and banks) on MONDAY (stock market is open).
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Prudential Financial (PRU; yield 4.2%; fwd P/E 8.1; buybacks; strong rally but more upside; divesting slow-growth retirement record-keeping/administration and individual variable-annuity businesses; keeping and growing life insurance and asset management (PGIM; AUM $1.5 trillion) businesses; strong business in Japan; pg 19);
Small-cap #2 TV broadcaster Gray TV (GTN; fwd P/E 5; strong cash flow; local TV is not dead (yet); growing rapidly by acquisitions; in several markets, it owns 2 of ABC, CBS, NBC, FOX TV stations; strong in local news that attracts political ads; competitor is #1 Nexstar Media (fwd P/E 6); pg 23).
BEARISH. See other stories.
Pg 15: FOLLOWUP. After initial excitement about Merck’s/MRK Covid-19 antiviral drug molnupiravir, concerns have grown about its serious SIDE EFFECTS (due to NHC production). It works by causing rapid MUTATIONS of Covid-19 virus so that it self-destructs, but that may also lead to cancer or birth defects in patients. Merck says that the side effects don’t reach harmful levels in patients but that is not very reassuring without extensive tests and considering that Merck carefully excluded the at-risk population from its tests. The FDA may approve molnupiravir with severe limitations similar to those for controlled substances. Patients may also require special monitoring. So, it may not be good for general and widespread use for Covid-19.
Pg 20: In spite of projections to the contrary, DOLLAR has been rising since mid-2021. The US has problems, but other countries have bigger problems. The FED would start QE taper soon. This is BAD news for exporters, multinationals, consumer-staples. But it is GOOD news for US tourists abroad, fund flows into the US, small/mid-caps and many domestic and cyclical (industrials, banks, energy, materials, transportation) companies.
Pg 21: A new vaccine VLA15 for LYME DISEASE (bacterial infection from ticks) is being developed by Pfizer/PFE and French Valneva/VALN with 2025 target (Phase 2 trials now; 3-dose + booster regime). An earlier vaccine LYMErix by GlaxoSmithKline/GSK was approved by the FDA in 1998 but was withdrawn by GSK in 2002 after poor sales, poor marketing (overhyped), negative media coverage on its side effects, poor acceptance by health professionals for a minor noncontagious disease treatable early by antibiotics (but becomes serious if left untreated), class action lawsuits, and FDA re-review that cleared it but didn’t satisfy critics. Can Pfizer be more successful in marketing the new vaccine after its success with Covid-19 vaccine? Ironically, the new VLA15 is similar but an improved version of the old LYMErix and Pfizer and Valneva have tried to address potential criticisms right from the start. Marketing will be to high-risk people in high-exposure areas, not for universal vaccinations. But will the potential sales for such limited application vaccine with a difficult dose regime even move the needle for Pfizer?
Pg 24: TECH TRADER. Facebook’s/FB problems have grown, and it may face more regulations. There was a negative investigative piece by the WSJ and then the whistleblower HAUGEN with negative internal disclosures and her appearance before a Congressional panel. An untimely 6-hour service OUTAGE may have demonstrated how critical FB has become to people and businesses. But beyond the huff and puff, nothing big may happen as the Congress has other serious issues before it, and there is a lack of consensus on almost anything. But some small things may happen (or not), like a new DATA PRIVACY bill and reform of SECTION 230 on the protection of web publishers. All this while, FB businesses (downloads, ads) and stock (near market multiple) haven’t been affected. Its costs for more content moderation may go up and there may be a small fine from the SEC.
Pg 26: ECONOMY. Where have America’s WORKERS gone? Fall is here, schools have opened, offices are opening, extra federal unemployment benefits have expired, but workers are still missing from jobs. It cannot be just the fear of Covid-19-Delta. JOBS REPORT was a huge miss, but wages rose. Labor participation rate was low at 61.6%. There are still 4.9 million unemployed but many of these may not return to work due to mismatch between skills and job requirement, early retirement, or work-life balance issues. UNEMPLOYMENT RATE fell to 4.8%, and may collapse to 2.9% by mid-2022, to 1.6% by late-2022. Pre-pandemic labor market doesn’t exist anymore. On the other hand, consumer DEMAND has recovered, and consumer spending may go up as excess savings are drawn down. This is not the current scenario by the FED, and it may have to catch up with RATE HIKES sooner and faster.
Pg 27: INCOME. Ex-dividend, record and payable dates are explained (for stocks, ETFs, CEFs). A buyer on/after the EX-DIV date does not get the dividend; a buyer before the ex-div date gets the dividend. Price is reduced by the EXCHANGE by the dividend distribution amount on the morning of the ex-div date. TAXATION of dividend (qualified vs nonqualified) depends on the holding period. RECORD date is the next day after the ex-div date. PAYABLE date may be several weeks after the ex-div date (and why is that allowed?). There are trading strategies that depend on getting or not getting dividend distributions. (Dividend reinvestment programs (DRIPs) work differently through companies vs at some brokers) (For MUTUAL FUNDS, ex-div and payable date (reinvestment date) are the same but these dates are typically not preannounced except for the yearend distributions that may be large)
(EXTRAS from online Friday that didn’t make the weekend paper version)
ETFs. Count Cathie WOOD of ARK among those moving from NYC to St Petersburg, FL. Some employees will move, others will work remote. Despite several similar headline-making moves, FL-based investment firms account for only 1.4% of industry AUM, while those in NY have 22%, followed by CA, MA, PA.
REVIEW. In a survey, teens liked Snapchat/SNAP, TikTok, and only the Instagram part of Facebook/FB (but not Facebook, WhatsApp). Among streaming, Netflix/NFLX, YouTube/GOOGL, Hulu & Disney+ (both part of Disney/DIS). Among videoconferencing, Zoom Video/ZM; among smartphones, iPhones; among online shopping sites, Amazon/AMZN; among restaurants, Chick-fil-A.
PREVIEW. High ENERGY prices (oil, natural gas) may also hurt producers. Say what? Too high prices may cause demand destruction as “energy tax” becomes a drag on the global economy. Imports and exports may be disrupted in the name of national policies. Inflation caused by high energy prices may not be transitory and may cause central banks to tighten monetary policies sooner.
DATA THIS WEEK. JOLTS report, small business optimism index on TUESDAY; CPI (+5.3%, core +4.0, y-o-y) on WEDNESDAY; PPI on THURSDAY; retail sales, business inventories, UM consumer sentiment on FRIDAY.
CLOSED: US bond market (and banks) on MONDAY (stock market is open).
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Prudential Financial (PRU; yield 4.2%; fwd P/E 8.1; buybacks; strong rally but more upside; divesting slow-growth retirement record-keeping/administration and individual variable-annuity businesses; keeping and growing life insurance and asset management (PGIM; AUM $1.5 trillion) businesses; strong business in Japan; pg 19);
Small-cap #2 TV broadcaster Gray TV (GTN; fwd P/E 5; strong cash flow; local TV is not dead (yet); growing rapidly by acquisitions; in several markets, it owns 2 of ABC, CBS, NBC, FOX TV stations; strong in local news that attracts political ads; competitor is #1 Nexstar Media (fwd P/E 6); pg 23).
BEARISH. See other stories.
Pg 15: FOLLOWUP. After initial excitement about Merck’s/MRK Covid-19 antiviral drug molnupiravir, concerns have grown about its serious SIDE EFFECTS (due to NHC production). It works by causing rapid MUTATIONS of Covid-19 virus so that it self-destructs, but that may also lead to cancer or birth defects in patients. Merck says that the side effects don’t reach harmful levels in patients but that is not very reassuring without extensive tests and considering that Merck carefully excluded the at-risk population from its tests. The FDA may approve molnupiravir with severe limitations similar to those for controlled substances. Patients may also require special monitoring. So, it may not be good for general and widespread use for Covid-19.
Pg 20: In spite of projections to the contrary, DOLLAR has been rising since mid-2021. The US has problems, but other countries have bigger problems. The FED would start QE taper soon. This is BAD news for exporters, multinationals, consumer-staples. But it is GOOD news for US tourists abroad, fund flows into the US, small/mid-caps and many domestic and cyclical (industrials, banks, energy, materials, transportation) companies.
Pg 21: A new vaccine VLA15 for LYME DISEASE (bacterial infection from ticks) is being developed by Pfizer/PFE and French Valneva/VALN with 2025 target (Phase 2 trials now; 3-dose + booster regime). An earlier vaccine LYMErix by GlaxoSmithKline/GSK was approved by the FDA in 1998 but was withdrawn by GSK in 2002 after poor sales, poor marketing (overhyped), negative media coverage on its side effects, poor acceptance by health professionals for a minor noncontagious disease treatable early by antibiotics (but becomes serious if left untreated), class action lawsuits, and FDA re-review that cleared it but didn’t satisfy critics. Can Pfizer be more successful in marketing the new vaccine after its success with Covid-19 vaccine? Ironically, the new VLA15 is similar but an improved version of the old LYMErix and Pfizer and Valneva have tried to address potential criticisms right from the start. Marketing will be to high-risk people in high-exposure areas, not for universal vaccinations. But will the potential sales for such limited application vaccine with a difficult dose regime even move the needle for Pfizer?
Pg 24: TECH TRADER. Facebook’s/FB problems have grown, and it may face more regulations. There was a negative investigative piece by the WSJ and then the whistleblower HAUGEN with negative internal disclosures and her appearance before a Congressional panel. An untimely 6-hour service OUTAGE may have demonstrated how critical FB has become to people and businesses. But beyond the huff and puff, nothing big may happen as the Congress has other serious issues before it, and there is a lack of consensus on almost anything. But some small things may happen (or not), like a new DATA PRIVACY bill and reform of SECTION 230 on the protection of web publishers. All this while, FB businesses (downloads, ads) and stock (near market multiple) haven’t been affected. Its costs for more content moderation may go up and there may be a small fine from the SEC.
Pg 26: ECONOMY. Where have America’s WORKERS gone? Fall is here, schools have opened, offices are opening, extra federal unemployment benefits have expired, but workers are still missing from jobs. It cannot be just the fear of Covid-19-Delta. JOBS REPORT was a huge miss, but wages rose. Labor participation rate was low at 61.6%. There are still 4.9 million unemployed but many of these may not return to work due to mismatch between skills and job requirement, early retirement, or work-life balance issues. UNEMPLOYMENT RATE fell to 4.8%, and may collapse to 2.9% by mid-2022, to 1.6% by late-2022. Pre-pandemic labor market doesn’t exist anymore. On the other hand, consumer DEMAND has recovered, and consumer spending may go up as excess savings are drawn down. This is not the current scenario by the FED, and it may have to catch up with RATE HIKES sooner and faster.
Pg 27: INCOME. Ex-dividend, record and payable dates are explained (for stocks, ETFs, CEFs). A buyer on/after the EX-DIV date does not get the dividend; a buyer before the ex-div date gets the dividend. Price is reduced by the EXCHANGE by the dividend distribution amount on the morning of the ex-div date. TAXATION of dividend (qualified vs nonqualified) depends on the holding period. RECORD date is the next day after the ex-div date. PAYABLE date may be several weeks after the ex-div date (and why is that allowed?). There are trading strategies that depend on getting or not getting dividend distributions. (Dividend reinvestment programs (DRIPs) work differently through companies vs at some brokers) (For MUTUAL FUNDS, ex-div and payable date (reinvestment date) are the same but these dates are typically not preannounced except for the yearend distributions that may be large)
(EXTRAS from online Friday that didn’t make the weekend paper version)
ETFs. Count Cathie WOOD of ARK among those moving from NYC to St Petersburg, FL. Some employees will move, others will work remote. Despite several similar headline-making moves, FL-based investment firms account for only 1.4% of industry AUM, while those in NY have 22%, followed by CA, MA, PA.