Post by Admin/YBB on Oct 23, 2021 8:26:27 GMT -6
Pg 10-11.
REVIEW. Buy EV truck Rivian, get a camp-kitchen (a twist on the old banks’ free toaster trick). The strange contraption slides out in the back of the truck. Oh well, we have had autos without kitchens for 118 years, but why not, and now you can have it (for $68K +$5K).
PREVIEW. Adobe projects good holiday (Nov 1-Dec 31) online sales (+5% to +15%) but prices will be higher (+9%) and deliveries may be delated (or more out of stock messages). Black Friday sales +5%, Cyber Monday +4%, and discounts will be smaller.
DATA THIS WEEK. New home sales, home price index, consumer confidence on TUESDAY; durable goods orders, wholesale inventories on WEDNESDAY; Q3 GDP (+4%) on THURSDAY; personal income, U Michigan sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Small-cap natural gas producer Chesapeake Energy (CHK; variable yield includes base + 50% FCF; fwd P/E 7; EV/EBITDA 2.4; emerged from bankruptcy in 06/2020; acquiring Vine Energy/VEI; will be disciplined for Shale 3.0; natural gas may become transitional fuel between oil/coal and renewables; new CEO Dell’Osso (was EVP + CFO); pg 16).
BEARISH. See other stories.
Pg 12: FOLLOWUP. Netflix/NFLX haters, go away! Its model of borrowing to develop or buy CONTENT has worked so well that it may not need to borrow anymore and can fund content with internal cash flows. There was a minor hiccup during the pandemic bit that is now past. It is entering videogaming. It has strong growth in the US, Europe, Asia.
Pg 13: FOLLOWUP. WeWork/WE finally became public via SPAC merger with BOWX at $9 billion market valuation after a near-death experience 2 years ago with hypergrowth at all costs. SoftBank/SFTBY has 56% stake, former CEO Adam NEWMAN has 9% (but has no role now in the company); Chairman is CLAURE, CEO is MATHRANI. WE now has an app that makes booking offices quite “uber”-like and has software-as-a-service (SaaS) model. In the post-pandemic environment, the HYBRID office-home trend is here to stay.
Pg 14: PREFERRED STOCKS offer good yields. Mentioned are those from banks (JPM-M, WFC-D, COF-N, PNC), financials (AXP), real estate (VNO-O, NRZ-D, PSA-Q, PEB, INN); among funds, OEF NPSAX; ETF PFF; CEF JPC.
Pg 17: 100 YEARS OF BARRON’S revisits Roaring 1920s when experts from Chase, Harvard, Barron’s, the Fed, etc were all astounded by the meteoric rise in stocks and the spectacular crash that started on 10/24/1929. Every known investment strategy was trashed except cash under the mattress. And like a horror movie, the investors never saw the killer coming at them. Dead cat bounces took dip buyers along to new bottoms. The Fed raised rates to control post-crash speculation. From a high of 381.17 on 9/3/29, the DJIA finally bottomed on 7/8/1932, and the high was surpassed only by 1954 (25 years later!). OK, enough of that, but what about the roaring 2020s now?
Pg 23: RETIRE EARLY the right way. For many OLDER workers and businessmen, now seems a good time to retire early with labor conditions tightening and markets (and portfolios) at near highs. The labor participation rate for 65+ has declined to 19.2% in 09/2021 (it rose from 12.9% in 2020 to pre-pandemic high of 20.8% in 02/2020). Unfortunately, many became unemployed involuntarily and cannot return to work. But YOUNGER workers have better opportunities. However, severe labor shortages and inflationary wage pressures may slow economic growth. Early retirement has COSTS – lost income; less savings; higher healthcare expenses until Medicare eligibility (65 for most); higher personal expenses for travel, recreation, entertainment. A caution is that market PULLBACK/CORRECTION may be ahead and that may spoil well-designed early retirement plans. Make realistic assessment of portfolio withdrawals needed to support INCOME-GAP in retirement; 2-4% may be OK but not much higher. Take a look at portfolio RISKS. Beware of TAXES that are rising and consider Roth Conversions; RMDs (at 72 now); Medicare planning (Part B premium trigger points; IRMAA); munis.
Pg 25: Comanager Dara WHITE of EM large-cap growth EEMAX (ER 1.47%; low turnover at 29%; top 10 account for 32%; no-load/NTF at Fido and Schwab) does bottom-up analysis rather than top-down country or sector analysis. Fund looks for high-quality, dominant companies globally or domestically, or those that have potential to become so; techs account for 27%. Macro issues like regulation, demographics, etc are also considered. The only exception is China where he and his 4 comanagers do analysis from all angles. They are not shying away from China, but its weight is only 26% (vs 34% for benchmark) and their approach is to invest “with China” in the favored industries such as healthcare, EVs, etc.
Pg 27: Robinhood/HOOD got into PROXY business by acquiring Say Technologies. Say has created an online platform for individual investors and activists to engage company executives on ESG issues. For example, the Say platform allows group actions on topics of interest and then related questions can be raised at company earnings calls. Some lower-rated topics may still increase awareness of touchy issues. Elon MUSK/TSLA picked top 3/607 Say-questions to answer at Q2 earnings call in June. There are other platforms such as YourStake, OpenInvest (JPM) that work through advisors, especially in conjunction with customized direct-indexed portfolios. Firms such as BlackRock/BLK are also allowing institutional holders of index funds to participate in proxy issues.
Pg 28: INCOME. Utilities for dividend and dividend growth: CMS, DUK, EXC, NEE, WEC, XEL, FPL; ETF XLU.
Pg 29: TECH TRADER. HP (HPQ; yield 3%; fwd P/E 7; buybacks) is doing quite well on strong demand for PCs from expanding work/study areas in homes. The Covid-19 protocol has required at least one PC/laptop per person (including kids) in households. Then there are printers, mouses, monitors, keyboards, webcams.
Negative impact of Apple’s/AAPL year-old restrictions on targeted ads (now iPhone users have to opt-in vs opt-out before) will soon be seen in earnings reports from FB, TWTR, GOOGL; SNAP crashed on earnings miss and blamed AAPL among other factors.
Pg 31: ECONOMY. Falling CONSUMER CONFIDENCE/SENTIMENT (from Conference Board, U Michigan) is bad news for the stock market. BLANCHFLOWER (Dartmouth) and BRYSON (U College London) have noted that sharp declines in consumer confidence precede economic slowdown or recession by up to 18 months. What is worrying consumers? Supposedly strong retail sales are from rising prices, not rising unit volumes. Consumers are directly affected by product shortages and long waits needed for many products and services. Job market is also causing worries – there is mismatch of skills or people don’t find work environments safe or attractive. Investors may look for companies operating in business-to-business (B2B) areas rather than business-to-people/consumers (B2P or B2C) areas.
Pg 32: Rajiv JAIN, GQG Partners (EM GQGPX, international GSIMX); formerly Vontobel Asset Management. These days, even the definition of defensive stocks has changed. Rising rates will hurt valuations. Global economic recovery theme has yet to play out fully and attractive are banks, techs, retail, e-commerce, energy, consumer stocks. He is wary of developments in China as it is now favoring state-owned/controlled enterprises over its big techs; there are huge debt problems as the Evergrande implosion has shown. His EM exposure in global funds is quite high (Brazil, Russia, India, Chine (other than big techs)).
Pg 34: OTHER VOICES. Marcin KLECZYNSKI, Malwarebytes. While regulations and executive actions are needed for CYBERCRIMES, some of the current efforts will frustrate cybersecurity professionals more than cybercriminals. Needed are additional layers of security rather than just adding complexities. Extensive dialogs are needed between politicians/legislators and industry specialists. Beyond sharing intelligence, tracking and punishing cybercriminals should be important elements of enforcement. Somethings can be done via presidential executive orders, others only by congressional actions. INCREMENTAL and DYNAMIC approaches are required to make ongoing adjustments because tech-savvy criminals soon learn to bypass laws that are passed. Developing cyber-METRICS and encouraging/requiring early REPORTING of breaches are important steps. Unfortunately, too much emphasis on cyber negligence and corporate liabilities will hamper information sharing. Most breaches occur from errors by untrained and unprepared employees and suppliers (with access to corporate networks) and programs on security training and education should be developed. (INSURANCE companies are taking the easy step of just paying ransomware and settling incidents quickly and that only encourages more such activities.)
(EXTRAS from online Friday that didn’t make the weekend paper version)
FEDERAL RESERVE will ban senior Fed officials from trading individual securities. They can hold diversified funds, but advance notices will be requited for buying or selling funds, and there will be 1-yr holding periods for purchases. President BIDEN has not made a decision on POWELL’s reappointment; his current term expires in early February 2022 and Predictit still shows 73% chance for reappointment (vs 90% few weeks ago).
REVIEW. Buy EV truck Rivian, get a camp-kitchen (a twist on the old banks’ free toaster trick). The strange contraption slides out in the back of the truck. Oh well, we have had autos without kitchens for 118 years, but why not, and now you can have it (for $68K +$5K).
PREVIEW. Adobe projects good holiday (Nov 1-Dec 31) online sales (+5% to +15%) but prices will be higher (+9%) and deliveries may be delated (or more out of stock messages). Black Friday sales +5%, Cyber Monday +4%, and discounts will be smaller.
DATA THIS WEEK. New home sales, home price index, consumer confidence on TUESDAY; durable goods orders, wholesale inventories on WEDNESDAY; Q3 GDP (+4%) on THURSDAY; personal income, U Michigan sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Small-cap natural gas producer Chesapeake Energy (CHK; variable yield includes base + 50% FCF; fwd P/E 7; EV/EBITDA 2.4; emerged from bankruptcy in 06/2020; acquiring Vine Energy/VEI; will be disciplined for Shale 3.0; natural gas may become transitional fuel between oil/coal and renewables; new CEO Dell’Osso (was EVP + CFO); pg 16).
BEARISH. See other stories.
Pg 12: FOLLOWUP. Netflix/NFLX haters, go away! Its model of borrowing to develop or buy CONTENT has worked so well that it may not need to borrow anymore and can fund content with internal cash flows. There was a minor hiccup during the pandemic bit that is now past. It is entering videogaming. It has strong growth in the US, Europe, Asia.
Pg 13: FOLLOWUP. WeWork/WE finally became public via SPAC merger with BOWX at $9 billion market valuation after a near-death experience 2 years ago with hypergrowth at all costs. SoftBank/SFTBY has 56% stake, former CEO Adam NEWMAN has 9% (but has no role now in the company); Chairman is CLAURE, CEO is MATHRANI. WE now has an app that makes booking offices quite “uber”-like and has software-as-a-service (SaaS) model. In the post-pandemic environment, the HYBRID office-home trend is here to stay.
Pg 14: PREFERRED STOCKS offer good yields. Mentioned are those from banks (JPM-M, WFC-D, COF-N, PNC), financials (AXP), real estate (VNO-O, NRZ-D, PSA-Q, PEB, INN); among funds, OEF NPSAX; ETF PFF; CEF JPC.
Pg 17: 100 YEARS OF BARRON’S revisits Roaring 1920s when experts from Chase, Harvard, Barron’s, the Fed, etc were all astounded by the meteoric rise in stocks and the spectacular crash that started on 10/24/1929. Every known investment strategy was trashed except cash under the mattress. And like a horror movie, the investors never saw the killer coming at them. Dead cat bounces took dip buyers along to new bottoms. The Fed raised rates to control post-crash speculation. From a high of 381.17 on 9/3/29, the DJIA finally bottomed on 7/8/1932, and the high was surpassed only by 1954 (25 years later!). OK, enough of that, but what about the roaring 2020s now?
Pg 23: RETIRE EARLY the right way. For many OLDER workers and businessmen, now seems a good time to retire early with labor conditions tightening and markets (and portfolios) at near highs. The labor participation rate for 65+ has declined to 19.2% in 09/2021 (it rose from 12.9% in 2020 to pre-pandemic high of 20.8% in 02/2020). Unfortunately, many became unemployed involuntarily and cannot return to work. But YOUNGER workers have better opportunities. However, severe labor shortages and inflationary wage pressures may slow economic growth. Early retirement has COSTS – lost income; less savings; higher healthcare expenses until Medicare eligibility (65 for most); higher personal expenses for travel, recreation, entertainment. A caution is that market PULLBACK/CORRECTION may be ahead and that may spoil well-designed early retirement plans. Make realistic assessment of portfolio withdrawals needed to support INCOME-GAP in retirement; 2-4% may be OK but not much higher. Take a look at portfolio RISKS. Beware of TAXES that are rising and consider Roth Conversions; RMDs (at 72 now); Medicare planning (Part B premium trigger points; IRMAA); munis.
Pg 25: Comanager Dara WHITE of EM large-cap growth EEMAX (ER 1.47%; low turnover at 29%; top 10 account for 32%; no-load/NTF at Fido and Schwab) does bottom-up analysis rather than top-down country or sector analysis. Fund looks for high-quality, dominant companies globally or domestically, or those that have potential to become so; techs account for 27%. Macro issues like regulation, demographics, etc are also considered. The only exception is China where he and his 4 comanagers do analysis from all angles. They are not shying away from China, but its weight is only 26% (vs 34% for benchmark) and their approach is to invest “with China” in the favored industries such as healthcare, EVs, etc.
Pg 27: Robinhood/HOOD got into PROXY business by acquiring Say Technologies. Say has created an online platform for individual investors and activists to engage company executives on ESG issues. For example, the Say platform allows group actions on topics of interest and then related questions can be raised at company earnings calls. Some lower-rated topics may still increase awareness of touchy issues. Elon MUSK/TSLA picked top 3/607 Say-questions to answer at Q2 earnings call in June. There are other platforms such as YourStake, OpenInvest (JPM) that work through advisors, especially in conjunction with customized direct-indexed portfolios. Firms such as BlackRock/BLK are also allowing institutional holders of index funds to participate in proxy issues.
Pg 28: INCOME. Utilities for dividend and dividend growth: CMS, DUK, EXC, NEE, WEC, XEL, FPL; ETF XLU.
Pg 29: TECH TRADER. HP (HPQ; yield 3%; fwd P/E 7; buybacks) is doing quite well on strong demand for PCs from expanding work/study areas in homes. The Covid-19 protocol has required at least one PC/laptop per person (including kids) in households. Then there are printers, mouses, monitors, keyboards, webcams.
Negative impact of Apple’s/AAPL year-old restrictions on targeted ads (now iPhone users have to opt-in vs opt-out before) will soon be seen in earnings reports from FB, TWTR, GOOGL; SNAP crashed on earnings miss and blamed AAPL among other factors.
Pg 31: ECONOMY. Falling CONSUMER CONFIDENCE/SENTIMENT (from Conference Board, U Michigan) is bad news for the stock market. BLANCHFLOWER (Dartmouth) and BRYSON (U College London) have noted that sharp declines in consumer confidence precede economic slowdown or recession by up to 18 months. What is worrying consumers? Supposedly strong retail sales are from rising prices, not rising unit volumes. Consumers are directly affected by product shortages and long waits needed for many products and services. Job market is also causing worries – there is mismatch of skills or people don’t find work environments safe or attractive. Investors may look for companies operating in business-to-business (B2B) areas rather than business-to-people/consumers (B2P or B2C) areas.
Pg 32: Rajiv JAIN, GQG Partners (EM GQGPX, international GSIMX); formerly Vontobel Asset Management. These days, even the definition of defensive stocks has changed. Rising rates will hurt valuations. Global economic recovery theme has yet to play out fully and attractive are banks, techs, retail, e-commerce, energy, consumer stocks. He is wary of developments in China as it is now favoring state-owned/controlled enterprises over its big techs; there are huge debt problems as the Evergrande implosion has shown. His EM exposure in global funds is quite high (Brazil, Russia, India, Chine (other than big techs)).
Pg 34: OTHER VOICES. Marcin KLECZYNSKI, Malwarebytes. While regulations and executive actions are needed for CYBERCRIMES, some of the current efforts will frustrate cybersecurity professionals more than cybercriminals. Needed are additional layers of security rather than just adding complexities. Extensive dialogs are needed between politicians/legislators and industry specialists. Beyond sharing intelligence, tracking and punishing cybercriminals should be important elements of enforcement. Somethings can be done via presidential executive orders, others only by congressional actions. INCREMENTAL and DYNAMIC approaches are required to make ongoing adjustments because tech-savvy criminals soon learn to bypass laws that are passed. Developing cyber-METRICS and encouraging/requiring early REPORTING of breaches are important steps. Unfortunately, too much emphasis on cyber negligence and corporate liabilities will hamper information sharing. Most breaches occur from errors by untrained and unprepared employees and suppliers (with access to corporate networks) and programs on security training and education should be developed. (INSURANCE companies are taking the easy step of just paying ransomware and settling incidents quickly and that only encourages more such activities.)
(EXTRAS from online Friday that didn’t make the weekend paper version)
FEDERAL RESERVE will ban senior Fed officials from trading individual securities. They can hold diversified funds, but advance notices will be requited for buying or selling funds, and there will be 1-yr holding periods for purchases. President BIDEN has not made a decision on POWELL’s reappointment; his current term expires in early February 2022 and Predictit still shows 73% chance for reappointment (vs 90% few weeks ago).