Post by Admin/YBB on Dec 11, 2021 12:14:34 GMT -6
Pg 14-15. FOMC Statement followed by POWELL’s press conference on WEDNESDAY. BOE monetary policy on THURSDAY.
REVIEW. Among 942 companies that became public in 2021 YTD, 383 were traditional IPOs, 599 SPAC mergers, and only 7 direct-listings (total 13 since 04/2018). So, the early talk of direct-listings catching on just didn’t happen.
PREVIEW. DocuSign/DOCU crashed after a huge earnings miss, but it may have found bottom/floor on bargain buys from ARK funds (Cathie WOOD) and DOCU CEO SPRINGER.
INSURANCE death claims/benefits in 2020 rose +15.4% (highest since Spanish flu year 1918) to $90.43 billion.
DATA THIS WEEK. PPI, small business optimism index on TUESDAY; import/export prices, housing market index, retail sales on WEDNESDAY; housing starts, industrial production, capacity utilization on THURSDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Swiss small-cap Sportrader (SRAD; stock fell sharply after Nasdaq IPO in September; provides data on 680,000 events covering 80+ sports in 120 countries; growing tie-ins with big bookmakers (some of whom are developing their own databases) and sport leagues; 30 US states have legalized sports betting, but the US sports betting industry is only catching up with global players; Founder/CEO KOERL owns 33% of shares but has majority voting control; pg 23);
digital/online home buying and sales (OPEN, OPAD; they buy houses at discount, fixup those and flip in 90-100 days; local real estate factors are important; they also cross-sell related services; Z failed due to its mistakes of moving too aggressively in several markets and couldn’t keep tight fix-and-flip schedules and handled the announcement badly – initially a suspension, then total exit days later; pg 30).
BEARISH. See other stories.
Pg 18: CRYPTO LENDING yields of 3-10% (fixed/variable paid in cryptos; rates decline progressively) are lucrative (at BlockFi, Celsius, Abra, Nexo, Genesis/DCG). The idea is similar to getting paid for stock lending (from margin brokerage accounts) to shorts and market-makers. There are market risks (due to price declines, borrower defaults or the same assets being reloaned multiple times) and regulatory risks (new players such as Coinbase/COIN are not being allowed and how long the existing players do this?); forget about FDIC or SIPC protections. But there is a risk that you can lose your lent crypto assets entirely during crypto crisis, so beware of those juicy yields. In absence of federal regulations (so far), several states (AL, KY, NJ, NY, TX) are taking crypto regulations in their own hands. Crypto brokers make money on various fees regardless of whether investors win or lose. Some in crypto industry are calling for national regulations (by CFTC or SEC or a new agency) before more chaos develops.
Pg 20: SAFE WITHDRAWAL RATE (SWR) for retirees is revisited. Instead of the old BENGEN’s “initial 4% plus COLA” rule, one may need a dynamic/flexible approach. Problems now are low yields and returns from bonds, and stocks near all-time highs. A Morningstar study (with BLANCHETT at PGIM) using 30-yr rolling-returns for 1930-1990 showed 3.2-6.8% withdrawal rates from 40-60% equity portfolios (lesser withdrawal % for all cash or bond or stock portfolios); 90% success rate was used. With uncertain future, the recommendation is only “initial 3.3% plus COLA” from 40-60% equity portfolios. Higher but flexible withdrawal rates (without COLA) may be possible if there are income streams from Social Security, pensions and annuities; adjusting spending may also be required during tough times. Other strategies may include using the IRS RMD schedule (that accounts for portfolio size and life-expectancy); to increase withdrawals only when portfolios do better and reducing them during bad times; to include stocks, bonds and alternatives in the mix (like the evolving multi-asset funds).
Pg 31: FUNDS. Comanager Cheryl SMITH of ESG moderate-allocation (50-70% equity) GCBLX invests in high-quality companies that also clear the ESG screens. Fund avoids fossil fuel industry but invests in renewable energy, energy efficiency and energy transitions. Its bond portion includes green bonds (that commit to spending money raised for sustainable projects). A portion of high ER of 1.47% funds ESG related activism through Green Century Capital.
Pg 32: ETFs. Beware of niche ETFs – there are too many and similarly named ETFs may be quite different. Some new examples include NFTZ, HART, OND, KROP.
Pg 33: TECH TRADER. Apple/AAPL (+34% YTD, amazing for such giant-cap) is approaching $3 trillion market-cap ($1 trillion in 2018, $2 trillion in 08/2020, $3 trillion in 12/2021?). And things are looking good. An Appeals Court stayed a lower court adverse ruling on Apple Store pricing policies; it is moving into augmented-reality/virtual-reality (AR/VR; metaverse) and autonomous driving. Its wearables and services business are also doing well.
Pg 34: INCOME. Quality dividend-growth is offered by KO, JPM, TXN, CMCSA, MSFT; TGT, CVX, CAT; and lagging big-pharma MRK, AMGN.
Pg 17:. Dividend Aristocrats (25+ years of dividend history) with good yield and YTD total return include XOM, CVX, PBCT, FRT, ESS.
Pg 35: ECONOMY. Missing US workers are a puzzle. It is suggested that long-term lingering effects of Covid-19 (fatigue, exhaustion, breathlessness, brain fog, tachycardia, depression; all now described as LONG-COVID) are limiting labor-force participation. Some have retired, others have become self-employed or taken part-time jobs. Google mobility data shows recovery in traffic but people are not driving to their old jobs. Some families with 2 incomes previously have adjusted to lifestyles with 1 income only. Long-Covid has affected more women and patients in 40s-60s. May be 20% of all mild Covid-19 cases turn into long-Covid. A Facebook group for long-Covid sufferers already has 9,000 members. Hopefully, there will be a delayed REBOUND in labor-force participation when there is full recovery from long-Covid.
Pg 36: Carson BLOCK, Founder/CIO of Muddy Waters. The activist short-seller is a CHINA BEAR. He has raised alarms on several US-listed Chinese VIEs-ADRs (defunct Luckin Coffee, etc) and wants those to be delisted from the US. The SEC has now passed rules requiring audits for these or to face delisting. Strangely, he moved to China in 1998 to research Chinese domestic A-share companies but found many problems and irregularities. After some career detours, he launched Muddy Waters in 2010 to focus on problem companies in China and elsewhere. In the past, he warned about Chinese reverse-mergers (many of those just went private and thwarted investigations) and now he is warning about Chinese VIEs-ADRs. Many larger/tier 1 VIEs-ADRs will list in HK. But the HK exchange has limited liquidity to accommodate all VIEs-ADRs, so many tier 2 companies may have to merge with others or go private. When these companies leave the US market, they may leave scorched-earth behind, sometimes intentionally to freeze/drive out the US investors and facilitate mergers or privatizations. All it may take is reporting a few bad quarters and many fickle US investors will be out in disgust. In better times, the US investors have rationalized their China investments and overlooked many issues, but they will be out after string of bad news. The US Institutional investors may be able to deal with these issues better than the US retail investors. In other markets, the index funds fueled by massive fund inflows have become price-insensitive buyers of stocks and that has created speculative excesses. Ironically, with fewer active managers around, when there are index fund outflows, there will not be anyone to catch the falling knives. So, when the break comes, it will be very hard and very fast.
Pg 70: OTHER VOICES. Charles GORE, Medicine Patent Pool (MPP). Covid-19-Omicron reminded us that Covid-19 will be with us for a while and that it must be addressed globally. A new variant found anywhere spreads globally within a few weeks. In an important step, Merck/MRK and Pfizer/PFE announced licensing agreements for their Covid-19 antivirals (under trials) with the Medicine Patent Pool (MPP) so that other companies can manufacture those under license. Spanish National Research Council has also signed an agreement with the MPP to license future Covid-19 drugs. There is also WHO Covid-19 Technology Access Pool, and MPP is involved with it. Similar processes were slower with Covid-19 vaccines but there were complicating technological factors. However, there is history of global cooperation on HIV/AIDS and other diseases and those lessons must be applied for Covid-19.
(EXTRAS from online Friday that didn’t make the weekend paper version)
None
REVIEW. Among 942 companies that became public in 2021 YTD, 383 were traditional IPOs, 599 SPAC mergers, and only 7 direct-listings (total 13 since 04/2018). So, the early talk of direct-listings catching on just didn’t happen.
PREVIEW. DocuSign/DOCU crashed after a huge earnings miss, but it may have found bottom/floor on bargain buys from ARK funds (Cathie WOOD) and DOCU CEO SPRINGER.
INSURANCE death claims/benefits in 2020 rose +15.4% (highest since Spanish flu year 1918) to $90.43 billion.
DATA THIS WEEK. PPI, small business optimism index on TUESDAY; import/export prices, housing market index, retail sales on WEDNESDAY; housing starts, industrial production, capacity utilization on THURSDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Swiss small-cap Sportrader (SRAD; stock fell sharply after Nasdaq IPO in September; provides data on 680,000 events covering 80+ sports in 120 countries; growing tie-ins with big bookmakers (some of whom are developing their own databases) and sport leagues; 30 US states have legalized sports betting, but the US sports betting industry is only catching up with global players; Founder/CEO KOERL owns 33% of shares but has majority voting control; pg 23);
digital/online home buying and sales (OPEN, OPAD; they buy houses at discount, fixup those and flip in 90-100 days; local real estate factors are important; they also cross-sell related services; Z failed due to its mistakes of moving too aggressively in several markets and couldn’t keep tight fix-and-flip schedules and handled the announcement badly – initially a suspension, then total exit days later; pg 30).
BEARISH. See other stories.
Pg 18: CRYPTO LENDING yields of 3-10% (fixed/variable paid in cryptos; rates decline progressively) are lucrative (at BlockFi, Celsius, Abra, Nexo, Genesis/DCG). The idea is similar to getting paid for stock lending (from margin brokerage accounts) to shorts and market-makers. There are market risks (due to price declines, borrower defaults or the same assets being reloaned multiple times) and regulatory risks (new players such as Coinbase/COIN are not being allowed and how long the existing players do this?); forget about FDIC or SIPC protections. But there is a risk that you can lose your lent crypto assets entirely during crypto crisis, so beware of those juicy yields. In absence of federal regulations (so far), several states (AL, KY, NJ, NY, TX) are taking crypto regulations in their own hands. Crypto brokers make money on various fees regardless of whether investors win or lose. Some in crypto industry are calling for national regulations (by CFTC or SEC or a new agency) before more chaos develops.
Pg 20: SAFE WITHDRAWAL RATE (SWR) for retirees is revisited. Instead of the old BENGEN’s “initial 4% plus COLA” rule, one may need a dynamic/flexible approach. Problems now are low yields and returns from bonds, and stocks near all-time highs. A Morningstar study (with BLANCHETT at PGIM) using 30-yr rolling-returns for 1930-1990 showed 3.2-6.8% withdrawal rates from 40-60% equity portfolios (lesser withdrawal % for all cash or bond or stock portfolios); 90% success rate was used. With uncertain future, the recommendation is only “initial 3.3% plus COLA” from 40-60% equity portfolios. Higher but flexible withdrawal rates (without COLA) may be possible if there are income streams from Social Security, pensions and annuities; adjusting spending may also be required during tough times. Other strategies may include using the IRS RMD schedule (that accounts for portfolio size and life-expectancy); to increase withdrawals only when portfolios do better and reducing them during bad times; to include stocks, bonds and alternatives in the mix (like the evolving multi-asset funds).
Pg 31: FUNDS. Comanager Cheryl SMITH of ESG moderate-allocation (50-70% equity) GCBLX invests in high-quality companies that also clear the ESG screens. Fund avoids fossil fuel industry but invests in renewable energy, energy efficiency and energy transitions. Its bond portion includes green bonds (that commit to spending money raised for sustainable projects). A portion of high ER of 1.47% funds ESG related activism through Green Century Capital.
Pg 32: ETFs. Beware of niche ETFs – there are too many and similarly named ETFs may be quite different. Some new examples include NFTZ, HART, OND, KROP.
Pg 33: TECH TRADER. Apple/AAPL (+34% YTD, amazing for such giant-cap) is approaching $3 trillion market-cap ($1 trillion in 2018, $2 trillion in 08/2020, $3 trillion in 12/2021?). And things are looking good. An Appeals Court stayed a lower court adverse ruling on Apple Store pricing policies; it is moving into augmented-reality/virtual-reality (AR/VR; metaverse) and autonomous driving. Its wearables and services business are also doing well.
Pg 34: INCOME. Quality dividend-growth is offered by KO, JPM, TXN, CMCSA, MSFT; TGT, CVX, CAT; and lagging big-pharma MRK, AMGN.
Pg 17:. Dividend Aristocrats (25+ years of dividend history) with good yield and YTD total return include XOM, CVX, PBCT, FRT, ESS.
Pg 35: ECONOMY. Missing US workers are a puzzle. It is suggested that long-term lingering effects of Covid-19 (fatigue, exhaustion, breathlessness, brain fog, tachycardia, depression; all now described as LONG-COVID) are limiting labor-force participation. Some have retired, others have become self-employed or taken part-time jobs. Google mobility data shows recovery in traffic but people are not driving to their old jobs. Some families with 2 incomes previously have adjusted to lifestyles with 1 income only. Long-Covid has affected more women and patients in 40s-60s. May be 20% of all mild Covid-19 cases turn into long-Covid. A Facebook group for long-Covid sufferers already has 9,000 members. Hopefully, there will be a delayed REBOUND in labor-force participation when there is full recovery from long-Covid.
Pg 36: Carson BLOCK, Founder/CIO of Muddy Waters. The activist short-seller is a CHINA BEAR. He has raised alarms on several US-listed Chinese VIEs-ADRs (defunct Luckin Coffee, etc) and wants those to be delisted from the US. The SEC has now passed rules requiring audits for these or to face delisting. Strangely, he moved to China in 1998 to research Chinese domestic A-share companies but found many problems and irregularities. After some career detours, he launched Muddy Waters in 2010 to focus on problem companies in China and elsewhere. In the past, he warned about Chinese reverse-mergers (many of those just went private and thwarted investigations) and now he is warning about Chinese VIEs-ADRs. Many larger/tier 1 VIEs-ADRs will list in HK. But the HK exchange has limited liquidity to accommodate all VIEs-ADRs, so many tier 2 companies may have to merge with others or go private. When these companies leave the US market, they may leave scorched-earth behind, sometimes intentionally to freeze/drive out the US investors and facilitate mergers or privatizations. All it may take is reporting a few bad quarters and many fickle US investors will be out in disgust. In better times, the US investors have rationalized their China investments and overlooked many issues, but they will be out after string of bad news. The US Institutional investors may be able to deal with these issues better than the US retail investors. In other markets, the index funds fueled by massive fund inflows have become price-insensitive buyers of stocks and that has created speculative excesses. Ironically, with fewer active managers around, when there are index fund outflows, there will not be anyone to catch the falling knives. So, when the break comes, it will be very hard and very fast.
Pg 70: OTHER VOICES. Charles GORE, Medicine Patent Pool (MPP). Covid-19-Omicron reminded us that Covid-19 will be with us for a while and that it must be addressed globally. A new variant found anywhere spreads globally within a few weeks. In an important step, Merck/MRK and Pfizer/PFE announced licensing agreements for their Covid-19 antivirals (under trials) with the Medicine Patent Pool (MPP) so that other companies can manufacture those under license. Spanish National Research Council has also signed an agreement with the MPP to license future Covid-19 drugs. There is also WHO Covid-19 Technology Access Pool, and MPP is involved with it. Similar processes were slower with Covid-19 vaccines but there were complicating technological factors. However, there is history of global cooperation on HIV/AIDS and other diseases and those lessons must be applied for Covid-19.
(EXTRAS from online Friday that didn’t make the weekend paper version)
None