Post by Admin/YBB on Jan 8, 2022 9:50:30 GMT -6
Pg 8-9. Senate Banking Committee holds hearings for the renomination of Jerome POWELL as the Fed Chair on TUESDAY and for the nomination of Lael BRAINARD as the Fed VC on THURSDAY. Q4 earnings season begins on FRIDAY with earnings from several big banks.
REVIEW. Deere/DE showed autonomous/farmer-free tractor at CES 2022 that can operate 24/7.
PREVIEW. Biogen’s/BIIB (-30% in 6 months) Aduhelm/aducanumab for ALZHEIMER has had disappointing sales as several medical centers/systems have declined to use it due to its low efficacy and high cost. MEDICARE will soon release guidelines on its coverage for Aduhelm and similar drugs (donanemeb from Eli Lilly/LLY).
DATA THIS WEEK. Wholesale inventories on MONDAY; small business optimism index on TUESDAY; CPI (+7.1%, core +5.4%), Fed beige book for 12 Fed districts, Treasury budget on WEDNESDAY; PPI, weekly initial jobless claims on THURSDAY; UM consumer sentiment, retail sales, capacity utilization, industrial production, business inventories on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. MGM Resorts International (MGM; +42% in 2021 and remains attractive; dividend may be increased; fwd EV/EBITDA 9.6; buybacks; operator of facilities; casinos in LV (50% of EBITDA), Atlantic City, near DC, several regional casinos/resorts and Macau/China; digital business (sports betting, gambling) BetMGM is a 50-50 joint-venture with UK Entain/GMVHY; pg 13);
Small-cap EV bus maker Proterra (PTRA; SPAC merger was in June 2021; also makes batteries and commercial EV charging stations; got caught in general SPACs selloff but it has products, sales, and should have positive EBITDA in 2023; some EV buses supply power to the grid; new CEO Gareth JOYCE; pg 14).
Pg 10: FOLLOWUP. Robinhood (HOOD; -50% from IPO price; P/S 7, no profits) is making significant changes. It has hired former TD Ameritrade EVP Steve QUIRK as the Chief Brokerage Officer (a newly created position). It is introducing ETF baskets (not a new concept).
Pg 11: ECONOMY. After waves of federal fiscal stimulus end, a residual MINI STIMULUS wave may be from STATE and LOCAL governments. They have been flush from federal aid (restricted), rising tax revenues (as economy recovers), lower costs (with limited or online operations). Their so-called rainy-day/budget-stabilization funds grew to $113 billion in FY 2021. They are looking for ways to SPEND this surplus by providing more direct aid, unemployment checks, educational subsidies, lower grocery sales taxes, income tax cuts, pay raises for public employees, making up for pension shortfalls. The effects of this spending may vary by sectors. This additional spending may keep inflation higher for longer and may also continue to provide economic boosts as Covid-19 lingers. RISK is that they may make permanent adjustments based on these temporary surpluses, but that is a problem for future public executives and politicians.
Pg 15: THE BACK STORY. INFLATION has caused serious economic problems, but its only cure is RECESSION. Mentioned are inflationary episodes of Nero’s Rome; the US in 1916-20 (around WW I), 1942 (around WW II), 1968-83 (runaway inflation finally tamed by VOLCKER). Then the 2000s (dot. com burst, Financial Crisis) brought deflationary concerns as Fed’s efforts to cause moderate inflation were unsuccessful. That bring us to today’s Covid era with the current inflation running very high and the Fed trying to catch up. (Well, 100 Years of Barron’s are over)
Pg 16: For INCOME, Tom HUBER (PRDGX) likes utilities, consumer-staples, energy, financials, real-estate. John TOBIN (EPSYX) likes yield-oriented global value stocks and uses the controversial stock-duration concept (duration is normally defined for bonds).
Pg 18: From the CES 2022 in LV: After many companies pulled out, a shortened live CES still included 2,300 exhibitors. There were lots of goodies on metaverse, EVs, TVs, health/fitness, WFH hardware (webcams, PC peripherals), 5G, satellite-based internet. EXTRA
Attendance of 40,000 was 76.6% below 171,000 in 2020 and 2,300 exhibitors were 48% below 4,419 in 2020. CES 2023 will be from January 5-8. EXTRA
TECH TRADER. There was lot of talk and displays related to metaverse at CES 2022, but it is still hard to define it. Is it virtual reality (VR), augmented reality (AR), digital games, Web3, cryptos, or all of the above? But one thing is clear – chip and headset makers will benefit from whatever it is.
Pg 19: ECONOMY. So, the Fed BALANCE SHEET ($9 trillion) matters. The discussion on its reduction in the FOMC Minutes trumped almost all of the other news (inflation, jobs, QE, rate hike, Delta/Omicron). The talk of Fed tightening while the real rates remain negative is laughable. There may be 10-12% market decline when the Fed executes its triple-actions and that may be a buying opportunity for the rebound to follow.
Pg 54: OTHER VOICES. Jay CLAYTON (former SEC Chairman, now at Sullivan & Cromwell and Apollo Group) and Mark WISEMAN (formerly at BlackRock, now at Alberta Investment Management, Boston Consulting and Hillhouse Capital). There are many lessons to be learned from Covid-crisis failures. The US Government spent $5-10 trillion (depending on what is counted) on various stimuluses and it is likely not to be repeated. These resources should be replenished so that the US can respond meaningfully to severe crises in future. There were wide disagreements on mission and objectives and that has caused lack of confidence in many of our institutions. Public and business impacts of actions varied. There is need for real-time public analysis, planning and decision-making. More of public-private partnerships are needed to promote the common good. Expert agencies for rapid responses for crisis should be developed. There is also a need for coordination among federal, state and local authorities even if a super-agency is not created to handle every crisis (so, there wasn’t any Covid-Czar).
(EXTRAS from online Friday that didn’t make the weekend paper version)
ETF. Cathie WOOD’s ARKK (and other ARK ETFs) peaked in February 2021 and is in deep negative territory as concerns grew on coming FED rate hikes.
REVIEW. Deere/DE showed autonomous/farmer-free tractor at CES 2022 that can operate 24/7.
PREVIEW. Biogen’s/BIIB (-30% in 6 months) Aduhelm/aducanumab for ALZHEIMER has had disappointing sales as several medical centers/systems have declined to use it due to its low efficacy and high cost. MEDICARE will soon release guidelines on its coverage for Aduhelm and similar drugs (donanemeb from Eli Lilly/LLY).
DATA THIS WEEK. Wholesale inventories on MONDAY; small business optimism index on TUESDAY; CPI (+7.1%, core +5.4%), Fed beige book for 12 Fed districts, Treasury budget on WEDNESDAY; PPI, weekly initial jobless claims on THURSDAY; UM consumer sentiment, retail sales, capacity utilization, industrial production, business inventories on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. MGM Resorts International (MGM; +42% in 2021 and remains attractive; dividend may be increased; fwd EV/EBITDA 9.6; buybacks; operator of facilities; casinos in LV (50% of EBITDA), Atlantic City, near DC, several regional casinos/resorts and Macau/China; digital business (sports betting, gambling) BetMGM is a 50-50 joint-venture with UK Entain/GMVHY; pg 13);
Small-cap EV bus maker Proterra (PTRA; SPAC merger was in June 2021; also makes batteries and commercial EV charging stations; got caught in general SPACs selloff but it has products, sales, and should have positive EBITDA in 2023; some EV buses supply power to the grid; new CEO Gareth JOYCE; pg 14).
Pg 10: FOLLOWUP. Robinhood (HOOD; -50% from IPO price; P/S 7, no profits) is making significant changes. It has hired former TD Ameritrade EVP Steve QUIRK as the Chief Brokerage Officer (a newly created position). It is introducing ETF baskets (not a new concept).
Pg 11: ECONOMY. After waves of federal fiscal stimulus end, a residual MINI STIMULUS wave may be from STATE and LOCAL governments. They have been flush from federal aid (restricted), rising tax revenues (as economy recovers), lower costs (with limited or online operations). Their so-called rainy-day/budget-stabilization funds grew to $113 billion in FY 2021. They are looking for ways to SPEND this surplus by providing more direct aid, unemployment checks, educational subsidies, lower grocery sales taxes, income tax cuts, pay raises for public employees, making up for pension shortfalls. The effects of this spending may vary by sectors. This additional spending may keep inflation higher for longer and may also continue to provide economic boosts as Covid-19 lingers. RISK is that they may make permanent adjustments based on these temporary surpluses, but that is a problem for future public executives and politicians.
Pg 15: THE BACK STORY. INFLATION has caused serious economic problems, but its only cure is RECESSION. Mentioned are inflationary episodes of Nero’s Rome; the US in 1916-20 (around WW I), 1942 (around WW II), 1968-83 (runaway inflation finally tamed by VOLCKER). Then the 2000s (dot. com burst, Financial Crisis) brought deflationary concerns as Fed’s efforts to cause moderate inflation were unsuccessful. That bring us to today’s Covid era with the current inflation running very high and the Fed trying to catch up. (Well, 100 Years of Barron’s are over)
Pg 16: For INCOME, Tom HUBER (PRDGX) likes utilities, consumer-staples, energy, financials, real-estate. John TOBIN (EPSYX) likes yield-oriented global value stocks and uses the controversial stock-duration concept (duration is normally defined for bonds).
Pg 18: From the CES 2022 in LV: After many companies pulled out, a shortened live CES still included 2,300 exhibitors. There were lots of goodies on metaverse, EVs, TVs, health/fitness, WFH hardware (webcams, PC peripherals), 5G, satellite-based internet. EXTRA
Attendance of 40,000 was 76.6% below 171,000 in 2020 and 2,300 exhibitors were 48% below 4,419 in 2020. CES 2023 will be from January 5-8. EXTRA
TECH TRADER. There was lot of talk and displays related to metaverse at CES 2022, but it is still hard to define it. Is it virtual reality (VR), augmented reality (AR), digital games, Web3, cryptos, or all of the above? But one thing is clear – chip and headset makers will benefit from whatever it is.
Pg 19: ECONOMY. So, the Fed BALANCE SHEET ($9 trillion) matters. The discussion on its reduction in the FOMC Minutes trumped almost all of the other news (inflation, jobs, QE, rate hike, Delta/Omicron). The talk of Fed tightening while the real rates remain negative is laughable. There may be 10-12% market decline when the Fed executes its triple-actions and that may be a buying opportunity for the rebound to follow.
Pg 54: OTHER VOICES. Jay CLAYTON (former SEC Chairman, now at Sullivan & Cromwell and Apollo Group) and Mark WISEMAN (formerly at BlackRock, now at Alberta Investment Management, Boston Consulting and Hillhouse Capital). There are many lessons to be learned from Covid-crisis failures. The US Government spent $5-10 trillion (depending on what is counted) on various stimuluses and it is likely not to be repeated. These resources should be replenished so that the US can respond meaningfully to severe crises in future. There were wide disagreements on mission and objectives and that has caused lack of confidence in many of our institutions. Public and business impacts of actions varied. There is need for real-time public analysis, planning and decision-making. More of public-private partnerships are needed to promote the common good. Expert agencies for rapid responses for crisis should be developed. There is also a need for coordination among federal, state and local authorities even if a super-agency is not created to handle every crisis (so, there wasn’t any Covid-Czar).
(EXTRAS from online Friday that didn’t make the weekend paper version)
ETF. Cathie WOOD’s ARKK (and other ARK ETFs) peaked in February 2021 and is in deep negative territory as concerns grew on coming FED rate hikes.