Post by Admin/YBB on Jan 15, 2022 11:32:39 GMT -6
Pg 12-13. BOJ monetary policy decision on TUESDAY.
REVIEW. Barron’s 2021 Market Forecast contest has a MIA winner (he/she hasn’t responded to emails; may be the prize needs to be higher than free lunch in Manhattan and 2-yr subscription for Barron’s).
PREVIEW. Don’t care for CRYPTOS? The IMF has noted that correlation between SP500 and cryptos in 2021 was 0.36; 0.34 for EMs. The IMF warned that this would work both ways – cryptos won’t offer protection from stock market selloff, and a selloff in cryptos would hurt stocks. The IMF sees cryptos as risk to global financial stability (looks like code for a call for crypto regulations).
DATA THIS WEEK. Housing market index, NY Fed Empire State manufacturing survey (peaked in Summer 2021) on TUESDAY; housing starts on WEDNESDAY; existing home sales on THURSDAY; LEI on FRIDAY.
CLOSED. US markets on Monday.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Small-cap home services company ANGI (losses to 2024; P/S 1.8; online booking, follow up, billing with % cut to Angi; hurt by pandemic as contractors were in short supply and didn’t need Angi; IAC owns 85%; 2017 merger of Angie’s List and HomeAdvisor; pg 21).
BEARISH. See other stories.
Pg 14, FOLLOWUP. Video-gamers have suffered as new videogame consoles are hard to find due to semi chip shortages. In this environment, Take-Two/TTWO, a video-console/game maker, bought mobile-game maker Zynga/ZNGA. Development cycle for mobile-games is shorter. ZYNGA had suffered from Apple’s/AAPL new privacy policy for ads. Early investor reaction for the deal was negative but it looks attractive on synergies and new markets for TTWO.
Pg 15: Covid-19/Omicron is stressing HOSPITAL capacities; it has been 2 tough years under the pandemic. Regions have been affected differently. Some areas are operating in crisis mode and have caps on healthcare. There are also blood shortages. But even after the pandemic passes, healthcare STAFF shortages (especially, nurses) will remain. And this as a new wave of baby boomer patients arrives.
Pg 16, INCOME. Many commodity producers have variable dividends (base amount + variable amount): OMF (financial), PXD. DVN, NEM, COP, FCX, AGCO; forthcoming FANG. Several cyclicals are under pressure to adopt variable dividends.
Pg 39: How about zero INCOME? Several companies that suspended their dividends during the pandemic have not restored them: ALK, AAL, BA, DAL, EXPE, GM, HLT, LVS, MAR, JWN, RCL, LUV, DIS. Airlines cannot restore dividends until 9/30/22 as part of the CARES Act payroll support. But times and situations are changing, and these companies may get boosts when they resume dividends.
Pg 37, FUNDS. Post-Financial-Crisis reforms are not working for some MONEY-MARKET FUNDS. GOVERNMENT money-market funds are doing fine (AUM grew to $4.1 trillion). But PRIME money-market funds have shrunk to $831 billion. These invest in commercial paper and CDs, can have redemption fees and/or gates and/or floating NAVs (institutional prime). When issues developed in 2020, these prime money market funds were reluctant to use their available tools and the FED had to step in with some liquidity backstops. So, now, the SEC has proposed new rules that will ditch redemption fees and gates in favor of SWING-PRICING (a form of floating NAV related to redemption level). The fund industry is opposing these new rules (Fido, Federated Hermes, Blackstone, BNY/Mellon, etc).
Pg 38, TECH TRADER. A rumored merger of weak SATELLITE TV rivals Dish Network/DISH and DirectTV (owned 70% by T, 30% by TPG) may not happen due to potential FTC opposition (satellite TV is the only option in many rural areas), and if it happens, that would be bad for both. Their systems are incompatible; neither has launched new satellites in many years and their existing ones may just fade/fail eventually. DISH is also expanding into wireless services.
Taiwan Semi/TSM has not benefitted from the current high demand for SEMI CHIPS. Possible reasons include high capex to build new capacity, increasing competition from INTC, and Taiwan-China frictions. But things are turning around and TSM may be in a race with NVDA to become the next $1 trillion company.
Pg 41, ECONOMY. Conventional wisdom is that the current INFLATION may peak soon, but some real-time data are showing that supply-chain CONGESTIONS remain in logistics, ports, trucking stops. On the other hand, DEMAND remain high. MONEY SUPPLY has grown from easy monetary and fiscal policies. Even the Chained-CPI is rising faster than CPI (Chained-CPI assumes that consumers switch to cheaper alternatives when prices rise). That means that prices are rising across the board. So, inflation may stick around for quite a while.
Pg 78, OTHER VOICES. Marc CHANDLER, Bannockburn Global Forex. DEMOCRACY is messy. Key to healthy democracy seems to be to have conditions that prevent a permanent majority. Peaceful transitions of power are crucial. But there are challenged to democracy from within (voting rights, individual rights, data privacy, polarized debates) and external – pandemic, RUSSIA (problems related to Ukraine, Georgia, etc), CHINA (problems related to Taiwan, etc). The US model of democracy is also not widely accepted. There are global REGIONS of influences and complicated international ties. New WEAPON developments complicate global relations. Income and wealth INEQUALITIES present challenges. It is desirable to have accommodations and ensure better lives for most people and democracy offers a good way to achieve those.
(EXTRAS from online Friday that didn’t make the weekend paper version)
BULLISH. GM (fwd P/E 9; an important player in EVs and EV batteries).
ECONOMY. MORTGAGE RATES rose to the highest level since 03/2020; they are at some SPREAD over 10-yr Treasuries whose yields also rose. With home prices rising, the home affordability has suffered.
REVIEW. Barron’s 2021 Market Forecast contest has a MIA winner (he/she hasn’t responded to emails; may be the prize needs to be higher than free lunch in Manhattan and 2-yr subscription for Barron’s).
PREVIEW. Don’t care for CRYPTOS? The IMF has noted that correlation between SP500 and cryptos in 2021 was 0.36; 0.34 for EMs. The IMF warned that this would work both ways – cryptos won’t offer protection from stock market selloff, and a selloff in cryptos would hurt stocks. The IMF sees cryptos as risk to global financial stability (looks like code for a call for crypto regulations).
DATA THIS WEEK. Housing market index, NY Fed Empire State manufacturing survey (peaked in Summer 2021) on TUESDAY; housing starts on WEDNESDAY; existing home sales on THURSDAY; LEI on FRIDAY.
CLOSED. US markets on Monday.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Small-cap home services company ANGI (losses to 2024; P/S 1.8; online booking, follow up, billing with % cut to Angi; hurt by pandemic as contractors were in short supply and didn’t need Angi; IAC owns 85%; 2017 merger of Angie’s List and HomeAdvisor; pg 21).
BEARISH. See other stories.
Pg 14, FOLLOWUP. Video-gamers have suffered as new videogame consoles are hard to find due to semi chip shortages. In this environment, Take-Two/TTWO, a video-console/game maker, bought mobile-game maker Zynga/ZNGA. Development cycle for mobile-games is shorter. ZYNGA had suffered from Apple’s/AAPL new privacy policy for ads. Early investor reaction for the deal was negative but it looks attractive on synergies and new markets for TTWO.
Pg 15: Covid-19/Omicron is stressing HOSPITAL capacities; it has been 2 tough years under the pandemic. Regions have been affected differently. Some areas are operating in crisis mode and have caps on healthcare. There are also blood shortages. But even after the pandemic passes, healthcare STAFF shortages (especially, nurses) will remain. And this as a new wave of baby boomer patients arrives.
Pg 16, INCOME. Many commodity producers have variable dividends (base amount + variable amount): OMF (financial), PXD. DVN, NEM, COP, FCX, AGCO; forthcoming FANG. Several cyclicals are under pressure to adopt variable dividends.
Pg 39: How about zero INCOME? Several companies that suspended their dividends during the pandemic have not restored them: ALK, AAL, BA, DAL, EXPE, GM, HLT, LVS, MAR, JWN, RCL, LUV, DIS. Airlines cannot restore dividends until 9/30/22 as part of the CARES Act payroll support. But times and situations are changing, and these companies may get boosts when they resume dividends.
Pg 37, FUNDS. Post-Financial-Crisis reforms are not working for some MONEY-MARKET FUNDS. GOVERNMENT money-market funds are doing fine (AUM grew to $4.1 trillion). But PRIME money-market funds have shrunk to $831 billion. These invest in commercial paper and CDs, can have redemption fees and/or gates and/or floating NAVs (institutional prime). When issues developed in 2020, these prime money market funds were reluctant to use their available tools and the FED had to step in with some liquidity backstops. So, now, the SEC has proposed new rules that will ditch redemption fees and gates in favor of SWING-PRICING (a form of floating NAV related to redemption level). The fund industry is opposing these new rules (Fido, Federated Hermes, Blackstone, BNY/Mellon, etc).
Pg 38, TECH TRADER. A rumored merger of weak SATELLITE TV rivals Dish Network/DISH and DirectTV (owned 70% by T, 30% by TPG) may not happen due to potential FTC opposition (satellite TV is the only option in many rural areas), and if it happens, that would be bad for both. Their systems are incompatible; neither has launched new satellites in many years and their existing ones may just fade/fail eventually. DISH is also expanding into wireless services.
Taiwan Semi/TSM has not benefitted from the current high demand for SEMI CHIPS. Possible reasons include high capex to build new capacity, increasing competition from INTC, and Taiwan-China frictions. But things are turning around and TSM may be in a race with NVDA to become the next $1 trillion company.
Pg 41, ECONOMY. Conventional wisdom is that the current INFLATION may peak soon, but some real-time data are showing that supply-chain CONGESTIONS remain in logistics, ports, trucking stops. On the other hand, DEMAND remain high. MONEY SUPPLY has grown from easy monetary and fiscal policies. Even the Chained-CPI is rising faster than CPI (Chained-CPI assumes that consumers switch to cheaper alternatives when prices rise). That means that prices are rising across the board. So, inflation may stick around for quite a while.
Pg 78, OTHER VOICES. Marc CHANDLER, Bannockburn Global Forex. DEMOCRACY is messy. Key to healthy democracy seems to be to have conditions that prevent a permanent majority. Peaceful transitions of power are crucial. But there are challenged to democracy from within (voting rights, individual rights, data privacy, polarized debates) and external – pandemic, RUSSIA (problems related to Ukraine, Georgia, etc), CHINA (problems related to Taiwan, etc). The US model of democracy is also not widely accepted. There are global REGIONS of influences and complicated international ties. New WEAPON developments complicate global relations. Income and wealth INEQUALITIES present challenges. It is desirable to have accommodations and ensure better lives for most people and democracy offers a good way to achieve those.
(EXTRAS from online Friday that didn’t make the weekend paper version)
BULLISH. GM (fwd P/E 9; an important player in EVs and EV batteries).
ECONOMY. MORTGAGE RATES rose to the highest level since 03/2020; they are at some SPREAD over 10-yr Treasuries whose yields also rose. With home prices rising, the home affordability has suffered.
