Post by Admin/YBB on Mar 26, 2022 7:47:44 GMT -6
Pg 12-13.
REVIEW. Post-WW II 1940s may be a better model for today than 1970s, says Scott MINERD (Guggenheim). Factors in play now (as in 1940s) include supply-chain disruptions, high demand, high savings and high money supply growth. These conditions may end in a brief slowdown/recession, followed by economic growth again.
PREVIEW. Russia-Ukraine war has benefitted FERTILIZER producers (Canadian NTR, MOS, CF). Russia and Belarus are major producers of materials needed for fertilizers (potash, phosphate, natural gas).
DATA THIS WEEK. Dallas Fed Texas manufacturing outlook on MONDAY; JOLTS report, home price index, consumer confidence on TUESDAY; ADP national employment report, final Q4 GDP on WEDNESDAY; ISM Chicago PMI, personal income and expenditure on THURSDAY; construction spending, jobs report (+450,000), unemployment rate (3.7%) on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Berkshire Hathaway (BRK-A/B; fwd P/E 26.9; P/B 1.5; new highs; buybacks; Warren BUFFETT has a winning hand in Occidental Petroleum (OXY; BRK owns 15%, may buy all?) and mini-BRK Alleghany/Y; Buffett owns 16.2% of BRK; succession risk – Buffett is 91 and the designated successor is Vice-Chairman Greg ABEL; pg 17);
Small-cap industrial nVent Electric (NVT; fwd P/E 15.9; net debt/EBITDA 2; makes electrical components for homes, businesses, infrastructure; high growth (organic, M&A) at reasonable valuation; possible takeover target; not impacted by supply-chain issues; women CEO Beth WOZNIAK and CFO Sara ZAWOYSKI; pg 18).
BEARISH.
Pg 14: FOLLOW UP. An obituary of Edward “Ned” JOHNSON III who passed away at 91. He ran Fidelity for almost 40 years and was responsible for its tremendous growth. Fidelity was started (1949- ) by his father Edward Johnson II and is now run by his daughter Abigail Johnson (2014- ).
Pg 14: FOLLOW UP. GameStop/GME plans to ride the crypto/NFT wave (in partnership with startup Immutable X) but that may not work for the videogaming retailer. It may run out of cash before its NFT business becomes profitable. There are bigger and better financed competitors such as OpenSea, Coinbase/COIN, etc.
Pg 15: ECONOMY. The GREAT RESIGNATION wave may have crested. Many have found different jobs closer to home that can support HYBRID office-home model and also take care of the CHILDCARE issues faced by younger families. Generous stimulus, unemployment benefits and excess personal savings provided the transitional funding needed. Fewer people are now quitting jobs. These factors are reflected in gradually rising LABOR-FORCE participation (62.3%; bottomed at 60.2% in 04/2020; pre-pandemic 63.2% in 02/2020). Other data from JOLTS reports and PAYROLL processor Gusto are confirming these trends. The Covid-19-OMICRON variant may have been the turning point when people realized that they have to coexist with Covid variants. One fly in the ointment is the poor recent performance of STOCKS and BONDS that is negatively impacting people’s retirement accounts. While this may cool home-based day/app-trading, some retired workers are returning to work; some are doing it just to escape the boredom. On hindsight, the Great Resignation may look like a GREAT SHUFFLE.
Pg 20, INCOME. Shareholder yield (%Dividend yield + %Buyback) provides a better picture than dividend yield alone. Attractive with 3%+ shareholder yields are WTV, XLE, XLP, XLI, SPY.
Pg 27-31: ONLINE BROKERS – BARRON’S RANKINGS, 2022
BROKERS STAR RATINGS NOTES
Interactive Brokers 5*
Fidelity 4.5*
E*Trade 4* (part of Morgan Stanley)
Schwab 4*
TD Ameritrade 4* (part of Schwab)
Merrill Edge 3.5*
tastyworks 3.5* (part of UK IG Group)
Webull 3* (fintech app)
Ally 2.5*
Robinhood 2* (fintech app)
JP Morgan Chase 2*
SoFi 2* (fintech app)
New to rankings are 3 fintech apps (Webull, Robinhhod, SoFi). Dropped were formerly ranked SogoTrade, TradeStation, TradingBlock. JP Morgan Chase started participating this year, but Vanguard again refused to participate. Direct-indexing is growing. Fidelity, Schwab, etc have in-house efforts. But there is also growth by M&A: Schwab bought Motif (2020), Morgan Stanley acquired Parametric (via Eaton Vance acquisition), Vanguard bought Just Invest, JP Morgan Chase bought 55ip.
Pg 32: FUNDS. Daniel CHUNG (Alger CEO, CIO; married into the family) manages long-short SPEDX. He notes that the last 2.5 years have had many changes and disruptions. For longs, he looks for early-stage growth companies with some catalysts (new management or products or regulations; M&A). He currently likes US shale producers (FANG, EOG); energy transformation plays; defense; EVs (TSLA); semis (AMAT, AMD). Shorts are companies that don’t fare well on his metrics (several new and shaky EV companies, QS, LCID, FREY).
Pg 34, TECH TRADER. CYBERSECURITY will become more important. Cyberattacks are the new tools of global warfare. The US-CISA has warned state/local governments and variety of businesses (energy, healthcare, banking, etc) on cyberthreats. Don’t become complacent just because there hasn’t been a major cyberbreach since the Russia-Ukraine war. As businesses are responsible for their cybersecurity, the level of preparedness varies a lot. All cyberattacks are not sophisticated, so be aware and take simple precautions. Older water utilities and power plants may not be equipped to handle cyberattacks, but the resulting damage may be significant. So far, most of the cyberattacks have been nuisances and haven’t caused serious or long-lasting damage.
Pg 35: ECONOMY. Highly cyclical HOUSING may not be hurt in this rate hike cycle (like in the past). BUYERS have better finances; demographic trends and work-from-home themes will continue to favor housing. Speculative investors (a new development) often buy houses with cash and are not much affected by rising rates. They are betting on quick profits or higher rents later (with 12-18-month lag). Housing SUPPLY will remain constrained due to supply-chain disruptions and higher material and labor costs. Of course, housing will soften as affordability becomes an issue. INFLATION will remain higher for longer as higher owners’ equivalent-rent start to show up in inflation indexes (CPI, PCE). Finally, POWELL’s bark may be worse than his bite, and if the economy slows down, the Fed may change course. Real estate stocks are attractive (residential REZ).
Pg 36: Dan ARIELY, Behavioral Economist, Duke U. We are IRRATIONAL by nature and to act in our long-term interests, we sometimes have to suppress some short-term urges and actions. To account for this in investments, Ariely has helped launch an indexed ETF HAPY (inception 2/23/22; from Harbor Capital that has been in the news a lot lately) of companies that rate highly on human capital factors. Standard economics assumes that people are rational but may occasionally need some nudges via incentives or legal penalties. BEHAVIORAL economics assumes that people are fundamentally irrational, and solutions may involve removing or restricting bad impulsive options. The current US direct-contribution (DC) retirement system leads to worries about money running out; In the old defined-benefit (DB), people had less worries about that. There are simple things related to personal finance that people can do – save first; use credit cards wisely; setup dedicated spending accounts and that money is either spent or goes to charities; create reliable income streams (from portfolios or immediate-annuities), etc. His appearance with half-face beard is strange but it is to hide childhood burn injuries; that long and painful experience also shaped some of his life philosophies.
Pg 70: OTHER VOICES. George MAGNUS, Oxford U. The US-CHINA DECOUPLING has begun. There are sharp disagreements on SANCTIONS on Russia. China wants better economy ahead of the 20th Communist Party Conference in late-2022. Covid-19 is surging, and oil and food prices have risen after the Russia-Ukraine WAR. President XI will carefully manage relations with Russia, the US, the EU. It will also try to sanction-proof its economy to the extent possible to protect it from secondary sanctions now (from its relations and trade with Russia) and possible primary sanctions later if China-TAIWAN issue flares up. ACCESS to Western financial networks and own assets held there may be a new risk. FOREIGN companies also face legal and regulatory hurdles in China. All countries are reviewing supply-chain issues and dependence on concentrated sources of materials and products (pandemic and war may finally end whatever remains of globalization).
(EXTRAS from online Friday that didn’t make the weekend paper version)
OTHER VOICES2. Erica DOWNS, Columbia U. CHINA will benefit from Western sanctions on RUSSIA. Chinese purchases of Russia oil/gas may be with yuan. There are some current logistics issues and there are plans for new pipelines. China may also be careful in keeping its oil/gas imports diversified.
REVIEW. Post-WW II 1940s may be a better model for today than 1970s, says Scott MINERD (Guggenheim). Factors in play now (as in 1940s) include supply-chain disruptions, high demand, high savings and high money supply growth. These conditions may end in a brief slowdown/recession, followed by economic growth again.
PREVIEW. Russia-Ukraine war has benefitted FERTILIZER producers (Canadian NTR, MOS, CF). Russia and Belarus are major producers of materials needed for fertilizers (potash, phosphate, natural gas).
DATA THIS WEEK. Dallas Fed Texas manufacturing outlook on MONDAY; JOLTS report, home price index, consumer confidence on TUESDAY; ADP national employment report, final Q4 GDP on WEDNESDAY; ISM Chicago PMI, personal income and expenditure on THURSDAY; construction spending, jobs report (+450,000), unemployment rate (3.7%) on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Berkshire Hathaway (BRK-A/B; fwd P/E 26.9; P/B 1.5; new highs; buybacks; Warren BUFFETT has a winning hand in Occidental Petroleum (OXY; BRK owns 15%, may buy all?) and mini-BRK Alleghany/Y; Buffett owns 16.2% of BRK; succession risk – Buffett is 91 and the designated successor is Vice-Chairman Greg ABEL; pg 17);
Small-cap industrial nVent Electric (NVT; fwd P/E 15.9; net debt/EBITDA 2; makes electrical components for homes, businesses, infrastructure; high growth (organic, M&A) at reasonable valuation; possible takeover target; not impacted by supply-chain issues; women CEO Beth WOZNIAK and CFO Sara ZAWOYSKI; pg 18).
BEARISH.
Pg 14: FOLLOW UP. An obituary of Edward “Ned” JOHNSON III who passed away at 91. He ran Fidelity for almost 40 years and was responsible for its tremendous growth. Fidelity was started (1949- ) by his father Edward Johnson II and is now run by his daughter Abigail Johnson (2014- ).
Pg 14: FOLLOW UP. GameStop/GME plans to ride the crypto/NFT wave (in partnership with startup Immutable X) but that may not work for the videogaming retailer. It may run out of cash before its NFT business becomes profitable. There are bigger and better financed competitors such as OpenSea, Coinbase/COIN, etc.
Pg 15: ECONOMY. The GREAT RESIGNATION wave may have crested. Many have found different jobs closer to home that can support HYBRID office-home model and also take care of the CHILDCARE issues faced by younger families. Generous stimulus, unemployment benefits and excess personal savings provided the transitional funding needed. Fewer people are now quitting jobs. These factors are reflected in gradually rising LABOR-FORCE participation (62.3%; bottomed at 60.2% in 04/2020; pre-pandemic 63.2% in 02/2020). Other data from JOLTS reports and PAYROLL processor Gusto are confirming these trends. The Covid-19-OMICRON variant may have been the turning point when people realized that they have to coexist with Covid variants. One fly in the ointment is the poor recent performance of STOCKS and BONDS that is negatively impacting people’s retirement accounts. While this may cool home-based day/app-trading, some retired workers are returning to work; some are doing it just to escape the boredom. On hindsight, the Great Resignation may look like a GREAT SHUFFLE.
Pg 20, INCOME. Shareholder yield (%Dividend yield + %Buyback) provides a better picture than dividend yield alone. Attractive with 3%+ shareholder yields are WTV, XLE, XLP, XLI, SPY.
Pg 27-31: ONLINE BROKERS – BARRON’S RANKINGS, 2022
BROKERS STAR RATINGS NOTES
Interactive Brokers 5*
Fidelity 4.5*
E*Trade 4* (part of Morgan Stanley)
Schwab 4*
TD Ameritrade 4* (part of Schwab)
Merrill Edge 3.5*
tastyworks 3.5* (part of UK IG Group)
Webull 3* (fintech app)
Ally 2.5*
Robinhood 2* (fintech app)
JP Morgan Chase 2*
SoFi 2* (fintech app)
New to rankings are 3 fintech apps (Webull, Robinhhod, SoFi). Dropped were formerly ranked SogoTrade, TradeStation, TradingBlock. JP Morgan Chase started participating this year, but Vanguard again refused to participate. Direct-indexing is growing. Fidelity, Schwab, etc have in-house efforts. But there is also growth by M&A: Schwab bought Motif (2020), Morgan Stanley acquired Parametric (via Eaton Vance acquisition), Vanguard bought Just Invest, JP Morgan Chase bought 55ip.
Pg 32: FUNDS. Daniel CHUNG (Alger CEO, CIO; married into the family) manages long-short SPEDX. He notes that the last 2.5 years have had many changes and disruptions. For longs, he looks for early-stage growth companies with some catalysts (new management or products or regulations; M&A). He currently likes US shale producers (FANG, EOG); energy transformation plays; defense; EVs (TSLA); semis (AMAT, AMD). Shorts are companies that don’t fare well on his metrics (several new and shaky EV companies, QS, LCID, FREY).
Pg 34, TECH TRADER. CYBERSECURITY will become more important. Cyberattacks are the new tools of global warfare. The US-CISA has warned state/local governments and variety of businesses (energy, healthcare, banking, etc) on cyberthreats. Don’t become complacent just because there hasn’t been a major cyberbreach since the Russia-Ukraine war. As businesses are responsible for their cybersecurity, the level of preparedness varies a lot. All cyberattacks are not sophisticated, so be aware and take simple precautions. Older water utilities and power plants may not be equipped to handle cyberattacks, but the resulting damage may be significant. So far, most of the cyberattacks have been nuisances and haven’t caused serious or long-lasting damage.
Pg 35: ECONOMY. Highly cyclical HOUSING may not be hurt in this rate hike cycle (like in the past). BUYERS have better finances; demographic trends and work-from-home themes will continue to favor housing. Speculative investors (a new development) often buy houses with cash and are not much affected by rising rates. They are betting on quick profits or higher rents later (with 12-18-month lag). Housing SUPPLY will remain constrained due to supply-chain disruptions and higher material and labor costs. Of course, housing will soften as affordability becomes an issue. INFLATION will remain higher for longer as higher owners’ equivalent-rent start to show up in inflation indexes (CPI, PCE). Finally, POWELL’s bark may be worse than his bite, and if the economy slows down, the Fed may change course. Real estate stocks are attractive (residential REZ).
Pg 36: Dan ARIELY, Behavioral Economist, Duke U. We are IRRATIONAL by nature and to act in our long-term interests, we sometimes have to suppress some short-term urges and actions. To account for this in investments, Ariely has helped launch an indexed ETF HAPY (inception 2/23/22; from Harbor Capital that has been in the news a lot lately) of companies that rate highly on human capital factors. Standard economics assumes that people are rational but may occasionally need some nudges via incentives or legal penalties. BEHAVIORAL economics assumes that people are fundamentally irrational, and solutions may involve removing or restricting bad impulsive options. The current US direct-contribution (DC) retirement system leads to worries about money running out; In the old defined-benefit (DB), people had less worries about that. There are simple things related to personal finance that people can do – save first; use credit cards wisely; setup dedicated spending accounts and that money is either spent or goes to charities; create reliable income streams (from portfolios or immediate-annuities), etc. His appearance with half-face beard is strange but it is to hide childhood burn injuries; that long and painful experience also shaped some of his life philosophies.
Pg 70: OTHER VOICES. George MAGNUS, Oxford U. The US-CHINA DECOUPLING has begun. There are sharp disagreements on SANCTIONS on Russia. China wants better economy ahead of the 20th Communist Party Conference in late-2022. Covid-19 is surging, and oil and food prices have risen after the Russia-Ukraine WAR. President XI will carefully manage relations with Russia, the US, the EU. It will also try to sanction-proof its economy to the extent possible to protect it from secondary sanctions now (from its relations and trade with Russia) and possible primary sanctions later if China-TAIWAN issue flares up. ACCESS to Western financial networks and own assets held there may be a new risk. FOREIGN companies also face legal and regulatory hurdles in China. All countries are reviewing supply-chain issues and dependence on concentrated sources of materials and products (pandemic and war may finally end whatever remains of globalization).
(EXTRAS from online Friday that didn’t make the weekend paper version)
OTHER VOICES2. Erica DOWNS, Columbia U. CHINA will benefit from Western sanctions on RUSSIA. Chinese purchases of Russia oil/gas may be with yuan. There are some current logistics issues and there are plans for new pipelines. China may also be careful in keeping its oil/gas imports diversified.
