Post by Admin/YBB on Apr 9, 2022 9:00:57 GMT -6
Pg 12-13. Chicago Fed President EVANS’ speech at Detroit Economic Club on MONDAY. 2022/Q1 EARNINGS SEASON opens with major banks reporting on WEDNESDAY.
REVIEW. The JOB market is very strong although there are wide variations among sectors. Lagging still are leisure/hospitality, mining, construction, manufacturing, education, health.
PREVIEW. Attractive FINTECHs from Jeff CANTWELL (WFC) include SHOP, SQ, PYPL, ADYEY, BILL, FIS, FISV, FLYW, GPN, MQ, PAY, TOST, FLT, WEX.
DATA THIS WEEK. CPI (+8.4% y-o-y), small business optimism index, Treasury budget on TUESDAY; PPI (+10.5% y-o-y; core PPI +8.4%) on WEDNESDAY; UM consumer sentiment, retail sales, import/export prices, business inventories on THURSDAY; industrial production, capacity utilization on FRIDAY.
CLOSED. US stock and bond markets (and many global markets) are closed for Good Friday.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. See other stories.
BEARISH. See other stories.
Pg 18: FOLLOW UP. Twitter (TWTR; fwd P/E 41; P/S 5) may need more than Elon MUSK’s tweets (and his 9.2% stake and board participation). The Musk-rally may be it for now unless Musk buys the entire company (after the standstill agreement expires; cofounder Jack DORSEY owns 2%). Musk is a charismatic and controversial personality, and he has a history of run ins with the SEC (which has yet to comment/rule on his very late filing of TWTR stake). Activists Elliott and Silver Lake are also involved.
Pg 25: In theory, STOCK SPLITS don’t do anything, yet they have observable positive effects, and more companies are rushing to do this now (GOOGL, AMZN, TSLA, GME, RH, etc). It is a late bull market sign with the prior split-booms in 2000 (record), 2007, 2015. The median SP500 stock price is $118 today (the median NYSE price is lower), so high stock price should be seen relative to that. Several stocks priced $1,000+ that have potential for future splits are NVR, BKNG, AZO, CMG, MTD. Reasonable stock price does improve stock liquidity, enhances chances for inclusion in indexes and increases access by small investors and employees. However, odd-lot trading, commission-free trading and the new fractional trading at many brokerages removes the latter obstacle.
Pg 27: Agribusiness giant Bunge (BG; yield 1.9%; fwd P/E 10.8; buybacks) is attractive. It buys crops (soybeans, corn, grains), transports, stores and processes them. Finished products include cooking oils, biofuels, animal feeds. It can pass on price increase (sometimes even more) to its customers.
Pg 28, TECH TRADER. PC and printer company HP (HPQ; yield 2.8%; fwd P/E 9; P/S 0.7; buybacks) remains attractive even after the bounce from BUFFETT’s/BRK 11.4% stake. It has benefitted from pandemic-driven demand for PCs but that may have peaked. It has expanded into gaming peripherals (HyperX) and audioconferencing and headsets (POLY). Other “value” techs include HPE, DXC, STX, WDC, MU, QRVO, SWKS. Several other tech picks from Paul WICK (SLMCX, ETF SEMI) are also mentioned.
Pg 29: ECONOMY. The FOMC Minutes noted that FED balance sheet reductions (QT or negative QE) may start at -$95 billion/mo (-$60 billion/mo Treasuries, -$35 billion/mo MBS). For a while, the Treasury roll offs may be enough but that won’t be so for MBS as prepayments slowdown with rising mortgage rates. This means that the Fed will be selling MBS almost from the start. About $1 trillion in QT is equivalent to 50 bps rate hike. Then the next 1-2 RATE HIKES may be 50 bps (vs 25 bps). Treasury will also be issuing more debt. All this is not priced fully in the stock and bond markets.
Pg 30: Kewsong LEE, CEO of Carlyle Group/CG (AUM $301 billion). Firm is expanding beyond private-equity LBOs to deals involving private credits, real estate, insurance, infrastructure, renewables and technology. Private capital provides more than just the money, e.g. the related business consulting and strategies. The M&A business remains strong. The US-China decoupling is unlikely, and it would be important to manage that relationship. Firm has an ESG overlay across the board. REGIONALIZATION (spheres of influence) will replace globalization. Forget JIT (just-in-time) but think of JIC (just-in-case). This will have implications on costs and will affect businesses differently. Inflation and commodity shortages will accelerate energy transitions. The era of liquidity- and momentum- driven markets is over. Companies will need profits and cash flows (or clear paths to those) to survive. Current themes include cybersecurity, energy security, food security, climate issues and infrastructure.
Pg 62: OTHER VOICES. David MALPASS, President of the World Bank. Due to Russia-Ukraine war and resulting disruptions in crop production and supply-chains, global FOOD PRICES have risen. Several producing countries have imposed EXPORT CONTROLS that are contributing further to food inflation. Poor countries import more foods, and their households spend 50%+ of their budgets on food items. It is suggested that many of these food export restrictions may be rash or premature based on available INVENTORIES. The G7 has pledged not to impose food export bans and many other producing countries should also do so to the extent possible.
(EXTRAS from online Friday that didn’t make the weekend paper version)
FOLLOW UP. Shipping container and equipment leasing company Triton (TRTN; yield 4.4%; fwd P/E 6; buybacks) may weather slowdown after supply-chain bottlenecks clear out. But transportation stocks have sold off sharply on these concerns.
REVIEW. The JOB market is very strong although there are wide variations among sectors. Lagging still are leisure/hospitality, mining, construction, manufacturing, education, health.
PREVIEW. Attractive FINTECHs from Jeff CANTWELL (WFC) include SHOP, SQ, PYPL, ADYEY, BILL, FIS, FISV, FLYW, GPN, MQ, PAY, TOST, FLT, WEX.
DATA THIS WEEK. CPI (+8.4% y-o-y), small business optimism index, Treasury budget on TUESDAY; PPI (+10.5% y-o-y; core PPI +8.4%) on WEDNESDAY; UM consumer sentiment, retail sales, import/export prices, business inventories on THURSDAY; industrial production, capacity utilization on FRIDAY.
CLOSED. US stock and bond markets (and many global markets) are closed for Good Friday.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. See other stories.
BEARISH. See other stories.
Pg 18: FOLLOW UP. Twitter (TWTR; fwd P/E 41; P/S 5) may need more than Elon MUSK’s tweets (and his 9.2% stake and board participation). The Musk-rally may be it for now unless Musk buys the entire company (after the standstill agreement expires; cofounder Jack DORSEY owns 2%). Musk is a charismatic and controversial personality, and he has a history of run ins with the SEC (which has yet to comment/rule on his very late filing of TWTR stake). Activists Elliott and Silver Lake are also involved.
Pg 25: In theory, STOCK SPLITS don’t do anything, yet they have observable positive effects, and more companies are rushing to do this now (GOOGL, AMZN, TSLA, GME, RH, etc). It is a late bull market sign with the prior split-booms in 2000 (record), 2007, 2015. The median SP500 stock price is $118 today (the median NYSE price is lower), so high stock price should be seen relative to that. Several stocks priced $1,000+ that have potential for future splits are NVR, BKNG, AZO, CMG, MTD. Reasonable stock price does improve stock liquidity, enhances chances for inclusion in indexes and increases access by small investors and employees. However, odd-lot trading, commission-free trading and the new fractional trading at many brokerages removes the latter obstacle.
Pg 27: Agribusiness giant Bunge (BG; yield 1.9%; fwd P/E 10.8; buybacks) is attractive. It buys crops (soybeans, corn, grains), transports, stores and processes them. Finished products include cooking oils, biofuels, animal feeds. It can pass on price increase (sometimes even more) to its customers.
Pg 28, TECH TRADER. PC and printer company HP (HPQ; yield 2.8%; fwd P/E 9; P/S 0.7; buybacks) remains attractive even after the bounce from BUFFETT’s/BRK 11.4% stake. It has benefitted from pandemic-driven demand for PCs but that may have peaked. It has expanded into gaming peripherals (HyperX) and audioconferencing and headsets (POLY). Other “value” techs include HPE, DXC, STX, WDC, MU, QRVO, SWKS. Several other tech picks from Paul WICK (SLMCX, ETF SEMI) are also mentioned.
Pg 29: ECONOMY. The FOMC Minutes noted that FED balance sheet reductions (QT or negative QE) may start at -$95 billion/mo (-$60 billion/mo Treasuries, -$35 billion/mo MBS). For a while, the Treasury roll offs may be enough but that won’t be so for MBS as prepayments slowdown with rising mortgage rates. This means that the Fed will be selling MBS almost from the start. About $1 trillion in QT is equivalent to 50 bps rate hike. Then the next 1-2 RATE HIKES may be 50 bps (vs 25 bps). Treasury will also be issuing more debt. All this is not priced fully in the stock and bond markets.
Pg 30: Kewsong LEE, CEO of Carlyle Group/CG (AUM $301 billion). Firm is expanding beyond private-equity LBOs to deals involving private credits, real estate, insurance, infrastructure, renewables and technology. Private capital provides more than just the money, e.g. the related business consulting and strategies. The M&A business remains strong. The US-China decoupling is unlikely, and it would be important to manage that relationship. Firm has an ESG overlay across the board. REGIONALIZATION (spheres of influence) will replace globalization. Forget JIT (just-in-time) but think of JIC (just-in-case). This will have implications on costs and will affect businesses differently. Inflation and commodity shortages will accelerate energy transitions. The era of liquidity- and momentum- driven markets is over. Companies will need profits and cash flows (or clear paths to those) to survive. Current themes include cybersecurity, energy security, food security, climate issues and infrastructure.
Pg 62: OTHER VOICES. David MALPASS, President of the World Bank. Due to Russia-Ukraine war and resulting disruptions in crop production and supply-chains, global FOOD PRICES have risen. Several producing countries have imposed EXPORT CONTROLS that are contributing further to food inflation. Poor countries import more foods, and their households spend 50%+ of their budgets on food items. It is suggested that many of these food export restrictions may be rash or premature based on available INVENTORIES. The G7 has pledged not to impose food export bans and many other producing countries should also do so to the extent possible.
(EXTRAS from online Friday that didn’t make the weekend paper version)
FOLLOW UP. Shipping container and equipment leasing company Triton (TRTN; yield 4.4%; fwd P/E 6; buybacks) may weather slowdown after supply-chain bottlenecks clear out. But transportation stocks have sold off sharply on these concerns.