Post by Admin/YBB on May 21, 2022 8:37:18 GMT -6
Pg 10-11. FOMC Minutes on WEDNESDAY.
REVIEW. $6+ GASOLINE may be here by Summer. Russian oil supplies have been off the Western markets; the US producers are busy producing and exporting refined products at the expense of gasoline for domestic use (oil refiners can optimize production for gasoline or other distillates); the US gasoline inventories are the lowest since 2019. There will be a supply deficit for gasoline in the US market and the national average pump price for gasoline may rise from $4.50 now to $6.20 in Summer.
PREVIEW. Financial advisors are warning clients about BEAR market and RECESSION. KROFT/Neuberger Berman is focusing on high-quality stocks and short-duration fixed-income (especially munis); POLICAR/NGP Financial Planning has started to buy selected stocks that have sold off; KIM/Ameriprise is bargain hunting.
DATA THIS WEEK. New home sales, S&P manufacturing PMI, S&P services PMI on TUESDAY; durable goods report on WEDNESDAY; Q1 GDP (2nd est same) on THURSDAY; personal income and spending, UM Sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Small-cap Genco Shipping & Trading (GNK; +42% YTD; new variable-dividend may reach 14.2% (new policy is to distribute the excess of operating earnings over capex + debt servicing + some reserves); fwd P/E 4.5 only; operates 44 dry-bulk ships (basically, large steel containers with engines); Baltic Dry index is at 3.300 (range since 05/2020 400-5,500); pg 15).
BEARISH. See other stories.
Pg 12: BARGAINS among BROKEN IPOs (now priced well below their IPO prices): BIRD, POSH, RIVN, HOOD, WRBY; ETF IPO (-50% YTD; holds large post-IPO stocks for up to 3 years). Many have high cash/share.
Pg 14: AVOID these fallen but not-yet-cheap stocks: CRWD, SNOW, SHOP, ZS, LYFT, PYPL. In falling markets, only the GAAP earnings matter. These stocks have large gaps between GAAP earnings and “funny” earnings due to high stock-based compensations.
Pg 16: REROUTING GLOBAL TRADE (looks like the original Cover story that got bupmed by the Market story). US-China tensions (not just on trade), pandemic, Russia-Ukraine war are leading to GLOBALIZATION 2.0, a more rationalized, higher-cost, lower-margin version. Safety, resiliency, supply-chain duplication, buffer-inventories, industry-country cooperation, regional trade agreements (RCEP, USMCA, EU, ASEAN, AfCFTA, etc) will be the new factors. Mentioned are ETFs India INDA, Mexico EWW, global industrial EXI; some stocks such as KMT, KLAC, TSM and several that trade on foreign exchanges.
Pg 20: FOLLOW UP. House-flipper Opendoor/OPEN may be attractive after 80% crash since early-2021. It is trying to succeed in an area where Offerpad/OPAD is struggling, and Zillow/Z just gave up.
Pg 21: There may be debt time-bombs in leveraged BOND CEFs. They have high leverage and may be forced to deleverage in down market (2008, 2020) due to regulatory limits on leverage. Rising rates lead to higher leverage costs and potential distribution cuts. The CEF sponsors collect fees on gross assets. Mentioned are PDI, PDO, DNP, CSQ, UTF; muni NAD, NEA, NVG, NZF, CA NAC. (As I have explained elsewhere, the CEF leverage is also understated because it is stated for gross assets, not for net assets that their holders will experience, ybbpersonalfinance.proboards.com/post/471/thread )
Pg 22: INCOME INVESTING. Asset-lite hotel stocks MAR, HLT resumed their dividends; CHH, WH did that earlier; H has yet to do this. Leisure travel has recovered faster than business travel. (Many of these yields are small, but it a good sign)
Pg 22, ECONOMY. While (nominal) RETAIL SALES rose (but profits didn’t), they declined in real terms, so noted Lyn ALDEN (own firm). This issue of declining UNIT sales is also seen elsewhere. So, the consumers are really pulling back as they buy less with more and their SAVINGS have declined, so notes David ROSENBERG (own firm). Improving supply-chain deliveries are causing INVENTORY buildup that will lead to slowdowns in new orders and future production. Sharply rising consumer CREDIT is cited as healthy but those rising credit balances at high interest rates have to be paid back. A silver lining may be that higher prices will cure higher prices (by lessening demand) and may limit inflation. That may cause the FED to declare victory on inflation sooner than later.
Pg 23, TECH TRADER. Huge TECH SELLOFF is causing VENTURE CAPITAL to dry for startups. Private market valuations are down sharply. The IPO market has almost come to a halt. Post-IPO stocks have also sold off (ETF IPO -50% YTD). SoftBank/SFTBY has lost $27 billion in its 3 venture funds. Post-IPO returns for public investors have been poor. The SPACs are struggling to find targets (they must do so within 2 years or return the money; there are several pre-merger-only SPAC ETFs counting on just this). Big techs face regulatory hurdles for big M&A.
Pg 24, Dan IVASCYN, Pimco CIO (PIMIX, PDI, PDO, etc). Peak CPI may be behind us, but it may persist at a high level. There is risk of recession due to FED actions and Russia-Ukraine war. Pimco macro themes are uncertainty, slower growth, high inflation. Nonagency MBS don’t offer opportunities that they once did; agency MBS are more attractive. Securitized credits and corporate credits are now attractive; HY is not very attractive. Pimco funds have lowered duration to lower rate risks. PIMIX is more diversified now compared to its early days, but its objectives remain the same – attractive and consistent income with some preservation of capital. It has Asian exposure but limited Chinese exposure. Exposure to the US credits is also less as that has become a crowded area. Individual investors should be patient with fixed income and should be adding to it now. Housing is not bubbly.
Pg 54: OTHER VOICES. Joseph QUINLAN, ML/BAC. Death of GLOBALIZATION may be exaggerated. The US direct investments (inflows and outflows) are rising. Cross-border flows of goods, services, capital and people (Covid permitting) will remain strong. The US multinationals continue to dominate. That is not to say that globalization faces new challenges now, but deglobalization is a myth as far as the US is concerned.
(EXTRAS from online Friday that didn’t make the weekend paper version) (Many this week)
Spirit Airlines/SAVE accepted the bid from Frontier Group/ULCC and is proceeding with shareholders’ vote. It ignored a higher bid from JetBlue/JBLU due to regulatory concerns, but JBLU is now proceeding with a hostile offer directly to SAVE stockholders. Another twist is that the DOJ is trying to block an alliance between American/AAL and JBLU. Investors may want to hold both SAVE and ULCC.
FUNDS. From Morningstar 2022 MIC-US, Chicago: BITCOIN is the most important cryptocurrency that will be around; ESG has become much more cost effective compared to a decade ago; Ukraine has won the Russia-Ukraine war by not losing/surrendering.
FUNDS. More from MIC-US panel with GIROUX/Price, MOORE/BlackRock, Simnegar/Fidelity (international). After the market selloff, they are finding bargains in techs (AAPL, MSFT, NVDA, AMZN), industrials, financials, consumer-staples (NSRGY), healthcare (NVO), materials (SXYAY). Many stocks are already priced for recession.
ETFs. With both stocks and bonds down this year, many investors are looking for ALTERNATIVES ETFs – multi-asset GMOM, CLSA, TDSB; managed-futures FMF, KMLM, DBMF; buffer BMAY.
Accessible from Morningstar (M*), Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
REVIEW. $6+ GASOLINE may be here by Summer. Russian oil supplies have been off the Western markets; the US producers are busy producing and exporting refined products at the expense of gasoline for domestic use (oil refiners can optimize production for gasoline or other distillates); the US gasoline inventories are the lowest since 2019. There will be a supply deficit for gasoline in the US market and the national average pump price for gasoline may rise from $4.50 now to $6.20 in Summer.
PREVIEW. Financial advisors are warning clients about BEAR market and RECESSION. KROFT/Neuberger Berman is focusing on high-quality stocks and short-duration fixed-income (especially munis); POLICAR/NGP Financial Planning has started to buy selected stocks that have sold off; KIM/Ameriprise is bargain hunting.
DATA THIS WEEK. New home sales, S&P manufacturing PMI, S&P services PMI on TUESDAY; durable goods report on WEDNESDAY; Q1 GDP (2nd est same) on THURSDAY; personal income and spending, UM Sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Small-cap Genco Shipping & Trading (GNK; +42% YTD; new variable-dividend may reach 14.2% (new policy is to distribute the excess of operating earnings over capex + debt servicing + some reserves); fwd P/E 4.5 only; operates 44 dry-bulk ships (basically, large steel containers with engines); Baltic Dry index is at 3.300 (range since 05/2020 400-5,500); pg 15).
BEARISH. See other stories.
Pg 12: BARGAINS among BROKEN IPOs (now priced well below their IPO prices): BIRD, POSH, RIVN, HOOD, WRBY; ETF IPO (-50% YTD; holds large post-IPO stocks for up to 3 years). Many have high cash/share.
Pg 14: AVOID these fallen but not-yet-cheap stocks: CRWD, SNOW, SHOP, ZS, LYFT, PYPL. In falling markets, only the GAAP earnings matter. These stocks have large gaps between GAAP earnings and “funny” earnings due to high stock-based compensations.
Pg 16: REROUTING GLOBAL TRADE (looks like the original Cover story that got bupmed by the Market story). US-China tensions (not just on trade), pandemic, Russia-Ukraine war are leading to GLOBALIZATION 2.0, a more rationalized, higher-cost, lower-margin version. Safety, resiliency, supply-chain duplication, buffer-inventories, industry-country cooperation, regional trade agreements (RCEP, USMCA, EU, ASEAN, AfCFTA, etc) will be the new factors. Mentioned are ETFs India INDA, Mexico EWW, global industrial EXI; some stocks such as KMT, KLAC, TSM and several that trade on foreign exchanges.
Pg 20: FOLLOW UP. House-flipper Opendoor/OPEN may be attractive after 80% crash since early-2021. It is trying to succeed in an area where Offerpad/OPAD is struggling, and Zillow/Z just gave up.
Pg 21: There may be debt time-bombs in leveraged BOND CEFs. They have high leverage and may be forced to deleverage in down market (2008, 2020) due to regulatory limits on leverage. Rising rates lead to higher leverage costs and potential distribution cuts. The CEF sponsors collect fees on gross assets. Mentioned are PDI, PDO, DNP, CSQ, UTF; muni NAD, NEA, NVG, NZF, CA NAC. (As I have explained elsewhere, the CEF leverage is also understated because it is stated for gross assets, not for net assets that their holders will experience, ybbpersonalfinance.proboards.com/post/471/thread )
Pg 22: INCOME INVESTING. Asset-lite hotel stocks MAR, HLT resumed their dividends; CHH, WH did that earlier; H has yet to do this. Leisure travel has recovered faster than business travel. (Many of these yields are small, but it a good sign)
Pg 22, ECONOMY. While (nominal) RETAIL SALES rose (but profits didn’t), they declined in real terms, so noted Lyn ALDEN (own firm). This issue of declining UNIT sales is also seen elsewhere. So, the consumers are really pulling back as they buy less with more and their SAVINGS have declined, so notes David ROSENBERG (own firm). Improving supply-chain deliveries are causing INVENTORY buildup that will lead to slowdowns in new orders and future production. Sharply rising consumer CREDIT is cited as healthy but those rising credit balances at high interest rates have to be paid back. A silver lining may be that higher prices will cure higher prices (by lessening demand) and may limit inflation. That may cause the FED to declare victory on inflation sooner than later.
Pg 23, TECH TRADER. Huge TECH SELLOFF is causing VENTURE CAPITAL to dry for startups. Private market valuations are down sharply. The IPO market has almost come to a halt. Post-IPO stocks have also sold off (ETF IPO -50% YTD). SoftBank/SFTBY has lost $27 billion in its 3 venture funds. Post-IPO returns for public investors have been poor. The SPACs are struggling to find targets (they must do so within 2 years or return the money; there are several pre-merger-only SPAC ETFs counting on just this). Big techs face regulatory hurdles for big M&A.
Pg 24, Dan IVASCYN, Pimco CIO (PIMIX, PDI, PDO, etc). Peak CPI may be behind us, but it may persist at a high level. There is risk of recession due to FED actions and Russia-Ukraine war. Pimco macro themes are uncertainty, slower growth, high inflation. Nonagency MBS don’t offer opportunities that they once did; agency MBS are more attractive. Securitized credits and corporate credits are now attractive; HY is not very attractive. Pimco funds have lowered duration to lower rate risks. PIMIX is more diversified now compared to its early days, but its objectives remain the same – attractive and consistent income with some preservation of capital. It has Asian exposure but limited Chinese exposure. Exposure to the US credits is also less as that has become a crowded area. Individual investors should be patient with fixed income and should be adding to it now. Housing is not bubbly.
Pg 54: OTHER VOICES. Joseph QUINLAN, ML/BAC. Death of GLOBALIZATION may be exaggerated. The US direct investments (inflows and outflows) are rising. Cross-border flows of goods, services, capital and people (Covid permitting) will remain strong. The US multinationals continue to dominate. That is not to say that globalization faces new challenges now, but deglobalization is a myth as far as the US is concerned.
(EXTRAS from online Friday that didn’t make the weekend paper version) (Many this week)
Spirit Airlines/SAVE accepted the bid from Frontier Group/ULCC and is proceeding with shareholders’ vote. It ignored a higher bid from JetBlue/JBLU due to regulatory concerns, but JBLU is now proceeding with a hostile offer directly to SAVE stockholders. Another twist is that the DOJ is trying to block an alliance between American/AAL and JBLU. Investors may want to hold both SAVE and ULCC.
FUNDS. From Morningstar 2022 MIC-US, Chicago: BITCOIN is the most important cryptocurrency that will be around; ESG has become much more cost effective compared to a decade ago; Ukraine has won the Russia-Ukraine war by not losing/surrendering.
FUNDS. More from MIC-US panel with GIROUX/Price, MOORE/BlackRock, Simnegar/Fidelity (international). After the market selloff, they are finding bargains in techs (AAPL, MSFT, NVDA, AMZN), industrials, financials, consumer-staples (NSRGY), healthcare (NVO), materials (SXYAY). Many stocks are already priced for recession.
ETFs. With both stocks and bonds down this year, many investors are looking for ALTERNATIVES ETFs – multi-asset GMOM, CLSA, TDSB; managed-futures FMF, KMLM, DBMF; buffer BMAY.
Accessible from Morningstar (M*), Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).