Post by Admin/YBB on Jul 23, 2022 8:41:03 GMT -6
Pg 10-11. FOMC Statement (75-bps hike) and POWELL’s press conference on WEDNESDAY.
REVIEW. BoA survey of fund managers showed deep pessimism and the highest cash levels since 10/2001. With such negativity, bottom may not be in but the worst may be behind.
PREVIEW. Short-selling research firm S3 Partners has a list of 25 stocks with potential SHORT-SQUEEZES that includes 5 EV stocks. These have high short-interest ratios. MEME stock fever again?
DATA THIS WEEK: National home price index, consumer confidence index, new home sales on TUESDAY; durable goods report on WEDNESDAY; Q2 GDP growth (+1.6% est) on THURSDAY; personal income and spending, PCE, UM Sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Academy Sports and Outdoors (ASO; late-2020 IPO; fwd P/E 5.9; net debt/EBITDA 0.2 only; everyday low prices; prior recommendation 07/2021; pg 9).
BEARISH. See other stories.
Pg 12: 50-bps hike by the ECB to 0% has increased the risks of euro breakup. Rates within the euro-zone are diverging with 10-yr in Germany at 1.2% but in Italy 3.6% (the 3rd largest economy within the euro-zone with political instability). Euro is again facing a crisis similar to that in 2010-12. A new ECB program called Transmission Protection instrument with tough conditions is really an anti-breakup plan for euro. Weak euro has also been a problem that is contributing to high inflation.
Pg 13: EURO (1999- ) is in crisis again. The underlying problem is a SINGLE CURRENCY for very different economies in the EURO-ZONE. Now there are stronger core countries and weaker peripheral countries, but none can adjust currency to suit their local needs. The same countries keep having the same problems repeatedly and there have been booms and busts. The ECB can even buy the debt of weaker countries under some strict rules as backstops which haven’t been triggered so far. But there is lots of bitterness and disunity within the euro-zone.
Pg 14, FUNDS. Recommended are I-Bonds (9.62%; limit $10K/yr/TD account), individual TIPS (at Treasury Direct or brokerages), TIPS funds (short-term – TRBFX, STIP, VTIP; IT/LT – SCHP, VIPSX, TIP). Beware of confusing reporting of 30-day SEC yields for TIPS funds (some simply add current CPI to real 30-day SEC yield).
Pg 15: An annual feature on BEST ANNUITIES for income and growth. BEAR market and rising RATES have made annuities attractive (record Q2 sales). Many annuities have GUARANTEED features that basically transfer some risks from annuity buyers to insurance companies; there are associated costs for this. There are several tables that provide 100 examples of different kinds of annuities from various vendors (all rated A- and above by AM Best).
Pg 23, ECONOMY. With SOLAR FARMS gobbling up the farmland in TX and OK, and many farmers selling farmland and livestock (hay prices have quintupled) due to hot and dry weather, the GLOBAL FOOD CRISIS may also hit the US. The main cause for the global food shortage is the Russia-Ukraine war and resulting disruptions in the supply of food grains and fertilizers. While wind farms and farming can coexist, solar farms eliminate farming and this trend in TX and OK may also spread to Midwest. With President BIDEN’s green agenda stuck in DC, he may resort to executive orders and government incentives to push solar farms. But this public spending has a serious long-term downside for farming. Food prices are also impacted by high ENERGY costs.
Pg 29, FUNDS. Co-manager and Westwood CIO Adrian HELFERT of allocation/flexible-income WWIAX (30-50% equities; ER 1.09%) looks for companies with dividends, cash flows, durable competitive advantages, and strong managements. He increased exposure to energy and real estate. Fund does some call-writing. In fixed income, he has reduced duration and watches for default risks (debt/EBITDA, etc). He expects the Fed to flip at some point. Westwood recently acquired the multi-asset fund business of Salient Partners.
EXTRA, FUNDS. STABLE-VALUE (SV) funds within 401k/403b are complex products under insurance company or bank contracts. With high market volatility and rising rates, SVs have become very popular and record 85% of 401k/403b inflows in May went into SVs (that looks strange). But there are risks (lack of transparency; insurance company strength) and plan restrictions (equity-wash rules; flexible to limited redemptions). There was a recent lawsuit against AutoZone/AZO 401k-SV from Prudential/PRU (PRU recently dumped its retirement business including SVs on Empire).
Pg 31, ETFs. Big DIVIDEND ETFs got bigger – SCHD, VYM, HDV, JEPI, SPYD, DVY, DGRO, RDVY, VIG, SDY, NOBL, DHS (listed by $inflows). Most had low exposure to energy except HDV and DHS.
Pg 32, FUNDS. Sammy SIMNEGAR of LC-growth FMAGX and international LC-growth FIVFX (unusual for a manager to run 2 major Fido funds) has soured on big techs (but likes other techs). He thinks that the Fed will be on tightening course until it achieves its +2% inflation target. To prepare for economic slowdown, he is avoiding housing (but owns selected REITs) and low-end retail stocks. He has reduced China exposure; he doesn’t take China-Taiwan risk seriously and owns TSM.
Pg 34, TECH TRADER. Best tech CEOs include Lutke/SHOP, Gelsinger/INTC, Nadella/MSFT, Cook/AAPL, Su/AMD. Most have technical backgrounds.
Pg 62. Dr FAUCI, NIH and WH Advisor. Covid-19 will be around but will have less serious effects on fully vaccinated. Fully vaccinated people are getting infected and reinfected, and most don’t need hospitalizations. Notably, President BIDEN got infected and is recovering. Current vaccines are still for the original Covid-19 and have become less effective; newer vaccines will counter several VARIANTS. Covid-19 virus is not stable and keeps evolving into new variants. Immunity for it also isn’t durable, so BOOSTERS and/or REVACCINATIONS will be required. At-home tests are available and may be leading to underreporting, but PCR test counts, hospitalizations and sampling of wastewater are providing useful indicators. Pandemic may become endemic, but it still remains a serious issue not to be underestimated. People will have to learn to live with low levels of Covid-19. Common sense precautions and mask use (without mandates) will be needed.
(EXTRAS from online Friday that didn’t make the weekend paper version)
None
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
REVIEW. BoA survey of fund managers showed deep pessimism and the highest cash levels since 10/2001. With such negativity, bottom may not be in but the worst may be behind.
PREVIEW. Short-selling research firm S3 Partners has a list of 25 stocks with potential SHORT-SQUEEZES that includes 5 EV stocks. These have high short-interest ratios. MEME stock fever again?
DATA THIS WEEK: National home price index, consumer confidence index, new home sales on TUESDAY; durable goods report on WEDNESDAY; Q2 GDP growth (+1.6% est) on THURSDAY; personal income and spending, PCE, UM Sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Academy Sports and Outdoors (ASO; late-2020 IPO; fwd P/E 5.9; net debt/EBITDA 0.2 only; everyday low prices; prior recommendation 07/2021; pg 9).
BEARISH. See other stories.
Pg 12: 50-bps hike by the ECB to 0% has increased the risks of euro breakup. Rates within the euro-zone are diverging with 10-yr in Germany at 1.2% but in Italy 3.6% (the 3rd largest economy within the euro-zone with political instability). Euro is again facing a crisis similar to that in 2010-12. A new ECB program called Transmission Protection instrument with tough conditions is really an anti-breakup plan for euro. Weak euro has also been a problem that is contributing to high inflation.
Pg 13: EURO (1999- ) is in crisis again. The underlying problem is a SINGLE CURRENCY for very different economies in the EURO-ZONE. Now there are stronger core countries and weaker peripheral countries, but none can adjust currency to suit their local needs. The same countries keep having the same problems repeatedly and there have been booms and busts. The ECB can even buy the debt of weaker countries under some strict rules as backstops which haven’t been triggered so far. But there is lots of bitterness and disunity within the euro-zone.
Pg 14, FUNDS. Recommended are I-Bonds (9.62%; limit $10K/yr/TD account), individual TIPS (at Treasury Direct or brokerages), TIPS funds (short-term – TRBFX, STIP, VTIP; IT/LT – SCHP, VIPSX, TIP). Beware of confusing reporting of 30-day SEC yields for TIPS funds (some simply add current CPI to real 30-day SEC yield).
Pg 15: An annual feature on BEST ANNUITIES for income and growth. BEAR market and rising RATES have made annuities attractive (record Q2 sales). Many annuities have GUARANTEED features that basically transfer some risks from annuity buyers to insurance companies; there are associated costs for this. There are several tables that provide 100 examples of different kinds of annuities from various vendors (all rated A- and above by AM Best).
Pg 23, ECONOMY. With SOLAR FARMS gobbling up the farmland in TX and OK, and many farmers selling farmland and livestock (hay prices have quintupled) due to hot and dry weather, the GLOBAL FOOD CRISIS may also hit the US. The main cause for the global food shortage is the Russia-Ukraine war and resulting disruptions in the supply of food grains and fertilizers. While wind farms and farming can coexist, solar farms eliminate farming and this trend in TX and OK may also spread to Midwest. With President BIDEN’s green agenda stuck in DC, he may resort to executive orders and government incentives to push solar farms. But this public spending has a serious long-term downside for farming. Food prices are also impacted by high ENERGY costs.
Pg 29, FUNDS. Co-manager and Westwood CIO Adrian HELFERT of allocation/flexible-income WWIAX (30-50% equities; ER 1.09%) looks for companies with dividends, cash flows, durable competitive advantages, and strong managements. He increased exposure to energy and real estate. Fund does some call-writing. In fixed income, he has reduced duration and watches for default risks (debt/EBITDA, etc). He expects the Fed to flip at some point. Westwood recently acquired the multi-asset fund business of Salient Partners.
EXTRA, FUNDS. STABLE-VALUE (SV) funds within 401k/403b are complex products under insurance company or bank contracts. With high market volatility and rising rates, SVs have become very popular and record 85% of 401k/403b inflows in May went into SVs (that looks strange). But there are risks (lack of transparency; insurance company strength) and plan restrictions (equity-wash rules; flexible to limited redemptions). There was a recent lawsuit against AutoZone/AZO 401k-SV from Prudential/PRU (PRU recently dumped its retirement business including SVs on Empire).
Pg 31, ETFs. Big DIVIDEND ETFs got bigger – SCHD, VYM, HDV, JEPI, SPYD, DVY, DGRO, RDVY, VIG, SDY, NOBL, DHS (listed by $inflows). Most had low exposure to energy except HDV and DHS.
Pg 32, FUNDS. Sammy SIMNEGAR of LC-growth FMAGX and international LC-growth FIVFX (unusual for a manager to run 2 major Fido funds) has soured on big techs (but likes other techs). He thinks that the Fed will be on tightening course until it achieves its +2% inflation target. To prepare for economic slowdown, he is avoiding housing (but owns selected REITs) and low-end retail stocks. He has reduced China exposure; he doesn’t take China-Taiwan risk seriously and owns TSM.
Pg 34, TECH TRADER. Best tech CEOs include Lutke/SHOP, Gelsinger/INTC, Nadella/MSFT, Cook/AAPL, Su/AMD. Most have technical backgrounds.
Pg 62. Dr FAUCI, NIH and WH Advisor. Covid-19 will be around but will have less serious effects on fully vaccinated. Fully vaccinated people are getting infected and reinfected, and most don’t need hospitalizations. Notably, President BIDEN got infected and is recovering. Current vaccines are still for the original Covid-19 and have become less effective; newer vaccines will counter several VARIANTS. Covid-19 virus is not stable and keeps evolving into new variants. Immunity for it also isn’t durable, so BOOSTERS and/or REVACCINATIONS will be required. At-home tests are available and may be leading to underreporting, but PCR test counts, hospitalizations and sampling of wastewater are providing useful indicators. Pandemic may become endemic, but it still remains a serious issue not to be underestimated. People will have to learn to live with low levels of Covid-19. Common sense precautions and mask use (without mandates) will be needed.
(EXTRAS from online Friday that didn’t make the weekend paper version)
None
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).