Post by Admin/YBB on Aug 27, 2022 5:23:31 GMT -6
Pg 10-11.
REVIEW. Companies are adjusting to increased TAIWAN-CHINA tensions. While an invasion of Taiwan is unlikely, China’s live military drills and other actions are disrupting shipping traffic.
PREVIEW. SEPTEMBER (typically the worst month) selloff has an early start in August. (Will it end early too?)
DATA THIS WEEK. Dallas Fed Texas manufacturing index on MONDAY; JOLTS report, home price index, consumer confidence on TUESDAY; ADP national employment report, ISM Chicago business on WEDNESDAY; construction spending, productivity on THURSDAY; factory orders, Jobs Report (+270,000 to +290,000), unemployment rate 3.5% in FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Alcoa (AA; yield 0.7%; fwd P/E 7.4; buybacks; aluminum pure play with 2.9% of global production capacity; uses low-cost and clean hydro-power; joint-venture with RIO; mines bauxite in Australia; China is a major aluminum producer and user and relies more on cheap coal power; Europe has shut facilities as aluminum is a power hog; pg 13);
T-Mobile (TMUS; EV/EBITDA 10; buybacks; it built on Sprint acquisition to outrun VZ and T; it has the best positioning in midband spectrum that has good combo of 5G speed and range; DT owns 48.4%, SoftBank Corp/SOBKY owns 3%; pg 14);
Deutsche Telecom (DT; leading European telecom; owns 48.4% of TMUS; after backing out the TMUS stake, the market value of the remaining DT businesses is negligible, so DT is TMUS+ (yes, there are issues with DT, but that is good for almost free); pg 15).
BEARISH. See other stories.
Pg 12, ECONOMY. The FED must beat INFLATION even if there is some pain. Markets promptly tanked. Data have been mixed. JOBS market has been strong but unbalanced. FISCAL policy is providing new stimulus. PCE (inflation) moderated some. UM Sentiments was revised upwards.
Pg 15 The payments-for-order-flows (PFOFs) have been under attack by the SEC Chairman GENSLER and others. But a new academic paper shows that PFOFs didn’t lead to unfavorable pricing for retail brokerage customers. It is also true that the degree of PFOFs varies widely within the industry with Robinhood/HOOD getting 72% of revenues from PFOFs, TD Ameritrade (now part of Schwab/SCHW) 20%, E*Trade (now part of Morgan Stanley/MS) 14%, Fidelity 0%. Most PFOF orders are routed to Virtu/VIRT and Citadel.
Pg 20: NYC skyscraper OBSERVATION DECKS (tickets average $40 for adults, $34 for children; expedited entries may double those) are very profitable and are attracting interest from REITs (ESRT, SLG, etc) and institutions (KKR, Tishman Speyer, Legends, BXP, etc). Operators offer elevator experiences, glass ledges, souvenir shops, VIP tour packages, restaurants, private event spaces.
Pg 22: FUNDS. The SEC Chairman GENSLER has a long history of criticizing mutual fund FEES (12b-1 and others). Now the SEC has published a report for RIAs on fund fees, how they are used, dual RIA-broker registrations, revenue-sharing, etc. A SEC report on fund fee reforms may be out in October; 12b-1 fees may be restricted but not eliminated.
Pg 23: INCOME. Q2 global and US dividends were at all-time high although the US lagged in dividend growth. Expectations are for record dividends in 2022 and 2023 but their growth may be muted.
Pg 25, TECH TRADER. There is more trouble ahead for Nvidia/NVDA. It has been cutting guidance repeatedly. Hopes for a quick turnaround may be unrealistic. Its issues are high prices of its chips/cards (AMD is a competitor), glut of chips/cards in crypto industry (Ethereum’s shift from proof-of-work to proof-of-stake would also reduce chip/card demand), rising inventories. Even after a sharp selloff, NVDA isn’t cheap. Barron’s has been negative on NVDA and is reiterating that view.
Pg 26: FUNDS. Comanager Matt BURDETT of income-builder/global-allocation TIBAX/TIBIX (also, newer term-structure CEF TBLD) sees big income opportunities in Europe (when most are very negative). Fund has 80% in dividend-stocks (mostly foreign, some US) and 13% in BBB & below rated bonds. Europe isn’t homogeneous. Many European companies have large global footprints (RHHBY, etc); Total/TTE and Shell/SHEL offer better values (EV/EBITDA, etc) in energy than Exxon Mobil/XOM; other examples are also mentioned. Europe will be in recession but the question is how deep would it be? Fund has overweight in financials, underweight in IT. Burdett is also comanager for 2 other Thornburg funds.
Pg 54: OTHER VOICES. Zac PRINCE, BlockFi. Firm had a “run” in June 2022; it tightened its margin requirements. Times have been tough after cryptos peaked in 2021. Industry overexpanded and became overleveraged. Cryptos developed correlations with broad markets. A crisis developed in the crypto world in June 2022. Some firms went under, other suspended withdrawals. BlockFi focused on liquidity and credit lines, disciplined risk management, transparency, compliance. It may have survived the crypto Winter.
(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. Companies are adjusting to increased TAIWAN-CHINA tensions. While an invasion of Taiwan is unlikely, China’s live military drills and other actions are disrupting shipping traffic.
PREVIEW. SEPTEMBER (typically the worst month) selloff has an early start in August. (Will it end early too?)
DATA THIS WEEK. Dallas Fed Texas manufacturing index on MONDAY; JOLTS report, home price index, consumer confidence on TUESDAY; ADP national employment report, ISM Chicago business on WEDNESDAY; construction spending, productivity on THURSDAY; factory orders, Jobs Report (+270,000 to +290,000), unemployment rate 3.5% in FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Alcoa (AA; yield 0.7%; fwd P/E 7.4; buybacks; aluminum pure play with 2.9% of global production capacity; uses low-cost and clean hydro-power; joint-venture with RIO; mines bauxite in Australia; China is a major aluminum producer and user and relies more on cheap coal power; Europe has shut facilities as aluminum is a power hog; pg 13);
T-Mobile (TMUS; EV/EBITDA 10; buybacks; it built on Sprint acquisition to outrun VZ and T; it has the best positioning in midband spectrum that has good combo of 5G speed and range; DT owns 48.4%, SoftBank Corp/SOBKY owns 3%; pg 14);
Deutsche Telecom (DT; leading European telecom; owns 48.4% of TMUS; after backing out the TMUS stake, the market value of the remaining DT businesses is negligible, so DT is TMUS+ (yes, there are issues with DT, but that is good for almost free); pg 15).
BEARISH. See other stories.
Pg 12, ECONOMY. The FED must beat INFLATION even if there is some pain. Markets promptly tanked. Data have been mixed. JOBS market has been strong but unbalanced. FISCAL policy is providing new stimulus. PCE (inflation) moderated some. UM Sentiments was revised upwards.
Pg 15 The payments-for-order-flows (PFOFs) have been under attack by the SEC Chairman GENSLER and others. But a new academic paper shows that PFOFs didn’t lead to unfavorable pricing for retail brokerage customers. It is also true that the degree of PFOFs varies widely within the industry with Robinhood/HOOD getting 72% of revenues from PFOFs, TD Ameritrade (now part of Schwab/SCHW) 20%, E*Trade (now part of Morgan Stanley/MS) 14%, Fidelity 0%. Most PFOF orders are routed to Virtu/VIRT and Citadel.
Pg 20: NYC skyscraper OBSERVATION DECKS (tickets average $40 for adults, $34 for children; expedited entries may double those) are very profitable and are attracting interest from REITs (ESRT, SLG, etc) and institutions (KKR, Tishman Speyer, Legends, BXP, etc). Operators offer elevator experiences, glass ledges, souvenir shops, VIP tour packages, restaurants, private event spaces.
Pg 22: FUNDS. The SEC Chairman GENSLER has a long history of criticizing mutual fund FEES (12b-1 and others). Now the SEC has published a report for RIAs on fund fees, how they are used, dual RIA-broker registrations, revenue-sharing, etc. A SEC report on fund fee reforms may be out in October; 12b-1 fees may be restricted but not eliminated.
Pg 23: INCOME. Q2 global and US dividends were at all-time high although the US lagged in dividend growth. Expectations are for record dividends in 2022 and 2023 but their growth may be muted.
Pg 25, TECH TRADER. There is more trouble ahead for Nvidia/NVDA. It has been cutting guidance repeatedly. Hopes for a quick turnaround may be unrealistic. Its issues are high prices of its chips/cards (AMD is a competitor), glut of chips/cards in crypto industry (Ethereum’s shift from proof-of-work to proof-of-stake would also reduce chip/card demand), rising inventories. Even after a sharp selloff, NVDA isn’t cheap. Barron’s has been negative on NVDA and is reiterating that view.
Pg 26: FUNDS. Comanager Matt BURDETT of income-builder/global-allocation TIBAX/TIBIX (also, newer term-structure CEF TBLD) sees big income opportunities in Europe (when most are very negative). Fund has 80% in dividend-stocks (mostly foreign, some US) and 13% in BBB & below rated bonds. Europe isn’t homogeneous. Many European companies have large global footprints (RHHBY, etc); Total/TTE and Shell/SHEL offer better values (EV/EBITDA, etc) in energy than Exxon Mobil/XOM; other examples are also mentioned. Europe will be in recession but the question is how deep would it be? Fund has overweight in financials, underweight in IT. Burdett is also comanager for 2 other Thornburg funds.
Pg 54: OTHER VOICES. Zac PRINCE, BlockFi. Firm had a “run” in June 2022; it tightened its margin requirements. Times have been tough after cryptos peaked in 2021. Industry overexpanded and became overleveraged. Cryptos developed correlations with broad markets. A crisis developed in the crypto world in June 2022. Some firms went under, other suspended withdrawals. BlockFi focused on liquidity and credit lines, disciplined risk management, transparency, compliance. It may have survived the crypto Winter.
(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).