Post by Admin/YBB on Oct 8, 2022 9:49:09 GMT -6
Pg 12-13. FOMC Minutes on WEDNESDAY. Q3 earnings season starts on FRIDAY.
REVIEW. Hedge funds have been shorting the UK pound (ODEY/Blue Bay made $1 billion on trades), but for the BOE, there was no SOROS-moment (1992).
PREVIEW. LUMBER fell -60%. PVC fell -46%; other petroleum products also fell, polyethylene -24%, polypropylene -32%. OXY is a major producer of petroleum products and its stock has rallied on Warren BUFFETT’s/BRK purchases (20% stake now). Eventually, the weakness in petrochemicals will hurt OXY earnings and WB’s pocketbook.
DATA THIS WEEK. Small business optimism on TUESDAY; PPI (+8.4%, core +7.2%), Treasury budget on WEDNESDAY; CPI (+8.1%, core +6.5%) on THURSDAY; UM consumer sentiment, consumer spending, retail sales, business inventories on FRIDAY.
With the CPI data on Thursday, good estimates would be possible for the I-Bond rate on November 1 and the Social Security increase for 2023.
CLOSED. US bond market on MONDAY (US stock markets will be open normally).
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Illumina (ILMN; new low-cost gene readers; acquisition of Grail (blood tests for cancer) is facing regulatory scrutiny; pg 15);
Madison Square Garden Sports (MSGS; special dividends only; fwd P/E 71.4; buybacks; 51% discount from the NAV; teams NY Knicks/NBA, NY Rangers/NHL; DOLAN family owns 20%, but control 70% via supervoting stock; hostile takeover is not possible, but minority stakes may be offered; sister co MSGE owns MSG/NY and Sphere/LV arenas and a cable network; pg 17).
BEARISH. See other stories.
Pg 14: CHINA feature on upcoming 20th Party Congress where President XI (69) is expected to win an unprecedented 3rd term. This despite various issues facing China – stalling economy; high debt; weak yuan; Covid fiasco; tech and large business crackdowns; poor stock market; China-Taiwan relations; US China relations. Future potential and opportunities remain, and foreign investors should try to “invest with the Party”.
Pg 22: Katrina DUDLEY, EUROPE TEMIX. Things couldn’t be worse for Europe but that is how opportunities develop. Costs have risen sharply due to supply-chain disruptions, energy crisis, Russia-Ukraine war. However, Europe wasn’t overvalued before all this, jobs are holding up so far, and any recession may be short and shallow. Be selective as countries are following different paths. Lower currencies (vs DOLLAR) are hurting the returns of the US investors. She LIKES telecom, energy, industrials, insurance, aircraft leasing, etc; she is AVOIDING travel, entertainment, etc. CHINA will remain a global growth engine despite pause or slowdown, so European companies with China exposure would be fine. RISKS include the ECB polies, energy crisis.
Pg 24: Post-CRYPTO-CRASH, look for durable opportunities in crypto assets and BLOCKCHAIN technology. Some companies are experimenting with crypto payments; interbank system SWIFT is testing crypto transfers; WisdomTree (WETF) is launching a blockchain-based short-term Treasury fund. Invest through crypto-service companies such as COIN, SI, SQ, PYPL, SBNY, etc. Crypto-related ETFs include BLOK (-50%), BKCH (-70%). REGULATORY issues prevent big banks and institutions from dealing with cryptos. In fact, crypto industry wants some regulations itself to eliminate the current regulatory chaos/vacuum and aggressive moves by the SEC.
Pg 25: MUSK-Twitter/TWTR saga of mistrust and allegations/accusations continues even after Musk’s flip to buying TWTR now at the original deal price ($54.20, 04/2022). Delaware Chancery Court gave Musk until October 28 to close the deal or face trial. TWTR price discount of 9.6% (still high) means that investors see a decent possibility for the deal to close in about 3 weeks. It would be an expensive purchase for Musk at fwd P/S 8 but 2nd thoughts or buyer’s remorse are not legal reasons to backout of a rushed/impulsive deal. Musk now plans for TWTR to become a super-app (he called the idea X-app).
Pg 26: INCOME. To avoid losses, short-term TIPS funds (STIP, VTIP) are suggested. (Better: short-term TIPS held to maturity (<= 5 years) nearly track CPI without undue risks).
Pg 26, TECH TRADER. Regulators (FTC, DOJ, WH advisors) are taking a hard look at Adobe-Figma deal. Adobe’s transition to WEB-based subscription model has been slow and that is why it is interested in buying web-based startup Figma at very high P/S 100. Regulators are concerned that the combo will dominate its markets one day like some other techs have done (FB, etc). ADBE has sold off on concerns.
Pg 27: ECONOMY. Consumer SAVINGS are declining due to post-pandemic SPENDING boom and high INFLATION. The official data on consumer savings may have overstated their earlier levels. Consumer DEBT is rising, so are loan delinquencies and defaults. Buy-now-pay-later (BNPL) sales programs are rising (beneficiary is AFRM). Auto-loan (prime, sub-prime) delinquencies are up sharply. The government data on consumer spending are not reflecting these issues yet as the data are skewed towards wealthier consumers. The US OIL inventories are low; the releases from the SPR will end soon (despite recent extension); the OPEC has cut production. So, the oil prices may remain high, around $100. The FED’s approach now is higher rates for longer. There are concerns that the US recession may be deeper as a result of these consumer issues and Fed policy.
Pg 54: OTHER VOICES. Seong-Hyon LEE, Senior Fellow at G.H.W Bush Foundation; Visiting Scholar at Fairbank Center/Harvard. Another piece on China Party Congress and 3rd term for President XI. More confusing terms/slogans are arising, like dual-circulation strategy to mean domestic self-sustainability, not domestic + international (export) focus of the past. Common-prosperity will be promoted extensively (in the past it justified crackdown on big businesses). Power-relations in international arena will be used to assert China growing stature (it may be a code word for leaving the Western Pacific to China). National-reunification would obviously mean China + Taiwan (a core-of-core interest, code words that China may be willing to go to war over this) at some point. Xi is a communist-socialist and an ideolog who believes that the East (code word for China) is rising, the West (code word for the US) is declining. Some of Xi’s economic and policy ideas have been disasters (business crackdowns, Covid prevention by lockdowns only) but his political hold on power remains firm.
(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. Hedge funds have been shorting the UK pound (ODEY/Blue Bay made $1 billion on trades), but for the BOE, there was no SOROS-moment (1992).
PREVIEW. LUMBER fell -60%. PVC fell -46%; other petroleum products also fell, polyethylene -24%, polypropylene -32%. OXY is a major producer of petroleum products and its stock has rallied on Warren BUFFETT’s/BRK purchases (20% stake now). Eventually, the weakness in petrochemicals will hurt OXY earnings and WB’s pocketbook.
DATA THIS WEEK. Small business optimism on TUESDAY; PPI (+8.4%, core +7.2%), Treasury budget on WEDNESDAY; CPI (+8.1%, core +6.5%) on THURSDAY; UM consumer sentiment, consumer spending, retail sales, business inventories on FRIDAY.
With the CPI data on Thursday, good estimates would be possible for the I-Bond rate on November 1 and the Social Security increase for 2023.
CLOSED. US bond market on MONDAY (US stock markets will be open normally).
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Illumina (ILMN; new low-cost gene readers; acquisition of Grail (blood tests for cancer) is facing regulatory scrutiny; pg 15);
Madison Square Garden Sports (MSGS; special dividends only; fwd P/E 71.4; buybacks; 51% discount from the NAV; teams NY Knicks/NBA, NY Rangers/NHL; DOLAN family owns 20%, but control 70% via supervoting stock; hostile takeover is not possible, but minority stakes may be offered; sister co MSGE owns MSG/NY and Sphere/LV arenas and a cable network; pg 17).
BEARISH. See other stories.
Pg 14: CHINA feature on upcoming 20th Party Congress where President XI (69) is expected to win an unprecedented 3rd term. This despite various issues facing China – stalling economy; high debt; weak yuan; Covid fiasco; tech and large business crackdowns; poor stock market; China-Taiwan relations; US China relations. Future potential and opportunities remain, and foreign investors should try to “invest with the Party”.
Pg 22: Katrina DUDLEY, EUROPE TEMIX. Things couldn’t be worse for Europe but that is how opportunities develop. Costs have risen sharply due to supply-chain disruptions, energy crisis, Russia-Ukraine war. However, Europe wasn’t overvalued before all this, jobs are holding up so far, and any recession may be short and shallow. Be selective as countries are following different paths. Lower currencies (vs DOLLAR) are hurting the returns of the US investors. She LIKES telecom, energy, industrials, insurance, aircraft leasing, etc; she is AVOIDING travel, entertainment, etc. CHINA will remain a global growth engine despite pause or slowdown, so European companies with China exposure would be fine. RISKS include the ECB polies, energy crisis.
Pg 24: Post-CRYPTO-CRASH, look for durable opportunities in crypto assets and BLOCKCHAIN technology. Some companies are experimenting with crypto payments; interbank system SWIFT is testing crypto transfers; WisdomTree (WETF) is launching a blockchain-based short-term Treasury fund. Invest through crypto-service companies such as COIN, SI, SQ, PYPL, SBNY, etc. Crypto-related ETFs include BLOK (-50%), BKCH (-70%). REGULATORY issues prevent big banks and institutions from dealing with cryptos. In fact, crypto industry wants some regulations itself to eliminate the current regulatory chaos/vacuum and aggressive moves by the SEC.
Pg 25: MUSK-Twitter/TWTR saga of mistrust and allegations/accusations continues even after Musk’s flip to buying TWTR now at the original deal price ($54.20, 04/2022). Delaware Chancery Court gave Musk until October 28 to close the deal or face trial. TWTR price discount of 9.6% (still high) means that investors see a decent possibility for the deal to close in about 3 weeks. It would be an expensive purchase for Musk at fwd P/S 8 but 2nd thoughts or buyer’s remorse are not legal reasons to backout of a rushed/impulsive deal. Musk now plans for TWTR to become a super-app (he called the idea X-app).
Pg 26: INCOME. To avoid losses, short-term TIPS funds (STIP, VTIP) are suggested. (Better: short-term TIPS held to maturity (<= 5 years) nearly track CPI without undue risks).
Pg 26, TECH TRADER. Regulators (FTC, DOJ, WH advisors) are taking a hard look at Adobe-Figma deal. Adobe’s transition to WEB-based subscription model has been slow and that is why it is interested in buying web-based startup Figma at very high P/S 100. Regulators are concerned that the combo will dominate its markets one day like some other techs have done (FB, etc). ADBE has sold off on concerns.
Pg 27: ECONOMY. Consumer SAVINGS are declining due to post-pandemic SPENDING boom and high INFLATION. The official data on consumer savings may have overstated their earlier levels. Consumer DEBT is rising, so are loan delinquencies and defaults. Buy-now-pay-later (BNPL) sales programs are rising (beneficiary is AFRM). Auto-loan (prime, sub-prime) delinquencies are up sharply. The government data on consumer spending are not reflecting these issues yet as the data are skewed towards wealthier consumers. The US OIL inventories are low; the releases from the SPR will end soon (despite recent extension); the OPEC has cut production. So, the oil prices may remain high, around $100. The FED’s approach now is higher rates for longer. There are concerns that the US recession may be deeper as a result of these consumer issues and Fed policy.
Pg 54: OTHER VOICES. Seong-Hyon LEE, Senior Fellow at G.H.W Bush Foundation; Visiting Scholar at Fairbank Center/Harvard. Another piece on China Party Congress and 3rd term for President XI. More confusing terms/slogans are arising, like dual-circulation strategy to mean domestic self-sustainability, not domestic + international (export) focus of the past. Common-prosperity will be promoted extensively (in the past it justified crackdown on big businesses). Power-relations in international arena will be used to assert China growing stature (it may be a code word for leaving the Western Pacific to China). National-reunification would obviously mean China + Taiwan (a core-of-core interest, code words that China may be willing to go to war over this) at some point. Xi is a communist-socialist and an ideolog who believes that the East (code word for China) is rising, the West (code word for the US) is declining. Some of Xi’s economic and policy ideas have been disasters (business crackdowns, Covid prevention by lockdowns only) but his political hold on power remains firm.
(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).