Post by Admin/YBB on Nov 12, 2022 10:17:53 GMT -6
Pg 10-11.
REVIEW. Berkshire Hathaway/BRK-A/B is benefitting from its ENERGY exposure (owns 20% of OXY, 8% of CVX, also OXY-pfd), much of which was acquired in 2022.
PREVIEW. 2022/Q3 EARNINGS were OK (with 90% of SP500 companies reporting), but watch out for falling 2023 estimates due to inflation, Fed tightening, economic slowdown/recession. The SP500 fwd P/E is 16.4 and may go lower (so, lower P/E on lower E; fwd P/E was 21 in January 2022). But stocks bottom 3-6 months ahead of the end of downward earnings revisions.
DATA THIS WEEK. PPI (est +8.3%, core +7.2%) on TUESDAY; retail sales, housing market index, business inventories on WEDNESDAY; housing starts on THURSDAY; LEI, existing home sales on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Women-forward/oriented dating app Bumble (BMBL; P/EBITDA 23; PEG 0.5; 02/2021 IPO; poor Q3 report; both men and women can use it but women must make the first move; market share growing and is now 19%; also owns dating app Badoo; big competition is from Tinder/MTCH; pg 16).
BEARISH.
Pg 12, CRYPTO Intrigue and Crash. It started with a Twitter spat between Sam Bankman-Fried “SBF”/FTX and Changpeng Zhao “CZ”/Binance. There were prior frictions from SBF’s closeness to the DC lawmakers, his push for a crypto legislation that was disliked by the crypto industry, his flamboyance, and his MIT connections. Someone leaked Alameda Research balance sheet that held lots of FTX token FTT and had other issues involving self-dealings between FTX and Alameda. CZ threatened to sell Binance’s entire FTT holding (about a half-billion dollars, a lot but not really that much), and a run on FTT and FTX (international) began. Ironically, SBF asked CZ for a rescue, and initially CZ agreed to do that for a song ($1 + FTX liabilities), but then withdrew a day later upon due diligence (some say that CZ was never serious about the rescue and was really going for the final kill). Then, SBF tried to patch up a $8-10 billion hole by raising new funds from his investors/supporters, but by now, SBF, FTX and Alameda were damaged goods (especially after CZ pulled out of the rescue saying that situation was hopeless and beyond what he/Binance could do). So, SBF filed for bankruptcy for FTX and 130 related entities, and surprising, that also including FTX-US (it was previously thought that the problem was with FTX-International only). The $32 billion empire of 30-yr old SBF (and his personal net worth of $16 billion) collapsed within a week (literally, within hours) causing $125 billion in estimated losses in the crypto industry. Regulators all over the globe moved in to freeze FTX assets. In the US, the SEC, CFTC, WH and Congress are looking at this fiasco. The full extent of this crypto contagion is yet to be determined/felt. The US-listed Coinbase/COIN was not involved in this mess, but its stock also suffered. (News on Saturday morning is that SBF may have fled from Bahamas to Argentina)
Pg 14, TECH TRADER. TECHs won big in Elections 2022. The CA Proposition 30 (on a general tax to support EVs) was defeated; CA Proposition 27 (on legalizing online sports betting) was also defeated. On the national scene, a Republican House means no regulations against the big techs (AAPL, AMZN, GOOGL, etc), but scrutiny again for TikTok (that has by now strengthened its US connections/roots). The Senate control is unclear but would have meaningful impact on future federal nominations (including at the FCC).
Pg 18, TAX STRATEGIES. Use tax-loss harvesting (TLH) this year for benefits in future years. Tax-loss CARRYFORWARDS don’t expire and can be used to offset future gains and up to $3,000/yr in ordinary income from net losses. Beware of WASH-SALE rule (to avoid +/- 30 day window for transactions). Use DOUBLE-UP strategy (buy to double position by November 29, sell the older lot on December 30, the last trading day of 2022), OR swap with something SIMILAR but not identical right away (easily possible with so many OEFs and ETFs). REINVESTING may cause small disallowances due to wash-sale, but they don’t spoil the entire TLH; one can also discontinue reinvestments to avoid this issue. With large declines in both stocks and bonds, consider TLH for all types of funds (stocks, bonds, hybrids). If you have losses in CRYPTOS, note that wash-sale rules don’t apply (but the IRS may not like immediate buys/sells). OTHER strategies: Delay/SHIFT income to lower tax years; use annual GIFTS of up to $16K/yr/person (2022), $17K/yr/person (2023) to avoid filing the Form 709 (complicated, but also doable); ROTH CONVERSIONS (immediate tax hit, but withdrawals are tax-free in retirement and no RMDs); CHARITABLE contributions.
Pg 25: ELECTION results for Congress won’t be clear for a while with 28 pending races for the House and 3 pending for the Senate. Thinking is that Republicans will control the House, but the Senate control is too close to call. A divided government and gridlock are likely. The so-called Red-wave didn’t materialize; one explanation is that voters considered various issues beyond economy and inflation. Legislative risks now include debt-ceiling (Summer 2023), fiscal/budget issues/impasse, just more fights in DC. Many important issues won’t be addressed.
Pg 26, FUNDS. Robert TURLEY, Lucy JOHNS, David HOEFT of moderate-allocation DODBX (1931- ) can now short up to 5% (unusual for the category). Fund’s stocks have value orientation (financials, healthcare, techs) and bonds are mostly corporates and securitized.
Pg 28, ECONOMY. Changes in INFLATION are gradual (even more gradual for PCE than CPI), so higher-for-longer could mean more than a decade! Low/moderate inflation-expectations notwithstanding. What then of the FED +2% average target? But investors got overexcited by a slightly better CPI (+7.7% vs +7.9%) and the markets ran off like crazy. Fed fund rate expectations came down, (volatilities fell across the board). 5-yr TIPS with rate rates of 1.45% may outperform 5-yr Treasury with nominal yield of 3.94% if the actual inflation turns out to be much higher than the current 5-yr inflation-expectations of +2.49% only. (FORSYTH replaced Beilfuss in “Economy”; the rotations among the columnists for “Trader” and “Up and Down Wall Street” were already seen for a while.)
Pg 29, INCOME. Attractive PREFERRED funds include CPXAX, NPSAX, PFANX, PPREX; ETF PFF. Also from BAC, KEY, etc.
Pg 30: Ray DALIO (73), Bridgewater Associates (AUM $150 billion). He is concerned about high global debt. Inflation is high and central banks are tightening. Many economies may be in recession soon. Political divisions are growing everywhere and there are global conflicts (actual and potential). The nature hasn’t been cooperating; there are natural disasters, droughts, floods, pandemics. He prefers reserve-currency countries with large market-caps (US, Europe, Japan) and some EMs (Singapore, Indonesia, Vietnam, India, Mexico); China is controversial but is attractively priced now. He thinks that normal fed fund rates may be 4.5-5.0% and their effects will have some lag. The US deficit is 5% of the GDP that needs to financed, and there is another 5% of the GDP coming from the QT (Fed balance sheet shrinking). Bond yields would have to rise to accommodate all this supply; the private bond market may be crowded out. Climate issues and support of Ukraine will cost billions/trillions. Keep in mind the Fed policies and the related business/economic cycles; the Fed tightening (now) will be followed eventually by Fed easing. Don’t rely on predictions. Aim for positive real returns. Stocks and bonds will be volatile and be opportunistic.
Pg 62, OTHER VOICES. Louis ROSENBERG, Unanimous AI (CEO), Responsible Metaverse Alliance (chief scientist), XR Safety Initiative (advisor). It was about 12 months ago when Facebook announced a strategic shift to METAVERSE and name/ticker change to META. The stock has collapsed by 70% since then. It has announced an ambitious capex plan but also job cuts to control costs. Metaverse startups are also struggling. Sure, there was too much hype. The current VR hardware looks creepy and cartoonish, good for short demos, but uncomfortable for longer-term. Basically, the VR experience is about the depth perception. But the real and virtual worlds remain distinct and the promise of a hybrid augmented-reality hasn’t been realized. Its future remains few years ahead.
(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).
Edit/add: Re pg 14 and 25 stories, the NBC is now calling the Senate for Democrats. Only the GA runoff on Dec 6 remains and NBC thinks that Democrat Warnock will win that.
www.cnbc.com/2022/11/12/midterm-senate-elections-2022-democrats-keep-majority.html
REVIEW. Berkshire Hathaway/BRK-A/B is benefitting from its ENERGY exposure (owns 20% of OXY, 8% of CVX, also OXY-pfd), much of which was acquired in 2022.
PREVIEW. 2022/Q3 EARNINGS were OK (with 90% of SP500 companies reporting), but watch out for falling 2023 estimates due to inflation, Fed tightening, economic slowdown/recession. The SP500 fwd P/E is 16.4 and may go lower (so, lower P/E on lower E; fwd P/E was 21 in January 2022). But stocks bottom 3-6 months ahead of the end of downward earnings revisions.
DATA THIS WEEK. PPI (est +8.3%, core +7.2%) on TUESDAY; retail sales, housing market index, business inventories on WEDNESDAY; housing starts on THURSDAY; LEI, existing home sales on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Women-forward/oriented dating app Bumble (BMBL; P/EBITDA 23; PEG 0.5; 02/2021 IPO; poor Q3 report; both men and women can use it but women must make the first move; market share growing and is now 19%; also owns dating app Badoo; big competition is from Tinder/MTCH; pg 16).
BEARISH.
Pg 12, CRYPTO Intrigue and Crash. It started with a Twitter spat between Sam Bankman-Fried “SBF”/FTX and Changpeng Zhao “CZ”/Binance. There were prior frictions from SBF’s closeness to the DC lawmakers, his push for a crypto legislation that was disliked by the crypto industry, his flamboyance, and his MIT connections. Someone leaked Alameda Research balance sheet that held lots of FTX token FTT and had other issues involving self-dealings between FTX and Alameda. CZ threatened to sell Binance’s entire FTT holding (about a half-billion dollars, a lot but not really that much), and a run on FTT and FTX (international) began. Ironically, SBF asked CZ for a rescue, and initially CZ agreed to do that for a song ($1 + FTX liabilities), but then withdrew a day later upon due diligence (some say that CZ was never serious about the rescue and was really going for the final kill). Then, SBF tried to patch up a $8-10 billion hole by raising new funds from his investors/supporters, but by now, SBF, FTX and Alameda were damaged goods (especially after CZ pulled out of the rescue saying that situation was hopeless and beyond what he/Binance could do). So, SBF filed for bankruptcy for FTX and 130 related entities, and surprising, that also including FTX-US (it was previously thought that the problem was with FTX-International only). The $32 billion empire of 30-yr old SBF (and his personal net worth of $16 billion) collapsed within a week (literally, within hours) causing $125 billion in estimated losses in the crypto industry. Regulators all over the globe moved in to freeze FTX assets. In the US, the SEC, CFTC, WH and Congress are looking at this fiasco. The full extent of this crypto contagion is yet to be determined/felt. The US-listed Coinbase/COIN was not involved in this mess, but its stock also suffered. (News on Saturday morning is that SBF may have fled from Bahamas to Argentina)
Pg 14, TECH TRADER. TECHs won big in Elections 2022. The CA Proposition 30 (on a general tax to support EVs) was defeated; CA Proposition 27 (on legalizing online sports betting) was also defeated. On the national scene, a Republican House means no regulations against the big techs (AAPL, AMZN, GOOGL, etc), but scrutiny again for TikTok (that has by now strengthened its US connections/roots). The Senate control is unclear but would have meaningful impact on future federal nominations (including at the FCC).
Pg 18, TAX STRATEGIES. Use tax-loss harvesting (TLH) this year for benefits in future years. Tax-loss CARRYFORWARDS don’t expire and can be used to offset future gains and up to $3,000/yr in ordinary income from net losses. Beware of WASH-SALE rule (to avoid +/- 30 day window for transactions). Use DOUBLE-UP strategy (buy to double position by November 29, sell the older lot on December 30, the last trading day of 2022), OR swap with something SIMILAR but not identical right away (easily possible with so many OEFs and ETFs). REINVESTING may cause small disallowances due to wash-sale, but they don’t spoil the entire TLH; one can also discontinue reinvestments to avoid this issue. With large declines in both stocks and bonds, consider TLH for all types of funds (stocks, bonds, hybrids). If you have losses in CRYPTOS, note that wash-sale rules don’t apply (but the IRS may not like immediate buys/sells). OTHER strategies: Delay/SHIFT income to lower tax years; use annual GIFTS of up to $16K/yr/person (2022), $17K/yr/person (2023) to avoid filing the Form 709 (complicated, but also doable); ROTH CONVERSIONS (immediate tax hit, but withdrawals are tax-free in retirement and no RMDs); CHARITABLE contributions.
Pg 25: ELECTION results for Congress won’t be clear for a while with 28 pending races for the House and 3 pending for the Senate. Thinking is that Republicans will control the House, but the Senate control is too close to call. A divided government and gridlock are likely. The so-called Red-wave didn’t materialize; one explanation is that voters considered various issues beyond economy and inflation. Legislative risks now include debt-ceiling (Summer 2023), fiscal/budget issues/impasse, just more fights in DC. Many important issues won’t be addressed.
Pg 26, FUNDS. Robert TURLEY, Lucy JOHNS, David HOEFT of moderate-allocation DODBX (1931- ) can now short up to 5% (unusual for the category). Fund’s stocks have value orientation (financials, healthcare, techs) and bonds are mostly corporates and securitized.
Pg 28, ECONOMY. Changes in INFLATION are gradual (even more gradual for PCE than CPI), so higher-for-longer could mean more than a decade! Low/moderate inflation-expectations notwithstanding. What then of the FED +2% average target? But investors got overexcited by a slightly better CPI (+7.7% vs +7.9%) and the markets ran off like crazy. Fed fund rate expectations came down, (volatilities fell across the board). 5-yr TIPS with rate rates of 1.45% may outperform 5-yr Treasury with nominal yield of 3.94% if the actual inflation turns out to be much higher than the current 5-yr inflation-expectations of +2.49% only. (FORSYTH replaced Beilfuss in “Economy”; the rotations among the columnists for “Trader” and “Up and Down Wall Street” were already seen for a while.)
Pg 29, INCOME. Attractive PREFERRED funds include CPXAX, NPSAX, PFANX, PPREX; ETF PFF. Also from BAC, KEY, etc.
Pg 30: Ray DALIO (73), Bridgewater Associates (AUM $150 billion). He is concerned about high global debt. Inflation is high and central banks are tightening. Many economies may be in recession soon. Political divisions are growing everywhere and there are global conflicts (actual and potential). The nature hasn’t been cooperating; there are natural disasters, droughts, floods, pandemics. He prefers reserve-currency countries with large market-caps (US, Europe, Japan) and some EMs (Singapore, Indonesia, Vietnam, India, Mexico); China is controversial but is attractively priced now. He thinks that normal fed fund rates may be 4.5-5.0% and their effects will have some lag. The US deficit is 5% of the GDP that needs to financed, and there is another 5% of the GDP coming from the QT (Fed balance sheet shrinking). Bond yields would have to rise to accommodate all this supply; the private bond market may be crowded out. Climate issues and support of Ukraine will cost billions/trillions. Keep in mind the Fed policies and the related business/economic cycles; the Fed tightening (now) will be followed eventually by Fed easing. Don’t rely on predictions. Aim for positive real returns. Stocks and bonds will be volatile and be opportunistic.
Pg 62, OTHER VOICES. Louis ROSENBERG, Unanimous AI (CEO), Responsible Metaverse Alliance (chief scientist), XR Safety Initiative (advisor). It was about 12 months ago when Facebook announced a strategic shift to METAVERSE and name/ticker change to META. The stock has collapsed by 70% since then. It has announced an ambitious capex plan but also job cuts to control costs. Metaverse startups are also struggling. Sure, there was too much hype. The current VR hardware looks creepy and cartoonish, good for short demos, but uncomfortable for longer-term. Basically, the VR experience is about the depth perception. But the real and virtual worlds remain distinct and the promise of a hybrid augmented-reality hasn’t been realized. Its future remains few years ahead.
(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).
Edit/add: Re pg 14 and 25 stories, the NBC is now calling the Senate for Democrats. Only the GA runoff on Dec 6 remains and NBC thinks that Democrat Warnock will win that.
www.cnbc.com/2022/11/12/midterm-senate-elections-2022-democrats-keep-majority.html