Post by Admin/YBB on Nov 19, 2022 11:33:42 GMT -6
Pg 12-13. FOMC Minutes on WEDNESDAY. Black FRIDAY (shopping).
REVIEW. SPACs crashed and burned (Defiance Next Gen SPAC ETF was liquidated in 09/2022) but Norwegian Freyr Battery/FREY (2021 SPAC merger) is having a great 2022. It makes lithium-ion batteries for EVs and energy storage. It announced a new plant called Giga America in GA.
PREVIEW. CRYPTO carnage continued with a sudden collapse and bankruptcy of FTX, but BITCOIN (“blue-chip” of cryptos) prices remained stable around $16,000; there may have been some institutional buying. But crypto stocks (COIN, MARA, ETF BLOK) have yet to find bottoms.
DATA THIS WEEK. Chicago Fed national activity index on MONDAY; Richmond Fed manufacturing index on TUESDAY; new home sales, manufacturing PMI, services PMI, durable goods report, UM sentiment on WEDNESDAY.
CLOSED: The US markets on THURSDAY (Thanksgiving); stocks close early at 1 PM, bonds at 2 PM, on FRIDAY (so that you can logoff and shop).
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Cellphone tower REITs (AMT, CCI, SBAC; better than general REITs; reasonable valuations, P/AFFO; high earnings growth; high free cash flows; long-term contracts with annual rent increases; expanding mobile market with 5G; pg 16);
Luxury EV maker Lucid (LCID; $3.9 billion cash but cash burn rate is $4 billion/yr; had good initial reviews but many customer complaints now, even with low sales volume; order book shrinking due to cancellations; whistle-blower lawsuits; NHTSA is monitoring the situation but hasn’t acted so far; 60% owned by Saudi sovereign fund; pg 21);
Activision (ATVI; trading at 22% discount from acquisition offer from MSFT (goal is to close by 06/2023; breakup fee is $2-3 billion; deal risks include antitrust issues in the US, EU, UK; Brazil and Saudi Arabia have already approved); prior bullish recommendation by Barron’s in 07/2022; pg 28).
BEARISH.
Pg 14: CRYPTOS. What after scandalous FTX bankruptcy? Too early to bargain hunt. Almost $200 billion vanished industry wide. The CONTAGION risk remains (BlockFi, Genesis/DCG, Gemini, GBTC, etc). Crypto stocks have been hurt (COIN, GBTC, SI, ARKW, etc). Other EXCHANGES (Binance, US-based COIN, etc) issued statements that they were unrelated, unaffected or different. There is damage to the credibility of cryptos (if there was some) and those of several celebrities. Government investigations and lawsuits are just starting. The US REGULATIONS on cryptos may finally come. Private STABLECOINS may be affected by these developments and also from evolving official CBDCs. Many deep-pocket and sovereign investors may stay away until then. People were aware of the huge volatility of cryptos but thought that the trading platforms and storages were reliable, but they were not. Many are thinking that either cryptos are just scams or irrelevant. But many investors, including institutions, haven’t given up (as indicated by support in Bitcoin price around $16,000).
Bahamas-based FTX’ abuses included misuses of corporate and customer funds; lack of documentations and records; chat message approvals of major expenses; secret backdoors in the software; unauthorized and/or hidden transfers; corporate self-dealings among subsidiaries or related units; unclear jurisdictions. Founder/CEO (former) “SBF” has continued his bizarre Twitter postings, but the new CEO has dissociated FTX from those. FTX has now joined the select group of historic frauds/failures, Enron, Lehman, Madoff.
Pg 23, INDIA ROUNDTABLE (1st via Zoom). Panelists include Todd McCLONE/WBEIX, Ajay KRISHNAN/WAESX & WAINX, Jitania KANDHARI/MS EM team, Alyssa AYRES/adjunct senior fellow at Elliott School - GWU & formerly, the State Department. There are several attractive features and changes in India – tax reforms; infrastructure improvements (the government’s approach is to develop power and transportation in regional clusters); digitalization (e-commerce, real-time payments, access to financial services); national ID program (controversial but necessary to prevent fraud in banking, property, social support/subsidy programs); the fastest global growth now; 1.8 billion population with 8-10 million/yr added to the workforce; median age only 29; middle class of 350 million; low labor costs; 4th globally by market-cap (but it is always expensive among the EMs; 16% of EM indexes); make-in-India initiatives (manufacturing is only 15-16% of GDP); low debt/GDP (corporate, household); strong foreign exchange reserves (no longer member of Fragile-5, as in 2013).
India may benefit from the move away from China (new China + 1 strategy) and the US-China friction. High oil prices cause stress for the Indian economy as much of the oil is imported (most recently from Russia; historically from Middle East). It is gradually lessening its defense ties with Russia; its largest trading partner now is the US. There have been border conflicts with China and Pakistan. Like the other EMs, it is affected by the US and global monetary policies; rupee has weakened (it wasted $70-100 billion trying to defend rupee but that was fruitless). Mentioned are HDB (“JPM of India”) and several stocks that trade in Indian exchanges; (several other Indian stocks that trade in the US and Europe were not mentioned).
Pg 29, FUNDS. The best ESG funds YTD were value/blend and included BVSIX, ETF ESGS, MSVIX, CESGX, BOSOX, etc; the worst were growth and included BSGKX, PARNX, LIMIX, ETF NWLG, PMVAX, etc. Underexposure to energy and overexposure to techs have hurt the ESG funds in 2022; some best performers avoided this; otherwise, their performance mirrored the broad market.
Pg 30, INCOME. Traditional 60-40/moderate-allocation portfolios have been very disappointing (due to rare simultaneous declines in stocks and bonds) but isn’t dead. Bad/terrible years are followed by strong rebounds. (A variation is multi-asset funds that mix stocks, bonds, alternatives).
Pg 31, TECH TRADER. Apple/AAPL bulls are getting worried about recession and how that would affect iPhone sales. Growth rate is slowing and may become negative in 2023, not good when the fwd P/E is 24. Its strong Q3 was from Macs (with new M1 processors), not from iPhones or iPads. Strong dollar has been a negative. The iPhone 14 factory in China is operating at reduced capacity due to Covid; new iPhone 14 deliveries may be delayed beyond Christmas. High end iPhones now cost $1,600 vs average iPhone price of $900. The Q4 estimates have been revised down.
Pg 32, ECONOMY. SERVICE inflation (beyond housing) is high and may remain so despite declines in goods prices and (delayed) declines in housing OERs. Wages, healthcare costs, auto insurance premiums, etc are rising and may be slow to respond to FED rate hikes. (Megan CASELLA was the author this week; last week’s shuffle may have been just for one time.)
Pg62, OTHER VOICES. Reva GOUJON, Rhodium Group (global research and analytics firm). BIDEN and XI indicated desire for peaceful coexistence (a favored term for China, not so much for the US) at G20 in Indonesia. But the path will be difficult due to the US restrictions on advanced tech exports to China, and China’s global, political and regional ambitions. The US is also focusing on advanced tech developments in the US and on stronger ties with TAIWAN. Chances of accidents/miscalculations in Indo-Pacific have also increased. A new US-China Cold War era is beginning.
(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. SPACs crashed and burned (Defiance Next Gen SPAC ETF was liquidated in 09/2022) but Norwegian Freyr Battery/FREY (2021 SPAC merger) is having a great 2022. It makes lithium-ion batteries for EVs and energy storage. It announced a new plant called Giga America in GA.
PREVIEW. CRYPTO carnage continued with a sudden collapse and bankruptcy of FTX, but BITCOIN (“blue-chip” of cryptos) prices remained stable around $16,000; there may have been some institutional buying. But crypto stocks (COIN, MARA, ETF BLOK) have yet to find bottoms.
DATA THIS WEEK. Chicago Fed national activity index on MONDAY; Richmond Fed manufacturing index on TUESDAY; new home sales, manufacturing PMI, services PMI, durable goods report, UM sentiment on WEDNESDAY.
CLOSED: The US markets on THURSDAY (Thanksgiving); stocks close early at 1 PM, bonds at 2 PM, on FRIDAY (so that you can logoff and shop).
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Cellphone tower REITs (AMT, CCI, SBAC; better than general REITs; reasonable valuations, P/AFFO; high earnings growth; high free cash flows; long-term contracts with annual rent increases; expanding mobile market with 5G; pg 16);
Luxury EV maker Lucid (LCID; $3.9 billion cash but cash burn rate is $4 billion/yr; had good initial reviews but many customer complaints now, even with low sales volume; order book shrinking due to cancellations; whistle-blower lawsuits; NHTSA is monitoring the situation but hasn’t acted so far; 60% owned by Saudi sovereign fund; pg 21);
Activision (ATVI; trading at 22% discount from acquisition offer from MSFT (goal is to close by 06/2023; breakup fee is $2-3 billion; deal risks include antitrust issues in the US, EU, UK; Brazil and Saudi Arabia have already approved); prior bullish recommendation by Barron’s in 07/2022; pg 28).
BEARISH.
Pg 14: CRYPTOS. What after scandalous FTX bankruptcy? Too early to bargain hunt. Almost $200 billion vanished industry wide. The CONTAGION risk remains (BlockFi, Genesis/DCG, Gemini, GBTC, etc). Crypto stocks have been hurt (COIN, GBTC, SI, ARKW, etc). Other EXCHANGES (Binance, US-based COIN, etc) issued statements that they were unrelated, unaffected or different. There is damage to the credibility of cryptos (if there was some) and those of several celebrities. Government investigations and lawsuits are just starting. The US REGULATIONS on cryptos may finally come. Private STABLECOINS may be affected by these developments and also from evolving official CBDCs. Many deep-pocket and sovereign investors may stay away until then. People were aware of the huge volatility of cryptos but thought that the trading platforms and storages were reliable, but they were not. Many are thinking that either cryptos are just scams or irrelevant. But many investors, including institutions, haven’t given up (as indicated by support in Bitcoin price around $16,000).
Bahamas-based FTX’ abuses included misuses of corporate and customer funds; lack of documentations and records; chat message approvals of major expenses; secret backdoors in the software; unauthorized and/or hidden transfers; corporate self-dealings among subsidiaries or related units; unclear jurisdictions. Founder/CEO (former) “SBF” has continued his bizarre Twitter postings, but the new CEO has dissociated FTX from those. FTX has now joined the select group of historic frauds/failures, Enron, Lehman, Madoff.
Pg 23, INDIA ROUNDTABLE (1st via Zoom). Panelists include Todd McCLONE/WBEIX, Ajay KRISHNAN/WAESX & WAINX, Jitania KANDHARI/MS EM team, Alyssa AYRES/adjunct senior fellow at Elliott School - GWU & formerly, the State Department. There are several attractive features and changes in India – tax reforms; infrastructure improvements (the government’s approach is to develop power and transportation in regional clusters); digitalization (e-commerce, real-time payments, access to financial services); national ID program (controversial but necessary to prevent fraud in banking, property, social support/subsidy programs); the fastest global growth now; 1.8 billion population with 8-10 million/yr added to the workforce; median age only 29; middle class of 350 million; low labor costs; 4th globally by market-cap (but it is always expensive among the EMs; 16% of EM indexes); make-in-India initiatives (manufacturing is only 15-16% of GDP); low debt/GDP (corporate, household); strong foreign exchange reserves (no longer member of Fragile-5, as in 2013).
India may benefit from the move away from China (new China + 1 strategy) and the US-China friction. High oil prices cause stress for the Indian economy as much of the oil is imported (most recently from Russia; historically from Middle East). It is gradually lessening its defense ties with Russia; its largest trading partner now is the US. There have been border conflicts with China and Pakistan. Like the other EMs, it is affected by the US and global monetary policies; rupee has weakened (it wasted $70-100 billion trying to defend rupee but that was fruitless). Mentioned are HDB (“JPM of India”) and several stocks that trade in Indian exchanges; (several other Indian stocks that trade in the US and Europe were not mentioned).
Pg 29, FUNDS. The best ESG funds YTD were value/blend and included BVSIX, ETF ESGS, MSVIX, CESGX, BOSOX, etc; the worst were growth and included BSGKX, PARNX, LIMIX, ETF NWLG, PMVAX, etc. Underexposure to energy and overexposure to techs have hurt the ESG funds in 2022; some best performers avoided this; otherwise, their performance mirrored the broad market.
Pg 30, INCOME. Traditional 60-40/moderate-allocation portfolios have been very disappointing (due to rare simultaneous declines in stocks and bonds) but isn’t dead. Bad/terrible years are followed by strong rebounds. (A variation is multi-asset funds that mix stocks, bonds, alternatives).
Pg 31, TECH TRADER. Apple/AAPL bulls are getting worried about recession and how that would affect iPhone sales. Growth rate is slowing and may become negative in 2023, not good when the fwd P/E is 24. Its strong Q3 was from Macs (with new M1 processors), not from iPhones or iPads. Strong dollar has been a negative. The iPhone 14 factory in China is operating at reduced capacity due to Covid; new iPhone 14 deliveries may be delayed beyond Christmas. High end iPhones now cost $1,600 vs average iPhone price of $900. The Q4 estimates have been revised down.
Pg 32, ECONOMY. SERVICE inflation (beyond housing) is high and may remain so despite declines in goods prices and (delayed) declines in housing OERs. Wages, healthcare costs, auto insurance premiums, etc are rising and may be slow to respond to FED rate hikes. (Megan CASELLA was the author this week; last week’s shuffle may have been just for one time.)
Pg62, OTHER VOICES. Reva GOUJON, Rhodium Group (global research and analytics firm). BIDEN and XI indicated desire for peaceful coexistence (a favored term for China, not so much for the US) at G20 in Indonesia. But the path will be difficult due to the US restrictions on advanced tech exports to China, and China’s global, political and regional ambitions. The US is also focusing on advanced tech developments in the US and on stronger ties with TAIWAN. Chances of accidents/miscalculations in Indo-Pacific have also increased. A new US-China Cold War era is beginning.
(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).