Post by Admin/YBB on Nov 26, 2022 10:48:44 GMT -6
Pg 12-13.
REVIEW. Bill ACKMAN is upbeat on CRYPTOs. He has invested in BLOCKCHAIN companies (ORIGYNTech, Goldfinch Finance) and crypto funds. He thinks that post-FTX, transparent and legitimate crypto companies should do well.
PREVIEW. New regulations from DOL will now allow workplace retirement plans (401k, 403b, 457) to offer ESG and climate related funds; these reverse previous DOL guidance. Some states (FL, TX) have anti-ESG rules. ESG fund AUMs peaked in 2021; 2022 has been tough for ESG funds (because they were tech heavy and excluded/underweighted traditional energy).
DATA THIS WEEK. Dallas Fed TX manufacturing index on MONDAY; home price index, consumer confidence on TUESDAY; JOLTS report, ISM Chicago business index, ADP national employment report, Q3 GDP on WEDNESDAY; personal income and expenditures, PCE (core +5% y-o-y), construction spending On THURSDAY; jobs report (+220,000), unemployment report (3.7%).
RECORD INFLOWS YTD into stock funds (OEFs+ETFs), may be the highest since 2013 for 2022.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Manufacturers of clean-energy equipment and accessories (FSLR, PWR, FLEX; also, GM, ENPH, FLNC, HMC, S Korean LG, Japanese Panasonic, German Siemens for their related US investments; many manufacturing facilities are moving onshore from overseas due to US Government incentives; pg 12);
Industrial Ingersoll Rand (IR; fwd P/E 22; net debt/EBITDA <1; potential long-term earnings compounder; restructured its product line, and now a big pumps/compressors manufacturer; CEO REYNAL was formerly with Gardner Denver (2020 merger with IR) and Danaher/DHR; several smaller acquisitions funded by cash flow; risks include slowdown/recession (US, Europe), execution risks; pg 14).
BEARISH. Business development companies (BDCs) (ARCC, BXSL, FSK, ORCC, nontraded BX-Bcred; many have floating-rates; low/no-rated, illiquid loans to highly leveraged co and LBOs; BDCs also are leveraged; high ERs (typical 1.0-1.5% base plus 17.5-20.0% of profits); BDCs delay mark-to-market, so their current NAVs may be misleading; too risky in slowdown/recession; consider publicly traded HY alternatives HYT, JQC, MDCEX; pg 10).
Pg 16: Financial/estate planning with parents is always difficult but may be possible as they get older. Barron’s columnist describes her experiences with her parents (89/84) and mentions “Dos” (involve siblings; prepare list of questions ahead; take an inventory of assets; review Wills/trusts, POA guardians/executors, online activities, contact lists; assisted-living; end-of-life planning) and “Don’ts” (avoid details about “money”, starting conversations casually, public discussions).
Pg 22, FUNDS. Comanagers Nolan ANDERSON (42) and Thomas CARNEY (58) of core-plus WCPNX (ER 0.50%) avoid derivatives, foreign bonds and leverage; they like to call it American cash bond fund. But they are not bond index (AGG) huggers; the securitized ABS are 29%. They are using barbell approach to duration with ST corporates and LT Treasuries. The duo also comanages ultra-ST SAFEX and ST WSHNX.
Pg 24, INCOME. Bond LADDERS with ETFs (from iShares, Invesco) are discussed. (Looks overly complicated for 3 years; better to build ladders with T-Bills/Notes or CDs. Funds are fine much of the time but sometimes it makes better sense to hold liquid securities directly.)
Pg 25, TECH TRADER. Amazon/AMZN is refocusing on e-commerce (online platform, warehousing, deliveries). Its cloud-computing business (AWS; 50% market share) has been soft. E-commerce capex should come down after boosts during 2020-22.
Pg 26, David RUBENSTEIN (73), Cofounder/Co-Chairman of Carlyle Group (CG; AUM $369 billion); book author (How to Invest), Bloomberg TV show host. 2022 has been tough for PRIVATE-EQUITY; sovereign funds are still active, but pension funds not so much; deals/buyouts/LBOs are harder to find/do. He has invested in CRYPTOS, but never in FTX, although he interviewed “SBF” for his TV show in better times when none of the current issues/problems were foreseen. He says to invest only that money in cryptos that one could afford to lose. FED’s current +2% average INFLATION target is unreasonable, but inflation is trending down, and at some point, the Fed may jump off that +2% train to may be +3%. Healthcare is now 20% of the GDP and is an important area for Carlyle; other areas include financials, AI, computational biology, quantum computing, genetics, blockchains, etc. Individual investors are better off in INDEX FUNDS. Professional investors are good students/learners/readers, learn from their mistakes and move on (not easy to do), enjoy investing. Among his regrets was that he didn’t see the potential in Mark ZUCKERBERG who was a contemporary of his daughter and (future) son-in-law at Harvard. At one point, he also hired Jarome POWELL who rose to partnership at Carlyle (1997-2005); he says that Powell isn’t an economist, but a number/data-oriented businessman who is also good at explaining things simply.
Pg 28, ECONOMY. Money supply M2 peaked in early-2021 and has been falling (although still high at $21.4 trillion; some of it residual from the pandemic stimulus). This decline in M2 is in part due to FED tightening (rate hikes, QT). But bank CREDIT is booming (corporate, consumer) and providing fuel to the economy. This means that the Fed may continue its tightening to the fed funds rate of 5%+ in 2023. Nancy LAZAR (Piper Sandler) thinks that the Fed should also raise its average inflation target as the inflation moderates and the economy slows down.
Pg 58, OTHER VOICES. Mindy LUBBER, Ceres (nonprofit sustainability/ESG). Global CLIMATE disasters continue, in the US (FL, Gulf region), Pakistan, Tonga, Guatemala, etc. Unfortunately, the UN COP27 (November 6-20, 2022, Egypt) failed to unify governments into concrete actions on climate and the final declaration was diluted by compromises to produce something. However, there was agreement to create a fund to help developing countries on climate issues and there were calls on the multilateral banks such as the IMF and World Bank to be more sensitive to the climate issues. There will be investment opportunities from energy transitions and other aspects of emission/pollution control in the developed and developing countries. Hope is now for a better COP28 (Dubai/UAE).
Supplement, GUIDE TO WEALTH has features on long-term financial planning (investing, spending, Wills/trusts, gifts, estate); featured suggestions from several financial advisors; retirement investing and planning (pre- and post- retirement planning, Roth Conversions), all-cash home purchases (use home equity, tap investment portfolio, borrow from family and friends). Then follow the Top Advisor Guide (state-by-state list), the Top RIA Firms, and the Top Advisory Teams.
(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. Bill ACKMAN is upbeat on CRYPTOs. He has invested in BLOCKCHAIN companies (ORIGYNTech, Goldfinch Finance) and crypto funds. He thinks that post-FTX, transparent and legitimate crypto companies should do well.
PREVIEW. New regulations from DOL will now allow workplace retirement plans (401k, 403b, 457) to offer ESG and climate related funds; these reverse previous DOL guidance. Some states (FL, TX) have anti-ESG rules. ESG fund AUMs peaked in 2021; 2022 has been tough for ESG funds (because they were tech heavy and excluded/underweighted traditional energy).
DATA THIS WEEK. Dallas Fed TX manufacturing index on MONDAY; home price index, consumer confidence on TUESDAY; JOLTS report, ISM Chicago business index, ADP national employment report, Q3 GDP on WEDNESDAY; personal income and expenditures, PCE (core +5% y-o-y), construction spending On THURSDAY; jobs report (+220,000), unemployment report (3.7%).
RECORD INFLOWS YTD into stock funds (OEFs+ETFs), may be the highest since 2013 for 2022.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Manufacturers of clean-energy equipment and accessories (FSLR, PWR, FLEX; also, GM, ENPH, FLNC, HMC, S Korean LG, Japanese Panasonic, German Siemens for their related US investments; many manufacturing facilities are moving onshore from overseas due to US Government incentives; pg 12);
Industrial Ingersoll Rand (IR; fwd P/E 22; net debt/EBITDA <1; potential long-term earnings compounder; restructured its product line, and now a big pumps/compressors manufacturer; CEO REYNAL was formerly with Gardner Denver (2020 merger with IR) and Danaher/DHR; several smaller acquisitions funded by cash flow; risks include slowdown/recession (US, Europe), execution risks; pg 14).
BEARISH. Business development companies (BDCs) (ARCC, BXSL, FSK, ORCC, nontraded BX-Bcred; many have floating-rates; low/no-rated, illiquid loans to highly leveraged co and LBOs; BDCs also are leveraged; high ERs (typical 1.0-1.5% base plus 17.5-20.0% of profits); BDCs delay mark-to-market, so their current NAVs may be misleading; too risky in slowdown/recession; consider publicly traded HY alternatives HYT, JQC, MDCEX; pg 10).
Pg 16: Financial/estate planning with parents is always difficult but may be possible as they get older. Barron’s columnist describes her experiences with her parents (89/84) and mentions “Dos” (involve siblings; prepare list of questions ahead; take an inventory of assets; review Wills/trusts, POA guardians/executors, online activities, contact lists; assisted-living; end-of-life planning) and “Don’ts” (avoid details about “money”, starting conversations casually, public discussions).
Pg 22, FUNDS. Comanagers Nolan ANDERSON (42) and Thomas CARNEY (58) of core-plus WCPNX (ER 0.50%) avoid derivatives, foreign bonds and leverage; they like to call it American cash bond fund. But they are not bond index (AGG) huggers; the securitized ABS are 29%. They are using barbell approach to duration with ST corporates and LT Treasuries. The duo also comanages ultra-ST SAFEX and ST WSHNX.
Pg 24, INCOME. Bond LADDERS with ETFs (from iShares, Invesco) are discussed. (Looks overly complicated for 3 years; better to build ladders with T-Bills/Notes or CDs. Funds are fine much of the time but sometimes it makes better sense to hold liquid securities directly.)
Pg 25, TECH TRADER. Amazon/AMZN is refocusing on e-commerce (online platform, warehousing, deliveries). Its cloud-computing business (AWS; 50% market share) has been soft. E-commerce capex should come down after boosts during 2020-22.
Pg 26, David RUBENSTEIN (73), Cofounder/Co-Chairman of Carlyle Group (CG; AUM $369 billion); book author (How to Invest), Bloomberg TV show host. 2022 has been tough for PRIVATE-EQUITY; sovereign funds are still active, but pension funds not so much; deals/buyouts/LBOs are harder to find/do. He has invested in CRYPTOS, but never in FTX, although he interviewed “SBF” for his TV show in better times when none of the current issues/problems were foreseen. He says to invest only that money in cryptos that one could afford to lose. FED’s current +2% average INFLATION target is unreasonable, but inflation is trending down, and at some point, the Fed may jump off that +2% train to may be +3%. Healthcare is now 20% of the GDP and is an important area for Carlyle; other areas include financials, AI, computational biology, quantum computing, genetics, blockchains, etc. Individual investors are better off in INDEX FUNDS. Professional investors are good students/learners/readers, learn from their mistakes and move on (not easy to do), enjoy investing. Among his regrets was that he didn’t see the potential in Mark ZUCKERBERG who was a contemporary of his daughter and (future) son-in-law at Harvard. At one point, he also hired Jarome POWELL who rose to partnership at Carlyle (1997-2005); he says that Powell isn’t an economist, but a number/data-oriented businessman who is also good at explaining things simply.
Pg 28, ECONOMY. Money supply M2 peaked in early-2021 and has been falling (although still high at $21.4 trillion; some of it residual from the pandemic stimulus). This decline in M2 is in part due to FED tightening (rate hikes, QT). But bank CREDIT is booming (corporate, consumer) and providing fuel to the economy. This means that the Fed may continue its tightening to the fed funds rate of 5%+ in 2023. Nancy LAZAR (Piper Sandler) thinks that the Fed should also raise its average inflation target as the inflation moderates and the economy slows down.
Pg 58, OTHER VOICES. Mindy LUBBER, Ceres (nonprofit sustainability/ESG). Global CLIMATE disasters continue, in the US (FL, Gulf region), Pakistan, Tonga, Guatemala, etc. Unfortunately, the UN COP27 (November 6-20, 2022, Egypt) failed to unify governments into concrete actions on climate and the final declaration was diluted by compromises to produce something. However, there was agreement to create a fund to help developing countries on climate issues and there were calls on the multilateral banks such as the IMF and World Bank to be more sensitive to the climate issues. There will be investment opportunities from energy transitions and other aspects of emission/pollution control in the developed and developing countries. Hope is now for a better COP28 (Dubai/UAE).
Supplement, GUIDE TO WEALTH has features on long-term financial planning (investing, spending, Wills/trusts, gifts, estate); featured suggestions from several financial advisors; retirement investing and planning (pre- and post- retirement planning, Roth Conversions), all-cash home purchases (use home equity, tap investment portfolio, borrow from family and friends). Then follow the Top Advisor Guide (state-by-state list), the Top RIA Firms, and the Top Advisory Teams.
(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).