Post by Admin/YBB on Dec 3, 2022 12:28:54 GMT -6
Pg 10-11.
REVIEW. 4 analysts/strategists offer views on attractiveness of BONDS, but suggestions vary widely – short/intermediate term Treasuries, corporates, munis, and long-term Treasuries.
PREVIEW. EU sanctions on Russian oil that start on December 5 may also be ineffective. Earlier sanctions have just diverted Russian oil at discount to Asian countries. (Not mentioned is the new EU + G7 OIL PRICE CAP of $60 that will soften the impact of December 5 sanctions)
DATA THIS WEEK. ISM services PMI, durable goods orders, factory orders on MONDAY; international trade deficit on TUESDAY; consumer credit, productivity on WEDNESDAY; weekly initial jobless claims on THURSDAY; PPI (+7.2% yoy; core +5.9%), UM consumer sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Small-caps (SCs are 30% cheaper than LCs; SC R2000 has a lot of garbage and has fwd P/E 20, but excluding unprofitable companies (33%, many biotechs) & few outliers, the fwd P/E is only 12; SCs have domestic orientation and have more cyclicality; risk – recession but it may be priced in; OEFs NSVAX, WGROX; ETFs FNDA, SLY (good that IWM is not recommended); stocks BOOT, CDAY, HUBS, MGY, SAIA, SITE, STZHF, TPR; pg 13);
AbbVie (ABBV; yield 3.7%; fwd P/E 13.8; low debt; strong free cash flow that can be used for acquisitions; defensive stock can be used for income, growth or core/blend; good pipeline of drugs; a negative has been its huge drug Humira coming off patent (36% of revenues); pg 14).
BEARISH. Chinese stocks (Chinese stocks are oversold due to many issues there (Covid, high debt, crackdown on big techs and businesses, trade issues, China-Taiwan issues), and may look tempting, but beware of risks; recent optimism is for hope in 2023 beyond the current problems; pressures are also easing on Chinese ADRs listed in the US; the US-China relations may also improve; mentioned are ETFs MCHI, KWEB and stocks BABA, TCEHY, etc; pg 15).
Pg 22, FUNDS. LAT AM funds may benefit from COMMODITIES (EWZ, EWW, ECH; active FLATX, OTGAX, PRLAX, SLAFX). General EM funds also have Lat Am exposure (JOEAX, CEMDX). Lat Am currencies may be tailwinds in the future.
Pg 23, INCOME. DIVIDEND stocks have done fine this year; several are up YTD (VYM, SCHD). This is surprising considering that dividend stocks are considered BOND PROXIES and bonds are having a terrible year due to FED tightening. Dividend stocks have benefitted from exposures to energy, healthcare, utilities, consumer-staples. Financials are becoming attractive. Combination of dividend-growth and free cash flow is also attractive. But don’t chase the highest yielders and beware of recessionary risks.
Pg 24, TECH TRADER. CLOUD companies Salesforce/CRM (fwd P/E 27) and CrowdStrike/CRWD (fwd P/E 60) had poor reports and guidance. They pointed to lower capex by customers who were worried about slowdown/recession. Both stocks tumbled. Cloud-computing ETF WCLD is down -50% YTD. It may be early to bottom fish – the down cycle is just starting and may last several quarters.
Pg 25, ECONOMY. FED’s INFLATION fight is hampered by the low LABOR PARTICIPATION rate (low population growth, retirements, falling immigration) that has restricted labor supply. Only the labor demand can be controlled in the near-term through Fed/government policies. Unfortunately, a significant rise in unemployment can come only from seriously weakening/damaging the economy. We have to get used to higher inflation and “higher rates for longer”.
Pg 26: Debra NETSCHERT, Healthcare PHLAX. 2022 Inflation Reduction Act is generally bullish for PHARMA; a negative may be federal negotiations for new drug prices for 9-13 years. Covid has accelerated R&D in biotech and biopharma. She likes companies that innovate, address chronic diseases (LLY), biotechs (APLS, ARGX), healthcare providers/value-based care (UNH). There will be more M&A in healthcare.
Pg 54, OTHER VOICES. Stephan ROACH, the Paul Tsai China Center, Yale U. In both the US and CHINA, it is popular to BLAME the other. Many of China’s troubles (zero-Covid policy; property sector collapse; tech sector implosion, etc) have been due to a heavy hand of President XI although the US actions have contributed. The US also has several issues including low SAVINGS RATE. The US relies on foreigners to buy and hold Treasuries and China had been leading that (it’s Japan now). But China cannot be blamed for many of the US’ problems. This blame game hasn’t been good for either country. In fact, misunderstandings have put the US and China on a collision course. Over the years, the trade war became a tech war, and now a Cold War. Roach suggests building mutual TRUST, better TRADE relations, and higher level of mutual ENGAGEMENTS.
Supplement PENTA – The Future of Giving has features on GIVING; CLIMATE focus by Rockefeller Foundation (President Rajiv SHAH); local and personal philanthropy by Kevin PLANK of Under Armour/UA; research-study TOURS; private JETS; expensive WATCHES; vintage/classic CARS; premium CHAMPAGNES; luxurious private PROPERTIES with exclusive access to clubs, restaurants, speakeasies, etc; donor-advised funds (DAFs; simple, flexible, upfront tax deductions, like private foundations without headaches, but criticized for fund hoarding/underuse); ANNUITIES for wealthy (tax-deferrals after exhausting other tax-deferred vehicles such as 401k/403b/457, IRAs, 529s, etc; no RMDs, stretch-payouts, lifetime income options, many different types).
(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. 4 analysts/strategists offer views on attractiveness of BONDS, but suggestions vary widely – short/intermediate term Treasuries, corporates, munis, and long-term Treasuries.
PREVIEW. EU sanctions on Russian oil that start on December 5 may also be ineffective. Earlier sanctions have just diverted Russian oil at discount to Asian countries. (Not mentioned is the new EU + G7 OIL PRICE CAP of $60 that will soften the impact of December 5 sanctions)
DATA THIS WEEK. ISM services PMI, durable goods orders, factory orders on MONDAY; international trade deficit on TUESDAY; consumer credit, productivity on WEDNESDAY; weekly initial jobless claims on THURSDAY; PPI (+7.2% yoy; core +5.9%), UM consumer sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Small-caps (SCs are 30% cheaper than LCs; SC R2000 has a lot of garbage and has fwd P/E 20, but excluding unprofitable companies (33%, many biotechs) & few outliers, the fwd P/E is only 12; SCs have domestic orientation and have more cyclicality; risk – recession but it may be priced in; OEFs NSVAX, WGROX; ETFs FNDA, SLY (good that IWM is not recommended); stocks BOOT, CDAY, HUBS, MGY, SAIA, SITE, STZHF, TPR; pg 13);
AbbVie (ABBV; yield 3.7%; fwd P/E 13.8; low debt; strong free cash flow that can be used for acquisitions; defensive stock can be used for income, growth or core/blend; good pipeline of drugs; a negative has been its huge drug Humira coming off patent (36% of revenues); pg 14).
BEARISH. Chinese stocks (Chinese stocks are oversold due to many issues there (Covid, high debt, crackdown on big techs and businesses, trade issues, China-Taiwan issues), and may look tempting, but beware of risks; recent optimism is for hope in 2023 beyond the current problems; pressures are also easing on Chinese ADRs listed in the US; the US-China relations may also improve; mentioned are ETFs MCHI, KWEB and stocks BABA, TCEHY, etc; pg 15).
Pg 22, FUNDS. LAT AM funds may benefit from COMMODITIES (EWZ, EWW, ECH; active FLATX, OTGAX, PRLAX, SLAFX). General EM funds also have Lat Am exposure (JOEAX, CEMDX). Lat Am currencies may be tailwinds in the future.
Pg 23, INCOME. DIVIDEND stocks have done fine this year; several are up YTD (VYM, SCHD). This is surprising considering that dividend stocks are considered BOND PROXIES and bonds are having a terrible year due to FED tightening. Dividend stocks have benefitted from exposures to energy, healthcare, utilities, consumer-staples. Financials are becoming attractive. Combination of dividend-growth and free cash flow is also attractive. But don’t chase the highest yielders and beware of recessionary risks.
Pg 24, TECH TRADER. CLOUD companies Salesforce/CRM (fwd P/E 27) and CrowdStrike/CRWD (fwd P/E 60) had poor reports and guidance. They pointed to lower capex by customers who were worried about slowdown/recession. Both stocks tumbled. Cloud-computing ETF WCLD is down -50% YTD. It may be early to bottom fish – the down cycle is just starting and may last several quarters.
Pg 25, ECONOMY. FED’s INFLATION fight is hampered by the low LABOR PARTICIPATION rate (low population growth, retirements, falling immigration) that has restricted labor supply. Only the labor demand can be controlled in the near-term through Fed/government policies. Unfortunately, a significant rise in unemployment can come only from seriously weakening/damaging the economy. We have to get used to higher inflation and “higher rates for longer”.
Pg 26: Debra NETSCHERT, Healthcare PHLAX. 2022 Inflation Reduction Act is generally bullish for PHARMA; a negative may be federal negotiations for new drug prices for 9-13 years. Covid has accelerated R&D in biotech and biopharma. She likes companies that innovate, address chronic diseases (LLY), biotechs (APLS, ARGX), healthcare providers/value-based care (UNH). There will be more M&A in healthcare.
Pg 54, OTHER VOICES. Stephan ROACH, the Paul Tsai China Center, Yale U. In both the US and CHINA, it is popular to BLAME the other. Many of China’s troubles (zero-Covid policy; property sector collapse; tech sector implosion, etc) have been due to a heavy hand of President XI although the US actions have contributed. The US also has several issues including low SAVINGS RATE. The US relies on foreigners to buy and hold Treasuries and China had been leading that (it’s Japan now). But China cannot be blamed for many of the US’ problems. This blame game hasn’t been good for either country. In fact, misunderstandings have put the US and China on a collision course. Over the years, the trade war became a tech war, and now a Cold War. Roach suggests building mutual TRUST, better TRADE relations, and higher level of mutual ENGAGEMENTS.
Supplement PENTA – The Future of Giving has features on GIVING; CLIMATE focus by Rockefeller Foundation (President Rajiv SHAH); local and personal philanthropy by Kevin PLANK of Under Armour/UA; research-study TOURS; private JETS; expensive WATCHES; vintage/classic CARS; premium CHAMPAGNES; luxurious private PROPERTIES with exclusive access to clubs, restaurants, speakeasies, etc; donor-advised funds (DAFs; simple, flexible, upfront tax deductions, like private foundations without headaches, but criticized for fund hoarding/underuse); ANNUITIES for wealthy (tax-deferrals after exhausting other tax-deferred vehicles such as 401k/403b/457, IRAs, 529s, etc; no RMDs, stretch-payouts, lifetime income options, many different types).
(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).