Post by Admin/YBB on Dec 17, 2022 10:08:27 GMT -6
Pg 10-11. BOJ monetary policy decision on TUESDAY.
REVIEW. ATLANTA is the hottest real estate market based on 10 indicators. Housing prices are up 5%+ vs +0.3% nationally. Almost 20% of renters can afford to buy. The job market is strong; many companies have opened corporate offices. It is benefitting from the trend to move South (Atlanta, Raleigh, Dallas, Fayetteville, Greenville, etc). San Francisco on the other hand is seeing price declines of 10-15% and outward migration.
PREVIEW. Elon MUSK is raising more money for his money-losing SpaceX at $77/share that puts its private valuation at $140 billion and makes it #3 global defense and aerospace firm by market value (#1 RTX, #2 BA, but those are with public enterprise-values). Among the global billionaires, Musk is now #2 due to decline in TSLA and overpaying for Twitter.
DATA THIS WEEK. Housing market index on MONDAY; housing starts on TUESDAY; consumer confidence, existing home sales on WEDNESDAY; Q3 GDP (+2.9%; final) on THURSDAY; personal income and expenditures, durable goods report, LEI, new home sales, UM consumer sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. 10 stocks for 2023 (Annual feature; AA, AMZN, BAC, BRK-A/B, CMCSA, DAL, GOOG/GOOGL, MDT, MSGS, TOL; pg 22);
Asset-lite EV makers (1st name/contract manufacturer: FSR/MGA (Canadian)/Foxconn (Taiwan), PSNY/VLVLY (Swedish), SEV (German)/VLMTY (Finnish); also mentioned are some struggling EV companies doing their own production: LCID, RIVN; big players mentioned include TSLA, GM, etc; the best play may be Canadian auto-parts and contract manufacturer for traditional cars and EVs, including entire cars, Magna/MGA (fwd P/E 10 only); pg 26).
BEARISH.
Pg 13: CRYPTO ICE AGE. The so-called crypto WINTER has turned into crypto ice age. Cryptos are fighting for survival with the headwinds of scandals, bankruptcies, frauds, regulators (DC, SEC, CFTC, IRS, global), higher rates and monetary tightening. It may be the biggest financial bubble-burst in the history. Things may get worse before getting better, if at all. The FTX (SBF) (and related Alameda (Caroline E) and Silvergate/SI) aftershocks have yet to fully play out; the reputational damage has been enormous. In a legislative vacuum, the SEC is moving ahead with its disclosure requirements and enforcement powers and that may lead to a set of case laws.
For the BULLS, a lot has to go right. They say that this is just a cyclical downturn and better times may follow after a flush out of bad actors and faulty products. Eventual monetary easing will also benefit the SURVIVORS. The US-based and regulated companies such as Coinbase/COIN (combo exchange, broker-dealer, custodian) may be winners; but its stock has crashed, and its bonds are trading as distressed at 50c-60c. BITCOIN stands out due to its design and fixed supply among the crowd of various cryptos. Bitcoin MINERS include CORZ (a penny stock on bankruptcy concerns), MARA, RIOT, etc. ETHEREUM is also making good progress with new developments including its recent shift to energy efficient proof-of-stake (PoS) vs the old energy-hog proof-of-work (PoW) system. The BLOCKCHAIN technology will find widespread uses (DeFi, global digital transactions, CBDCs, NFTs, related apps, services). Big banks (GS, etc) and brokerages (Fidelity, etc) remain interested in cryptos.
Pg 28: MEDICARE premiums and high-income IRMAA triggers (quantum jumps, not gradual/progressive) are discussed. Noted that the current premiums are based on tax returns 2 years prior. The offered solutions are to plan years ahead to reduce retirement income (Roth conversions; etc), the QCDs starting at 70.5, avoiding sudden large capital gains or T-IRA withdrawals. (Beware of the trap that Medicare MAGI = AGI + muni interest) (Note that even at the highest IRMAA, the Medicare premium is subsidized; so, the basic Medicare premium is really a great deal, but we pay for it partially via payroll taxes)
Pg 29, FUNDS. Customizable DIRECT-INDEXING is taking off (BlackRock, Fidelity, Goldman Sachs, Morgan Stanley, Northern Trust, Vanguard, etc). It is driven by commission-free trading and fractional-trading. The tax-loss harvesting (TLH) may be possible. The average ER of 0.40% is between those for passive and active ETFs. The account minimum may vary. Many advisors may prefer it because it may make client switches more difficult. Will it be better than ETFs? Not for small investors with short-term horizons.
Pg 30, INCOME INVESTING. After a forgettable year, bonds will be attractive – Treasuries, investment-grade, munis, bond-proxies (dividend stocks, REITs). With recession possible, be careful with HY, and there, stick with BB-rated.
Pg 31, ECONOMY. Global RECESSION may be avoided by CHINA REOPENING; the government STIMULUS will lead to better growth in 2023. This Chinese recovery may not boost demand for COMMODITIES because the DEBT is already high, and funding of (useless) infrastructure projects is unlikely. The focus now will be on CONSUMERS and rescuing the PROPERTY sector. ENERGY demand will still go up. During much of 2023, China will be in a different economic PHASE than the US and Europe. An immediate risk is Covid spread during/after the Lunar New Year.
Pg 32: Stephanie LYNCH, Global Endowment Management (GEM; 2007- ; AUM $11.2 billion). The GEM serves as outsourced-CIO (OCIO). This was the worst year for endowments since the GFC (2008-09). For FY 2022 (to 6/30/22), the median loss was -7.8%; ALTERNATIVES moderated losses in STOCKS and BONDS. The environment has shifted from low rates and volatility to high rates and volatility; other changes include demographics, deglobalization, geopolitical, inflation. Stock and bond CORRELATIONS have become positive (a low-rate phenomenon and it may be changing); NATURAL RESOURCES remain uncorrelated. Defensive posture will be appropriate for RECESSION that, hopefully, is a shallow one. Alts exposures may be reduced and may become more selective. GLOBAL exposure is active and at market-weight, including China. There is a small exposure to CRYPTO infrastructure. Interest in ESG remains strong, despite the recent criticism and controversy, as those objectives generally align with those of foundations and endowments. Risk of FED overshoot in tightening is high and so is the related market downside. The effects of Fed actions on economy take time but everybody seems impatient now (including the Fed).
Pg 34, TECH TRADER. Nasdaq Comp PEAKED on 1/3/22, the 1st trading day of 2022 and from then on, it was downhill, terrible, horrible, the worst since 2008. The IPO market is dead. The CRYPTOS are in shambles. Even the CLOUD-computing did poorly (it was among the last to go). Strong DOLLAR was no help. High rates (the 2-yr went from 0.7% to 4.2%) by the FED poisoned the money-well. BEWARE that the time for bottom fishing is NOT YET! Headaches for 2023 include Fed tightening, possible recession, bad Q4 earnings season (to start January 15). Be ready for NEW LOWS in Nasdaq Comp in Q1 or Q2. 2023 projections/guesses: Consolidation in streaming; metaverse remaining huge drag for META; MSFT + ATVI acquisition going through despite the FTC opposition; semis rally in H2; Chinese techs may do well due to China reopening and stimulus.
Pg 62, OTHER VOICES. Nathan SHEETS, Citi/C. 2023 may have rolling recessions but positive markets. It will be the Year of the Rabbit in CHINA, supposedly a good year. But many geopolitical issues will linger. High energy prices and inflation will cause recession in EUROPE. The US may have soft-landing or shallow recession. The EMs will be variably affected by the US, Europe, China. The GLOBAL growth may be under +2%. In the expectations of better 2024, the markets in 2023 may surprise on the positive side.
(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. ATLANTA is the hottest real estate market based on 10 indicators. Housing prices are up 5%+ vs +0.3% nationally. Almost 20% of renters can afford to buy. The job market is strong; many companies have opened corporate offices. It is benefitting from the trend to move South (Atlanta, Raleigh, Dallas, Fayetteville, Greenville, etc). San Francisco on the other hand is seeing price declines of 10-15% and outward migration.
PREVIEW. Elon MUSK is raising more money for his money-losing SpaceX at $77/share that puts its private valuation at $140 billion and makes it #3 global defense and aerospace firm by market value (#1 RTX, #2 BA, but those are with public enterprise-values). Among the global billionaires, Musk is now #2 due to decline in TSLA and overpaying for Twitter.
DATA THIS WEEK. Housing market index on MONDAY; housing starts on TUESDAY; consumer confidence, existing home sales on WEDNESDAY; Q3 GDP (+2.9%; final) on THURSDAY; personal income and expenditures, durable goods report, LEI, new home sales, UM consumer sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. 10 stocks for 2023 (Annual feature; AA, AMZN, BAC, BRK-A/B, CMCSA, DAL, GOOG/GOOGL, MDT, MSGS, TOL; pg 22);
Asset-lite EV makers (1st name/contract manufacturer: FSR/MGA (Canadian)/Foxconn (Taiwan), PSNY/VLVLY (Swedish), SEV (German)/VLMTY (Finnish); also mentioned are some struggling EV companies doing their own production: LCID, RIVN; big players mentioned include TSLA, GM, etc; the best play may be Canadian auto-parts and contract manufacturer for traditional cars and EVs, including entire cars, Magna/MGA (fwd P/E 10 only); pg 26).
BEARISH.
Pg 13: CRYPTO ICE AGE. The so-called crypto WINTER has turned into crypto ice age. Cryptos are fighting for survival with the headwinds of scandals, bankruptcies, frauds, regulators (DC, SEC, CFTC, IRS, global), higher rates and monetary tightening. It may be the biggest financial bubble-burst in the history. Things may get worse before getting better, if at all. The FTX (SBF) (and related Alameda (Caroline E) and Silvergate/SI) aftershocks have yet to fully play out; the reputational damage has been enormous. In a legislative vacuum, the SEC is moving ahead with its disclosure requirements and enforcement powers and that may lead to a set of case laws.
For the BULLS, a lot has to go right. They say that this is just a cyclical downturn and better times may follow after a flush out of bad actors and faulty products. Eventual monetary easing will also benefit the SURVIVORS. The US-based and regulated companies such as Coinbase/COIN (combo exchange, broker-dealer, custodian) may be winners; but its stock has crashed, and its bonds are trading as distressed at 50c-60c. BITCOIN stands out due to its design and fixed supply among the crowd of various cryptos. Bitcoin MINERS include CORZ (a penny stock on bankruptcy concerns), MARA, RIOT, etc. ETHEREUM is also making good progress with new developments including its recent shift to energy efficient proof-of-stake (PoS) vs the old energy-hog proof-of-work (PoW) system. The BLOCKCHAIN technology will find widespread uses (DeFi, global digital transactions, CBDCs, NFTs, related apps, services). Big banks (GS, etc) and brokerages (Fidelity, etc) remain interested in cryptos.
Pg 28: MEDICARE premiums and high-income IRMAA triggers (quantum jumps, not gradual/progressive) are discussed. Noted that the current premiums are based on tax returns 2 years prior. The offered solutions are to plan years ahead to reduce retirement income (Roth conversions; etc), the QCDs starting at 70.5, avoiding sudden large capital gains or T-IRA withdrawals. (Beware of the trap that Medicare MAGI = AGI + muni interest) (Note that even at the highest IRMAA, the Medicare premium is subsidized; so, the basic Medicare premium is really a great deal, but we pay for it partially via payroll taxes)
Pg 29, FUNDS. Customizable DIRECT-INDEXING is taking off (BlackRock, Fidelity, Goldman Sachs, Morgan Stanley, Northern Trust, Vanguard, etc). It is driven by commission-free trading and fractional-trading. The tax-loss harvesting (TLH) may be possible. The average ER of 0.40% is between those for passive and active ETFs. The account minimum may vary. Many advisors may prefer it because it may make client switches more difficult. Will it be better than ETFs? Not for small investors with short-term horizons.
Pg 30, INCOME INVESTING. After a forgettable year, bonds will be attractive – Treasuries, investment-grade, munis, bond-proxies (dividend stocks, REITs). With recession possible, be careful with HY, and there, stick with BB-rated.
Pg 31, ECONOMY. Global RECESSION may be avoided by CHINA REOPENING; the government STIMULUS will lead to better growth in 2023. This Chinese recovery may not boost demand for COMMODITIES because the DEBT is already high, and funding of (useless) infrastructure projects is unlikely. The focus now will be on CONSUMERS and rescuing the PROPERTY sector. ENERGY demand will still go up. During much of 2023, China will be in a different economic PHASE than the US and Europe. An immediate risk is Covid spread during/after the Lunar New Year.
Pg 32: Stephanie LYNCH, Global Endowment Management (GEM; 2007- ; AUM $11.2 billion). The GEM serves as outsourced-CIO (OCIO). This was the worst year for endowments since the GFC (2008-09). For FY 2022 (to 6/30/22), the median loss was -7.8%; ALTERNATIVES moderated losses in STOCKS and BONDS. The environment has shifted from low rates and volatility to high rates and volatility; other changes include demographics, deglobalization, geopolitical, inflation. Stock and bond CORRELATIONS have become positive (a low-rate phenomenon and it may be changing); NATURAL RESOURCES remain uncorrelated. Defensive posture will be appropriate for RECESSION that, hopefully, is a shallow one. Alts exposures may be reduced and may become more selective. GLOBAL exposure is active and at market-weight, including China. There is a small exposure to CRYPTO infrastructure. Interest in ESG remains strong, despite the recent criticism and controversy, as those objectives generally align with those of foundations and endowments. Risk of FED overshoot in tightening is high and so is the related market downside. The effects of Fed actions on economy take time but everybody seems impatient now (including the Fed).
Pg 34, TECH TRADER. Nasdaq Comp PEAKED on 1/3/22, the 1st trading day of 2022 and from then on, it was downhill, terrible, horrible, the worst since 2008. The IPO market is dead. The CRYPTOS are in shambles. Even the CLOUD-computing did poorly (it was among the last to go). Strong DOLLAR was no help. High rates (the 2-yr went from 0.7% to 4.2%) by the FED poisoned the money-well. BEWARE that the time for bottom fishing is NOT YET! Headaches for 2023 include Fed tightening, possible recession, bad Q4 earnings season (to start January 15). Be ready for NEW LOWS in Nasdaq Comp in Q1 or Q2. 2023 projections/guesses: Consolidation in streaming; metaverse remaining huge drag for META; MSFT + ATVI acquisition going through despite the FTC opposition; semis rally in H2; Chinese techs may do well due to China reopening and stimulus.
Pg 62, OTHER VOICES. Nathan SHEETS, Citi/C. 2023 may have rolling recessions but positive markets. It will be the Year of the Rabbit in CHINA, supposedly a good year. But many geopolitical issues will linger. High energy prices and inflation will cause recession in EUROPE. The US may have soft-landing or shallow recession. The EMs will be variably affected by the US, Europe, China. The GLOBAL growth may be under +2%. In the expectations of better 2024, the markets in 2023 may surprise on the positive side.
(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).