Post by Admin/YBB on Apr 29, 2023 8:00:54 GMT -6
Pg 8-9. FOMC Statement and POWELL’s presser on WEDNESDAY. ECB monetary policy announcement on THURSDAY.
REVIEW. Tesla’s/TSLA price cuts were initially seen as positive to gain market share, but with cuts continuing, several analysts downgraded the stock on margin concerns.
PREVIEW. After Bed Bath & Beyond’s bankruptcy, the off-price retail giant TJX looks a winner. It operates T.J Maxx, Marshalls, HomeGoods, etc.
DATA THIS WEEK. Manufacturing PMI, construction spending, factory orders on MONDAY; JOLTS report on TUESDAY; ADP national employment report, services PMI on WEDNESDAY; international trade balance on THURSDAY; jobs report (+185,000), unemployment report (3.5-3.6%) on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Kenvue (KVUE; yield 3.7%; P/E 15.7; low debt; upcoming consumer healthcare spinoff from JNJ (JNJ will retain 90% stake, to be distributed later, may be in 2023/H2); brands Band-Aid, Listerine, Neutrogena, Tylenol, etc; JNJ to cover talcum powder liabilities in North America (not elsewhere); in the name, “Ken” is for knowledge; JNJ to focus on pharma and medical devices; pg 10);
Berkshire Hathaway (BRK-A/B (B-shares are at 2% discount from A-shares); fwd P/E 21.6, but look-through fwd P/E 14 only; valued at 75% of the intrinsic-value; Warren BUFFETT is 92+; likely successor is Greg ABEL (60); also added daughter Susan to the Board (son Howard was already involved); businesses – railroad, P&C insurance (under Ajit JAIN), utilities; recent purchases include P&C insurer Alleghany, truck stop chain Pilot Flying J, added to OXY (now owns 23.6%), CVX, Japanese trading companies; still $129 billion in “cash”, mostly in T-Bills; some buybacks; Annual Meeting, 5/6/23, Omaha, NE (Abel and Jain may have more visibility), pg 11);
Thermo Fisher (TMO; yield 0.26% and growing; fwd P/E 24; net debt/EBITDA 2.2; growth by acquisitions; makes lab instruments and equipment, and diagnostic tools for healthcare; lot of recurring revenue and free cash flow; a Covid beneficiary but that effect is now fading and has spooked some investors; pg 12).
BEARISH. First Republic Bank (FRC; it may be the next bank to be rescued, with possibly JPM or PNC, and the FDIC involved; besides the deposits drain, several elite financial advisory teams/practices (21+) have left for JPM, MS, RY, etc; FRC took pride in good customer service, and its current situation doesn’t help; pg 13).
Pg 17, ECONOMY. INFLATION in Europe is much worse than in the US. Europe has been more affected by the Russia-Ukraine war. The ECB is now raising rates and that affects the euro zone; rates take a while to have an effect. Also, the monetary policy can only affect the demand side, not the supply side. Labor unions are strong in Europe. Government subsidies also add to inflation. Government military spending is increasing. Many businesses are suffering.
Pg 8, INCOME INVESTING. Stocks for current dividends and divided-growth include GS, KR, SHW, TGT, UNH.
Pg 19, FUNDS. The CEFs at discount are attractive as the rates may be peaking: Munis AFB, MYI, NEA, RMMZ, MIO; multi-market munis JMM; TIPS WIW. (By MFO @lewisbraham)
Pg 20: Dave ELLISON, Financial SC-HSFNX, LC-HLFNX. The current BANKING CRISIS is from DURATION and LIQUIDITY issues, not from credit-quality issues. Banks were also not pricing deposits to retain them. So, when the RATES rose, and financials deteriorated for some regional banks, the deposits fled. Only the biggest banks now may be insulated from these problems (JPM, BAC, C, WFC). There was a quiet period between the SVB and Signature rescues and similar problems for FRC now, but it seems that the government is in a reactive mode. This cycle of rate hikes has to play itself out and then the banks may rebound. For values, they are not in the ugly stage yet, but only in the OK stage (KBE and KRE are well above their 2020 lows). Not all regionals are stressed. He likes CFG, MTB, WBS.
Pg 22, TECH TRADER. Amazon/AMZN is finding that there is a limit to cost cutting. After the earnings release, it rallied but then reversed as investors saw cautious guidance. Big techs now face slower growth but still have high P/Es. Growth via M&A is also becoming problematic as the UK regulators rejected MSFT +ATVI acquisition; MSFT will appeal.
Pg 54, OTHER VOICES. George HALL (Brandis U) and Thomas SARGENT (NYU; Hoover Institution; 2011 Econ Nobel). The DEBT-CEILING goes back to 1776. Until 1917, these congressional limits were per Treasury bond issue, with terms and purpose(s) specified; those couldn’t be rolled over without new approvals. An aggregate debt-ceiling started in 1939. Efforts by the Presidents to circumvent debt limits were futile and often backfired. (Nothing about the current debt-ceiling impasse)
(EXTRAS from online Friday that didn’t make the weekend paper version)
See Column Topics. It seems some consolidation/rearrangement of Columns is going on.
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
REVIEW. Tesla’s/TSLA price cuts were initially seen as positive to gain market share, but with cuts continuing, several analysts downgraded the stock on margin concerns.
PREVIEW. After Bed Bath & Beyond’s bankruptcy, the off-price retail giant TJX looks a winner. It operates T.J Maxx, Marshalls, HomeGoods, etc.
DATA THIS WEEK. Manufacturing PMI, construction spending, factory orders on MONDAY; JOLTS report on TUESDAY; ADP national employment report, services PMI on WEDNESDAY; international trade balance on THURSDAY; jobs report (+185,000), unemployment report (3.5-3.6%) on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Kenvue (KVUE; yield 3.7%; P/E 15.7; low debt; upcoming consumer healthcare spinoff from JNJ (JNJ will retain 90% stake, to be distributed later, may be in 2023/H2); brands Band-Aid, Listerine, Neutrogena, Tylenol, etc; JNJ to cover talcum powder liabilities in North America (not elsewhere); in the name, “Ken” is for knowledge; JNJ to focus on pharma and medical devices; pg 10);
Berkshire Hathaway (BRK-A/B (B-shares are at 2% discount from A-shares); fwd P/E 21.6, but look-through fwd P/E 14 only; valued at 75% of the intrinsic-value; Warren BUFFETT is 92+; likely successor is Greg ABEL (60); also added daughter Susan to the Board (son Howard was already involved); businesses – railroad, P&C insurance (under Ajit JAIN), utilities; recent purchases include P&C insurer Alleghany, truck stop chain Pilot Flying J, added to OXY (now owns 23.6%), CVX, Japanese trading companies; still $129 billion in “cash”, mostly in T-Bills; some buybacks; Annual Meeting, 5/6/23, Omaha, NE (Abel and Jain may have more visibility), pg 11);
Thermo Fisher (TMO; yield 0.26% and growing; fwd P/E 24; net debt/EBITDA 2.2; growth by acquisitions; makes lab instruments and equipment, and diagnostic tools for healthcare; lot of recurring revenue and free cash flow; a Covid beneficiary but that effect is now fading and has spooked some investors; pg 12).
BEARISH. First Republic Bank (FRC; it may be the next bank to be rescued, with possibly JPM or PNC, and the FDIC involved; besides the deposits drain, several elite financial advisory teams/practices (21+) have left for JPM, MS, RY, etc; FRC took pride in good customer service, and its current situation doesn’t help; pg 13).
Pg 17, ECONOMY. INFLATION in Europe is much worse than in the US. Europe has been more affected by the Russia-Ukraine war. The ECB is now raising rates and that affects the euro zone; rates take a while to have an effect. Also, the monetary policy can only affect the demand side, not the supply side. Labor unions are strong in Europe. Government subsidies also add to inflation. Government military spending is increasing. Many businesses are suffering.
Pg 8, INCOME INVESTING. Stocks for current dividends and divided-growth include GS, KR, SHW, TGT, UNH.
Pg 19, FUNDS. The CEFs at discount are attractive as the rates may be peaking: Munis AFB, MYI, NEA, RMMZ, MIO; multi-market munis JMM; TIPS WIW. (By MFO @lewisbraham)
Pg 20: Dave ELLISON, Financial SC-HSFNX, LC-HLFNX. The current BANKING CRISIS is from DURATION and LIQUIDITY issues, not from credit-quality issues. Banks were also not pricing deposits to retain them. So, when the RATES rose, and financials deteriorated for some regional banks, the deposits fled. Only the biggest banks now may be insulated from these problems (JPM, BAC, C, WFC). There was a quiet period between the SVB and Signature rescues and similar problems for FRC now, but it seems that the government is in a reactive mode. This cycle of rate hikes has to play itself out and then the banks may rebound. For values, they are not in the ugly stage yet, but only in the OK stage (KBE and KRE are well above their 2020 lows). Not all regionals are stressed. He likes CFG, MTB, WBS.
Pg 22, TECH TRADER. Amazon/AMZN is finding that there is a limit to cost cutting. After the earnings release, it rallied but then reversed as investors saw cautious guidance. Big techs now face slower growth but still have high P/Es. Growth via M&A is also becoming problematic as the UK regulators rejected MSFT +ATVI acquisition; MSFT will appeal.
Pg 54, OTHER VOICES. George HALL (Brandis U) and Thomas SARGENT (NYU; Hoover Institution; 2011 Econ Nobel). The DEBT-CEILING goes back to 1776. Until 1917, these congressional limits were per Treasury bond issue, with terms and purpose(s) specified; those couldn’t be rolled over without new approvals. An aggregate debt-ceiling started in 1939. Efforts by the Presidents to circumvent debt limits were futile and often backfired. (Nothing about the current debt-ceiling impasse)
(EXTRAS from online Friday that didn’t make the weekend paper version)
See Column Topics. It seems some consolidation/rearrangement of Columns is going on.
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).