Post by Admin/YBB on Jun 3, 2023 7:05:06 GMT -6
Pg 8-9.
REVIEW. A 250,000 barrels/day oil-products REFINERY in Cushing, OK proposed by Southern Rock Energy would be the 1st large refinery in 50 years. There is shortage of refinery capacity in the US as several refineries have been shut down.
PREVIEW. Nvidia’s/NVDA new AI supercomputer DGX GH200 will have powerful NVDA chips and lots of memory (144 TB).
DATA THIS WEEK. Durable goods orders, ISM services PMI, factory orders on MONDAY; consumer credit, international trade deficit on WEDNESDAY; weekly initial jobless claims, wholesale inventories on THURSDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Selected REITs (AMT, ARE, REXR, VICI; caution/avoid BXP, DLR; pg 10);
Steris (STE; fwd P/E 22.7; buybacks; provides sterilization equipment, chemicals and disinfectants to hospitals and research labs; recurring sales/contracts; has pricing power; stock has been volatile due to supply-chain issues; may be takeover target; pg 13);
Eaton (ETN; fwd P/E 20; electrification play – renewable energy, energy efficiency, EVs; beneficiary of Inflation Reduction Act, Infrastructure Investment and Jobs Act; founded in the US but HQ now in Dublin, Ireland; prior Barron’s recommendation a year ago; pg 14).
BEARISH.
Pg 12: M&A funds are struggling due to regulatory issues (Lina KHAN/FTC; several stuck or busted deals), but seem attractive now: MERFX, HMEZX, ARBFX; ETF MNA.
Pg 15: ESG has become controversial, but many CEOs continue to get big bonuses for meeting ESG goals (CMG, D, etc). Many companies have gone quiet on ESG – they are following the ESG goals without talking about it too much publicly.
Pg 20, FUNDS. Large-cap growth AMAGX (ER 0.90%; no-load) outperforms in its category, has cautious approach to growth with low debt; is managed according to Islamic finance (no financials or sin stocks); turnover is low. 41% of the assets are in the top 10.
Pg 21, INCOME INVESTING. HY/junk (HYG, BINC, etc) isn’t pricing recession yet. Credit spreads are low at 450 bps (vs 1,000 bps in recession); defaults are rising but are only 2.1% now (vs 9% in recession). Investors are also optimistic about a FED pivot. Stick with short-term HY (but in bond market’s recent crises, the ST-HY also sold off sharply; the BL/FR becomes ST-HY when rates stop rising).
Pg 22, TECH TRADER. IBM (P/S 2) is a hidden AI stock with generous dividends. Its “Watson” was too early for the AI boom now and that business was sold. It has launched a new “Watson X” (where X is .ai or .data or .governance) but may skip a me-too public generative AI product (like ChatGPT, Bing AI, Bard, etc). It is working with its industry and government partners (banks, chemicals, climate, NASA, etc; 20+ now) to develop industry-specific databases and related generative AI.
EXTRA: Thomas SIEBEL, C3.ai/AI. Stock has had a spectacular rally YTD. He downplays concerns about AI regulations and doesn’t support them except for abusive AI (personal privacy, cultural biases, election interference). Generative AI has been fun so far but lacks big commercial applications. Many technological revolutions may produce initial periods of bubbles and the AI will be no different.
Pg 23, ECONOMY. The debt-ceiling deal may come back to bite the stock investors. Its negative effects may have been equivalent to +25 bps rate hike. Now will come a flood of Treasury issuances that may raise bond yields and drain liquidity, sort of adding to the ongoing Fed QT (and partially doing the Fed’s job). The jobs report was a blowout, but much of that was from birth-death adjustments. The jobless rate, in fact, rose to 3.7%. Wages rose by +4.3%; the core PCE is +4.7% – both too high. Weak retail data show that lower- and middle- income consumers are being squeezed. So, even if the FED may skip the rate hike in June, it may not be done yet. This AI-powered tech rally may stall.
Pg 24: Chris DAVIS, Davis Advisors (1969- ; a value shop founded by his father; AUM $20 billion) and NYVTX, etc. He likes durable companies with strong managements, good cash flows and intrinsic values (BRK (he is a board member), META, big banks, etc). The era of negative rates is over – never before in history since 3,000 BC, rates were zero (forget negative). That easy money fed a lot of speculation and mis-investments. He thinks there will be a recession, but its impact will vary widely across sectors. Deglobalization is a negative for the global economy and will cause high labor costs and expensive capex. Banking will be fine because the depositors will be protected (regardless of the FDIC limits); the issues of liquidity, underwater bonds and CREs will be sorted out. Investors still remember the financial crisis (GFC), re-regulation, new fintechs, Covid, rate shocks, and think that banks will crash, but only some will; he likes COF, WFC, BK, DBSDY, JBAXY, PGR, etc.
Pg 54, OTHER VOICES. Ian Shepherson, Pantheon Macroeconomics. INFLATION is moderating and that should lead to FED PIVOT sometime in 2024-25. Among the factors driving inflation now, Covid supply-chain disruptions have been resolved; the stimulus money has been spent; the labor markets are normalizing; some disruptions related to Russia-Ukraine war remain, but global trade shifts have occurred for several others.
Supplement GUIDE TO WEALTH. Several good features are followed by the state-by-state top advisor directory, and the listings of the top RIA firms and the top advisory teams.
Pg S2, BIG TRENDS. MEDICAL miracles (genetics, new drugs for weight-loss, etc); INDIA (manufacturing shifts from China; financials; risks – regional tensions; poor infrastructure; ETFs INDA, etc); WATER scarcity (especially in the Western US and elsewhere globally; adverse agricultural impacts; ETFs PHO, etc); ENERGY TRANSITIONS (they will take time; related opportunities and costs; alternative energy – solar, wind, nuclear (coming back); ETFs IDU, etc); AI (rapid revolutionary changes will be followed by deflation as lot of the labor force is replaced by AI).
Pg S6: With the market down since early-2022 high (although +10% YTD), there are still several bargains (picks from 5 advisors): Railroad CSX; real estate services JLL; sustainable jet fuels CLMT; innovation ETF KOMP; Brazilian fintech PAGS.
Pg S8: David GIROUX, PRWCX, T Rowe Price CIO of US Equity + Multi-Assets. Some big themes are assisted/hands-off -driving (NXPI, etc), EVs (non-Tesla cars, charging stations, batteries), climate change (hydrogen producers (LIN, etc), alternative-energy (AEE, XEL, EXC, CNP, WEC, NEE, DTE)), AI (revolutionary but also deflationary). Overhyped are inflation (many factors are transient – Covid, Russia-Ukraine war, etc), reshoring (OK for higher techs in/around the US but China will remain an important for many cheaper consumer products).
Pg S10, FUNDS. THEMATIC funds (113 ETFs) may be hit or miss. They are often concentrated and vary widely within the groups, so there are 6 robotics and AI ETFs (BOTZ, IRBO, etc); several for infrastructure, EVs, alternative energy, and of course, multi-thematic. (By MFO @lewisbraham)
(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. A 250,000 barrels/day oil-products REFINERY in Cushing, OK proposed by Southern Rock Energy would be the 1st large refinery in 50 years. There is shortage of refinery capacity in the US as several refineries have been shut down.
PREVIEW. Nvidia’s/NVDA new AI supercomputer DGX GH200 will have powerful NVDA chips and lots of memory (144 TB).
DATA THIS WEEK. Durable goods orders, ISM services PMI, factory orders on MONDAY; consumer credit, international trade deficit on WEDNESDAY; weekly initial jobless claims, wholesale inventories on THURSDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Selected REITs (AMT, ARE, REXR, VICI; caution/avoid BXP, DLR; pg 10);
Steris (STE; fwd P/E 22.7; buybacks; provides sterilization equipment, chemicals and disinfectants to hospitals and research labs; recurring sales/contracts; has pricing power; stock has been volatile due to supply-chain issues; may be takeover target; pg 13);
Eaton (ETN; fwd P/E 20; electrification play – renewable energy, energy efficiency, EVs; beneficiary of Inflation Reduction Act, Infrastructure Investment and Jobs Act; founded in the US but HQ now in Dublin, Ireland; prior Barron’s recommendation a year ago; pg 14).
BEARISH.
Pg 12: M&A funds are struggling due to regulatory issues (Lina KHAN/FTC; several stuck or busted deals), but seem attractive now: MERFX, HMEZX, ARBFX; ETF MNA.
Pg 15: ESG has become controversial, but many CEOs continue to get big bonuses for meeting ESG goals (CMG, D, etc). Many companies have gone quiet on ESG – they are following the ESG goals without talking about it too much publicly.
Pg 20, FUNDS. Large-cap growth AMAGX (ER 0.90%; no-load) outperforms in its category, has cautious approach to growth with low debt; is managed according to Islamic finance (no financials or sin stocks); turnover is low. 41% of the assets are in the top 10.
Pg 21, INCOME INVESTING. HY/junk (HYG, BINC, etc) isn’t pricing recession yet. Credit spreads are low at 450 bps (vs 1,000 bps in recession); defaults are rising but are only 2.1% now (vs 9% in recession). Investors are also optimistic about a FED pivot. Stick with short-term HY (but in bond market’s recent crises, the ST-HY also sold off sharply; the BL/FR becomes ST-HY when rates stop rising).
Pg 22, TECH TRADER. IBM (P/S 2) is a hidden AI stock with generous dividends. Its “Watson” was too early for the AI boom now and that business was sold. It has launched a new “Watson X” (where X is .ai or .data or .governance) but may skip a me-too public generative AI product (like ChatGPT, Bing AI, Bard, etc). It is working with its industry and government partners (banks, chemicals, climate, NASA, etc; 20+ now) to develop industry-specific databases and related generative AI.
EXTRA: Thomas SIEBEL, C3.ai/AI. Stock has had a spectacular rally YTD. He downplays concerns about AI regulations and doesn’t support them except for abusive AI (personal privacy, cultural biases, election interference). Generative AI has been fun so far but lacks big commercial applications. Many technological revolutions may produce initial periods of bubbles and the AI will be no different.
Pg 23, ECONOMY. The debt-ceiling deal may come back to bite the stock investors. Its negative effects may have been equivalent to +25 bps rate hike. Now will come a flood of Treasury issuances that may raise bond yields and drain liquidity, sort of adding to the ongoing Fed QT (and partially doing the Fed’s job). The jobs report was a blowout, but much of that was from birth-death adjustments. The jobless rate, in fact, rose to 3.7%. Wages rose by +4.3%; the core PCE is +4.7% – both too high. Weak retail data show that lower- and middle- income consumers are being squeezed. So, even if the FED may skip the rate hike in June, it may not be done yet. This AI-powered tech rally may stall.
Pg 24: Chris DAVIS, Davis Advisors (1969- ; a value shop founded by his father; AUM $20 billion) and NYVTX, etc. He likes durable companies with strong managements, good cash flows and intrinsic values (BRK (he is a board member), META, big banks, etc). The era of negative rates is over – never before in history since 3,000 BC, rates were zero (forget negative). That easy money fed a lot of speculation and mis-investments. He thinks there will be a recession, but its impact will vary widely across sectors. Deglobalization is a negative for the global economy and will cause high labor costs and expensive capex. Banking will be fine because the depositors will be protected (regardless of the FDIC limits); the issues of liquidity, underwater bonds and CREs will be sorted out. Investors still remember the financial crisis (GFC), re-regulation, new fintechs, Covid, rate shocks, and think that banks will crash, but only some will; he likes COF, WFC, BK, DBSDY, JBAXY, PGR, etc.
Pg 54, OTHER VOICES. Ian Shepherson, Pantheon Macroeconomics. INFLATION is moderating and that should lead to FED PIVOT sometime in 2024-25. Among the factors driving inflation now, Covid supply-chain disruptions have been resolved; the stimulus money has been spent; the labor markets are normalizing; some disruptions related to Russia-Ukraine war remain, but global trade shifts have occurred for several others.
Supplement GUIDE TO WEALTH. Several good features are followed by the state-by-state top advisor directory, and the listings of the top RIA firms and the top advisory teams.
Pg S2, BIG TRENDS. MEDICAL miracles (genetics, new drugs for weight-loss, etc); INDIA (manufacturing shifts from China; financials; risks – regional tensions; poor infrastructure; ETFs INDA, etc); WATER scarcity (especially in the Western US and elsewhere globally; adverse agricultural impacts; ETFs PHO, etc); ENERGY TRANSITIONS (they will take time; related opportunities and costs; alternative energy – solar, wind, nuclear (coming back); ETFs IDU, etc); AI (rapid revolutionary changes will be followed by deflation as lot of the labor force is replaced by AI).
Pg S6: With the market down since early-2022 high (although +10% YTD), there are still several bargains (picks from 5 advisors): Railroad CSX; real estate services JLL; sustainable jet fuels CLMT; innovation ETF KOMP; Brazilian fintech PAGS.
Pg S8: David GIROUX, PRWCX, T Rowe Price CIO of US Equity + Multi-Assets. Some big themes are assisted/hands-off -driving (NXPI, etc), EVs (non-Tesla cars, charging stations, batteries), climate change (hydrogen producers (LIN, etc), alternative-energy (AEE, XEL, EXC, CNP, WEC, NEE, DTE)), AI (revolutionary but also deflationary). Overhyped are inflation (many factors are transient – Covid, Russia-Ukraine war, etc), reshoring (OK for higher techs in/around the US but China will remain an important for many cheaper consumer products).
Pg S10, FUNDS. THEMATIC funds (113 ETFs) may be hit or miss. They are often concentrated and vary widely within the groups, so there are 6 robotics and AI ETFs (BOTZ, IRBO, etc); several for infrastructure, EVs, alternative energy, and of course, multi-thematic. (By MFO @lewisbraham)
(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).