Post by Admin/YBB on Jul 1, 2023 5:26:21 GMT -6
Pg 10-11. FOMC Minutes on WEDNESDAY.
REVIEW. The BLS reported that full-time workers at the office work on average more hours (8.2) than those at home (5.7).
PREVIEW. Investors are ignoring inverted YIELD-CURVE (since mid-2022) that has been a necessary precursor of past recessions. Many expect only a shallow recession.
DATA THIS WEEK. ISM manufacturing PMI, construction spending on MONDAY; factory orders on WEDNESDAY; ADP national employment report, JOLTS report, ISM services PMI, international trade deficit on THURSDAY; jobs report (+212,500), unemployment rate 3.7% on FRIDAY.
CLOSED. US stocks close EARLY at 1:00 PM Eastern and bonds at 2:00 PM on MONDAY. US markets are CLOSED on TUESDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. FAST streaming TV (FAST = free ad-supported TV; 3,270 FAST channels and growing; there are elaborate show guides; leaders are Tubi/FOXA, ROKU, Pluto TV/PARA; also active in this area are AMZN, CMCSA, DISH, Samsung Electronics, but NOT NFLX yet; TV manufacturers offer plug-n-play FAST channel bundles available via wi-fi connections; content providers and streaming platforms split the ad revenues 50-50; FAST is now growing beyond the US; pg 16);
Rockwell Automation (ROK; fwd P/E 25.5; more a tech company than a typical industrial; high-margin software sales are 30% of revenues; backlog is increasing; benefitting from global supply-chain normalization, the US reshoring, and several federal programs for infrastructure development; pg 24).
BEARISH.
Pg 12, INCOME plays include:
Dividend Stocks VYM, SCHD, SCHY
Energy MLPs AMLP; CEF TYG
Utilities XLU
MBS OEF DLTNX; ETF JMBS
Real Estate VNQ
HY OEF TUHYX; ETF HYG
Preferreds PFF
Munis OEF VWITX
Convertibles CWB
Treasuries BIL, SHY, TLT; beware that T-Bill rates will drop
Hybrids 60-40 will be fine for many; reports of its death were premature.
(Most shown here are ETFs; several stocks are also mentioned in the article.)
Pg 15, FOLLOW UP. Decision from a US District judge may be soon on FTC vs MSFT regarding the ATVI acquisition. If the Judge issues an injunction against the deal, MSFT is likely to walk away after July 18 (the breakup fee is $3 billion) and the ATVI stock may collapse (it’s trading at -11.3% discount from the deal price of $95). If the Judge’s ruling is positive for MSFT, it may extend the deal deadline. Beyond the US, there are regulatory actions pending in the UK. Take profits in ATVI.
Pg 22, FUNDS. Jeffrey KOLITCH, Real Estate BREFX and Income BRIFX (both equity funds). He is looking for bargains when there are concerns about the CREs, residential housing, and rising rates. Top-quality office properties are doing fine but avoid low-quality office properties. The impact of the regional BANKING CRISIS on the CREs has been small. It’s a mistake to generalize from problems in some subsectors to all real estate. The residential housing is adjusting to a jump in mortgage rates from 3% to 7%. He likes industrial funds PLD, REXR; data-centers EQIX, DLR; rentals/apartments INVH, AMH, AVB, EQR; self-storage PSA, EXR, CUBE; stocks TOL, CBRE.
Pg 25, TECH TRADER. Generative AI is a threat to Google’s/GOOGL dominant SEARCH business. Its entry Bard is getting less attention than ChatGPT, Bing AI. Issues include that Google hasn’t integrated Bard into its search (as MSFT has done for Bing); no ads so far in Bard but there are plans for targeted ads in future (so, as a free tool, it doesn’t add to revenues or earnings now). The ad business at other sites is growing faster. A catchup by Google will raise its capex. Alphabet is also facing regulatory issues in the US and EU.
Pg 26, FUNDS. EM small-cap MSMLX (ER 1.37%) has heavy China exposure (27.8%) followed by India (18%). Manager Vivek TANNEERU (VT) thinks that the US-China relations will stabilize. China wasn’t as stimulative as the Western countries during Covid, but it is catching up. He looks for growth companies with good balance sheets; he doesn’t hedge currencies. Several EMs are managing inflation well. At some point, the EMs will be hot again. VT also manages MASGX.
Pg 27, ECONOMY. When RATES were low, deficits didn’t matter (MMT), but now the interest costs on the US debt will rise from 13.8% of the federal revenues in 2023 to 35.4% in 2053 (the CBO data assume no significant policy changes). The budget deficit will rise from 5.8% of GDP in 2023 to 10% in 2053; the total debt from 98% of GDP in 2023 to 181% in 2053. The debt-ceiling fiasco/drama did little to change all this. Rising rates also hurt BANKS who have to hold Treasuries as part of their capital (but the conventional wisdom was that higher rates were good for banks). The government should decrease debt in good times so that there is room to increase it in tough times. Monetary and fiscal policies are also becoming more linked – that is clear in crises. INFLATION may result from high rates and deficits.
Pg 54, OTHER VOICES. Kirk McCLURE, Professor Emeritus at U Kansas and Alex SCHWARTZ, Professor at New School. HOUSIN AFFORDABILITY has been declining and new home construction won’t improve that. Housing growth in the past produced excess housing inventories. Housing policies should address income aspects and housing subsidies instead of how many houses will be built.
(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. The BLS reported that full-time workers at the office work on average more hours (8.2) than those at home (5.7).
PREVIEW. Investors are ignoring inverted YIELD-CURVE (since mid-2022) that has been a necessary precursor of past recessions. Many expect only a shallow recession.
DATA THIS WEEK. ISM manufacturing PMI, construction spending on MONDAY; factory orders on WEDNESDAY; ADP national employment report, JOLTS report, ISM services PMI, international trade deficit on THURSDAY; jobs report (+212,500), unemployment rate 3.7% on FRIDAY.
CLOSED. US stocks close EARLY at 1:00 PM Eastern and bonds at 2:00 PM on MONDAY. US markets are CLOSED on TUESDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. FAST streaming TV (FAST = free ad-supported TV; 3,270 FAST channels and growing; there are elaborate show guides; leaders are Tubi/FOXA, ROKU, Pluto TV/PARA; also active in this area are AMZN, CMCSA, DISH, Samsung Electronics, but NOT NFLX yet; TV manufacturers offer plug-n-play FAST channel bundles available via wi-fi connections; content providers and streaming platforms split the ad revenues 50-50; FAST is now growing beyond the US; pg 16);
Rockwell Automation (ROK; fwd P/E 25.5; more a tech company than a typical industrial; high-margin software sales are 30% of revenues; backlog is increasing; benefitting from global supply-chain normalization, the US reshoring, and several federal programs for infrastructure development; pg 24).
BEARISH.
Pg 12, INCOME plays include:
Dividend Stocks VYM, SCHD, SCHY
Energy MLPs AMLP; CEF TYG
Utilities XLU
MBS OEF DLTNX; ETF JMBS
Real Estate VNQ
HY OEF TUHYX; ETF HYG
Preferreds PFF
Munis OEF VWITX
Convertibles CWB
Treasuries BIL, SHY, TLT; beware that T-Bill rates will drop
Hybrids 60-40 will be fine for many; reports of its death were premature.
(Most shown here are ETFs; several stocks are also mentioned in the article.)
Pg 15, FOLLOW UP. Decision from a US District judge may be soon on FTC vs MSFT regarding the ATVI acquisition. If the Judge issues an injunction against the deal, MSFT is likely to walk away after July 18 (the breakup fee is $3 billion) and the ATVI stock may collapse (it’s trading at -11.3% discount from the deal price of $95). If the Judge’s ruling is positive for MSFT, it may extend the deal deadline. Beyond the US, there are regulatory actions pending in the UK. Take profits in ATVI.
Pg 22, FUNDS. Jeffrey KOLITCH, Real Estate BREFX and Income BRIFX (both equity funds). He is looking for bargains when there are concerns about the CREs, residential housing, and rising rates. Top-quality office properties are doing fine but avoid low-quality office properties. The impact of the regional BANKING CRISIS on the CREs has been small. It’s a mistake to generalize from problems in some subsectors to all real estate. The residential housing is adjusting to a jump in mortgage rates from 3% to 7%. He likes industrial funds PLD, REXR; data-centers EQIX, DLR; rentals/apartments INVH, AMH, AVB, EQR; self-storage PSA, EXR, CUBE; stocks TOL, CBRE.
Pg 25, TECH TRADER. Generative AI is a threat to Google’s/GOOGL dominant SEARCH business. Its entry Bard is getting less attention than ChatGPT, Bing AI. Issues include that Google hasn’t integrated Bard into its search (as MSFT has done for Bing); no ads so far in Bard but there are plans for targeted ads in future (so, as a free tool, it doesn’t add to revenues or earnings now). The ad business at other sites is growing faster. A catchup by Google will raise its capex. Alphabet is also facing regulatory issues in the US and EU.
Pg 26, FUNDS. EM small-cap MSMLX (ER 1.37%) has heavy China exposure (27.8%) followed by India (18%). Manager Vivek TANNEERU (VT) thinks that the US-China relations will stabilize. China wasn’t as stimulative as the Western countries during Covid, but it is catching up. He looks for growth companies with good balance sheets; he doesn’t hedge currencies. Several EMs are managing inflation well. At some point, the EMs will be hot again. VT also manages MASGX.
Pg 27, ECONOMY. When RATES were low, deficits didn’t matter (MMT), but now the interest costs on the US debt will rise from 13.8% of the federal revenues in 2023 to 35.4% in 2053 (the CBO data assume no significant policy changes). The budget deficit will rise from 5.8% of GDP in 2023 to 10% in 2053; the total debt from 98% of GDP in 2023 to 181% in 2053. The debt-ceiling fiasco/drama did little to change all this. Rising rates also hurt BANKS who have to hold Treasuries as part of their capital (but the conventional wisdom was that higher rates were good for banks). The government should decrease debt in good times so that there is room to increase it in tough times. Monetary and fiscal policies are also becoming more linked – that is clear in crises. INFLATION may result from high rates and deficits.
Pg 54, OTHER VOICES. Kirk McCLURE, Professor Emeritus at U Kansas and Alex SCHWARTZ, Professor at New School. HOUSIN AFFORDABILITY has been declining and new home construction won’t improve that. Housing growth in the past produced excess housing inventories. Housing policies should address income aspects and housing subsidies instead of how many houses will be built.
(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).