Post by Admin/YBB on Jul 29, 2023 6:38:37 GMT -6
Pg 9, PREVIEW & REVIEW (consolidated). With HURRICANE season approaching, Florida is gearing up for an INSURANCE crisis. Many insurers have either sharply raised premiums or have quit writing policies. 2022 (Ian, etc) was the 2nd worst year for the US disaster claims after #1 2017 (Harvey, Irma, Maria, etc).
DATA THIS WEEK (seriously shrunk). JOLTS report on TUESDAY; jobs report (+200,000), unemployment rate 3.6% FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Costco (COST; fwd P/E 37 (never cheap); strong growth; most of the profits are from membership dues, and the rest of the business almost is run at-cost; pg 17).
BEARISH.
Pg 10: The PHARMA industry (MRK, JNJ, BMY, ALPMY, etc) is launching legal wars against Medicare/CMS on its new DRUG PRICING negotiation authority. The pharma industry is hoping to delay, slow or reverse the implementation by winning a national injunction in SOME court and then eventually fighting it before the SUPREMES. The US Chamber of Commerce has also asked a federal court for injunction against Medicare/CMS. CONGRESS passed the related law as part of the Inflation Reduction Act, and since then, the pharma index has lagged. (The current system is that private PBMs and healthcare systems negotiate drug prices, and then the Medicare/CMS just goes along. This system was seriously broken by Biogen’s/BIIB greedy pricing of its 1st Alzheimer drug that was approved by the FDA. Eventually, that drug failed in the marketplace due to resistance from Medicare/CMS. Biogen’s 2nd Alzheimer drug has done better.)
Pg 12: The champion in stock CLASSES (A – 1 vote/share, B – 10 votes/share, K – nonvoting) and various TRACKING-stocks is John MALONE (82)/Liberty Media (but you cannot buy it); the CEO is Greg MAFFEI (65). He likes to issue pure-play tracking-stocks for his various business segments and these have had mixed successes. He can also buy and sell businesses at the right prices. After a long while, there is a flurry of recent activity to simplify structure (as Malone is getting old). Primary companies LSXMK, FWONK, BATRK; secondary companies LBRDK, LBTYK, QRTEA, LTRPA, LLYVA.
Pg 18: INDIA’s economy is growing strongly. Its global policies are complex or puzzling. The bureaucratic red tape (a legacy of British Raj that introduced divided responsibilities in civil service to avoid fraud) has been cut a lot but still remains a major bottleneck. Mark MOBIUS (own firm) says to think of India as a “united states of India”. Most of its 28 states are culturally and linguistically very different (need Hindi and English to get by everywhere), have their own state bureaucracies, and even have border and rights disputes; some Indian states are larger than many countries. Overlay on this a national government and its own bureaucracy. The median workers’ age is only 28. While India is the most populous democracy in the world, there are issues of human rights, press freedom, etc. The US has been wooing Prime Minister MODI (2014- ). India has jumped over several technologies – e.g. it skipped cable and went directly from on-air broadcasting to wireless streaming and satellite TV. However, in many areas, India relies on technology transfers as part of big purchases and that means a slightly outdated technology. There are now 120 Indian Unicorns and several Indian billionaires. Some Chinese manufacturing has shifted to India but much more is potentially possible (and that didn’t happen in the past). In evaluating Indian companies, look at returns on capital or assets, not P/Es that tend to be high. Mentioned are GQGPX (Rajiv JAIN), MINDX, WAINX; ETFs INDA, EPI.
Pg 21, FUNDS. Avoid GROWTH-TRAPS, just as value-traps. INKER (GMO) defines growth-traps as companies with declining revenue growth but high valuations. Use GARP to avoid growth-traps and examples include JENSX, etc. (By @lewisbraham at MFO)
EXTRA, FUNDS. Tiny disaster recovery ETF FIXT invests with equal-weights in about 50 companies that handle disaster recovery efforts.
Pg 22, INCOME. MUNIs with 5-8% effective/tax-equivalent yield are attractive. The current high money-market (or T-Bills) rates won’t last. Mentioned are MDNLX, HY muni PRFHX, CEF NMCO.
Pg 23, TECH TRADER. In the first half of Q2 earnings season, AI powered big techs. Now comes the showtime for techs with ad revenues and cloud businesses (it has been weak due to lower capex).
Pg 24: Cathie WOOD, ARK. Her stomach-churning thematic funds are doing better this year. She maintains the $2,000 target for TSLA but sold some around $264 anyway for “portfolio adjustments”. She likes COIN and expects some regularity clarity soon from Congress and courts that may limit the scope of the SEC/GENSLER. She is bullish on Bitcoin, DeFi and NFTs. Her other big themes are AI (beneficiaries TWLO, TDOC) and gene sequencing (CRSP, PACB; but she sold ILMN as it’s too greedy and not passing on cost savings to consumers).
Pg 26, ECONOMY. The global outlook is murky in the views from 3 central banks – the US FED, ECB, BOJ. In a surprise, the BOJ tweaked its yield-curve control for 10-yr to be nominally within +/- 0.50% (around 0%), but it will now intervene only at +/- 1%, so effectively widening the trading band. The yen may strengthen as the rates rise and the yen-carry-trade may become less popular. The Fed raised rates that are now the highest in 16 years; obviously, higher than pre-GFC. The CME FedWatch shows that this may be the last rate hike with cuts to follow in 2024, but POWELL was noncommittal on rate hold or hike at the next FOMC. The US economy grew at +2.4%, the labor market remains strong and inflation continues to moderate (and the Fed staff sees only soft landing, not recession).
Pg 54, OTHER VOICES. Charles DUNST, Asia Group (advisory firm in DC). There are several federal incentive programs for semi chips, but there is now a shortage of skilled US workers. TSM may have to bring workers from Taiwan for its AZ chips facility. The US workforce training programs and boosts to vocational education will take some time. In the meantime, some temporary restricted visas may be issued to high tech workers.
(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.
None
Accessible from Morningstar (M*), PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).
DATA THIS WEEK (seriously shrunk). JOLTS report on TUESDAY; jobs report (+200,000), unemployment rate 3.6% FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Costco (COST; fwd P/E 37 (never cheap); strong growth; most of the profits are from membership dues, and the rest of the business almost is run at-cost; pg 17).
BEARISH.
Pg 10: The PHARMA industry (MRK, JNJ, BMY, ALPMY, etc) is launching legal wars against Medicare/CMS on its new DRUG PRICING negotiation authority. The pharma industry is hoping to delay, slow or reverse the implementation by winning a national injunction in SOME court and then eventually fighting it before the SUPREMES. The US Chamber of Commerce has also asked a federal court for injunction against Medicare/CMS. CONGRESS passed the related law as part of the Inflation Reduction Act, and since then, the pharma index has lagged. (The current system is that private PBMs and healthcare systems negotiate drug prices, and then the Medicare/CMS just goes along. This system was seriously broken by Biogen’s/BIIB greedy pricing of its 1st Alzheimer drug that was approved by the FDA. Eventually, that drug failed in the marketplace due to resistance from Medicare/CMS. Biogen’s 2nd Alzheimer drug has done better.)
Pg 12: The champion in stock CLASSES (A – 1 vote/share, B – 10 votes/share, K – nonvoting) and various TRACKING-stocks is John MALONE (82)/Liberty Media (but you cannot buy it); the CEO is Greg MAFFEI (65). He likes to issue pure-play tracking-stocks for his various business segments and these have had mixed successes. He can also buy and sell businesses at the right prices. After a long while, there is a flurry of recent activity to simplify structure (as Malone is getting old). Primary companies LSXMK, FWONK, BATRK; secondary companies LBRDK, LBTYK, QRTEA, LTRPA, LLYVA.
Pg 18: INDIA’s economy is growing strongly. Its global policies are complex or puzzling. The bureaucratic red tape (a legacy of British Raj that introduced divided responsibilities in civil service to avoid fraud) has been cut a lot but still remains a major bottleneck. Mark MOBIUS (own firm) says to think of India as a “united states of India”. Most of its 28 states are culturally and linguistically very different (need Hindi and English to get by everywhere), have their own state bureaucracies, and even have border and rights disputes; some Indian states are larger than many countries. Overlay on this a national government and its own bureaucracy. The median workers’ age is only 28. While India is the most populous democracy in the world, there are issues of human rights, press freedom, etc. The US has been wooing Prime Minister MODI (2014- ). India has jumped over several technologies – e.g. it skipped cable and went directly from on-air broadcasting to wireless streaming and satellite TV. However, in many areas, India relies on technology transfers as part of big purchases and that means a slightly outdated technology. There are now 120 Indian Unicorns and several Indian billionaires. Some Chinese manufacturing has shifted to India but much more is potentially possible (and that didn’t happen in the past). In evaluating Indian companies, look at returns on capital or assets, not P/Es that tend to be high. Mentioned are GQGPX (Rajiv JAIN), MINDX, WAINX; ETFs INDA, EPI.
Pg 21, FUNDS. Avoid GROWTH-TRAPS, just as value-traps. INKER (GMO) defines growth-traps as companies with declining revenue growth but high valuations. Use GARP to avoid growth-traps and examples include JENSX, etc. (By @lewisbraham at MFO)
EXTRA, FUNDS. Tiny disaster recovery ETF FIXT invests with equal-weights in about 50 companies that handle disaster recovery efforts.
Pg 22, INCOME. MUNIs with 5-8% effective/tax-equivalent yield are attractive. The current high money-market (or T-Bills) rates won’t last. Mentioned are MDNLX, HY muni PRFHX, CEF NMCO.
Pg 23, TECH TRADER. In the first half of Q2 earnings season, AI powered big techs. Now comes the showtime for techs with ad revenues and cloud businesses (it has been weak due to lower capex).
Pg 24: Cathie WOOD, ARK. Her stomach-churning thematic funds are doing better this year. She maintains the $2,000 target for TSLA but sold some around $264 anyway for “portfolio adjustments”. She likes COIN and expects some regularity clarity soon from Congress and courts that may limit the scope of the SEC/GENSLER. She is bullish on Bitcoin, DeFi and NFTs. Her other big themes are AI (beneficiaries TWLO, TDOC) and gene sequencing (CRSP, PACB; but she sold ILMN as it’s too greedy and not passing on cost savings to consumers).
Pg 26, ECONOMY. The global outlook is murky in the views from 3 central banks – the US FED, ECB, BOJ. In a surprise, the BOJ tweaked its yield-curve control for 10-yr to be nominally within +/- 0.50% (around 0%), but it will now intervene only at +/- 1%, so effectively widening the trading band. The yen may strengthen as the rates rise and the yen-carry-trade may become less popular. The Fed raised rates that are now the highest in 16 years; obviously, higher than pre-GFC. The CME FedWatch shows that this may be the last rate hike with cuts to follow in 2024, but POWELL was noncommittal on rate hold or hike at the next FOMC. The US economy grew at +2.4%, the labor market remains strong and inflation continues to moderate (and the Fed staff sees only soft landing, not recession).
Pg 54, OTHER VOICES. Charles DUNST, Asia Group (advisory firm in DC). There are several federal incentive programs for semi chips, but there is now a shortage of skilled US workers. TSM may have to bring workers from Taiwan for its AZ chips facility. The US workforce training programs and boosts to vocational education will take some time. In the meantime, some temporary restricted visas may be issued to high tech workers.
(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.
None
Accessible from Morningstar (M*), PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).