Post by Admin/YBB on Sept 9, 2023 7:32:39 GMT -6
Pg 12. ECB monetary policy decision on THURSDAY. UAW strike may be after midnight on THURSDAY.
PREVIEW & REVIEW (consolidated). DoorDash/DASH CEO warned about consumer satisfaction issues with grocery deliveries (#1 WMT, #2 Instacart, #3 AMZN). DASH business is more for restaurant food deliveries. This may affect the upcoming Instacart IPO.
DATA THIS WEEK (seriously shrunk but supplemented from the link below). CPI (+3.6% yoy; core +4.4%), Treasury budget on WEDNESDAY; PPI, retail sales, business inventories on THURSDAY; capacity utilization, industrial production, UM consumer sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
Data This Week Link,
www.barrons.com/market-data/market-lab?mod=md_subnav#consensus-estimate
BULLISH. Bank M&A (many pay good dividends because their stocks are depressed; banks have already had their earnings recession but earnings rebound may not be soon; they face competition from other banks and fintech; digitalization is expensive; most have large unrealized portfolio losses that may be useful for some acquirers; regulators are unlikely to clear acquisitions by big banks except as rescues during crisis; ideal for M&A are small- and mid- size banks with assets under $100 billion that are out of regulators’ radars; pg 13);
Selected food stocks (CAG, CPB, GIS, K, KHC, MDLZ; good dividends; reasonable P/Es; defensive stocks; headwinds include inflation, obesity; pg 16);
Enphase (ENPH; fwd P/E 21; infrastructure stimulus should boost its solar-roof business; also expanding in Europe; it doesn’t make solar panels, but makes related accessories – microinverters, controllers, battery packs, monitoring systems; some EV-related business; insider purchases; pg 18);
AAR Corp (AIR; fwd P/E 16.7; net debt/EBITDA < 1; good free cash flow; distributes used engines and airframe parts and sells repair/maintenance services to airlines; it harvest parts from old, decommissioned planes; growing via M&A; air travel is still in recovery mode with domestic travel fully recovered but international travel recovering slowly; pg 25).
BEARISH.
Pg 19, FOLLOW UP. Disney/DIS vs Charter/CHTR is getting messy and ugly. CHTR want reforms for bundles for the streaming age, DIS likes the status quo. The current deal/contract expired on 8/31/23 and the blackout at CHTR began. Losses at DIS also started to pile up and its stock is now at the lowest since 05/2014. Barron’s is reiterating its previous untimely recommendations for DIS – now, lower the better; Barron’s thinks that this painful impasse for both cannot continue for long.
Pg 26, FUNDS. After strong 2021 and 2022, the COMMODITY FUNDS have poor 2023YTD. Sluggish China is a big factor. VanEck (CMCAX) and Pimco (CMDT) have launched new commodity funds. Top performers YTD include CANE; UGA, KARB, DBO, PDBA, DBA, CCRV, USL, OILK, USO; only CANE (sugar) is ahead of SP500.
(It was hard to guess on Friday which of the fund features would make the print edition. Enjoy the EXTRAs or skip)
EXTRA, FUNDS. ACTIVE large-cap and small-cap stock funds outperformed in August as they avoided the Magnificent 7 and utilities. But passive stock funds outperformed YTD.
EXTRA, FUNDS. No wonder firms like ACTIVE ETFs for more revenues they bring in (from higher ERs). Investors are also willing to pay higher but reasonable ERs, so inflows into active ETFs have been strong. However, most are expected to lag comparable passive ETFs. DFA (DFSV, etc) and Capital Group (CGGR, etc) have become big players for active ETFs; a newcomer is Price (TCAF, etc). Options-based active ETFs are also popular (giant JEPI, etc). (Active bond ETFs have been around for several years, but active equity ETFs are relatively new development).
EXTRA, FUNDS. BlackRock and several other firms have filed for physical/spot-crypto ETFs, 6 of them for trading on the CBOE. Even the exchanges are jumping into the crypto space – LNSTY, BKKT (ICE is majority owner), NDAQ, CME. (Rumors in social-media are that to save face, the SEC may just approve BlackRock’s application as its model for the spot-crypto ETF and reject all others that are different.)
Pg 27, INCOME. High-quality dividend stocks have lagged and are now attractive – ETFs Aristocrat NOBL; dividend-growth VIG, DGRO. (Comments also mention dividend-blend SCHD)
Pg 28, ECONOMY. UK officials have found gross ERRORS in their earlier (under) estimates for the economy. Extraordinary revisions showed that the UK economy had already recovered by 2021 yearend; the biggest revisions were in services and wholesale and retail sales. Unfortunately, many government and business decisions were made for a dour economy that wasn’t. Inflation is still high at +6.8% and more BOE rate hikes are expected. The US has already revised its 2021 data, so no similar surprises are expected. But there is a lesson for the FED that the best data estimates for economy can be wrong; the US did have big revisions in the recent jobs data and more revisions may be forthcoming. The current economic data are lagging indicators at best, and then there are these revisions when more actual data come in later. Of course, revisions can be favorable or unfavorable. So, central bankers must be agile and flexible.
Pg 29, TECH TRADER. A BIG week for tech – iPhone launch at the annual Apple Fall event (China trying to ruin the party by banning government use of iPhones?), chip-designer Arm IPO from SoftBank/SFTBY, the DOJ vs GOOGL antitrust/antimonopoly trial in DC.
Pg 30: Alan PATRICOF (88), Greycroft Partners (2006- ), PrimeTime Partners (2020- ). At some point, LONGEVITY will become a societal issue; there are longevity clinics now; Primetime Partners invests only in companies that serve the 60+ market. The venture capital (VC) business has slowed over the last 12-18 months (following a boom). The IPO market has been shut; let us see how ARM and other IPOs go. The VC-backed companies remain good, but their valuations have come down (interest rates are higher too). His advice to VCs is to be realistic and patient. The Russia-Ukraine war is also an overhang. Things can change quickly or just muddle through. He has seen and participated in the eras of PCs, cell phones/smartphones, storage, Internet, space exploration, and now AI. Elsewhere, the CRE market is in trouble; major cities are losing their tax base; he ran in the NYC Marathon last year; he just returned from Burning Man. His book, No Red Lights: Reflections on Life, 50 Years in VC, and Never Driving Alone, 05/2022.
Pg 62, OTHER VOICES. Paul SHEARD, former Vice-Chair of S&P Global/SPGI. The US annual budget deficit is $1.6 trillion, and the total national debt is $32.91 trillion. There may be a government shutdown over the budget issues. The author discusses 5 “myths”. 1st, that it over borrows to spend; instead, the government creates money that goes into the economy and it collects taxes from revenues and income, and the imbalance is the deficit; 2nd, paying off national debt means nothing; it is just a national liability that can remain. 3rd, QE doesn’t mean the Fed is printing money, but QE only changes the nature of financing of the national debt. 4th, banks cannot lend extra reserves until there is lending demand. 5th, banks get short-term deposits to lend long-term; instead, banks create money when they lend. The US economy produces $27 trillion in goods and services annually, and a mismatch of $1.9 trillion (a shortfall from tax collections) is OK. His book, The Power of Money: How Governments and Banks Create Money and Help Us All Prosper.
Edit/Add, Pg 63. Roth 401k/403b are attractive for younger workers in low tax brackets. However, all can benefit from having a mix in regular and Roth 401k/403b. One rule of thumb is (age + 20)% in regular 401k/403b, rest in Roth 401k/403b. After 2026, 50+ catchup contributions can only be in Roth 401k/403b (it was delayed 2 years because many plans weren’t ready).
(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).
PREVIEW & REVIEW (consolidated). DoorDash/DASH CEO warned about consumer satisfaction issues with grocery deliveries (#1 WMT, #2 Instacart, #3 AMZN). DASH business is more for restaurant food deliveries. This may affect the upcoming Instacart IPO.
DATA THIS WEEK (seriously shrunk but supplemented from the link below). CPI (+3.6% yoy; core +4.4%), Treasury budget on WEDNESDAY; PPI, retail sales, business inventories on THURSDAY; capacity utilization, industrial production, UM consumer sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
Data This Week Link,
www.barrons.com/market-data/market-lab?mod=md_subnav#consensus-estimate
BULLISH. Bank M&A (many pay good dividends because their stocks are depressed; banks have already had their earnings recession but earnings rebound may not be soon; they face competition from other banks and fintech; digitalization is expensive; most have large unrealized portfolio losses that may be useful for some acquirers; regulators are unlikely to clear acquisitions by big banks except as rescues during crisis; ideal for M&A are small- and mid- size banks with assets under $100 billion that are out of regulators’ radars; pg 13);
Selected food stocks (CAG, CPB, GIS, K, KHC, MDLZ; good dividends; reasonable P/Es; defensive stocks; headwinds include inflation, obesity; pg 16);
Enphase (ENPH; fwd P/E 21; infrastructure stimulus should boost its solar-roof business; also expanding in Europe; it doesn’t make solar panels, but makes related accessories – microinverters, controllers, battery packs, monitoring systems; some EV-related business; insider purchases; pg 18);
AAR Corp (AIR; fwd P/E 16.7; net debt/EBITDA < 1; good free cash flow; distributes used engines and airframe parts and sells repair/maintenance services to airlines; it harvest parts from old, decommissioned planes; growing via M&A; air travel is still in recovery mode with domestic travel fully recovered but international travel recovering slowly; pg 25).
BEARISH.
Pg 19, FOLLOW UP. Disney/DIS vs Charter/CHTR is getting messy and ugly. CHTR want reforms for bundles for the streaming age, DIS likes the status quo. The current deal/contract expired on 8/31/23 and the blackout at CHTR began. Losses at DIS also started to pile up and its stock is now at the lowest since 05/2014. Barron’s is reiterating its previous untimely recommendations for DIS – now, lower the better; Barron’s thinks that this painful impasse for both cannot continue for long.
Pg 26, FUNDS. After strong 2021 and 2022, the COMMODITY FUNDS have poor 2023YTD. Sluggish China is a big factor. VanEck (CMCAX) and Pimco (CMDT) have launched new commodity funds. Top performers YTD include CANE; UGA, KARB, DBO, PDBA, DBA, CCRV, USL, OILK, USO; only CANE (sugar) is ahead of SP500.
(It was hard to guess on Friday which of the fund features would make the print edition. Enjoy the EXTRAs or skip)
EXTRA, FUNDS. ACTIVE large-cap and small-cap stock funds outperformed in August as they avoided the Magnificent 7 and utilities. But passive stock funds outperformed YTD.
EXTRA, FUNDS. No wonder firms like ACTIVE ETFs for more revenues they bring in (from higher ERs). Investors are also willing to pay higher but reasonable ERs, so inflows into active ETFs have been strong. However, most are expected to lag comparable passive ETFs. DFA (DFSV, etc) and Capital Group (CGGR, etc) have become big players for active ETFs; a newcomer is Price (TCAF, etc). Options-based active ETFs are also popular (giant JEPI, etc). (Active bond ETFs have been around for several years, but active equity ETFs are relatively new development).
EXTRA, FUNDS. BlackRock and several other firms have filed for physical/spot-crypto ETFs, 6 of them for trading on the CBOE. Even the exchanges are jumping into the crypto space – LNSTY, BKKT (ICE is majority owner), NDAQ, CME. (Rumors in social-media are that to save face, the SEC may just approve BlackRock’s application as its model for the spot-crypto ETF and reject all others that are different.)
Pg 27, INCOME. High-quality dividend stocks have lagged and are now attractive – ETFs Aristocrat NOBL; dividend-growth VIG, DGRO. (Comments also mention dividend-blend SCHD)
Pg 28, ECONOMY. UK officials have found gross ERRORS in their earlier (under) estimates for the economy. Extraordinary revisions showed that the UK economy had already recovered by 2021 yearend; the biggest revisions were in services and wholesale and retail sales. Unfortunately, many government and business decisions were made for a dour economy that wasn’t. Inflation is still high at +6.8% and more BOE rate hikes are expected. The US has already revised its 2021 data, so no similar surprises are expected. But there is a lesson for the FED that the best data estimates for economy can be wrong; the US did have big revisions in the recent jobs data and more revisions may be forthcoming. The current economic data are lagging indicators at best, and then there are these revisions when more actual data come in later. Of course, revisions can be favorable or unfavorable. So, central bankers must be agile and flexible.
Pg 29, TECH TRADER. A BIG week for tech – iPhone launch at the annual Apple Fall event (China trying to ruin the party by banning government use of iPhones?), chip-designer Arm IPO from SoftBank/SFTBY, the DOJ vs GOOGL antitrust/antimonopoly trial in DC.
Pg 30: Alan PATRICOF (88), Greycroft Partners (2006- ), PrimeTime Partners (2020- ). At some point, LONGEVITY will become a societal issue; there are longevity clinics now; Primetime Partners invests only in companies that serve the 60+ market. The venture capital (VC) business has slowed over the last 12-18 months (following a boom). The IPO market has been shut; let us see how ARM and other IPOs go. The VC-backed companies remain good, but their valuations have come down (interest rates are higher too). His advice to VCs is to be realistic and patient. The Russia-Ukraine war is also an overhang. Things can change quickly or just muddle through. He has seen and participated in the eras of PCs, cell phones/smartphones, storage, Internet, space exploration, and now AI. Elsewhere, the CRE market is in trouble; major cities are losing their tax base; he ran in the NYC Marathon last year; he just returned from Burning Man. His book, No Red Lights: Reflections on Life, 50 Years in VC, and Never Driving Alone, 05/2022.
Pg 62, OTHER VOICES. Paul SHEARD, former Vice-Chair of S&P Global/SPGI. The US annual budget deficit is $1.6 trillion, and the total national debt is $32.91 trillion. There may be a government shutdown over the budget issues. The author discusses 5 “myths”. 1st, that it over borrows to spend; instead, the government creates money that goes into the economy and it collects taxes from revenues and income, and the imbalance is the deficit; 2nd, paying off national debt means nothing; it is just a national liability that can remain. 3rd, QE doesn’t mean the Fed is printing money, but QE only changes the nature of financing of the national debt. 4th, banks cannot lend extra reserves until there is lending demand. 5th, banks get short-term deposits to lend long-term; instead, banks create money when they lend. The US economy produces $27 trillion in goods and services annually, and a mismatch of $1.9 trillion (a shortfall from tax collections) is OK. His book, The Power of Money: How Governments and Banks Create Money and Help Us All Prosper.
Edit/Add, Pg 63. Roth 401k/403b are attractive for younger workers in low tax brackets. However, all can benefit from having a mix in regular and Roth 401k/403b. One rule of thumb is (age + 20)% in regular 401k/403b, rest in Roth 401k/403b. After 2026, 50+ catchup contributions can only be in Roth 401k/403b (it was delayed 2 years because many plans weren’t ready).
(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).