Post by Admin/YBB on Nov 18, 2023 7:50:27 GMT -6
Pg 12. FOMC Minutes on WEDNESDAY.
PREVIEW & REVIEW (consolidated). Some outliers in the recent CPI report are mentioned. But on the whole, the CPI was as expected.
DATA THIS WEEK. LEI on MONDAY; existing home sales on TUESDAY; durable goods, UM Sentiment on WEDNESDAY.
CLOSED. US markets on THURSDAY. US stocks close early at 1:00 PM (Eastern), US bond market closes early at 2:00 PM 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. First Citizens (FCNCA; yield 0.45%; fwd P/E 7.8; P/tBV 1.1; Tier 1 Capital 13.2%; #15 bank in the US; it has grown via acquisitions of several failed banks under the FDIC workouts, with SVB being the latest; it also acquired CIT; 25% economic, 50% voting control by HOLDING family and several family members are senior executives; pg 14);
Retailers benefiting from holiday shopping (WMT (discounts), BBY (electronics), MAT (toys), LVMUY (luxury); omnichannel stores with good inventory management will do well; consumers’ tastes and shopping patterns are changing, but they are in good shape and spirits; Black Friday will still be important but not as mush as it used to be; pg 21).
BEARISH.
Pg 13: As HOUSING AFFORDABILITY worsens, home prices may fall. Despite mortgage rates near 23-year high, home prices have remained stable around +40% above pre-pandemic levels (so far). There may be some trigger(s) – news of oversupply (so far, the existing homeowners aren’t selling due to their lower rate mortgages, but this won’t go on forever), changes in recession probabilities, some other surprises. Prices may break in 2024/H2, and local real estate markets may be affected differently. In the meantime, renting has become more attractive than buying.
Pg 16: Article focuses on how Israel-Hamas conflict has affected business and universities.
Pg 23, FUNDS. Go-anywhere moderately-aggressive-allocation (70-90% equity) EKBAX (ER 1.1%; no-load/NTF at Fidelity, Schwab) invests in stocks (45% tech, 29% industrials) and bonds (including HY, convertibles). Manager Margret PATEL was a HY specialist in her former career (at Wells Fargo, Pioneer, Third Avenue, Northstar). (By @lewisbraham at MFO)
EXTRA, FUNDS. THEMATIC funds have been disasters for investors (but they do sound interesting). Moreover, investors have poor timing with those – the M* investor-returns lag the fund TRs badly. Most big firms offer such niche/thematic ETFs – Fidelity, Blackrock/BLK (ICLN), Invesco/IVZ, etc; others also offer them, ARKK, DRIV, etc.
Pg 24, Q&A. Thomas BUBERT, CEO of AXA/AXAHY (French insurer). With the big issues of geopolitics, migration, cybersecurity, AI, energy transition, climate, the global economies should cooperate more. Historically, different risks occurred at different times, but now there are multiple risks simultaneously, or sequentially. Several risks are interconnected. Social discontent and fragmentation are also the result. In just the past 10-20 months, we may have lost lot of progress that took 10-20 years. Within the countries, there are widely different opportunity levels in bigger and smaller cities. The global markets haven’t priced in the interrelated risks. Gradual damage from them is also difficult to quantify. The insurance business relies on social contracts and pragmatism. Activists simplistically like to think of on/off switches. The notion of peace dividend has been turned on its head. AXA itself has transformed from a big life insurer to a big P&C insurer but it wasn’t easy.
Pg 26, ECONOMY. After Tesla/TSLA joined SP500 in late-2020 (when it became profitable and eligible for SP500), it has had a wild and disappointing ride; it peaked in late-2021. (2020 was a great year for TSLA, in part due to its prospects for joining SP500, but then, it has been a dog after joining SP500.)
Pg 27, TECH TRADER. Delayed Covid-boom (due to supply chain disruptions) is now post-Covid-bust for Cisco/CSCO. Its Q3 report was OK, but it’s all gloom going forward. Its customers are sitting on lots of idle CSCO equipment and it’s unclear when they will start to reorder. The stock may not have bottomed even with the yield of 3%, fwd P/E 12, fwd P/S 3.5; buybacks are in place.
Pg 27, INCOME. Treasury FRNs (=< 2 year maturity) have rates that reset weekly to 3-month T-Bill auctions rate, so their effective duration is just 1 week. These can be bought at monthly auctions via brokerages or Treasury Direct, or in the secondary market. There are funds – USFR, TFLO, both with the ER of 15 bps. The interest is exempt from state/local taxes. Interest in FRNs grew after the Fed started to increase rates in mid-2022 (so, don’t look for long performance histories). (Finally, the FRNs are getting the media attention they deserve) (Be aware that now there are 3 types of floating-rate (FR) funds – Treasury FRNs, corporate FRs, junk FRs/BL (these have done well this year), so pay attention to which ones you are buying/holding.)
Pg 54, OTHER VOICES. Dana PETERSON, The Conference Board (NYC-based nonprofit organization for 1,000+ businesses). Investors expecting that the FED is done raising rates may be disappointed. Inflation is down but not as much as the Fed would like; it has reiterated its +2% average inflation target. Interpretation of higher rates for longer is more appropriate. There are various sources for sticky-inflation. That may mean higher rates for years. Productivity gains from tech and AI may help but not enough. This will affect the long-term outlook for almost everything in the economy.
Pg 55, RETIREMENT. Some healthcare groups and doctors may not accept MEDICARE ADVANTAGE (MA; Part C), or that may change annually. Issues may be related to reimbursement rates and prior approvals. So, check whether your healthcare provider is in/out-network. The MA plans combine Parts A (hospitals), B (doctors), D (meds) with other supplementary coverages (eye, dental, gym). Almost 50% of Medicare-eligible people now use MA. Common enrollment periods are OEP Oct 15 – Dec 7, MA OEP Jan 1 – Mar 31; be sure to check the possible changes. (Also check plan’s formulary for any changes to your meds’ tiers)
(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). Some outliers in the recent CPI report are mentioned. But on the whole, the CPI was as expected.
DATA THIS WEEK. LEI on MONDAY; existing home sales on TUESDAY; durable goods, UM Sentiment on WEDNESDAY.
CLOSED. US markets on THURSDAY. US stocks close early at 1:00 PM (Eastern), US bond market closes early at 2:00 PM 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. First Citizens (FCNCA; yield 0.45%; fwd P/E 7.8; P/tBV 1.1; Tier 1 Capital 13.2%; #15 bank in the US; it has grown via acquisitions of several failed banks under the FDIC workouts, with SVB being the latest; it also acquired CIT; 25% economic, 50% voting control by HOLDING family and several family members are senior executives; pg 14);
Retailers benefiting from holiday shopping (WMT (discounts), BBY (electronics), MAT (toys), LVMUY (luxury); omnichannel stores with good inventory management will do well; consumers’ tastes and shopping patterns are changing, but they are in good shape and spirits; Black Friday will still be important but not as mush as it used to be; pg 21).
BEARISH.
Pg 13: As HOUSING AFFORDABILITY worsens, home prices may fall. Despite mortgage rates near 23-year high, home prices have remained stable around +40% above pre-pandemic levels (so far). There may be some trigger(s) – news of oversupply (so far, the existing homeowners aren’t selling due to their lower rate mortgages, but this won’t go on forever), changes in recession probabilities, some other surprises. Prices may break in 2024/H2, and local real estate markets may be affected differently. In the meantime, renting has become more attractive than buying.
Pg 16: Article focuses on how Israel-Hamas conflict has affected business and universities.
Pg 23, FUNDS. Go-anywhere moderately-aggressive-allocation (70-90% equity) EKBAX (ER 1.1%; no-load/NTF at Fidelity, Schwab) invests in stocks (45% tech, 29% industrials) and bonds (including HY, convertibles). Manager Margret PATEL was a HY specialist in her former career (at Wells Fargo, Pioneer, Third Avenue, Northstar). (By @lewisbraham at MFO)
EXTRA, FUNDS. THEMATIC funds have been disasters for investors (but they do sound interesting). Moreover, investors have poor timing with those – the M* investor-returns lag the fund TRs badly. Most big firms offer such niche/thematic ETFs – Fidelity, Blackrock/BLK (ICLN), Invesco/IVZ, etc; others also offer them, ARKK, DRIV, etc.
Pg 24, Q&A. Thomas BUBERT, CEO of AXA/AXAHY (French insurer). With the big issues of geopolitics, migration, cybersecurity, AI, energy transition, climate, the global economies should cooperate more. Historically, different risks occurred at different times, but now there are multiple risks simultaneously, or sequentially. Several risks are interconnected. Social discontent and fragmentation are also the result. In just the past 10-20 months, we may have lost lot of progress that took 10-20 years. Within the countries, there are widely different opportunity levels in bigger and smaller cities. The global markets haven’t priced in the interrelated risks. Gradual damage from them is also difficult to quantify. The insurance business relies on social contracts and pragmatism. Activists simplistically like to think of on/off switches. The notion of peace dividend has been turned on its head. AXA itself has transformed from a big life insurer to a big P&C insurer but it wasn’t easy.
Pg 26, ECONOMY. After Tesla/TSLA joined SP500 in late-2020 (when it became profitable and eligible for SP500), it has had a wild and disappointing ride; it peaked in late-2021. (2020 was a great year for TSLA, in part due to its prospects for joining SP500, but then, it has been a dog after joining SP500.)
Pg 27, TECH TRADER. Delayed Covid-boom (due to supply chain disruptions) is now post-Covid-bust for Cisco/CSCO. Its Q3 report was OK, but it’s all gloom going forward. Its customers are sitting on lots of idle CSCO equipment and it’s unclear when they will start to reorder. The stock may not have bottomed even with the yield of 3%, fwd P/E 12, fwd P/S 3.5; buybacks are in place.
Pg 27, INCOME. Treasury FRNs (=< 2 year maturity) have rates that reset weekly to 3-month T-Bill auctions rate, so their effective duration is just 1 week. These can be bought at monthly auctions via brokerages or Treasury Direct, or in the secondary market. There are funds – USFR, TFLO, both with the ER of 15 bps. The interest is exempt from state/local taxes. Interest in FRNs grew after the Fed started to increase rates in mid-2022 (so, don’t look for long performance histories). (Finally, the FRNs are getting the media attention they deserve) (Be aware that now there are 3 types of floating-rate (FR) funds – Treasury FRNs, corporate FRs, junk FRs/BL (these have done well this year), so pay attention to which ones you are buying/holding.)
Pg 54, OTHER VOICES. Dana PETERSON, The Conference Board (NYC-based nonprofit organization for 1,000+ businesses). Investors expecting that the FED is done raising rates may be disappointed. Inflation is down but not as much as the Fed would like; it has reiterated its +2% average inflation target. Interpretation of higher rates for longer is more appropriate. There are various sources for sticky-inflation. That may mean higher rates for years. Productivity gains from tech and AI may help but not enough. This will affect the long-term outlook for almost everything in the economy.
Pg 55, RETIREMENT. Some healthcare groups and doctors may not accept MEDICARE ADVANTAGE (MA; Part C), or that may change annually. Issues may be related to reimbursement rates and prior approvals. So, check whether your healthcare provider is in/out-network. The MA plans combine Parts A (hospitals), B (doctors), D (meds) with other supplementary coverages (eye, dental, gym). Almost 50% of Medicare-eligible people now use MA. Common enrollment periods are OEP Oct 15 – Dec 7, MA OEP Jan 1 – Mar 31; be sure to check the possible changes. (Also check plan’s formulary for any changes to your meds’ tiers)
(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).