Post by Admin/YBB on Nov 25, 2023 9:08:35 GMT -6
Pg 12. PREVIEW & REVIEW (consolidated). Dilemma for OpenAI is whether to make lots of money commercializing the current generative-AI GPT4, or go for advanced developments in AGI with a new GPT5, 6,…(a secret internal development on AGI was also reported). That conflict is inherent in its structure with governing nonprofit-OpenAI and operating capped-for-profit-OpenAI. The related drama played out in social-media – firing of the CEO Sam Altman, 2 interim CEOs that followed, nonprofit-OpenAI Board revamp, and finally, the return of Sam Altman, all within a few days. Microsoft/MSFT is a big partner in the for-profit-OpenAI but has a large AI program of its own (at one point, it was willing to absorb almost the entire staff of OpenAI), as do others (GOOGL, IBM, CRM, AMZN, etc). (In fact, if OpenAI is bogged down by internal infighting, it may lose its current lead in generative-AI GPT4, and the future breakthrough(s) for AGI may come from elsewhere).
DATA THIS WEEK. New home sales on MONDAY; home price index, consumer confidence on TUESDAY; Q3 GDP (2nd reading) on WEDNESDAY; personal income and consumption expenditures (core PCE index +3.5% yoy) on THURSDAY; construction spending 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. Corporate travel (finally rebounding after several false starts; settlements of auto/UAW and entertainment worker strikes are positive; but capacity constraints may develop; beneficiaries will be airlines – DAL, UAL, AAL, JBLU and hotels – HLT, H, MAR, IHG; pg 14);
Vontier (VNT; yield 0.3%; fwd P/E 10.7; 2020 spinoff from Fortiv/FTV; roots in Danhar, so practices DBS; positioned to benefit from transition from ICE to EV; businesses – parts/systems for ICE & EV, gas pumps & EV charging stations, software for card readers (swipes & chips), commercial fleet tracking systems; pg 23);
New vaccines (Covid vaccines launched a new wave of vaccine development; techniques include mRNA, conjugation, adjuvants; goals are preventive as well as treatment; delivery via injections, nasal sprays, skin patches; current – for Covid, flu, pneumonia, RSV, shingles, and for many diseases; potential – for Alzheimer, cancer, combos (Covid + flu + RSV, etc), gonorrhea, Group B Strep, heart diseases, MS, etc; vaccine science is already much ahead of growing public hesitancy about vaccinations; vaccines have less side-effects than other drugs, but some have had serious side-effects; HIV vaccine looks unlikely now because that virus makes billions of copies per day; beneficiaries MRNA, BNTX, PFE, MRK, GSK, SNY, VALN, JNJ, etc; pg 24).
BEARISH. SOFI (fwd P/E 100; P/tBV 2; sells personal and consolidated loans to investors at good markups (basic upfront amount + high servicing fees); some loans may be bundled and securitized; it recognizes “gains” from loan sale as income immediately, a questionable practice that has been allowed for the last 5 years; there may be adjustments/claw-backs later if some loans go bad; Q4 report will be in 01/2024, but it offered glimpses on 11/14/23; competitors ATLC, ENVA, OPRT, UPST; pg 12).
Pg 26, FUNDS. Another piece on high yearend CG distributions. (This piece by Lauren Foster seems to be based on a longer piece by @lewisbraham in the Guide to Wealth supplement, see below)
Pg 26, INCOME from EM dividend-stocks – CEMDX/CEMIX with holdings in Brazil, China, Greece, Mexico.
Pg 28, TECH TRADER. This TECH RALLY has legs (for 18-24 months) from the AI-related developments. Just go for the Magnificent 7 – AAPL, MSFT, GOOGL, AMZN, NVDA, META, TSLA. Spending for digital ads and IT infrastructure are strong. There may be a trickle-down effect to other techs – ADBE, CRM, NOW, TSM, AMD, MRVL, AMAT, etc.
Pg 29, ECONOMY. RATE hikes haven’t hurt Main Street (?) but it may be different for Wall Street. The GDP growth remains solid. Many homeowners have low-rate mortgages. Consumer debt is low (?). Surveys show that many people don’t know who Powell or Yellen are (so?). Home prices are OK so far despite poor housing affordability mainly due to high mortgage rates. The stock rally powered by AI continues. But it could be a tough going for stocks going forward. (May be author Forsyth is looking at a glass half-full, not half-empty)
Pg 58, OTHER VOICES. Matthew EISLER, U Strathclyde (Scotland). Only Tesla/TSLA is making money on EVs (and that only since 2021), but all others are incurring huge losses. As EV demand has slowed, several automakers have cut down their EV and battery developments. Top-down regulations are pushing for clean-energy and EVs, but profits must follow at some point. Hybrids were the solution for a previous era push on emissions and MPG mandates. Initially, Tesla benefited from those old federal programs. But when others jumped into EVs, many of those old programs had expired. There are now some federal incentives for EV charging stations, and EV makers can also tap into general infrastructure and onshoring incentives. But new national policies are needed for EVs to go along with clean-energy and electrification mandates. Book, Age of Auto Electric: Environment, Energy, and the Quest for the Sustainable Car, 12/2022.
Pg 59, RETIREMENT. The good news is that Americans have $39 trillion in RETIREMENT ACCOUNTS. But the bad news is that only 54.3% have defined-contribution (DC) retirement accounts, 13% have traditional defined-benefit (DB) pensions, and accounting for overlaps, that leaves lots of Americans without ANY retirement funds beyond Social Security (1935- ). The average balance in DC accounts is only $86K. In the very old days, people worked until they died. Pensions were a creation of Industrial Revolution to make room for younger employees by luring older workers to “retire”, and the first retirement fund was by American Express in 1875. It didn’t catch on right away, and then the Great Depression came (1930s), and the SSA was created. Employees liked old pensions, but employers saw them as growing liabilities. According to the father of 401k, Ted BENNA, 401k was by accident from the short 869-word section (subtitled 401k) in the 1978 Revenue Act that allowed pretax employer and employee contributions for retirements (unclear who slipped that in). Companies caught on to this quickly, and by 1983, there were already 7.1 million 401k accounts, now 60 million accounts. The great shift from old pensions to 401k/403b also started. But 401k/403b aren’t perfect, and while auto-signups and auto-escalations have helped, that hasn’t been enough (especially for lower-income and self-employed groups and small businesses). (By Kenneth Pringle who has authored some great historical pieces)
Supplement, GUIDE TO WEALTH.
Pg S2: Yearend tips for portfolios: Max 401k/403b, make IRA contributions and/or Roth conversions, payoff high-rate debt, deploy some tech profits into bonds, rebalance if far from targets, consider alternatives, keep cash in higher-rate money-market funds. Some stock and bond ideas are also included.
Pg S6: Several high 2023 yearend mutual fund distributions are mentioned: IYVAX, KLCKX, FMXKX, CREEX, DHSCX, JPDEX (tax-aware!), BTIIX (SP500!). Heavy outflows and/or manager change are reasons. The ETFs avoid this problem due to their tax-efficient design. There are also direct-indexed accounts that can do TLH; some of these accept mutual funds (in-kind) that they can slowly adjust with TLH. Mutual fund holders with huge CG distributions may also sell them ahead if their unrealized gains are not large. For individuals, excess TLH net losses beyond $3K/yr offset of ordinary income can be carried over to future years. Tax issues don’t matter in tax-deferred/free accounts. Charitably inclined may contribute highly appreciated securities to DAFs or directly to charities (but one has to itemize to claim charitable deductions). (By @lewisbraham at MFO)
Pg S8: Top yearend ideas from 5 financial pros:
Cheryl HOLLAND/Abacus: Family talks about finances around holidays.
Patrick FRUZZETI/Rose-Hightower: TLH, QCDs, CRTs from IRAs, DAFs.
Matthew SPRADLIN/Godfrey & Spradlin-Steward Partners: 529s – split w/spouse to max state tax benefits; use 5-yr forward for 5x annual contributions (but cannot contribute more for 5 years), individual 401k for proprietors.
Indrika ARNOLD/Colony Group: Gifting with purpose – it’s a good feeling when gift recipients benefit from gifts while you are around.
Mark MUMFORD/Hollow Brook: TLH, gifts.
This being an ad supplement (although the best one that Barron’s has), these features are followed by the lists of top advisors (state-by-state), top RIA firms, and top advisory firms.
(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. New home sales on MONDAY; home price index, consumer confidence on TUESDAY; Q3 GDP (2nd reading) on WEDNESDAY; personal income and consumption expenditures (core PCE index +3.5% yoy) on THURSDAY; construction spending 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. Corporate travel (finally rebounding after several false starts; settlements of auto/UAW and entertainment worker strikes are positive; but capacity constraints may develop; beneficiaries will be airlines – DAL, UAL, AAL, JBLU and hotels – HLT, H, MAR, IHG; pg 14);
Vontier (VNT; yield 0.3%; fwd P/E 10.7; 2020 spinoff from Fortiv/FTV; roots in Danhar, so practices DBS; positioned to benefit from transition from ICE to EV; businesses – parts/systems for ICE & EV, gas pumps & EV charging stations, software for card readers (swipes & chips), commercial fleet tracking systems; pg 23);
New vaccines (Covid vaccines launched a new wave of vaccine development; techniques include mRNA, conjugation, adjuvants; goals are preventive as well as treatment; delivery via injections, nasal sprays, skin patches; current – for Covid, flu, pneumonia, RSV, shingles, and for many diseases; potential – for Alzheimer, cancer, combos (Covid + flu + RSV, etc), gonorrhea, Group B Strep, heart diseases, MS, etc; vaccine science is already much ahead of growing public hesitancy about vaccinations; vaccines have less side-effects than other drugs, but some have had serious side-effects; HIV vaccine looks unlikely now because that virus makes billions of copies per day; beneficiaries MRNA, BNTX, PFE, MRK, GSK, SNY, VALN, JNJ, etc; pg 24).
BEARISH. SOFI (fwd P/E 100; P/tBV 2; sells personal and consolidated loans to investors at good markups (basic upfront amount + high servicing fees); some loans may be bundled and securitized; it recognizes “gains” from loan sale as income immediately, a questionable practice that has been allowed for the last 5 years; there may be adjustments/claw-backs later if some loans go bad; Q4 report will be in 01/2024, but it offered glimpses on 11/14/23; competitors ATLC, ENVA, OPRT, UPST; pg 12).
Pg 26, FUNDS. Another piece on high yearend CG distributions. (This piece by Lauren Foster seems to be based on a longer piece by @lewisbraham in the Guide to Wealth supplement, see below)
Pg 26, INCOME from EM dividend-stocks – CEMDX/CEMIX with holdings in Brazil, China, Greece, Mexico.
Pg 28, TECH TRADER. This TECH RALLY has legs (for 18-24 months) from the AI-related developments. Just go for the Magnificent 7 – AAPL, MSFT, GOOGL, AMZN, NVDA, META, TSLA. Spending for digital ads and IT infrastructure are strong. There may be a trickle-down effect to other techs – ADBE, CRM, NOW, TSM, AMD, MRVL, AMAT, etc.
Pg 29, ECONOMY. RATE hikes haven’t hurt Main Street (?) but it may be different for Wall Street. The GDP growth remains solid. Many homeowners have low-rate mortgages. Consumer debt is low (?). Surveys show that many people don’t know who Powell or Yellen are (so?). Home prices are OK so far despite poor housing affordability mainly due to high mortgage rates. The stock rally powered by AI continues. But it could be a tough going for stocks going forward. (May be author Forsyth is looking at a glass half-full, not half-empty)
Pg 58, OTHER VOICES. Matthew EISLER, U Strathclyde (Scotland). Only Tesla/TSLA is making money on EVs (and that only since 2021), but all others are incurring huge losses. As EV demand has slowed, several automakers have cut down their EV and battery developments. Top-down regulations are pushing for clean-energy and EVs, but profits must follow at some point. Hybrids were the solution for a previous era push on emissions and MPG mandates. Initially, Tesla benefited from those old federal programs. But when others jumped into EVs, many of those old programs had expired. There are now some federal incentives for EV charging stations, and EV makers can also tap into general infrastructure and onshoring incentives. But new national policies are needed for EVs to go along with clean-energy and electrification mandates. Book, Age of Auto Electric: Environment, Energy, and the Quest for the Sustainable Car, 12/2022.
Pg 59, RETIREMENT. The good news is that Americans have $39 trillion in RETIREMENT ACCOUNTS. But the bad news is that only 54.3% have defined-contribution (DC) retirement accounts, 13% have traditional defined-benefit (DB) pensions, and accounting for overlaps, that leaves lots of Americans without ANY retirement funds beyond Social Security (1935- ). The average balance in DC accounts is only $86K. In the very old days, people worked until they died. Pensions were a creation of Industrial Revolution to make room for younger employees by luring older workers to “retire”, and the first retirement fund was by American Express in 1875. It didn’t catch on right away, and then the Great Depression came (1930s), and the SSA was created. Employees liked old pensions, but employers saw them as growing liabilities. According to the father of 401k, Ted BENNA, 401k was by accident from the short 869-word section (subtitled 401k) in the 1978 Revenue Act that allowed pretax employer and employee contributions for retirements (unclear who slipped that in). Companies caught on to this quickly, and by 1983, there were already 7.1 million 401k accounts, now 60 million accounts. The great shift from old pensions to 401k/403b also started. But 401k/403b aren’t perfect, and while auto-signups and auto-escalations have helped, that hasn’t been enough (especially for lower-income and self-employed groups and small businesses). (By Kenneth Pringle who has authored some great historical pieces)
Supplement, GUIDE TO WEALTH.
Pg S2: Yearend tips for portfolios: Max 401k/403b, make IRA contributions and/or Roth conversions, payoff high-rate debt, deploy some tech profits into bonds, rebalance if far from targets, consider alternatives, keep cash in higher-rate money-market funds. Some stock and bond ideas are also included.
Pg S6: Several high 2023 yearend mutual fund distributions are mentioned: IYVAX, KLCKX, FMXKX, CREEX, DHSCX, JPDEX (tax-aware!), BTIIX (SP500!). Heavy outflows and/or manager change are reasons. The ETFs avoid this problem due to their tax-efficient design. There are also direct-indexed accounts that can do TLH; some of these accept mutual funds (in-kind) that they can slowly adjust with TLH. Mutual fund holders with huge CG distributions may also sell them ahead if their unrealized gains are not large. For individuals, excess TLH net losses beyond $3K/yr offset of ordinary income can be carried over to future years. Tax issues don’t matter in tax-deferred/free accounts. Charitably inclined may contribute highly appreciated securities to DAFs or directly to charities (but one has to itemize to claim charitable deductions). (By @lewisbraham at MFO)
Pg S8: Top yearend ideas from 5 financial pros:
Cheryl HOLLAND/Abacus: Family talks about finances around holidays.
Patrick FRUZZETI/Rose-Hightower: TLH, QCDs, CRTs from IRAs, DAFs.
Matthew SPRADLIN/Godfrey & Spradlin-Steward Partners: 529s – split w/spouse to max state tax benefits; use 5-yr forward for 5x annual contributions (but cannot contribute more for 5 years), individual 401k for proprietors.
Indrika ARNOLD/Colony Group: Gifting with purpose – it’s a good feeling when gift recipients benefit from gifts while you are around.
Mark MUMFORD/Hollow Brook: TLH, gifts.
This being an ad supplement (although the best one that Barron’s has), these features are followed by the lists of top advisors (state-by-state), top RIA firms, and top advisory firms.
(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).