Post by Admin/YBB on Dec 16, 2023 9:05:26 GMT -6
Pg 12. BOJ monetary policy decision on TUESDAY.
PREVIEW & REVIEW (consolidated). FUNDS. In the ETF performance race YTD, #1-ARKK, #2-FBCG, but they got there in very different ways. Also, FBCG is a long-term winner.
DATA THIS WEEK. Housing starts on TUESDAY; consumer confidence on WEDNESDAY; LEI on THURSDAY; personal income and expenditures (PCE +2.8% yoy; core PCE +3.3%), new home sales, UM consumer sentiment on FRIDAY.
Costco/COST sold $100 million worth of 1 oz gold biscuits/bars in 3 months; there is a limit of 2 per member. The new supply is gone as soon as it is loaded online (COST can get only so many at one time from its supplier)
www.barrons.com/magazine?mod=BOL_TOPNAV
Data This Week Link,
www.barrons.com/market-data/market-lab?mod=md_subnav#consensus-estimate
BULLISH.
BEARISH.
Pg 13. EV BUBBLE has burst. Peak evaluations were in 2020-21. Nobody besides Tesla/TSLA (and Chinese BYDDY, LI) can make any money from EVs, so they are cutting EV budgets and capex. TSLA also has a major recall. EV production costs are too high for the newcomers (GM, F, STLA, VW, etc), while TSLA can just afford to cut prices for a while. The tax credits for EV purchases will become more strict in 2024. (Traditional automakers are moving back to hybrids that they can produce at lower costs).
Pg 14, FUNDS. HEDGE-funds are suing the SEC over new reporting and disclosure rules for short-selling, swaps and securities-lending. They are arguing that the interrelated nature of these activities makes these rules problematic. Some fund firms (Price/TROW, etc) and university endowments (Harvard, etc) are also complaining about the new rules. New rules may affect how the activists operate – they make the news, but their long-term influence on valuations has been mixed.
Pg 16: Potential CLEAN ENERGY unicorn IPOs include Climeworks (carbon-capture), Oklo (nuclear reactors), Redwood Materials (battery recycling), Sila Nanotechnologies (EV batteries), Solugen (low-emission chemicals).
Pg 27: Commercialization of CHRISTMAS goes back to an anonymous poem (later attributed to Clarke MOORE) published on 12/23/1823 that popularized the modern version of Santa Claus. Today, holiday sales account for almost 25% of annual sales. Early Americans looked down on Christmas festivities and even tried to ban them. Then, Charles DICKENS’ “A Christmas Carol” followed and the rest is history. By 1887, Christmas holiday shopping and spirit was in full swing. Macy’s in NYC, Marshal Field in Chicago, Sears catalogs did their parts in their heydays, as Amazon does it so well now. President ROOSEVALT even gave in to the pressures by businesses to move Thanksgiving up by a week to lengthen the holiday season, but eventually the Congress fixed that for the last Thursday of November (whatever the date). There were “innovations” along the way – artificial Christmas Tree in 1940s; stuffed toys from Disney; Hallmark card in 1950s; kids even thinking in 1950s that Santa probably worked for Mattel; Black Friday (the day after Thanksgiving) in 1980s, etc. Holiday sales should be up by 3-4% this year; an average American will spend $875. There is also the packaging of Christmas-Hanukkah-Kwanzaa. Well, Santa Claus and Christmas will be great so long as the credit cards hold out.
Pg 28, FUNDS. Forget cheap small-caps (R2000), the micro-caps are super-cheap. The economy avoiding recession and the Fed cutting rates in 2024 will provide the needed spark as these companies live and breathe in debt. Mentioned are several micro-caps with P/B in the range 0.8-1.9 – AVALX, BRSIX, BRSVX, FRMCX, OBMCX, PVIVX, WAMVX; ETF IWC; included for comparison are R2000 IWM (P/B 1.6), SP500 SPY (P/B 3.6). (P/B is fine for newer companies and most financials; but even Warren Buffett has given up talking about P/B for BRK, although others continue to do so.) (By @lewisbraham at MFO)
EXTRA1, FUNDS. Now BlackRock/BLK has core-plus active ETF BRTR (earlier, multisector BINC). It will be a cousin of its OEF MDHQX / MAHQX (NTF/no-load at Fidelity and Schwab). Vanguard also introduced core VCRB and core-plus VPLS. (Of course, active bond ETFs have been around for years – BOND, FBND, TOTL, etc, so these late entrants are just catching up, but making noises about a new ETF revolution that is in the active equity ETFs, not active bond ETFs.)
EXTRA2, FUNDS. There is always hope that stock-pickers will do better. Several active large-cap OEFs are mentioned – CGWRX, DODGX, HHDVX, HWAAX, LGVAX, MRFOX, OAKLX, OAKMX, SVFAX.
EXTRA3, FUNDS. BREAKING News – Allocation 60-40 has been found alive again, this time by Vanguard. (of course, Vanguard also has a very comprehensive and solid lineup of allocation funds).
Pg 29, INCOME. Several companies cut dividends in 2020 and some have resumed them at some level. Among the last holdouts to do so are AAL, BA, CCL, RCL. Despite high debt, they have free cash flows now to support dividends. While dividend resumption should be helpful for their stocks, that didn’t work for LUV, LVS, etc, so look at other factors too.
Pg 30, TECH TRADER. Look for more AI-driven rallies, IPOs and M&A in 2024, so answered ChatGPT (it is a neutral party?). AI has been the biggest thing since the slide rule (what’s that? Millennials may ask). Fed rate cuts and cost cutting by techs will also add to the effects of AI and cloud. But AI must deliver earnings at some point. The IPO window may finally open. There are 1,000+ unicorns waiting for possible exits to the public market, but many never will. There is lots of cash on the sidelines to overcome reluctance by the FTC or the Administration.
Pg 31, ECONOMY. For many SMALL BUSINESSES, it may be recession already from the rapid RATE hikes by the FED. They are having trouble getting financing that has been made difficult by tight credit and high rates; almost 30% are relying on their personal credit cards as a last resort. High INFLATION also hits them hard. Small businesses account for 67% of the new US jobs and 44% of all US economic activity. Small business sales haven’t grown much since 2020. The small business optimism index is now below the 2020 pandemic lows. None of these data are showing up yet in broad national measures. The Fed is concerned enough that it has been meeting with some small business owners to assess the situation on the ground.
Pg 32, Q&A. Cathy MARCUS, PGIM REAL ESTATE (private and institutional real estate). She uses a metrics-based approach to real estate equities, debt, and loan servicing. Rising RATES have hurt real estate. Private real estate VALUATIONS lag and may have to fall 10% or more before they become attractive. One problem is that private real estate valuations are transactions-driven and there hasn’t been much activity. On the other hand, retail/listed real estate funds have been devastated (but they are leading indicators). Things may look better in 2024/H2 when the rates may start to go down. RETAIL real estate has downsized to basic/essential levels, but big malls will continue to struggle. The shakeout in OFFICES has yet to come and urban downtown areas with high concentrations of offices may be vulnerable; their ground-level retail store operations aren’t enough to carry them through. Office-to-residential conversions sound interesting but aren’t easy and it’s often better to start from scratch (i.e., demolition and costly rebuilding). There will be more consolidations/M&A. Attractive areas are industrial/warehouses, general retail (strip-malls, groceries), data centers, apartments, senior housing, real estate debt. Mentioned are VRE, WELL. (PGIM also has listed real estate funds such as PRKAX / PRKZX, but those weren’t mentioned.)
Pg 62, OTHER VOICES. William PESEK, formerly with Barron’s and Bloomberg. With JAPAN slowing down, possibly in recession already, it would be hard for the BOJ to quit its easy money policies. Inflation is +2.6%. Recall that BOJ pioneered with ZIRP in 1999, QEs in 2001, and loading up its balance sheet with a variety of bonds and stocks. CHINA is Japan’s top trading partner and Chinese slowdown doesn’t help. Japan was also spooked by the collapse of the US SVB because its banks are also sitting on huge holdings of depreciated government bonds. Japanese wages are stagnant. So, be ready for only minor tweaks by the BOJ, not major shifts in its monetary policy. Book “Japanization: What the World Can Learn from Japan’s Lost Decade”, 2014.
Pg 63, RETIREMENT. Fidelity says that 20% of retirees haven’t yet taken their RMDs. Deadline is 12/31/23 (really, 12/29/23 this year) and there are stiff penalties for missing RMDs. They are based on prior yearend balances and some consolidation rules apply. Several firms offer RMD services. Those who don’t need RMDs for expenses may consider QCDs that don’t flow through income.
NOTE. It’s very irritating that Barron’s has stopped mentioning TICKERS for most companies mentioned. I now have to look them up. Sometimes this takes time as there are similar names, especially for banks.
(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). FUNDS. In the ETF performance race YTD, #1-ARKK, #2-FBCG, but they got there in very different ways. Also, FBCG is a long-term winner.
DATA THIS WEEK. Housing starts on TUESDAY; consumer confidence on WEDNESDAY; LEI on THURSDAY; personal income and expenditures (PCE +2.8% yoy; core PCE +3.3%), new home sales, UM consumer sentiment on FRIDAY.
Costco/COST sold $100 million worth of 1 oz gold biscuits/bars in 3 months; there is a limit of 2 per member. The new supply is gone as soon as it is loaded online (COST can get only so many at one time from its supplier)
www.barrons.com/magazine?mod=BOL_TOPNAV
Data This Week Link,
www.barrons.com/market-data/market-lab?mod=md_subnav#consensus-estimate
BULLISH.
BEARISH.
Pg 13. EV BUBBLE has burst. Peak evaluations were in 2020-21. Nobody besides Tesla/TSLA (and Chinese BYDDY, LI) can make any money from EVs, so they are cutting EV budgets and capex. TSLA also has a major recall. EV production costs are too high for the newcomers (GM, F, STLA, VW, etc), while TSLA can just afford to cut prices for a while. The tax credits for EV purchases will become more strict in 2024. (Traditional automakers are moving back to hybrids that they can produce at lower costs).
Pg 14, FUNDS. HEDGE-funds are suing the SEC over new reporting and disclosure rules for short-selling, swaps and securities-lending. They are arguing that the interrelated nature of these activities makes these rules problematic. Some fund firms (Price/TROW, etc) and university endowments (Harvard, etc) are also complaining about the new rules. New rules may affect how the activists operate – they make the news, but their long-term influence on valuations has been mixed.
Pg 16: Potential CLEAN ENERGY unicorn IPOs include Climeworks (carbon-capture), Oklo (nuclear reactors), Redwood Materials (battery recycling), Sila Nanotechnologies (EV batteries), Solugen (low-emission chemicals).
Pg 27: Commercialization of CHRISTMAS goes back to an anonymous poem (later attributed to Clarke MOORE) published on 12/23/1823 that popularized the modern version of Santa Claus. Today, holiday sales account for almost 25% of annual sales. Early Americans looked down on Christmas festivities and even tried to ban them. Then, Charles DICKENS’ “A Christmas Carol” followed and the rest is history. By 1887, Christmas holiday shopping and spirit was in full swing. Macy’s in NYC, Marshal Field in Chicago, Sears catalogs did their parts in their heydays, as Amazon does it so well now. President ROOSEVALT even gave in to the pressures by businesses to move Thanksgiving up by a week to lengthen the holiday season, but eventually the Congress fixed that for the last Thursday of November (whatever the date). There were “innovations” along the way – artificial Christmas Tree in 1940s; stuffed toys from Disney; Hallmark card in 1950s; kids even thinking in 1950s that Santa probably worked for Mattel; Black Friday (the day after Thanksgiving) in 1980s, etc. Holiday sales should be up by 3-4% this year; an average American will spend $875. There is also the packaging of Christmas-Hanukkah-Kwanzaa. Well, Santa Claus and Christmas will be great so long as the credit cards hold out.
Pg 28, FUNDS. Forget cheap small-caps (R2000), the micro-caps are super-cheap. The economy avoiding recession and the Fed cutting rates in 2024 will provide the needed spark as these companies live and breathe in debt. Mentioned are several micro-caps with P/B in the range 0.8-1.9 – AVALX, BRSIX, BRSVX, FRMCX, OBMCX, PVIVX, WAMVX; ETF IWC; included for comparison are R2000 IWM (P/B 1.6), SP500 SPY (P/B 3.6). (P/B is fine for newer companies and most financials; but even Warren Buffett has given up talking about P/B for BRK, although others continue to do so.) (By @lewisbraham at MFO)
EXTRA1, FUNDS. Now BlackRock/BLK has core-plus active ETF BRTR (earlier, multisector BINC). It will be a cousin of its OEF MDHQX / MAHQX (NTF/no-load at Fidelity and Schwab). Vanguard also introduced core VCRB and core-plus VPLS. (Of course, active bond ETFs have been around for years – BOND, FBND, TOTL, etc, so these late entrants are just catching up, but making noises about a new ETF revolution that is in the active equity ETFs, not active bond ETFs.)
EXTRA2, FUNDS. There is always hope that stock-pickers will do better. Several active large-cap OEFs are mentioned – CGWRX, DODGX, HHDVX, HWAAX, LGVAX, MRFOX, OAKLX, OAKMX, SVFAX.
EXTRA3, FUNDS. BREAKING News – Allocation 60-40 has been found alive again, this time by Vanguard. (of course, Vanguard also has a very comprehensive and solid lineup of allocation funds).
Pg 29, INCOME. Several companies cut dividends in 2020 and some have resumed them at some level. Among the last holdouts to do so are AAL, BA, CCL, RCL. Despite high debt, they have free cash flows now to support dividends. While dividend resumption should be helpful for their stocks, that didn’t work for LUV, LVS, etc, so look at other factors too.
Pg 30, TECH TRADER. Look for more AI-driven rallies, IPOs and M&A in 2024, so answered ChatGPT (it is a neutral party?). AI has been the biggest thing since the slide rule (what’s that? Millennials may ask). Fed rate cuts and cost cutting by techs will also add to the effects of AI and cloud. But AI must deliver earnings at some point. The IPO window may finally open. There are 1,000+ unicorns waiting for possible exits to the public market, but many never will. There is lots of cash on the sidelines to overcome reluctance by the FTC or the Administration.
Pg 31, ECONOMY. For many SMALL BUSINESSES, it may be recession already from the rapid RATE hikes by the FED. They are having trouble getting financing that has been made difficult by tight credit and high rates; almost 30% are relying on their personal credit cards as a last resort. High INFLATION also hits them hard. Small businesses account for 67% of the new US jobs and 44% of all US economic activity. Small business sales haven’t grown much since 2020. The small business optimism index is now below the 2020 pandemic lows. None of these data are showing up yet in broad national measures. The Fed is concerned enough that it has been meeting with some small business owners to assess the situation on the ground.
Pg 32, Q&A. Cathy MARCUS, PGIM REAL ESTATE (private and institutional real estate). She uses a metrics-based approach to real estate equities, debt, and loan servicing. Rising RATES have hurt real estate. Private real estate VALUATIONS lag and may have to fall 10% or more before they become attractive. One problem is that private real estate valuations are transactions-driven and there hasn’t been much activity. On the other hand, retail/listed real estate funds have been devastated (but they are leading indicators). Things may look better in 2024/H2 when the rates may start to go down. RETAIL real estate has downsized to basic/essential levels, but big malls will continue to struggle. The shakeout in OFFICES has yet to come and urban downtown areas with high concentrations of offices may be vulnerable; their ground-level retail store operations aren’t enough to carry them through. Office-to-residential conversions sound interesting but aren’t easy and it’s often better to start from scratch (i.e., demolition and costly rebuilding). There will be more consolidations/M&A. Attractive areas are industrial/warehouses, general retail (strip-malls, groceries), data centers, apartments, senior housing, real estate debt. Mentioned are VRE, WELL. (PGIM also has listed real estate funds such as PRKAX / PRKZX, but those weren’t mentioned.)
Pg 62, OTHER VOICES. William PESEK, formerly with Barron’s and Bloomberg. With JAPAN slowing down, possibly in recession already, it would be hard for the BOJ to quit its easy money policies. Inflation is +2.6%. Recall that BOJ pioneered with ZIRP in 1999, QEs in 2001, and loading up its balance sheet with a variety of bonds and stocks. CHINA is Japan’s top trading partner and Chinese slowdown doesn’t help. Japan was also spooked by the collapse of the US SVB because its banks are also sitting on huge holdings of depreciated government bonds. Japanese wages are stagnant. So, be ready for only minor tweaks by the BOJ, not major shifts in its monetary policy. Book “Japanization: What the World Can Learn from Japan’s Lost Decade”, 2014.
Pg 63, RETIREMENT. Fidelity says that 20% of retirees haven’t yet taken their RMDs. Deadline is 12/31/23 (really, 12/29/23 this year) and there are stiff penalties for missing RMDs. They are based on prior yearend balances and some consolidation rules apply. Several firms offer RMD services. Those who don’t need RMDs for expenses may consider QCDs that don’t flow through income.
NOTE. It’s very irritating that Barron’s has stopped mentioning TICKERS for most companies mentioned. I now have to look them up. Sometimes this takes time as there are similar names, especially for banks.
(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).