Post by Admin/YBB on Apr 27, 2024 6:25:29 GMT -6
Pg 9. PREVIEW & REVIEW (consolidated). FOMC Statement & Powell’s presser on WEDNESDAY. (Quarterly Treasury Refunding summary on MONDAY, details on WEDNESDAY – that may overshadow the FOMC Statement & presser)
Small Viking Cruises (VIK) offers European river cruises to wealthy Americans 55+ (no kids under 18); each cruise has up to 130 passengers. Its IPO on 5/1/24 will raise $1 billion and will value VIK at $10 billion.
DATA THIS WEEK. Consumer confidence on TUESDAY; JOLTS report, construction spending on WEDNESDAY; international trade deficit, durable goods orders, factory orders on THURSDAY; jobs report (+210K to +225K), unemployment rate 3.8% 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. Lithium producer Albemarle (ALB; yield 1.4%; fwd P/E 15.6; fwd EV/EBITDA 13.4; declining EV sales have crushed lithium producers; ALB has operations in Australia, Chile, US, and has slowed plans to add capacity; pg 10);
Indirect AI beneficiaries (BKR, JPM, META, UNH, WMT; TTD, APP, DKNG; pg 16).
BEARISH.
Pg 11: TikTok/ByteDance executives were asleep after the prior scare (when MSFT or ORCL considered buying TikTok), and suddenly, a US legislation was passed and signed for TikTok to be sold within a year (by its Chinese parent ByteDance) or be banned in the US. This will affect millions of TikTok users, and many businesses (Duolingo/DUOL, e.l.f. Beauty/ELF, etc) that have built promotional strategies on TikTok (those would have to be rebuilt on another platform). In case of ban, the US alternatives will benefit – Reels/META, Shorts/YouTube/GOOGL, etc. TikTok has also played a role in the cancel-culture movement.
Pg 13, ECONOMY. Computers, phone apps, and AI are contributing to labor PRODUCTIVITY in many service businesses. That may be one more reason for the amazing strength of the US economy. The BLS data on labor productivity is quite volatile (noisy), but long-term trends can be obtained from it. Tech capex, government R&D, and government incentives (chips, energy transitions, infrastructure) should provide a boost to productivity. The tight labor market and rising wages are forcing businesses to use computers, automation, AI. The hybrid office-home models provide additional flexibility. Immigration is adding to the labor pool. The strength in the labor market shows up in higher consumer spending. So, the US economy continues to surprise skeptics.
Pg 21, THE BACK STORY (PRINGLE). In 2023, a MO court ruled against the National Association of Realtors (1908- ) and imposed huge fines. That should finally break its longstanding monopoly on real estate sales practices and commissions (5-6%). After a start in 1908 with a few local real estate boards and agents, the NAR grew into a powerhouse with 1.5 million members, control of the multiple listing service (MLS), specified/recommended and shared commissions (between sellers’ and buyers’ agents). The NAR has been sued in 1947, 1969, 1970, 2008, but those had almost no effects, or were mere slaps on the hands (the NAR spends more on lobbying than any other organization). Then came the big MO court loss.
Pg 22, FUNDS. There are several low-ER TARGET-MATURITY bond ETFs – BSCP, IBTE, IBHF, etc. These provide diversification with better handle on their TRs (due to declining duration risk). There may be limited value in (liquid) Treasury target-maturity ETFs for retail investors, but advisors like them for convenience. (By @lewisbraham at MFO)
EXTRA, FUNDS. Financials fund HLFNX / HILFX holds big banks (JPM, BAC, C, WFC; GS, MS) and payment processors (V, MA), as expected, but also fintech Coinbase/COIN (exchange, broker-dealer, custodian), PayPal/PYPL (owns Venmo payment app), etc.
EXTRA, FUNDS. BlackRock/BLK has shuffled management to adjust for the ESG backlash in TX, FL, MS, NC, etc (FINK who used to be too aggressive on ESG has gone quiet now that BLK has lost billions in business). It’s improving relations with financial advisors and has recently acquired SpiderRock Advisors and Global Infrastructure Partners.
Pg 23, INCOME. Dangers of BUYBACKs are shown by CLF and MMM – it would have been better for them to pay more in dividends or at least skip buybacks. But beware of high yielding stocks. (The so-called shareholder yield = dividend yield + buyback yield may mislead)
Pg 23, ECONOMY. GOLD has rallied despite outflows from gold-bullion ETFs. Foreign central banks (China, India, Turkey, etc) are driving this rally. Russia-Ukraine war and aggressive dollar diplomacy have been reasons for foreign central banks to diversify away from dollar. Foreign investors (especially in the EMs) have also warmed up to gold, but not the US investors yet. However, these moves are still far from de-dollarization. (This looks like a hasty follow up to last week’s Q&A with Imaru Casanova/VanEck by the same columnist. Filler?)
Pg 24, TECH TRADER. BIG TECH Q1 earnings have been hurt by huge CAPEX for AI that has yet to translate into revenues or profits. CLOUD titans are going crazy over capex for AI data centers that is following the demand that they see. Capex is also up sharply for computer HARDWARE – chips, networks, PCs. There is some spending on SOFTWARE too – AI applications, ERP software. Surprisingly (or, not) the capex for AI now far exceeds that for the most capex intensive industry – energy (so much for the light-capex tech model of the past). All else in tech is meh.
Pg 26, Q&A/Interview. Snead GRANT, BNY Mellon. Investors should ignore alarming market and rate projections and stick with their financial plans. Many large-caps have refinanced their debt and are in good financial shape, but that isn’t so for small-caps. But don’t chase expensive mega-caps. Implications of AI are interesting for related chips, application-software, and cybersecurity companies. The US reshoring story is good, and it will benefit industrial, manufacturing, and infrastructure companies. Her assumption is for a US soft landing, but she is watching geopolitical events, energy, and gold. If inflation remains sticky, the Fed may even have to raise rates and that isn’t in the market (the expectations now are for Fed rate hold or cuts). Money-market funds won’t be at 5%+ forever, so diversify gradually into higher duration bonds, munis, and alternatives. She is skeptical of foreign markets, the developed (UK, Japan) or EMs (China). They seem to have potential, but she would like to see some improvements first.
Pg 54, OTHER VOICES. Harvey BASSMAN, Simplify Asset Management, and creator of bond volatility index MOVE. Since 03/2022, the bond volatility index MOVE (for Treasuries) has diverged from the stock (SP500) volatility index VIX. After all the huffing and puffing, and misleading Fed dot-plots, the FED will likely be one-and-done (June cut?) before the election. Despite denials, the Fed is a bit political. That would explain the past Fed pronouncements about the inflation being Transitory (06/2021), inaction during the limbo status for POWELL (late-2021 to mid-2022), subsequent rush to catchup through a historic rate pace, and possibly one cut in June 2024 (July or September would be in the middle of the election season). The US elections will add to uncertainty and drama over the future of Powell and the Fed itself. The bond volatility index MOVE should be calmer for a while and that should provide a good entry point for spread bonds (MBS and other credits).
(For information on MOVE, see ybbpersonalfinance.proboards.com/post/632/thread )
Pg 55, RETIREMENT. GOLD is shining (or was) but don’t get carried away. Limit gold-bullion (GLD, GLDM, IAU, IAUM) to 5% of retirement account. Beware of the ads for expensive and illiquid gold-IRAs. (Gold-miners aren’t mentioned)
EXTRA. Kevin KELLER, the CFP Board. The DOL has issued FIDUCIARY rules for RETIREMENT advice. Investors expect or believe that their advisors are giving them good advice, but 1974 ERISA and 2019 SEC Reg BI have left gaps that can hurt retirees. They are often sold high fee/commission and illiquid products by conflicted brokers and insurance agents that may benefit the so-called advisors more than the retirees. There is undue concern that the DOL Rules will reduce access to advice. The CFP Board will also make appropriate adjustments to its already strict CFP Certifications.
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.
Accessible from PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).
Small Viking Cruises (VIK) offers European river cruises to wealthy Americans 55+ (no kids under 18); each cruise has up to 130 passengers. Its IPO on 5/1/24 will raise $1 billion and will value VIK at $10 billion.
DATA THIS WEEK. Consumer confidence on TUESDAY; JOLTS report, construction spending on WEDNESDAY; international trade deficit, durable goods orders, factory orders on THURSDAY; jobs report (+210K to +225K), unemployment rate 3.8% 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. Lithium producer Albemarle (ALB; yield 1.4%; fwd P/E 15.6; fwd EV/EBITDA 13.4; declining EV sales have crushed lithium producers; ALB has operations in Australia, Chile, US, and has slowed plans to add capacity; pg 10);
Indirect AI beneficiaries (BKR, JPM, META, UNH, WMT; TTD, APP, DKNG; pg 16).
BEARISH.
Pg 11: TikTok/ByteDance executives were asleep after the prior scare (when MSFT or ORCL considered buying TikTok), and suddenly, a US legislation was passed and signed for TikTok to be sold within a year (by its Chinese parent ByteDance) or be banned in the US. This will affect millions of TikTok users, and many businesses (Duolingo/DUOL, e.l.f. Beauty/ELF, etc) that have built promotional strategies on TikTok (those would have to be rebuilt on another platform). In case of ban, the US alternatives will benefit – Reels/META, Shorts/YouTube/GOOGL, etc. TikTok has also played a role in the cancel-culture movement.
Pg 13, ECONOMY. Computers, phone apps, and AI are contributing to labor PRODUCTIVITY in many service businesses. That may be one more reason for the amazing strength of the US economy. The BLS data on labor productivity is quite volatile (noisy), but long-term trends can be obtained from it. Tech capex, government R&D, and government incentives (chips, energy transitions, infrastructure) should provide a boost to productivity. The tight labor market and rising wages are forcing businesses to use computers, automation, AI. The hybrid office-home models provide additional flexibility. Immigration is adding to the labor pool. The strength in the labor market shows up in higher consumer spending. So, the US economy continues to surprise skeptics.
Pg 21, THE BACK STORY (PRINGLE). In 2023, a MO court ruled against the National Association of Realtors (1908- ) and imposed huge fines. That should finally break its longstanding monopoly on real estate sales practices and commissions (5-6%). After a start in 1908 with a few local real estate boards and agents, the NAR grew into a powerhouse with 1.5 million members, control of the multiple listing service (MLS), specified/recommended and shared commissions (between sellers’ and buyers’ agents). The NAR has been sued in 1947, 1969, 1970, 2008, but those had almost no effects, or were mere slaps on the hands (the NAR spends more on lobbying than any other organization). Then came the big MO court loss.
Pg 22, FUNDS. There are several low-ER TARGET-MATURITY bond ETFs – BSCP, IBTE, IBHF, etc. These provide diversification with better handle on their TRs (due to declining duration risk). There may be limited value in (liquid) Treasury target-maturity ETFs for retail investors, but advisors like them for convenience. (By @lewisbraham at MFO)
EXTRA, FUNDS. Financials fund HLFNX / HILFX holds big banks (JPM, BAC, C, WFC; GS, MS) and payment processors (V, MA), as expected, but also fintech Coinbase/COIN (exchange, broker-dealer, custodian), PayPal/PYPL (owns Venmo payment app), etc.
EXTRA, FUNDS. BlackRock/BLK has shuffled management to adjust for the ESG backlash in TX, FL, MS, NC, etc (FINK who used to be too aggressive on ESG has gone quiet now that BLK has lost billions in business). It’s improving relations with financial advisors and has recently acquired SpiderRock Advisors and Global Infrastructure Partners.
Pg 23, INCOME. Dangers of BUYBACKs are shown by CLF and MMM – it would have been better for them to pay more in dividends or at least skip buybacks. But beware of high yielding stocks. (The so-called shareholder yield = dividend yield + buyback yield may mislead)
Pg 23, ECONOMY. GOLD has rallied despite outflows from gold-bullion ETFs. Foreign central banks (China, India, Turkey, etc) are driving this rally. Russia-Ukraine war and aggressive dollar diplomacy have been reasons for foreign central banks to diversify away from dollar. Foreign investors (especially in the EMs) have also warmed up to gold, but not the US investors yet. However, these moves are still far from de-dollarization. (This looks like a hasty follow up to last week’s Q&A with Imaru Casanova/VanEck by the same columnist. Filler?)
Pg 24, TECH TRADER. BIG TECH Q1 earnings have been hurt by huge CAPEX for AI that has yet to translate into revenues or profits. CLOUD titans are going crazy over capex for AI data centers that is following the demand that they see. Capex is also up sharply for computer HARDWARE – chips, networks, PCs. There is some spending on SOFTWARE too – AI applications, ERP software. Surprisingly (or, not) the capex for AI now far exceeds that for the most capex intensive industry – energy (so much for the light-capex tech model of the past). All else in tech is meh.
Pg 26, Q&A/Interview. Snead GRANT, BNY Mellon. Investors should ignore alarming market and rate projections and stick with their financial plans. Many large-caps have refinanced their debt and are in good financial shape, but that isn’t so for small-caps. But don’t chase expensive mega-caps. Implications of AI are interesting for related chips, application-software, and cybersecurity companies. The US reshoring story is good, and it will benefit industrial, manufacturing, and infrastructure companies. Her assumption is for a US soft landing, but she is watching geopolitical events, energy, and gold. If inflation remains sticky, the Fed may even have to raise rates and that isn’t in the market (the expectations now are for Fed rate hold or cuts). Money-market funds won’t be at 5%+ forever, so diversify gradually into higher duration bonds, munis, and alternatives. She is skeptical of foreign markets, the developed (UK, Japan) or EMs (China). They seem to have potential, but she would like to see some improvements first.
Pg 54, OTHER VOICES. Harvey BASSMAN, Simplify Asset Management, and creator of bond volatility index MOVE. Since 03/2022, the bond volatility index MOVE (for Treasuries) has diverged from the stock (SP500) volatility index VIX. After all the huffing and puffing, and misleading Fed dot-plots, the FED will likely be one-and-done (June cut?) before the election. Despite denials, the Fed is a bit political. That would explain the past Fed pronouncements about the inflation being Transitory (06/2021), inaction during the limbo status for POWELL (late-2021 to mid-2022), subsequent rush to catchup through a historic rate pace, and possibly one cut in June 2024 (July or September would be in the middle of the election season). The US elections will add to uncertainty and drama over the future of Powell and the Fed itself. The bond volatility index MOVE should be calmer for a while and that should provide a good entry point for spread bonds (MBS and other credits).
(For information on MOVE, see ybbpersonalfinance.proboards.com/post/632/thread )
Pg 55, RETIREMENT. GOLD is shining (or was) but don’t get carried away. Limit gold-bullion (GLD, GLDM, IAU, IAUM) to 5% of retirement account. Beware of the ads for expensive and illiquid gold-IRAs. (Gold-miners aren’t mentioned)
EXTRA. Kevin KELLER, the CFP Board. The DOL has issued FIDUCIARY rules for RETIREMENT advice. Investors expect or believe that their advisors are giving them good advice, but 1974 ERISA and 2019 SEC Reg BI have left gaps that can hurt retirees. They are often sold high fee/commission and illiquid products by conflicted brokers and insurance agents that may benefit the so-called advisors more than the retirees. There is undue concern that the DOL Rules will reduce access to advice. The CFP Board will also make appropriate adjustments to its already strict CFP Certifications.
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.
Accessible from PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).