Post by Admin/YBB on Jun 22, 2024 7:14:37 GMT -6
Pg 10. PREVIEW & REVIEW (consolidated). Presidential debate at 9:00 PM Eastern on THURSDAY.
Tech XLK is rebalancing by drastically changing the weights of NVDA and AAPL based on the market close on 6/14/24 (then, #1 MSFT, #2 NVDA, #3 AAPL).
DATA THIS WEEK. Consumer confidence on TUESDAY; new home sales on WEDNESDAY; durable goods orders, wholesale inventories on THURSDAY; ISM Chicago business barometer, UM sentiment, personal income and consumption expenditures (PCE index +2.6%, core +2.6%) 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. Nike (NKE; yield 1.6%; fwd P/E 24.3; stock has underperformed for a while; the next earnings report on 6/27/24 may not be good, but things should improve from then on; slower innovations by NKE were an opportunity for the competition to introduce more novel and flashy footwears; Summer Olympics will showcase many of its new products and may provide a boost for turnaround; pg 13);
Small-caps (Dead money for quite a while; the Q2 earnings may provide a boost if SC earnings hold up as expected; SP SC 600 is a better index than R2000; EXTRA).
BEARISH.
Pg 12, TECH TRADER. Lot of great news is already in for Nvidia/NVDA at fwd P/S 20, fwd P/E 45. Its market-cap now is 5x the total worldwide sales of chips. (The XLK rebalance may provide a late-stage boost for NVDA, or it may be used as opportunity by some large investors to unload into high demand from XLK) But AI is here to stay and there are several more reasonably prices players – MU, ANET, GLW, QCOM, ORCL, TSM, MSFT, ADBE, HPE, DELL.
Pg 14: WIND ENERGY (on-land, offshore) is rebounding. Wind energy stocks have been trashed by a downturn; several European companies have cancelled the US projects. But the US and European investors are returning under new terms. There are federal and state government subsidies. Wind energy prospects would be affected by the US elections. Mentioned are GEV, EQNR, AGR, Orsted/DNNGY, Vestas/VWDRY, TPIC.
Pg 15: HEAT WAVE in parts of the US is hurting the economy – work interruptions, worker injuries, lower crop yields, power disruptions. Agriculture and industries requiring outdoor activities are most impacted. Insurers see rising claims. Don’t underestimate the impact of heatstroke on personal health.
Pg 28, THE BACKSTORY (PRINGLE). Paramount Global/PARA had its glory days. Its humble origins were in NY when it did shootings in the wilderness of NJ, but it eventually moved to a barn in Hollywood, CA (after rejecting AZ). Paramount was formed by Adolph ZUKOR through mergers in 1916. It also launched nationwide film distribution. It was a vertically integrated operation from production to distribution to exhibition. It faced antitrust charges. The Great depression was terrible for Paramount – it had 1,000 theaters, but few paying theater goers. It filed for bankruptcy in 1933, and when it emerged out from bankruptcy in 1935, Zukor had lost control but remained a figurehead Chairman. New boss Barnet BALABAN renovated and airconditioned theaters and recruited a new crowd of movie stars.
The US Government finally broke up Paramount in 1948 into smaller Paramount, MGM, Warner Bros and other entities for its theater chains. That was the end of Hollywood’s Golden Age. Charles BLUHDORN (Gulf & Western, a conglomerate 1934-89) acquired Paramount and restructured his various operations, and the result was Paramount Communications. It existed for 1989-94 when Viacom (1952-2005) absorbed it. Sumner REDSTONE’s National Amusements bought Viacom in 1994. Shari REDSTONE, who didn’t get along with his father Sumner for much of his life, but reconciled at the end, inherited the control of National Amusements that controls the current Paramount (77.4% voting control, 9.76% economic control). Its future now depends solely on Shari who has rejected some recent bids and may selfishly drive it into oblivion. There is also interest in the pieces of Paramount – film catalog, studios, CBS, MTV, Nickelodeon, etc. (This story is still unfolding)
Pg 29, INCOME. Many companies waste money on BUYBACKS when their stocks are too expensive. (Shareholder yield = dividend yield + buyback yield) Here are some where the buybacks are at reasonable prices (BARPs?): DE, CAT, PYPL, JNJ, CAH, etc.
Pg 30, ECONOMY. EUROPE may survive the recent political upheavals. There will be elections in the UK (on July 4) and France (but its Presidential election will be in 2027). There is economic growth, although less than that in the US. Inflation seems to be in control. The ECB has cut rates and the BOE may cut soon. Some political and economic changes are coming, but it would take a lot to derail the European rebound.
Pg 31, FUNDS. Global large-cap value VGPMX (1984- ) is positively featured in its current form (2018- ). In its former life, it existed as a hodge-podge precious-metals fund (gold-mining+), and now is an odd mix of some precious-metal miners (25%+) and sectors exposed to long capex cycles (materials, tech, industrials, energy). The idea is that capex cycles lead to shortages and excesses (boom-bust cycles), and that presents investment opportunities. This strategy avoids current hot areas but can lead to exposures in the related beneficiaries (e.g. AI). (By @lewisbraham at MFO)
Pg 32, INTERVIEW/Q&A. Kevin HOLT, LC-Value-ACSTX (ER 0.82%; no-load/NTF at Fidelity and Schwab). He uses the classical value approach and has a long-term view of holdings. He looks for free cash flow (FCF), M&A potential, management incentives, and companies on which analysts diverge. Rather than growth vs value, he considers expensive vs inexpensive. Fund has exposure in financials, healthcare, energy, tech.
Pg 62, OTHER VOICES. Susan WACHTER, Wharton/Penn. Higher rates have cooled HOUSING a bit but not the housing prices. The CPI includes owners’ equivalent rents (OERs) and those are rising. The OERs are a blend of owner-occupied homes and existing and new rentals with different dynamics, so they change slowly. There is also lag from data measurements and reporting. So, the OERs and inflation may not go down without a recession. Lower rates do benefit housing affordability.
Pg 63, RETIREMENT. When to take Social Security (at 62 or FRA or 70) is a hotly debated topic. But there is a 2nd chance if you choose early but then have second thoughts. You can SUSPEND benefits when/after you reach your FRA; the suspended benefits will resume at 70 at higher level. Note that on suspension, most related benefits will also suspend (an exception is for the divorced spouses). The old abusive loophole for file-and-suspend, when the related benefits continued even after the primary suspension, was closed in 2015.
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).
Tech XLK is rebalancing by drastically changing the weights of NVDA and AAPL based on the market close on 6/14/24 (then, #1 MSFT, #2 NVDA, #3 AAPL).
DATA THIS WEEK. Consumer confidence on TUESDAY; new home sales on WEDNESDAY; durable goods orders, wholesale inventories on THURSDAY; ISM Chicago business barometer, UM sentiment, personal income and consumption expenditures (PCE index +2.6%, core +2.6%) 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. Nike (NKE; yield 1.6%; fwd P/E 24.3; stock has underperformed for a while; the next earnings report on 6/27/24 may not be good, but things should improve from then on; slower innovations by NKE were an opportunity for the competition to introduce more novel and flashy footwears; Summer Olympics will showcase many of its new products and may provide a boost for turnaround; pg 13);
Small-caps (Dead money for quite a while; the Q2 earnings may provide a boost if SC earnings hold up as expected; SP SC 600 is a better index than R2000; EXTRA).
BEARISH.
Pg 12, TECH TRADER. Lot of great news is already in for Nvidia/NVDA at fwd P/S 20, fwd P/E 45. Its market-cap now is 5x the total worldwide sales of chips. (The XLK rebalance may provide a late-stage boost for NVDA, or it may be used as opportunity by some large investors to unload into high demand from XLK) But AI is here to stay and there are several more reasonably prices players – MU, ANET, GLW, QCOM, ORCL, TSM, MSFT, ADBE, HPE, DELL.
Pg 14: WIND ENERGY (on-land, offshore) is rebounding. Wind energy stocks have been trashed by a downturn; several European companies have cancelled the US projects. But the US and European investors are returning under new terms. There are federal and state government subsidies. Wind energy prospects would be affected by the US elections. Mentioned are GEV, EQNR, AGR, Orsted/DNNGY, Vestas/VWDRY, TPIC.
Pg 15: HEAT WAVE in parts of the US is hurting the economy – work interruptions, worker injuries, lower crop yields, power disruptions. Agriculture and industries requiring outdoor activities are most impacted. Insurers see rising claims. Don’t underestimate the impact of heatstroke on personal health.
Pg 28, THE BACKSTORY (PRINGLE). Paramount Global/PARA had its glory days. Its humble origins were in NY when it did shootings in the wilderness of NJ, but it eventually moved to a barn in Hollywood, CA (after rejecting AZ). Paramount was formed by Adolph ZUKOR through mergers in 1916. It also launched nationwide film distribution. It was a vertically integrated operation from production to distribution to exhibition. It faced antitrust charges. The Great depression was terrible for Paramount – it had 1,000 theaters, but few paying theater goers. It filed for bankruptcy in 1933, and when it emerged out from bankruptcy in 1935, Zukor had lost control but remained a figurehead Chairman. New boss Barnet BALABAN renovated and airconditioned theaters and recruited a new crowd of movie stars.
The US Government finally broke up Paramount in 1948 into smaller Paramount, MGM, Warner Bros and other entities for its theater chains. That was the end of Hollywood’s Golden Age. Charles BLUHDORN (Gulf & Western, a conglomerate 1934-89) acquired Paramount and restructured his various operations, and the result was Paramount Communications. It existed for 1989-94 when Viacom (1952-2005) absorbed it. Sumner REDSTONE’s National Amusements bought Viacom in 1994. Shari REDSTONE, who didn’t get along with his father Sumner for much of his life, but reconciled at the end, inherited the control of National Amusements that controls the current Paramount (77.4% voting control, 9.76% economic control). Its future now depends solely on Shari who has rejected some recent bids and may selfishly drive it into oblivion. There is also interest in the pieces of Paramount – film catalog, studios, CBS, MTV, Nickelodeon, etc. (This story is still unfolding)
Pg 29, INCOME. Many companies waste money on BUYBACKS when their stocks are too expensive. (Shareholder yield = dividend yield + buyback yield) Here are some where the buybacks are at reasonable prices (BARPs?): DE, CAT, PYPL, JNJ, CAH, etc.
Pg 30, ECONOMY. EUROPE may survive the recent political upheavals. There will be elections in the UK (on July 4) and France (but its Presidential election will be in 2027). There is economic growth, although less than that in the US. Inflation seems to be in control. The ECB has cut rates and the BOE may cut soon. Some political and economic changes are coming, but it would take a lot to derail the European rebound.
Pg 31, FUNDS. Global large-cap value VGPMX (1984- ) is positively featured in its current form (2018- ). In its former life, it existed as a hodge-podge precious-metals fund (gold-mining+), and now is an odd mix of some precious-metal miners (25%+) and sectors exposed to long capex cycles (materials, tech, industrials, energy). The idea is that capex cycles lead to shortages and excesses (boom-bust cycles), and that presents investment opportunities. This strategy avoids current hot areas but can lead to exposures in the related beneficiaries (e.g. AI). (By @lewisbraham at MFO)
Pg 32, INTERVIEW/Q&A. Kevin HOLT, LC-Value-ACSTX (ER 0.82%; no-load/NTF at Fidelity and Schwab). He uses the classical value approach and has a long-term view of holdings. He looks for free cash flow (FCF), M&A potential, management incentives, and companies on which analysts diverge. Rather than growth vs value, he considers expensive vs inexpensive. Fund has exposure in financials, healthcare, energy, tech.
Pg 62, OTHER VOICES. Susan WACHTER, Wharton/Penn. Higher rates have cooled HOUSING a bit but not the housing prices. The CPI includes owners’ equivalent rents (OERs) and those are rising. The OERs are a blend of owner-occupied homes and existing and new rentals with different dynamics, so they change slowly. There is also lag from data measurements and reporting. So, the OERs and inflation may not go down without a recession. Lower rates do benefit housing affordability.
Pg 63, RETIREMENT. When to take Social Security (at 62 or FRA or 70) is a hotly debated topic. But there is a 2nd chance if you choose early but then have second thoughts. You can SUSPEND benefits when/after you reach your FRA; the suspended benefits will resume at 70 at higher level. Note that on suspension, most related benefits will also suspend (an exception is for the divorced spouses). The old abusive loophole for file-and-suspend, when the related benefits continued even after the primary suspension, was closed in 2015.
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).
