Post by Admin/YBB on Jun 29, 2024 6:23:39 GMT -6
Pg 9. PREVIEW & REVIEW (consolidated). FOMC Minutes on WEDNESDAY.
Global SHIPPING rates have surged. First, it was the pandemic, then, continuing conflicts in the Middle East. There are new ships, but not enough shipping containers. There may be strikes by dockworkers in the US. All of this isn’t good news for inflation.
DATA THIS WEEK. Construction spending on MONDAY; JOLTS report on TUESDAY; international trade deficit, factory orders on WEDNESDAY; jobs report (+195,000 to +207,500), unemployment rate 4.0% on FRIDAY.
CLOSED. US markets on THURSDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
Data This Week Link,
www.barrons.com/market-data/market-lab?mod=md_subnav#consensus-estimate
BULLISH. Honeywell (HON; yield 2%; fwd P/E 19.1; debt/EBITDA 1.2 only; recovering from pandemic hit; growth internally and via M&A; new CEO Vimal KAPUR, 06/2023- ; potential for activists to push for breakup or spinoffs; pg 11).
BEARISH.
Pg 10. This HOMEBUYING season has been forgettable. Existing home sales are the slowest since 2011 (NAR data). Home affordability is poor. Mortgage applications are the lowest since 2000. Buyers are frustrated, sellers are unmotivated – there is a disconnect on pricing. The new home sales have been better – in fact, these aren’t priced much higher than comparable existing homes. Homebuilders’ stocks are struggling (ITB, XHB). Lower rates may jump start housing in 2025.
Pg 12: WEARABLES (smart watches, bands, rings) now provide important medical alerts to patients and doctors. They can monitor heartbeats, blood glucose levels, oxygen levels, falls, etc. The FDA requires tests and certifications for clinical-grade (vs consumer-grade) medical devices. It’s no longer necessary to make clinical or hospital visits for many of these diagnostic tests. These developments are possible with the cooperation between device makers (AAPL, GOOGL, Samsung Electronics, etc) and medtech specialists (IRTC, DXCM, ABT, etc). In fact, one issue is how to process and interpret the huge amounts of data generated by these devices. False alarms are also possible. Quite likely, standard clinical tests may be required as follow up to indications provided by these smart devices. Health professionals may require additional training and may have to be reimbursed for their time. Device makers also dream of automating aspects of medical care, but those efforts haven’t been successful yet, and one reason is that consumer-grade devices market is completely different than the clinical-grade devices market (involving the FDA and medical professional associations).
Pg 14, INCOME. Better times for income investors are ahead as the Fed may be cutting rates soon/later.
Cash: BIL, SGOV (or, simply, T-Bills)
T-Notes/Bonds: SHY, TLT (also, IEF)
TIPS: VTIP, TIP (or, 5-yr TIPS)
MBS: DLTNX, MBB, VMBS
Preferreds: PFF, FPEI
Dividend Funds: VYM, SCHY (also, VIG, SCHD)
Real Estate: VNQ
Pipelines: AMLP, TYG
Utilities: XLU, UTG
Munis: VMLTX, MUB
Others: MDFIX (discounted CEFs), JAAA (CLOs)
Pg 21, FUNDS. SILVER is more attractive than gold or Dr Copper. Silver is both an industrial and precious metal. It’s used in semi chips and electronics and is getting boost from AI. Demand from solar industry is at a record high. Mentioned are bullion SLV and miners SIVR, SIL, SILJ, SLVP.
EXTRA, FUNDS. The infamous annual RUSSELL index rebalancing happened at the market close on Friday, 6/28/24. It was all preannounced to happen on a single day at the market close, so anyone could front-run the changes. Most Russell indexes will now get more AI tilt because that is where big market-caps are. (We have just been through the strange SPDR tech XLK rebalancing).
Pg 22, ECONOMY. The trends in economic data favor a rate cut by the Fed in 2024. But 2 aspects of the JOBS report are diverging significantly – the nonfarm payrolls are flat or gradually rising, but the household employment surveys are showing declines. The discrepancy is explained by the undercounting of immigrants by the BLS. There may be 4 million undocumented immigrants in the US, and most may not show up in the BLS household survey data. Other factors may include population shifts from large metro centers (in the East, West, Midwest) to Sunbelt cities, multiple part-time job holders, etc. The fed fund futures traders may be acting on faulty data in projecting more cuts.
Pg 23, TECH TRADER. As the columnist SAVITZ gets ready for his 3rd retirement from Barron’s, he offers some nuggets: The next great thing isn’t often that great (but sometimes, it’s really great); tech startups come and go; some of his great ideas weren’t supposed to turn into obvious losers; successful companies rarely emerge from garages or dorm rooms (but that does happen); reality trumps PR; be nimble; he is reserving judgement on the current AI hype.
Pg 24, INTERVIEW/Q&A. Blake HAXTON, Paralympian (canoeing, rowing), Analyst for BGHAX (global HY) and BCCAX (global corporates). HY spreads are low, but defaults are also low. HY has a place in the fixed-income portions of many investors. He finds attractive credits in energy, homebuilding, metals and mining. His disability developed suddenly when he was of college-age, both of his legs were amputated, but he overcame health difficulties to finish college and law school, developed career as a fund analyst and is also a Paralympian headed to the 2024 Paris Paralympics in 2 months. (Interesting that the fund analyst is featured instead of its 2 fund managers, McCLAIN and ZOX. A great human interest and motivational story.)
Pg 54, OTHER VOICES. Paolo ZANNONI, Prado Holding. More BANK FAILURES and rescues are coming. Since the 2008 GFC, 500+ US banks have failed. Unusually, in 2023, only 3 US banks of medium size failed. The public should understand that bank failures are normal, and some failing banks will be rescued. This goes back to the ancient times and a typical cycle is – a bank starts, grows, overgrows, fails, gets fixed, new banking regulations emerge, rinse-and-repeat. The business of taking short-term deposits and lending long-term using high leverage is inherently unstable. Think of bank rescues as a social safety net without which most bankers won’t be in this risky business. So, a fresh point of view is needed for the banking cycle from flourish to perish. Book, Money and Promises: Seven Deals That Changed the World. (Certainly a very unusual point of view)
Pg 55, RETIREMENT. What should a retiree sitting on humongous gains in Nvidia/NVDA do? Be aware that outsized gains of doubling or tripling in a few months are very rare. A common financial advice is to limit individual stock positions to 4-5% of the portfolio. You don’t have to follow this rigidly but become concerned if a stock position becomes 10% and consider taking some off the table. As a retiree, consider the risks of severe decline and that you won’t have as much time to recuperate from those losses. In taxable accounts, use tax-loss harvesting (TLH) to reduce taxes on capital gains (or, make charitable donations using highly appreciated securities); beware of wash-sales. If your funds are overweight in hot stocks (e.g. LC-growth), switch to another more diversified or hybrid fund. Finally, remember that there are many AI plays beyond NVDA.
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).
Global SHIPPING rates have surged. First, it was the pandemic, then, continuing conflicts in the Middle East. There are new ships, but not enough shipping containers. There may be strikes by dockworkers in the US. All of this isn’t good news for inflation.
DATA THIS WEEK. Construction spending on MONDAY; JOLTS report on TUESDAY; international trade deficit, factory orders on WEDNESDAY; jobs report (+195,000 to +207,500), unemployment rate 4.0% on FRIDAY.
CLOSED. US markets on THURSDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
Data This Week Link,
www.barrons.com/market-data/market-lab?mod=md_subnav#consensus-estimate
BULLISH. Honeywell (HON; yield 2%; fwd P/E 19.1; debt/EBITDA 1.2 only; recovering from pandemic hit; growth internally and via M&A; new CEO Vimal KAPUR, 06/2023- ; potential for activists to push for breakup or spinoffs; pg 11).
BEARISH.
Pg 10. This HOMEBUYING season has been forgettable. Existing home sales are the slowest since 2011 (NAR data). Home affordability is poor. Mortgage applications are the lowest since 2000. Buyers are frustrated, sellers are unmotivated – there is a disconnect on pricing. The new home sales have been better – in fact, these aren’t priced much higher than comparable existing homes. Homebuilders’ stocks are struggling (ITB, XHB). Lower rates may jump start housing in 2025.
Pg 12: WEARABLES (smart watches, bands, rings) now provide important medical alerts to patients and doctors. They can monitor heartbeats, blood glucose levels, oxygen levels, falls, etc. The FDA requires tests and certifications for clinical-grade (vs consumer-grade) medical devices. It’s no longer necessary to make clinical or hospital visits for many of these diagnostic tests. These developments are possible with the cooperation between device makers (AAPL, GOOGL, Samsung Electronics, etc) and medtech specialists (IRTC, DXCM, ABT, etc). In fact, one issue is how to process and interpret the huge amounts of data generated by these devices. False alarms are also possible. Quite likely, standard clinical tests may be required as follow up to indications provided by these smart devices. Health professionals may require additional training and may have to be reimbursed for their time. Device makers also dream of automating aspects of medical care, but those efforts haven’t been successful yet, and one reason is that consumer-grade devices market is completely different than the clinical-grade devices market (involving the FDA and medical professional associations).
Pg 14, INCOME. Better times for income investors are ahead as the Fed may be cutting rates soon/later.
Cash: BIL, SGOV (or, simply, T-Bills)
T-Notes/Bonds: SHY, TLT (also, IEF)
TIPS: VTIP, TIP (or, 5-yr TIPS)
MBS: DLTNX, MBB, VMBS
Preferreds: PFF, FPEI
Dividend Funds: VYM, SCHY (also, VIG, SCHD)
Real Estate: VNQ
Pipelines: AMLP, TYG
Utilities: XLU, UTG
Munis: VMLTX, MUB
Others: MDFIX (discounted CEFs), JAAA (CLOs)
Pg 21, FUNDS. SILVER is more attractive than gold or Dr Copper. Silver is both an industrial and precious metal. It’s used in semi chips and electronics and is getting boost from AI. Demand from solar industry is at a record high. Mentioned are bullion SLV and miners SIVR, SIL, SILJ, SLVP.
EXTRA, FUNDS. The infamous annual RUSSELL index rebalancing happened at the market close on Friday, 6/28/24. It was all preannounced to happen on a single day at the market close, so anyone could front-run the changes. Most Russell indexes will now get more AI tilt because that is where big market-caps are. (We have just been through the strange SPDR tech XLK rebalancing).
Pg 22, ECONOMY. The trends in economic data favor a rate cut by the Fed in 2024. But 2 aspects of the JOBS report are diverging significantly – the nonfarm payrolls are flat or gradually rising, but the household employment surveys are showing declines. The discrepancy is explained by the undercounting of immigrants by the BLS. There may be 4 million undocumented immigrants in the US, and most may not show up in the BLS household survey data. Other factors may include population shifts from large metro centers (in the East, West, Midwest) to Sunbelt cities, multiple part-time job holders, etc. The fed fund futures traders may be acting on faulty data in projecting more cuts.
Pg 23, TECH TRADER. As the columnist SAVITZ gets ready for his 3rd retirement from Barron’s, he offers some nuggets: The next great thing isn’t often that great (but sometimes, it’s really great); tech startups come and go; some of his great ideas weren’t supposed to turn into obvious losers; successful companies rarely emerge from garages or dorm rooms (but that does happen); reality trumps PR; be nimble; he is reserving judgement on the current AI hype.
Pg 24, INTERVIEW/Q&A. Blake HAXTON, Paralympian (canoeing, rowing), Analyst for BGHAX (global HY) and BCCAX (global corporates). HY spreads are low, but defaults are also low. HY has a place in the fixed-income portions of many investors. He finds attractive credits in energy, homebuilding, metals and mining. His disability developed suddenly when he was of college-age, both of his legs were amputated, but he overcame health difficulties to finish college and law school, developed career as a fund analyst and is also a Paralympian headed to the 2024 Paris Paralympics in 2 months. (Interesting that the fund analyst is featured instead of its 2 fund managers, McCLAIN and ZOX. A great human interest and motivational story.)
Pg 54, OTHER VOICES. Paolo ZANNONI, Prado Holding. More BANK FAILURES and rescues are coming. Since the 2008 GFC, 500+ US banks have failed. Unusually, in 2023, only 3 US banks of medium size failed. The public should understand that bank failures are normal, and some failing banks will be rescued. This goes back to the ancient times and a typical cycle is – a bank starts, grows, overgrows, fails, gets fixed, new banking regulations emerge, rinse-and-repeat. The business of taking short-term deposits and lending long-term using high leverage is inherently unstable. Think of bank rescues as a social safety net without which most bankers won’t be in this risky business. So, a fresh point of view is needed for the banking cycle from flourish to perish. Book, Money and Promises: Seven Deals That Changed the World. (Certainly a very unusual point of view)
Pg 55, RETIREMENT. What should a retiree sitting on humongous gains in Nvidia/NVDA do? Be aware that outsized gains of doubling or tripling in a few months are very rare. A common financial advice is to limit individual stock positions to 4-5% of the portfolio. You don’t have to follow this rigidly but become concerned if a stock position becomes 10% and consider taking some off the table. As a retiree, consider the risks of severe decline and that you won’t have as much time to recuperate from those losses. In taxable accounts, use tax-loss harvesting (TLH) to reduce taxes on capital gains (or, make charitable donations using highly appreciated securities); beware of wash-sales. If your funds are overweight in hot stocks (e.g. LC-growth), switch to another more diversified or hybrid fund. Finally, remember that there are many AI plays beyond NVDA.
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).
