Post by Admin/YBB on Jul 6, 2024 7:26:18 GMT -6
Pg 7. PREVIEW & REVIEW (consolidated). Fed Chair POWELL at Senate committee on TUESDAY, at House committee on WEDNESDAY. Q2 earnings season starts with big banks reporting on FRIDAY.
DATA THIS WEEK. Consumer credit on MONDAY; wholesale inventories on WEDNESDAY; Treasury budget, CPI (+3.1% yoy) on THURSDAY; PPI, UM sentiment 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. AMC (revenues falling; high debt/EBITDA 9; debt trades at 68c; strong movie releases would help; meme stocks are back and it’s using that window to issue stock (new or to convert debt); very speculative play that will work if bankruptcy is avoided; pg 10);
Ford (F; yield 4.7% plus special dividends; fwd P/E 6.6; limited buybacks; EV unit Modele is losing money and posing a difficult dilemma – cut capex for profitability now or boost capex for future growth; the US new car sales are healthy at 15.5 million/yr; warranty costs are 3.5% of sales (so, consumers are the quality-control inspectors for the US cars) vs 3% for GM, only 1% for TM; Wall Street would like the spinoff or IPO of Ford Pro commercial sales and service unit, but that is unlikely; Ford family has 40% voting control and it prefers dividends; F stock is lagging GM and it may have to do with differing interests of the Ford family and the Wall Street; pg 11);
Fast foods – Burger Chains (MCD, WEN, Burger Kink/RBI; new and cheaper value meal packages are better than the app discounts for higher prices; higher traffic may overcome lower margins on these value packages; some franchisees want corporate contributions for these low margin value packages; non-Burger competition includes CMG, DPZ, Taco Bell/YUM, Chick-fil-A; pg 16).
BEARISH.
Pg 8: With the DOLLAR at these high levels, and expected to weaken in future, several areas look attractive – corporates, MBS, (but Treasuries not so much), and foreign stocks. Lot of the US stock market outperformance vs the foreign markets has been due to dollar strength. Beware that the dollar index is old and outdated (last revised in 1999), and the government and businesses use the trade-weighted dollar. Strong dollar is good for the US travelers abroad, but is bad for the US multinationals and exporters. The dollar is also unusual because it isn’t affected much by the state of the US economy; other currencies are affected by their local economies. This may be explained by the RESERVE CURRENCY status of the dollar. While the Fed policy is in limbo, most other countries are cutting rates, except Japan. Higher yields available in the developed markets have reduced the demand for the EM currencies. The US tariffs also boost the dollar. Although the dollar may not strengthen much, there is a risk that it may not weaken much either (as many expect). Several countries are reducing their exposure to the dollar by adding gold to their reserves and by trading more in regional and local currencies.
Pg 18, INTERVIEW/Q&A. FUNDS. David BARON, BFGFX / BFGIX. He likes large positions in founder-led growth companies that are trading at discount from firm’s intrinsic value estimates, for example, TSLA, SpaceX (private), BIRK, ONON, SPOT, SHOP, H, FIGS, etc. His goal is to double the money in 4-5 years. He thinks that sideline money can support this rally; his upside now is 20-30%, downside 10-15%. Ron BARON (81) founded Baron Capital and now sons David (44) and Michael also work for the firm. Both are involved with multiple funds.
Pg 21, TECH TRADER. With Nvidia/NVDA up +159% YTD (just behind SMCI +198% YTD), holders should keep an eye on fundamentals. Ride the rally, but take some/all off the table when fundamentals start to weaken (This is easier said than done)
Pg 21, ECONOMY. Japanese YEN at 4-decade low will remain weak until the US FED cuts rates. The Japanese economy has diverged from the other developed economies. Japan is just beginning to remove massive monetary stimulus; inflation is picking up (and welcomed after years of deflation). Japan has tried to support the yen but that has only slowed the decline. A combination of Fed rate cuts and hawkish BOJ would help the yen. There is a wide gap between the yields of Japanese and the US bonds. Japan now holds $1.2 trillion in the US Treasuries, the highest in the world (#2 China has been gradually selling and may soon become #3, now #3 UK). Japanese stocks finally made a new all-time high but yen weakness has cut into the returns of the US investors from Japan funds. Mentioned is NGRRX (but there are a number of Japan OEFs and ETFs).
Pg 22, INCOME. Several nonbank financials are attractive – CB, CME, HIG, MMC, SCHW, TRV.
EXTRA, FUNDS. SMALL-CAP (SC) R2000/IWM is more cyclical after the June 28 rebalancing as companies such as SMCI have moved out. The Top 5 R2000 stocks are FTAI, INSM, ANF, FN, SFM, accounting for a whopping 1.93%. The Top 5 sectors are healthcare, industrials, financials, tech, consumer cyclicals. If you own R2000/IWM, keep an eye on Fed news. (Better, own SP SC 600 IJR, SPSM)
SCs are going through a period of profit slump. This notwithstanding that 40% of R2000/IWM are unprofitable. A simple solution is to use better SC index SP SC 600 (IJR, SPSM), or SC-quality DFAS (active).
Pg 50, OTHER VOICES. Cory COGLIANESE, Professor at Penn. The SUPREMES have put regulating AGENCIES (Fed, EPA, SEC, etc) on notice about their regulating powers. Statue of limitation for regulatory challenges have been set aside and precedence alone won’t hold. This means that nothing is considered settled and can be litigated over and over. But are the courts ready for the flood of new cases that will follow? And uncertainties may linger for quite a while hurting business sentiments and planning.
Pg 51, RETIREMENT. Don’t overstay in “cash” when rates start dropping. Gradually increase maturity – T-Notes, CDs, short/intermediate-term bond funds. Consider buffer funds such as MAXJ – it holds IVV with option collars.
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).
DATA THIS WEEK. Consumer credit on MONDAY; wholesale inventories on WEDNESDAY; Treasury budget, CPI (+3.1% yoy) on THURSDAY; PPI, UM sentiment 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. AMC (revenues falling; high debt/EBITDA 9; debt trades at 68c; strong movie releases would help; meme stocks are back and it’s using that window to issue stock (new or to convert debt); very speculative play that will work if bankruptcy is avoided; pg 10);
Ford (F; yield 4.7% plus special dividends; fwd P/E 6.6; limited buybacks; EV unit Modele is losing money and posing a difficult dilemma – cut capex for profitability now or boost capex for future growth; the US new car sales are healthy at 15.5 million/yr; warranty costs are 3.5% of sales (so, consumers are the quality-control inspectors for the US cars) vs 3% for GM, only 1% for TM; Wall Street would like the spinoff or IPO of Ford Pro commercial sales and service unit, but that is unlikely; Ford family has 40% voting control and it prefers dividends; F stock is lagging GM and it may have to do with differing interests of the Ford family and the Wall Street; pg 11);
Fast foods – Burger Chains (MCD, WEN, Burger Kink/RBI; new and cheaper value meal packages are better than the app discounts for higher prices; higher traffic may overcome lower margins on these value packages; some franchisees want corporate contributions for these low margin value packages; non-Burger competition includes CMG, DPZ, Taco Bell/YUM, Chick-fil-A; pg 16).
BEARISH.
Pg 8: With the DOLLAR at these high levels, and expected to weaken in future, several areas look attractive – corporates, MBS, (but Treasuries not so much), and foreign stocks. Lot of the US stock market outperformance vs the foreign markets has been due to dollar strength. Beware that the dollar index is old and outdated (last revised in 1999), and the government and businesses use the trade-weighted dollar. Strong dollar is good for the US travelers abroad, but is bad for the US multinationals and exporters. The dollar is also unusual because it isn’t affected much by the state of the US economy; other currencies are affected by their local economies. This may be explained by the RESERVE CURRENCY status of the dollar. While the Fed policy is in limbo, most other countries are cutting rates, except Japan. Higher yields available in the developed markets have reduced the demand for the EM currencies. The US tariffs also boost the dollar. Although the dollar may not strengthen much, there is a risk that it may not weaken much either (as many expect). Several countries are reducing their exposure to the dollar by adding gold to their reserves and by trading more in regional and local currencies.
Pg 18, INTERVIEW/Q&A. FUNDS. David BARON, BFGFX / BFGIX. He likes large positions in founder-led growth companies that are trading at discount from firm’s intrinsic value estimates, for example, TSLA, SpaceX (private), BIRK, ONON, SPOT, SHOP, H, FIGS, etc. His goal is to double the money in 4-5 years. He thinks that sideline money can support this rally; his upside now is 20-30%, downside 10-15%. Ron BARON (81) founded Baron Capital and now sons David (44) and Michael also work for the firm. Both are involved with multiple funds.
Pg 21, TECH TRADER. With Nvidia/NVDA up +159% YTD (just behind SMCI +198% YTD), holders should keep an eye on fundamentals. Ride the rally, but take some/all off the table when fundamentals start to weaken (This is easier said than done)
Pg 21, ECONOMY. Japanese YEN at 4-decade low will remain weak until the US FED cuts rates. The Japanese economy has diverged from the other developed economies. Japan is just beginning to remove massive monetary stimulus; inflation is picking up (and welcomed after years of deflation). Japan has tried to support the yen but that has only slowed the decline. A combination of Fed rate cuts and hawkish BOJ would help the yen. There is a wide gap between the yields of Japanese and the US bonds. Japan now holds $1.2 trillion in the US Treasuries, the highest in the world (#2 China has been gradually selling and may soon become #3, now #3 UK). Japanese stocks finally made a new all-time high but yen weakness has cut into the returns of the US investors from Japan funds. Mentioned is NGRRX (but there are a number of Japan OEFs and ETFs).
Pg 22, INCOME. Several nonbank financials are attractive – CB, CME, HIG, MMC, SCHW, TRV.
EXTRA, FUNDS. SMALL-CAP (SC) R2000/IWM is more cyclical after the June 28 rebalancing as companies such as SMCI have moved out. The Top 5 R2000 stocks are FTAI, INSM, ANF, FN, SFM, accounting for a whopping 1.93%. The Top 5 sectors are healthcare, industrials, financials, tech, consumer cyclicals. If you own R2000/IWM, keep an eye on Fed news. (Better, own SP SC 600 IJR, SPSM)
SCs are going through a period of profit slump. This notwithstanding that 40% of R2000/IWM are unprofitable. A simple solution is to use better SC index SP SC 600 (IJR, SPSM), or SC-quality DFAS (active).
Pg 50, OTHER VOICES. Cory COGLIANESE, Professor at Penn. The SUPREMES have put regulating AGENCIES (Fed, EPA, SEC, etc) on notice about their regulating powers. Statue of limitation for regulatory challenges have been set aside and precedence alone won’t hold. This means that nothing is considered settled and can be litigated over and over. But are the courts ready for the flood of new cases that will follow? And uncertainties may linger for quite a while hurting business sentiments and planning.
Pg 51, RETIREMENT. Don’t overstay in “cash” when rates start dropping. Gradually increase maturity – T-Notes, CDs, short/intermediate-term bond funds. Consider buffer funds such as MAXJ – it holds IVV with option collars.
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).
