Post by Admin/YBB on Jul 13, 2024 6:10:36 GMT -6
Pg 8. PREVIEW & REVIEW (consolidated). Who to believe? OPEC says that oil demand will keep rising through 2045, but BP says that it will peak in 2025. IEA, Paris puts demand peak in 2029, while the US EIA between 2030-40. Meanwhile, the oil production bottomed in 2020 and has been rising since.
DATA THIS WEEK. Retail sales, business inventories on TUESDAY; housing starts, capacity utilization, industrial production on WEDNESDAY; LEI 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. ResMed (RMD; yield 1%; fwd P/E 21.9; buybacks; makes CPAP devices for sleep apnea; stock is oversold on concerns about the market impact of the new obesity drugs – GLP-1 agonists; but these new drugs are very expensive, available in injectable or IV forms, and may not be covered by insurance; pg10).
BEARISH (several after a long hiatus). Paramount (PARA; controlled by Shari REDSTONE/NAI; deal from Skydance (David ELLISON; has father Larry’s deep pockets) offers $23 for A shares (voting), $15 for B shares (nonvoting) for 70% economic interest and 100% voting control of Paramount; there is a 45-day wait for a better deal to emerge (unlikely), but beyond that, the PARA shareholders don’t get to vote; Shari Redstone is to sell her interests in NAI and Paramount and benefits the most; even the big holders such as Mario Gabelli/GAMI and John Rogers/Ariel weren’t approached during the long and twisted negotiations between Shari Redstone and Davis Ellison; Warren BUFFETT/BRK sold at a big loss in 2023; there may be shareholder lawsuits; pg 11). (A bad example for the US capital markets)
Steel industry (Tariffs will hurt the US steel industry (NUE, CLF, X, etc) and the US consumers as lot of imported steel is used in American products; China may avoid the full impact of tariffs by routing its steel via Asia and Lat Am; Nippon Steel deal to buy US Steel/X is in limbo; top global steel producers now are #1 China, #2 India, #3 Japan, #4 US; if Nippon buys X, Japan will become #2, India #3; pg 12).
Meme stocks (Keith GILL, a poster at Redditt and a former employee at MassMutual, is a major force behind the meme stocks – AMC, GME, BB, now CHWY; crazy meme stock rallies have wiped out several short-sellers; a question is where does Gill get $xxx millions to drive the meme stocks? Regulators and E*Trade/MS are looking into possible market manipulations; Ryan Cohen is tied to both GME and CHWY, he has an obvious interest in killing the shorts, but it would be illegal for him to just fund Gill; motivation alone isn’t a proof of a crime; pg 14).
Pg 15, TECH TRADER. The talk about REGULATING TECHS is easy, but it’s hard in practice (there have been only a handful of historic cases). The next battleground may be data privacy (Europe is much ahead on it) and AI. However, the Supremes have taken away an important agency tool by reversing “Chevron” – it provided deference to regulating agencies and for past precedents. The rules by several agencies have been overturned. Critics say that this shifts power from agencies to courts, when it should revert to the Congress (if it has time to micromanage). It’s unclear what impact this will have on ongoing cases such as DOJ vs Google, etc. (Just the threat of being overturned may prove to be enough to keep agencies in check; concerns have been that some agencies have far overreached their authority, e.g. SEC, FTC, EPA, etc.).
Pg 32, INCOME. MUNI BONDS are attractive for investors in higher tax brackets. Inflation is moderating and expectations for Fed rate cuts are rising. State and local governments finances are in good shape due to stimulus during the pandemic and stronger economy. TCJA is expiring in 2025, and if not extended, income taxes will rise. Mentioned are MUB, VMLTX; lower-quality FAARX, CGMU.
Pg 33, FUNDS. Is this finally the turn in the SMALL-CAPS (SCs) ? If you need SC exposure, consider SC-growth (GARP strategy) HISGX / HASGX. The SCs offer faster growth at great valuations. The SCs R2000/IWM now are near 20-year low at 5.2% (by market-cap; the recent peak was at 8.8% in 2006) of the total Russell R3000 universe. Active management (or, a better SC index, IJR, SPSM) can avoid 40% of unprofitable SCs in R2000. Fed rate cuts should also benefit them. The SCs are already in the “basement” and may not fall much further.
EXTRA, FUNDS. Bill ACKMAN is launching a humongous CEF Pershing Square USA/PSUS (rumored at $25 billion) at an outrageous ER of 2% (but waived for the 1st year). His Europe-based Pershing Square Holdings/PSHZF ($10 billion) already trades at a large 23% discount. Ackman holds concentrated positions and the new PSUS will hold 12-20 US LCs. (Ackman has out of the box ideas and has had several misfires. Trying to launch $25 billion CEF in this out-of-favor wrapper may be another – the largest US CEFs now are gold PHYS ($7.51 billion), multisector PDI ($5.95 billion), silver PSLV ($5.30 billion)).
EXTRA, FUNDS. SMALL-CAP FTAI’s rally has stalled and that may hurt several hot SP500-beating SC-growth (SCG) funds. Other SC winners in these hot funds were SMCI (now moved out of R2000) and EVER. Mentioned are CTASX / CTSIX, JSJAX / JSJIX, CWSAX / CWSGX, HRSRX / HRSMX.
EXTRA, FUNDS. Famously disrupted Cathie WOOD (ARKK, etc) has avoided mega-techs in favor of other stocks such as PLTR, PATH, TXG; streaming ROKU, sports-betting DKNG, biotech CRSP, TWST, TXG; crypto COIN. (She lost her Midas touch)
Pg 62, OTHER VOICES. Xavier BARATON and William SELS, HSBC. Get ready for falling rates. Several EMs have cut rates, Europe has just started cutting, and the US Fed may follow soon. Start the switch from T-Bills, short-term CDs, money-market funds to short/intermediate-term bond funds with some credit risks.
Pg 63, RETIREMENT. Retirees should limit their exposure to Magnificent 7. REBALANCE and/or add RSP, VIG, VTV, etc.
EXTRA. Cooling inflation is good, but it may reduce the SOCIAL SECURITY COLA for 2025 – used is the Q3 average data for CPI-W and the current estimate is +2.7% (vs +3.2% in 2024).
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).
Edit/Add. Re EXTRA, FUNDS - Hot SCG
Those hot SCG funds are for YTD (really, StockCharts 11/1/23-). But ANYTHING that beats SP500 these days attracts attention, especially SCG. Not all are recognized by StockCharts, but they are by MFO Premium.
i.ibb.co/L1yX6J0/Hot-SCG-YTD.png
i.ibb.co/hspBB3g/Not-Hot-SCG-3-Yrs.png
DATA THIS WEEK. Retail sales, business inventories on TUESDAY; housing starts, capacity utilization, industrial production on WEDNESDAY; LEI 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. ResMed (RMD; yield 1%; fwd P/E 21.9; buybacks; makes CPAP devices for sleep apnea; stock is oversold on concerns about the market impact of the new obesity drugs – GLP-1 agonists; but these new drugs are very expensive, available in injectable or IV forms, and may not be covered by insurance; pg10).
BEARISH (several after a long hiatus). Paramount (PARA; controlled by Shari REDSTONE/NAI; deal from Skydance (David ELLISON; has father Larry’s deep pockets) offers $23 for A shares (voting), $15 for B shares (nonvoting) for 70% economic interest and 100% voting control of Paramount; there is a 45-day wait for a better deal to emerge (unlikely), but beyond that, the PARA shareholders don’t get to vote; Shari Redstone is to sell her interests in NAI and Paramount and benefits the most; even the big holders such as Mario Gabelli/GAMI and John Rogers/Ariel weren’t approached during the long and twisted negotiations between Shari Redstone and Davis Ellison; Warren BUFFETT/BRK sold at a big loss in 2023; there may be shareholder lawsuits; pg 11). (A bad example for the US capital markets)
Steel industry (Tariffs will hurt the US steel industry (NUE, CLF, X, etc) and the US consumers as lot of imported steel is used in American products; China may avoid the full impact of tariffs by routing its steel via Asia and Lat Am; Nippon Steel deal to buy US Steel/X is in limbo; top global steel producers now are #1 China, #2 India, #3 Japan, #4 US; if Nippon buys X, Japan will become #2, India #3; pg 12).
Meme stocks (Keith GILL, a poster at Redditt and a former employee at MassMutual, is a major force behind the meme stocks – AMC, GME, BB, now CHWY; crazy meme stock rallies have wiped out several short-sellers; a question is where does Gill get $xxx millions to drive the meme stocks? Regulators and E*Trade/MS are looking into possible market manipulations; Ryan Cohen is tied to both GME and CHWY, he has an obvious interest in killing the shorts, but it would be illegal for him to just fund Gill; motivation alone isn’t a proof of a crime; pg 14).
Pg 15, TECH TRADER. The talk about REGULATING TECHS is easy, but it’s hard in practice (there have been only a handful of historic cases). The next battleground may be data privacy (Europe is much ahead on it) and AI. However, the Supremes have taken away an important agency tool by reversing “Chevron” – it provided deference to regulating agencies and for past precedents. The rules by several agencies have been overturned. Critics say that this shifts power from agencies to courts, when it should revert to the Congress (if it has time to micromanage). It’s unclear what impact this will have on ongoing cases such as DOJ vs Google, etc. (Just the threat of being overturned may prove to be enough to keep agencies in check; concerns have been that some agencies have far overreached their authority, e.g. SEC, FTC, EPA, etc.).
Pg 32, INCOME. MUNI BONDS are attractive for investors in higher tax brackets. Inflation is moderating and expectations for Fed rate cuts are rising. State and local governments finances are in good shape due to stimulus during the pandemic and stronger economy. TCJA is expiring in 2025, and if not extended, income taxes will rise. Mentioned are MUB, VMLTX; lower-quality FAARX, CGMU.
Pg 33, FUNDS. Is this finally the turn in the SMALL-CAPS (SCs) ? If you need SC exposure, consider SC-growth (GARP strategy) HISGX / HASGX. The SCs offer faster growth at great valuations. The SCs R2000/IWM now are near 20-year low at 5.2% (by market-cap; the recent peak was at 8.8% in 2006) of the total Russell R3000 universe. Active management (or, a better SC index, IJR, SPSM) can avoid 40% of unprofitable SCs in R2000. Fed rate cuts should also benefit them. The SCs are already in the “basement” and may not fall much further.
EXTRA, FUNDS. Bill ACKMAN is launching a humongous CEF Pershing Square USA/PSUS (rumored at $25 billion) at an outrageous ER of 2% (but waived for the 1st year). His Europe-based Pershing Square Holdings/PSHZF ($10 billion) already trades at a large 23% discount. Ackman holds concentrated positions and the new PSUS will hold 12-20 US LCs. (Ackman has out of the box ideas and has had several misfires. Trying to launch $25 billion CEF in this out-of-favor wrapper may be another – the largest US CEFs now are gold PHYS ($7.51 billion), multisector PDI ($5.95 billion), silver PSLV ($5.30 billion)).
EXTRA, FUNDS. SMALL-CAP FTAI’s rally has stalled and that may hurt several hot SP500-beating SC-growth (SCG) funds. Other SC winners in these hot funds were SMCI (now moved out of R2000) and EVER. Mentioned are CTASX / CTSIX, JSJAX / JSJIX, CWSAX / CWSGX, HRSRX / HRSMX.
EXTRA, FUNDS. Famously disrupted Cathie WOOD (ARKK, etc) has avoided mega-techs in favor of other stocks such as PLTR, PATH, TXG; streaming ROKU, sports-betting DKNG, biotech CRSP, TWST, TXG; crypto COIN. (She lost her Midas touch)
Pg 62, OTHER VOICES. Xavier BARATON and William SELS, HSBC. Get ready for falling rates. Several EMs have cut rates, Europe has just started cutting, and the US Fed may follow soon. Start the switch from T-Bills, short-term CDs, money-market funds to short/intermediate-term bond funds with some credit risks.
Pg 63, RETIREMENT. Retirees should limit their exposure to Magnificent 7. REBALANCE and/or add RSP, VIG, VTV, etc.
EXTRA. Cooling inflation is good, but it may reduce the SOCIAL SECURITY COLA for 2025 – used is the Q3 average data for CPI-W and the current estimate is +2.7% (vs +3.2% in 2024).
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).
Edit/Add. Re EXTRA, FUNDS - Hot SCG
Those hot SCG funds are for YTD (really, StockCharts 11/1/23-). But ANYTHING that beats SP500 these days attracts attention, especially SCG. Not all are recognized by StockCharts, but they are by MFO Premium.
i.ibb.co/L1yX6J0/Hot-SCG-YTD.png
i.ibb.co/hspBB3g/Not-Hot-SCG-3-Yrs.png
