Post by yogibearbull on Oct 29, 2022 14:34:21 GMT
Pg 8-9. FOMC Statement and POWELL’s press conference on WEDNESDAY (I try to provide real-time reporting on these in several venues, BUT I have a dentist appointment then, so regrettably, my info will follow LATER).
REVIEW. German Adidas/ADDYY said adios to YE/WEST/whoever and will rebrand those lines of its own design and production (it was just using the Yeezy brand name and that was a very profitable marketing). Company sales are falling, inventories are high, and its stock has crashed. But it will do fine.
PREVIEW. Slow and steady Warren BUFFETT’s BRK (#6; almost $100+ billions in T-Bills) is catching up with fast and flashy Elon MUSK’s TSLA (#5) in market-cap. BRK is already ahead of META and NVDA that are having a forgettable year.
DATA THIS WEEK. ISM Chicago business index on MONDAY; JOLTS report, ISM manufacturing PMI, construction spending on TUESDAY; ADP national employment report on WEDNESDAY; ISM services PMI, international trade deficit, factory orders on THURSDAY; jobs report (+200,000), unemployment rate (3.6%) on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Visa (V; fwd yield 0.86%; fwd P/E 24; buybacks 3%; strong dollar is a headwind as 55% of revenues are non-US; exit from Russia caused a small loss in revenue; proposed law for dual-routing of payments is unlikely to pass; selloff is an opportunity; pg 18).
BEARISH.
Pg 10: MUNIs are attractive after this huge selloff, the worst in 40 years. Muni yields of 3-5% are comparable or higher than Treasuries (typically, the situation is just the reverse) and those are very attractive to those in 37% federal tax bracket and living in high tax states (CA, NY); for some, that may be 10% taxable yield equivalent. The muni market isn’t under stress despite huge muni fund outflows. Mentioned are OEFs EILTX, PMLAX, VWITX, PYMAX (HY muni); ETF MUB; CEFs BTT, NEA (distribution cut), NZF; and a few individual muni issues.
Pg 12: Big techs (AMZN (digital euro), MSFT, GOOGL, ACN (digital e-krona), Bitt/OSTK, eCurrency Mint) are pushing for CBDCs (central bank digital currencies) globally. Cryptos were crazy stuff until STABLECOINS (popular but some spectacular collapses) scared the establishment and authorities. Lacking resources, the central banks are partnering with big techs on CBCDs. There are also issues of privacy and security. 11 countries have CBDCs now (Granada, Jamaica, Bahamas, etc), 15 have pilot programs (digital-yuan/China, Russia, Singapore, Sweden, Ukraine, etc), and 72 are at R&D stages (Australia, Brazil, Canada, Germany, India, Iran, Japan, Switzerland, Venezuela, etc). Many EMs are interested in the CBDCs. One angle for many countries is that CBDCs may become dollar alternative(s). The US is going very slow and remains in the “study” stage; there are mixed views on digital-dollar at the Fed and Treasury, but the danger is that the US could be among the last. Banks view CBDCs with concerns as they would be out of the CBDC transactions loop; also worried are companies that offer stablecoins now (Circle, etc). Big techs see CBDCs as their opportunity to jump into this fintech (and outsmart the banks).
Pg 19, FUNDS. John ROTH (52; retiring young in 2022!) and Nicola STAFFORD (42; to be the sole manager) of mid-cap blend FMCSX call the MCs the sweet spot between the SCs and LCs. Turnover is low at 17%. They are underweight in techs (6.7%) and have some private-equity investments (MUSK’s SpaceX, etc; they sold TSLA when it clearly became a LC).
Pg 21: INCOME. DIVIDEND and DIVIDEND-GROWTH ideas include banks (USB, TFC, etc), REITs (SPG, O, DLR, etc), MLPs.
Pg 22: TECH TRADER. It was a META disaster. Mark ZUCKERBERG is following a disastrous path to metaverse with huge capex (AI, datacenters) but with little odds to success; moreover, who needs this? But MZ is a controlling shareholder, and he doesn’t care about the other shareholders anymore. The Q3 revenues and earnings were down but the ballooning capex (now and for years out) was astounding to even many bulls and they threw in the towel. Reality Lab, the metaverse unit, is losing billions/yr. There are things that META can do including kicking MZ upstairs and hiring a competent CEO, but will it?
Pg 23, ECONOMY. The gloom over HOUSING is overblown. Sure, there is some cooling: sales and traffic are down; the 30-yr mortgage is 7.1% (many new buyers are priced out, and many current homeowners don’t want to give up their low-rate mortgages); inventories are at 4 months for existing homes, 8 months for new homes; (home flippers are hurting). But housing is correlated with M2 money supply and that has been steady, and there are now more institutional players in the housing market.
Pg 24, FUNDS. Nick GALLUCCIO, Teton/TETAA and WWSAX. After the small-cap R2000 peaked in 11/2021, it has been brutal. The pandemic, Russia-Ukraine war and Fed tightening have created hits to all asset classes. Most SCs are domestically oriented; they will also benefit from onshoring by the multinationals. The SP SC 600 (a better index than R2000) fwd P/E is only 11; its EV/EBITDA is also low. The SCs will lead in any economic recovery (whenever it comes). He avoids value traps by looking at turnarounds, undervalued assets and growth. He likes regional banks, energy services, power equipment and control, airline maintenance and parts, auto auctioneers, fluid flow equipment and control.
Pg 54: OTHER VOICES. Ludovic SUBRAN, Allianz. Americans enjoyed ASSET BOOM to 2021 yearend due to ZIRP. The wealth was distributed unevenly as the US Gini coefficient has been among the highest in the world. But forget about those good times now. The pandemic followed by Russia-Ukraine war delivered the classic 1-2 punch. High inflation is also making the situation worse. There have been some structural shifts – deglobalization; digitalization (lessening the need for labor); shrinking workforce; shorter and regional supply-chains; high energy costs, the Fed tightening; the UK crisis revealing high debt and leverage. The EMs will be more negatively affected by these trends. But things will eventually get better.
(EXTRAS from online Friday that didn’t make the weekend paper version)
None
LINK
REVIEW. German Adidas/ADDYY said adios to YE/WEST/whoever and will rebrand those lines of its own design and production (it was just using the Yeezy brand name and that was a very profitable marketing). Company sales are falling, inventories are high, and its stock has crashed. But it will do fine.
PREVIEW. Slow and steady Warren BUFFETT’s BRK (#6; almost $100+ billions in T-Bills) is catching up with fast and flashy Elon MUSK’s TSLA (#5) in market-cap. BRK is already ahead of META and NVDA that are having a forgettable year.
DATA THIS WEEK. ISM Chicago business index on MONDAY; JOLTS report, ISM manufacturing PMI, construction spending on TUESDAY; ADP national employment report on WEDNESDAY; ISM services PMI, international trade deficit, factory orders on THURSDAY; jobs report (+200,000), unemployment rate (3.6%) on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Visa (V; fwd yield 0.86%; fwd P/E 24; buybacks 3%; strong dollar is a headwind as 55% of revenues are non-US; exit from Russia caused a small loss in revenue; proposed law for dual-routing of payments is unlikely to pass; selloff is an opportunity; pg 18).
BEARISH.
Pg 10: MUNIs are attractive after this huge selloff, the worst in 40 years. Muni yields of 3-5% are comparable or higher than Treasuries (typically, the situation is just the reverse) and those are very attractive to those in 37% federal tax bracket and living in high tax states (CA, NY); for some, that may be 10% taxable yield equivalent. The muni market isn’t under stress despite huge muni fund outflows. Mentioned are OEFs EILTX, PMLAX, VWITX, PYMAX (HY muni); ETF MUB; CEFs BTT, NEA (distribution cut), NZF; and a few individual muni issues.
Pg 12: Big techs (AMZN (digital euro), MSFT, GOOGL, ACN (digital e-krona), Bitt/OSTK, eCurrency Mint) are pushing for CBDCs (central bank digital currencies) globally. Cryptos were crazy stuff until STABLECOINS (popular but some spectacular collapses) scared the establishment and authorities. Lacking resources, the central banks are partnering with big techs on CBCDs. There are also issues of privacy and security. 11 countries have CBDCs now (Granada, Jamaica, Bahamas, etc), 15 have pilot programs (digital-yuan/China, Russia, Singapore, Sweden, Ukraine, etc), and 72 are at R&D stages (Australia, Brazil, Canada, Germany, India, Iran, Japan, Switzerland, Venezuela, etc). Many EMs are interested in the CBDCs. One angle for many countries is that CBDCs may become dollar alternative(s). The US is going very slow and remains in the “study” stage; there are mixed views on digital-dollar at the Fed and Treasury, but the danger is that the US could be among the last. Banks view CBDCs with concerns as they would be out of the CBDC transactions loop; also worried are companies that offer stablecoins now (Circle, etc). Big techs see CBDCs as their opportunity to jump into this fintech (and outsmart the banks).
Pg 19, FUNDS. John ROTH (52; retiring young in 2022!) and Nicola STAFFORD (42; to be the sole manager) of mid-cap blend FMCSX call the MCs the sweet spot between the SCs and LCs. Turnover is low at 17%. They are underweight in techs (6.7%) and have some private-equity investments (MUSK’s SpaceX, etc; they sold TSLA when it clearly became a LC).
Pg 21: INCOME. DIVIDEND and DIVIDEND-GROWTH ideas include banks (USB, TFC, etc), REITs (SPG, O, DLR, etc), MLPs.
Pg 22: TECH TRADER. It was a META disaster. Mark ZUCKERBERG is following a disastrous path to metaverse with huge capex (AI, datacenters) but with little odds to success; moreover, who needs this? But MZ is a controlling shareholder, and he doesn’t care about the other shareholders anymore. The Q3 revenues and earnings were down but the ballooning capex (now and for years out) was astounding to even many bulls and they threw in the towel. Reality Lab, the metaverse unit, is losing billions/yr. There are things that META can do including kicking MZ upstairs and hiring a competent CEO, but will it?
Pg 23, ECONOMY. The gloom over HOUSING is overblown. Sure, there is some cooling: sales and traffic are down; the 30-yr mortgage is 7.1% (many new buyers are priced out, and many current homeowners don’t want to give up their low-rate mortgages); inventories are at 4 months for existing homes, 8 months for new homes; (home flippers are hurting). But housing is correlated with M2 money supply and that has been steady, and there are now more institutional players in the housing market.
Pg 24, FUNDS. Nick GALLUCCIO, Teton/TETAA and WWSAX. After the small-cap R2000 peaked in 11/2021, it has been brutal. The pandemic, Russia-Ukraine war and Fed tightening have created hits to all asset classes. Most SCs are domestically oriented; they will also benefit from onshoring by the multinationals. The SP SC 600 (a better index than R2000) fwd P/E is only 11; its EV/EBITDA is also low. The SCs will lead in any economic recovery (whenever it comes). He avoids value traps by looking at turnarounds, undervalued assets and growth. He likes regional banks, energy services, power equipment and control, airline maintenance and parts, auto auctioneers, fluid flow equipment and control.
Pg 54: OTHER VOICES. Ludovic SUBRAN, Allianz. Americans enjoyed ASSET BOOM to 2021 yearend due to ZIRP. The wealth was distributed unevenly as the US Gini coefficient has been among the highest in the world. But forget about those good times now. The pandemic followed by Russia-Ukraine war delivered the classic 1-2 punch. High inflation is also making the situation worse. There have been some structural shifts – deglobalization; digitalization (lessening the need for labor); shrinking workforce; shorter and regional supply-chains; high energy costs, the Fed tightening; the UK crisis revealing high debt and leverage. The EMs will be more negatively affected by these trends. But things will eventually get better.
(EXTRAS from online Friday that didn’t make the weekend paper version)
None
LINK
