Post by yogibearbull on Jun 10, 2023 15:01:29 GMT
Pg 8-9. FOMC Statement and POWELL’s presser on WEDNESDAY. ECB monetary policy announcement on THURSDAY.
REVIEW. SMALL-CAPs are moving ahead in June. The rally has broadened, and investors are less fearful of banks and cyclicals. While techs at 27% dominate the LC SP500, financials and industrials account for 34% of the SP SC 600.
PREVIEW. The official data on OIL supply and demand from the OPEC and the US EIA are not very reliable, and that may explain the disconnect between falling oil prices and the OPEC production cuts (beyond the extent indicated by economic factors). The oil futures market is in a slight backwardation now (Note that contango means good physical supply, backwardation means tight physical supply).
DATA THIS WEEK. Treasury budget on MONDAY; CPI (+4.2% yoy; core +5.2%), small business optimism index on TUESDAY; PPI (+1.5% only; core +2.9%) on WEDNESDAY; retail sales, capacity utilization, industrial production, business inventories on THURSDAY; UM consumer sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. TreeHouse Foods (THS; fwd P/E 17.5; Chicago (Oak Brook, IL) area pure play for lower cost private label food products for Amazon, Costco, Trader Joe’s/Aldo Nord, Aldi, etc; its costs have gone up due to inflation and supply-chain issues; it started and grew by acquisitions, so there are some integration issues; it may be recession resistant; it sold the meal-prep unit; investor day 6/13/23; CEO OAKLAND (Board Chair, 04/2023- ); pg 16);
NET Power (NPWR; carbon-capture/clean-energy business that has only demo plants so far but is building a large power plant for OXY; licenses carbon-capture technology for royalty revenues; it's a recent SPAC merger with an energy business of Danny RICE and family; beneficiary of the US infrastructure initiatives; pg 17).
BEARISH.
Pg 10: This week, the SEC hit the global Binance and the US-based Coinbase/COIN (short interest 22%) with lawsuits. The CRYPTO industry claims that it is unique or different, and new regulations are needed by the CFTC or the SEC or another agency. But the SEC is going ahead with its “regulation by ENFORCEMENT” under the 1933 “investment contract” provisions and other existing rules/laws. COIN also claims that the SEC approval of its direct-listing on Nasdaq in 04/2021 was an implicit approval by the SEC of most of its crypto activities (a shaky argument). The CFTC and the STATEs are also going after the crypto firms. Strangely, the CFTC also approved using leverage and borrowing for CBOE crypto futures (even the SEC doesn’t object to crypto futures and has approved several futures-based crypto ETFs, but none for “physical” cryptos). The SEC is also willing to let the CFTC regulate Bitcoin as a commodity, not a security; similar may also apply for Ethereum. Possible future paths include a truce/settlement among the SEC, the CFTC and cryptos; Congressional action (the crypto industry thinks that any such action would be more favorable); the remaining crypto industry in the US just moving overseas where regulations are more crypto-friendly (the EU, the HK, Dubai/Middle East). The crypto market believes that all this will somehow be sorted out and its post-ice-age recovery continued (Bitcoin is around $25.600). The global thinking seems to be that the cryptos got here without the US, and may continue to grow without the US, but it would be nice for the crypto world if the US, the largest capital market in the world, is a bit friendlier.
Pg 12. Shantanu NARAYEN, Adobe/ADBE CEO. Adobe successfully transitioned to subscription-based model. It is now embracing generative AI as people use its tools to create their own content with text, data, images, and videos. It’s now offering free-beta Firefly and other new tools, but that will change later to a combo free (basic) and subscription (advanced) services. He welcomes AI regulation, but the approach for everybody to “stop the AI” while new regulations develop won’t work. Adobe already prevents violations of copyrights or trademarks and has developed mechanisms to pay creators/developers. AI will hugely expand Adobe’s total addressable market (TAM).
Pg 17, INCOME INVESTING. Amazon/AMZN Wireless may not be much of a threat to AT&T/T and Verizon/VZ, but their stocks fell, and it may be a buying opportunity for dividend investors. Many AMZN ventures haven’t been successful (plane leasing, industrial distribution, PBM, etc), and there are huge regulatory hurdles for entry into telecom. Chris SEYEK (Wolfe Research) worries about dividends when payouts exceed 80% of net income or free cash flow, or debt/EBITDA >3.5. Both T and VZ are fine on all those criteria.
Pg 18: Online Brokers - Barron's Rankings, 2023
Broker Star Rating Notes
Interactive Brokers 5* IBKR Pro, IBKR Lite
Fidelity 5* Also Solo FidFolios, Fidelity Bloom
Schwab 4.5*
E*Trade 4* Also Power E*Trade
TD Ameritrade 4* Bought by Schwab. Last year in rankings.
More in the link,
ybbpersonalfinance.proboards.com/post/1063/thread
www.barrons.com/articles/interactive-fidelity-schwab-best-online-brokers-ratings-52d73cb3
Pg 22, FUNDS. Bad stock and bond markets in 2022 revealed differences in target-date funds’ (TDFs) glide-path strategies. Plain vanilla Vanguard TDFs continued to attract strong inflows. More complicated and varied T Rowe Price TDFs didn’t fare as well.
EXTRA, FUNDS. DEEP-VALUE stocks (bottom 20% of value universe) are so cheap now that they may be fine in the next recession within 1-2 years, so said Ben INKER (GMO). Mentioned are US PPADX and international GTMIX.
Pg 23, TECH TRADER. Apple/AAPL needs an AI strategy, not a new super expensive $3,499 VR headset (in 2024!). The 2-hr keynote at Apple’s Worldwide Developers Conference had no mention of generative AI. May be Apple’s long-term relationship with Alphabet/GOOGL is hampering its own development of AI. (But Apple has a history of entering markets late and then dominating them)
Pg 24: Sara DEVEREUX, Vanguard Fixed-Income Head. She joined Vanguard in 2019 from Goldman Sachs/GS. After a terrible 2022, BONDS are doing better in 2023; she wears a button, “Bonds Are Back”. She thinks that the US will have a shallow recession in 2023. Inflation fell from its peak but is still high; the core PCE may be +3.3% by 2023YE, +2.xx% by 2024YE. Many supply-related issues have been resolved, but the demand has to cool to tame wages and inflation. The labor market remains strong, but it is a lagging indicator. Due to many factors now, the unemployment rate may peak at 5% in the next recession. The FED may pause in June to assess the impact of its rapid tightening so far, but rates may go up later, and may remain higher for longer. The times now are opportunities for active bond investors (remember, she is at Vanguard!). She likes portfolios of high-quality bonds of short/intermediate duration with some HY and EM (consider those as equity equivalent); munis are also attractive. HY spreads are tight, but their absolute yields are OK. She is avoiding FR/BL as those are of lower quality. Vanguard funds mentioned are VCOBX (core), VCPAX (core plus), VGIT (Treasuries – intermediate), VMSIX (multisector), VTES (short-term muni).
Pg 27: Tax Loss Harvesting (TLH) can be used to offset up to $3K/yr in ordinary income after using up all of the gains; the excess losses can be carried over to future years. But the default cost-basis methods (FIFO for stocks and ETFs; average-cost method for OEFs) aren’t the best for TLH. Use specific share identification method to maximize TLH. Switching among the cost-basis methods may be tricky.
Pg 54, COMMENTARY. Good economic and market news hasn’t helped BIDEN in approval ratings. And a lot can go wrong between now and 2024 elections; Democrats did better in 2022 midterm elections. A strong job market doesn’t help those who have been laid off or are facing impending layoffs. Consumer confidence is low; retail prices are high. If grumpy public cannot be happy now, then when?
(EXTRAS from online Friday that didn’t make the weekend paper version)
See Column Topics. It seems some consolidation/rearrangement of Columns is going on.
LINK
REVIEW. SMALL-CAPs are moving ahead in June. The rally has broadened, and investors are less fearful of banks and cyclicals. While techs at 27% dominate the LC SP500, financials and industrials account for 34% of the SP SC 600.
PREVIEW. The official data on OIL supply and demand from the OPEC and the US EIA are not very reliable, and that may explain the disconnect between falling oil prices and the OPEC production cuts (beyond the extent indicated by economic factors). The oil futures market is in a slight backwardation now (Note that contango means good physical supply, backwardation means tight physical supply).
DATA THIS WEEK. Treasury budget on MONDAY; CPI (+4.2% yoy; core +5.2%), small business optimism index on TUESDAY; PPI (+1.5% only; core +2.9%) on WEDNESDAY; retail sales, capacity utilization, industrial production, business inventories on THURSDAY; UM consumer sentiment on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. TreeHouse Foods (THS; fwd P/E 17.5; Chicago (Oak Brook, IL) area pure play for lower cost private label food products for Amazon, Costco, Trader Joe’s/Aldo Nord, Aldi, etc; its costs have gone up due to inflation and supply-chain issues; it started and grew by acquisitions, so there are some integration issues; it may be recession resistant; it sold the meal-prep unit; investor day 6/13/23; CEO OAKLAND (Board Chair, 04/2023- ); pg 16);
NET Power (NPWR; carbon-capture/clean-energy business that has only demo plants so far but is building a large power plant for OXY; licenses carbon-capture technology for royalty revenues; it's a recent SPAC merger with an energy business of Danny RICE and family; beneficiary of the US infrastructure initiatives; pg 17).
BEARISH.
Pg 10: This week, the SEC hit the global Binance and the US-based Coinbase/COIN (short interest 22%) with lawsuits. The CRYPTO industry claims that it is unique or different, and new regulations are needed by the CFTC or the SEC or another agency. But the SEC is going ahead with its “regulation by ENFORCEMENT” under the 1933 “investment contract” provisions and other existing rules/laws. COIN also claims that the SEC approval of its direct-listing on Nasdaq in 04/2021 was an implicit approval by the SEC of most of its crypto activities (a shaky argument). The CFTC and the STATEs are also going after the crypto firms. Strangely, the CFTC also approved using leverage and borrowing for CBOE crypto futures (even the SEC doesn’t object to crypto futures and has approved several futures-based crypto ETFs, but none for “physical” cryptos). The SEC is also willing to let the CFTC regulate Bitcoin as a commodity, not a security; similar may also apply for Ethereum. Possible future paths include a truce/settlement among the SEC, the CFTC and cryptos; Congressional action (the crypto industry thinks that any such action would be more favorable); the remaining crypto industry in the US just moving overseas where regulations are more crypto-friendly (the EU, the HK, Dubai/Middle East). The crypto market believes that all this will somehow be sorted out and its post-ice-age recovery continued (Bitcoin is around $25.600). The global thinking seems to be that the cryptos got here without the US, and may continue to grow without the US, but it would be nice for the crypto world if the US, the largest capital market in the world, is a bit friendlier.
Pg 12. Shantanu NARAYEN, Adobe/ADBE CEO. Adobe successfully transitioned to subscription-based model. It is now embracing generative AI as people use its tools to create their own content with text, data, images, and videos. It’s now offering free-beta Firefly and other new tools, but that will change later to a combo free (basic) and subscription (advanced) services. He welcomes AI regulation, but the approach for everybody to “stop the AI” while new regulations develop won’t work. Adobe already prevents violations of copyrights or trademarks and has developed mechanisms to pay creators/developers. AI will hugely expand Adobe’s total addressable market (TAM).
Pg 17, INCOME INVESTING. Amazon/AMZN Wireless may not be much of a threat to AT&T/T and Verizon/VZ, but their stocks fell, and it may be a buying opportunity for dividend investors. Many AMZN ventures haven’t been successful (plane leasing, industrial distribution, PBM, etc), and there are huge regulatory hurdles for entry into telecom. Chris SEYEK (Wolfe Research) worries about dividends when payouts exceed 80% of net income or free cash flow, or debt/EBITDA >3.5. Both T and VZ are fine on all those criteria.
Pg 18: Online Brokers - Barron's Rankings, 2023
Broker Star Rating Notes
Interactive Brokers 5* IBKR Pro, IBKR Lite
Fidelity 5* Also Solo FidFolios, Fidelity Bloom
Schwab 4.5*
E*Trade 4* Also Power E*Trade
TD Ameritrade 4* Bought by Schwab. Last year in rankings.
More in the link,
ybbpersonalfinance.proboards.com/post/1063/thread
www.barrons.com/articles/interactive-fidelity-schwab-best-online-brokers-ratings-52d73cb3
Pg 22, FUNDS. Bad stock and bond markets in 2022 revealed differences in target-date funds’ (TDFs) glide-path strategies. Plain vanilla Vanguard TDFs continued to attract strong inflows. More complicated and varied T Rowe Price TDFs didn’t fare as well.
EXTRA, FUNDS. DEEP-VALUE stocks (bottom 20% of value universe) are so cheap now that they may be fine in the next recession within 1-2 years, so said Ben INKER (GMO). Mentioned are US PPADX and international GTMIX.
Pg 23, TECH TRADER. Apple/AAPL needs an AI strategy, not a new super expensive $3,499 VR headset (in 2024!). The 2-hr keynote at Apple’s Worldwide Developers Conference had no mention of generative AI. May be Apple’s long-term relationship with Alphabet/GOOGL is hampering its own development of AI. (But Apple has a history of entering markets late and then dominating them)
Pg 24: Sara DEVEREUX, Vanguard Fixed-Income Head. She joined Vanguard in 2019 from Goldman Sachs/GS. After a terrible 2022, BONDS are doing better in 2023; she wears a button, “Bonds Are Back”. She thinks that the US will have a shallow recession in 2023. Inflation fell from its peak but is still high; the core PCE may be +3.3% by 2023YE, +2.xx% by 2024YE. Many supply-related issues have been resolved, but the demand has to cool to tame wages and inflation. The labor market remains strong, but it is a lagging indicator. Due to many factors now, the unemployment rate may peak at 5% in the next recession. The FED may pause in June to assess the impact of its rapid tightening so far, but rates may go up later, and may remain higher for longer. The times now are opportunities for active bond investors (remember, she is at Vanguard!). She likes portfolios of high-quality bonds of short/intermediate duration with some HY and EM (consider those as equity equivalent); munis are also attractive. HY spreads are tight, but their absolute yields are OK. She is avoiding FR/BL as those are of lower quality. Vanguard funds mentioned are VCOBX (core), VCPAX (core plus), VGIT (Treasuries – intermediate), VMSIX (multisector), VTES (short-term muni).
Pg 27: Tax Loss Harvesting (TLH) can be used to offset up to $3K/yr in ordinary income after using up all of the gains; the excess losses can be carried over to future years. But the default cost-basis methods (FIFO for stocks and ETFs; average-cost method for OEFs) aren’t the best for TLH. Use specific share identification method to maximize TLH. Switching among the cost-basis methods may be tricky.
Pg 54, COMMENTARY. Good economic and market news hasn’t helped BIDEN in approval ratings. And a lot can go wrong between now and 2024 elections; Democrats did better in 2022 midterm elections. A strong job market doesn’t help those who have been laid off or are facing impending layoffs. Consumer confidence is low; retail prices are high. If grumpy public cannot be happy now, then when?
(EXTRAS from online Friday that didn’t make the weekend paper version)
See Column Topics. It seems some consolidation/rearrangement of Columns is going on.
LINK
.
