From Barron’s, March 18, 2024 (Part 2)
Mar 16, 2024 12:34:51 GMT
Chahta, fishingrod, and 7 more like this
Post by yogibearbull on Mar 16, 2024 12:34:51 GMT
Pg 10. PREVIEW & REVIEW (consolidated). The BOJ policy announcement on TUESDAY. The FOMC Statement and POWELL’s presser on WEDNESDAY (look for hints for possible June FOMC rate cut). The BOE policy announcement on THURSDAY.
BITCOIN HALVING happens every 4 years (the next is in April), and then the reward for mining a block is cut into half. This is bad for Bitcoin miners, but good for Bitcoin itself. The maximum possible Bitcoin are 21 million, and now 19.6 million are outstanding. But some have been lost in cyberspace (lost/forgotten keys). Some are held passively by the institutions, the US Government (from confiscations), and will also be mostly so by the new spot-Bitcoin ETFs (GBTC, IBIT, FBTC, etc). After the past halvings, Bitcoin rallied sharply.
DATA THIS WEEK. Housing starts on TUESDAY; 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. Disney (DIS; Nelson PELTZ/Trian controls $3 billion in stock in a partnership with Isaac PERLMUTTER and is demanding 2 board seats and several changes, but the CEO Bob IGER is resisting; IGER is cutting costs, making many changes, including some that Peltz wants; ESPN is a trouble spot and needs to make the transition from cable to full streaming (not just ESPN+); recent rebound in stock makes Iger’s hand stronger; DIS fired Peltz/Trian as pension fund manager in 2021, so there may be more to this fight; pg 11);
Energy beneficiaries from AI (AES, SRE, SIEGY; data center companies EQIX, VRT; electricity demand from AI will be high, but the bottleneck may be the transmission grid infrastructure; pg 13);
PayPal (PYPL; fwd P/E 11.5, low for fintech, peaked at 57.3x in 07/2021; buybacks; its Venmo app is popular; stock peaked in 2021; recent earnings misses and disappointing guidance; former highflyer is attractive on valuation and potential; new CEO CHRISS; pg 14);
Japan (Nikkei 225 rally to new highs has legs; in 10 years, it rose +217% in yen, +118% in dollars, vs +237% for SP500; Nikkei 225 peaked in 1989; Japan today is quite different and much more shareholder-friendly than in the past; cited are managers of HJPNX, MJFOX; several Japanese stocks are also mentioned; pg 15).
BEARISH.
Pg 17, ECONOMY. Why is the public unhappy when the Government reports good data on inflation (CPI, PPI, PCE) ? First, lower inflation doesn’t mean lower prices, so there is sticker shock. Second, the CPI now doesn’t capture what people pay for housing and personal loans. In 1983, the true housing costs were replaced with the fictitious owners’ equivalent rent (OER), and ever since, the CPI and housing have been on different cycles. And why are auto-loans excluded from the CPI ? If these were properly accounted for, the true CPI may be 2x-3x the reported CPI. Consumers also suffered from low interest rates on their savings during the years of ZIRP. Stock market at/near highs reduces the pain some, but not enough.
Pg 24, Q&A/Interview. Dana TELSEY, Telsey Advisory Group (2006- ). ONLINE shopping boomed during the pandemic, but IN-STORE shopping is rebounding now – the future is for a HYBRID retail model. Shopping is a personal experience that cannot be without in-store inspections and interactions, and then there is window-shopping just for fun and/or relaxation. In fact, a pattern developing is for online looking, and then online ordering for in-store pickups, or buying in the store itself. The direct-to-consumer (DTC) model has limits. Successful retailers are tapping into these trends, but many retailers will be left behind (just look at the lists of retail Chapter 11 or 7 filings). The US consumer is healthy, the job market is strong, inflation is moderating (but lower inflations doesn’t mean lower prices). If HOUSING improves, that will make retail even better. AI is having an impact – stores can make adjustments faster. She likes BBWI, BURL, RL, TJX, ANF, DECK.
Pg 26, FUNDS. Dividend-growth LBSAX (ER 0.90%; no-load/NTF at Fidelity, Schwab) / GSFTX (ER 0.65%) holds about 80 stocks and has the AUM of $39.7 billion. It reopened in November 2023 (and also had a manager change in June 2023). It’s compared in passing (U/D CR) with the current-dividend VYM (not div-gr VIG). (By @lewisbraham at MFO)
EXTRA, FUNDS. A recent report showed that ACTIVE funds lagged PASSIVE funds AGAIN. But notable exceptions were bond and real estate categories. Active funds may do better in inefficient areas. (Use lower-cost active funds)
Pg 27, TECH TRADER. Even with the recent rally, ORCL is among the cheapest tech stocks with fwd P/E 19 and low PEG. ORCL and MSFT had IPOs in 1986 just 1 day apart with much hoopla, and one can see where they are in 2024. ORCL has become a cloud giant that is gaining on AWS/AMZN, Azure/MSFT, Google Cloud. AI will benefit its ERP systems. Larry Ellison owns 42% of stock. An announcement with NVDA is pending.
Pg 54, OTHER VOICES. Sander GERBER (Hudson Bay Capital) and Stephen MIRAN (Manhattan Institute, NYC think tank & formerly, the US Treasury). A case is made AGAINST the FED rate cuts. Inflation is high and sticky, the US economy is growing strongly, the neutral rate may be higher than some current believe, so the current fed fund rate may not be restrictive enough. Other factors to consider are that deglobalization is expensive and is contributing to inflation, AI is capex intensive (unlike prior software-driven booms), population is rising from loose US border policies, housing has cooled but many consumer mortgages are below 4%, corporations have refinanced at lower rates. And there is fiscal recklessness in DC on budget deficit and debt that may call for TIGHTER monetary policies, not loose. (Well, raising rates may be difficult, but the Fed may keep rates higher for longer, much longer. Tune in on WEdnesday)
Pg 55, RETIREMENT. Future of SOCIAL SECURITY will be impacted by the outcome of BIDEN-TRUMP rematch. While both have been vague on details, Biden’s proposals will fix it with more taxes (higher payroll tax rates or limits), while Trump’s will make benefit delays or cuts, or add means testing. The Social Security Trust Fund (well, there isn’t any; it’s just a Treasury IOU) will run out in 2033 (meaning that the SSA claim on Treasury IOU will drop from 100% to 77%). But people should make the decision to take it early (62), at FRA (66-67), or late (70) based on their personal situations, and not worry about the future of the SSA.
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.
LINK
BITCOIN HALVING happens every 4 years (the next is in April), and then the reward for mining a block is cut into half. This is bad for Bitcoin miners, but good for Bitcoin itself. The maximum possible Bitcoin are 21 million, and now 19.6 million are outstanding. But some have been lost in cyberspace (lost/forgotten keys). Some are held passively by the institutions, the US Government (from confiscations), and will also be mostly so by the new spot-Bitcoin ETFs (GBTC, IBIT, FBTC, etc). After the past halvings, Bitcoin rallied sharply.
DATA THIS WEEK. Housing starts on TUESDAY; 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. Disney (DIS; Nelson PELTZ/Trian controls $3 billion in stock in a partnership with Isaac PERLMUTTER and is demanding 2 board seats and several changes, but the CEO Bob IGER is resisting; IGER is cutting costs, making many changes, including some that Peltz wants; ESPN is a trouble spot and needs to make the transition from cable to full streaming (not just ESPN+); recent rebound in stock makes Iger’s hand stronger; DIS fired Peltz/Trian as pension fund manager in 2021, so there may be more to this fight; pg 11);
Energy beneficiaries from AI (AES, SRE, SIEGY; data center companies EQIX, VRT; electricity demand from AI will be high, but the bottleneck may be the transmission grid infrastructure; pg 13);
PayPal (PYPL; fwd P/E 11.5, low for fintech, peaked at 57.3x in 07/2021; buybacks; its Venmo app is popular; stock peaked in 2021; recent earnings misses and disappointing guidance; former highflyer is attractive on valuation and potential; new CEO CHRISS; pg 14);
Japan (Nikkei 225 rally to new highs has legs; in 10 years, it rose +217% in yen, +118% in dollars, vs +237% for SP500; Nikkei 225 peaked in 1989; Japan today is quite different and much more shareholder-friendly than in the past; cited are managers of HJPNX, MJFOX; several Japanese stocks are also mentioned; pg 15).
BEARISH.
Pg 17, ECONOMY. Why is the public unhappy when the Government reports good data on inflation (CPI, PPI, PCE) ? First, lower inflation doesn’t mean lower prices, so there is sticker shock. Second, the CPI now doesn’t capture what people pay for housing and personal loans. In 1983, the true housing costs were replaced with the fictitious owners’ equivalent rent (OER), and ever since, the CPI and housing have been on different cycles. And why are auto-loans excluded from the CPI ? If these were properly accounted for, the true CPI may be 2x-3x the reported CPI. Consumers also suffered from low interest rates on their savings during the years of ZIRP. Stock market at/near highs reduces the pain some, but not enough.
Pg 24, Q&A/Interview. Dana TELSEY, Telsey Advisory Group (2006- ). ONLINE shopping boomed during the pandemic, but IN-STORE shopping is rebounding now – the future is for a HYBRID retail model. Shopping is a personal experience that cannot be without in-store inspections and interactions, and then there is window-shopping just for fun and/or relaxation. In fact, a pattern developing is for online looking, and then online ordering for in-store pickups, or buying in the store itself. The direct-to-consumer (DTC) model has limits. Successful retailers are tapping into these trends, but many retailers will be left behind (just look at the lists of retail Chapter 11 or 7 filings). The US consumer is healthy, the job market is strong, inflation is moderating (but lower inflations doesn’t mean lower prices). If HOUSING improves, that will make retail even better. AI is having an impact – stores can make adjustments faster. She likes BBWI, BURL, RL, TJX, ANF, DECK.
Pg 26, FUNDS. Dividend-growth LBSAX (ER 0.90%; no-load/NTF at Fidelity, Schwab) / GSFTX (ER 0.65%) holds about 80 stocks and has the AUM of $39.7 billion. It reopened in November 2023 (and also had a manager change in June 2023). It’s compared in passing (U/D CR) with the current-dividend VYM (not div-gr VIG). (By @lewisbraham at MFO)
EXTRA, FUNDS. A recent report showed that ACTIVE funds lagged PASSIVE funds AGAIN. But notable exceptions were bond and real estate categories. Active funds may do better in inefficient areas. (Use lower-cost active funds)
Pg 27, TECH TRADER. Even with the recent rally, ORCL is among the cheapest tech stocks with fwd P/E 19 and low PEG. ORCL and MSFT had IPOs in 1986 just 1 day apart with much hoopla, and one can see where they are in 2024. ORCL has become a cloud giant that is gaining on AWS/AMZN, Azure/MSFT, Google Cloud. AI will benefit its ERP systems. Larry Ellison owns 42% of stock. An announcement with NVDA is pending.
Pg 54, OTHER VOICES. Sander GERBER (Hudson Bay Capital) and Stephen MIRAN (Manhattan Institute, NYC think tank & formerly, the US Treasury). A case is made AGAINST the FED rate cuts. Inflation is high and sticky, the US economy is growing strongly, the neutral rate may be higher than some current believe, so the current fed fund rate may not be restrictive enough. Other factors to consider are that deglobalization is expensive and is contributing to inflation, AI is capex intensive (unlike prior software-driven booms), population is rising from loose US border policies, housing has cooled but many consumer mortgages are below 4%, corporations have refinanced at lower rates. And there is fiscal recklessness in DC on budget deficit and debt that may call for TIGHTER monetary policies, not loose. (Well, raising rates may be difficult, but the Fed may keep rates higher for longer, much longer. Tune in on WEdnesday)
Pg 55, RETIREMENT. Future of SOCIAL SECURITY will be impacted by the outcome of BIDEN-TRUMP rematch. While both have been vague on details, Biden’s proposals will fix it with more taxes (higher payroll tax rates or limits), while Trump’s will make benefit delays or cuts, or add means testing. The Social Security Trust Fund (well, there isn’t any; it’s just a Treasury IOU) will run out in 2033 (meaning that the SSA claim on Treasury IOU will drop from 100% to 77%). But people should make the decision to take it early (62), at FRA (66-67), or late (70) based on their personal situations, and not worry about the future of the SSA.
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.
LINK
