From Barron’s, April 8, 2024 (Part 2)
Apr 6, 2024 13:16:34 GMT
Capital, oldskeet, and 3 more like this
Post by yogibearbull on Apr 6, 2024 13:16:34 GMT
Pg 11. PREVIEW & REVIEW (consolidated). The FOMC Minutes on WEDNESDAY. The ECB policy decision is on THURSDAY. Q1 Earnings Season kicks off with several big banks reporting on FRIDAY.
GOLD is rallying on central bank buying (PBOC, etc) and geopolitical concerns. On some days, gold isn’t even correlated with dollar, so that is an indication of some unusual factors (typically, gold and dollar are inversely correlated). Silver is also rallying.
DATA THIS WEEK. CPI (+3.4% yoy, core +3.7%) on WEDNESDAY; PPI on THURSDAY; 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. Cruise operator Carnival (CCL; fwd P/E 14.9; 2024 may be the 1st profitable year after the pandemic; past cruise operational issues may be behind; balance sheet is improving; cruise demand is up but it takes time for new ships to be ordered and put into service; cruise business is also affected by the geopolitical situation and events such as Baltimore bridge collapse; pg12);
Disney (DIS; Iger prevailed over activist Peltz/Trian; several of Peltz’ proposals are already being implemented, the stock is up, and now can move on with its turnaround; DIS has only one class of stock and such activist attacks are less common with multiclass structures, but there are pros and cons; pg 13);
India (INDA; fwd P/E 23; always pricey, but investors have accepted that; it’s benefiting from the troubles in China; current geopolitical situation is favorable to India; regulators are trying to cool startup/IPO fervor; general elections are in phases, from April-June; pg 19).
BEARISH. Tesla (TSLA; fwd P/E 60; still pricey stock reacted badly to lower sales and rising inventories for Q1; the lower-cost Model 2 may be delayed at least to 2025 (Reuters said cancelled, but Musk denied); it must focus on launching ad campaigns to sell its current models because just cutting prices (and claiming that Musk is enough for the ads) has limits; Elon Musk is distracted with X/Twitter, AI outside of TSLA, etc; stock may have more downside, but there are support zones around the current price, then $148, then $100; pg 19).
Pg 14: Big changes in REAL ESTATE commissions after the court loss for trade association NAR would benefit several firms: COMP, CSGP, DOUG, EXPI, HOUS, RDFN, RMAX, Z. But there may be some initial confusion among buyers, sellers, and real estate firms. Losers will be the firms that benefitted from the old monopolistic, high (5-7%), seller-paid commissions.
Pg 20: Under attack by the US Government, will Apple/AAPL see the fate of Standard Oil or AT&T (that were broken up), or MSFT (that survived as-is) ? This is an unfolding story.
Pg 21, ECONOMY. While the US FED isn’t in rush to cut rates, the ECB may start cutting earlier in the EU; also, the BOE in UK. That would make the dollar stronger (it already is so at 100+). The economic situations are different in the US, EU, and UK. The SNB already cut rates in the last month. The central bankers are also getting frustrated by official inflation measures that don’t account for pandemic, geopolitics or what the consumers actually see.
Pg 22, Q&A/Interview. Matthias DOEPKE, LSE and NWU. The US FERTILITY rate has dropped to 1.7 children per woman (vs 2.12 in 2007). Any net population gain must come from immigration. The author has examined macroeconomic and demographic factors. As more women work, population growth slows initially, but eventually, as they retire, they add to the aging of population. Bad economic times also slow population growth. Support systems needed for aging population (Social Security, Medicare, Medicaid) create challenges for the Government. A tight labor market may also be from low population growth. Japan, China, and much of Europe suffer from the problems of low population growth. But some of these issues may be political because floodgates can be opened anytime to get more people from the overpopulated parts of the world. The US needs favorable family and childcare policies for successful women, and long-term immigration policies. AI and automation will help as those will create new types of jobs to replace some old jobs.
Pg 24, INCOME. INFRASTRUCTURE stocks are attractive for growth and income – cell towers (AMT, a REIT), renewable energy (NEE, BEP), toll-road and airport operators (Spanish FERVF), gas pipelines (Canadian TRP).
EXTRA, FUNDS. Uncertainties about the fed fund rates are headwinds for bonds. But they will benefit from rate cuts (maybe in June or later). Stick with short/intermediate durations for now, some credit risks with FR/BL BKLN, SRLN; dividend stocks (XLP, XLU).
Pg 25, TECH TRADER. A big earthquake in seismically active TAIWAN added to the worries of AI and chip industries that were already concerned about China-Taiwan-US relations. AI has created shortages of everything related, even for NVDA, MU, etc. AI software engineers are also in very high demand. It will take years for the semi-industry to shift away from its reliance on TSM and Taiwan. The news from INTC was so bad that it tumbled on the day of the Taiwan earthquake; its market-cap is only 8% of TSM and it’s also smaller than AMD or QCOM or AVGO. But not-ready-now INTC still has the best prospects of being a challenger to TSM.
Pg 50, OTHER VOICES. Patrick SPRINGER, Morgan Stanley/MS. This JAPANESE BULL MARKET may continue as it will benefit from close US-Japan relations and the current multipolar geopolitics. In looking at foreign alternatives to the expensive US, Europe is a mess, India is expensive (also part of BRICS), but Japan offers opportunities. It will benefit from friend-reshoring in semi and high tech. It doesn’t have a handful of dominant mega-caps. 45% of Topix2000 is without analyst coverage. It has become investor-friendly (several now offer dividends) and the Japanese Government has put pressure on companies to improve governance and performance. More than 100 companies have net cash that is 20% of their market-cap. Japanese small/mid-caps badly lag large-caps, even more so than in the US. There are risks in Japan, but also lot of potential.
Pg 51, RETIREMENT. You can still make 2023 IRA contributions of $6,500 (+$1,000 for 50+) by 4/15/24; 2024 IRA limits are $7,000 + $1,000 (50+). Make these contributions even if you aren’t sure where to invest – just use money-market or index funds or use DCA.
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
GOLD is rallying on central bank buying (PBOC, etc) and geopolitical concerns. On some days, gold isn’t even correlated with dollar, so that is an indication of some unusual factors (typically, gold and dollar are inversely correlated). Silver is also rallying.
DATA THIS WEEK. CPI (+3.4% yoy, core +3.7%) on WEDNESDAY; PPI on THURSDAY; 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. Cruise operator Carnival (CCL; fwd P/E 14.9; 2024 may be the 1st profitable year after the pandemic; past cruise operational issues may be behind; balance sheet is improving; cruise demand is up but it takes time for new ships to be ordered and put into service; cruise business is also affected by the geopolitical situation and events such as Baltimore bridge collapse; pg12);
Disney (DIS; Iger prevailed over activist Peltz/Trian; several of Peltz’ proposals are already being implemented, the stock is up, and now can move on with its turnaround; DIS has only one class of stock and such activist attacks are less common with multiclass structures, but there are pros and cons; pg 13);
India (INDA; fwd P/E 23; always pricey, but investors have accepted that; it’s benefiting from the troubles in China; current geopolitical situation is favorable to India; regulators are trying to cool startup/IPO fervor; general elections are in phases, from April-June; pg 19).
BEARISH. Tesla (TSLA; fwd P/E 60; still pricey stock reacted badly to lower sales and rising inventories for Q1; the lower-cost Model 2 may be delayed at least to 2025 (Reuters said cancelled, but Musk denied); it must focus on launching ad campaigns to sell its current models because just cutting prices (and claiming that Musk is enough for the ads) has limits; Elon Musk is distracted with X/Twitter, AI outside of TSLA, etc; stock may have more downside, but there are support zones around the current price, then $148, then $100; pg 19).
Pg 14: Big changes in REAL ESTATE commissions after the court loss for trade association NAR would benefit several firms: COMP, CSGP, DOUG, EXPI, HOUS, RDFN, RMAX, Z. But there may be some initial confusion among buyers, sellers, and real estate firms. Losers will be the firms that benefitted from the old monopolistic, high (5-7%), seller-paid commissions.
Pg 20: Under attack by the US Government, will Apple/AAPL see the fate of Standard Oil or AT&T (that were broken up), or MSFT (that survived as-is) ? This is an unfolding story.
Pg 21, ECONOMY. While the US FED isn’t in rush to cut rates, the ECB may start cutting earlier in the EU; also, the BOE in UK. That would make the dollar stronger (it already is so at 100+). The economic situations are different in the US, EU, and UK. The SNB already cut rates in the last month. The central bankers are also getting frustrated by official inflation measures that don’t account for pandemic, geopolitics or what the consumers actually see.
Pg 22, Q&A/Interview. Matthias DOEPKE, LSE and NWU. The US FERTILITY rate has dropped to 1.7 children per woman (vs 2.12 in 2007). Any net population gain must come from immigration. The author has examined macroeconomic and demographic factors. As more women work, population growth slows initially, but eventually, as they retire, they add to the aging of population. Bad economic times also slow population growth. Support systems needed for aging population (Social Security, Medicare, Medicaid) create challenges for the Government. A tight labor market may also be from low population growth. Japan, China, and much of Europe suffer from the problems of low population growth. But some of these issues may be political because floodgates can be opened anytime to get more people from the overpopulated parts of the world. The US needs favorable family and childcare policies for successful women, and long-term immigration policies. AI and automation will help as those will create new types of jobs to replace some old jobs.
Pg 24, INCOME. INFRASTRUCTURE stocks are attractive for growth and income – cell towers (AMT, a REIT), renewable energy (NEE, BEP), toll-road and airport operators (Spanish FERVF), gas pipelines (Canadian TRP).
EXTRA, FUNDS. Uncertainties about the fed fund rates are headwinds for bonds. But they will benefit from rate cuts (maybe in June or later). Stick with short/intermediate durations for now, some credit risks with FR/BL BKLN, SRLN; dividend stocks (XLP, XLU).
Pg 25, TECH TRADER. A big earthquake in seismically active TAIWAN added to the worries of AI and chip industries that were already concerned about China-Taiwan-US relations. AI has created shortages of everything related, even for NVDA, MU, etc. AI software engineers are also in very high demand. It will take years for the semi-industry to shift away from its reliance on TSM and Taiwan. The news from INTC was so bad that it tumbled on the day of the Taiwan earthquake; its market-cap is only 8% of TSM and it’s also smaller than AMD or QCOM or AVGO. But not-ready-now INTC still has the best prospects of being a challenger to TSM.
Pg 50, OTHER VOICES. Patrick SPRINGER, Morgan Stanley/MS. This JAPANESE BULL MARKET may continue as it will benefit from close US-Japan relations and the current multipolar geopolitics. In looking at foreign alternatives to the expensive US, Europe is a mess, India is expensive (also part of BRICS), but Japan offers opportunities. It will benefit from friend-reshoring in semi and high tech. It doesn’t have a handful of dominant mega-caps. 45% of Topix2000 is without analyst coverage. It has become investor-friendly (several now offer dividends) and the Japanese Government has put pressure on companies to improve governance and performance. More than 100 companies have net cash that is 20% of their market-cap. Japanese small/mid-caps badly lag large-caps, even more so than in the US. There are risks in Japan, but also lot of potential.
Pg 51, RETIREMENT. You can still make 2023 IRA contributions of $6,500 (+$1,000 for 50+) by 4/15/24; 2024 IRA limits are $7,000 + $1,000 (50+). Make these contributions even if you aren’t sure where to invest – just use money-market or index funds or use DCA.
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
