From Barron’s, September 20, 2021 (Part 2)
Sept 18, 2021 15:26:33 GMT
uncleharley, johntaylor, and 1 more like this
Post by yogibearbull on Sept 18, 2021 15:26:33 GMT
Pg 12-13. FOMC Statement and POWELL’s press conference on WEDNESDAY. BOJ monetary policy on WEDNESDAY.
REVIEW. Goldman Sachs/GS has a new ARK-like active ETF GTEK (ER 0.75%). However, it has small/mid-cap global tech leaders.
PREVIEW. Hopes are high for SOLAR energy but there are challenges related to manufacturing, production costs and shipping. YTD RUN -35%, FSLR +5%.
DATA THIS WEEK. Housing market index on MONDAY; housing starts on TUESDAY; existing home sales on WEDNESDAY; LEI on THURSDAY; new home sales on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Antiviral drugs for Covid-19 (GILD, PFE, MRK, AVIR, RHHBY; development of antiviral drugs has been overshadowed by unexpected early successes of Covid-19 vaccines but these drugs will be effective for primary or supplemental treatments; pg 19);
5 cheap mining stocks for cyclical growth (NGLOY, BHP, GLNCY, RIO, VALE; good dividends (fixed or variable); single-digit fwd P/Es; strong balance sheets; low capex needs/plans; hurt by concerns about slowing/stalling recovery; iron-ore and copper prices weak due to China concerns but aluminum, thermal coal prices remain strong; also improving in ESG areas; pg 28);
Macau casino stocks (major players WYNN, LVS have 50%+ revenues from Macau, MGM has smaller exposure; all hurt by new Chinese investigations of Macau casino operations, new laws being formulated to address illegal gambling activities, strengthen operating regulations, and enhance local ownerships; upcoming licensing renewals in June 2022 (granted in early 2000s) may be tough; but the outlook for these stocks is good in the hope that extreme outcomes are unlikely and the current selloff is an opportunity; pg 30);
Microsoft (MSFT; strong presence in cybersecurity; Vice Chairman and President Brad SMITH has a leading role; other areas of MSFT, or cybersecurity efforts by other companies, are not covered; pg 32).
BEARISH. See other stories.
Pg 15: MARKETS. With so much liquidity around from easy monetary policy, can there be a correction this September (half gone) and October? There are many dip-buyers and fence-sitters (waiting to deploy cash). The FED QE is $120 billion/mo; global QE total is $300 billion/mo – that is lot of money being pumped into the global financial system. Market-melt-up is as plausible as melt-down. Keep an eye on the Fed and don’t worry about much else to follow. CONCERNS include rising Covid-19 cases; current inflation (transitory or not); budget and debt-ceiling fights in DC; QE tapering soon; higher taxes; Fed Chair appointment (new) or reappointment (POWELL), etc. Well, so what’s new? Investors have ignored these so far. There has to be some trigger to alter the current viewpoints, some external event, or a policy pileup in DC. Note that the House votes on infrastructure on September 27, and the debt-ceiling has be resolved in October.
Pg 26: Daniel YERGIN (74), IHS Markit. Authored several books on energy including Prize (2008) and recent The New Map: Energy, Climate, and the Clash of Nations (2020). OIL/GAS demand will peak but they will remain important sources of energy as RENEWABLES become dominant. Oil companies have become more disciplined and are not increasing oil/gas capex even with oil prices strong; some are diversifying into alternate energy. Oil companies are attractive with crude oil in $60-80 range. Headwinds include Covid-19, US-CHINA relations, geopolitical events. Chinese import 75% of their oil and most of it goes through South China Sea and that may be behind their actions in that area. China also remains central to global supply-chains and any changes to that will require time (years) and huge capital investments elsewhere. Public isn’t aware of this, but there are significant US oil/gas exports to China now, and if the US-China relations get worse, they may flip to Russia. FWIW, it would be hard to break up Russia-China relations (so pointless or foolish for the US to try); it was formerly based in Marx and Lenin but is now firmly grounded on oil/gas and other economic considerations. The US-China relations have been changing for a while, most notably since 2015. China tends to act when it is displeased (examples include Australia, Canada, Japan, etc) and so far it has not reacted much against the US. Russia is worried about the US SHALE revolution that has turned out to be unique to the US (in spite of others trying to duplicate it). Role of Middle East and OPEC has become less central as global oil producer/supplier. The US role is also shifting in the Middle East and we see Saudi Arabia becoming more friendly with Russia (that now drives OPEC+).
Pg 33: TECH TRADER. Apple/AAPL Fall product launch week was boring (new iPhone 13, upgrades to iPad and Apple Watch). However, earnings will continue to remain strong even as sales growth will slow. Expect aggressive promos with generous trade-ins and higher data use with 5G. Stock may rebound.
Outlook for Cisco/CSCO remains bullish post-earnings release.
Pg 34: FUNDS. SCHWAB has raised FEES for mutual funds from Dodge & Cox, Fidelity, Vanguard on its TF platform ($74.95 to buy vs $49.95 for other firms; no fee on sale). Schwab says that most firms with funds on its platform (NTF or TF) pay fees for recordkeeping and shareholder servicing, and it will now charge more for those who won’t pay. Fidelity has a similar policy. Some firms (MS, etc) just drop funds from the non-paying firms. Big fund firms with their own huge marketing arms tend not to pay fees to 3rd party fund platforms (and Schwab, with its limited mutual fund offerings, cannot make reciprocal deals). This is FEE-WAR in reverse developing so soon after the earlier fee-war to zero commissions for stocks and ETFs drove huge industry consolidation (gone are TD Ameritrade, E*Trade, USAA funds, OppenheimerFunds, etc, and State Street funds may be next (rumors are that Invesco/IVZ is interested)). These fee policies will encourage more INVESTORS to shift from mutual funds to ETFs that are commission-free at most brokerages. Financial ADVISORS are watching these trends with concerns, but big financial advisors are often offered special deals on fees. (A comprehensive treatment of an old story)
Pg 35: INCOME. Big US companies will be boosting DIVIDENDS and BUYBACKS. Many companies restructured during the pandemic, earnings have recovered with economy reopening, and they are now flush with cash. The SHAREHOLDER YIELD (%dividend yield + % buyback) will rise gradually over several quarters.
(EXTRAS from online Friday that didn’t make the weekend paper version)
None
LINK
REVIEW. Goldman Sachs/GS has a new ARK-like active ETF GTEK (ER 0.75%). However, it has small/mid-cap global tech leaders.
PREVIEW. Hopes are high for SOLAR energy but there are challenges related to manufacturing, production costs and shipping. YTD RUN -35%, FSLR +5%.
DATA THIS WEEK. Housing market index on MONDAY; housing starts on TUESDAY; existing home sales on WEDNESDAY; LEI on THURSDAY; new home sales on FRIDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Antiviral drugs for Covid-19 (GILD, PFE, MRK, AVIR, RHHBY; development of antiviral drugs has been overshadowed by unexpected early successes of Covid-19 vaccines but these drugs will be effective for primary or supplemental treatments; pg 19);
5 cheap mining stocks for cyclical growth (NGLOY, BHP, GLNCY, RIO, VALE; good dividends (fixed or variable); single-digit fwd P/Es; strong balance sheets; low capex needs/plans; hurt by concerns about slowing/stalling recovery; iron-ore and copper prices weak due to China concerns but aluminum, thermal coal prices remain strong; also improving in ESG areas; pg 28);
Macau casino stocks (major players WYNN, LVS have 50%+ revenues from Macau, MGM has smaller exposure; all hurt by new Chinese investigations of Macau casino operations, new laws being formulated to address illegal gambling activities, strengthen operating regulations, and enhance local ownerships; upcoming licensing renewals in June 2022 (granted in early 2000s) may be tough; but the outlook for these stocks is good in the hope that extreme outcomes are unlikely and the current selloff is an opportunity; pg 30);
Microsoft (MSFT; strong presence in cybersecurity; Vice Chairman and President Brad SMITH has a leading role; other areas of MSFT, or cybersecurity efforts by other companies, are not covered; pg 32).
BEARISH. See other stories.
Pg 15: MARKETS. With so much liquidity around from easy monetary policy, can there be a correction this September (half gone) and October? There are many dip-buyers and fence-sitters (waiting to deploy cash). The FED QE is $120 billion/mo; global QE total is $300 billion/mo – that is lot of money being pumped into the global financial system. Market-melt-up is as plausible as melt-down. Keep an eye on the Fed and don’t worry about much else to follow. CONCERNS include rising Covid-19 cases; current inflation (transitory or not); budget and debt-ceiling fights in DC; QE tapering soon; higher taxes; Fed Chair appointment (new) or reappointment (POWELL), etc. Well, so what’s new? Investors have ignored these so far. There has to be some trigger to alter the current viewpoints, some external event, or a policy pileup in DC. Note that the House votes on infrastructure on September 27, and the debt-ceiling has be resolved in October.
Pg 26: Daniel YERGIN (74), IHS Markit. Authored several books on energy including Prize (2008) and recent The New Map: Energy, Climate, and the Clash of Nations (2020). OIL/GAS demand will peak but they will remain important sources of energy as RENEWABLES become dominant. Oil companies have become more disciplined and are not increasing oil/gas capex even with oil prices strong; some are diversifying into alternate energy. Oil companies are attractive with crude oil in $60-80 range. Headwinds include Covid-19, US-CHINA relations, geopolitical events. Chinese import 75% of their oil and most of it goes through South China Sea and that may be behind their actions in that area. China also remains central to global supply-chains and any changes to that will require time (years) and huge capital investments elsewhere. Public isn’t aware of this, but there are significant US oil/gas exports to China now, and if the US-China relations get worse, they may flip to Russia. FWIW, it would be hard to break up Russia-China relations (so pointless or foolish for the US to try); it was formerly based in Marx and Lenin but is now firmly grounded on oil/gas and other economic considerations. The US-China relations have been changing for a while, most notably since 2015. China tends to act when it is displeased (examples include Australia, Canada, Japan, etc) and so far it has not reacted much against the US. Russia is worried about the US SHALE revolution that has turned out to be unique to the US (in spite of others trying to duplicate it). Role of Middle East and OPEC has become less central as global oil producer/supplier. The US role is also shifting in the Middle East and we see Saudi Arabia becoming more friendly with Russia (that now drives OPEC+).
Pg 33: TECH TRADER. Apple/AAPL Fall product launch week was boring (new iPhone 13, upgrades to iPad and Apple Watch). However, earnings will continue to remain strong even as sales growth will slow. Expect aggressive promos with generous trade-ins and higher data use with 5G. Stock may rebound.
Outlook for Cisco/CSCO remains bullish post-earnings release.
Pg 34: FUNDS. SCHWAB has raised FEES for mutual funds from Dodge & Cox, Fidelity, Vanguard on its TF platform ($74.95 to buy vs $49.95 for other firms; no fee on sale). Schwab says that most firms with funds on its platform (NTF or TF) pay fees for recordkeeping and shareholder servicing, and it will now charge more for those who won’t pay. Fidelity has a similar policy. Some firms (MS, etc) just drop funds from the non-paying firms. Big fund firms with their own huge marketing arms tend not to pay fees to 3rd party fund platforms (and Schwab, with its limited mutual fund offerings, cannot make reciprocal deals). This is FEE-WAR in reverse developing so soon after the earlier fee-war to zero commissions for stocks and ETFs drove huge industry consolidation (gone are TD Ameritrade, E*Trade, USAA funds, OppenheimerFunds, etc, and State Street funds may be next (rumors are that Invesco/IVZ is interested)). These fee policies will encourage more INVESTORS to shift from mutual funds to ETFs that are commission-free at most brokerages. Financial ADVISORS are watching these trends with concerns, but big financial advisors are often offered special deals on fees. (A comprehensive treatment of an old story)
Pg 35: INCOME. Big US companies will be boosting DIVIDENDS and BUYBACKS. Many companies restructured during the pandemic, earnings have recovered with economy reopening, and they are now flush with cash. The SHAREHOLDER YIELD (%dividend yield + % buyback) will rise gradually over several quarters.
(EXTRAS from online Friday that didn’t make the weekend paper version)
None
LINK