Cover story: Three out of four of GS’s businesses are thriving, but trading—the most important part of which is fixed income, currency, and commodities—has suffered; The bank has kept much of its FICC team intact in the belief the down cycle will turn, and Goldman is more diversified than it was before the financial crisis, making today a good time to buy shares.
Features: 1) After a year of disappointing IPOs from firms such as SNAP and APRN, there is growing optimism now that Dropbox and Spotify are preparing to go public, and some venture capitalists believe this will be the best year for offerings since 2014; 2) Cautious on SNA: Company’s in-house financing arm has boosted sales at a fast clip, despite a decrease in the number of U.S. auto mechanics, but investors are concerned about slowing organic growth in its main tools division; 3) The U.S. economic expansion may be getting a little long in the tooth, but capital spending has picked up and shows signs of staying strong this year, a situation in the works long before the GOP tax overhaul.
Tech Trader: Conventional wisdom says the chip sector is a good place to pick a sure thing in tech, given its importance as the backbone of the industry; But for investors who want to look beyond it, three strong picks are auto-parts supplier APTV, semiconductor maker STM, and motor manufacturer Nidec.
Trader: Consumers are pouring money into equities, a big change from when they withdrew $9B during the last six months of the year, a situation that isn’t worrisome—at least not yet; Cautious on VRTX: Investors may be disappointed when the company reports earnings Wednesday, but it is well prepared for the months ahead, says Guggenheim analyst Tony Butler; A move by arbitrageurs long on DVMT and short on the VMW shares it tracks to unwind trades on the mistaken belief the spread was too wide has created one of the better trading opportunities of the year.
Interview: Marvin Schwartz, head of Neuberger Berman’s Straus Group, talks about tax reform, the outlook for oil, and the elevated levels of today’s market (picks: DVN, JPM, LNC, FDX).
Small Caps: Small company investors may want to switch their focus from the Russell 2000 to the lesser-known S&P SmallCap 600, which has consistently performed better during the past two decades.
Follow-Up: Cautious on FSLR: Solar power will continue to get cheaper and supplant fuel-generated electricity, but investors should monitor how Trump administration tariffs disrupt the market in the short term.
Asian Trader: Vietnam was the best-performing market in Asia last year, with traditional manufacturing, consumer, and utility stocks driving the rally, and its market continues to look strong in 2018.
Emerging Markets: Turkey’s economic stimulus helped pull it out of a recession, “but the binge is flashing signs of an incipient hangover,” with inflation near 12% and a current account deficit near 5.5% of GDP.
Commodities: “The outlook for lithium continues to shine, even as lithium-related stocks started off the year on a sour note”; cobalt should also benefit from its use in lithium-ion batteries.
Streetwise: “Blockchain has taken on the same magical quality as bitcoin, with companies using it as a buzzword they know will appeal to investors—a turbocharger to turn a boring business into a rocket ship.”