Saturday, March 3, 2018

Barrons weekend update

Barrons weekend update: positive feature on IVZ; cautious on VMW 
Cover story: “Abetted by a robust job market, low interest rates, and beneficial demographics, the nation’s housing market has been enjoying a Goldilocks sort of recovery—neither too cold nor too hot (with the exception of several coastal markets), but just about right”—and the rebound is far from over. 

Features: 1) The high end of the housing market has excess inventory, but demand for less-expensive homes remains strong, and the Southeast is likely to see some of the largest price gains; 2) Strong Q4 results from some retailers, including KSS and M, have given investors hope, but a full rebound in the sector could take a few more quarters, says Brian Tunick of RBC Capital Markets; 3) Positive on IVZ: Company could be a long-term beneficiary of the next bear market because of the firm’s “bread-and-butter” factor investing strategy, and its penchant for buying weaker players during downturns; 4) Cautious on VMW: VMware investors aren’t happy about a potential deal with DVMT, because it would link a thriving, cash-rich company with a highly leveraged one, and the move is likely to generate strong opposition from shareholders; 5) Greg Fleming of Rockefeller Capital Management turned a small family office into a modern, independent financial services company, which for the first time will offer advisory services on corporate transactions. 

Tech Trader: The big battle between the U.S. and China won’t be over tariffs, but over the future of wireless technology—more specifically, so-called 5G—with Chinese giant Huawei poised to dominate the wireless network sector. 

Trader: Brian Nick of TIAA Investments sees the S&P 500 closing the year somewhere between 2800 and 2900 as earnings continue to rise but P/E ratios fall; Cautious on LB: Company reported better-than-expected Q4 earnings, but it still faces a number of problems, including changing shopping trends, and shares could drop further; Cautious on Spotify: Aside from greater competition from AAPL’s streaming service, Spotify’s new family plan poses a risk, and growth is coming at an increased cost. 

Interview: Former FDIC chairman Sheila Bair shares her views on China’s large debt, trouble spots in the U.S. financial system and economy, and what regulators should do about bitcoin. 

Profile: Bill Costello, co-manager of the Westwood SmallCap fund, looks for growth contributors that the market has underestimated (top 10 holdings: APOG, MCS, AIN, TWNK, CPE, INN, DEA, KMPR, FIX, SSB). 

European Trader: In Italy’s elections, the worst case scenario would be an anti-euro coalition government, but the most likely one will be a traditional coalition government with a weak mandate. 

Asian Trader: Investors remain skeptical about Japan’s slow-growth economy, but 25 years after its stock market bubble burst, things are looking up for Japanese equities. 

Emerging Markets: When Kenya, which faces a host of political problems, recently issued bonds, it had seven times the demand it needed—and it’s among several exotic sovereigns finding favor in the markets. 

Commodities: Many of the key drivers that led investors to be bullish on silver last year are still in play for 2018, especially rising inflationary pressures and a weaker U.S. dollar. 

Streetwise: For investors, the possibility that Chinese president Xi Jinping will extend his reign and modernize the country is a good thing, and he appears to be steering the Chinese economy in the right direction.