Sunday, April 15, 2018

Barrons weekend update

Barrons weekend update: positive feature on UBS 
Cover story: Complex supply chains “are under threat from a wave of protectionism playing out around the world, most dramatically between the U.S. and China”; The potential for billions of dollars in tariffs has already rippled through the global economy and could have an impact on commerce for years; “A decades-long drive toward globalization may have hit a wall just as the world’s leading economic powers are growing in near lockstep.” 

1) As three-quarters of S&P 500 companies report earnings during the next three weeks, the growth rate will be inflated by corporate tax cuts and higher oil prices, but results are still likely to impress; 
2) Barron’s latest Big Money Poll found that with the recent decline in stocks, a growing number of money managers say the market is undervalued, and they are bullish on the U.S., emerging markets, financials, and tech; 
3) Positive on USB: The firm has consistently generated the highest returns among the top 10 banks, but investors have punished it for earnings outlooks and government sanctions—a reaction that looks overdone. 

Tech Trader: Though FB may be a formidable business, “it is ultimately just a moment in the long evolution of the Internet,” says Tiernan Ray—and its moment will pass; New social sites that rely on blockchain, which is decentralized and allows users to control their data, could well supplant Facebook at some point. 

Trader: A doubling of the VIX doesn’t have to be a harbinger of future pain, says Leo Chen of Cumberland Advisors—but it is unlikely to return to the ultralow levels of 2017; Oil prices, which hit their highest levels in three and a half years this past week, may be high enough to make oil company stocks attractive again; Cautious on CMI: The maker of truck engines and parts is an unacknowledged Internet play because of the role trucks play in e-commerce, and it has a strong balance sheet—though a global trade war could pose problems. 

Interview: Ken Allen, manager of the T. Rowe Price Science and Technology fund, looks for what the market has missed when it unloads shares of a company generating lots of cash (picks: FB, GOOGL, AMZN, TSLA; pans: AAPL, NFLX). 

Profile: Charlie Dreifus, manager of the Royce Special Equity fund, takes a risk-averse investment approach, though this sometimes means the fund trails during bull markets (top 10 holdings: PLCE, UNF, AVX, SMP, SCHL, HUBB, MDP, TER, CPLA, WMK). 

Follow-Up: Positive on RGNX: NVS’s takeover bid for AVXS looks bullish for the company, which makes the viral delivery mechanism for AveXis’ marquee treatment for severe spinal muscular atrophy. 

European Trader: Sweden’s big-bank stocks have taken a hit over concerns about their exposure to the country’s cooling housing market, but the selloff appears overdone and could present an opportunity. 

Emerging Markets: The market’s growing interest in Mexican stocks is based on the belief Nafta will live on and Mexico’s next likely president, left-leaning Andres Manuel Lopez Obrador, will shift to the center. 

Commodities: Most analysts believe the boost in aluminum prices—the result of U.S. sanctions on Russia, including Rusal—won’t last much longer than the rift with Moscow, though its duration is hard to predict. 

Streetwise: There is reason to be skeptical of megarich benefactors such as Stephen Schwarzman of BX swooping in to save education, especially when it involves public schools.