Cover story: A move by the S&P and MSCI to reconstitute their indexes by moving AMZN to consumer discretionary and FB and GOOGL to communications services and out of the tech sector will have a ripple effect throughout the professional money-management industry, and could mean big changes for investors’ portfolios.
Features: 1) With changes being made to how stocks are classified by industry, the tech sector is about to get smaller, which could help investors, partly by cutting out short-term noise; 2) Positive on KSU: Railway will benefit from the fact that the U.S. trade relationship with Mexico isn’t set to substantially change, allowing it to continue transporting goods in both directions across the border; 3) Two years after starting as a new kind of real estate company, Compass has reversed course and embraced a traditional model using agent commissions, but says its technology boosts effectiveness.
Tech Trader: Though most co-CEO efforts during the past few decades have failed, CRM’s move to have chief operating officer Keith Block share the CEO role with Marc Benioff has so far been a success by nearly every measure.
Trader: Investors have approached uncertainty around Nafta by buying tech giants such as AAPL and MSFT, while other tech shares—including ADSK, ANET, and SPLK—have been rallying on good news; Cautious on BBY: Investors’ reaction to the retailer’s earnings says more about market expectations than the results themselves; Cautious on DLTR: The recent share drop can’t solely be attributed to the discount retailer’s one cent miss on net income per share—it reflects other concerns.
Profile: Michael Lippert, manager of the Baron Opportunity fund, invests in innovation through companies instigating change or benefiting from it (top 10 holdings: AMZN, MSFT, GOOG, GWRE, IT, AAPL, CSGP, TSLA, ACXM, EA).
Interview: Mariana Mazzucato, a professor of economics at University College London, talks about the limitations of conventional views of value and other conclusions from her recent book, “The Value of Everything: Making and Taking in the Global Economy.”
Follow-Up: The political heat on FB and TWTR “has reached white-hot intensity over their susceptibility to foreign interests digitally manipulating their vast platforms,” and for now Washington may have the upper hand.
European Trader: Fears about the Brexit may start to grow as investors in the U.S. and U.K. return from their summer holidays, says Helen Thomas of Blonde Money.
Emerging Markets: The new trade deal with Mexico led its markets and currency to dip, because a Nafta agreement was already priced in.
Commodities: A serious threat to hog supplies in China, the world’s largest pork consumer, could lead to a bounce-back in hog prices, which are down 28% year to date.
Streetwise: Columnist Mary Childs discusses the debate about whether a hedge fund such as Aurelius Capital Management can ever be justified in forcing a perfectly functional company into bankruptcy—in this case, Windstream Holdings.
