Cover story: Positive on JPM: Under chief Jamie Dimon, the bank “has become the world’s top bank, with the industry’s deepest management talent and highest returns,” and its strengths are underappreciated, especially in consumer banking and wealth management, two resilient areas; The bank is expected to boost its quarterly payout to about 90 cents, after the Federal Reserve releases the results of its annual stress tests for major banks later this month.
Tech Trader: Cautious on AAPL, AMZN, FB, GOOGL: Reports that the Department of Justice and the Federal Trade Commission have divvied up the tech giants for investigations has sparked concern because it’s unclear what “bad deeds” will be investigated, or whether existing antitrust law can address them.
Trader: The Fed’s move toward easier monetary policy could give stocks a boost, but such shifts take about six months to work through the system, so we won’t know for sure until Q3 earnings season—and there could be more frightening moments between now and then; Cautious on UBER: Though the stock has rallied after what looked like a disastrous IPO, investors “should think twice before hitching a ride on Uber’s volatile stock”; Cautious on JCP: A new management team has been trying to carry out a turnaround, but it isn’t happening quickly—Penney’s bond spreads are notably wide, even for a junk-rated company, and the stock isn’t doing well either.Interview: Owen Bennett, who covers tobacco and cannabis stocks at Jefferies Financial Group, likes APHA and Green Organic Dutchman, but is cautious on CRON.
Profile: David Green, manager of Hotchkis & Wiley Value Opportunities fund, invests in stocks of any size, bonds of any credit quality, preferred stock, and merger arbitrage, yet is also concentrated, with 40 to 75 securities (top 10 holdings: GE, MSFT, WFC, General Electric 5% Perpetual Bond, AIG, SRG, UHAL, GS, MS, BAC).
Features: 1) Modern monetary theory has heavily influenced the Green New Deal and other recent Democratic proposals that have drawn criticism from Republicans, but the theory “is actually grounded in old and uncontroversial economic ideas, and its appeal is neither ideological nor partisan”; 2) Cautious on AAPL, AMZN, FB, GOOGL: News of government regulation shouldn’t cause investors to be impetuous—stock price volatility is a chance to step back and analyze each company on its own merits and determine whether regulatory action would materially affect the companies’ economic business models; 3) If the markets are right, interest rates could fall by three-quarters of a point over the next year, which would have wide-ranging consequences for stocks, bonds, and savings vehicles like money-market funds.
Advisor Guide: 1) Stephanie Stiefel of Neuberger Berman, who oversees $2.59B as managing director and head of client development for the Strauss Group within the firm’s private wealth management division, talks about how she helps clients build and protect wealth in uncertain times; 2) Kimberlee Orth, founder of Orth Financial Group, says taking the time to deeply understand a client’s needs, motivations, goals, and fears sets the best advisors apart from the rest, especially in the age of the robo advisor and low-cost fintech services; 3) Valerie Houts, a managing director at Merrill Lynch’s Venture Services Group, talks about the scope of her business and how she oversees one of the largest advisory practices focused on venture-capital and private-equity investors.
European Trader: Positive on British Land: The company and its peer, Land Securities, have been overexposed to struggling retail sites and hurt by Brexit uncertainty, but an upcoming planning decision in London could transform British Land and send shares back up.
Emerging Markets: Positive on BABA, Tencent: Donald Trump’s trade war with China sent shares of the tech giants down, spelling a buying opportunity for investors—both companies have strong bull cases, and derive nearly all their income domestically, with Chinese economic growth a macro driver.
Commodities: “Gold has moved higher for the year, after stalling just below the $1,300-an-ounce mark for weeks. All the factors for the metal to rally to record levels might finally be falling into place.”
Streetwise: Back at the end of 2006, the Fed had room for five percentage points of cuts during the dire recession that followed, says columnist Jack Hough, who adds that while there’s no reason to expect the next downturn to be as severe as the last one, it could be a stubborn one if the Fed lacks the firepower to fight it.