FINSUM + Magnifi: Big Tech’s Winners and Losers as the Pandemic Fades
April 20, 2021
The pandemic fueled growth in lots of different technology sectors, but it remains to be seen how permanent these changes are. Technology acceleration was high: FactSet expects earnings growth to jump 22% in Q1 2021 as compared to the same quarter last year. But after the pandemic fades which industries will remain? E-commerce companies like Amazon, Pinterest, and Etsy will likely stick around as many shopping patterns have changed permanently. Companies like Zoom and video companies will taper off as the workplace returns to normal. However, hardware and cloud computing will likely retain strong earnings given trends. Finally, chip manufacturing is still running shortages but Nvidia, AMD, and Qualcomm will have pent-up demand for the foreseeable future.
FINSUM + Magnifi: Goldman Says these S&P Losers Could become Outperformers
April 20, 2021
Q1 Earnings are starting to roll in for many companies and this presents an opportunity. Regression to the mean is almost an inevitability in the stock market, but timing it is difficult. But Goldman is advising its clients that 13 companies lagging the S&P 500 by 6% over the past month are going to post better earnings reports than Wall Street projects. These companies are Activision Blizzard, Air Products and Chemicals, CF Industries, Charter Communications, Edison International, Enphase Energy, Everest Re Group, Fiserv, Global Payments, Intercontinental Exchange, Leggett & Platt, McKesson, TE Connectivity, and T-Mobile. As many stocks are trading at record highs these underperformers could turn to outperformers at the turn of the next earnings report.
FINSUM + Magnifi: Gold Could Surge on Chinese Import Changes
April 20, 2021
China is one of the largest gold consumers in the world, but the pandemic has put the market in turmoil as supply couldn’t match. This has elevated domestic prices high above the international rates. However, China has permitted banks to import Gold into the country. This could be a boom to world gold prices as the country plans to invest $8.5 billion into imported gold in April for April and May supply. Vaccines and stimulus have halted Gold's growth as of late but a fundamental shift from a major bullion consumer might turn the market bullish.
FINSUM + Magnifi: 5 Growing Dividend Darlings Income Investors Should Know
April 16, 2021
65 Stocks make up the dividend aristocrats in the S&P 500, known for their consistency however some are growing faster than others. A.O. Smith (AOS), AbbVie (ABBV), Lowe’s (LOW), Illinois Tool Works (ITW), and S&P Global (SPGI). AOS who produces gas and water heaters, has the fastest dividend growth rate at 21% over the past five years while ABBV promises a higher yield of 4.9% and still a promising 5-year growth rate of 18%. All of these stocks have trend growth rates above 15%, but outside ABBV are on the lower end of yield return.
FINSUM + Magnifi: Biden Admin Planning A Big New Regulatory Push
April 16, 2021
The Biden admin is tackling some of the changes made during Trump's administration, particularly to environmental social governance, fair lending, and consumer protection rules. The administration will not allow a set of measures that disincentivize ESG factors by shareholder voting restrictions. They have also reinstated the Consumer Financial Protection Bureau’s ability to seek monetary penalties for abusive practices and expanded the Equal Credit Opportunity Act to gender and sexual orientation protection. Finally, the administration reinforced the SEC’s ability to investigate and subpoena companies and individuals for investigation. These measures are just some of the ways the new administration is changing the regulatory landscape.
FINSUM + Magnifi: Chinese Economic Data and Opec Demand Report Lift Oil Prices
April 16, 2021
China is one of the biggest importers of crude oil and good news on trade reports boosted the oil futures market. Imports in U.S. dollars rose in March by 38.1% from the prior year which was well above estimates. Additionally OPEC forecasts a 100,000 barrel a day increase in its oil demand projections for 2021. It expects it to climb to 96.5 million barrels per day by the end of the year. The upward revisions all come despite the slowing of the vaccine rollout from Johnson and Johnson. OPEC sees reopening and strong growth in OECD countries in Q2 and Q3 driving the oil demand. Oil was over $60 a barrel in futures markets.
FINSUM + Magnifi: Goldman Sachs says High-Yield Bonds are Income Investors' Fixed Income Solution
April 13, 2021
The recovery has boosted the junk bond market as investors saw investment-grade bonds and government debt perform poorly in Q1. All but 10% of high yield debt is within five percentage points of Treasuries. This has put a squeeze on the possibilities of the return in the high yield market but it's the only fixed income market with any possibility of gains. But Goldman sees junk bonds going higher despite this, and that a growing economy with additional stimulus should provide an environment that produces good returns for more risky corporations. Additionally, junk bonds are uncorrelated with Treasuries and aren’t a hedge but diverse in a portfolio with
investment-grade and government debt.
FINSUM + Magnifi: This Sector is at Huge Risk from Biden’s Tax Plan
April 13, 2021
Treasury Secretary Janet Yellen released bits of the Biden administration's Future Tax plan which is linked to the $2.3 trillion infrastructure proposal. Titled “Made in America”, the plan eliminates many subsidies for fossil fuel companies and introduces a host of incentives for alternative energy. The treasury estimates that the fossil fuel measures will save $35 billion over the next decade. Such measures are the elimination of the drilling costs reduction, which on its own is estimated to generate $13 billion in the same decade. Additionally, the bill extends the investment tax credit for green energy and incentivizes sustainable aviation fuel. Finally, the bill raises the corporate tax rate from 21% to 28%.
FINSUM + Magnifi: Gold Bulls See Second Stimulus Package as Tipping Point for Another Run
April 13, 2021
Gold had one of its biggest runs last August, but gold funds and ETFs have been the real victors. VanEck Vectors Gold Miners is up 50% over the past year which is 1.5x the gain in Gold itself, and smaller miners have been gaining traction with Canadian Amex Exploration up 128% and Starr Peak Mining up 300% over the past 12 months. As the Biden administration looks immediately to another trillion-dollar stimulus infrastructure package after just passing the first one, many are worried about the ‘Cobra effect’, a phrase coined by Lawrence McDonald. Where stimulus will be short-lived and people will be short-changed with hyperinflation. Junior minors such as Amex and Starr Peak are capitalizing on new territory and are in a position to benefit from macro factors the most.
FINSUM + Magnifi: Ecommerce Will Benefit from This Change to Consumer Spending
April 8, 2021
Consumers spent more at online stores last year than the previous year by a staggering $900 billion according to a Mastercard Economics Institute study. This isn’t very surprising as more shopping was relegated to online retailers due to the pandemic. But what is shocking is that a large share of it is here to stay. The study shows that habits have formed in consumer shopping, and that online deal hunting will remain electronic. Grocers will retain about 70-80% of their online commerce. Even industries more likely to return to pre-pandemic levels, clothing and electronics are expected to keep about 20% of their digital sales.