Barron’s Weekend Summary: organized retail crime has been growing for years—with tens of billions of dollars of stolen merchandise reported in 2019
Cover Story:
While organized retail crime has been growing for years—with tens of billions of dollars of stolen merchandise reported in 2019—the massive swing toward online shopping during the Covid-19 pandemic has made it easier than ever to resell stolen merchandise on such platforms as Amazon.com, eBay, and Facebook Marketplace. Retail thefts, both in total numbers and dollar amounts, are now up roughly 30% since the onset of the pandemic, according to the Coalition of Law Enforcement and Retail (CLEAR).
Interview:
Barron’s interviews TS Lombard global macro strategist Dario Perkins. He answers questions related to the reopening from Covid-19 and Russia’s invasion of Ukraine, and how he interprets the global economy. One of the key questions concerns the possibility of recession in Europe: “The European economy is probably contracting right now, because inflation is hitting 7% to 8% and wages are going up 1%. People are getting very squeezed by this and we’re not yet seeing it in the data because it’s too early.”
Tech Trader:
This past week, Berkshire disclosed an 11.4% stake in the PC and printer company HP, which is not to be confused with Hewlett Packard Enterprise , the server, networking, and storage company from which it split in 2014. “You could argue that Berkshire is a little late here. HP’s PC business soared during the pandemic, driving growth to the highest level since the company was split in two; HP’s stock price has doubled since 2019. Meanwhile, there are signs that PC demand is going to slow from here as the stay-at-home trend fades.”
The Trader:
Michael Darda, chief economist at MKM Partners, warns against excessive concerns of recession. “The growth scare is so last cycle, an artifact of an environment where growth had trouble getting to trend and inflation couldn’t even sniff the Fed’s 2% target. When the stock market would sell off, as it did in 2013 or 2015, credit spreads would blow out, bond yields would fall, and inflation expectations would sink, all signs that investors were pricing in a weakening economy.’
-Defense stocks jumped when Russia invaded Ukraine—the Invesco Aerospace & Defense exchange-traded fund gained 9.6% from Feb. 23 through March 7—but have been fairly rangebound ever since. The dynamic has been even more apparent in the big defense stocks. General Dynamics gained 14% but then fell 1.4%, while Lockheed Martin rallied 20% before dipping 0.3%, and Northrop Grumman surged 24% before declining 1.8%. Russia’s actions, however, demonstrate that more money will need to be spent on the military, if only to prevent what’s happening in Ukraine from happening elsewhere.
Features:
The Covid-19 pandemic is not over. But many of the pandemic assistance programs associated with it are done, or soon will be. Mortgage forbearance, which began after passage of the Cares Act, is a case in point. Throughout the pandemic, federal and private programs have allowed borrowers to stay in their homes and stop mortgage payments for up 18 months with no negative impact on their credit scores.
-As we consider how the war in Ukraine will end, we must first understand how it began. Russia invaded for geostrategic reasons—having Ukraine as a buffer state safeguards Moscow from invasion from the west—and for economic reasons, which have often gone overlooked. The transition from the Soviet Union to the Russian Federation wasn’t exactly lucrative. It may have increased total wealth, but Russia remains a poor country. Its gross domestic product ranks just behind South Korea’s, a respectable placement but hardly where a superpower should be. In terms of per capita GDP, Russia ranks 85th, nestled between Bulgaria and Malaysia.
-Semiconductor stocks like Nvidia have soared over the last few quarters, driven higher by robust demand for chips amid a global supply shortage.
But the tide may be turning for semiconductor manufacturers, warned Truist analyst William Stein. As a result, Stein adjusted his price targets for several key semiconductor stocks, including Advanced Micro Devices, Intel, and Nvidia.
European Trader:
-Russia’s invasion of Ukraine surprised Europe and the world. But as the war grinds beyond the six-week mark, one thing is clear: Europe will never be the same. Before the invasion, Europe had been proceeding at a, well, European pace. The continent was changing, particularly when it came to energy, but the economy was set to grow again after a brief energy-induced hiccup, and nothing seemed too pressing.
Emerging Markets:
European Union leaders declared after a summit at Versailles last month that “Ukraine belongs to our European family.” That was a rather obvious observation from the 27 member states, considering the popular outpouring for Ukraine across the continent, and their own provision of arms and sanctions to help it fight Russia. The prospect of EU membership could be key to an eventual peace process, giving Kiev and Volodymyr Zelensky a win to offset any concessions to Moscow.
Commodities:
Oil prices go up and down—like most anything else. Now, they’re well below their peak of last month and they probably won’t be hitting that high again any time soon. WTI crude is down about 25%, to just under $97 a barrel, from a multiyear peak of $130 hit on March 8, the day that the U.S. banned Russian oil imports and the U.K. promised a phase-out. The price is still higher than the $89 level on Feb. 10, just before Russia made clear that it would invade Ukraine. The war started on Feb. 24.
Streetwise:
America’s worst airline (sic) (JetBlue Airways) made a surprise bid for the second-worst one (sic), topping an offer by the third-worst. Regulators are expected to object to the deal in the name of preserving customer choice. Jack Hough has no particular complaints about JetBlue Airways, and He says, he’s never flown Spirit Airlines or Frontier Group. But he bases his opinion on a recent ranking by The Wall Street Journal, part of the same company as Barron’s. It’s based on fine details like whether the flights customers pay for occur anywhere near the agreed-upon time, and whether the luggage comes along for the ride.