Barron’s Weekend Summary: The coronavirus pandemic is reshaping consumer, corporate, and government behavior, and markets, the economy, and government won’t be the same when it passes.
* Cover story: The coronavirus crisis will eventually pass, but what awaits on the other side will not look like it did before anybody knew what a coronavirus was, and the pandemic is reshaping consumer, corporate, and government behavior; Universal health care and social safety nets—once deemed too radical—are getting more mainstream attention, debt has turned into a curse word, and shortages of crucial ingredients for drugs and medical supplies are testing the long-held merits of global diversification.
* Tech Trader: The TMUS-S merger the government recently approved is a significant event, and will bring meaningful change to the U.S. wireless industry, long after Covid-19 is gone—the loss of a maverick player could hurt competition in the long run, but wireless subscribers should actually benefit over the next few years.
* Trader: No one knows the extent of the damage done to the economy by Covid-19—the recovery could be V-shaped, swoosh-shaped, U-shaped, or L-shaped, in which the economy doesn’t bounce back at all; Brian Rauscher of Fundstrat is bullish about the market—he says there are many technical factors to identify buying opportunities and that some have reached extremes not seen since the financial crisis, and he doesn’t believe that valuations must come down; Thursday’s rally in high-yield bonds could give the impression that the Federal Reserve was considering “buying the whole market,” but the details of the central bank’s intervention may disappoint bulls.
* Features: 1) Cautious on SoftBank: Wall Street applauded the company’s plan to sell $41B in assets, but the move is a concession that chief Masayoshi Son’s bold vision has gone off the rails, and the coronavirus pandemic is likely to spur an additional wave of Vision Fund write-downs—and even some failures—in the weeks and months to come; 2) A coronavirus response plan from the left-leaning Center for American Progress calls for national stay-at-home policies and a ban on all nonessential travel until at least May 20, more or less in line with a proposal from the right-leaning American Enterprise Institute, though its plan doesn’t set a specific timeline; 3) The pandemic seems an ideal opportunity for an investor such as Warren Buffett, but he has remained quiet of late, and has yet to make the kind of splashy investment that he did during the financial crisis, when he helped shore up GS and GE—and it’s likely investors won’t know more until after Berkshire Hathaway’s May 2 annual meeting; 4) Positive on AEP, D, FE, NEE: Utilities offer reliable dividend income, and being regulated means the government will allow a reasonable return on investments—for investors, these four companies have strong fundamental businesses, and their relative outperformance recently should continue; 5) Positive on DIS: The company has taken a hit from the coronavirus, but analysts say it has the financial strength to weather the downturn; In an interview with Barron’s, executive chairman Bob Iger talks about the challenge of the virus, and how it will change the entertainment industry.
* Profile: Bryan Krug, manager of the Artisan High Income fund, says that because his portfolio is far more concentrated than the benchmark high-yield-bond index, he doesn’t need to defend the market as a whole, and his ability to be selective has helped during recent market volatility (top 10 holdings: General Electric, Ardonagh Midco 3, NFP, Vertafore, Charter Communications, TKC Holdings, Acrisure, Realogy Group, Tutor Perini, AssuredPartners).
* European Trader: Positive on Hennes & Mauritz: The world’s second-biggest fashion chain has taken a hit from the coronavirus, with shares down 30 percent during the past three months, but now might be the time for investors to get in—the company is making the right moves for growth, and when normality returns, they could soar.
* Emerging Markets: “Things may not be as bad as they look in India as the nation opens its own Covid-19 chapter, investors say, so plunging stock prices could create bargains in what has been the most expensive big emerging market.”
* Commodities: Some investors see gold as a haven investment while others are in a mad scramble to sell the tangible investment in a bid for cash to cover losses in the stock market, but several big investors think prices will rise, and that an opportunity in the gold-mining space is also developing.
* Streetwise: Before the coronavirus, DIS’ thriving parks division was on its way to becoming the company’s biggest earner, its studio business was shattering box office records, and its ESPN sports network was thriving, but though all three are threatened by the pandemic, JPM analyst Alexia Quadrani calls the company a top pick, and still expects it to turn a profit this year, albeit a lower one.