Barron’s Weekend Summary: Fed chairman Jerome Powell is arguably a more important figure in Washington than whoever will occupy the White House after the election.
* Cover Story: On Wednesday, Federal Reserve chairman Jerome Powell, the Washington leader who has done more than any other to stabilize the US economy and steady markets, will lead the Federal Open Market Committee in a two-day session on the economy and monetary policy—for investors, Powell is arguably a more important figure in Washington than whoever will occupy the White House after the election.
* Tech Trader: Story reports on takeaways from the earnings reports of AAPL, AMZN, FB, GOOGL, and TWTR, all of which beat sales and profit expectations in their recent quarterly reports: AAPL will be fine despite some headwinds, no company has benefited more from the acceleration in online shopping than AMZN, online-ad platforms are also benefiting from the e-commerce surge, there is a lack of pure plays on the public cloud, and there’s a reason Twitter’s valuation is just five percent of Facebook’s.
* Trader: To convince investors that it is in the clear, Gordon Haskett analyst John Inch says GE should sell shares in a secondary offering—though selling stock at low equity prices isn’t normally good for shareholders, during the current pandemic market, “investors sleep better when balance sheets have low debt levels.”
* Profile: Haruki Toyama and Rich Eisinger, co-managers of the Madison Mid Cap fund, follow a Warren Buffett approach of seeking cheap stocks and trying to invest in businesses with strong, durable cash flow; the fund is also concentrated, another Buffett hallmark (top 10 holdings: Liberty Broadband, CPRT, DLTR, INFO, ACGL, BRO, IT, MKL, LH, KMX).
* Interview: Warren Pierson and Mary Ellen Stanek of Baird Advisors talk about how bond investors should be positioned in a market with rock-bottom yields the norm and a presidential election looming; They expect continued recovery with slower growth in the last couple of months of 2020 and into 2021, and note that unless wages rise significantly, it will be hard for inflation to have any staying power.
* Features: 1) Positive on ZNGA: The gaming company has seen huge growth—it now has eight games with at least $100M worth of sales—but the stock has long trailed those of larger game publishers ATVI, EA, and TTWO, creating an opportunity for investors, who could see significant upside in the year to come; 2) Semiconductor deals have reached a frenzy—with more than $100B worth of acquisitions announced this year, including two major ones this past week, the chip sector is being rethought and remade by the companies rich enough to strike deals; 3) Positive on LFUS, PH, TEL: China, which is recovering from the coronavirus pandemic, offers a glimpse into what business may look like in North America over the next few months if the US matches its progress, a situation that would benefit industrials—cautiously optimistic investors should keep their eyes on these three compaies; 4) Positive on ABT, NEM, SBAC, ROP, CSL: “No matter who wins the US presidential election on November 3, and regardless of which party controls Congress, the country will still be wrestling with a viral pandemic and the uncertainties of a battered economy,” but these five companies should outperform regardless of who takes the White House; 5) Positive on ANTM: Shares of Anthem, the country’s second-largest managed-care company, should see shares rise after the election—discounts in managed-care stocks have tended in recent presidential cycles to expand ahead of Election Day and contract in the months after; SVB Leerink analyst Stephen Tanal says the company is in a compelling position, with an attractive valuation.
* Emerging Markets: After decades of piling up cash, China needs outside money to leap further forward, with foreign reserves almost flat and the current account surplus near zero—which is why despite tensions with Washington, Chinese leaders are talking with C, BLK, JPM, Vanguard, and other Wall Street titans.
* Commodities: “Wheat futures have touched their highest prices in nearly six years as dry weather threatens global supplies of the commodity, but some analysts urge caution with months to go before the harvest.”
* Streetwise: Robinhood users aren’t driving tech stocks to absurd valuations, says Nasdaq chief Adena Friedman—instead, low bond yields have flattered stocks, and tech stocks stand out because fast growth is scarce and because companies have separated into two classes, based on how vulnerable they are to the virus.