Cover:
-Energy has become a crucial issue in President Donald Trump's second term, as he aims to tame inflation through oil drilling and sees oil and gas as America's most powerful asset in trade negotiations. The US has abundant resources, unlike its biggest rivals like China. Trump's early moves in energy have been controversial and have not been beneficial for stocks. Some of his decisions, such as halting payments on energy loans and grants, have landed in court. Tariffs on Canadian and Mexican energy products have unsettled American companies and upset allies. The fallout and the possibility of Trump removing sanctions on Russian oil have knocked oil prices and stocks lower. Some of the best opportunities in energy align with Trump's interests, but they tend to be in areas with demand drivers beyond federal policy. Natural gas is the best positioned among energy segments. Exporting LNG is a profitable business, with Cheniere Energy's stock doubling in three years. However, the field is becoming more competitive, leading to a glut of LNG by 2027, causing Venture Global's stock to fall 30%.
Interview:
-Andrea Auerbach, the global head of private investments at Cambridge Associates, has witnessed the growth of the private-market investing industry since the early 1990s. The industry now encompasses venture capital, private equity, and private credit, with assets under management expected to reach $15T this year, up from $10T in 2021. Auerbach, who has been closely involved in the industry's expansion, has seen the industry's growth, including its recent struggles with rising interest rates. Many private asset managers are now looking to expand by tapping retail investors, including through 401(k) assets. The "democratization" of alternatives has significant implications for the industry.
Tech Trader:
-Intel shares have surged due to the Trump administration's promise to support domestic chip manufacturing and reports of semiconductor companies considering purchasing parts of Intel. However, investors should be cautious as the likelihood of transformative deals is low and Intel's challenges remain unchanged. The rally began after Vice President JD Vance vowed more chips would be made in the US, and Taiwan Semiconductor Manufacturing was considering taking a stake in Intel's chip factories. Intel stock rose by nearly 40% over five trading sessions through Tuesday. The flurry of news reports contradicted each other, with some citing Trump's support for TSMC's stake in Intel's factories.
The Trader:
-Walmart missed expectations for its full-year sales forecast, expecting a 3% to 4% growth. Despite a strong holiday quarter, the company's sales outlook is conservative due to inflation and economic uncertainties impacting consumer spending. Walmart's management believes US shoppers are resilient, but the Street is seeking more reassurance. The company's conservative sales outlook could indicate the impact of inflation on discount retail. The final reading of the University of Michigan's consumer sentiment index for February was 64.7, a 10% decrease from January, and all five index components fell this month. Existing home sales in January also came in lower than expectations. The company's conservative sales outlook may not send an upbeat message about the consumer during a time of ongoing inflation and tariff threats.
-The Consumer Analyst Group of New York (CAGNY) is holding its annual conference, showcasing updates from staples companies. The stocks of General Mills and Conagra Brands fell after their presentations, with the latter notching its worst percentage decrease in nearly three years in intraday trading. The problem is that "big food" was already "limping into CAGNY," as people are buying less branded packaged food, as their sales are still trailing overall food sales. Inflation-squeezed shoppers are doing without, trading down to private labels or buying more alternatives like fresh bakery and produce items. The stocks have stagnated, with the S&P 500 index up 23% and the Consumer Staples Select Sector SPDR exchange-traded fund up just 9% over the past year. The average packaged-food stock is down around 3% since the start of 2025, with big names like Kraft Heinz, General Mills, Conagra, and Campbell's down more than that. Berkshire Hathaway is losing money on its $9B Kraft stake.
Features:
-The firing of nearly 7,000 Internal Revenue Service employees, which began during the tax-filing season, is expected to unwind recent improvements in taxpayer services. Tax experts suggest that the cuts in the IRS workforce could lead to longer wait times on the phone, delayed refunds, and issues with resolving matters. The Department of Government Efficiency (DOGE), run by President Donald Trump's advisor Elon Musk, is responsible for the layoffs. The employees are probationary workers, who have been with the agency for less than two years. These workers are the ones the IRS has been hiring recently to improve its capabilities after years of dismal service and near-zero audit rates for complex tax returns. To avoid problems, taxpayers should know when to call the IRS hotline, get things right the first time on their tax return, and keep a paper trail in case of mishandling.
-Americans are experiencing increased anxiety about the economy due to high food prices and policy changes causing concerns about inflation. The University of Michigan's consumer sentiment index surprised to the downside in February, coming in at 64.7, a drop from December's reading of 74 and January's reading of 71.1. This sentiment could have troubling repercussions for the economy, as consumers often spend more when they feel better about the financial outlook and retrench in times of uncertainty. The Trump administration's recent policy changes have heightened uncertainties about the economic outlook. Democrats and independents were more likely to report a negative change in sentiment, while Republicans' sentiment was largely unchanged. Concerns about President Donald Trump's policies, particularly tariffs, have fueled pessimism. February's median inflation expectation for the year ahead spiked to 4.3%, the highest reading since November 2023.
Europe:
-Investors have been rushing into European stock markets due to their undervaluation after long-time laggard returns. The MSCI EMU index of large- and mid-cap European stocks trades for about 14 times expected earnings for the next 12 months, less than two-thirds the 22 times forward price/earnings multiple on the S&P 500 index. Many investment "tourists" now find they have too much company and are taking their winnings and going home. However, more experienced global investors can still find compelling values among individual European stocks rather than broad exchange-traded funds. European stocks have outpaced U.S. stock indexes of late, despite the dominance of big technology names among the latter. Bank of America's latest survey of fund managers found that 12% of respondents were overweight European stocks, the highest percentage of accounts since last June.
Emerging Markets:
-No update
Commodities:
-Energy has become a central focus in President Donald Trump's second term, as he plans to tame inflation through oil drilling and sees oil and gas as America's most powerful asset in trade negotiations. The US has abundant resources, unlike its biggest rivals, like China. Trump's early moves in energy have been controversial and have not been great for stocks. Some of his decisions, such as halting payments on energy loans and grants, have landed in court. Tariffs on Canadian and Mexican energy products have unsettled American companies and upset allies. The fallout and the possibility of Trump removing sanctions on Russian oil have knocked oil prices and stocks lower. Some of the best opportunities in energy align with Trump's interests, but they tend to be in areas with demand drivers beyond federal policy. Natural gas is the best positioned among energy segments, followed by nuclear power, oil, solar, and wind. Cheniere Energy's stock doubling in the past three years. However, the field is becoming more competitive, and analysts predict a glut of LNG by 2027. Natural-gas producers, such as Antero Resources and Chart Industries, can benefit from increased LNG exports. The Trump administration is pro-nuclear, with Chris Wright as secretary of energy and a focus on commercializing affordable and abundant nuclear energy. The more promising stocks today are providers of fuel for nuclear plants, such as Cameco and smaller uranium miners like Uranium Energy and enCore Energy. Trump's plans to ease environmental restrictions and open up more federal land for drilling, including in Alaska, are expected to boost the industry. Solar energy is also expected to grow in the Trump years, with domestic manufacturing agendas lifting companies like First Solar. Despite the challenges, the industry is positioned to continue growing, with investors expecting increased go-public activity across the nuclear technology space in the next 12 months.