Barron’s Weekend Summary: Legal sports gambling has now spread to 30 states and Washington, D.C.—home to more than 130 million people
* Cover Story:
-Legal sports gambling has now spread to 30 states and Washington, D.C.—home to more than 130 million. In the four years that it has been legal, both the amount of money bet on sports and the amount counted as revenue by gambling companies have risen nearly 1,000%, to $57B and $4.3B, respectively, according to the American Gaming Association, or AGA.
* Interview:
Carly Tripp oversees $144B as global chief investment officer and head of investments for Nuveen Real Estate, one of the nation’s largest real estate investment managers, which scooped up more than $10B in U.S. property last year. While many other investors were bearish on retail property as the pandemic hit, Tripp rightly spotted opportunities among the subset of retailers that correctly anticipated how shoppers might want to buy in a pandemic. Tripp talked with Barron’s from Davidson, N.C., about some of her latest contrarian ideas, including why renting may be preferred to owning a home, why office space isn’t dead, and the best types of malls, senior housing, and industrials to own.
* Tech Trader:
-The automotive computer chip shortage is complicated, and companies with capital to throw around can push their way to the front of the line. And the issues are more severe for some parts than others. So maybe GM has this figured out, and empty Chevy dealer lots will soon be filled with shiny new Bolts and Silverados. But Barra’s optimism runs counter to other data points suggesting the chip supply issue will be here for a long time.
* The Trader:
-Escalating geopolitical tension was the first problem Friday. Both the United Kingdom and the U.S. suggested that Russia could soon invade Ukraine and advised their citizens to leave the country. Geopolitical tension isn’t good, but it doesn’t have to do permanent damage to the stock market. The peak-to-trough move in the S&P 500 when Russia annexed Crimea back in 2014 was about 2%, yet the S&P 500 rose 11% for all of 2014. Still, the news injected a rush of uncertainty into the market. And investors really hate uncertainty.
-Not everyone is suffering because of inflation. Some companies are able to raise prices without destroying too much demand for their products—and those are the ones investors should want to own. Caterpillar for one, is lucky enough to have customers flush with cash from rising commodity prices, so it’s easy to get them to pay up. After reporting its latest financial results, management said pricing had “picked up” in the third and fourth quarters of 2021, helping earnings top estimates by 17%. At $201.24, the stock is down 2.4% this year but beating the S&P 500’s 7.3% loss.
-Shares of Ford—along with those of other auto makers—are falling because of concerns that profits have gone as high as they are going to. The term “peak profits” has crept into more than a few Wall Street reports as analysts wonder if record vehicle pricing can be sustained and worry that supply-chain woes, higher prices for materials, and parts shortages will crimp margins.
* Features:
-Russia continues to build up its military presence on the border with Ukraine, according to the State Department. More than 30 Russian Navy ships are conducting military exercises in the Black Sea, including patrol ships, missile boats, and landing ships, the Russian Defense Ministry said in a statement on Saturday. The exercises come a day after Ukrainian intelligence officials said Russian troops were carrying out combat trainings in occupied territories bordering Ukraine.
-The debate over whether President Biden can and should cancel trillions in student loan debt is heating up, now that his legislative agenda appears to be losing steam. Congressional Republicans are already lining up to oppose any further action to relieve borrowers of federally-backed student debt, with Rep. Virginia Foxx of North Carolina, the ranking republican on the House Education and Labor Committee issuing a statement last month lamenting the impact of the current collections freeze on the budget deficit.
* European Trader:
The FTSE 100 was a good place to invest when the U.S. markets were not. Even better, the UK’s outperformance could continue for a while. “It has to do with tech,” says Jack Ablin, chief investment officer at Cresset Capital. The London Stock Exchange has no equivalents to the massive U.S. tech stocks such as Apple, Netflix, or Facebook parent Meta Platforms. And tech has been the most notable underperforming sector in the US.
* Emerging Markets:
-Oil prices spiked higher on Friday afternoon on news that U.S. officials believe Russia is close to invading Ukraine. Such a move could spur sanctions against Russian exports of oil and gas, causing supply to fall and prices to rise. Brent crude futures, the international benchmark, rose 3.8% to $94.88 on Friday, their highest level since 2014. Oil stocks rose too, with Chevron up 1.8%.
-The iShares MSCI Brazil exchange-traded fund has jumped 17% year-to-date. Global emerging markets are up 2%, the S&P 500 is down 4%. The real has climbed 7% against the dollar.With two-thirds of its market cap in materials or financial stocks, and a 32% nose dive in 2021, Brazil was a sort of paradise for investors rotating into value. It still is. “Brazil is trading at a 30% discount to historical averages, while the rest of the world is at a 5% premium,” says Daniel Gewehr, portfolio manager at São Paulo-based WHG Asset. “There should be positive equity returns on a 12- to 24-month view.”
* Commodities:
- Gold is breaking out on the upside!! [The spot gold price rose 1.26% Friday to $1,860.60 an ounce.] A jumping rise has started and it’s being fueled by fears that Russia will soon invade Ukraine. High inflation is also a booster. Gold is ending the week in its best rise in three months, and it’s very strong above $1,830. Gold shares are following gold’s strength with the The NYSE Arca Gold BUGS index jumping up and approaching its 65
* Streetwise:
-Jack Hough advises investors not to allow their investing decisions to be dominated by inflation fears: Don’t let inflation fears dominate your investment thoughts. Save time to worry about earnings growth, too.Below, some statistical bellyaching and portfolio defeatism, plus one Wall Street bank’s top stock picks for the times. Fourth-quarter reporting season is about 80% over, and the results are solid enough. Most companies have beaten expectations, and earnings per share are on track to rise 26% from depressed levels a year ago. That marks the end of easy comparisons, however.