Barron’s Weekend Summary: A transition to a new pandemic normal holds major implications for the U.S. economy, and particularly for the hard-hit services sector, where recovery so far has been stunted even as spending elsewhere has soared
Cover Story:
-A transition to a new pandemic normal holds major implications for the U.S. economy, and particularly for the hard-hit services sector, where recovery so far has been stunted even as spending elsewhere has soared. It’s likely to be reminiscent of the country’s first two reopenings—in summer 2020, after the initial series of lockdowns lifted, and spring 2021, after widespread vaccinations and another round of stimulus checks fueled fresh confidence among Americans. Consumer spending on services jumped 9.1% from the second to the third quarters of 2020, and 4% from the first to the second quarters of 2021.
Interview:
-Barron’s interviews economist Eswar Prasad. Prasad wrote The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance, a 500-page book that has become a road map for money managers, market strategists, and others seeking to understand this new world. With a background in global trade, monetary policy, and financial regulation, including a stint as the International Monetary Fund’s top hand on China, Prasad has spent his career studying the global economic landscape.
Tech Trader:
-Tech investors just survived what could be the most tumultuous stretch of earnings we’ve ever seen. The tech megacaps— Alphabet, Amazon, Apple, Meta Platforms, and Microsoft—are some of the most widely scrutinized institutions on Earth. Investors, analysts, journalists, and legislators poke, prod, test, and study the companies down to a microscopic level. And yet this quarter, each one of them managed to surprise. Facebook parent Meta Platforms tanked the entire market on Thursday after its weak report, only to see stocks rescued a day later by Amazon’s impressive growth.
The Trader:
-The stock market had the feel of steering out of a spin after hitting an ice patch—and driving away safely. Unfortunately, the road ahead may be even more treacherous. The S&P 500 gained 1.5% this past week, its second week of gains following a disastrous start to the year, while the NASDAQ rose 2.4%, and even the Dow Jones Industrial Average, which has held up better than both, rose 1%. “That the market managed to finish higher despite some wild swings suggests that stocks may be ready to run. It’s not every week, after all, that we see the Nasdaq Composite drop 3.7% in one day, as it did this past Thursday after Meta Platforms ’disastrous earnings report, and still finish the week higher.”
-It has been an up-and-down story for the Knightscope stock since it moved from the over-the-counter market to NASDAQ —where it made its debut a week ago Thursday, at $14.44. The shares quickly fell to $6, then shot above $27 on a Monday gush of trading. Knightscope stock tumbled for the rest of the week, to a Friday close of $9.01.-
Features:
-Bitcoin has rebounded more than 3% over the last 24 hours, pushing to just below $41,700, as the crypto market appeared to regain momentum. The gains appear to have benefited at least one trader: Sen. Ted Cruz (R-Texas). A big proponent of crypto, Cruz has railed against initiatives in Congress to tax and regulate the industry. At a Senate hearing last November, he had harsh words for Democrats considering new rules for the industry.
-Tesla could be bigger than both General Motors and Ford Motor combined, by sales, in just five years — if everything plays out the way Morgan Stanley analyst Adam Jonas is thinking. It’s a provocative idea for investors to ponder — and a bit of a shocking one. Two century-old auto makers with hundreds of billions in sales eclipsed by a start-up founded less than 20 years ago doesn’t seem plausible. It really shouldn’t be. The market has already declared a victory in the electric vehicle transition. Still, the math behind that kind of market share shift and growth is something to behold.
European Trader:
-Shares in Germany’s HelloFresh, the world’s leading meal-kit delivery company are down more than 20% this year, putting it near the bottom of Frankfurt’s blue-chip DAX index. But not all pandemic stocks are equal. HelloFresh is bruised, but it’s a buy. The stock benefits from tailwinds predating Covid-19 and is undervalued by multiple metrics. HelloFresh’s business is delivering weekly meal kits to subscribers. Consisting of pre-portioned ingredients and cooking instructions, the kits offer choices across cuisines and dietary preferences. “Venison Steaks and Creamy Peppercorn Sauce” and “Zucchini Pomodoro Penne Bake” were among the recent offers.
Emerging Markets:
-The past three months have been tough for Russian stocks. The VanEck Russia ETF has dropped 27% over the past 60 days of trading, among the largest drawdowns since Covid-19 hit in 2020. While Russian stocks have rallied a bit since bottoming on Jan. 24, it seems that the likelihood of a Russian invasion of Ukraine continues to grow. Capital Alpha Partners’ Byron Callan, for instance, puts the probability of a conventional conflict between Russia and Ukraine around 70%.
Commodities:
Oil prices were rising sharply again Friday, hovering around eight-year highs on continued geopolitical fears, a wave of cold in the U.S. and concerns about the capacity of OPEC to keep to its production targets. Brent crude, the international benchmark, was up to 2% to $92.89 a barrel while West Texas Intermediate, which had passed the $90 mark Thursday, was up 2.1% to $92.1 a barrel.
Streetwise:
-This week Jack Hough opines on Cathie Wood: “Opinions on Cathie Wood run strong. ‘She knows nothing more than anyone else,’ one reader all-capped me in an email this past week. I think value investors have been waiting so long for a momentum-stock comeuppance that some are now trying to remember the moves to their end-zone dances.”