Barron’s Weekend Summary: Most respondents in Barron’s Big Money Poll are bullish on US stocks for the next 12 months, with only a small percentage bearish.
* Cover Story: In Barron’s latest Big Money Poll, 54 percent of respondents said they’re bullish on the prospects for US stocks during the next 12 months, roughly a third describe themselves as neutral, and the remaining 13 percent are bearish; Few Big Money managers would venture to call stocks undervalued—about 44 percent see the US market as overvalued, while 50 percent consider valuations fair; Bullish money managers expect the Dow Jones Industrial Average to end the year about even with its current level, at 28,433, and by mid-2021, they see it topping 30,000.
* Tech Trader: Handset makers and wireless carriers are betting billions of dollars that new 5G networks and phones that can take advantage of them will reinvigorate smartphone demand, but the hype is thick, and the situation demands a reality check; AAPL’s recently announced iPhone 12 models, the first of its 5G-enabled handsets, should sell well—analysts say there are lots of old models out there, and that the pandemic pushed replacement cycles well beyond four years.
* Trader: Wolfe Research strategist Chris Senyek says the market is too optimistic about everything from Covid-19 trends, economic data, and what a Biden win would mean, while monetary policy continues to favor growth and momentum stocks—his “renormalization” basket includes DIS, WYNN, and MTN.
* Interview: Steve Milunovich, who recently retired after many years at Wolfe Research, shares his views on technology—he says the current ability to generate free cash flow is a difference between today and the tech bubble, that Covid-19 has been a real accelerant to digital transformation, and that perhaps the most important thing in the last five to 10 years is the rise of the platform company.
* Profile: London-based Suzanne Hutchins, manager of the BNY Mellon Global Real Return fund, which can invest worldwide in stocks, bonds, commodities, and precious metals without weighting constraints; It can also hedge, typically buying put options in indexes such as the S&P 500 or the Euro Stoxx 50 to limit the downside (top 10 holdings: GRR Commodity Fund, LIN, S&P 500 Call Option, MSFT, AIA Group, Vivendi, MA, DEO, ES, BCS).
* Features: 1) Electric vehicles and special purpose acquisition companies have generated a large amount of hype this year, with shares of NKLA and HYLN soaring after they announced since-closed mergers with SPACs—but a host of problems should be a warning that investors need to handle the next round of EV-SPAC deals with caution; 2) Cautious on BAC, C, JPM: The banks’ third-quarter earnings largely surprised to the upside as robust trading activity helped offset lower net-income margins, and profits weren’t crimped by having to add billions to reserves to protect against bad loans—yet their stocks have lost ground because of a number of investor concerns; 3) Preferred stocks have enjoyed a strong rally since the market lows in March, reducing opportunities in the $350B sector, but investors can still find yields of four to eight percent on preferred shares and related securities from companies such as GE, WFC, COF, and Qurate Retail.
* European Trader: Positive on Bunzl: The London-based company has had a busy year transporting disposable gloves and masks to businesses seeking protection against coronavirus, with shares increasing by nearly 48 percent over the past six months—and they could have further to rise despite lower demand from retail and leisure customers hurt by the lockdown.
* Emerging Markets: Chinese stocks rallied in parallel with US equities through the spring, but since July they have pulled away, and while past China bull runs in 2015 and 2017 ended badly, the country’s economy and market governance may have outgrown the vulnerabilities that drove those crashes.
* Commodities: “The oil market has been preoccupied for months with concerns surrounding weaker demand driven by Covid-19 economic restrictions, but the presidential election has started to take center stage as traders weigh election-win scenarios and the potential outcomes for the energy sector.”
* Streetwise: “The long-awaited AAPL iPhone supercycle is here, but it’s no slamdunkercycle, judging by the disagreement among Wall Street forecasters,” says columnist Jack Hough, who adds that while the 5G-enabled iPhone 12 models are supposed to entice people to upgrade, there are two problems: The networks are mostly unprepared, and many of the users are stuck at home, on Wi-Fi.