Barron’s Weekend Summary
* Cover Story:The labor shortage in the US is intensifying and solutions are not forthcoming. “There are 9.2 million job openings and 9.5 million unemployed in the U.S., with workers quitting their jobs at a near-record rate as companies seek to fill a record number of open positions. Employers, economists, and policy makers blame the bottleneck on twin forces they expect to ease this fall: generous jobless benefits and a year of remote learning that has pushed some two million parents—mostly mothers—out of the labor force.”
* Tech Trader: “The world’s five largest tech companies— Apple (ticker: AAPL), Microsoft (MSFT), Amazon.com (AMZN), Alphabet (GOOGL), and Facebook (FB)—all reported quarterly results. Their collective performance was astonishing. As a group, their revenue increased 36%, to $332 billion. These companies spent the pandemic making gobs of money.”But unimpressed investors decided to take profits and all but one – Alphabet which gained 1.3% for the week - fell. Amazon lost the most: 7.6% on Friday.
* Trader : The Covid pandemic has been good to healthcare stocks. And while most people are concerned over the return of Covid-19 and its variants, healthcare stocks are poised for gains, “rising 8.5% over the past three months, the best of any sector. The Health Care Select Sector SPDR exchange-traded fund (ticker: XLV) is trading near an all-time high—and don’t be surprised if more highs follow.”
Last week’s tumble of the big tech appears bad on the surface, but the big tech stocks are far more resilient. “The weakness at the index level hid strength beneath the market’s surface. More than 300 companies in the S&P 500 ended in positive territory. And some of the gains were sizable, with companies such as Advanced Micro Devices (AMD), Mattel (MAT), and Perkin Elmer (PKI) adding more than 10% each, mostly on positive earnings news. The Invesco S&P 500 Equal Weight exchange-traded fund (RSP) rose 0.6%, while the small-cap Russell 2000 gained 0.8%.”
“The EV-SPAC vehicle rally has turned into a rout, and things might not improve anytime soon. This past week was dreadful for electric-vehicle stocks that came to market via special-purpose acquisition vehicles, or SPACS. Nikola (NKLA) shares dropped 15.2% after former CEO Trevor Milton was charged with securities fraud. Faraday Future Intelligent Electric (FFIE) fell 18.5%. Lordstown Motors (RIDE) was down 16.5%, while Arrival (ARVL) lost 6.8%.”
* Interview: Barron’s spoke with Richard Parsons, who was chairman and CEO of Time Warner in the wake of its AOL merger. about the evolving media landscape, the post pandemic recovery, and his recent foray into the world of blockchain. He sees a future for movie theaters, and a tightening competitive race in the streaming wars. Parsons, a lifelong New Yorker, is also bullish on the future of the Big Apple.
* Features: 1 The long-awaited infrastructure-investment bill, totaling some $1 trillion is almost a ‘done deal’. “The legislation should be a boost to businesses like Vulcan Materials (ticker: VMC) and Martin Marietta Materials (MLM), which make concrete and asphalt; Caterpillar (CAT) and Terex (TEX), which make construction equipment; and United Rentals (URI), which rents the machinery. Most of their stocks have already jumped on the prospect of infrastructure spending.But one infrastructure play has been overlooked: Atlas Technical Consultants (ATCX) provides engineering and design services, inspection and certification of buildings and public works, and other construction-related services.”
“Mandates for Covid-19 vaccination have started dotting the map, as businesses and governmental units across the country try to stem the spike in cases spread by the virus’s contagious Delta variant. At the same time, research is concluding that the protection from vaccination starts to taper after several months, boosting the case for booster shots. All this makes Covid vaccine sales look like a long-term business for Pfizer (ticker: PFE), BioNTech (BNTX), Moderna (MRNA), and other producers.”
* Europe: Bitcoin was trading lower on Friday, ending the week around $39,000. The cryptocurrency suffered a 2% drop in the last 24 hours alone, which suggests some profit-taking—following a recent 35% surge. But, “the news out of Europe was both positive and unsettling for the cryptocurrency.And Congress may be getting closer to regulating the crypto industry.”
* Emerging Markets: Indian Prime Minister Narendra Modi wants to increase his country’s energy output from ‘renewable’ sources by some 500%. And shares in companies such as Mumbai-based conglomerate, Reliance Industries (RIL.India) - which have quadrupled over the past five years as it shifted from oil refining into telecoms and internet through its Jio Platforms subsidiary - are likely to continue performing strongly.
* Commodities : Semiconductors manufacturing represents the fundamental pillar of Taiwan’s economy. The recent “chip shortages mean that cheaper electronics are selling out and Taiwan factories have been replenishing stocks with more expensive chips. And when it comes to chips, it’s all about the size of the wafer, which is essential in the production of integrated circuits,” leading led to a higher export value of semiconductors.
* Streetwise: Intel’s CEO Pat Gelsinger “says that “intel is back” and that he can mlm return the chipmaker to glory by 2025.” Jack Hough examines his plan. “Intel will get dibs on the next generation of the world’s most coveted chip-making machines, and reclaim its technology lead by 2025,” said Gelsinger, who “reckons the company could “triple, quadruple” in value.”