Barrons weekend summary: Cover story highlights 4 growth names and 4 big dividend stocks; positive feature on IHRT
* Cover story: “Stocks have shined this year, recent wobbles notwithstanding, and the longest economic expansion in U.S. history continues. Manufacturing might already be in recession, but the larger consumer economy is strong, with unemployment low and confidence high”; Positive on AMZN, ANET, EQIX, MRK, AVGO, TGT, VZ, WY: The first four companies can buck slowing growth, while the latter four offer big dividends for yield-hungry investors.
* Features: 1) Losing a trade war would be a catastrophic blow to the national psyche of China or the U.S., but even more dangerous than losing is a country thinking it can “win”—and both sides now seem to be gaining confidence in their ability to prevail; 2) Run-of-the-mill worries about corporate profits or tighter monetary policy can’t be blamed for the latest gyrations in the bond market—it could be fears of a looming recession, an escalation of the U.S.China trade war, or a Chinese military response to protests in Hong Kong, among other catalysts; 3) Positive on IHRT: Company cut its debt after exiting Chapter 11 and is well-positioned in the fast-growing and competitive digital streaming and podcasting business—and shares at around $13 look appealing as creditors who received a stake in the bankruptcy sell their holdings.
* Tech Trader: Companies that can shrug off trade wars, geopolitical turmoil, and plunging sovereign bond yields and produce financial results that beat expectations could see their share prices rise amid the volatility (positive on TTWO, SHOP, MTCH, AMD).
* Trader: Recent market volatility has little to do with fundamentals themselves—it was the market’s way of thinking through the potential impact of new tariffs and an escalating U.S.-China trade war on tariffs to determine how much those fundamentals would be worth; China bear Kyle Bass of Hayman Capital Management says the country would probably like to see the yuan weaken by about five percent a year over the next eight years—and that the U.S. has an advantage in a currency war; BCS analyst David Strauss believes a potential split-up of ARNC will force investors to look more closely at valuation multiples.
* Profile: Thomas Browne and Brian Leonard, managers of the Keeley Mid Cap Dividend fund, are value managers who happen to buy dividend-paying stocks, based on the idea dividends suggest that company management is conservative and less likely to pile on debt (top 10 holdings: TSS, VMC, CY, ITT, FMC, AL, OSK, HPP, BWXT, BRX).
* Interview: Minneapolis-based market strategist Larry Jeddeloh says too much of the country’s prosperity depends on the Federal Reserve, which means U.S. rates will eventually fall to zero, prompting the Fed to buy Treasury paper and launch another bullish move to equities that will return Donald Trump to office.
* Follow-Up: Positive on DIS: The recent quarterly miss was almost entirely due to worse-than-expected performance at the entertainment giant’s newly acquired 21st Century Fox properties, but nothing has changed in what matters most to investors: its consumer streaming potential.
* European Trader: Cautious on Rightmove: Investors might be wise to sell shares of the UK-based real estate listing service, which faces some severe property market headwinds and uncertainty over Brexit for at least the next six to nine months.
* Emerging Markets: Chinese property developers are borrowing massively in dollar-denominated bond markets, prompting increased concern among investors about what could go wrong as Beijing lets the yuan drift downward in response to U.S tariffs.
* Commodities: The corn crop appears set to get worse—“The combination of a weather-related planting delay, lower-than-forecast crop yields, and the probability of fall frost could conspire to produce double-digit gains in futures prices.”
* Streetwise: August has been the worst month for stocks over the past decade, and the second-worst since 1950, behind September—and this August has already brought plenty of financial mayhem, says columnist Jack Hough.