Barron’s Weekend Summary: The wedding boom, which began at the end of last year, has fueled hopes that the U.S. could reverse a long trend of falling fertility rates.
* Cover Story:
The wedding boom, which began at the end of last year, has fueled hopes that the U.S. could reverse a long trend of falling fertility rates. But fresh data and interviews with demographers show that, once the backlog of ceremonies clears, the surge in trips to the altar is unlikely to lead to more trips to the maternity ward. Indeed, despite a slight uptick in 2021, the birthrate is still hovering close to historic lows, far below what is needed to keep the population from shrinking.
* Interview:
Barron’s interviews Rich Greenfield, proprietor of LightShed Partners, a research and investment boutique focused on technology, media, and telecommunications. Greenfield discusses social media, games and streaming services and the quest for users. There’s fresh turmoil in the media industry. Advertising spending is softening, pressured by a toxic brew of high inflation, rising interest rates, and worries about an economic slowdown. While consumers are starting to head back to movie theaters, the streaming-video business is showing signs of maturing, with slowing growth and increasing competition. Netflix is going to sell ads. Elon Musk is (maybe) buying Twitter. Apple is airing baseball games.
* Tech Trader:
-A recent law barring large social media companies from moderating content could be bad in ways that investors likely aren’t expecting. In fact, the biggest risk facing Meta Platforms FB –4.06%, Twitter, and Alphabet isn’t the rise of TikTok—or Apple’s tough stance on privacy—it’s the possibility that a new Texas law could effectively upend social media’s business model. The tech companies got some relief this past week when the Supreme Court stepped in to put the law on hold, but there’s no guarantee it stays that way pending a full review of the case in US District Court.
* The Trader:
The end of cheap money has caught up with the market’s scorekeepers: The S&P Global SPGI and MSCI. Their shares are down more than 28% this year, trailing far behind the S&P 500SPX index. Both run indexes and sell reams of data and analytics services. And both are highly insulated from competition, making their stocks good long-term bets. MSCI, though, is looking stronger in the near term.-Consider the stock market this past holiday-shortened week. Through the first three days of trading, the S&P 500SPX index looked like it was going to be able to start a winning streak after breaking a seven-day losing streak the week before. Instead, it finished down 1.2%. The Nasdaq Composite, which closed off 1%, and the Dow Jones Industrial Average, which fell 0.9%, followed similar trajectories. It’s not just the stock indexes that failed to follow the trend—bond yields did, too.
* Features:
-Lux Capital’s co-founders Josh Wolfe and Peter Hébert tell Barron’s that a wide swath of investment firms and portfolio companies aren’t likely to survive the downturn. “In the same way tech led the excess on the way up, you’ll see it on the way down,” Wolfe says. “It feels like the summer of 2000, where you had speculative excess that will get squeezed out.” But there is a silver lining in this dire forecast. The coming dislocations should give patient investors a new set of moneymaking opportunities.
-Convertible securities are somewhat complex instruments that are unfamiliar to most investors. Now could be a good time to learn about them. Converts are bond/stock hybrids that can offer the security of bonds and the upside of stocks. They’ve historically generated strong returns—gaining about 50% in 2020.But the $280B market has been stung this year and is now worth a look.
* European Trader:
Stellantis is a holding in the Global X Autonomous & Electric VehicleDRVE ETF. The three largest providers of ETFs in the U.S.—Vanguard, State Street, and BlackRock own roughly 5% of Stellantis’s shares outstanding. Those three own almost 20% of both General Motors and Ford.The US just doesn’t pay much attention to Stellantis. That’s a shame, too, because investors are overlooking a star with strong global market position and a competitive plan to win in electric vehicles.
* Emerging Markets:
-Tether is making a push into emerging markets as competition grows with rival stablecoin issuer Circle. The largest cryptocurrency after Bitcoin and Ether, Tether’s USDT has long been the leading stablecoin—a type of digital token pegged to a real asset, such as the dollar. But USDT’s dominance has recently come under pressure. Rival USD Coin (USDC), issued by BlackRock and Fidelity-backed Circle, and is increasingly taking market share amid unanswered questions about Tether’s collateralization.
* Commodities:
-Oil could be headed for $150 a barrel. That might not be good for the economy, but it would be great news for energy stocks. Crude prices had been under pressure since peaking in March, as investors fretted about the impact of China’s Covid-19 lockdown on global growth and a potential recession in the U.S. But after getting knocked down as low as $94.29 on April 11, the price of oil has been steadily rising, while making higher highs and higher lows. Oil exploration stocks, in particular, stand to benefit. . Callon Petroleum would be able to return 86% of its market cap, or $3.1B; SilverBow Resources could return 72%, or $620M; Murphy Oil could return 69%, or $4.7B; Ovintiv –could return 67%, or $9.8B; and Ranger Oil could return 65%, or $1.2B.
-Natural-gas prices could jump by 15% or more by year end as supplies fall far short of demand, experts say.“Increasing supply is now getting trickier, and we really don’t see much of a jump until this time next year,” says Peter McNally, an energy expert at Third Bridge. Shortages of equipment and personnel, combined with underinvestment in the sector, will probably lead the price to rally to $10—or about 15% more than recent futures prices. However, McNally says that some US regions may see temporary spikes to $30 due to lack of infrastructure.
* Streetwise:-Jack Hough talks about the 401K. “A 401(k) is an example of a defined-contribution fund, which is a polite way of saying that we know what goes into it, but it’s anyone’s guess what’s there by retirement age, or how long it lasts. These plans now make up 70% of U.S. retirement assets, double their 1980 share. So savers have to get their investment choices right, be willing to work longer, or keep an open mind between, say, Palm Beach and Papua New Guinea. (I’ve heard all good things.)”