Displaying items by tag: stocks

(New York)

The market will inevitably be shocked by some big news this year. Trying to forecast such news always seems like a futile exercise, but Barron’s has gone out on a limb and tried to select what will rock markets in 2018. There a three big calls being made. The first is a US government shutdown on the back of political in-fighting. That might cause a dip, but not a lasting one. The other two could be different. For instance, a looming trade war with China or other major trading partners could cause serious market issues. Additionally, there may be indictments of Trump’s closest family members, including Donald Trump Jr. and Jared Kushner, according to Barron’s.

FINSUM: Indictments of Trump’s family would rock Washington and the national psyche to its core. But it is hard to say that it would have a lasting effect on markets other than to create political uncertainty.

(San Francisco)

In what appears to be the first big American reinvestment on the back of the new US tax package, Apple has announced that it will invest $30 bn in the US and pay its $38 bn tax bill. It will expand US operations and add 20,000 new jobs. The company will also give all of its more than 120,000 employees a $2,500 stock bonus. President Trump commented on the news that “I promised that my policies would allow companies like Apple to bring massive amounts of money back to the United States”.

FINSUM: This is why we thought the lowering of corporate taxes was a good idea, and we are very happy to hear that Apple will pay its bill and invest more in the US. As an aside, we do sort of feel like Apple is using this investment as PR fodder to combat against the battery/performance scandal.

(New York)

It looks like the end of the road for one of the most popular and successful subsections of the REIT business. For the last decade there has been a veritable gold rush in self storage units. The business is a very profitable one and operators were able to charge gigantic rent increases over the last several years because of a lack of new supply. However, the market is now being flooded with new rental units, which could spell the end of the boom. There are also some demographic factors working against self storage, such as how Millennials collect less stuff than previous generations, and are likely to inherit large houses form their parents.

FINSUM:This is a succinct and well-conceived argument on the sector. That said, it does not look like performance will fall off a cliff, just that the best years are behind self-storage for now.

(New York)

Goldman Sachs just reported its first quarterly loss since 2011. The good news is that the loss does not mean the sky is falling in on investment banking or the markets. The loss was because of a huge $4.4 bn tax charge the company took in advance of the new tax regime for this year. Aside form the tax charge, Goldman’s business looked solid, with higher overall revenue and pre-tax margins in 2017. The one sore spot was bond trading, which produced only $1 bn of revenue.

FINSUM: The fall in bond trading revenue at GS has been prolific. In 2009 the firm created $23 bn of revenue in FICC trading. In 2017 revenues were just $5.3bn.

(San Francisco)

While most publications have been running stories arguing that it may be time to get out of the FAANGs, Barron’s has a run a piece to the contrary, saying that they have more room to run. While the piece admits that the group of stocks is under a lot of pressure and is highly priced, it contends that it is not time to pull out yet. The argument is that despite accusations of misbehavior and threats from Trump, the sector will remain the centerpiece for growth investors. If the economy continues to chug (meaning stay under 3% growth), then tech’s steady growth will remain attractive.

FINSUM: We tend to like this view. Despite how richly these companies are valued, we think there is still room for medium-term value growth as regulation is still a way off and their fundamental businesses are solid.