Enthusiasm over bullish job data seems to have faded a bit, with stock futures slipping and investors looking for the next catalyst to send this market bigger. And in line with what we’ve seen this year, technology is poised to head south.
The investment director of the Bahnsen Group, David Bahnsen, considers that the markets are in the middle of the period of technological withdrawal, it is not heading towards a “sudden and shocking decrease of 30%, 40%, 50%, but that we reach a point, empirically and demonstratively, this requires reassessment. “
In ours call of the day, Bahnsen tells MarketWatch that investors may be blind to the valuation risks for certain high-profile stocks, as price / earnings ratios have not been corrected to anything “normal or reasonable”.
“
“There is not enough momentum, there are not enough buyers to support this level of valuation.”
”
He draws a little history as a guide to what can happen.
Microsoft MSFT,
took 16 years to make new highs and Cisco CSCO,
is not even close to its all-time high in 1999. “Intel INTC,
it is practically right where it was in 1999 and yet all three companies have crushed it in the last 20 years, increasing double-digit earnings per year for 20 years, ”he said. “If stock prices have not moved, this can only happen for one reason. The stocks were too damn big. ”
The message for the shares that investors love now – the popular FAANG (Facebook FB,
Apple AAPL,
Amazon AMZN,
Netflix NFLX,
Google GOOGL alphabetically owned,
) names and companies such as Tesla TSLA,
– is that they can continue to grow and be successful and profitable, however valuations can be normalized and stock prices cannot “go anywhere long”, warned Bahnsen.
One solution: look at old technologies, such as IBM IBM,
Cisco CSCO,
and Intel INTC,
“They are literally stable generators of cash flows, who have call options for their future,” he said. “They have exciting new technologies that aren’t in Netflix NFLX,
and Facebook FB,
camp and certainly not Tesla and Snowflake SNOW,
camp, but none of those companies can do anything they do without Intel processors, chips, servers, mainframe, hardware. ”
“The technology infrastructure we need still depends on Cisco, Intel and IBM,” he said, adding that patient investors waiting for these shares to be paid slowly continue to receive decent dividends from them.
Bahnsen is also important on the subject of COVID-19 demand, and considers consumer commodities to be the most undervalued on the market. He owns Procter & Gamble PG,
Kimberly-Clark KMB,
and Pepsi PEP,
he said that three names that have not yet made new maxims continue to grow on both the top and the bottom line.
Return to corporate taxes?
US ES00 futures,
YM00,
NQ00,
slides after DJIA Dow Jones Industrial Average,
and S&P 500 SPX,
both set records on Monday. European stocks SXXP,
is playing to hit Wall Street earnings, while Asia has been mixed, with stocks in China slipping after the central bank reportedly asked lenders to limit loan growth this year.
Influential Democratic Sen. Joe Manchin has warned that the proposed rate of income tax on President Joe Biden’s infrastructure package is too high and will raise it to 25 percent, but not 28 percent, of the bill.
The non-partisan MP in the Senate on Monday decided on a democratic effort to pass more laws through reconciliation, which means the party could get more measures approved in the Senate this year.
Swiss banking giant Credit Suisse CS,
CSGN,
will have a $ 4.7 billion hit in connection with the collapse of Archegos Capital Management. He also reduced his dividend and announced that the heads of banking and risk investments would leave.
Roblox RBLX Tween-centric social gaming platform,
is in a sweet spot in the industry and Wall Street is paying attention.
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