The enthusiasm for optimistic job data appears to have subsided somewhat, with stock futures falling and investors looking for the next catalyst to send this market up. And in line with what we saw this year, the technology is prepared to lead the way to the south.
The investment director of the Bahnsen Group, David Bahnsen, believes that the markets are in the midst of a technological retreat, not moving towards a “sudden and shocking drop of 30%, 40%, 50%, but that we have reached an empirical point and demonstrably, it requires reevaluation. ”
In our call of the day, Bahnsen tells MarketWatch that investors may be blind to the risk of valuing 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 now who are able to withstand this level of valuation.”
“
It brings a little bit of history as a guide to what can happen.
Microsoft MSFT,
it took 16 years to make new highs and Cisco CSCO,
is nowhere near its historical record in 1999. “Intel INTC,
it’s basically close to where it was in 1999, and yet all three companies have crushed in the past 20 years, increased double-digit profits a year for 20 years, ”he said. “If the stock prices have not changed, it can only happen for one reason. The stocks were very high. “
The message for stocks that investors love now – the popular FAANG (Facebook FB,
Apple AAPL,
Amazon AMZN,
Netflix NFLX,
Google GOOGL, owned by Alphabet,
) names and companies like Tesla TSLA,
– is that they can continue to grow, be successful and be profitable, but valuations can be normalized and stock prices can “go nowhere for a long time,” warned Bahnsen.
One solution: look at old technology firms, like IBM IBM,
Cisco CSCO,
and Intel INTC,
“They are literally stable cash flow generators with call options in their future,” he said. “They have new and interesting technologies that are not on Netflix NFLX,
and Facebook FB,
camp and certainly not the Tesla and Snowflake SNOW,
camp of things, but none of these companies can do what 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 who expect these shares to pay off slowly are still receiving decent dividends from them.
Bahnsen is also big on the theme of pent-up demand for COVID-19 and believes that consumer basic products are the most underestimated in the market. He owns Procter & Gamble PG,
Kimberly-Clark KMB,
and Pepsi PEP,
three names that have yet to break new records continue to grow in both revenue and profitability, he said.
Difficulty in corporate taxes?
US stock futures ES00,
YM00,
NQ00,
are falling after the Dow Jones Industrial Average DJIA,
and S&P 500 SPX,
both set historical records on Monday. European SXXP shares,
are trying to recover Wall Street’s gains, while Asia was mixed, with China’s shares falling after the central bank reportedly asked creditors to curb loan growth this year.
The influential Democratic Senator Joe Manchin warned that the corporate tax rate proposed in President Joe Biden’s infrastructure package is very high and that he would increase it to 25%, but not to the 28% that the bill requires.
The Senate’s nonpartisan parliamentarian decided on Monday for a Democratic effort to pass more legislation through reconciliation, which means that the party can pass more measures in the Senate this year.
Swiss banking giant Credit Suisse CS,
CSGN,
will have a $ 4.7 billion coup linked to the collapse of Archegos Capital Management. It also cut its dividends and announced the withdrawal of its investment banks and venture capitalists.
Tween-centric social gaming platform, Roblox RBLX,
is in an ideal spot in the industry and Wall Street is getting it.
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