Enthusiasm over bullish job data seems to have faded a bit as stock futures slip, and investors are looking for the next catalyst to send this market higher. And in line with what we have seen this year, the technology is set to lead south.
The Bahnsen Group’s Chief Investment Officer, David Bahnsen, believes that the markets are halfway through a technical recovery, not heading for a “sudden and shocking decline of 30%, 40%, 50%, but that we’re getting to a point, empirically and demonstratively. , it requires pricing. ”
In our today’s call, Bahnsen MarketWatch tells that investors may be blind to valuation risks for certain high-profile stocks, as price / earnings ratios have not corrected to anything “normal or reasonable.”
“There is not enough momentum, there are not enough buyers right now who are able to support this valuation level.”
He pulls up some history as a guide to what might happen.
took 16 years to make new heights and Cisco CSCO,
is not even close to the highest level set in 1999. “Intel INTC,
is pretty much exactly where it was in 1999, and yet all three companies smashed it in the last 20 years, earnings grew by two digits a year for 20 years, ”he said. “If stock prices did not move, it can only happen for one reason. The shares were too damn high. ”
The message to the stocks that investors love now – the popular FAANG (Facebook FB,
Alphabet-owned Google GOOGL,
) names and companies such as Tesla TSLA,
– is that they can continue to grow and succeed and be profitable, but still valuations can be normalized, and stock prices can “go nowhere for a long time,” warned Bahnsen.
One solution: Look at old technological opponents like IBM IBM,
and Intel INTC,
“They are literally stable cash flow generators who have call options on their future,” he said. “They have new and exciting technologies not found in the Netflix NFLX,
and Facebook FB,
camp and certainly not Tesla and Snowflake SNOW,
camp of things, but none of these companies can do any of the things they do without Intel processors, chips, servers, mainframe, hardware. ”
“The technological infrastructure we need is still dependent on Cisco, Intel and IBM,” he said, adding that patient investors waiting for these stocks to pay off slowly will still reap decent returns from them.
Bahnsen is also big on the uncovered COVID-19 demand theme and believes that consumer pins are the most undervalued on the market. He owns Procter & Gamble PG,
and Pepsi PEP,
three names that have not yet reached new heights continue to grow both top and bottom lines, he said.
Pushback on corporation tax?
US Stocks ES00,
slips after Dow Jones Industrial Average DJIA,
and S&P 500 SPX,
both logged record highs on Monday. European equities SXXP,
plays catch-up on Wall Street gains while Asia was mixed and Chinese stocks slipped after the central bank reportedly asked lenders to slow lending growth this year.
Influential Democratic Senator Joe Manchin warned that the proposed corporate tax rate in President Joe Biden’s infrastructure package is too high and he will raise it to 25%, but not the 28% required by the bill.
The Senate’s non-partisan parliamentarian decided on Monday for a democratic effort to pass more legislation through reconciliation, meaning the party could get more measures approved in the Senate this year.
Swiss banking giant Credit Suisse CS,
will take a hit of $ 4.7 billion. linked to the breakdown of Archegos Capital Management. It also cut its dividends, announcing that its investment bank and venture capitalists will leave.
Tween-centered social gaming platform Roblox RBLX,
is in a sweet industry and Wall Street is taking attention.
In addition to the Milky Way, the galaxy is a bunch of blue stars warmer than the sun.
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