• World’s Largest Pension Fund Loses $165 Billion in Worst Quarter
    Bloomberg

    World’s Largest Pension Fund Loses $165 Billion in Worst Quarter

    (Bloomberg) -- The world’s biggest pension fund posted a record loss in the first three months of 2020 after the coronavirus pandemic sparked a global market rout in the period.Japan’s Government Pension Investment Fund lost 11%, or 17.7 trillion yen ($164.7 billion), in the three months ended March, it said in Tokyo on Friday. The decline in value was the steepest based on comparable data back to April 2008, reducing the fund’s total assets to 150.63 trillion yen. Foreign stocks were the worst performing investment, followed by domestic equities.The results come just months after the fund revamped top management and revised its asset allocation to focus more on overseas debt. The loss, which wiped out gains for the fiscal year, may attract political attention as social security remains a major concern for tens of millions of Japan’s retirees.“The decline in domestic and foreign equities led to a negative return for the fiscal year,” said Masataka Miyazono, the president of GPIF. “Both equity markets performed strongly during 2019 even under pressures from the U.S.-China trade negotiations. The global coronavirus pandemic led to investors taking a risk-off stance.”Overseas bonds were the only major asset to generate a positive quarterly return. The securities gained 0.5%, compared with losses of 0.5% for domestic bonds, 18% for local equities and 22% for foreign stocks. In April, GPIF raised its asset allocation to foreign bonds by 10 percentage points to 25%, while keeping the target for foreign and domestic stocks unchanged at 25%.Naoki Fujiwara, the chief fund manager at Shinkin Asset Management Co., said the losses were expected. Equities have rebounded since March, so the pension fund should be recouping losses for the April-June period, Fujiwara said.“The current portfolio is exposed to equity volatility,” he said. “We’re in a low-yield environment right now, and will likely be for the next two years, so maybe it’s alright for now, but in the long run, the pension fund should correct the allocation of equities.”Read more: An Ex-Goldman Bond Trader’s Quiet Rise to Managing $1.6 TrillionUnder the new guidance of GPIF President Miyazono and Chief Investment Officer Eiji Ueda, the fund must navigate a volatile market torn between an ongoing coronavirus pandemic and promises of economic stimulus measures. Fears of a second wave of outbreak are already hampering the global equity markets recovery.The GPIF isn’t rushing to buy foreign bonds, which are 3% below its allocation target, Miyazono told reporters in Tokyo. The fund has a long-term investment timeframe much longer than 10-20 years, he said, adding that there will be no impact on pension payouts from a single year’s results.Investments in ESG indices reached a record high of 5.7 trillion yen. The GPIF, a leader in socially responsible investing, has invested in indexes such as the FTSE Blossom Japan, MSCI Japan ESG Select Leaders and MSCI Japan Empowering Women.During the January-March quarter, the MSCI All-Country World Index of global stocks slumped 22%, the worst since the global financial crisis. Yields on the 10-year U.S. Treasuries slumped 125 basis points to near record lows during the same period, fueled by unprecedented measures from the U.S. Federal Reserve and intense demand for haven assets. From April, the GPIF has adjusted its portfolio, setting a general target to keep 25% each in all four asset classes, with the allocation of each assets allowed to deviate by different ranges.(Adds second chart, ESG holdings in 10th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Barrons.com

    What a Democratic Sweep Could Mean for the Market

    The elections will probably arrive before a Covid-19 vaccine does. What Wall Street should expect in a Biden administration.

  • 2 “Strong Buy” Dividend Stocks Yielding Over 8%
    TipRanks

    2 “Strong Buy” Dividend Stocks Yielding Over 8%

    With markets volatile – bouncing around the 3,000 to 3,200 range for the last two weeks – and fears rising that a second wave of coronavirus cases will force a new round of economic shutdowns, investors are giving a second look to some strong defensive stocks. We’re talking about stocks with classic defensive profiles: high yielding dividends, combined with a high upside potential. Using TipRanks database, we’ve pinpointed two such stocks. Both offer investors a fine combination of defensive traits: dividends yielding over 8%, an upside potential starting at 25%, and ‘Strong Buy’ consensus rating from Wall Street’s analyst corps. Archrock, Inc. (AROC)We’ll start with Archrock, a natural gas midstreaming company. The midstream sector connects gas extraction with the final customer; midstream companies control the pipelines, transport, and storage facilities that the natural gas industry depends on. Archrock has operations in the lower 48 states, providing the compression equipment that liquifies natural gas for transport and storage.The economic shutdowns in Q1 forced a decline in demand, and Archrock’s Q1 EPS was a down sharply sequentially, from 27 cents to 12 cents. At the same time, revenues beat both the estimates and the year-ago number. At $249.7 million, the top line was up 5.7% year-over-year.A strong free cash flow and heavy-handed actions to cut costs and shore up liquidity allowed AROC to maintain its dividend payment for Q1, and the company paid out 14.5 cents per share common share back in May. This was unchanged from Q4, and up 10% from the first quarter of 2019. It’s a measure of Archrock’s underlying soundness and commitment to the dividend that the company has kept up the payment even during the corona crisis. At 58 cents per share annualized, AROC's dividend yield is an impressive 8.54%.5-star analyst T J Schultz, of RBC Capital, believes AROC has a firm foundation to move forward. He writes of the stock, “We expect lower associated gas production to have an impact on AROC utilization into 2021, but we think manageable debt leverage and ample dividend coverage provide some flexibility… we think the riskreward is decent at current levels given AROC’s liquidity, lack of near-term debt maturities, and ability to pull additional levers to manage liquidity further if needed.”Schultz’ Buy rating on the stock is supported by an $11 price target, which suggests an impressive 68% upside potential for the year. (To watch Schultz’ track record, click here)Overall, the Strong Buy analyst consensus rating on AROC is unanimous, based on 3 recent Buy reviews. Shares are priced at $6.55, and the $9.17 average price target implies a one-year upside of 40%. (See Archrock stock analysis at TipRanks)Altria Group, Inc. (MO)The next stock on our list is a classic ‘sin stock.’ Altria is a tobacco company, the maker of Marlboro cigarettes. Tobacco companies have a long history of outperforming market downturns, and the reason is psychological. People will make big changes when financial hardship hits. They’ll give up luxuries and large purchases, and even delay home and repairs – but they’ll keep buying small pleasures like cigarettes. It’s a quirk that has helped make MO a strong defensive play even as overall smoking rates decline.A look at the Q1 numbers bears out Altria’s solid position. Revenues and earnings – the top and bottom lines – both beat the estimates. Revenues, at $5.05 billion, were 9% above forecasts, and 15% over the year-ago number. EPS came in at $1.09, 12% higher than expected and up almost 7% year-over-year.Wise diversification from the company has also helped. Altria has taken strong positions the cannabis industry, the vaping sector, and in alcohol, with large-scale investments in Cronos Group, JUUL Labs, and AB InBev. These moves mark a shift for Altria, from pure-play tobacco to the full spectrum of vices.Altria’s sound niche has allowed the company to keep its solid dividend – with a 12-year history of reliable payments and steady growth – up to date. The company declared its next payment for July 10, of 84 cents per common share. This gives and annualized rate of $3.36 per share, and a yield of 8.56%. The 77% payment ratio is high, showing a commitment to returning profits to shareholders – but it also shows that the company can sustain the dividend at current income levels.Piper Sandler analyst Michael Lavery sees Altria’s overall position as favorable, even during the pandemic. He states his belief that “We believe consumption may have actually increased during the pandemic, as smokers spend more time away from offices, restaurants, and places with smoking bans. Lower income consumers have also benefited from increased unemployment benefits and the government stimulus... Altria has a vast database of adult US smokers, and it has data at the zip code level to inform pricing and couponing strategies. Altria can monitor and manage mix with its revenue management system on a very targeted basis.”Lavery’s Buy rating on the stock is backed by his $57 price target, which implies a robust upside for MO shares of 45%. (To watch Lavery’s track record, click here)With 6 Buy ratings set in recent weeks, MO shares have a Strong Buy from the analyst consensus rating. The $54.50 average price target suggests an upside of 39% from the $39.24 current trading price. (See Altria stock-price forecast on TipRanks)To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

  • Fuel Cell Stock Rallies to 17-Year High After China Order
    Bloomberg

    Fuel Cell Stock Rallies to 17-Year High After China Order

    (Bloomberg) -- Shares of Ballard Power Systems Inc. rallied to a 17-year high after the company announced a $7.7 million order from China.The Vancouver-based hydrogen fuel-cell maker jumped as much as 8.3% to its highest since December 2002 after the receiving a purchase contract from Guangdong Synergy Ballard Hydrogen Power Co., a 10%-owned joint venture located in China.The company’s technology currently powers over 650 electric buses and more than 2,200 electric trucks in China, according to Alfred Wong, managing director at Ballard.“This follow-on order from the Synergy-Ballard joint venture is an important indicator of the continued progress and market demand for Ballard fuel cell technology,” Wong said in a statement Thursday. “We expect to see high adoption of fuel cell electric vehicles in China.”Ballard is the second-best performing stock on Canada’s benchmark S&P/TSX Composite Index this year with a 165% rally, pushing its market value to almost C$6 billion ($4.4 billion) amid burgeoning speculation that wide-scale adoption of hydrogen fuel cells may at long last be around the corner.“We believe Ballard fuel cell technology will offer a compelling value proposition, including high reliability and durability,” Wong said in the company statement.(Updates to add value of contract in first paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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  • Liberals aren’t giving Joe Biden credit for a radical tax plan that goes after the indolent rich
    MarketWatch

    Liberals aren’t giving Joe Biden credit for a radical tax plan that goes after the indolent rich

    Biden’s unapologetic liberalism would nearly double the average tax rate paid by nonworking millionaires and make the working rich pay more into Social Security, all to help the most vulnerable.

  • I have a seven-figure nest egg — am I saving too much for retirement?
    MarketWatch

    I have a seven-figure nest egg — am I saving too much for retirement?

    I recently had a conversation with a colleague about retirement and was told I’m saving too much! My wife and I are both 57 and have been aggressive savers ever since my brother, an institutional retirement financial expert, told us to max out our savings when we were 25 years old. My colleague says we are “postponing” our lives and creating tax problems for when we retire.

  • U.S.News & World Report

    8 Upgraded Stocks to Buy in July

    These stocks scored analyst upgrades heading into July. June was another volatile and chaotic month for investors. But even amid the economic uncertainty and difficult climate, Wall Street analysts see ...

  • Financial Times

    Inflation is coming

    It is high time to prepare for this change and figure out what to look out for and how one might go about immunising investment portfolios against such an outcome. Man Group’s DNA team likes to think about inflation and deflation using a paradigm we call Fire and Ice, with ice being deflation and fire hyper-inflation. Neither are good news for asset prices and we believe that investors are unprepared for the coming storm.

  • His Wealth Surged by $25 Billion. Then Jack Ma’s Rival Quit
    Bloomberg

    His Wealth Surged by $25 Billion. Then Jack Ma’s Rival Quit

    (Bloomberg) -- Colin Huang’s ascent is one for the history books: In just six months, his fortune swelled by $25 billion -- one of the biggest gains among the world’s richest people.His Pinduoduo Inc., a Groupon-like shopping app he founded in 2015, has become China’s third-largest e-commerce platform, with a market value of more than $100 billion. In the first quarter, as the coronavirus pandemic caused most of the nation’s economy to grind to a halt, PDD’s active users surged 68% and revenue jumped 44%, the company said in May.Now Huang, who has overseen the firm as its American depositary receipts have more than quadrupled in less than two years, has stepped down as chief executive officer.At one point, his net worth climbed as high as $45 billion, placing him just behind China’s wealthiest people -- Tencent Holdings Ltd.’s Pony Ma and Alibaba Group Holding Ltd.’s Jack Ma -- on the Bloomberg Billionaires Index. That’s even as PDD continued to post losses, primarily because it chases growth with the help of generous subsidies and has been known to spend more on marketing than it earns in sales.“Pinduoduo was perfectly positioned for people being stuck at home,” said Tom Ronk, CEO of Century Pacific Investments in Newport, California.Huang, who controlled 43.3% of PDD shares, has reduced his stake to 29.4%, according to a June 30 regulatory filing. His fortune now stands at $30 billion.That excludes a $2.4 billion charitable holding that he shares with PDD’s founding team, and $7.9 billion that went to Pinduoduo Partnership, of which Huang and newly named CEO Lei Chen are members. The partnership will help fund science research and management incentives, according to a letter following Huang’s resignation. The wealth estimate also excludes $3.9 billion that people familiar with the matter said was transferred to an angel investor.PDD declined to comment on Huang’s holdings or net worth.Facing ChallengesHe will remain chairman and work on the company’s long-term strategy and corporate structure to help drive the future of the e-commerce giant, PDD said.“PDD is still facing some high-level challenges in product supply, relationship with brand merchants, logistics and payments,” said Shawn Yang, an analyst at Blue Lotus Capital Advisors. “Colin may want to focus more on these issues.”PDD’s success hinges on deals, which have become particularly popular with customers looking for bargains as the world’s second-largest economy slows. Most of its users come from smaller Chinese cities, and the app gives them extra discounts when they recommend a product through social networks and get friends to buy the same item.Fen Liu, a homemaker in Quanzhou, a provincial city in Fujian, said she accrued enough coupons with her friends’ help to reduce the price of a suitcase to zero.“I couldn’t believe my eyes when I saw my suitcase arrive in the mail,” she said. “It’s made me a loyal Pinduoduo user ever since.”‘Bargain Hunters’While PDD’s aggressive price-reduction strategies have helped win over people with lower incomes, they may stifle the company’s efforts to attract wealthier consumers, according to Charlie Chen and Veronica Shen, analysts at China Renaissance Securities in Hong Kong.“PDD’s users are largely bargain hunters reluctant to buy large-ticket items,” they wrote in a June 29 note, adding that the company’s image remains a key obstacle to users spending more. “We believe PDD is working to change its low-price brand image -- but this could be costly.”That may require heavy marketing and hurt margins further despite a strong user-base foundation for future growth, the analysts said. And PDD’s management has offered no clear path to profitability.Last year, the company’s “10 Billion RMB Subsidies” campaign, which is ongoing, led to a $2 billion increase in sales and marketing expenses to $3.9 billion, and those costs have been at 90% to 120% of revenue for the past two quarters, China Renaissance said.For the nation’s June 18 shopping festival, PDD provided a subsidy program with no cap across different product categories to push spending and attract more users. Other fast-growing Chinese startups -- including rival Meituan Dianping, ride-hailing app DiDi Chuxing and Starbucks Corp. competitor Luckin Coffee Inc. -- have also adopted subsidies strategies to maintain customer loyalty.Huang, 40, grew up in the eastern city of Hangzhou, where Alibaba has its headquarters. After receiving a degree at Zhejiang University, he went to the University of Wisconsin for a master’s in computer science. He began his career at Google in 2004 as a software engineer and returned to China in 2006 to help establish its operations in the country.He then became a serial entrepreneur. He started his first company in 2007, an e-commerce website called Ouku.com that he sold three years later after realizing it was too similar to thousands of others. He then launched Leqi, which helped companies market their services on websites like Alibaba’s Taobao or JD.com Inc., and a gaming firm that let users play on Tencent’s messaging app WeChat. Both took off and Huang found himself “financially free,” according to a 2017 interview.After getting an ear infection, he decided to retire in 2013 at age 33. But following a year of pondering what to do with his life -- he contemplated starting a hedge fund and moving to the U.S. -- he came up with the idea of combining e-commerce and social media. At the time, Alibaba dominated the online business, and WeChat became a must-have application on smartphones in China.The tables have turned since. In 2018, Alibaba launched a PDD-style app in an attempt to lure smaller-town users with bargains. It came months before Huang took his company public in New York, raising $1.63 billion in its July 2018 initial public offering. Since then, PDD has surged 389%, while Alibaba has gained just 13%.In 2017, Huang had said he was unlikely to spend the rest of his life at PDD. While he’s still chairman of the company, he now wants to give more responsibility to younger colleagues to keep the entrepreneurial spirit as PDD matures, he wrote in a letter to employees.“We envision Pinduoduo to be an organization that creates value for the public rather than being a showoff trophy for a few or carry too much personal color,” Huang said. “This will allow Pinduoduo to continually evolve with or without us one day.”(Updates PDD, Alibaba moves in 22nd paragraph. A previous version of this story corrected Fen Liu’s location.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Cramer Weighs In On American Tower, Starbucks And More
    Benzinga

    Cramer Weighs In On American Tower, Starbucks And More

    On CNBC's "Mad Money Lightning Round," Jim Cramer said that Vroom Inc (NASDAQ: VRM) is a great company and the auto industry is coming back. He likes the stock and he thinks that used cars are very, very hot.Cramer doesn't like Archer-Daniels-Midland Co (NYSE: ADM). The stock has really done absolutely nothing.If it's a financial technology digitized bank, it's going to go up, said Cramer. Green Dot Corporation (NYSE: GDOT) belongs to the group, but Cramer prefers Paypal Holdings Inc (NASDAQ: PYPL) and Square Inc (NYSE: SQ).Cramer is not recommending the oil stocks, so he is not a buyer of WPX Energy Inc (NYSE: WPX).ANGI Homeservices Inc (NASDAQ: ANGI) is a great stock and Cramer would stay on it.Cramer prefers American Tower Corp (NYSE: AMT) over Crown Castle International Corp (NYSE: CCI).When it comes to Starwood Property Trust, Inc. (NYSE: STWD), Cramer finds it to be a sub-optimal situation.Everybody hates Starbucks Corporation (NASDAQ: SBUX) now, but wait until you see what the CEO, Kevin Johnson, has got in mind, said Cramer. He thinks that it will be on every corner and he likes the stock.See more from Benzinga * Cramer Gives His Opinion On American Tower, Virgin Galactic And More * Fast Money Picks For June 1(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  • U.S.News & World Report

    9 Cheap Dividend Stocks Under $10

    Explore these bargain income investments. If you're looking for bargain stocks, one thing is important to remember above all else: Many cheap stocks have a low price for a reason. The following nine dividend stocks all offer share prices under $10 a piece to accommodate this strategy; however, investors should be aware that this often comes with some trade-offs -- such as low growth prospects or less frequent payouts.

  • General Electric Is Still Playing a Losing Hand
    InvestorPlace

    General Electric Is Still Playing a Losing Hand

    In early June, it appeared all the tumblers were coming into place for General Electric (NYSE:GE). After over a year of cost cutting and streamlining, the company looked like things might be turning around. In the first five trading days of June, GE stock climbed over 25%, nearly in lockstep with Boeing (NYSE:BA) stock.Source: Sundry Photography / Shutterstock.com But in this case, what goes up fast can come down just as hard. And in the case of GE stock, the stock has given up all of its gains as new cases of the novel coronavirus are threatening to cool the embers of the economic recovery.In the past, General Electric was a stock that investors ran to in times of economic uncertainty. But in those days, GE was in defensive industries and offered a strong dividend. That's not the reality of GE today.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Utility Stocks to Buy Keeping Lights On And Dividends Flowing The company reshuffled the deck, but for now, there's nothing in their hand that makes me want to invest. The Novel Coronavirus Came at a Really Bad TimeIn the company's first-quarter earnings call, chief executive officer Larry Culp confirmed what many investors already knew. It's going to be rough sledding for GE in the next quarter. And that the company was facing some challenging times.So let me tell you what we do know. The second quarter will be the first full quarter with pressure from COVID-19, and we expect that our financial results will decline sequentially before they improve later this year. The bottom line is we have some challenging times ahead …I had my doubts, but I've been impressed with the discipline and execution that Culp has brought to GE. He had an unenviable job and has accomplished a great deal. It's been no small feat winning back the trust of analysts. But in addition to getting the company's financial house in order, Culp has streamlined the business.Right now, the company is still a conglomerate, but the parts seem to relate better. But the underlying question is whether the whole is greater than the parts. This Is Not Your Parents General ElectricLarry Ramer writes about General Electric's future-facing portfolio. The company is operating in many areas that represent the future of our nation. The electric power grid, wind turbines, digital technology, and renewable energy are all part of the company's product portfolio. And with core offerings in health care and aviation, it seems that the company would be a sexy pick among industrial stocks. That would probably be true if this were 2017 or 2018.But right now, the economy is struggling to get off its back. Yes, we had an encouraging May jobs report, and the June numbers may also be encouraging. However, the economy is still trying to recover from the novel coronavirus. And while it may not require one of GE's ventilators, it's not going to be the V-shaped recovery some had hoped.The General Electric of Jack Welch was perhaps the ultimate defensive stock. Today, the company needs a robust economy for success. And that's probably at least a year away. The simple truth is that Culp was dealt a bad hand in the midst of a robust economy. He's played that hand really well all things considered, but without a vibrant economy, the company looks stuck in neutral. GE Stock Looks About RightInvestors don't seem to have a lot of conviction on GE stock one way or the other. They seem to be building a line of support at around $6.50. But the immediate question is if there's any reason to believe investors will send the stock back to around $8.50. And then the other question is that really enough incentive to buy the stock right now?The company did pay its greatly reduced dividend. But at a single penny per share, GE has a long way to go to return to its days as a dividend darling.With all that said, I think GE stock could be a long-term option. But until business conditions improve across all areas, there's really no reason to initiate a position.Chris Markoch is a freelance financial copywriter who has been covering the market for over five years. He has been writing for InvestorPlace since 2019. As of this writing, Chris Markoch did not hold a position in any of the aforementioned securities. More From InvestorPlace * Why Everyone Is Investing in 5G All WRONG * America's 1 Stock Picker Reveals His Next 1,000% Winner * Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company * Radical New Battery Could Dismantle Oil Markets The post General Electric Is Still Playing a Losing Hand appeared first on InvestorPlace.

  • Barrons.com

    Retirees, Beware These Tax Traps on Social Security and Medicare

    Seniors face multiple income traps, and it’s not just the rich. For instance, lower- and middle-income retirees get hit by the so-called tax torpedo as rising income causes their Social Security benefits to be taxed.

  • Do these simple things to turn your retirement savings into big money
    MarketWatch

    Do these simple things to turn your retirement savings into big money

    Much of your investment returns will be determined by things outside your control. • When you’re near retirement or when you finally do make the leap, does the market suddenly take a big turn for the worse and force you to say goodbye to a lot of the money you have saved? You decide you’ll each invest $5,000 at once and add the same amount on every subsequent birthday until you reach the “new” expected retirement age of 67.

  • Bloomberg

    Tesla's Overexcited Fans Should Cool Down a Little

    (Bloomberg Opinion) -- Back when Tesla Inc. delivered 95,000 cars to customers during the spring quarter of 2019, the stock price was languishing at about $235 and Elon Musk’s electric car company was valued at “only” $40 billion. Fast forward a year and the shares are now priced at more than $1,200. With a market capitalization of $224 billion, Tesla has surpassed Toyota Motor Corp. as the world’s most valuable automaker.Yet in the second quarter of 2020, Tesla delivered 91,000 vehicles — about 5% fewer than the same period last year. That’s pretty underwhelming for a company whose fans view it as a fast-growing technology company in the mold of Amazon.com Inc., rather than a sluggish metal-bashing carmaker. So how is the massive recent jump in its market value justified?In fairness, it shows resilience to sell this many cars when the company’s main California plant was shut by the pandemic for much of the spring period. Doubtless, Tesla’s new Shanghai plant picked up the production slack, which suggests the expense and effort of getting that China factory up and running was worth it. The launch of Tesla’s new Model Y crossover vehicle will have helped. Ford Motor Co. and General Motors Co. both saw their U.S. deliveries decline by a third in the same quarter. Nevertheless, Tesla’s stock market acolytes pushed the shares up another 8% on Thursday, adding $16.5 billion to the market value. Such exuberance is hard to understand. Musk’s company sold 7,650 more vehicles than analysts expected during the second quarter, and the stock price jump equates to about $2 million of added shareholder value for each of those additional sales. This seems a little excessive given that a Tesla Model 3 sells for less than $40,000, and the profit margin on those cars is pretty slim.  The shareholder reaction makes even less sense when you consider that Tesla investors aren’t really meant to buying the stock because of the company’s current sales, which are less than 4% of Volkswagen AG’s. Rather, the investment case is a long-term one: that it will come to occupy a dominant position in clean transport and energy in the years ahead. That explains why the shares trade at 320 times its analyst-estimated earnings this year. Viewed through this lens, Tesla’s ability to shift a few thousand extra cars in recent weeks shouldn’t matter so much for the valuation.  Investors’ tendency to overreact to Tesla news made more sense when its survival was open to doubt. A year ago it was laying off workers, U.S. sales were slowing and its retail strategy was confused. Senior staff kept heading for the exit. The company was burning through cash and ran pretty low on financial fuel. It had just $2.2 billion of cash in March 2019, compared with more than $8 billion now.But subsequent evidence that Tesla can sell cars for more than it costs to produce them has transformed the mood — and with it Tesla’s stock price.Instead of “killing” off Tesla, the tepid electric offerings of established carmakers such as Audi and Mercedes have only underscored the quality of their rival’s battery and powertrain technology (the same can’t be said of Tesla’s build quality). Volkswagen’s software problems with its forthcoming ID.3 electric vehicle suggest catching Tesla won’t be straightforward, even with the Germans’ vast resources.Tesla’s stratospheric valuation appears to have become self-reinforcing. Should it require more money to fund its roughly $9 billion of capital expenditure over the next three years, it can raise it from shareholders without worrying about diluting them too much.Similarly, holders of more than $4 billion of convertible bonds that Tesla issued to fund its expansion should be happy to convert them into stock, rather than demand cash repayment, taking some of the pressure off the company and its balance sheet.  Still, Tesla’s valuation remains impossible to justify by any standard metrics. Analysts’ average price target is more than 40% below the current level. Even Musk has suggested that the share price, which has almost trebled since the start of 2020, is too high — although, as with his taunting of the U.S. Securities and Exchange Commission and his comments about “fascist” lockdowns, it’s usually better to tune out what Musk says and focus on his actions instead.  The skeptics might have more faith in Tesla’s new position as the leader of the automaker pack when Musk stops his provocations and his shareholders stop getting giddy over modest good news.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Moderna shares slide after report of delay in COVID-19 vaccine trial
    Reuters

    Moderna shares slide after report of delay in COVID-19 vaccine trial

    The late-stage trial to test Moderna's vaccine candidate in 30,000 volunteers was expected to start next week, but there is no clarity on how long the delay will last, the report https://www.statnews.com/2020/07/02/trial-of-moderna-covid-19-vaccine-delayed-investigators-say-but-july-start-still-possible said. Changes in study plan are common and the company is still aiming to start the trial in July, according to the report. Moderna reiterated that its trial will begin this month, and that the company has worked with the National Institutes of Health (NIH) for its study plan.

  • Financial Times

    The lockdown death of a 20-year-old day trader | Free to read

    Alex Kearns was an ordinary 20-year-old. On June 12 back at home in Naperville, Illinois, Kearns took his own life, after believing he had lost nearly $750,000 in a soured options bet made on Robinhood, an online brokerage that has become emblematic of a new era in retail investing. In a note left for his family, Kearns said he had “no clue about what I was doing” and never intended to “take this much risk”.

  • El Al Crisis Worsens, Aeromexico Opts For Bankruptcy
    Benzinga

    El Al Crisis Worsens, Aeromexico Opts For Bankruptcy

    The airline industry is sitting in a financial hotseat as the economic slowdown caused by the coronavirus pandemic burns up cash, but for some carriers it feels like an inferno.Israeli-flag carrier El Al on Thursday said it has ceased scheduled passenger operations through the end of July and sent most employees home without pay amid a liquidity crisis, while Aeromexico received court approval to use existing resources to pay employees and vendors, and honor ticket purchases and existing agreements with business partners as it seeks to restructure under U.S. bankruptcy protection.The International Air Transport Association recently projected that the commercial airline industry would lose $84 billion this year, with revenues halved because of the significant decline in passenger travel.El Al had planned to resume passenger flights Wednesday after a three-month shutdown for health safety reasons, but a dispute with unionized pilots and other workers over concessions and pay forced the company to cancel flights, according to the Jerusalem Post. El Al officials are seeking to secure a rescue package from the Israeli government, without which they warn the company may not survive. A key condition of the assistance is reaching agreement with employees on downsizing measures.The Israeli carrier and the government are negotiating two bailout options. The first consists of obtaining a $400 million loan, guaranteed by the state, and offering a stock sale to raise $150 million. The second proposal is for a $250 million state-backed loan and offering $150 million in shares, with the state agreeing to purchase all shares not purchased by investors.The airline has been trying to secure government aid for more than two months. El Al said on its website that it is continuing to operate cargo-only passenger flights and special passenger charters with Boeing 787 Dreamliner aircraft. The Israel newspaper Maariv reported that the dispute between the pilots and the company was also caused by El Al's refusal to transfer Boeing 737 pilots to Dreamliner aircraft for cargo and passenger flights.El Al released first-quarter results showing a $140 million loss compared to a $55 million loss in the same period in 2019, with cash and short-term deposits dwindling to $131 million from $264 million at the start of the year. Revenues fell 25% and in an ironic note, sharply lower fuel prices are actually hurting the company because of hedging contracts that locked in jet fuel prices at higher levels and cost it $56 million for the quarter.Similar to other airlines, it has taken a series of self-help measures that include placing workers on unpaid leave, canceling capital investment projects, deferring aircraft lease payments and selling spare aircraft engines.Aeromexico bankruptcyMeanwhile, Aeromexico cleared the first step of Chapter 11 bankruptcy with court approval to maintain continuing operations without interruption. As announced in its court filing on Monday, the airline is in talks to obtain debtor-in-possession financing as part of its restructuring process.Debtor-in-possession financing lenders get first priority on a company's assets in the event of liquidation. Such deals, which must be approved by the court, allow a bankrupt company to remain in business and make payments for goods and services during the reorganization. "We are committed to taking the necessary measures so that we can operate effectively in this new landscape and be well prepared for a successful future when the COVID-19 pandemic is behind us," CEO Andrés Conesa said in a statement. "We expect to utilize the Chapter 11 process to strengthen our financial position, obtain new financing and increase our liquidity, and create a sustainable platform to succeed in an uncertain global economy."The airline said it expects to double the number of domestic flights in July and quadruple international flights compared to June, joining other airlines that are slowly increasing operations in response to better travel demand.Aeromexico's rehabilitation is important to Delta Air Lines too. Under a 3-year-old joint cooperation agreement, the airlines operate hundreds of weekly routes between cities on both sides of the border. They have integrated services, products, airports and sales teams, including online ticket purchases and carry-on baggage policies.Aeromexico, like El Al and other passenger airlines, has also made extensive use of passenger planes for dedicated cargo customers.Aeromexico joins Chilean-based LATAM Airlines and Avianca, the top two carriers in Latin America, in seeking U.S. bankruptcy protection. Last week the German government tossed Lufthansa Airlines a safety net worth in excess of $10 billion, while the governments in Hong Kong and Austria have invested in Cathay Pacific and Austrian Airlines, respectively, to prop up those national carriers. Click here for more FreightWaves stories by Eric Kulisch.RECOMMENDED READING:El Al says it might not survive, seeks Israeli bailoutAirlines seek government help to survive winter doldrumsAvianca receives preliminary OK for chapter 11 bankruptcyPhoto: Flickr/Nicky BoogaardSee more from Benzinga * Spot Rates Soar Into The Holiday – FreightWaves NOW * COVID Ushers In Direct Cargo Flights From Vietnam * Update: Trucking Jobs Up By 8,100 In June; Still Below Year-Ago Levels(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  • Analysts Say These 3 Stocks Are Their Top Picks for Post-Pandemic Gains
    TipRanks

    Analysts Say These 3 Stocks Are Their Top Picks for Post-Pandemic Gains

    Amid the market’s wild roller coaster ride, one fact has become abundantly clear: COVID-19 is a game-changer. With the number of new cases spiking, the resumption of normality is fading farther off into the distance, taking hopes of a V-shaped recovery along with it. That said, regardless of the recovery’s shape, some argue that the investing landscape has been altered for the foreseeable future.Against this backdrop, investment strategies will need to take the new reality into consideration, focusing on the names poised to emerge from the crisis as the ultimate winners. Even though this might feel like guesswork, the Street’s pros can help steer investors in the right direction.To this end, we used TipRanks’ database to get all the details on three Buy-rated stocks flagged by analysts as positioned for gains in a post-COVID environment.Adtran Inc. (ADTN)As one of the top providers of networking and communications equipment, Adtran helps communications services companies manage and scale services that connect people from all over the world. With COVID-19 making residential broadband access a necessity, some analysts see this name as a key beneficiary of the global pandemic.MKM Partners’ Michael Genovese reminds investors that during the firm’s virtual idea dinner on March 14, he laid out the case for ADTN, with COVID-19's impact only supporting his belief that the stock is a top pick. “In our view, the Adtran story has gotten even better post COVID-19 since home Broadband has gone up in importance. We believe Internet 3.0, with a good portion of human work and social life occurring online, is here to stay. We see a renewed Telco focus on Wireline and on the Edge of the network where Adtran plays,” he commented.When it comes to its Fiber products, the last few years have seen the company place a significant focus on this aspect of the business, with it revamping its PON capabilities and offering Fiber platforms with innovative SDN and Cloud features.According to Genovese, these efforts have already paid off. “Over the past year, Adtran has successfully transitioned its largest copper customers, CenturyLink and DT (DTE), into large fiber customers. Adtran's 1Q20 its Fiber revenues were up 26% year-over-year. Last month, ADTN announced a win with DT to add significantly more Fiber over the next several years,” the analyst stated.Adding to the good news, the company revealed BT Openreach had chosen it to help it make multi-gigabit services available to 20 million homes in the UK. It should be noted that in the UK, Huawei equipment can only account for 35% of the Broadband Access network. As Genovese points out, to limit its use of Huawei products, BT has turned to other providers like ADTN.“According to our checks, Adtran could see more than $10 million in sales from BT Openreach in 2Q20. We believe the contract with BT is long-term and worth hundreds of millions of dollars over time. Adtran also recently revealed a Fiber win with a U.S. Tier 1 we think it is Verizon, with revenues expected to ramp in 2021,” Genovese explained.Given the fact that the Tier 3 market is stronger than it has ever been and that the stock is trading at an attractive level, the deal is sealed for Genovese. As a result, the four-star analyst maintained a Buy rating and $16 price target. This figure puts the upside potential at 50%. (To watch Genovese’s track record, click here)Turning now to the rest of the Street, opinions are split almost evenly. 3 Buys and 2 Holds add up to a Moderate Buy consensus rating. At $14, the average price target brings the upside potential to 30%. (See Adtran stock analysis on TipRanks)Sirius XM Holdings (SIRI)Next up we have Sirius XM Holdings, a leading audio entertainment company that offers a platform for subscription and digital advertising-supported audio products. While shares have underperformed the broader market since February 19, several factors could help SIRI take off post-pandemic.Citing recent comments from CFO David Frear as well as an improved outlook for new car sales in the U.S., J.P. Morgan analyst Sebastiano Petti sees SIRI’s long-term growth prospects as being even stronger. “We are increasingly bullish on the fundamentals of the legacy SIRI business as auto sales improve from April’s trough and churn/conversion rates come in better than initially expected exiting 1Q,” he explained. The above also supported the firm’s decision to make it the top pick in June’s Spectrum of Opportunity report.Looking at the company’s standing, Petti likes its “resilient subscription business model, strong FCF generation, low leverage, solid liquidity profile, and an improving backdrop.” He also stated, “At 14.6x 2021E FCF (16.6x fully-taxed), we believe SIRI shares are attractively valued given the company’s strong growth outlook as trends normalize post-COVID-19.”All of the above prompted Petti to bump up his estimate for EBITDA by 3%, with the figure now landing at $603 million. On top of this, the analyst also trimmed his call for 2020 SIRI self-pay net losses to 925,000, from the previous estimate of -1.11 million. What drove this revision? Better-than-expected new and used auto sales in the second quarter.“We see potential upside to our 2020 self-pay net add estimate given the likelihood for 2020 SAAR over 12.5 million following May’s better than expected results, continued dealership re-openings, and pickup in economic activity. In mid-May, SIRI’s CFO noted that new car sales were 35% below the prior year with used car sales trending ~20% lower year-over-year – better than declines of 55-60% at the time of 1Q earnings. Consistent with management commentary at the JPM TMC conference, we now look for better churn and conversion rates in 2020 with the former benefitting from a sharp decline in vehicle related churn,” Petti added.Unsurprisingly, Petti continues to give SIRI his stamp of approval. Along with an Overweight rating, he keeps the price target at $7. Should the target be met, a twelve-month gain of 19% could be in store. (To watch Petti’s track record, click here)Looking at the consensus breakdown, 5 Buys, 3 Holds and 1 Sell have been issued in the last three months. This means that SIRI gets a Moderate Buy consensus rating. Based on the $6.51 average price target, shares could surge 11% in the next year. (See Sirius XM stock analysis on TipRanks)Avid Bioservices Inc. (CDMO)Focused on developing and manufacturing therapies derived from mammalian cell culture, Avid Bioservices wants to help improve the lives of patients. Despite the fact that some healthcare names have experienced major COVID-related disruptions, the pandemic has actually created opportunities for this company.After a recent conference call, Craig-Hallum's Matt Hewitt tells clients that “Avid Bioservices is the top name that we would be buying.” The four-star analyst points out that while there was an equipment issue in the previous quarter, this has been addressed, with the piece of equipment now running properly again.Most important, however, is the increased demand the company is witnessing thanks to COVID-19. “While some pharma/biotech companies have delayed clinical trials, this hasn’t affected any of the products that Avid manufactures, with some customers actually requesting a greater amount of material. Additionally, Avid has increased its inventory of key inputs, helping to minimize supply disruption,” Hewitt explained.It should also be noted that prior to the pandemic’s onset, capacity was tight, so customers may want to take care of this sooner, something that stands to benefit CDMO’s backlog, in Hewitt’s opinion. “There may also be an opportunity for the company to produce treatments or vaccines for the coronavirus, as long as they are antibody-based (not viral vector-based),” the analyst added.On top of this, in May, the company broke the news of its partnership with Aragen Bioscience. The collaboration enables CDMO to offer customers Aragen’s cell line development expertise, while Aragen is able to direct customers to Avid for their process development and manufacturing requirements.Weighing in on the implications, Hewitt stated, “While this announcement may have been ignored by many investors, we view it as a key addition to the company’s platform... As several other CDMOs offer cell line development services (Catalent launched a new technology back in November), we believe this partnership helps fill a key gap in Avid’s service offerings, with cross-sales already beginning to take place. Longer term, we see the potential for more partnerships like this to be signed, particularly for finished dose manufacturing.”According to Hewitt, the growing demand also means that CDMO could expand its manufacturing capacity sooner than he originally expected. It also doesn’t hurt that its CEO search is set to wrap up soon, with the appointment potentially acting as a catalyst for shares.In line with his bullish take, Hewitt reiterated a Buy rating and $10 price target. This target conveys his confidence in CDMO’s ability to climb 40% higher in the next twelve months. (To watch Hewitt’s track record, click here)CDMO has stayed relatively under-the-radar so far, with its Moderate Buy consensus rating breaking down into only 1 Buy. Additionally, the $9 average price target implies 26% upside potential. (See Avid Bioservices stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

  • Barrons.com

    Want to Do a Free Roth IRA Conversion and Be Charitable? Here’s How.

    The Cares Act has opened the door for more Americans to take deductions for certain donations on their taxes next year, with retirees who do a Roth IRA conversion in line to see a particularly generous benefit.

  • TheStreet.com

    Buy Only the Best Stocks: Cramer's 'Mad Money' Recap

    New COVID-19 cases are exploding and politicians are paralyzed. But, says Jim Cramer, both blue-chip and speculative stocks are still soaring.