Excitement for bullish employment data appears to have faded a bit, with equity futures falling and investors looking for the next catalyst to drive this market higher. And in tune with what we’ve seen this year, technology is poised to lead the way south.
Bahnsen Group Chief Investment Officer David Bahnsen believes the markets are halfway through a technological pullback, not heading for a “sudden and shocking 30%, 40%, 50% drop, but we hit a point , empirically and demonstratively that it requires a price change “.
In our call of the day, Bahnsen tells MarketWatch that investors could be blind to the valuation risks of certain high-profile stocks, as the price / earnings ratios have not been corrected to anything “normal or reasonable.”
“
“There is not enough momentum, there are not enough buyers right now that can support this level of valuation.”
“
Take a little history as a guide to what can happen.
Microsoft MSFT,
it took 16 years to reach new highs and Cisco CSCO,
it is not even close to its all-time high set in 1999. “Intel INTC,
It is basically close to where it was in 1999 and yet the three companies crushed it for the last 20 years, increased profits by double digits per year for 20 years, “he said. “If stock prices didn’t move, that can only happen for one reason. Stocks were damn high. “
The message for stocks 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 and be successful and profitable, but valuations can normalize and share prices can “go nowhere for a long time,” Bahnsen warned.
One Solution: Look at the old-tech stalwarts like IBM IBM,
Cisco CSCO,
and Intel INTC,
“They are literally stable cash flow generators who have call options on their future,” he said. “They have exciting new technologies that are not on Netflix NFLX,
and Facebook FB,
camp and certainly not the Tesla and Snowflake SNOW,
In the field of things, however, none of those companies can do anything they do without the Intel processors, the chips, the servers, the mainframe, the hardware. ”
“The technology infrastructure that we require is still dependent on Cisco, Intel and IBM,” he said, adding that patient investors who expect these stocks to pay off slowly are still getting decent dividends from them.
Bahnsen is also important on the subject of suppressed demand for COVID-19 and believes that consumer staples are the most undervalued on the market. He owns Procter & Gamble PG,
Kimberly-Clark KMB,
and Pepsi PEP,
three names that have yet to hit new highs continue to grow in both revenue and results, he said.
Rejection of corporate taxes?
US Stock Futures ES00,
YM00,
NQ00,
slide after the Dow Jones Industrial Average DJIA,
and S&P 500 SPX,
both hit all-time highs on Monday. European shares SXXP,
They are catching up with Wall Street gains, while Asia was mixed, with China’s shares falling after the central bank reportedly asked lenders to slow loan 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 would increase it to 25%, but not the 28% that the bill calls for.
The independent Senate MP ruled Monday in favor of a Democratic effort to pass more legislation through reconciliation, meaning the party could get more bills passed in the Senate this year.
Swiss banking giant Credit Suisse CS,
CSGN,
will take a $ 4.7 billion hit linked to the collapse of Archegos Capital Management. He also cut his dividend and announced that his heads of investment and risk banking will be leaving.
Tween Roblox RBLX-centric social gaming platform,
is in an industry sweet spot and Wall Street is catching on.
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