Carrier Global to Buy Viessmann
Posted by Eddy Elfenbein on April 24th, 2023 at 1:05 pm

The Wall Street Journal is reporting that Carrier Global (CARR), one of our Buy List stocks, is in talks to buy Viessmann, a German industrial manufacturer, for $10 billion. The deal will be in cash and stock.

Viessmann is a family-owned company. Last year, it had sales of $4.4 billion.

Carrier is mostly known as an HVAC company but it has been working to diversify its business. Earlier, the company said it’s also looking to sell off its Fire & Security business.

From the WSJ:

Buying closely held Viessmann would further diversify Carrier’s operations outside of the U.S. Last year, the Florida-based maker of air conditioners and other types of heating and cooling equipment reported net sales of $20.4 billion, of which 60% came from the Americas and 23% from Europe, the Middle East and Africa, according to the company’s annual report.

We own Carrier and Otis (OTIS). Both were spun off from United Technologies.

Carrier, with a market value of $38 billion, is focused on expanding its refrigeration as well as its heating, ventilation and air-conditioning businesses. Last year, it acquired substantially all of Toshiba Corp.’s stake in the companies’ Toshiba Carrier Corp. joint venture for $900 million. TCC provides residential and light-commercial HVAC products including heat pumps.

Carrier’s Fire & Security division accounted for about 17% of the company’s sales in 2022. Demand for the division’s products, which are used across residential, commercial and industrial properties, was mixed in the most recent quarter, buffeted by slower new construction in some markets, management said on a conference call in February.

Shares of Carrier are down about 5% in today’s trading.

Morning News: April 24, 2023
Posted by Eddy Elfenbein on April 24th, 2023 at 7:05 am

Brazil Woos Skeptical Foreign Investors with New Fiscal Plan

Germany’s ‘Very Generous’ Pay Deal May Complicate ECB’s Inflation Fight

Americans Escaping Pricey Cities Bring Higher Housing Costs, Inflation With Them

Car Dealer Markups Helped Drive Inflation, Study Finds

Hedge Funds Place Biggest Ever Short on Benchmark Treasuries

Morgan Stanley Sees Risks to Stocks From Earnings, Fed

Credit Suisse Saw $69 Billion of Outflows Before UBS Takeover

Why the Banking Mess Isn’t Over

Silicon Valley Startups Brace for a Summer of Pain

The Crypto Detectives Are Cleaning Up

The Future of AI Relies on a High School Teacher’s Free Database

Are Text Messages the New Social Media? One Start-Up Thinks So.

What Young Workers Miss Without the ‘Power of Proximity’

Weapons Makers Can’t Hire Enough Workers as Ukraine War Drives Demand

Toyota Pitches a New Prius as Plug-In Hybrids Battle EVs for Share

How the World Is Spending $1.1 Trillion on Climate Technology

Small Towns Chase America’s $3 Trillion Climate Gold Rush

How to Spot Greenwashing: When Companies Aren’t as Green as They Claim

Bed, Bath & Beyond Plans to Swiftly Liquidate, Shutter Stores

There Was No Good Way for Bed Bath & Beyond to Die

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Morning News: April 21, 2023
Posted by Eddy Elfenbein on April 21st, 2023 at 7:03 am

How a Brazen Plot to Rig Oil Auctions Cost Venezuela Billions

Taiwan Quietly Urges US to Calm Rhetoric on China Chip Risk

Yellen Says National Security Comes Before Economy in U.S.-China Relationship

Fed Rethinks Loophole That Masked Losses on SVB’s Securities

Credit Suisse Investors Challenge Switzerland’s $17 Billion Bond Write-Down

America’s Inflation Antihero Gets a Makeover

Billion-Dollar Hedge Fund Startups Rise to Pre-Pandemic Levels

The Fabulous Yields, and Lurking Risks, of Money Market Funds

Rates on C.D.s Are Soaring, but the High Rates May Not Last

AI Is Coming for Wealth Management. Here’s What That Means

Battle Over Labor Secretary Nominee Reflects a Larger Fight for Biden

Franchisers, Facing Challenges to Business Model, Punch Back

Home Prices in March Posted Biggest Annual Decline in 11 Years

How Hard Lines in Fox-Dominion Deal Talks Suddenly Softened

Tesla Increases Price of Model S, X in US After Shares Slump

Apple Plans iPhone Journaling App in Expansion of Health Initiatives

When Apple Comes Calling, ‘It’s the Kiss of Death’

Google Launched Bard Chatbot Despite Ethics Concerns, Warnings It Was a ‘Pathological Liar’

Luxury Fortunes Jump $93 Billion on Demand Boom for Hermes, Dior

Americans Are Set to Spend More Than Brits at UK Hotels for Coronation

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Morning News: April 20, 2023
Posted by Eddy Elfenbein on April 20th, 2023 at 5:14 am

Forget Macron, Europe and the U.S. See Eye-to-Eye on China’s Threat

China Central Bank Pledges ‘Appropriate’ Interest Rates in 2023

India Races to Get Rich Before It Gets Old as Population Passes China

Australia Plots Biggest Shake-Up of Central Bank in Decades

Credit Suisse Bondholder Wipeout Challenged in Swiss Court

Banks Leaned on a Little-Known Lender in March as Customers Fled

In Prosecution of Turkish Bank, the Supreme Court Issues a Mixed Ruling

As Fears of Banking Crisis Surged, Members of Congress Sold Bank Shares

US Treasury’s Cash Pile Jumps $108 Billion on Tax Day

TSMC’s Outlook Disappoints as Global Tech Slump Persists

Tesla Earnings Dented by Price Cuts

Tesla’s Not Done Cutting Prices as It Protects Lead in EVs

Understanding How AI Impacts Business

The Future of Social Media Is a Lot Less Social

Facebook Users Can Apply for Their Portion of a $725 Million Lawsuit Settlement

After Fox Settlement, Assault on Media Protections Is Likely to Continue

DeSantis-Allied Board Plans to Nullify Disney’s Prior Development Deal

Bed Bath & Beyond Preparing for Bankruptcy Filing Within Days

The World’s Richest Person Auditions His Five Children to Run LVMH, the Luxury Empire

When Will I Retire? How About Never

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CWS Market Review – April 19, 2023
Posted by Eddy Elfenbein on April 19th, 2023 at 6:13 pm

Earlier today I had one of the most thrilling experiences of my professional life. I got to ring the opening bell at the New York Stock Exchange.

Here’s the video.

This was an amazing experience. I want to thank the folks at the NYSE for their hospitality. I was joined on the balcony by my business partners at AdvisorShares. They’re the ones who make sure that our ETF (CWS) runs smoothly.

Here are a few pictures from today’s festivities.

This is the famous facade of the NYSE:

Here’s a look at the balcony from the trading floor”

This is Peter Tuchman, one of the legendary traders on the floor. He’s often photographed in news stories about the market. He stayed with us and chatted markets.

Me looking professional.

71 seconds to go. This is the view from the balcony. You can barely make out Jim Cramer in the middle. I cut off his head (sorry, Jim!). Above that you can see me on the screen taking this picture.

Me with gavel.

“The Dukes are buying. Let’s get in on this.”

CWS!

No stock stuff today. I just wanted to share a fun day with you.

The regular premium issue will go out on Friday. By the way, we had a very Buy List good earnings report today from Abbott Labs (ABT). The stock beat earnings by four cents per share and closed the day higher by 7.8%. Stryker (SYK) also got to a new all-time high today. I’ll have full details in the upcoming issue.

– Eddy

P.S. I’m available for any of your bell-ringing needs (weddings, graduations, Notre Dame, etc.)

Morning News: April 19, 2023
Posted by Eddy Elfenbein on April 19th, 2023 at 7:10 am

Russia Is Importing Western Weapons Technology, Bypassing Sanctions

U.K. Inflation Stays Above 10%, Raising Prospect of Further Interest Rate Increases

Banks Betting on Paris Say There Really Is Life After London

$1 Billion Sale Marks First Major Bank’s AT1 Bond Offer Since Credit Suisse Wipeout

As Possible Debt Limit Crisis Nears, Wall Street Shrugs

Deciphering the Fed Is a Test Even High School Kids Can Pass Now

Kim Kardashian Hires Wall Street Talent to Bulk Up Buyout Firm

TikTok Could Get a Lifeline from Big Tech as a U.S. Ban Looms

Fox to Pay $787.5 Million to Settle Dominion’s Defamation Lawsuit

Fox’s Dominion Payout Gives Private Equity Firm 1,500% Return

Bitcoin Falls on Interest-Rate Worries. But Bullish Signs Are Still Flashing Gains Ahead.

Goldman Sachs Moves to Keep Shrinking Its Consumer-Lending Business

Netflix Gains 1.75 Million Subscribers, Axes DVD-Rental Business

San Jose Plans Robocar Network Instead of Airport Shuttle

In China, a Big Auto Show Returns to a Country That Has Gone Electric

Johnson & Johnson Posts Higher Quarterly Sales, Raises 2023 Outlook

Insurer Travelers Profit Falls on U.S. Storm Costs

The Companies That Give Everyone the Day Off When Life Gets Stressful

‘Leave Pity City,’ MillerKnoll CEO Tells Staff Who Asked Whether They’d Lose Bonuses

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CWS Market Review – April 18, 2023
Posted by Eddy Elfenbein on April 18th, 2023 at 4:22 pm

(This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

More Evidence of a Coming Recession

The case for a recession continues to get stronger. On Friday, we learned that consumer spending fell in March. This was the second month in a row that Americans cut back on their shopping.

An economy can withstand a lot, but it’s particularly hard to grow when folks aren’t out there in the malls.

For March, retail sales fell by 1%. That comes after a drop of 0.2% in February. It’s even worse than it sounds because these numbers aren’t adjusted for inflation.

This comes on top of other troubling news. Job openings are down, unemployment claims are up and we’re looking at another weak quarter for corporate earnings.

Still, I’d caution investors against getting too pessimistic. The odds are that we’re facing a brief and shallow recession. This slowdown was caused by the Fed, and the central bank can easily reverse course.

The other factor to watch is the credit markets. The banking sector got a big scare in March, but we still don’t know how widespread the damage was. The fact is that many smaller banks have been losing customers to the big banks.

Friday was the unofficial kickoff of Q1 earnings season as several of the big banks reported earnings. JPMorgan Chase (JPM) led the way with a big earnings beat. For Q1, JPM earned $4.32 per share compared with the Street’s forecast of $3.41.

JPM said that net interest income will be about $81 billion for 2023. That’s an increase of about $7 billion from its previous forecast. But here’s the interesting part. That forecast is based on JPM paying less to depositors later in 2023. In other words, JPMorgan Chase thinks interest rates will go down later this year. I suspect they’re right.

Wells Fargo (WFC) also did well last quarter. For Q1, the bank earned $1.23 per share which was 10 cents more than expectations. WFC’s net interest income increased by 45%. The CEO said, “the majority of our businesses remain strong.”

Citigroup (C) earned $1.86 per share which was 19 cents ahead of expectations. The bank has been cutting back on its international operations. Many of the big banks are going for less than 10 times earnings.

Shares of State Street (STT) got hit hard on Monday after the bank showed an outflow of deposits. Charles Schwab (SCHW) also fell hard after it said it lost $41 billion in deposits during Q1. This stock has been beaten up this year, but the company said that it can withstand customer outflows. On Monday, Schwab said its Q1 earnings rose to 93 cents per share, three cents more than Wall Street’s consensus.

The downfall of Silicon Valley Bank and Signature Bank probably happened too late during Q1 to have a noticeable impact on this round of earnings. The top-tier banks are doing well, but the concern is still among the regional banks. This could still get messy.

On Thursday, one of my favorite regional banks, Hingham Institution for Savings (HIFS), reported disappointing results. For Q1, HIFS said it made $3.87 per share. That’s down from the $5.38 it made in last year’s Q1. The bank provides unlimited deposit insurance for all its depositors.

Shares of HIFS got dinged for an 8% loss on Friday. It was down again on Monday, and it hit a fresh 52-week low. The stock is nearly back to where it was five years ago. Still, I can’t say I’m terribly worried about Hingham. The company has a great long-term track record and it’s still not followed by any analysts on Wall Street. I also like that Hingham often pays a special dividend near the end of the year.

The Bank of Apple

On Monday, Apple (AAPL) and Goldman Sachs (GS) announced a new partnership, the Apple Card savings account. This is a savings account that pays 4.15% per year. That’s far higher than most savings accounts.

So what’s the catch?

Nothing, really. The savings account is for users of Apple’s credit card (also a Goldman partnership). There are no fees. No minimum deposit. The account max is $250,000. It looks simple. You can set up an account from the Wallet app on your iPhone.

Not only that, but Apple Card rewards program offers 3% on purchases. If you want, that money is deposited directly in your Apple savings account.

This offering comes during a rough time for many banks. As rates go higher, there’s more pressure to entice savers with better rates. Over the last year, customers have pulled $800 billion from U.S. commercial banks.

As odd as this may seem, Apple has already taken on some of the trappings of being a bank. Of course, Apple has Apple Pay and Apple Wallet. Apple also has a “buy now, pay later” service. The new savings account should really be seen as logical progression to those businesses.

If you add up all the cash and marketable securities on Apple’s balance sheet, it comes to $169 billion. That’s far larger than all but a few banks.

If you’re interested, here’s how you can set up an Apple savings account in your iPhone.

Bottom-Fishing with Whirlpool

I’ve been looking at shares of Whirlpool (WHR) recently. I wanted to highlight it for you this week because it’s an interesting example of bottom fishing, and why that’s a very hard thing to do.

I’ll try to walk you through my reasoning. By most metrics, Whirlpool is an inexpensive stock. Just going by the dividend, WHR currently yields 5.2%. That’s certainly tempting.

Also, the stock has not performed well. Two years ago, WHR was going for over $250 per share. Lately, it’s been around $135 per share, but a lower stock doesn’t mean it’s inexpensive. That only means that it’s cheaper than where it was before.

Bottom-fishing for stocks is notoriously difficult. Oftentimes, stocks are down for very good reasons. Investors can be tempted by low valuations which prove to illusionary. But if your bottom-fishing works out, you can reel in big profits.

Let’s start with some basics. Whirlpool is a major home appliance company. It was founded by Louis Upton in 1911. (Kate Upton is a descendent.) You’re very likely to find a Whirlpool product in just about every kitchen or laundry room across the U.S.

Business has been rough lately and Whirlpool’s earnings have not done well. In 2021, the company made $26.59 per share. Last year, that fell to $19.64 per share. Wall Street expects it to earn $15.84 per share for this year, and $18.08 for 2024. If the latter figure is correct, that means that Whirlpool is going for about 7.5 times forward earnings. Clearly, traders are wary of WHR.

In January, Whirlpool said it expects earnings to fall slightly this year due to supply-chain issues. WHR’s Q4 sales fell 15%. For the year, sales were down just over 10%.

For this year, Whirlpool sees earnings ranging between $16 and $18 per share on revenues of $19.4 billion. Whirlpool has $1.4 billion in cash from operating activities and about $800 million in free cash flow.

Whirlpool is also working to alter its business. The company has divested its businesses in Europe, Africa and the Middle East, but it’s not leaving Europe. Instead, Whirlpool plans to work with Arcelik, a Turkish company, to make a company that’s focused on the European market. Whirlpool will own 25% of the venture.

The company recently closed on a $3 billion acquisition of Emerson Electric’s InSinkErator business.

Whirlpool has also been cutting costs. The company expects to save between $800 million and $900 million this year. The company is sitting on $2 billion in cash.

If Whirlpool can manage its transition well, then it’s probably a very cheap stock right now. Last week, Goldman Sachs upgraded the shares from neutral to buy. That was the first good news it’s had in some time. Goldman has a price target of $160 per share. (Personally, I think price targets are pointless.)

We’ll soon learn more. Whirlpool will report its Q1 earnings on Monday, April 24. Wall Street expects earnings of $2.20 per share.

For now, I would rate Whirlpool a risky buy. It’s not part of our Buy List but it’s one to keep an eye on.

That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

– Eddy

P.S. If you want more info on our ETF, you can check out the ETF’s website.

Morning News: April 18, 2023
Posted by Eddy Elfenbein on April 18th, 2023 at 6:03 am

China’s Consumer-Driven Growth Gives Boost to Global Economy

U.S., Allies Weigh How to Reduce Economic Ties With China

Buy Now and Save! Price War Over Electric Cars Erupts in China

Only 10 Electric Vehicles Qualify for Full $7,500 US Tax Credit

U.S. Car Brands Will Benefit Most From Electric Car Tax Breaks

America’s Most Prolific Logger Recasts Itself as Environmental Do-Gooder

Plutocratic Power and Its Perils

New York Finance Regulator to Bill Crypto Firms for Annual Supervision Fees

Investors Most Underweight Stocks Versus Bonds Since 2009, BofA Says

They Can’t Even: A Generation Avoids Facing Its Finances

Cook Opens First India Apple Store to Accelerate Sales Push

Worthless Degrees Are Creating an Unemployable Generation in India

McKinsey, Bain Delay Some M.B.A. Start Dates to 2024

How Mexico Became the Biggest User of the World’s Most Notorious Spy Tool

CEO Sundar Pichai Uses Google’s PR Offensive to Highlight Bard’s Flaws

Musk Wants to Build Own ChatGPT AI to Rival Microsoft and Google

How Disney’s Feud with DeSantis Reignited Over a Last-Ditch Development Deal

Smaller, Versatile Concert Halls Step Out of the Shadow of Stadiums

Hollywood Writers Approve of Strike as Shutdown Looms

David’s Bridal Files for Bankruptcy for the Second Time in 5 Years

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Morning News: April 17, 2023
Posted by Eddy Elfenbein on April 17th, 2023 at 7:06 am

Inflation Tests a Global Economy That Has Weathered Covid-19, Ukraine War

Determined to Flee China, Thousands Take a Long, Dangerous Route to the Southern U.S. Border

How Immigrants Are Saving the Economy

ECB Told Not to Take Banks’ Word for it When Assessing Risk

First Republic Worked Hard to Woo Rich Clients. It Was the Bank’s Undoing

Morgan Stanley Strategist Sees US Stock Rally at Risk

Drug and Game Makers Lead M&A’s Latest $20 Billion Bounce

Tax Day Cash Will Indicate Just How Close the US Is to Default

Let’s Be Clear About What ‘Budget Deficits’ Are: They’re an Effect of Excess Tax Revenue

Long-Shot Candidate Emerges as One to Watch for Next Morgan Stanley CEO

Wall Street Tells New High School Graduates to Pick Tech Career Over Finance

How the US is Subsidizing High-Risk Homebuyers — at the Cost of Those with Good Credit

Merck to Buy Prometheus Biosciences for About $11 Billion

Google Devising Radical Search Changes to Beat Back A.I. Rivals

How AI Is Building the Next Blockbuster Videogames

ChatGPT and Advanced AI Face New Regulatory Push in Europe

Who Owns a Song Created by A.I.?

The End of Faking It in Silicon Valley

GM Ditches Apple CarPlay on EVs as Fight for Your Car’s Screen Intensifies

The Defamation Trial of the Century Is Delayed

Are Crumbl Cookies the Best or the Worst? It Doesn’t Matter

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Morning News: April 14, 2023
Posted by Eddy Elfenbein on April 14th, 2023 at 7:04 am

Saudi-Led Oil Cuts Risk Fueling Inflation and Harming Global Economy, IEA Says

Biden’s Plan to Phase Out Gas Cars Isn’t Crazy at All

China’s Car Buyers Have Fallen Out of Love With Foreign Brands

China Lays Out Three-Point Plan at Global Debt Relief Talks

U.S. Buyback Tax Could Hit More Foreign Firms Than First Expected

Unemployment Is Low. Inflation Is Falling. But What Comes Next?

As Bond Market Turbulence Eases, Companies Borrow Again

Earnings Season Arrives With Recession Fears Front and Center

Investors Put $538 Billion Into Cash Funds Over Eight Weeks, Bank of America Says

With the Odds on Their Side, They Still Couldn’t Beat the Market

MUFG Clients Lost $700 Million in Credit Suisse AT1 Wipeout

Insider Loans Surged Ahead of Turmoil at US Regional Banks

JPMorgan Deposits Unexpectedly Rise as Firm Raises NII Outlook

BlackRock Assets Exceed $9 Trillion in Wake of Bank Failures

Wells Fargo Net Interest Income Beats Estimates on Fed Hikes

How Severe Is the Housing Shortage? It Depends on How You Define ‘Shortage’

Tech Bellwether Infosys Warns of Trouble in Key Finance Sectors

Company Plans to Ditch Human Workers in Favor of ChatGPT-Style AI

Yes, People Will Pay $27,500 for an Old ‘Rocky’ Tape. Here’s Why.

Bud Light Faces Boycott Calls, but Punishing Brands Is Harder Than It Looks

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