Reuters Insider - Time to buy Boeing, Goldman, Children's Place, says Hilary Kramer
15/03/2019 24:22
Click the following link to watch video: https://share.insider.thomsonreuters.com/link?entryId=0_3yo06t6y&referenceId=0_3yo06t6y&pageId=ReutersNews Source: Reuters Insider Description: A&G Capital's chief investment officer tells Reuters' Fred Katayama why she likes financial and retail stocks. She sees the S&P 500 breaking out, supported by continued low rates. Short Link: https://reut.rs/2O4UZoH Video Transcript: US stocks seesawing in and out of positive territory today. Right now they're a little bit on the downside, near the flat line however. Financials, among the leaders, and we're going to get to those stocks later with Hilary Kramer. She is Chief Investment Officer at A&G Capital. Hilary, welcome back. Stocks sort of seesawing today. Why the indecisive, lack of news drivers or what? Well, there's lots of concerns still and overhang around Brexit, Europe, concerns on economic numbers that are coming out. Certainly, housing has been a real disappointment. And then of course there's a lot of news from mainland Europe: Germany, Italy, bad numbers out of there. We had dead numbers out of Japan on the - - waters. So generally, the economics would bring us down but then some stocks just keep climbing the wall of worry. Yeah. New home sales had a bad number earlier today. Now, we're hovering near that resistance point on the S&P 500 of 2,810. Right now we're just below that. Are we going to break higher or lower the way you see it? I actually think we're going to break up and the reason is that it's always been the Federal Reserve, the Federal Reserve. And even though I'm on the camp that the Federal Reserve should be tightening and should be biting the bullet, which Chairman Powell had indicated originally he would, there's no way they can when we really look at the debt numbers and what it would cost the US government and all of us Americans to be able to deal with the cost of the debt. No. We're going to stay at the 2.25 level and that's going to make the market go up. As long as financing and the cost of money stays low, we are going to break through 2,810 to 2,820. We're going to have a much better time between now and when we start first quarter earnings. Okay, so lower rates are here to stay. Boeing is shedding another 0.75% today in the aftermath of grounding, including the US now grounding those planes. Buying opportunity for Boeing for now, or should you stay away? I think it's a buying opportunity. I've watched Boeing, followed it for many, many years. I was very lucky to actually purchase a Boeing 737 Business Jet in 1997. I know the company. I know the management there. I know that it could be six months of grounding for these airplanes, but Boeing will ultimately do fine. They are very diversified. So much of their new business is coming from drones, from the unmanned aerial vehicles, also on the cyber security side. It's so much more than just airplanes and so much more than just 737s. And again, it's not really fundamental to the plane as much as its manuals and some of the training issues. But software is still yet to be seen. You like financials at this point, among them Morgan Stanley and Goldman Sachs. Morgan Stanley is trading up today, Goldman Sachs a little lower. Why so? Aren't you concerned, in Goldman's case, about the Malaysian scandal? Okay. So first of all on Goldman Sachs, when it comes to Malaysia, yes they could end up spending up to $6 billion in fines and liability, and the legal cases could go on kind of indefinitely. But in many ways, that's been baked in and Goldman Sachs has so many areas of revenue potential way beyond just trading, equity, fixed income, and restructuring, financing, investment banking. Just think of what they're doing in the inroads, that Goldman Sachs is doing. It's kind of buried in the press, but they're out there. They're going for the consumer. They're going into electronics. They have the iPhone joint venture with Berkshire Hathaway. This is really incredible. You watch and wait and see. Goldman Sachs with its Marcus unit, it is going to be a major competitor of JPMorgan before long. And Morgan Stanley, MS, the overhang on the stock has been the concern about the brokerage unit because margins keep getting narrow and narrower, and it's become an asset aggregator rather than a performance-based percentage-wise. But Morgan Stanley is very, very strong on trading, very strong on asset management, and they still know how to make money even if brokers aren't paid the same commission as they were. Quickly before we go, I know you like Children's Place. Now, that stock really is in the headlines last week when it plummeted, missed earnings estimates by a mile. Revenue also they missed. And also on the outlook, it's weighed down Gymboree. Why do you like it? PLCE is a buy at this point, in terms of retail. Retail is out. Fred, that's right. On every single metric, Children's Place missed. But if you really read between the lines, you'd see that it has to do with the integration of the merger with Gymboree, the liquidation, a lot of the merchandise. And Children's Place has come out the lone winner in the children's attire market. They actually have a strong online presence. They have something very similar to Kohl's Cash which is very attractive. They have consumer and customer loyalty. PLCE is a great place to be in retail. My wife goes there. Thanks a lot, Hilary, for your thoughts. Our thanks to Hilary Kramer of A&G Capital. I'm Fred Katayama, and this is Reuters