Investing

BlackRock takes equities to overweight for 2021, sees powerful restart to the economy

BlackRock has raised equities to overweight for 2021, based on its view that the restart of the economy will accelerate with the distribution of vaccines.

The firm is raising equities from neutral on a tactical basis, meaning over a six-to-12-month basis. From a long-term strategic view, BlackRock remains neutral on stocks, due to valuations and a challenging environment for earnings and dividend payouts. The S&P 500 has traded to new highs and risen more than 14% this year, even after the big selloff in March.

“The big change around the outlook itself is upgrading risk assets overall and seeing 2021 as a very constructive year for risk assets,” said Mike Pyle, BlackRock’s global chief investment strategist. BlackRock released its 2021 outlook Monday.

Pyle said BlackRock has cut investment grade credit to underweight, on a tactical basis, and prefers high yield debt for income potential. The firm also upgraded emerging market debt to neutral and Asian fixed income to overweight.

“We see 2021 as a really powerful year for the restart, in terms of economic activity, but also importantly a year where we’re going to see central banks hold interest rates within a pretty tight range,” Pyle said.

Pyle said the firm remains focused on the stocks of quality companies, particularly in the U.S. The firm’s strategists favor companies that will

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Starboard Value sees big return in this infrastructure play

Jeff Smith, chief executive officer and chief investment officer of Starboard Value LP.

Chris Goodney | Bloomberg | Getty Images

Starboard Value hit an unexpected stumbling block in its activist campaign in AECOM when one of the hedge fund’s members quit the infrastructure company’s board of directors over the summer. Peter Feld quit the AECOM board in protest of CFO Troy Rudd’s promotion to chief executive officer in June.

That snag, however, has not dented Starboard’s overall return on its AECOM investment. Since taking a stake in the company, AECOM shares are up more than 40%, easily outperforming the broader market in that time.

Company: AECOM (ACM)

Business: AECOM is a company that designs, builds, finances and operates infrastructure assets for governments, businesses and organizations. The company’s design and consulting services segment is engaged in planning, consulting, architectural and engineering design services to commercial and government clients in major end markets, such as transportation, facilities, environmental, energy, water and government. Its services include planning, consulting, architectural and engineering design, program management and construction management for industrial, commercial, institutional and government clients. Its services need technical expertise, which include civil, structural, process, mechanical, geotechnical systems and electrical engineering, architectural, landscape and interior design, cost consulting and environmental, health and safety work.

Stock Market Value: $7.7 billion ($51.33 per share)

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Top currency regulator says to expect ‘clarity’ in coming weeks on bitcoin

Top currency regulator says to expect ‘clarity’ in coming weeks on bitcoin

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Pandemic-induced options trading craze shows no signs of slowing down

Traders work on the floor of the NYSE in New York.

NYSE

Options trading is the new sports betting.

Talk about unintended consequences.

The stay-at-home requirement created by Covid-19 has spawned a huge sub-industry in options trading in tandem with an increase in equities trading that shows no signs of letting up.  

Trading in equity options hit new highs in November, continuing a trend that began earlier in the year.

Equity option trading is 50% above last year’s levels year to date on all the options platforms.

Equity options (volume)

  • Nasdaq  49%
  • CBOE    51%
  • ICE         58%

Source:  Piper Sandler

“The public is embracing options in a truly unprecedented manner, as you can see from the volumes,” Steve Sosnick from Interactive Brokers told me. “I attribute some of the popularity to the lockdown … People were stuck at home, many with $1,200 checks or rent/loan moratoria and no sports to watch or bet on.  So they went to the stock market, then realized that options have similar payoff structures to sports bets.”

That analogy to sports betting is deliberate: “The psychology [of sports betting versus betting on stocks] is very similar. With sports gambling, I stand to make some percentage of the money.  It’s the same thing with stocks and options, but with stocks and options there is thousands of bets

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Warren Buffett’s Berkshire Hathaway annual meeting to be virtual again

Warren Buffett during an interview with CNBC’s Becky Quick on February 24, 2020.

Gerry Miller | CNBC

Berkshire Hathaway said Thursday it will hold its annual shareholder meeting virtually in May.

“Unfortunately, we do not currently believe it will be safe at that time to hold a meeting with nearly 40,000 attendees as we last did in 2019,” the company said in a statement.

The announcement comes even as coronavirus vaccinations could begin in the U.S. as soon as this month for front line workers and at-risk patients. However, it’s still unclear how quickly distribution to the general public in 2021 will be, so Berkshire is not taking any chances.

On Wednesday, the U.S. hit 100,000 Covid-19 hospitalizations — the most since the pandemic began, according to data from the COVID Tracking Project, which is run by journalists at The Atlantic.

Berkshire Hathaway said that May’s meeting will be similar to its 2020 annual shareholder meeting, which was also held virtually.

Typically every May, tens of thousands of people descend on Omaha to hear CEO Warren Buffett and Vice Chairman Charlie Munger opine on the state of Berkshire’s businesses and investing.

“We hope that the 2021 meeting will be the last time that shareholders are unable to attend in person. We look forward to 2022 when we expect to

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How pro investors are adapting to the influx of quick-triggered, app-using market players

Op-ed: How pro investors are adapting to the influx of quick-triggered, app-using market players