Coming up, strong Economic Data this week seems to justify the new bull market, but are we out of the woods yet . Im asking Morgan Stanleys chris toomey. Then its been a bumpy road for disney, but barrons is expecting the companys stock to reboundful well tell you why disney is a buy. And well take a look under the stock market, ask and were seeing bullish signs. We begin, as always, with three things investors ought to be thinking about right now. Markets ended the week higher, but the dow snapped its longest winning streak since 1987. Plus, the Federal Reserve went ahead with an expected quarter percent rate hike. General electric may not be the giant it once was, but its sock has powered past many of the big name tech companies. Well tell you how it got there. And finally, the braves are the best team in baseball, but investors are not cheering for liberty media. Why we think john malones empire is worth more than wall street does. Ben levisohn, kristin bell strum and andrew barry. So, ben, that 252year, 35year 25year streak that, i guess, was last time the dow was up 13 days in a row, but even though its going well, investors are staying calm. It all just seems a little too good to be true. Yeah. I mean, its actually kind of nice. Its a reminder with this streak ending that you cant go up forever, but the market is still going up. And really its because everything is coming up the way the bulls want it to. The Economic Data has been good, strong gdp, strong consumer confidence, we have falling inflation, jobless claims are holding up just fine, ask and really that just says things should keep going up. [laughter] jack well, this is what Jerome Powell wanted to do after, obviously, a very late start. He seems to be doing well now whether hes lucky or good. Then he had his press conference where he acknowledged that hes now weighing the benefits of hiking versus not hiking. Do you think that cheered the market as well . I think market is glad to see that the fed is going to do what it needs to do. It should fight inflation. I mean, the fed messed up and let inflation get ooh too hot, and it needs to bring it down. And if inflation if doesnt keep going down, it needs to do something. I think the market was heartened to hear if inflation doesnt keep doing what its doing, they could take a pause come september. Jack were in earnings season, and the same game plays out where analysts lore the bar until companies can clear it and then they say, hey, we beat. They seem to be clearing the bar by a little more. They are. It looks about like 80 of companies have beaten now with about half of the s p 500 reporting, and thats actually better than average. And the the earnings beats are good i must have that you could see Second Quarter profits actually rise from a year ago which is not what anyone expected. Everyone expects another drop. And so that would be a pretty big deal. And we still have some more Big Companies coming, apple, amazon, or cater pillar. And all these, if they can keep reporting pretty Solid Earnings, were going to see a market that goes higher. Jack kristin, there are few things ugh uglier than the ge chart since the turn of the millennia. In fact, august of 2000, i think, was the alltime high for that stock. But last fall baer ons turned bullish barrons turned bullish, and its done well since then. The stock has doubled since our stock pick came out. And surprisingly, this company is beating big tech. Weve heard so much about how big tech is dominating in the market right now, but theyre outperformed apple, microsoft, amazon, a lot of other big names. And theyre basically doing this because the company is getting smaller, theyre getting more focused, theyre spinning off pieces of the business to be independent companies. Case in point, Ge Health Care which spun off at the beginning of the year. Ge still owns a chunk of that company, its doing very well, and it actually was just announcing that it thinks its going to get a boost from these new alzheimers drugs because patients are going to need scans on Ge Health Care machines. So a lot of good is happening for the company. Jack they just had earnings,s how were those . They blew earnings away, and and they actually did that by growing across the company. The core of ge right now is its Aerospace Business and, you know, people are flying again, travel is back. Thats really benefiting them. But theyre seeing growth across the business, so even in wind which has historically been a real problem for them, and and i think for investors, theyre going to be looking forward to the next spinoff. Theyre spinning off the energy business. Thats going to probably happen early next year, and i think thatll be the next thing to watch. Jack all right. I want to get to andrew and talk about how the braves are beating my mets by 17 games right now. The best team in baseball. Wall street doesnt have a lot of respect for that empire. Malone empires been out of favor for the past few years, but the braves are a particularly interesting stock, rich people paying record prices, but individuals can buy the braves stock which is the only publiclytraded Major League Baseball team, at a pretty attractive price. Could be worth at least 3 billion. Jack and what are the other parts to this empire . One of the best parts is liberty series xm which holds a big stake in siriusxm, the satellite radio company. Berkshire hathaways the biggest holder, and Warren Buffett if loves the service. He has his cadillac tuned to seriously sinatra all the time. [laughter] the the final one is Liberty Broadband which owns about a 26 stake in charter communications. All of them look pretty cheap relative to the value of their assets. Jon could they be spun off to actually realize that value . The Atlanta Braves have been simplified which could that facilitate a sale in the next year or so. Liberty siriusxm is getting templer as well, and the accoun. Jack all right. Gdp report, strong inflation boosting Investor Confidence in the economy. Morgan stanleys chris toomey has been bare on stocks, however. Around data and and Solid Earnings after data providing for your family is a top priority. But what happens when you need Affordable Health care . Christian Health Care Ministries could save you up to 40 today. As a member, you can choose your provider without network restrictions. Sign up at your convenience with our anytime enrollment. Join a Christian Community that supports each others medical expenses, offering peace of mind as you prioritize whats most important. Enroll now at your chm dot org agerelated Macular Degeneration may lead to severe vision loss and if youre taking a multivitamin alone, you may be missing a critical piece. Preservision. Preservision areds 2 contains the only clinically proven nutrient formula recommended by the National Eye Institute to help reduce the risk of moderate to advanced amd progression. Preservision is backed by 20 years of clinical studies. So ask your doctor about adding preservision and fill in a missing piece of your plan. Like i did with preservision. Now with ocusorb better absorbing nutrients. Jack the feds key inflation measure is showing prices are climbing at the lowest level in nearly two years. Consumer spending is strong, and this weeks gdp report revealed the economy grew more than expected at 2. 4 . Chris toomey at Morgan Stanley whose team is number five on barrons list of the best add advisers in the country, is joining me now. Thanks for coming in the studio. Thanks for having me. Jack the fed took very dramatic measures, seems to be having some success, and yet it didnt kill the economy in the process. Sure. Jack wall street seems to be happy about this whats not to love . I mean, i think those are famous last words, right, jack . [laughter] look, i think in fairness, chairman powells getting a lot of credit for the hard work that hes done. The market is responding in a very positive way. And for a job that kind of typically ranks with regards to a similar category as weatherman, this is the first time hes starting to get some of that credit that he hasnt been getting in the past. I think in many regards we were very defensively positioned in 2022. 2023 jack which was a good call. Which was a good call. 2023 we were expecting earnings to go down, gdp to moderate, not necessarily go into an inflatioo recession, inflation to come down. And that with those earnings going down, we would see muted prices with regards to the stock market. I think what we got wrong was, first, the fiscal stimulus. So the Biden Administration passed two big bills, big laws, the chips act as well as the inflation reduction act, which we see a fair amount of stimulus within the economy. And then we had that banking crisis which added that monetary stimulus with regards to liquidity flowing in the system. But if you look at the projection with regards to the path of the stock market whether its the s p 500 or the nasdaq up 20 , up several, 30 or so, what youre seeing is the fact that we have just gotten pe multiple. Earnings are till down about 4 . If you look at the earnings pigture, we saw earnings go down in the fourth quarter, we saw earnings go down in the First Quarter which confirmed an earnings recession, and Second Quarter were expecting earnings to be down about 9 , halfway through that. So we are seeing continued earnings, and thats a concern to us. Jack could the market just be looking through this saying, okay, no recession or muted recession, inflation will be whupped . Of course, pes are sell elevated because earnings are down, but erin earnings come back and were all a set. That is a misperception. Jack okay. Perception is higher. In reality, at the beginning of the year i think the concern was the fed was going to do too much damage, that they had raised rates too quickly, too fast, too aggressively and that the economy was going to be experiencing some trauma in the first half and and that if you remember, bond market was pricing two rate cuts in the second half. Now were in a situation where not only did we not get two rate cuts, we actually saw rates go higher. So what weve seen right now is really a kiss connect with regards to disconnect with regards to the market and rates which would have typically driven that pe multiple higher. So in our view, the pe multiples to too high and earnings expectations are also too high which is typically a recipe for disaster. Jack one thing that does worry me a little bit, and has that a lot of companies, unprofitable companies, are still paying off very, very low rates on borrowing because they got the loan back when money was free. When those turn over, they are going to be paying twice, triple what they were borrowing, and and some of them just dont have the cash flow toover to cover that. So this lag that you hear about with the fed rate hikes, we could be seeing that the over the coming months and years. What do you think . I totally agree. Fed policy operates with long and and variable lags. This is the lag that were seeing. And a lot of that has to do with sensitivity to Interest Rates by the consumer and businesses, right . If so the consumer during covid built up a huge savings in their balance sheet. We saw them jon cc no vacations. They saw them refinance their mortgages at very low rates. A lot of those are 30year mortgages, so theyre in pretty good shape with regards to taking advantage of those low rates. You also have a situation with regards to corporates doing the same thing with regards to pushing maturities out and refinancing at lower a rates. The problem is, is that if you look through that in the next three years, were going to see over 5 trillion that that needs to be refinanced. And a lot of that refinancing is going to be at rates, like you said, that are twice what they were originally financed at. In the situation where those businesses are going down, right . So an environment where the cost of capital is essentially zero, a lot of businesses will actually be able to do very well. In this situation youve got about 500 billion worth of distressed debt, only 10 of that has defaulted. So that is a big worry with regards to whats going on in the market. Jack one media giant has its fair share of missteps, but barrons is anticipating a rebound for the company. Well tell you what its doing right next meet the future. A chef. A designer. And, ooh, an engineer. All learning to save and spend their money with chase. The chefs cooking up firsts with her new debit card. Hungry . Uhuh. The designers eyeing sequins. Uh no plaid. While mom is eyeing his spending. Nice. And the engineer . Shes taking control with her own account for college. Three futures, all with chase. Freedom for kids. Control for parents. One bank for both. Chase. Make more of whats yours. Wherever you go. Wherever you stay. All you need is one key. Earn and use rewards across expedia, hotels. Com, and vrbo. Sleepovers just arent what they used to be. A house full of screens . Basically no hiccups . You guys have no idea how good youve got it. How old are you . Like, 80 . Back in my day, it was scary stories and flashlights. We dont get scared. Oh, really . 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Its the cover story this week, and barrons Senior Writer joins the panel. Thanks for coming on the show, nick. Thank you. Jack what has gone so wrong in recent years . Certainly, jack, the Stock Performance has been less than enchanting for the past couple years for disney. The parks are doing great, record revenue, record earnings, the issues are really on on the media side of the business. Theres the linear tv which is still profitable, but its a shrinking business, and then theres streaming which is the fastest part of the portfolio growing part of the portfolio, but its losing millions of dollars in this year. Theres a lot of focus on disneys battle with Florida Governor ron desantis, but disney has enough problems right now that you really dont need to blame them on the go woke, go broke kind of idea. Theres a lot of unnecessary noise more than anything. Jack but its still headline risk. Youve got the linear melting ice cube that you mentioned. Youve got money losing streaming. Wheres the upside here . As everyone has heard, bob iger base igers back as ceo, hes got a new mantra of restoring creativity to disneys franchises. The company should return to Earnings Growth in the second half of this year, streaming is on track to break even next year, and you have an inexpensive stock. When you look at the price to earnings multiple versus its history, varsities us versus the market, versus peers, but when you do an evaluation based on the sum of the parts. The theme parks ato loan could be worth almost the entire market cap of the company. Yeah, by our math, 124 per share which is almost 50 higher than the current sock price. Okay. That would be an impressive jump. What kind of catalyst do you see the stock there . A new marvel movie coming out this year, maybe we should all go together [laughter] but that return to Earnings Growth. An lists are penciling in Earnings Growth in the September Quarter which would follow four quarters of negative year ore year numbers, so thats a good sign of the therapyaround turnaround starting to get under way. Theres an investor summit in september, thatll be a chance the give longterm targets for the streaming business, what do margins look like after break even, and theyve talk about bringing back the dividend by the end of this year which should broaden the appeal to to more investors. A starting point of an inexpensive stock. And they have samuel l. Jackson, and what else do you need. Jack i want to ask you about espn. At one point that was sort of the crown jewel at least in the abc empire, but you had all these families, news households paying for es espn, some of which werent even watching sports. That group is shrinking, shrinking, shrinking. Meanwhile, the cost after of actually buying rights to these plan choose franchises is going up. Whats the future for espn . No doubt can about it, its a tougher business in the streaming era. Iger has talked about the future is streaming and theme parks which suggests that maybe every else, Linear Networks could be on the table for sale. Its all peculation, but they could spin it off, they could find a minority partner to bring some cash in and share the burden there. Ill say they are separating everything spn into its own segment this year, so look at that how you will. That may be a precursor. One analyst has suggested that disney should trade e e spn straight up for comcast can, hulu stake. That seems farfetched to me, but there are some ideas out there with what they could do. Jack one more bit of speculation is this idea that perhaps one analyst floated that apple could buy disney. It sounds crazy, but on the other hand, they have this new vr headset, they have a deal with disney to put content in there . Yeah, they do. The relationship between these two Company Companies goes back all the way to steve jobs and pixar. Its definitely speculation, but the idea is apple doesnt need to make money on streaming the way that disney does or any other Media Company does. They can use this exclusivelyowned content to drive more sales of hardware. They have deep pockets to spend on sports rights, all kinds of Creative Ideas with using augmented reality at the theme parks. For the record, i dont think that apple will buy disney in its wirety, but its one more interesting possibility to watch going forward. Yeah. Apple never does big deals, so i think one reason why its a long shot, i think their biggest deal was buying beats, the headphone company. They like to grow internally and organically. It would be out of character. Disneys market cap is Something Like 6 of apples market cap, so apple is so much bigger that it is the digestible, but i dont think its going to happen. Jack well see if iger can work that magic once again. Thanks, nick. You guys have a couple of investment ideas, and ben says some stocks are acting strangely, strangely bullish. Well tell you what companies are looking ho you got this. Lets go. Gobble gobble. Ive seen bigger legs on a turkey rude. Who are you . Im an investor in a fund that helps advance innovative sports tech like this Smart Fitness mirror. Im also mr. Leg day. 1989 anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. I go through a lot of pants. Before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. [ applause ] the day you get your clearchoice dental implants makes every day a confident day. A neverhidemysmile day. A lifeoftheparty day. A takeontheworld day. A believeinmyself day. A flashmynewteeth day. Because your clearchoice day is the day you get your confidence back for good. A clearchoice day changes every day. Schedule a free consultation. My relationship with my credit cards wasnt good. I got into debt in college, and no matter how much i paid, it followed me everywhere. The high interest. I felt trapped. Debt debt debt debt so i broke up with my Credit Card Debt and consolidated it into a low rate personal loan from sofi. I finally feel like a grownup. Break up with bad Credit Card Debt. Get a personal loan with low fixed rates and borrow up to 100k. Go to sofi. Com to view your rate. Sofi get your money right. Jack and theres an old song on wall street with, buy the rumor, sell the news. The idea is in the leadup to something happening, the street figures it out, and by the time it actually happens, everybody who would if a buyer has already bought. Youve pointed out right now its buy the rumor and keep on holding i on on. Keep on buying the news. Its been impressive. This was something youd look for, stocks are run up into earnings, then the news would come out, and it would drop even if they beat earnings. But what were seeing is stocks like Meta Platforms which gained 40 in the three months heading into its Earnings Report comes out with the news, gains 4. 4 . And this is a huge stock. Alphabet, up 14 in the three months before the report, it gains 5. Ing . Then theres 5. 8 . Then theres stocks you havent heard of, carrier, an hvac stock the, they do air conditioners, and right now theyre doing great, haw today gained 34 in the three months before their earnings, and guess what . They gained 4. 2 . This is a sign that people, as on the mix as they have been about this market, werent optimistic enough, and that is a great sign for a bull market. Jack Something Else you pointed out recently was despite all this excitement, its been a very calm rally, and you see that as a good thing . I do. You look at this dow winning streak that just ended. Thirteen days of gains. Its a great winning streak, but then you look at how much the market went up during that time, it was just 5. 3. I asked our markets data team at dow jones to look at 13day gains, not just winning streaks, but how much the market has gained in 13 days, that 5. 3 doesnt even make the top 100. Jackie jack wow. And that streak equaled one in 1987. Is so the market gained 111 , more than twice as butch as much. 1 11 . Nobodys getting too excited about things, theyre not having reasons to buy a ton, sell a ton and do it all over again, theyre just taking the market and push it higher. This is a great sign. Jack it is nice to be a little calmer. Lets go to actionable ideas. What do you have for us, andrew . Buy alcoa. Used to be part of the dow, leading Aluminum Company in the world. Out of favor right now, the stocks down 20 , Aluminum Prices are weak, but aluminum is the other green metal besides copper, and alcoa whats one of biggest producers in the world. Its got a very modest margin value. Health cared be a takeover candidate, and this is a stock that was up almost as high as 100 a couple years ago. Jack kristin, what have you got for us . I like moderna. The stock is down, and thats mostly because their whole business is covid right now, and very few people are getting covid vaccines. However, that also means its cheap. They have a lot of cash on the books, and i think people are overlooking the pipeline are. They have vaccines coming for rsv, theyre working on combination vaccines and, you know, i think if any of these work out, its going to be a big catalyst. Jack great ideas, kristin, and andrew. Check out this weaks edition of barrons. Com. Dont forget to follow us on twitter, x, whatever its called, barrons online. And thats all for us us. See you next week on barrons round table. Larry welcome to code low. I am larry kudlow. When will they leave us alone. Just yesterday the
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