How early days of Starlink, Amazon satellite work revealed key lesson about business risk and the future
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CNBC
4 minutes ago
- CNBC
'Big beautiful bill': These are the sectors investors are betting on and avoiding in a new fiscal era
The "One Big Beautiful Bill" has drawn mixed reactions on Wall Street, but for some investors, it represents a blueprint for a new phase of U.S. economic policy. The bill , which is characterized by extensive tax reforms and selective incentives, is forecast to add to the federal deficit and has drawn criticism and triggered warnings from credit agencies. Strategists CNBC spoke to say they believe the bill is more than just another round of stimulus, and investors are making clear sectoral bets. 'A pivot point' Peter Andersen, founder of Andersen Capital Management, calls the bill "a pivot point," arguing that the U.S. is "moving from monetary stimulus to fiscal muscle." The government is shifting away from relying on the Federal Reserve's near-zero interest rates and bond-buying programs to boost the economy, and turning instead to targeted government spending. He said infrastructure is "the most exciting aspect" of the bill's national security emphasis. That, he added, involves not just "bridges and bombs," but also firewalls and data security. The OBBB is allocating roughly $150 billion in defense aimed at bolstering industry capacity, including funding for drones, military infrastructure and artificial intelligence. "Cybersecurity will be the new front line of national power," he said. His portfolio of 14 high-conviction stocks include s four cybersecurity names, including Palo Alto and CyberArk , and an equipment rental company with clients in the manufacturing industry, United Rentals . Industrials and technology plays Similarly for Tat Wai Toh, head of portfolio strategy at RBC Wealth Management Asia, the bill signals "the next fiscal supercycle" — one built on structural industrial policy rather than short-term stimulus. "This is more than infrastructure repainting. It's a restructuring of industrial policy, with AI, defense, logistics, and electrification at its core," he said. RBC is overweight on sectors that "dig, build, ship, power, and protect," including heavy electricals, infrastructure, oilfield services, defense, and banks which Toh believes are poised to benefit from rising loan demand. Likewise, Robert Teeter, managing director and chief investment strategist of Silvercrest Asset Management Group, said industrials and energy infrastructure are immediate beneficiaries of the bill. "It's certainly a new fiscal cycle and a new fiscal stimulative cycle," he said. The bill is boosting tax provisions designed to spur capital investment in U.S. manufacturing , such as full expensing for research and development and factory structures. He also highlighted that the tech sector stands to gain from incentives for R & D and productivity improvements, with benefits spreading from AI hardware providers to companies deploying the technology. His firm stayed overweight on equities through recent tariff-related volatility in anticipation of the bill's passage, favoring technology, industrials, and small caps. Too optimistic? However, not all investors believe that the bill heralds that much of a positive change. Cody Willard, general manager of CL Willard Capital Partners, is less convinced that the OBBB is a transformational catalyst on its own. "I think that's too optimistic," said the hedge fund manager. "It's more of a continuation of constant fiscal spending and infrastructure improvement promises from the U.S. Government." The administration appears intent on "running it hot" with large deficits and lower rates, pushing the U.S. into "a state of fiscal dominance whereby monetary policy must remain servile to the Treasury's funding needs," said Sprott Asset Management market strategist Paul Wong. The likely outcome, Wong argues, is negative real yields, structural dollar weakness, and a shift toward real assets. "The long term winner is real assets, as the USD is heading lower. Long bonds are most at risk," he said. Real assets include gold, oil and real estate. Sprott's portfolios are "well positioned" in precious metals — both gold and silver — which the firm believes will continue to perform well in the current market environment. They also hold uranium, copper, and rare earths to capture geopolitical and energy policy shifts. Underweight sectors In fact, some sectors face clear downsides from the OBBB. One area investors are underweight on is clean technology. "Any investors that are looking at solar power, wind power, I think that probably will not be great positions to be in," said Andersen. In a similar vein, Teeter said the sector "loses a lot of benefits in the legislation" and may lag in the near term. For one thing, the bill accelerates the phasing out of solar and wind projects via the clean energy production tax credit and investment tax credit, imposing much tighter deadlines for eligibility. On top of that, it introduces stringent "foreign entity of concern" restrictions, limiting eligibility for clean energy projects, if they are owned or materially assisted by entities from countries such as China, Iran and Russia. RBC's Toh also said he believes that hospitals and managed care sectors face reimbursement pressures.
CNBC
36 minutes ago
- CNBC
Ethereum, altcoins are big beneficiaries of tokenization: Aminoca Brands Chairman
Yat Siu, Chairman of Web3 game developer Animoca Brands talks to CNBC's Squawk Box Asia Chery Kang about the factors driving tokenization of real world assets and why Ethereum is a good a barometer for the altcoins ecosystem.
CNBC
4 hours ago
- CNBC
CNBC Daily Open: Will the other shoe drop when it comes to U.S. inflation?
Waiting for tariff-induced price increases in the U.S. to show up can feel like watching an M. Night Shyamalan movie. July's consumer price index came in mostly benign. The headline annual rate of 2.7% was lower than the Dow Jones estimate of 2.8%. That said, the core figure was 0.1 percentage points more than expected, and the highest since February, before U.S. President Donald Trump unleashed his tariffs in April. "The tariffs are in the numbers, but they're certainly not jumping out hair on fire at this point," former White House economist Jared Bernstein, who served under Joe Biden, told CNBC. Things appear idyllic so far, but you know something's going to shock you out of your seats eventually — are the figures accurate, except that the decimal point should be shifted to the right? — which makes monitoring U.S. inflation a tense (and exciting) experience. Jan Hatzius, Goldman Sachs' chief economist, in a Sunday research note estimated that the big reveal (when the U.S. consumer admits, "I see higher prices") could happen by October. But markets hit record highs as investors saw the mild inflation numbers as a sign that the Federal Reserve has room to cut rates three times this year — or that tariffs might not drive prices that much higher. Maybe the original premise was wrong: As far as inflation goes, could we be in a happily-ever-after Disney flick, instead of a Shyamalan movie? [no byline of yours?] U.S. prices in July rose less than expected. The consumer price index increased a seasonally adjusted 0.2% for the month, putting the annual figure at 2.7%. Economists polled by Dow Jones were expecting a 0.2% and 2.8% rise, respectively. The S&P 500 and Nasdaq Composite close at new highs. On Tuesday, July's tame CPI report pushed the indexes up 1.13% and 1.39% respectively. The Dow Jones Industrial Average also rose, adding 1.1%. The Stoxx Europe 600 ticked up 0.21%. Trump threatens Fed chair Powell with a 'major lawsuit.' In a post on Truth Social, the U.S. president said the potential proceedings would relate to Powell's management of the Fed's headquarters renovations. Perplexity AI offers $34.5 billion to buy Google's browser. The bid for Chrome, which came unsolicited, is higher than Perplexity's $18 billion valuation in July, but the firm said investors have agreed to back the deal. [PRO] Traders see three rate cuts this year. With Tuesday's cooler-than-forecast inflation report, the futures market is now expecting a cut in each of the Fed's meeting in September, October and December, according to the CME FedWatch tool. More European companies are shunning high-stakes deals in favor of smaller M&As Executives from industrial giants to consumer goods firms are deploying capital on strategic deals designed to snap up competitors and acquire technologies instead of staking their reputations on major deals that run the risk of never materializing. It's a strategy that allows firms to pursue growth without the immense risks and regulatory headaches that have scuttled larger deals.
