Oil Prices Should Head Much Lower Again: 3-Minute MLIV
Anna Edwards, Guy Johnson, Kriti Gupta and Mark Cudmore break down today's key themes for analysts and investors on "Bloomberg: The Opening Trade." (Source: Bloomberg)
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Yahoo
41 minutes ago
- Yahoo
Florida hasn't had a CFO in months. Who will DeSantis pick, and why does it matter?
For nearly three months, Florida has been without a Chief Financial Officer. "Without a CFO in place, who in the hell is doing the business of the people?" asked former CFO Jimmy Patronis in a recent podcast. Patronis left the post on April 1 to replace former U.S. Rep. Matt Gaetz as Northwest Florida's member of Congress. Susan Miller, who was chief of staff under Patronis, is currently in charge of the Department of Financial Services, but Gov. Ron DeSantis has not officially named her CFO, even on an interim basis. The last press release from the department was in May, according to its website. The vacancy in a high-level cabinet position is unusual — the CFO is third in the line of succession for governor, after the lieutenant governor and attorney general. Especially since Florida also currently has no lieutenant governor: Former Lt. Gov. Jeanette Nuñez left that role in February to be interim president of Florida International University, one of several DeSantis allies in leadership positions in Florida's higher education. (She's since been confirmed as president permanently.) At the first Florida Cabinet meeting since Patronis' absence, every new regulation or rule change was approved unanimously by DeSantis, Attorney General (and former DeSantis chief of staff) James Uthmeier, and Agriculture Commissioner Wilton Simpson. DeSantis had said he would appoint a temporary CFO by mid-May, after the scheduled end of the regular legislative session. But the session was extended due to a stalemate over budget talks between the House and Senate. A final budget was approved on June 17 and now awaits DeSantis' review. Now, a CFO choice could be forthcoming. When a choice is made, it may bring more Republican drama. DeSantis is said to favor a staunch loyalist for the position: Sen. Blaise Ingoglia, R-Spring Hill. At the same time, Sen. Joe Gruters, R-Sarasota, last year announced his intent to run for the open seat in 2026. He's endorsed by President Donald Trump. It could make for an awkward GOP primary since Ingoglia is expected to also file to run for the seat for a full term. And Ingoglia, if appointed to serve the rest of Patronis' term, technically would have the advantage of being the incumbent. Here's what to know, and why it's important: The Department of Financial Services is powerful, in charge of paying state vendors and overseeing insurance, financial regulators and fire investigations. It was created in 2002 after the Florida Cabinet was overhauled in 1998 by combining the former offices of comptroller, treasurer, insurance commissioner, and fire marshal. "My department serves consumers and taxpayers through its work in 13 different divisions and additional initiatives I set forth," Patronis once wrote for the DFS website. "A world of information and assistance is provided by the department on issues ranging from insurance education and assistance, fire prevention and safety, and even unclaimed cash and property. "I have also established additional priorities to assist Floridians including fighting fraud, consumer protection and fiscal transparency." The DFS is made of the following divisions, each one with a direct impact on Floridians: Accounting and Auditing Consumer Services Criminal Investigations Funeral, Cemetery, and Consumer Services Insurance Agent and Agency Services Office of Financial Regulation Office of Insurance Regulation Rehabilitation and Liquidation Risk Management Treasury State Fire Marshal Unclaimed Property Workers' Compensation State Sen. Joe Gruters, R-Sarasota, is a long-time Trump ally who has support from Patronis and some influential Trump backers. DeSantis will be making the interim appointment, however, and the two men have had a contentious relationship. 'I don't know where the Governor's going to go with the CFO seat, although I'm pushing hard and I'd like to have it now because I think it'd be better for Florida,' Gruters told reporters in December. He announced his bid for the CFO position in June 2024. Gruters, 47, is a Tampa native with a bachelors' degree from Florida State University and an MBA from the University of South Florida. Previously a CPA for Robinson, Gruters & Roberts PA CPA LLC in Venice, he worked for multiple campaigns and became the chair of the Sarasota Republican Party. Gruters was an early Trump supporter and one of the few GOP leaders who got behind him in 2012. He became Florida co-chair of Trump's 2016 campaign. He won election as a House member in 2016 and moved to the Florida Senate two years later. He was reelected to the Senate in 2022. In 2019 he was elected chair of the Republican Party of Florida and reelected in 2021. In 2023, Trump appointed Gruters to manage the Patriot Legal Defense Fund, his tax-exempt legal defense expense fund. Trump announced in April he was appointing Gruters to vice chair of the White House Homeland Security Council. Gruters and DeSantis clashed back when Gruters was the state GOP chair over Gruters' pay and his organization of a fundraiser for the party. It didn't help when Gruters sided with Trump during DeSantis' campaign for the Republican presidential nomination, and later criticized the governor for spending taxpayer funds to attack an amendment that would have legalized recreational marijuana; Gruters supported the amendment. Gruters is married to Sydney Gruters and they have three children. Sydney Gruters was appointed by Trump in his first term to serve as the state director for Florida and the U.S. Virgin Islands for the U.S. Department of Agriculture. After that she worked as district director for U.S. Rep. Greg Steube before being hired as executive director of the New College Foundation during DeSantis' experiment in revamping the liberal arts college along more conservative lines. State Sen. Blaise Ingoglia, R-Spring Hill, is a Queens, New York, native who moved to Florida in 1996 to start a mortgage company and homebuilding company. He became politically active, his bio says, when property taxes skyrocketed, founding "Government Gone Wild" and producing seminars and videos over governmental wastefulness. The 54-year-old was elected chair of the Hernando County Republican Executive Committee in 2009, and then was elected vice-chair of the Republican Party of Florida in 2011. In 2014, he was elected to the Florida House of Representatives and was later chosen chair of the Republican Party of Florida. He was reelected as state chair in 2017. Ingoglia ran for the Florida Senate in 2022 with DeSantis' endorsement and won. As a close ally of DeSantis, described as the governor's "conservative pitbull in the Florida Senate,' Ingoglia has criticized legislative leaders during a rift with the governor over immigration laws. He's sponsored bills in line with DeSantis' agenda, including lowering property taxes and imposing term limits on local officials. Ingoglia has been an official campaign spokesperson for both Trump and DeSantis. This story includes previous reporting by Gray Rohrer of the USA TODAY Network – Florida Capital Bureau. This article originally appeared on Tallahassee Democrat: Florida Chief Financial Officer pick may come down to loyalties
Bloomberg
43 minutes ago
- Bloomberg
Treasuries Climb as Oil Slump Boosts Bets on Fed Rate Cuts
Treasuries gained as a decline in oil prices and dovish comments from Federal Reserve officials boosted bets on US interest-rate cuts. The two-year yield fell three basis points to 3.83%. Money markets fully priced in two quarter-point cuts from the Fed by the end of the year and a 25% chance of a third reduction, up from 13% on Monday. Traders also lifted the probability of a move in July to 20% from zero a week ago.
Yahoo
44 minutes ago
- Yahoo
There Are Currently Better Options Than Microsoft
Microsoft Corporation (NASDAQ: MSFT) is one of the most well-known companies, belonging to the mag-7 and being the biggest company in the world according to market capitalization. While MSFT is definitely a great company, this article will show why it currently is not a buy for me, mainly because there are better deals in other mag-7 companies at lower valuations and better fundamentals. Warning! GuruFocus has detected 6 Warning Sign with MSFT. From a fundamental perspective, Microsoft is a strong company, with a gross profit margin of 69.7% and an EBITDA margin of 55.25%, far above the industry medians of 50.78% and 10.48%, respectively. Furthermore, the ROE is great at 33.61%, while the industry median is only at 4.96%. The same can also be said for growth. While MSFT is not as far ahead of other companies as it was in terms of profitability, a revenue growth rate of 14.13% and an EBITDA growth rate of 19.16% are still great. Furthermore, forward growth rates are even stronger than current ones, suggesting a positive outlook. Only ROE growth is a weak point in this sector, with both current and forward ROE growth expected to be negative. As with all Mag-7 companies, valuation is the biggest problem for Microsoft. Everyone already knows that we are talking about a great company, so the most important thing to get right is to find a good entrance price. Currently, the EV/EBITDA ratio of the stock is relatively high at 22.8, a 31% premium to the industry median. Moreover, the P/S and P/B ratios are even more elevated at 12.51 and 10.49, suggesting a 311% and 214% premium, respectively. The P/E ratio at 35.11 is also very high at the moment. Figure 1 shows the historical P/E ratio of MSFT as can be seen, the company currently trades at 2020 and 2023 levels, leaving it at a higher bound of its average valuation. When comparing Microsoft's user base to that of other Mag-7 companies, like Alphabet (NASDAQ: GOOG) and Meta (NASDAQ: META), one can instantly see that the company's valuation is elevated. At around 1.5 billion users and a market cap of 3.35T, the company has a valuation of $2.233 per user. At the same time, GOOG and META only have valuations of $820 and $494 per user, respectively, making them much cheaper in comparison. Additionally, ROE is a weak point too, with only Tesla Inc. (NASDAQ: TSLA) and Amazon (NASDAQ: AMZN) being worse at 8.79% and 25.24%, respectively. From a growth perspective, Microsoft is solid but does not particularly stand out at slightly better revenue growth but significantly less EBITDA growth than Alphabet. Furthermore, the negative ROE growth is the second worst in the peer group, with only Tesla's ROE falling by almost 70%. In total, Microsoft seems fundamentally somewhere around the average, with profitability being a strength while growth is a comparative weakness. Figure 2 shows the valuation metrics of Microsoft and its peer group. As can be seen, MSFT is one of the most expensive Mag-7 companies, having a higher EV/EBITDA and P/E ratio than everyone but TSLA and NVDA. In terms of P/S ratio, the company is even more expensive than TSLA, while it is only in the middle of all companies in terms of its P/B ratio. All of this makes a current investment in MSFT look rather bad. Meta, for example, is beating Microsoft in almost every category, with MSFT only slightly exceeding in EBITDA margins, having 4% more. At the same time, META trades at a discount between 15% and 30%, depending on the ratio. This very same example could also be done for GOOG, which has comparable metrics but a discount of almost 50%. Furthermore, GOOG has a far lower P/FCF ratio at 27.1 compared to that of MSFT, which is at 51.2, showing that the premium persists through multiple valuation metrics. This, in total, makes MSFT look very expensive. The only companies in this list looking like a worse deal are TSLA and Apple (NASDAQ: AAPL), which have worse profitability and growth at comparably high valuations. One of the major concerns for Microsoft is the company's big exposure to AI, due to its aggressive investments in this sector. While it could be a long-term growth factor, one should also consider the increased competition in the sector, with almost every company boosting AI investments. In contrast to other companies like Meta, which approaches the AI battle by focusing on a sector, in this case marketing, to gain an edge, Microsoft focuses on large language models, something most companies do. At the same time, the legal battle between Elon Musk and OpenAI, one of Microsoft's most important AI investments, remains a concern, as Musk wants to stop OpenAI from becoming a for-profit company. Also, it remains questionable if Microsoft can continue charging premium prices for its M365 Copilot, while users have so many other alternatives. The same argument can also be made for the company's cloud business, where it faces strong competition from Amazon and Alphabet. Also, many companies are trying to cut costs on cloud spending to increase profit, which could further damage growth in this sector. All of this poses strong questions about whether a forward revenue growth rate of 14.30% and a forward EBITDA growth rate of 19.88% are justified. Apart from that, Microsoft is also not as immune to geopolitical tensions as one might think. While the trade deal between the US and China has decreased trade tensions for now, a new collapse in foreign relations remains a risk, as it could increase the costs of hardware for the company. Another item of interest could be that MSFT has seen increased insider selling over the past few months $47.9M sold during the last 3 months. Additionally, the famous hedge fund manager and value investor Ken Fisher (Trades, Portfolio) has recently reduced his position in MSFT by 10%. Furthermore, George Soros (Trades, Portfolio) completely cut his position in the company by the end of March. From a technical perspective, MSFT looks fine but not great. Although 6-month and 1-year momentum are positive, they are not extremely high. Figure 3 further shows that the company is trading above its 200-day simple moving average, indicating lower volatility and higher returns. However, it is currently at a resistance at $454 and could bounce back from here. Furthermore, even if it manages to break through this level, we still have to see prices above the resistance of $467 to be able to speak of a new uptrend. In total, MSFT looks like a much worse deal than other Mag-7 stocks like META and GOOG at the moment, which trade at similar multiples, while having similar or even stronger fundamentals. Because of this, I give MSFT a sell rating as it is likely time to shift funds into other Mag-7 companies, especially with the current resistance being a barrier at the moment. This article first appeared on GuruFocus. Sign in to access your portfolio
