By Barbara Kollmeyer, MarketWatch
Walt Disney/Everett Collection
Have we truly grown weary of talking about a trade deal?
Because frankly, there isn’t a whole lot for investors to obsess about right now, as the Fed stays in its corner and earnings season grinds to a halt. Growth worries? China just cut its forecasts and announced a plan (see below). Outside of that, there’s always the discussion of too-fast-too-far stock market gains.
Enter Lori Calvasina, head of U.S. equity strategy at RBC Capital, who told Bloomberg Radio that everyone fretting over these juicy gains seen since the start of the year can just relax because valuations aren’t crazy and sentiment doesn’t look stretched
“I don’t see the same pressure on this market that we saw last year,” she says, adding that the market may just need some “signs the economy is digging out of the rough patch,” to keep moving higher. But be patient because those signals may not come until later in the year.
Indeed, we had a bear market, but that was last year, says Ross Gerber, president and CEO of Gerber Kawasaki, who provides our call of the day . An upbeat Gerber tells MarketWatch that the checklist of worries is small for investors, with concerns about earnings already baked in, a trade deal inevitable and, at least in his view, a recession not likely to happen.
On to his call — a company that offers the “best reward deal” he’s seen in a long time.
“Disney is changing Hollywood as we know it,” says Gerber, who is pretty pumped about the House of Mouse’s /zigman2/quotes/203410047/composite DIS -0.18% soon-to-be-released streaming app that he says “everyone with a child is going to sign up for.” To be sure, getting through the toddler years without Nemo or Woody and the gang, would be a grind.
Then there’s the movie slate — “Captain Marvel” this week and “Frozen 2” later this year — and a mind-blowing “Star Wars” theme park to rake in even more cash. Gerber, whose firm manages $830 million, says Netflix /zigman2/quotes/202353025/composite NFLX -1.32% is spending good money on movies right now because it knows it will have to fill in the gaps on a lot of content headed to Disney.
The company just announced it will cut compensation for CEO Bob Iger by $13.5 million in a move aimed at closing its deal for 21st Century Fox /zigman2/quotes/209921865/composite FOX -5.68% , which will yield more Marvel characters and probably a controlling stake in Hulu.
While Netflix has seen a 31% run-up so far this year, Disney is way behind with a 4.3% gain that puts it behind the S&P’s 11.4% rise. Investors pay about 15 times forward price/earnings for Disney, while Netflix is a scorching 130 times. But Gerber says he’ll stick with both.
Disney falls into the consumer discretionary sector that he likes — he’s also a fan of Home Depot /zigman2/quotes/208081807/composite HD -3.42% —along with tech and he’s keen on China, including Tencent and that country’s own answer to Netfix, IQIYI Inc. /zigman2/quotes/203657421/composite IQ +2.42% , though some see Chines online video companies as problematic.
Gerber also has a claim to fame as a Tesla /zigman2/quotes/203558040/composite TSLA -3.60% bull and he isn’t about to change his mind, excited about a recent move by the car maker to online sales and innovation that just doesn’t stop. “Apple is so profitable it’s crazy, and they don’t do anything. Tesla breaks even at best and they’re doing a new thing everyday,” he says.
Here’s at least one person that doesn’t agree on that last point. A 66% decline for Telsa this year? You’d better believe it says this former hedge-fund manager.
“We will face a graver and more complicated environment as well as risks and challenges…We must be fully prepared for a tough struggle.” — That was China’s Premier Li Keqiang at the opening of the National People’s Congress, as he announced the weakest growth target in around 30 years, of 6% to 6.5%, but investors cheered his plan to boost the economy, which including tax cuts. And there was more worrying data out as the Caixin-Markit Services purchasing manager’s index fell to a four-month low.