Market Overview

Barron's Recap (4/14/12): Student-Loan Debt Drags on the Economy


This weekend in Barron's online: Student-loan debt drags on the economy, a look at Kohl's and Seagate Technology, and what America's top 100 financial advisors are recommending.

Cover Story

"What a Drag" by Jonathan R. Laing. Student-loan debt is compounding at an alarming rate. Last month the Federal Reserve Bank of New York said that $870 billion in loans were carried by some 37 million present and former students, which exceeded the money owed by all Americans for auto loans. And that was just one of two separate government reports in recent weeks that have revealed the extent of the growing student debt burden. At $1 trillion and climbing, this debt clearly has contributed to the weakness of the economic recovery, and it may be a burden on economic growth for decades to come.

See also: Student Loans: One of the Biggest Economic Issues of 2012

Feature Stories

In "Plucking Kohl's from the Bargain Bin," Christopher C. Williams points out that there is much to like about Kohl's (NYSE: KSS), the off-price department-store chain, even though the stock recently has fallen out of favor with investors. Shares are just 1% higher year to date, perhaps because management has forecast only 2% growth in same-store sales in the current fiscal year. But hopeful analysts and investors are looking beyond this transitional year to the retailer's future growth trajectory. Earnings are expected to rise by double digits in fiscal 2013 and 2014. The company's aggressive share-repurchase program is in part responsible for that. And Kohl's has begun to return capital to investors with a generous dividend policy, while also taking steps to reinvigorate sales.

"One of the Best Tech Plays Outside Apple" by Andrew Bary takes a look at how the world's largest disk-drive maker, Seagate Technology (NASDAQ: STX) may offer investors "a byte of the action." The Dublin-based company has a lot to offer, with its superlow valuation, strong market position and shareholder-friendly management. Seagate has a 3.8% dividend yield, and shares trade for about four times the projected profit for the current fiscal year, as well as three times that expected in fiscal 2013.

See also: Seagate, SAP and Other Top European Tech Stocks

Barron's ranks America's leading financial advisors in Suzanne McGee's "The Top 100." The top ten include advisors from the likes of Morgan Stanley Private Wealth Management, Edelman Financial Services, Convergent Wealth Advisors and Graystone Consulting. The article also looks at what the top 100 financial advisors are recommending. Given the stock-market rally of the past six months, should investors worry about seeing their gains evaporate in another downturn? Perhaps not; this year's top advisors recommend standing pat.

In "The Great Bond Conundrum" by Steve Garmhausen, some top advisors suggest that investors facing meager fixed-income yields could make things much worse by turning to longer-term bonds to boost yield. Instead of lengthening maturities, they say, fixed-income investors often would be better off seeking yield by inching down the credit-quality scale, or by focusing on overlooked bond categories such as health-care issues and "private activity" munis. See the article for more recommendations on how to avoid the risks and get decent income from bonds.

Jonathan Buck's "A No-Confidence Vote for France" suggests that socialist leader François Hollande likely will be the next president of France, and the article discusses why that will be a setback for business and for the French economy. Current president Nicolas Sarkozy is deeply unpopular at home due to the eurozone sovereign-debt crisis. France, like much of the eurozone, struggles with diminishing competitiveness, high unemployment and excessive government spending. But, the article says, Hollande's socialist policies could worsen these problems and punish business.

Also featured:

  • "Time to Start Trading" by Michael A. Sisk discusses "tactical" trading.
  • "The Gift of Giving" by Steve Garmhausen offers advice on exploiting gift-tax exemptions.
  • "Clever Is as Clever Does" by Bill Alpert examines for-profit colleges' part in the student-loan debt crisis.
  • "The Big Flaws in Dodd-Frank" by Gene Epstein is an interview with professor Charles Calomiris.
  • "A Fund Duo That Teams Up to Outperform" by Sarah Max is a profile of the co-managers of the Janus Triton (NASDAQ: JATTX) fund.
  • "A Distant Mirror" is an editorial commentary by Thomas G. Donlan


Columns in this weekend's Barron's discuss:

  • Should Microsoft (NASDAQ: MSFT) swap Bing for shares of Facebook?
  • Are expectations for corporate profits too low?
  • Regulators grapple with robotic trading
  • The prospects for gold-mining stocks
  • Has Sony (NYSE: SNE) lost its way?
  • And more ...

See also:
Facebook Would Die Without Microsoft
Sony Dives as Cuts, Overhaul Fail to Wow Investors

Posted-In: Apple Barron's Bing Charles Calomiris Convergent Wealth AdvisorsBarron's Media Trading Ideas Best of Benzinga


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