Post by Admin/YBB on Jul 17, 2021 6:45:07 GMT -6
Pg M1, TRADER. A down week. With PEAK GROWTH (in GDP, earnings, inflation), the market is changing gears and that may favor quality stocks (AAPL, GOOGL, FB, COST, CVS, AMGN, etc). Both ARK-Wood type and cyclical (energy) stocks have taken hits. Q2 earnings are soaring but those disappointing even slightly will be punished. POWELL is staying course in spite of eyebrow raising inflation data. FED tapering of QE may be announce in August/September.
Fastenal/FAST reported good earnings but fell on inflation concerns. It has been passing on some cost increases, but margins may be hurt.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes.
NO-CHANGE (for the current ZIRP of 0-0.25%) through Jan 2022 FOMC. Beyond, the probabilities of rate rise are in double-digit %; more than 50% for Nov 2022 FOMC and later.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -0.52%, SP500 -0.97%, Nasdaq Comp -1.87%, R2000 -5.12%. DJ Transports -1.29%; DJ Utilities +0.95%. (Rotating spot 10-yr yield TNX -4.13%) US$ index (spot) +0.63%, oil/WTI futures -3.69%, gold futures +0.25%.
YTD (index changes only), DJIA +13.33%, SP500 +15.20%, Nasdaq Comp +11.94%. (Rotating spot 10-yr yield TNX +41.77%)
Pg M4, EUROPE. Small-cap PharmaSGP (Germany) was hit hard during the pandemic and is attractive for recovery. Its primary business is nonprescription drugs (including alternative medicines) and healthcare products. Its product pipeline is strong. It is expanding online and foreign sales and is growing via acquisitions.
Pg M4, EMERGING MARKETS. Covid-19 shocks may have passed BRAZIL and INDIA and their stock markets have rebounded (EWZ +30% from March bottom, INDA +13% from April bottom). However, Covid-19/Delta is spreading in EAST ASIA with INDONESIA leading (its new cases quadruples in a month), but their markets are also not concerned. Covid-19 has hurt poor people and small businesses more severely, while big companies used it to cut costs or restructure. Global DEMAND from developed countries is rising and that is benefitting EM exporters and IT outsources. Speculative stock activity is growing globally. CHINA is the EM hub, so things can change quickly for worse with the reemergence of Covid-19; there are also concerns about increasing Chinese regulations for techs.
Pg M6, COMMODITIES. NATURAL GAS has rallied to 2.5-yr high (+45% YTD) due to high Summer demand, inventory drawdown and supply issues related to gas pipelines. Last Winter’s storm Uri affected natural gas infrastructure and also lowered the gas inventory. Areas that rely on hydroelectric power are affected by water shortages. Exports of natural gas are at record levels. There may be shortages this Winter. Prices may remain elevated around $3.85-4.00 per million BTU through early-2022.
Pg M5, OPTIONS. Have a BUY LIST ready to take advantage of Q2 earnings related volatility. Earnings will also provide real data points to compare with what the FED is saying about the economy. SKEW is elevated as high demand for puts for hedging is making them more expensive than calls. VIX is relatively tame now; VIX in high 20s or low 30s may provide good entry points for quality and divided-paying stocks. (No specific options recommendations)
(SP500 VIX 18.45, Nasdaq 100 VXN 21.06, SKEW 151.94 (high) (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW?.tsrc=fin-srch
Pg M27, M32: A down week in EUROPE (Finland +1.27%, Spain -2.85%) and a good week in ASIA (China +1.76%, Philippines -2.13%). The equity CEF index (data to Thursday) underperformed the DJIA and its discount was -4.5%.
TREASURY* 3-mo yield 0.05%, 2-yr 0.25%, 5-yr 0.79%, 10-yr 1.31%, 30-yr 1.93%. DOLLAR rose, DXY 92.71, +0.66% (M35). GOLD (Handy & Harman spot, Thursday) rose to $1,806, +0.33% (M38); the gold-miners tanked uncharacteristically. (^XAU was at 137.56, -2.70% for the week)
*Treasury Yield-Curve www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
Top FDIC insured savings deposit rates*: Money-market accounts 0.61%; 3-mo Jumbo CD 0.35%, 1-yr CDs 0.60%; 5-yr CDs 1.00% (M33).
*For local rates www.depositaccounts.com/banks/rates-map/
(BONUS from Part 2 include Cover Story, Up and Down Wall Street, Streetwise and these won’t be repeated in Part 2)
Pg 21: COVER STORY is Midyear Roundtable Update. A report card for January picks and pans is also included.
Tod AHLESTEN, Parnassus CIO and PRBLX: SPGI, AMT, BSX, BDX; expecting 10-15% correction
Scott BLACK, Delphi Management: UCTT, COHU; very strong earnings for 2021; SP500 top-heavy; federal deficit 1.3x GDP
Meryl WITMER, Eagle Capital: GRSV*, HLMN*, DOOR; *SPAC mergers
Mario GABELLI, Gamco/GBL: CNHI, TV, DTEGY, VIVHY, VIACA, BATRA, MSGS, SBGI, TRATF; watch taxes, bond yields (& P/E); geopolitical issues (Taiwan-China, etc); likes infrastructure, renewable energy (batteries)
Rupal BHANSALI, Ariel Investments: PM, ELEZY, BIDU; global equity valuations are in bubble territory
Henry ELLENBOGEN, Durable Capital: RH, SHOP; think US vs China vs digital economy; US IPO market is sound
Sonal DESAI, Franklin Templeton: MPACX, GLD, PYEWX, FVHIX, FHYVX, VNQ; 10-yr at 2% by yearend; tapering of QE may be announced at Jackson Hole
Abby COHEN, Goldman Sachs/GS: TM, STBFY, SIEGY, WYGPY; unlike in January, GS has consensus view now; the Fed will act later than sooner; SP500 yearend target 4,300
William PREIST, Epoch Investment Partners: TMUS, SPLK, MDT, WWD; rates to remain low and that would favor growth over value; Taiwan-China concerns
James ANDERSON, Baillie Gifford: TCEHY, AMSL, DELHY, ILMN, MRNA; cooling of IPOs and SPACs healthy; Chinese regulations of techs a concern (thinks DIDI acted in bad faith; doesn’t own)
Pg 5, UP & DOWN WALL STREET. How long is TRANSITORY? (not 1-2 months, according to Yellen) Are we headed for STAGFLATION? (i.e. high inflation, slow growth) The BOND market is projecting slower economic growth and lower rates (and lower inflation) down the road (how long is that?); falling nominal yields are due to falling real rates (with inflation-expectations being steady). Real WAGES are also falling due to high current inflation (CPI +5.5%, core CPI +4.5%, PPI +7.3%, core PPE +5.4%; these don’t take into account rising home prices either). RETAIL sales in real terms are also falling. Equal-weight SP500 RSP is lagging over 3 months (meaning market breadth is narrow) and small-cap R2000 IWM is down. FED chair POWELL promised to discuss tapering QE, inflation-expectations and coming economic slowdown (economy is peaking now) at the July 27-28 FOMC. Stephanie POMBOY (MacroMaven) notes that normally forward-looking market will be forced to look at weakening fundamentals. Doug RAMSEY (Leuthold) mentions some Rule of 20 that the sum pf inflation and market P/E (using peak earnings) should be less than 20 and the market is way above that and near levels close to those in dot. com era (and you know what followed that).
Pg 9, STREETWISE. Homeowners have STREAMING SUBSCRIPTION fatigue. Many have half-dozen or more subscription services and will cut down when offices reopen, and kids are back to school. So, wait for streaming stocks until the dust settles in Fall and some high P/S stocks come down to earth. Competing TV broadcasters will also benefit from live sports.
UBS has an AI software program to identify big dividend boosters: MSFT, NKE, MA, ATVI, MS, UPS, ITW, HPQ.
(More later….)
Fastenal/FAST reported good earnings but fell on inflation concerns. It has been passing on some cost increases, but margins may be hurt.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes.
NO-CHANGE (for the current ZIRP of 0-0.25%) through Jan 2022 FOMC. Beyond, the probabilities of rate rise are in double-digit %; more than 50% for Nov 2022 FOMC and later.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -0.52%, SP500 -0.97%, Nasdaq Comp -1.87%, R2000 -5.12%. DJ Transports -1.29%; DJ Utilities +0.95%. (Rotating spot 10-yr yield TNX -4.13%) US$ index (spot) +0.63%, oil/WTI futures -3.69%, gold futures +0.25%.
YTD (index changes only), DJIA +13.33%, SP500 +15.20%, Nasdaq Comp +11.94%. (Rotating spot 10-yr yield TNX +41.77%)
Pg M4, EUROPE. Small-cap PharmaSGP (Germany) was hit hard during the pandemic and is attractive for recovery. Its primary business is nonprescription drugs (including alternative medicines) and healthcare products. Its product pipeline is strong. It is expanding online and foreign sales and is growing via acquisitions.
Pg M4, EMERGING MARKETS. Covid-19 shocks may have passed BRAZIL and INDIA and their stock markets have rebounded (EWZ +30% from March bottom, INDA +13% from April bottom). However, Covid-19/Delta is spreading in EAST ASIA with INDONESIA leading (its new cases quadruples in a month), but their markets are also not concerned. Covid-19 has hurt poor people and small businesses more severely, while big companies used it to cut costs or restructure. Global DEMAND from developed countries is rising and that is benefitting EM exporters and IT outsources. Speculative stock activity is growing globally. CHINA is the EM hub, so things can change quickly for worse with the reemergence of Covid-19; there are also concerns about increasing Chinese regulations for techs.
Pg M6, COMMODITIES. NATURAL GAS has rallied to 2.5-yr high (+45% YTD) due to high Summer demand, inventory drawdown and supply issues related to gas pipelines. Last Winter’s storm Uri affected natural gas infrastructure and also lowered the gas inventory. Areas that rely on hydroelectric power are affected by water shortages. Exports of natural gas are at record levels. There may be shortages this Winter. Prices may remain elevated around $3.85-4.00 per million BTU through early-2022.
Pg M5, OPTIONS. Have a BUY LIST ready to take advantage of Q2 earnings related volatility. Earnings will also provide real data points to compare with what the FED is saying about the economy. SKEW is elevated as high demand for puts for hedging is making them more expensive than calls. VIX is relatively tame now; VIX in high 20s or low 30s may provide good entry points for quality and divided-paying stocks. (No specific options recommendations)
(SP500 VIX 18.45, Nasdaq 100 VXN 21.06, SKEW 151.94 (high) (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW?.tsrc=fin-srch
Pg M27, M32: A down week in EUROPE (Finland +1.27%, Spain -2.85%) and a good week in ASIA (China +1.76%, Philippines -2.13%). The equity CEF index (data to Thursday) underperformed the DJIA and its discount was -4.5%.
TREASURY* 3-mo yield 0.05%, 2-yr 0.25%, 5-yr 0.79%, 10-yr 1.31%, 30-yr 1.93%. DOLLAR rose, DXY 92.71, +0.66% (M35). GOLD (Handy & Harman spot, Thursday) rose to $1,806, +0.33% (M38); the gold-miners tanked uncharacteristically. (^XAU was at 137.56, -2.70% for the week)
*Treasury Yield-Curve www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
Top FDIC insured savings deposit rates*: Money-market accounts 0.61%; 3-mo Jumbo CD 0.35%, 1-yr CDs 0.60%; 5-yr CDs 1.00% (M33).
*For local rates www.depositaccounts.com/banks/rates-map/
(BONUS from Part 2 include Cover Story, Up and Down Wall Street, Streetwise and these won’t be repeated in Part 2)
Pg 21: COVER STORY is Midyear Roundtable Update. A report card for January picks and pans is also included.
Tod AHLESTEN, Parnassus CIO and PRBLX: SPGI, AMT, BSX, BDX; expecting 10-15% correction
Scott BLACK, Delphi Management: UCTT, COHU; very strong earnings for 2021; SP500 top-heavy; federal deficit 1.3x GDP
Meryl WITMER, Eagle Capital: GRSV*, HLMN*, DOOR; *SPAC mergers
Mario GABELLI, Gamco/GBL: CNHI, TV, DTEGY, VIVHY, VIACA, BATRA, MSGS, SBGI, TRATF; watch taxes, bond yields (& P/E); geopolitical issues (Taiwan-China, etc); likes infrastructure, renewable energy (batteries)
Rupal BHANSALI, Ariel Investments: PM, ELEZY, BIDU; global equity valuations are in bubble territory
Henry ELLENBOGEN, Durable Capital: RH, SHOP; think US vs China vs digital economy; US IPO market is sound
Sonal DESAI, Franklin Templeton: MPACX, GLD, PYEWX, FVHIX, FHYVX, VNQ; 10-yr at 2% by yearend; tapering of QE may be announced at Jackson Hole
Abby COHEN, Goldman Sachs/GS: TM, STBFY, SIEGY, WYGPY; unlike in January, GS has consensus view now; the Fed will act later than sooner; SP500 yearend target 4,300
William PREIST, Epoch Investment Partners: TMUS, SPLK, MDT, WWD; rates to remain low and that would favor growth over value; Taiwan-China concerns
James ANDERSON, Baillie Gifford: TCEHY, AMSL, DELHY, ILMN, MRNA; cooling of IPOs and SPACs healthy; Chinese regulations of techs a concern (thinks DIDI acted in bad faith; doesn’t own)
Pg 5, UP & DOWN WALL STREET. How long is TRANSITORY? (not 1-2 months, according to Yellen) Are we headed for STAGFLATION? (i.e. high inflation, slow growth) The BOND market is projecting slower economic growth and lower rates (and lower inflation) down the road (how long is that?); falling nominal yields are due to falling real rates (with inflation-expectations being steady). Real WAGES are also falling due to high current inflation (CPI +5.5%, core CPI +4.5%, PPI +7.3%, core PPE +5.4%; these don’t take into account rising home prices either). RETAIL sales in real terms are also falling. Equal-weight SP500 RSP is lagging over 3 months (meaning market breadth is narrow) and small-cap R2000 IWM is down. FED chair POWELL promised to discuss tapering QE, inflation-expectations and coming economic slowdown (economy is peaking now) at the July 27-28 FOMC. Stephanie POMBOY (MacroMaven) notes that normally forward-looking market will be forced to look at weakening fundamentals. Doug RAMSEY (Leuthold) mentions some Rule of 20 that the sum pf inflation and market P/E (using peak earnings) should be less than 20 and the market is way above that and near levels close to those in dot. com era (and you know what followed that).
Pg 9, STREETWISE. Homeowners have STREAMING SUBSCRIPTION fatigue. Many have half-dozen or more subscription services and will cut down when offices reopen, and kids are back to school. So, wait for streaming stocks until the dust settles in Fall and some high P/S stocks come down to earth. Competing TV broadcasters will also benefit from live sports.
UBS has an AI software program to identify big dividend boosters: MSFT, NKE, MA, ATVI, MS, UPS, ITW, HPQ.
(More later….)