Post by Admin/YBB on Aug 7, 2021 5:40:53 GMT -6
Pg M1, TRADER. New highs again for DJIA and SP500 (trailing P/E 28.1). There is wild speculation in meme stocks (AMC, GME, newest HOOD). If this is stock BUBBLE, it may deflate in a nice way (unlike bursting in 1929 or 2000) by moving sideways as spectacular earnings catch up ($198-220 in 2021, $300 in 2025). But there may be pullbacks/corrections along the way.
Despite concerns about Covid-19-Delta, it may be time to bet on reopening, meaning economically sensitive CYCLICALS. Several BANKS look attractive (CFR, WTFC, TRMK, FHN, CMA).
HVAC stocks (CARR, TT, JCI, LII) are benefitting from Summer heat and additional emphasis on HVAC and ESG issues at workplaces and schools. Their valuations are bit expensive.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes.
NO-CHANGE (for the current ZIRP of 0-0.25%) through May 2022 FOMC. Beyond, the probabilities of rate rise are in double-digit %; more than 50% for December 2022 FOMC and later.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +0.78%, SP500 +0.94%, Nasdaq Comp +1.11%, R2000 +0.97%. DJ Transports +0.29%; DJ Utilities +2.13%. (Rotating spot Treasury TLT -1.16%) US$ index (spot) +0.66%, oil/WTI futures -7.67%, gold futures -2.90%.
YTD (index changes only), DJIA +15.04%, SP500 +18.12%, Nasdaq Comp +15.11%. (Rotating spot Treasury TLT -6.31%)
Pg M4, EUROPE. Telecom equipment maker Nokia (NOK; EV/EBITDA 10) is attractive on global rollout of 5G. Ericsson/ERIC is a strong competitor, but Chinese rival Huawei has been blocked by the US and many European countries. NOK benefitted from pandemic and also from the meme stock crowd.
Pg M4, EMERGING MARKETS. One area that CHINA is NOT cracking down on is renewable energy and electric vehicles (EVs). These industries are aligned with Chinese goal of carbon neutrality by 2060. China is also a major global supplier for these areas. Related funds are MASGX/MISFX, KGRN.
EXTRA1. Covid-19-Delta is seriously affecting global SUPPLY-CHAINS through Vietnam, S Korea, Malaysia, Thailand. These countries were beneficiaries of the moves out of China, but those moves may now be deferred/delayed. China is also cracking down on its big tech and e-commerce companies (the latest being the food-delivery company Meituan) and many Chinese companies are trading at near 20-yr lows relative valuations.
EXTRA2. The latest CHINESE crackdown is on food-delivery giant Meituan – it faces a huge fine for violating antimonopoly lawsits “anti-monopolistic” behavior.
Pg M6, COMMODITIES. Buy/accumulate silver (SLV) on dips during seasonally weak August and September; expect new silver bulls to throw in the towel in frustration. Silver is both precious and industrial metal, and the demand will remain strong. Beware that strong dollar hurts PMs and silver is quite volatile.
Pg M5, OPTIONS. Clorox/CLX benefitted during the pandemic, but it has been hurt by recovery. However, Covid-19-Delta is gaining strength. In this uncertain situation, bullish CLX investors may sell puts or just buy more shares.
(SP500 VIX 16.15, Nasdaq 100 VXN 19.61, SKEW 148.27 (high)) (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW?.tsrc=fin-srch
Pg M24, M28: A good week in EUROPE (Denmark +2.77%, Sweden +0.40%) and a good week (again) in ASIA (Philippines +4.35%, Malaysia -0.13%). The equity CEF index (data to Thursday) outperformed the DJIA and its discount was -5%.
TREASURY* 3-mo yield 0.06%, 2-yr 0.21%, 5-yr 0.77%, 10-yr 1.31%, 30-yr 1.94%. DOLLAR rose, DXY 92.78, +0.7% (M31). GOLD (Handy & Harman spot, Thursday) slumped to $1,763, -3.4% (M34); the gold-miners fell sharply. (^XAU was at 136.76, -4.88% 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 1.10% (M29).
*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 20: COVER STORY, “Stocks to Play a Return to the Office – When It Comes”. People are returning to OFFICES for few days a week. As companies have reduced office spaces, some have to set up operations in conference rooms or other general areas; social-distancing is to be maintained. This return to work doesn’t feel normal. Most companies continue to work with hybrid OFFICE-HOME models. Several companies have delayed return to work plans (AAPL, BLK, WFC, FB, GOOGL, etc) due to rising Covid-19-Delta cases. Millions have resigned/retired, a phenomenon called The GREAT RESIGNATION. JOB HOPPING rate is high and reasons cited include wages, work culture and policies, schedule flexibility. Some employers have become creative with special ALLOWANCES (cars/transportation, meals, etc). On the other hand, some employers are penalizing for remote work from OUT OF STATE locations (citing geographical wage adjustments to prevent abuses of remote work). The BOND market is betting on lower rates for longer. But the STOCK market is undecided on rates, work from home vs reopening (the so-called Rotation), spread and impact of Covid-19-Delta. Throw into the mix vaccination levels and requirements, confusing CDC pronouncements, Fed policies, infrastructure stimulus, taxes. Recommended is a hybrid approach to stocks that doesn’t make any single-outcome bet, so include real estate (HPP, BXP), consumer stocks (ROST, WW, SBUX, RUTH), tech (MSFT, CSCO); or, as some may say, to barbell with growth and cyclicals.
Pg 6, UP & DOWN WALL STREET. The JOBS report was good with much of the gain from public education and leisure/hospitality. Headline UNEMPLOYMENT rate (U3) fell to 5.4% and total unemployment rate (U6) fell to 9.2%. Jobs report didn’t (yet) include the effects of recently rising Covid-19-Delta cases. This and future strong jobs reports may accelerate the FED moves to normalize monetary policy, starting first with reducing QE. High current INFLATION readings remain a concern and the UM consumer confidence fell.
Companies and households are loading up on DEBT. RATES are low and HY spreads are tight. The FED is pumping liquidity with Treasury-QE and MBS-QE. Companies are using debt to fund dividends and buybacks. And besides credit card and other consumer debt, buy-now-pay-later (BNPL) schemes are becoming popular with households. Square/SQ is paying stiff $29 billion for Australian Afterpay.
Pg 9, STREETWISE. PLASTICS! It is everywhere and has doubled in price in a year. After the “secret” was revealed in the film The Graduate (1967), the use of plastics by weight has grown 15-fold (a pound of plastic is lot of plastic in packaging). Plastic is bad for environment because it doesn’t degrade or decompose, so almost all of the plastic produced is still around somewhere (that is also said of gold); less than 10% is recycled. Many states and cities have banned plastic grocery bags and/or require recycling of plastic packaging. Some production capacity in Texas was damaged during the last Winter. There are also bottlenecks in shipping. But demand will keep growing during recovery. Chemical company, and a major plastics producer, LyondellBasell (LYB; yield 4.5%; fwd P/E 5.2) looks attractive to HOUGH, but beware that his recommendations on it twice, 5 and 3 years ago, didn’t work.
(More later….)
Despite concerns about Covid-19-Delta, it may be time to bet on reopening, meaning economically sensitive CYCLICALS. Several BANKS look attractive (CFR, WTFC, TRMK, FHN, CMA).
HVAC stocks (CARR, TT, JCI, LII) are benefitting from Summer heat and additional emphasis on HVAC and ESG issues at workplaces and schools. Their valuations are bit expensive.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes.
NO-CHANGE (for the current ZIRP of 0-0.25%) through May 2022 FOMC. Beyond, the probabilities of rate rise are in double-digit %; more than 50% for December 2022 FOMC and later.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +0.78%, SP500 +0.94%, Nasdaq Comp +1.11%, R2000 +0.97%. DJ Transports +0.29%; DJ Utilities +2.13%. (Rotating spot Treasury TLT -1.16%) US$ index (spot) +0.66%, oil/WTI futures -7.67%, gold futures -2.90%.
YTD (index changes only), DJIA +15.04%, SP500 +18.12%, Nasdaq Comp +15.11%. (Rotating spot Treasury TLT -6.31%)
Pg M4, EUROPE. Telecom equipment maker Nokia (NOK; EV/EBITDA 10) is attractive on global rollout of 5G. Ericsson/ERIC is a strong competitor, but Chinese rival Huawei has been blocked by the US and many European countries. NOK benefitted from pandemic and also from the meme stock crowd.
Pg M4, EMERGING MARKETS. One area that CHINA is NOT cracking down on is renewable energy and electric vehicles (EVs). These industries are aligned with Chinese goal of carbon neutrality by 2060. China is also a major global supplier for these areas. Related funds are MASGX/MISFX, KGRN.
EXTRA1. Covid-19-Delta is seriously affecting global SUPPLY-CHAINS through Vietnam, S Korea, Malaysia, Thailand. These countries were beneficiaries of the moves out of China, but those moves may now be deferred/delayed. China is also cracking down on its big tech and e-commerce companies (the latest being the food-delivery company Meituan) and many Chinese companies are trading at near 20-yr lows relative valuations.
EXTRA2. The latest CHINESE crackdown is on food-delivery giant Meituan – it faces a huge fine for violating antimonopoly laws
Pg M6, COMMODITIES. Buy/accumulate silver (SLV) on dips during seasonally weak August and September; expect new silver bulls to throw in the towel in frustration. Silver is both precious and industrial metal, and the demand will remain strong. Beware that strong dollar hurts PMs and silver is quite volatile.
Pg M5, OPTIONS. Clorox/CLX benefitted during the pandemic, but it has been hurt by recovery. However, Covid-19-Delta is gaining strength. In this uncertain situation, bullish CLX investors may sell puts or just buy more shares.
(SP500 VIX 16.15, Nasdaq 100 VXN 19.61, SKEW 148.27 (high)) (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW?.tsrc=fin-srch
Pg M24, M28: A good week in EUROPE (Denmark +2.77%, Sweden +0.40%) and a good week (again) in ASIA (Philippines +4.35%, Malaysia -0.13%). The equity CEF index (data to Thursday) outperformed the DJIA and its discount was -5%.
TREASURY* 3-mo yield 0.06%, 2-yr 0.21%, 5-yr 0.77%, 10-yr 1.31%, 30-yr 1.94%. DOLLAR rose, DXY 92.78, +0.7% (M31). GOLD (Handy & Harman spot, Thursday) slumped to $1,763, -3.4% (M34); the gold-miners fell sharply. (^XAU was at 136.76, -4.88% 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 1.10% (M29).
*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 20: COVER STORY, “Stocks to Play a Return to the Office – When It Comes”. People are returning to OFFICES for few days a week. As companies have reduced office spaces, some have to set up operations in conference rooms or other general areas; social-distancing is to be maintained. This return to work doesn’t feel normal. Most companies continue to work with hybrid OFFICE-HOME models. Several companies have delayed return to work plans (AAPL, BLK, WFC, FB, GOOGL, etc) due to rising Covid-19-Delta cases. Millions have resigned/retired, a phenomenon called The GREAT RESIGNATION. JOB HOPPING rate is high and reasons cited include wages, work culture and policies, schedule flexibility. Some employers have become creative with special ALLOWANCES (cars/transportation, meals, etc). On the other hand, some employers are penalizing for remote work from OUT OF STATE locations (citing geographical wage adjustments to prevent abuses of remote work). The BOND market is betting on lower rates for longer. But the STOCK market is undecided on rates, work from home vs reopening (the so-called Rotation), spread and impact of Covid-19-Delta. Throw into the mix vaccination levels and requirements, confusing CDC pronouncements, Fed policies, infrastructure stimulus, taxes. Recommended is a hybrid approach to stocks that doesn’t make any single-outcome bet, so include real estate (HPP, BXP), consumer stocks (ROST, WW, SBUX, RUTH), tech (MSFT, CSCO); or, as some may say, to barbell with growth and cyclicals.
Pg 6, UP & DOWN WALL STREET. The JOBS report was good with much of the gain from public education and leisure/hospitality. Headline UNEMPLOYMENT rate (U3) fell to 5.4% and total unemployment rate (U6) fell to 9.2%. Jobs report didn’t (yet) include the effects of recently rising Covid-19-Delta cases. This and future strong jobs reports may accelerate the FED moves to normalize monetary policy, starting first with reducing QE. High current INFLATION readings remain a concern and the UM consumer confidence fell.
Companies and households are loading up on DEBT. RATES are low and HY spreads are tight. The FED is pumping liquidity with Treasury-QE and MBS-QE. Companies are using debt to fund dividends and buybacks. And besides credit card and other consumer debt, buy-now-pay-later (BNPL) schemes are becoming popular with households. Square/SQ is paying stiff $29 billion for Australian Afterpay.
Pg 9, STREETWISE. PLASTICS! It is everywhere and has doubled in price in a year. After the “secret” was revealed in the film The Graduate (1967), the use of plastics by weight has grown 15-fold (a pound of plastic is lot of plastic in packaging). Plastic is bad for environment because it doesn’t degrade or decompose, so almost all of the plastic produced is still around somewhere (that is also said of gold); less than 10% is recycled. Many states and cities have banned plastic grocery bags and/or require recycling of plastic packaging. Some production capacity in Texas was damaged during the last Winter. There are also bottlenecks in shipping. But demand will keep growing during recovery. Chemical company, and a major plastics producer, LyondellBasell (LYB; yield 4.5%; fwd P/E 5.2) looks attractive to HOUGH, but beware that his recommendations on it twice, 5 and 3 years ago, didn’t work.
(More later….)