Post by Admin/YBB on Aug 14, 2021 6:14:29 GMT -6
Pg M1, TRADER. BORING – these incremental new highs. Even the meme stocks weren’t moving. Friday had the lowest volume for 2021. What fear? VIX is only 15.45. But below the surface, chip stocks fell hard, while banks and industrial did well. Equal-weight SP500 did better than SPY. Is there a mild ROTATION from growth into cyclicals? If so, investors are not concerned about Covid-19-Delta.
Rally in UTILITIES may stall; XLU was at a new high, but it may be exhaustion rather than momentum breakout. It is quite unusual for stocks (SPY), utilities (XLU) and bond prices (TLT) to all move in the same direction, but that is what they have done recently.
Wendy’s/WEN has transitioned from a meme stock in June to one with earnings. It beat estimates and raised guidance.
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 +0.87%, SP500 +0.71%, Nasdaq Comp -0.09%, R2000 -1.10%. DJ Transports +2.93%; DJ Utilities +1.25%. (Rotating spot SP500 equal-weight RSP +0.82%) US$ index (spot) -0.30%, oil/WTI futures +0.23%, gold futures +0.86%.
YTD (index changes only), DJIA +16.04%, SP500 +18.95%, Nasdaq Comp +15.01%. (Rotating spot SP500 equal-weight RSP +21.78%)
Pg M4, EUROPE. Looking for winners from the US car-rental boom? Look at German Sixt that operates in 100 countries (now #4 in the US). In addition to traditional car-rentals, it offers flexible short-term rentals (like Zipcar) and rideshare via Sixt Ride (in partnership with Lyft). Sixt family controls 58.3%.
Pg M4, EMERGING MARKETS. #MeToo movement is coming to China, and it hit Alibaba/BABA first (despite Jack MA hypocritically proclaiming to be for women rights and his wanting to be a woman in his next life). This gives Chinese authorities another stick to use on its big techs.
Pg M6, COMMODITIES. LUMBER bubble has burst (peak $1,671 per 1,000 board ft; now $500-600) but don’t expect the HOUSING prices to go down (because of lumber) as housing demand remains high. Recommended is options straddle in the expectation of a trading range of $400-600. Risks includes weather and possible higher US tariffs on Canadian lumber if prices fall too much.
Pg M5, OPTIONS. Rate increases will benefit rate-sensitive FINANCIALS. Recommended is pairing put-selling with call-buying for financial XLF. Watch the August Fed conference in Jackson Hole and the September FOMC meeting.
(SP500 VIX 15.45, Nasdaq 100 VXN 18.52, SKEW 159.66 (very high)) (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW?.tsrc=fin-srch
Pg M27, M32: A good week in EUROPE (Italy +2.40%, Finland +0.07%) and a flat week in ASIA (Japan +1.33%, S Korea -3.74%). The equity CEF index (data to Thursday) outperformed the DJIA and its discount was -4%.
TREASURY* 3-mo yield 0.06%, 2-yr 0.23%, 5-yr 0.79%, 10-yr 1.29%, 30-yr 1.94%. DOLLAR fell, DXY 92.52, -0.28% (M35). GOLD (Handy & Harman spot, Thursday) rose to $1,777, +0.79% (M38); the gold-miners fell. (^XAU was at 135.27, -1.09% 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% (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 18: COVER STORY, “Boeing/BA is Broken. How It Can Win the Future – and Boost Its Stock by 35%”. Investor reaction was mildly positive for 2021/Q2 profit, BA’s 1st since 2019. There has been strength in defense and services, but the commercial business remains depressed. Debt is high although the investment-grade credit rating remains. Inventories of planes is high. It may have to issue new stock if it wants to introduce badly needed midmarket plane. The business was decimated by 737 MAX accidents, Covid-19, Dreamliner 787 issues. New CEO CALHOUN has been in place since January 2020. Deliveries of 737 MAX have started, and it should be back in commercial service soon.
Pg 5, UP & DOWN WALL STREET. Repeated STIMULI and increasing DEBT will hurt the US DOLLAR in the long run. The US has gone through several long stretches of strong and weak dollar. It has benefited from the RESERVE status of dollar in financing its budget and trade deficits. But a huge oversupply of dollar may lead to loss of confidence in dollar. Stephanie POMBOY (MacroMaven) thinks that we are getting close to the tipping point with very stimulative monetary and fiscal policies. And if the stock market bubble bursts, the public and private PENSION plans will also get into trouble and may need rescues. Dollar’s share of global reserve currency has fallen to 60% but there are no viable ALTERNATIVES. Euro, Japanese yen, Chinese yuan won’t do. But may be cryptos, stablecoins, CBDCs (central bank digital currency) if these develop enough. As some countries have moved forward with CBDCs, the US should develop digital-dollar with more urgency. To be without CBDC when others have it won’t be good for the reserve status of dollar.
EXTRA. Attractive payouts from floating-rate and senior-loan CEFs: JFR, JRO, AFT, FRA, EFR, NSL, DSU. Beware of the complexity and risks of leveraged CEFs.
Pg 7, STREETWISE. Bull run in online USED-CAR dealer Carvana (CVNA; 2017 IPO) should continue as the used-car market is hot (there is shortage of new cars due to limited supply of semi chips). Its average gross profit per car has jumped to $5K (vs $2K 3 years ago); its goal is stable $4K/car long-term. It has 13 huge assembly line type inspection and reconditioning centers (IRCs) that process used-car acquired (from customers and via auction) for resale; cars needing more complex work are pulled out; 8 more IRCs will be added by 2022. To acquire cars from customers, it provides online quotes, financing (but the loans are sold), pickups for trade-in, deliveries for purchases (or, people can drop-off trade-in and pick-up purchases at retail stores). Its retail centers operate huge vending machine type displays for cars. The objective is to make used-car buying experience simple and fun.
(More later….)
Rally in UTILITIES may stall; XLU was at a new high, but it may be exhaustion rather than momentum breakout. It is quite unusual for stocks (SPY), utilities (XLU) and bond prices (TLT) to all move in the same direction, but that is what they have done recently.
Wendy’s/WEN has transitioned from a meme stock in June to one with earnings. It beat estimates and raised guidance.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes.
NO-CHANGE (for the current ZIRP of 0-0.25%) through May 2022 FOMC. Beyond, the probabilities of rate rise are in double-digit %; more than 50% for December 2022 FOMC and later.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +0.87%, SP500 +0.71%, Nasdaq Comp -0.09%, R2000 -1.10%. DJ Transports +2.93%; DJ Utilities +1.25%. (Rotating spot SP500 equal-weight RSP +0.82%) US$ index (spot) -0.30%, oil/WTI futures +0.23%, gold futures +0.86%.
YTD (index changes only), DJIA +16.04%, SP500 +18.95%, Nasdaq Comp +15.01%. (Rotating spot SP500 equal-weight RSP +21.78%)
Pg M4, EUROPE. Looking for winners from the US car-rental boom? Look at German Sixt that operates in 100 countries (now #4 in the US). In addition to traditional car-rentals, it offers flexible short-term rentals (like Zipcar) and rideshare via Sixt Ride (in partnership with Lyft). Sixt family controls 58.3%.
Pg M4, EMERGING MARKETS. #MeToo movement is coming to China, and it hit Alibaba/BABA first (despite Jack MA hypocritically proclaiming to be for women rights and his wanting to be a woman in his next life). This gives Chinese authorities another stick to use on its big techs.
Pg M6, COMMODITIES. LUMBER bubble has burst (peak $1,671 per 1,000 board ft; now $500-600) but don’t expect the HOUSING prices to go down (because of lumber) as housing demand remains high. Recommended is options straddle in the expectation of a trading range of $400-600. Risks includes weather and possible higher US tariffs on Canadian lumber if prices fall too much.
Pg M5, OPTIONS. Rate increases will benefit rate-sensitive FINANCIALS. Recommended is pairing put-selling with call-buying for financial XLF. Watch the August Fed conference in Jackson Hole and the September FOMC meeting.
(SP500 VIX 15.45, Nasdaq 100 VXN 18.52, SKEW 159.66 (very high)) (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW?.tsrc=fin-srch
Pg M27, M32: A good week in EUROPE (Italy +2.40%, Finland +0.07%) and a flat week in ASIA (Japan +1.33%, S Korea -3.74%). The equity CEF index (data to Thursday) outperformed the DJIA and its discount was -4%.
TREASURY* 3-mo yield 0.06%, 2-yr 0.23%, 5-yr 0.79%, 10-yr 1.29%, 30-yr 1.94%. DOLLAR fell, DXY 92.52, -0.28% (M35). GOLD (Handy & Harman spot, Thursday) rose to $1,777, +0.79% (M38); the gold-miners fell. (^XAU was at 135.27, -1.09% 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% (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 18: COVER STORY, “Boeing/BA is Broken. How It Can Win the Future – and Boost Its Stock by 35%”. Investor reaction was mildly positive for 2021/Q2 profit, BA’s 1st since 2019. There has been strength in defense and services, but the commercial business remains depressed. Debt is high although the investment-grade credit rating remains. Inventories of planes is high. It may have to issue new stock if it wants to introduce badly needed midmarket plane. The business was decimated by 737 MAX accidents, Covid-19, Dreamliner 787 issues. New CEO CALHOUN has been in place since January 2020. Deliveries of 737 MAX have started, and it should be back in commercial service soon.
Pg 5, UP & DOWN WALL STREET. Repeated STIMULI and increasing DEBT will hurt the US DOLLAR in the long run. The US has gone through several long stretches of strong and weak dollar. It has benefited from the RESERVE status of dollar in financing its budget and trade deficits. But a huge oversupply of dollar may lead to loss of confidence in dollar. Stephanie POMBOY (MacroMaven) thinks that we are getting close to the tipping point with very stimulative monetary and fiscal policies. And if the stock market bubble bursts, the public and private PENSION plans will also get into trouble and may need rescues. Dollar’s share of global reserve currency has fallen to 60% but there are no viable ALTERNATIVES. Euro, Japanese yen, Chinese yuan won’t do. But may be cryptos, stablecoins, CBDCs (central bank digital currency) if these develop enough. As some countries have moved forward with CBDCs, the US should develop digital-dollar with more urgency. To be without CBDC when others have it won’t be good for the reserve status of dollar.
EXTRA. Attractive payouts from floating-rate and senior-loan CEFs: JFR, JRO, AFT, FRA, EFR, NSL, DSU. Beware of the complexity and risks of leveraged CEFs.
Pg 7, STREETWISE. Bull run in online USED-CAR dealer Carvana (CVNA; 2017 IPO) should continue as the used-car market is hot (there is shortage of new cars due to limited supply of semi chips). Its average gross profit per car has jumped to $5K (vs $2K 3 years ago); its goal is stable $4K/car long-term. It has 13 huge assembly line type inspection and reconditioning centers (IRCs) that process used-car acquired (from customers and via auction) for resale; cars needing more complex work are pulled out; 8 more IRCs will be added by 2022. To acquire cars from customers, it provides online quotes, financing (but the loans are sold), pickups for trade-in, deliveries for purchases (or, people can drop-off trade-in and pick-up purchases at retail stores). Its retail centers operate huge vending machine type displays for cars. The objective is to make used-car buying experience simple and fun.
(More later….)