Post by Admin/YBB on Nov 13, 2021 7:55:41 GMT -6
NOTE: Now a SINGLE Barron's issue! The old MAIN section (mostly commentaries/opinions; my Part 2) and the MARKET WEEK pullout (mostly data; my Part 1) have been combined without much fanfare. I will keep Part 1 and Part 2 organization for posting for now. I may make adjustments later but combining Part 1 and Part 2 will not be possible due to post length limits at some sites (M*) and lot of scrolling that a very long post may require. Shrinking Barron’s remains at $5.00/issue at newsstands.
Pg 35, TRADER. High INFLATION (CPI +6.2%) may not be the biggest problem for the markets and the investors. It may be the BOND market which had a poor auction this week on Wednesday. The bond volatility index MOVE is at 78.31, the highest since April 2020; the SP500 VIX is subdued at 16.27. This high MOVE, low VIX combo is unusual.
J&J/JNJ is another company SPLITTING up. By mid/late-2023, it will separate consumer health unit from much bigger pharma and medical devices units. It is unclear how the talc litigation, now in a unit under bankruptcy, will be handled.
Big earnings and revenue miss caused a selloff in Disney/DIS stock to 1-yr low. But this may be a good entry point as its parks and movies are good recovery plays and its streaming should have good global growth.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes.
NO-CHANGE (for the current ZIRP of 0-0.25%) through January 2022 FOMC. Beyond, the probabilities of rate rise are in double-digit %; more than 50% for June 2022 FOMC and later (the current QE-taper schedule will end QE in June).
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -0.63%, SP500 -0.31%, Nasdaq Comp -0.69%, R2000 -1.04%. DJ Transports -0.50%; DJ Utilities -1.13%. (Rotating spot materials XLB +2.60%) US$ index (spot) +0.83%, oil/WTI futures -0.59%, gold futures +2.84%.
YTD (index changes only), DJIA +17.95%, SP500 +24.67%, Nasdaq Comp +23.06%. (Rotating spot materials XLB +24.46%)
Pg 38, EUROPE. Container shippers Danish Maersk/AMKBY and German Hapag-Lloyd/HPGLY are benefitting from global supply-chain bottlenecks. Both are also introducing cleaner fuel-efficient ships.
Pg 38, EMERGING MARKETS. INDIA has promised to achieve NET-ZERO CARBON by 2070 (vs 2050 goal by most developed countries). But there are few direct plays for this huge energy transition. Big Indian companies will be involved in both traditional and alternative energy and won’t offer big returns that small pure play companies can. Smaller Indian companies are too fragmented and may be too risky. So, the best way to play would be through BANKS that would finance this energy transition at industrial and consumer levels.
Pg 39, OPTIONS. This has become a GREEDY options market. Many options newbies think that buying calls on speculative highflyers is the road to riches, and it may be for a while. On the other hand, institutions are selling calls. Aggressive investors can tap into the craziness by pairing call-buying with put-selling on Tesla/TSLA (hmm, that seems like just copying the newbies).
(SP500 VIX 16.29, Nasdaq 100 VXN 21.42, SKEW 144.37 (high)) (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW?.tsrc=fin-srch
Pg 40, COMMODITIES. WHEAT futures at 9-yr high will make bread more expensive (luckily, wheat contributes only a small fraction to the total cost of bread). Demand is strong but supply is weak due to poor WEATHER conditions in the wheat growing regions of the US, Ukraine and Middle East. Russia has imposed grain export taxes. Globally, wheat demand has exceeded supply for 2 years. But wheat futures may top out soon, so there is high risk for traders.
Pg 57, 62: An up week in EUROPE (Denmark +2.32%, Belgium -0.99%) and an up week in ASIA (China +3.82%, New Zealand -2.71%). The equity CEF index (data to Thursday) outperformed the DJIA, and its discount was -2.25%.
TREASURY* 3-mo yield 0.05%, 2-yr 0.53%, 5-yr 1.24%, 10-yr 1.58%, 30-yr 1.95%. DOLLAR rose, DXY 95.12, +0.8% (pg 65). GOLD (Handy & Harman spot, Thursday) rose to $1,861, +3.3% (pg 68); the gold-miners rose. (^XAU was at 143.59, +7.09% 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 1.25% (pg 63).
*For local rates www.depositaccounts.com/banks/rates-map/
US SAVINGS I-Bonds, current rate 7.12% (annualized). Rates change on May 1 & Nov 1. Limit $10K/person/yr (additional $5K possible via tax refund). Cannot cash within 12 months; 3-month interest penalty if cashed in 1-5 years. Tax may be deferred until redeemed. Better than EE Bonds now. Not tradable like TIPS. Need to open account at Treasury Direct.
www.treasurydirect.gov/tdhome.htm
(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, “MALL Stocks Are Back in Fashion as Shoppers Return. How to Play It”. Malls are coming back and many RETAIL stocks are rebounding. On the way to mall-funeral, the pandemic happened. After initial hits to weak retail players, the retail SURVIVORS are doing quite well (AEO, ANF, M, JNW, CAL, SIG, etc; mall owner SPG; ETFs XRT, equal-weight RCD). The stuck-at-home people are becoming mall shoppers again. Many stores are also serving as DISTRIBUTION POINTS for their and others’ online sales. There are new problems such as SUPPLY-CHAIN issues and many retailers have responded by moving up the holiday schedule or by taking logistics in their own hands (AEO, WMT, etc). Shoppers are also buying early and whenever they find any stuff. The economy is slowing down to its normal growth rate.
Pg 9, UP & DOWN WALL STREET. Stocks are near all-time highs (Wilshire 5000 +23.5% YTD) but the UM consumer confidence is near 10-yr low. Gains of WALL STREET are not trickling down to the MAIN STREET. Current high inflation is shown by CPI +6.2% y-o-y. The LABOR market is very tight despite the unemployment rate at 4.6%. Many of the 5 million still unemployed are not returning to work; the JOLTS report showed 10.44 million job openings. The monetary and fiscal stimulus are also creating inflationary pressures. The FED monetary policy remains easy in spite of the start of QE-taper (only at -$15 billion/mo); this has caused the belly of the yield-curve (2Y-5Y) to bulge. In fiscal stimulus, $1.85 trillion SOFT-INFRASTRUCTURE stimulus will soon follow the $1.2 trillion INFRASTRUCTURE-CAPEX stimulus already passed.
Markets haven’t adjusted to the high current INFLATION, believing the Fed story so far that it may be transitory. The outlook for classic 60-40 allocation/balanced stock-bond funds is poor (although multi-assets funds with stocks-bonds-alternatives may serve as substitutes/supplements). Consider options writing and/or put spreads on stock portfolios; short-term corporate bond funds; FR/BL bond funds (more adventurous may look at leveraged CEFs).
Pg 11, STREETWISE. BARBIE from Mattel/MAT is popular again (in 9 body shapes, 35 skin colors, 90+ hair colors). Barbie and other MAT toys are getting their own movies/shows that will be on Netflix/NFLX. The new CEO AMON of Qualcomm/QCOM is expanding beyond wireless phone chips (as Apple/AAPL is now making more of own chips) into special chips for cars, industrial machinery, metaverse. Its investor day is Tuesday.
(More later….)
Pg 35, TRADER. High INFLATION (CPI +6.2%) may not be the biggest problem for the markets and the investors. It may be the BOND market which had a poor auction this week on Wednesday. The bond volatility index MOVE is at 78.31, the highest since April 2020; the SP500 VIX is subdued at 16.27. This high MOVE, low VIX combo is unusual.
J&J/JNJ is another company SPLITTING up. By mid/late-2023, it will separate consumer health unit from much bigger pharma and medical devices units. It is unclear how the talc litigation, now in a unit under bankruptcy, will be handled.
Big earnings and revenue miss caused a selloff in Disney/DIS stock to 1-yr low. But this may be a good entry point as its parks and movies are good recovery plays and its streaming should have good global growth.
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 January 2022 FOMC. Beyond, the probabilities of rate rise are in double-digit %; more than 50% for June 2022 FOMC and later (the current QE-taper schedule will end QE in June).
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -0.63%, SP500 -0.31%, Nasdaq Comp -0.69%, R2000 -1.04%. DJ Transports -0.50%; DJ Utilities -1.13%. (Rotating spot materials XLB +2.60%) US$ index (spot) +0.83%, oil/WTI futures -0.59%, gold futures +2.84%.
YTD (index changes only), DJIA +17.95%, SP500 +24.67%, Nasdaq Comp +23.06%. (Rotating spot materials XLB +24.46%)
Pg 38, EUROPE. Container shippers Danish Maersk/AMKBY and German Hapag-Lloyd/HPGLY are benefitting from global supply-chain bottlenecks. Both are also introducing cleaner fuel-efficient ships.
Pg 38, EMERGING MARKETS. INDIA has promised to achieve NET-ZERO CARBON by 2070 (vs 2050 goal by most developed countries). But there are few direct plays for this huge energy transition. Big Indian companies will be involved in both traditional and alternative energy and won’t offer big returns that small pure play companies can. Smaller Indian companies are too fragmented and may be too risky. So, the best way to play would be through BANKS that would finance this energy transition at industrial and consumer levels.
Pg 39, OPTIONS. This has become a GREEDY options market. Many options newbies think that buying calls on speculative highflyers is the road to riches, and it may be for a while. On the other hand, institutions are selling calls. Aggressive investors can tap into the craziness by pairing call-buying with put-selling on Tesla/TSLA (hmm, that seems like just copying the newbies).
(SP500 VIX 16.29, Nasdaq 100 VXN 21.42, SKEW 144.37 (high)) (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW?.tsrc=fin-srch
Pg 40, COMMODITIES. WHEAT futures at 9-yr high will make bread more expensive (luckily, wheat contributes only a small fraction to the total cost of bread). Demand is strong but supply is weak due to poor WEATHER conditions in the wheat growing regions of the US, Ukraine and Middle East. Russia has imposed grain export taxes. Globally, wheat demand has exceeded supply for 2 years. But wheat futures may top out soon, so there is high risk for traders.
Pg 57, 62: An up week in EUROPE (Denmark +2.32%, Belgium -0.99%) and an up week in ASIA (China +3.82%, New Zealand -2.71%). The equity CEF index (data to Thursday) outperformed the DJIA, and its discount was -2.25%.
TREASURY* 3-mo yield 0.05%, 2-yr 0.53%, 5-yr 1.24%, 10-yr 1.58%, 30-yr 1.95%. DOLLAR rose, DXY 95.12, +0.8% (pg 65). GOLD (Handy & Harman spot, Thursday) rose to $1,861, +3.3% (pg 68); the gold-miners rose. (^XAU was at 143.59, +7.09% 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 1.25% (pg 63).
*For local rates www.depositaccounts.com/banks/rates-map/
US SAVINGS I-Bonds, current rate 7.12% (annualized). Rates change on May 1 & Nov 1. Limit $10K/person/yr (additional $5K possible via tax refund). Cannot cash within 12 months; 3-month interest penalty if cashed in 1-5 years. Tax may be deferred until redeemed. Better than EE Bonds now. Not tradable like TIPS. Need to open account at Treasury Direct.
www.treasurydirect.gov/tdhome.htm
(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, “MALL Stocks Are Back in Fashion as Shoppers Return. How to Play It”. Malls are coming back and many RETAIL stocks are rebounding. On the way to mall-funeral, the pandemic happened. After initial hits to weak retail players, the retail SURVIVORS are doing quite well (AEO, ANF, M, JNW, CAL, SIG, etc; mall owner SPG; ETFs XRT, equal-weight RCD). The stuck-at-home people are becoming mall shoppers again. Many stores are also serving as DISTRIBUTION POINTS for their and others’ online sales. There are new problems such as SUPPLY-CHAIN issues and many retailers have responded by moving up the holiday schedule or by taking logistics in their own hands (AEO, WMT, etc). Shoppers are also buying early and whenever they find any stuff. The economy is slowing down to its normal growth rate.
Pg 9, UP & DOWN WALL STREET. Stocks are near all-time highs (Wilshire 5000 +23.5% YTD) but the UM consumer confidence is near 10-yr low. Gains of WALL STREET are not trickling down to the MAIN STREET. Current high inflation is shown by CPI +6.2% y-o-y. The LABOR market is very tight despite the unemployment rate at 4.6%. Many of the 5 million still unemployed are not returning to work; the JOLTS report showed 10.44 million job openings. The monetary and fiscal stimulus are also creating inflationary pressures. The FED monetary policy remains easy in spite of the start of QE-taper (only at -$15 billion/mo); this has caused the belly of the yield-curve (2Y-5Y) to bulge. In fiscal stimulus, $1.85 trillion SOFT-INFRASTRUCTURE stimulus will soon follow the $1.2 trillion INFRASTRUCTURE-CAPEX stimulus already passed.
Markets haven’t adjusted to the high current INFLATION, believing the Fed story so far that it may be transitory. The outlook for classic 60-40 allocation/balanced stock-bond funds is poor (although multi-assets funds with stocks-bonds-alternatives may serve as substitutes/supplements). Consider options writing and/or put spreads on stock portfolios; short-term corporate bond funds; FR/BL bond funds (more adventurous may look at leveraged CEFs).
Pg 11, STREETWISE. BARBIE from Mattel/MAT is popular again (in 9 body shapes, 35 skin colors, 90+ hair colors). Barbie and other MAT toys are getting their own movies/shows that will be on Netflix/NFLX. The new CEO AMON of Qualcomm/QCOM is expanding beyond wireless phone chips (as Apple/AAPL is now making more of own chips) into special chips for cars, industrial machinery, metaverse. Its investor day is Tuesday.
(More later….)