Post by Admin/YBB on Nov 27, 2021 7:32:43 GMT -6
Pg 29, TRADER. While the pandemic isn’t over, all wasn’t lost on Black Friday. The knee-jerk market reaction was to a new Covid-19 variant in Africa (Omicron) and CYCLICALS took it on the chin. VIX rose to 28.6. Most traders were already gone on vacation, and it was a thin and short trading day. A 5% pullback would just give up gains of the last 7 weeks. But if it keeps up like this for another week, then the dip-buyers can worry.
In spite of selloff on Black Friday, be thankful: DJIA +17%, SP500 +26%, Nasdaq Comp +27% YTD. How will 2022 turn out? Earnings should remain strong; small-caps and big growth-techs should outperform. Cautious may worry about debt, MPT, inflation, and may hide in consumer-staples, healthcare, utilities.
3 Chinese EVs (NIO, XPEV, LI) are now attractive relative to the US EVs. Barron’s didn’t like them in 12/2020 but they have better valuations and prospects now.
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 the QE in June).
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -1.97%, SP500 -2.20%, Nasdaq Comp -3.52%, R2000 -4.15%. DJ Transports -1.83%; DJ Utilities -0.81%. (Rotating spot small-cap R2000 -4.15%) US$ index (spot) +0.04%, oil/WTI futures -10.45% (crash?), gold futures -3.56%.
YTD (index changes only), DJIA +14.03%, SP500 +22.33%, Nasdaq Comp +20.20%. (Rotating spot small-cap R2000 +13.73%)
Pg 32, EUROPE. New Covid-19 variant from Africa (B.1.1.529/Omicron) is already found in Europe and Asia. Several countries have restricted travel to Africa. Even before this, Austria was in lockdown; Germany has left its states to handle the worsening Covid-19 crisis there; France, Italy and Spain are resisting drastic actions. People are less afraid of Covid-19 now (vs last year). Impact on economies and central bank policies are unclear at this stage.
Pg 32, EMERGING MARKETS. Several EM central banks have raised RATES (Brazil, Mexico, Russia) and are leading the US FED. Several EMs are holding the rates steady (India, Indonesia, Philippines). But it may be a bit early to buy EM bonds (LEMB -7% since September 1). The EMs and the US may be on different rate, economic and Covid-19 cycles. (Then there is Turkey which is cutting rates in the face of high inflation and people there are switching from crashing lira into US dollar).
Pg 33, OPTIONS. If you have losses in Peloton/PTON, consider doubling-up by Tuesday, November 30 and selling the older lot(s) after 30 days by Friday, December 31. One can use calls to double-up. (This TAX-LOSS SELLING strategy is applicable to any stock held at loss but has only 2 days remaining to execute. An alternative is to swap into something similar but not identical anytime up to 4:00 PM on Friday, December 31.) (This article was turned in early AM on Wednesday, 11/24/21 and wasn’t updated on Friday)
(SP500 VIX 28.62, Nasdaq 100 VXN 28.45 (unusual), SKEW 148.27 (high)) (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW?.tsrc=fin-srch
Pg 34, COMMODITIES. Coordinated release of crude oil from national reserves by several countries wouldn’t have much impact on the gasoline prices at pumps (average $3.40/gallon). OPEC/OPEC+ continue to limit production; global energy policies are hampering oil/gas production; energy companies are focusing on cash flows and profits. Attractive are unhedged companies COP, OXY. (This article was also turned in early AM on Wednesday, 11/24/21 and wasn’t updated on Friday).
NOTE – It is strange that 2 very dynamic areas of options and commodities have STALE articles.
Pg 49, 54: An UGLY week in EUROPE (Belgium -2.31%, Netherlands -6.68%) and a BAD week in ASIA (Philippines UNCH, India -3.75%). The equity CEF index (data to Thursday (really, Wednesday this week)) outperformed the DJIA, and its discount was -2.5%.
TREASURY* 3-mo yield 0.06%, 2-yr 0.50%, 5-yr 1.16%, 10-yr 1.48%, 30-yr 1.83%. DOLLAR rose, DXY 96.06, +0.05% (highest since mid-2020; pg 57). GOLD (Handy & Harman spot, Thursday) fell to $1,782, -4.25% (pg 60); the gold-miners tanked again. (^XAU was at 131.06, -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 1.25% (pg 55).
*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 16: COVER STORY, “IBM Is Finally Growing Again. And the Stock is One of Tech’s Biggest Bargains”. Yield 5.6%, fwd P/E 11. New CEO Arvind KRISHNA started in 01/2020 and has restructured the business into 3 units: Infrastructure (former hardware divisions remaining after the data-center spinoff Kyndryl/KD, see below), Software (with focus on AI and hybrid clouds), Consulting. Several acquisitions have also been made.
Pg 21: The DATA-CENTER business spinoff Kendryl/KD has had very poor reception; the IBM holders got 1 share of KD for 5 shares of IBM and they are dumping KD that is without dividend or growth for now. It was at $40 in when-issued trading, opened at $28.41 on November 4, and closed at $16.32 on Friday. Its enterprise value is only $5 billion (EV/sales < 0.3). At $19 billion in revenues and 90,000 employees, it is twice as big as its nearest rival DXC.
Pg 7, UP & DOWN WALL STREET. Don’t panic from the SELLOFF in stocks and commodities on Black Friday, a thin and short trading day. Causes were a new Covid-19 variant (Omicron) in Africa and growing Covid-19 problems in Europe. The US, UK, EU restricted flight to/from Africa. It is too soon to assess the impact on the FED policy and economy; the fed fund futures had only a minor reaction. The PCE was +5.0%, core PCE +4.1%. Labor force participation remained low and caregiving for children and elderly were cited as major reasons for missing workers. The JOBS report is expected to be +525,000 and the FOMC meeting is in 2 weeks.
According to Nancy LAZAR (Cornerstone Macro), supply-chain disruptions and pent-up post-pandemic demand have caused huge pileup of stuff in ports and warehouses but that is gradually dissipating. In fact, there may soon be surpluses of the late-arriving stuff in store inventories. Joe CARSON (Alliance Bernstein) thinks that INFLATION has moved away from specialized areas (new/used cars, etc) to broader areas of food, energy, housing rent-equivalents (catching up with soaring housing prices now at 1.5xUS GDP), services, and of course, stocks (at high of 2.5xUS GDP vs a low of only 0.5xUS GDP in 1970s). So, in cooling the inflation, the FED may also end up cooling the hot housing and/or stock markets.
STREETWISE is missing.
(More later….)
In spite of selloff on Black Friday, be thankful: DJIA +17%, SP500 +26%, Nasdaq Comp +27% YTD. How will 2022 turn out? Earnings should remain strong; small-caps and big growth-techs should outperform. Cautious may worry about debt, MPT, inflation, and may hide in consumer-staples, healthcare, utilities.
3 Chinese EVs (NIO, XPEV, LI) are now attractive relative to the US EVs. Barron’s didn’t like them in 12/2020 but they have better valuations and prospects now.
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 the QE in June).
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -1.97%, SP500 -2.20%, Nasdaq Comp -3.52%, R2000 -4.15%. DJ Transports -1.83%; DJ Utilities -0.81%. (Rotating spot small-cap R2000 -4.15%) US$ index (spot) +0.04%, oil/WTI futures -10.45% (crash?), gold futures -3.56%.
YTD (index changes only), DJIA +14.03%, SP500 +22.33%, Nasdaq Comp +20.20%. (Rotating spot small-cap R2000 +13.73%)
Pg 32, EUROPE. New Covid-19 variant from Africa (B.1.1.529/Omicron) is already found in Europe and Asia. Several countries have restricted travel to Africa. Even before this, Austria was in lockdown; Germany has left its states to handle the worsening Covid-19 crisis there; France, Italy and Spain are resisting drastic actions. People are less afraid of Covid-19 now (vs last year). Impact on economies and central bank policies are unclear at this stage.
Pg 32, EMERGING MARKETS. Several EM central banks have raised RATES (Brazil, Mexico, Russia) and are leading the US FED. Several EMs are holding the rates steady (India, Indonesia, Philippines). But it may be a bit early to buy EM bonds (LEMB -7% since September 1). The EMs and the US may be on different rate, economic and Covid-19 cycles. (Then there is Turkey which is cutting rates in the face of high inflation and people there are switching from crashing lira into US dollar).
Pg 33, OPTIONS. If you have losses in Peloton/PTON, consider doubling-up by Tuesday, November 30 and selling the older lot(s) after 30 days by Friday, December 31. One can use calls to double-up. (This TAX-LOSS SELLING strategy is applicable to any stock held at loss but has only 2 days remaining to execute. An alternative is to swap into something similar but not identical anytime up to 4:00 PM on Friday, December 31.) (This article was turned in early AM on Wednesday, 11/24/21 and wasn’t updated on Friday)
(SP500 VIX 28.62, Nasdaq 100 VXN 28.45 (unusual), SKEW 148.27 (high)) (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW?.tsrc=fin-srch
Pg 34, COMMODITIES. Coordinated release of crude oil from national reserves by several countries wouldn’t have much impact on the gasoline prices at pumps (average $3.40/gallon). OPEC/OPEC+ continue to limit production; global energy policies are hampering oil/gas production; energy companies are focusing on cash flows and profits. Attractive are unhedged companies COP, OXY. (This article was also turned in early AM on Wednesday, 11/24/21 and wasn’t updated on Friday).
NOTE – It is strange that 2 very dynamic areas of options and commodities have STALE articles.
Pg 49, 54: An UGLY week in EUROPE (Belgium -2.31%, Netherlands -6.68%) and a BAD week in ASIA (Philippines UNCH, India -3.75%). The equity CEF index (data to Thursday (really, Wednesday this week)) outperformed the DJIA, and its discount was -2.5%.
TREASURY* 3-mo yield 0.06%, 2-yr 0.50%, 5-yr 1.16%, 10-yr 1.48%, 30-yr 1.83%. DOLLAR rose, DXY 96.06, +0.05% (highest since mid-2020; pg 57). GOLD (Handy & Harman spot, Thursday) fell to $1,782, -4.25% (pg 60); the gold-miners tanked again. (^XAU was at 131.06, -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 1.25% (pg 55).
*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 16: COVER STORY, “IBM Is Finally Growing Again. And the Stock is One of Tech’s Biggest Bargains”. Yield 5.6%, fwd P/E 11. New CEO Arvind KRISHNA started in 01/2020 and has restructured the business into 3 units: Infrastructure (former hardware divisions remaining after the data-center spinoff Kyndryl/KD, see below), Software (with focus on AI and hybrid clouds), Consulting. Several acquisitions have also been made.
Pg 21: The DATA-CENTER business spinoff Kendryl/KD has had very poor reception; the IBM holders got 1 share of KD for 5 shares of IBM and they are dumping KD that is without dividend or growth for now. It was at $40 in when-issued trading, opened at $28.41 on November 4, and closed at $16.32 on Friday. Its enterprise value is only $5 billion (EV/sales < 0.3). At $19 billion in revenues and 90,000 employees, it is twice as big as its nearest rival DXC.
Pg 7, UP & DOWN WALL STREET. Don’t panic from the SELLOFF in stocks and commodities on Black Friday, a thin and short trading day. Causes were a new Covid-19 variant (Omicron) in Africa and growing Covid-19 problems in Europe. The US, UK, EU restricted flight to/from Africa. It is too soon to assess the impact on the FED policy and economy; the fed fund futures had only a minor reaction. The PCE was +5.0%, core PCE +4.1%. Labor force participation remained low and caregiving for children and elderly were cited as major reasons for missing workers. The JOBS report is expected to be +525,000 and the FOMC meeting is in 2 weeks.
According to Nancy LAZAR (Cornerstone Macro), supply-chain disruptions and pent-up post-pandemic demand have caused huge pileup of stuff in ports and warehouses but that is gradually dissipating. In fact, there may soon be surpluses of the late-arriving stuff in store inventories. Joe CARSON (Alliance Bernstein) thinks that INFLATION has moved away from specialized areas (new/used cars, etc) to broader areas of food, energy, housing rent-equivalents (catching up with soaring housing prices now at 1.5xUS GDP), services, and of course, stocks (at high of 2.5xUS GDP vs a low of only 0.5xUS GDP in 1970s). So, in cooling the inflation, the FED may also end up cooling the hot housing and/or stock markets.
STREETWISE is missing.
(More later….)
