Post by Admin/YBB on Jan 1, 2022 5:57:11 GMT -6
Pg 39, TRADER. 2021 was a great year with all 11 S&P SECTORS doing over +14%, a first since 1995, and 90% of SP500 stocks up. And SP500 (+30%) beat Nasdaq Comp (+23%), a first since 2016. Best sectors were energy (XLE +53%), real estate (XLRE +46%), tech (XLK +36%), financials (XLF +35%), consumer-discretionary (XLY +28%). Banks will benefit from rising RATES (KBWB +38%). Impact of Covid-19-Omicron seems mild (on people and economy) and CYCLICALS should continue strong in 2022 (energy/Shale 3.0?). But techs may face valuation issues. SMALL-CAP R2000/IWM lagged badly (+15%) even its better selective cousin SP SC 600/IJR (+27%); small-caps look attractive on valuation as the JANUARY EFFECT kicks in.
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. In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or later FOMC (note the format change).
1st rate hike, FOMC 3/16/22+
2nd rate hike, FOMC 9/21/22+ (it flips between 6/15/22 & 9/21/22)
3rd rate hike, FOMC 12/14/22+
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +1.24%, SP500 +1.12%, Nasdaq Comp +0.56%, R2000 +0.32%. DJ Transports +1.20%; DJ Utilities +2.27%. (Rotating spot energy XLE +0.84%) US$ index (spot) -0.04%, oil/WTI futures +4.34%, gold futures +0.08%.
YTD (index changes only), DJIA +18.92%, SP500 +27.23%, Nasdaq Comp +22.14%. (Rotating spot energy XLE +46.07%)
Pg 32, EUROPE. It has been a tough year for German e-commerce fashion retailer Zalando/ZLNDY. It sells its own brands as well those from vendors in 23 countries on its platform. It also does its own payment processing, fulfillment, customer service. It is growing partnerships with LVMH, etc. Its business is rebounding in Q4 and prospects for 2022 are good.
Pg 32, EMERGING MARKETS. Interesting EM IPOs in 2022: S Korean LG Energy Solutions (EV batteries); Indian Life Insurance Corporation (LIC; 70% market share), One97 Communications (parent of PayTM), Flipkart (e-commerce; owned by WMT); Indonesian GoTo Group (former Gojek + Tokopedia); Columbian Rappi (delivery); Mexican Kavak (used cars); Chinese Bytedance (parent of TikTok), Shein (women’s dress designer). But strong IPO market needs strong stock market.
Pg 33, OPTIONS. There is high level of put-selling (note high SKEW), especially in OTM puts. Market weakness would make this practice even more attractive.
(SP500 VIX 17.22, Nasdaq 100 VXN 21.20, SKEW 154.58 (very high)) (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW?.tsrc=fin-srch
Pg 33, COMMODITIES. Bad WINTERS in the US, Europe, Ukraine look bullish for WHEAT; ETF is WEAT. All bets are off if Russia invades Ukraine; both countries are big wheat exporters (#2, #4) and account for 29% of global exports. Russia has imposed export tax on wheat to control domestic wheat prices. (A comment notes that fertilizer prices have doubled/tripled)
Pg 66**, 70**: A flat week in EUROPE** (Switzerland +1.15%, Netherlands -1.17%, Greece -1.40%) and a down week in ASIA** (Thailand +1.90%, China -2.95%). The equity CEF index** (data to Thursday) outperformed the DJIA, and its discount was -2%.
TREASURY* 3-mo yield 0.06%, 2-yr 0.73%, 5-yr 1.26%, 10-yr 1.52%, 30-yr 1.90%. DOLLAR** rose, DXY 96.67, +0.6% (pg 73). GOLD** (Handy & Harman spot, Thursday) rose to $1,808, +1.6% (pg 76**); the gold-miners rose. (^XAU was at 132.45, +1.41% 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 0.85%; 5-yr CDs 1.29% (pg 71**).
*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.
www.treasurydirect.gov/tdhome.htm
**MISSING data. Info carried over is stale by 2 weeks. It would be bad if all this data were dropped.
(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, “Barron’s Best Income Investments for the New Year”. Bonds may have difficult a year, but choices include Treasuries, HY, convertibles (really, hybrid), munis. List below mixes OEFs, ETFs, CEFs, stocks/bonds.
Energy Pipelines AMLP, TYG, EPD
US Dividend Stocks VYM, SCHD
Foreign Dividend Stocks IEFA, VGK, VWO
Telecoms T, VZ
Electric Utilities XLU, UTG, D
Real Estate VNQ, SPG, BRX
Convertibles CWB, PACIX
HY HYG, PRFRX, AMC
Preferreds PFF, JPC, JPM-MM
Tax Exempt Muni BTT, MUB, VWITX
Taxable Muni BBN, BAB, NBB
Treasuries IEF, TLT, TIP
Pg 5, UP & DOWN WALL STREET. Despite good stock market and strong economic data (jobs, retail sales, GDP), there was misery around: Low UM consumer confidence (the worst since 2008); spreading Covid-19-Omicron; surging inflation (the highest since 1982); ho-hum AAII Sentiment Survey. That was the worst DISCONNECT between the Wall Street and Main Street since 1997. The FED is rapidly tapering QE and may soon raise rates (although real rates will remain negative). Expect volatile stocks with modest returns – and if that doesn’t happen, just join the miserable crowd.
ARK (and hyper-growth) bubble popped, and solar (TAN), clean-energy (ICLN) and SPAC (SPAK) stocks sold off, but the stock market kept going on (SP500 +28% YTD). David ROSENBERG noted that SP500 fwd P/E was high at 21.9 and suggested caution. Jill HALL (BAC) noted that R1000 fwd P/E was 21, but that for badly lagging small-cap R2000 was only 15.5 (25% of R2000 companies are low-quality); on the other hand, selective SP SC 600 was not so lagging. Maybe it is time to look at quality small-caps.
(More later….)
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. In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or later FOMC (note the format change).
1st rate hike, FOMC 3/16/22+
2nd rate hike, FOMC 9/21/22+ (it flips between 6/15/22 & 9/21/22)
3rd rate hike, FOMC 12/14/22+
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +1.24%, SP500 +1.12%, Nasdaq Comp +0.56%, R2000 +0.32%. DJ Transports +1.20%; DJ Utilities +2.27%. (Rotating spot energy XLE +0.84%) US$ index (spot) -0.04%, oil/WTI futures +4.34%, gold futures +0.08%.
YTD (index changes only), DJIA +18.92%, SP500 +27.23%, Nasdaq Comp +22.14%. (Rotating spot energy XLE +46.07%)
Pg 32, EUROPE. It has been a tough year for German e-commerce fashion retailer Zalando/ZLNDY. It sells its own brands as well those from vendors in 23 countries on its platform. It also does its own payment processing, fulfillment, customer service. It is growing partnerships with LVMH, etc. Its business is rebounding in Q4 and prospects for 2022 are good.
Pg 32, EMERGING MARKETS. Interesting EM IPOs in 2022: S Korean LG Energy Solutions (EV batteries); Indian Life Insurance Corporation (LIC; 70% market share), One97 Communications (parent of PayTM), Flipkart (e-commerce; owned by WMT); Indonesian GoTo Group (former Gojek + Tokopedia); Columbian Rappi (delivery); Mexican Kavak (used cars); Chinese Bytedance (parent of TikTok), Shein (women’s dress designer). But strong IPO market needs strong stock market.
Pg 33, OPTIONS. There is high level of put-selling (note high SKEW), especially in OTM puts. Market weakness would make this practice even more attractive.
(SP500 VIX 17.22, Nasdaq 100 VXN 21.20, SKEW 154.58 (very high)) (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW?.tsrc=fin-srch
Pg 33, COMMODITIES. Bad WINTERS in the US, Europe, Ukraine look bullish for WHEAT; ETF is WEAT. All bets are off if Russia invades Ukraine; both countries are big wheat exporters (#2, #4) and account for 29% of global exports. Russia has imposed export tax on wheat to control domestic wheat prices. (A comment notes that fertilizer prices have doubled/tripled)
Pg 66**, 70**: A flat week in EUROPE** (Switzerland +1.15%, Netherlands -1.17%, Greece -1.40%) and a down week in ASIA** (Thailand +1.90%, China -2.95%). The equity CEF index** (data to Thursday) outperformed the DJIA, and its discount was -2%.
TREASURY* 3-mo yield 0.06%, 2-yr 0.73%, 5-yr 1.26%, 10-yr 1.52%, 30-yr 1.90%. DOLLAR** rose, DXY 96.67, +0.6% (pg 73). GOLD** (Handy & Harman spot, Thursday) rose to $1,808, +1.6% (pg 76**); the gold-miners rose. (^XAU was at 132.45, +1.41% 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 0.85%; 5-yr CDs 1.29% (pg 71**).
*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.
www.treasurydirect.gov/tdhome.htm
**MISSING data. Info carried over is stale by 2 weeks. It would be bad if all this data were dropped.
(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, “Barron’s Best Income Investments for the New Year”. Bonds may have difficult a year, but choices include Treasuries, HY, convertibles (really, hybrid), munis. List below mixes OEFs, ETFs, CEFs, stocks/bonds.
Energy Pipelines AMLP, TYG, EPD
US Dividend Stocks VYM, SCHD
Foreign Dividend Stocks IEFA, VGK, VWO
Telecoms T, VZ
Electric Utilities XLU, UTG, D
Real Estate VNQ, SPG, BRX
Convertibles CWB, PACIX
HY HYG, PRFRX, AMC
Preferreds PFF, JPC, JPM-MM
Tax Exempt Muni BTT, MUB, VWITX
Taxable Muni BBN, BAB, NBB
Treasuries IEF, TLT, TIP
Pg 5, UP & DOWN WALL STREET. Despite good stock market and strong economic data (jobs, retail sales, GDP), there was misery around: Low UM consumer confidence (the worst since 2008); spreading Covid-19-Omicron; surging inflation (the highest since 1982); ho-hum AAII Sentiment Survey. That was the worst DISCONNECT between the Wall Street and Main Street since 1997. The FED is rapidly tapering QE and may soon raise rates (although real rates will remain negative). Expect volatile stocks with modest returns – and if that doesn’t happen, just join the miserable crowd.
ARK (and hyper-growth) bubble popped, and solar (TAN), clean-energy (ICLN) and SPAC (SPAK) stocks sold off, but the stock market kept going on (SP500 +28% YTD). David ROSENBERG noted that SP500 fwd P/E was high at 21.9 and suggested caution. Jill HALL (BAC) noted that R1000 fwd P/E was 21, but that for badly lagging small-cap R2000 was only 15.5 (25% of R2000 companies are low-quality); on the other hand, selective SP SC 600 was not so lagging. Maybe it is time to look at quality small-caps.
(More later….)