Post by Admin/YBB on Jul 16, 2022 5:28:59 GMT -6
Pg 37, TRADER. It is still a BEAR market. Another 75-bps rate hike is coming at July FOMC. The AAII Sentiment has been very negative for quite a while (see link below), but the market doesn’t seem ready to turnaround. There have been “hundreds” of earnings and price-target downward revisions. Q2 earnings will be weak, and guidance will be poor. SP500 200-dMA has been declining. Some downside remains.
According to David ROSENBERG, rising DOLLAR has added to global risks. Euro is near parity and yen is at 20-year low. A factor for dollar strength may be short-covering. Dollar is overbought now and may reverse suddenly.
Mattel/MAT may beat high earnings expectations on Thursday. There is good balance among toy supply, demand and inventories. Michael NG (GS) has upgraded it.
www.barrons.com/magazine?mod=BOL_TOPNAV
AAII Sentiment ybbpersonalfinance.proboards.com/thread/141/aaii-sentiment-survey-weekly?page=6&scrollTo=702
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 (+/- 0.25%). 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 a later FOMC.
7th, 8th & 9th rate hike, FOMC 7/27/22+ (75 bps hike possible)
10th, 11th & 12th rate hike, FOMC 9/21/22+ (75 bps hike possible)
13th rate hike, FOMC 11/2/22+
14th rate hike, FOMC 12/14/22+ (target 3.50-3.75%)
At the June FOMC, POWELL showed that he can revise his own previous guidance & market expectations if the new data require that.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -0.16%, SP500 -0.93%, Nasdaq Comp -1.57%, R2000 -1.41%. DJ Transports -1.38%; DJ Utilities +0.12%. (Rotating spot bank KBE -0.45%) US$ index (spot) +0.91%, oil/WTI futures -6.87%, gold futures -2.20%.
YTD (index changes only), DJIA -13.90%, SP500 -18.95%, Nasdaq Comp -26.80%. (Rotating spot bank KBE -18.16%)
Pg 49: NYSE cumulative (5-day) A/D line fell.
Pg 40, EUROPE. Apple/AAPL AirPods are hot, but their German micro-battery producer/supplier Varta/VARTY has plunged due to supply-chain issues, Covid-19 in China/Asia, higher costs of materials and energy and higher product prices that are hurting demand. Company also makes batteries for other applications – consumers, autos, industrial.
Pg 40, EMERGING MARKETS. Treasury Secretary YELLEN’s idea of capping sanction-less price of Russian oil around $50 sounds good but may be unworkable unless PUTIN plays. And even then, Russia may play favorites for its oil supplies and a dual pricing structure for Russian oil may evolve (oil with/without sanctions).
Pg 41, OPTIONS. In these uncertain times of high inflation and rising rates, use covered-calls to generate income from stocks. Bank WFC is used as an example.
(SP500 VIX 24.23 (high), Nasdaq 100 VXN 30.39 (high), options SKEW 122.48, bond MOVE 129.85 (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 42, COMMODITIES. A sharp drop in LUMBER prices (-40% YTD; -59% from 05/2021 peak) and a rapid rise in mortgage rates are moderating housing prices. Housing starts are slowing. A new smaller lumber contract (about a truck load) will start trading at CME next month.
EXTRA. Dr COPPER is at 20-month low. Rio Tinto/RIO warned about 2022/Q2 due to inflation (that make mine closures more costly) and labor shortages.
Consumers are getting sticker shock from FOOD INFLATION: average +10.4% (higher than headline CPI); even food-at-home +12.2%; margarine +34.5%; eggs +33.1%; while some meats are cheaper, chicken is so expensive that some are buying whole birds and doing cutting/cleaning themselves. People are shopping more at wholesalers (Costco/COST, etc) and discounters (Aldi, etc). While COMMODITY prices have weakened, they account for only 5-10% of the related retail food costs. (Ironically, food and energy are excluded from core CPI) (This is a new consumer-oriented column. Regular or one-time?)
Pg 54: A down week in EUROPE (Denmark +1.03%, Italy -4.55%) and a bad week in ASIA (Taiwan +0.78%, China -6.81%).
TREASURY* 3-mo yield 2.37%, 1-yr 3.12%, 2-yr 3.13%, 5-yr 3.05%, 10-yr 2.93%, 30-yr 3.10%. REAL yields 5-yr 0.46%, 10-yr 0.57%, 30-yr 0.86%.
DOLLAR rose, ^DXY 107.98, +1.01% (20-yr high; pg 59). GOLD fell again to $1,706, -1.84% (Handy & Harman spot, Thursday) (pg 61); the gold-miners tanked again. (^XAU was at 103.24, -5.26% for the week)
Top FDIC insured savings deposit rates** (This feature seems to be discontinued)
US SAVINGS I-Bonds^, current rate 9.62% (annualized). Rates change on May 1 & Nov 1.
*Treasury Yield-Curve home.treasury.gov/policy-issues/financing-the-government/interest-rate-statistics?data=yield
**For local rates www.depositaccounts.com/banks/rates-map/
^Treasury Direct (I-Bonds + T-Bills/Notes/Bonds, FRNs, TIPS) 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 17: COVER STORY, “What to Buy Right Now: 42 Picks from Barron’s (Midyear) ROUNDTABLE Pros”. A report card of prior hits/misses is also included.
Tod AHLSTEN/Parnassus CIO & PRBLX: VRSK, MMC, ICE, AMAT. Opportunities in the downturn.
William PRIEST/Epoch Inv Partners: TMUS, DTEGY, TSM, LSXMA, DE
Rupal BHANSALI/Ariel CIO: DIISY, BAP, BBSEY, BIDU, ELEZY, SNMRY, PM. Likes Lat Am & Europe over US; prefers dividend payors.
Henry ELLENBOGEN/Durable Capital: INTU, TEAM, DUOL. Likes quality-growth.
Abby Joseph COHEN/Columbia U: LG Chem, FANUY, BKNG, JWN. No recession in 2022 or 2023.
Scott BLACK/Delphi: CACI, CB. Shallow recession is already here (notable early projection). Avoid story stocks with low/no earnings. His SP500 earnings est $219 only.
Sonal DESAI/Franklin Templeton FI CIO: CPREX, FHYVX, GLFOX, EAPCX, FRIAX; ETF SRLN. No recession in 2022/H1 or 2023/H1, may be in 2023/H2.
Mario GABELLI/Gamco: CNHI, AJRD, HRI, BATRA, PARA, SBGI, DRQ, HAL. Mild recession. Despite volatility now, 2023/H1 looks promising for US, Europe, China.
Meryl WITMER/Eagle Capital: SLVM, DFIN, EEFT
David GIROUX/Price CIO & PRWCX: FTV, NXPI, GE, TEL. Mild recession. Overweight – IT, industrials; underweight – consumer-staples, utilities; leveraged-loans still OK.
Pg 7, UP & DOWN WALL STREET. The FED is fighting INFLATION belatedly. POWELL is paying attention to headline inflation and also the UM consumer sentiment. Recent declines in crude oil, gasoline and natural gas prices should be helpful. Commodity prices have also weakened. On the other hand, owners’ equivalent-rents (OERs) are still rising. The CME fed fund futures are projecting 75 bps hike at the July FOMC and several more until 3.50-3.75% fed fund goal at the December FOMC. The yield-curve is partially inverted.
Nancy LAZAR (now at Piper Sandler) says that pressures on corporate PROFITS (some due to post-pandemic over-hiring) and consumer INCOME will lead to RECESSION in 2022/Q3 (that is among the early projections). The LABOR market will deteriorate quickly, and the unemployment rate will soon be 5%. Several companies have started preparing for recession and may issue cautious guidance in Q2. The current SP500 EARNINGS estimate of $230 for 2022 is just too high. The Fed/FOMC will stay on monetary tightening course until inflations comes down. She sees RECOVERY in 2023/H2.
EXTRA. Supremes’ ruling limiting powers of the EPA (in EPA vs WV) will not change the US utilities trend away from COAL. The US utilities have already cut the use of coal by 50% and only 21% electricity generation now is from coal and that should decline to 0 by 2035. Natural gas is a better transitional fuel. Utilities are expensive but attractive: NEE, AEP, AEE; ETF XLU; CEF UTG.
Pg 11, STREETWISE. The US movie THEATERS are back (2022/H1 ticket sales +228% over 2021/H1, but still -31% vs 2019/H1) but now lack new movies to show. Some theaters are using live concerts and videogames to draw crowds. A post-pandemic change in theater business is shorter exclusive theater runs (45-90 days only) for new movies before they move on to STREAMING. Global movie markets are still impacted by Covid-19. Attractive are IMAX, CNK (play meme stock AMC at your own risk).
Forget CRYPTO-winter, think crypto-extinction. On the other hand, think STOCK-winter if RECESSION hits THIS year (several firms projecting that include BoA, Piper Sandler, Delphi, etc).
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
According to David ROSENBERG, rising DOLLAR has added to global risks. Euro is near parity and yen is at 20-year low. A factor for dollar strength may be short-covering. Dollar is overbought now and may reverse suddenly.
Mattel/MAT may beat high earnings expectations on Thursday. There is good balance among toy supply, demand and inventories. Michael NG (GS) has upgraded it.
www.barrons.com/magazine?mod=BOL_TOPNAV
AAII Sentiment ybbpersonalfinance.proboards.com/thread/141/aaii-sentiment-survey-weekly?page=6&scrollTo=702
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 (+/- 0.25%). 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 a later FOMC.
7th, 8th & 9th rate hike, FOMC 7/27/22+ (75 bps hike possible)
10th, 11th & 12th rate hike, FOMC 9/21/22+ (75 bps hike possible)
13th rate hike, FOMC 11/2/22+
14th rate hike, FOMC 12/14/22+ (target 3.50-3.75%)
At the June FOMC, POWELL showed that he can revise his own previous guidance & market expectations if the new data require that.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -0.16%, SP500 -0.93%, Nasdaq Comp -1.57%, R2000 -1.41%. DJ Transports -1.38%; DJ Utilities +0.12%. (Rotating spot bank KBE -0.45%) US$ index (spot) +0.91%, oil/WTI futures -6.87%, gold futures -2.20%.
YTD (index changes only), DJIA -13.90%, SP500 -18.95%, Nasdaq Comp -26.80%. (Rotating spot bank KBE -18.16%)
Pg 49: NYSE cumulative (5-day) A/D line fell.
Pg 40, EUROPE. Apple/AAPL AirPods are hot, but their German micro-battery producer/supplier Varta/VARTY has plunged due to supply-chain issues, Covid-19 in China/Asia, higher costs of materials and energy and higher product prices that are hurting demand. Company also makes batteries for other applications – consumers, autos, industrial.
Pg 40, EMERGING MARKETS. Treasury Secretary YELLEN’s idea of capping sanction-less price of Russian oil around $50 sounds good but may be unworkable unless PUTIN plays. And even then, Russia may play favorites for its oil supplies and a dual pricing structure for Russian oil may evolve (oil with/without sanctions).
Pg 41, OPTIONS. In these uncertain times of high inflation and rising rates, use covered-calls to generate income from stocks. Bank WFC is used as an example.
(SP500 VIX 24.23 (high), Nasdaq 100 VXN 30.39 (high), options SKEW 122.48, bond MOVE 129.85 (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 42, COMMODITIES. A sharp drop in LUMBER prices (-40% YTD; -59% from 05/2021 peak) and a rapid rise in mortgage rates are moderating housing prices. Housing starts are slowing. A new smaller lumber contract (about a truck load) will start trading at CME next month.
EXTRA. Dr COPPER is at 20-month low. Rio Tinto/RIO warned about 2022/Q2 due to inflation (that make mine closures more costly) and labor shortages.
Consumers are getting sticker shock from FOOD INFLATION: average +10.4% (higher than headline CPI); even food-at-home +12.2%; margarine +34.5%; eggs +33.1%; while some meats are cheaper, chicken is so expensive that some are buying whole birds and doing cutting/cleaning themselves. People are shopping more at wholesalers (Costco/COST, etc) and discounters (Aldi, etc). While COMMODITY prices have weakened, they account for only 5-10% of the related retail food costs. (Ironically, food and energy are excluded from core CPI) (This is a new consumer-oriented column. Regular or one-time?)
Pg 54: A down week in EUROPE (Denmark +1.03%, Italy -4.55%) and a bad week in ASIA (Taiwan +0.78%, China -6.81%).
TREASURY* 3-mo yield 2.37%, 1-yr 3.12%, 2-yr 3.13%, 5-yr 3.05%, 10-yr 2.93%, 30-yr 3.10%. REAL yields 5-yr 0.46%, 10-yr 0.57%, 30-yr 0.86%.
DOLLAR rose, ^DXY 107.98, +1.01% (20-yr high; pg 59). GOLD fell again to $1,706, -1.84% (Handy & Harman spot, Thursday) (pg 61); the gold-miners tanked again. (^XAU was at 103.24, -5.26% for the week)
Top FDIC insured savings deposit rates** (This feature seems to be discontinued)
US SAVINGS I-Bonds^, current rate 9.62% (annualized). Rates change on May 1 & Nov 1.
*Treasury Yield-Curve home.treasury.gov/policy-issues/financing-the-government/interest-rate-statistics?data=yield
**For local rates www.depositaccounts.com/banks/rates-map/
^Treasury Direct (I-Bonds + T-Bills/Notes/Bonds, FRNs, TIPS) 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 17: COVER STORY, “What to Buy Right Now: 42 Picks from Barron’s (Midyear) ROUNDTABLE Pros”. A report card of prior hits/misses is also included.
Tod AHLSTEN/Parnassus CIO & PRBLX: VRSK, MMC, ICE, AMAT. Opportunities in the downturn.
William PRIEST/Epoch Inv Partners: TMUS, DTEGY, TSM, LSXMA, DE
Rupal BHANSALI/Ariel CIO: DIISY, BAP, BBSEY, BIDU, ELEZY, SNMRY, PM. Likes Lat Am & Europe over US; prefers dividend payors.
Henry ELLENBOGEN/Durable Capital: INTU, TEAM, DUOL. Likes quality-growth.
Abby Joseph COHEN/Columbia U: LG Chem, FANUY, BKNG, JWN. No recession in 2022 or 2023.
Scott BLACK/Delphi: CACI, CB. Shallow recession is already here (notable early projection). Avoid story stocks with low/no earnings. His SP500 earnings est $219 only.
Sonal DESAI/Franklin Templeton FI CIO: CPREX, FHYVX, GLFOX, EAPCX, FRIAX; ETF SRLN. No recession in 2022/H1 or 2023/H1, may be in 2023/H2.
Mario GABELLI/Gamco: CNHI, AJRD, HRI, BATRA, PARA, SBGI, DRQ, HAL. Mild recession. Despite volatility now, 2023/H1 looks promising for US, Europe, China.
Meryl WITMER/Eagle Capital: SLVM, DFIN, EEFT
David GIROUX/Price CIO & PRWCX: FTV, NXPI, GE, TEL. Mild recession. Overweight – IT, industrials; underweight – consumer-staples, utilities; leveraged-loans still OK.
Pg 7, UP & DOWN WALL STREET. The FED is fighting INFLATION belatedly. POWELL is paying attention to headline inflation and also the UM consumer sentiment. Recent declines in crude oil, gasoline and natural gas prices should be helpful. Commodity prices have also weakened. On the other hand, owners’ equivalent-rents (OERs) are still rising. The CME fed fund futures are projecting 75 bps hike at the July FOMC and several more until 3.50-3.75% fed fund goal at the December FOMC. The yield-curve is partially inverted.
Nancy LAZAR (now at Piper Sandler) says that pressures on corporate PROFITS (some due to post-pandemic over-hiring) and consumer INCOME will lead to RECESSION in 2022/Q3 (that is among the early projections). The LABOR market will deteriorate quickly, and the unemployment rate will soon be 5%. Several companies have started preparing for recession and may issue cautious guidance in Q2. The current SP500 EARNINGS estimate of $230 for 2022 is just too high. The Fed/FOMC will stay on monetary tightening course until inflations comes down. She sees RECOVERY in 2023/H2.
EXTRA. Supremes’ ruling limiting powers of the EPA (in EPA vs WV) will not change the US utilities trend away from COAL. The US utilities have already cut the use of coal by 50% and only 21% electricity generation now is from coal and that should decline to 0 by 2035. Natural gas is a better transitional fuel. Utilities are expensive but attractive: NEE, AEP, AEE; ETF XLU; CEF UTG.
Pg 11, STREETWISE. The US movie THEATERS are back (2022/H1 ticket sales +228% over 2021/H1, but still -31% vs 2019/H1) but now lack new movies to show. Some theaters are using live concerts and videogames to draw crowds. A post-pandemic change in theater business is shorter exclusive theater runs (45-90 days only) for new movies before they move on to STREAMING. Global movie markets are still impacted by Covid-19. Attractive are IMAX, CNK (play meme stock AMC at your own risk).
Forget CRYPTO-winter, think crypto-extinction. On the other hand, think STOCK-winter if RECESSION hits THIS year (several firms projecting that include BoA, Piper Sandler, Delphi, etc).
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).