Post by Admin/YBB on Aug 13, 2022 5:26:18 GMT -6
Pg 27, TRADER. Don’t buy into the hype of peak INFLATION and the FED changing the course sooner than later. Wild actions in techs and meme stocks won’t impress the Fed (but won’t stop speculators). The JOB market has been strong. While China’s Covid-zero policy is a global negative, some COMMODITY prices are perking up. The market will be volatile. It may pay to be defensive (consumer-staples, healthcare, utilities) as bulls and bears duke it out. (Notable that “Trader” from a new author is the skeptic this week)
It has been a good Q2 with 90% of the SP500 companies reporting. But the guidance has been poor for Q3, the rest of 2022 and 2023. As stocks had sold off (fwd P/E bottomed at 15 from 21 peak on Jan 1), they have rebounded (fwd P/E 17). Companies that missed were punished (NVDA, MU, WMT, TGT, etc). Stocks may struggle going forward.
Coinbase/COIN is bouncing like a meme stock. Short interest is high at 18%. This when COIN is more than just cryptos trading – it is also broker-dealer, custodian and has partnered with BlackRock/BLK, etc. However, it is burning cash and faces regulatory scrutiny.
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 (+/- 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.
10th & 11th rate hikes, FOMC 9/21/22+ (50 bps hike possible)
12th & 13th rate hikes, FOMC 11/2/22+ (50 bps hike possible)
14th, FOMC 12/14/22+ (3.50-3.75%)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +2.92%, SP500 +3.26%, Nasdaq Comp +3.08%, R2000 +4.93%. DJ Transports +3.74%; DJ Utilities +2.72%. (Rotating spot R2000 +4.93%) US$ index (spot) -0.86%, oil/WTI futures +3.69%, gold futures +1.45%.
YTD (index changes only), DJIA -7.09%, SP500 -10.20%, Nasdaq Comp -16.60%. (Rotating spot R2000 -10.19%)
Pg 40: NYSE cumulative (5-day) A/D line rose for the 4th week (but NOT at a new high like for the SP500 A/D).
Pg 30, EUROPE. UK retailer JD Sports Fashion (JDSPY; fwd P/E 10.5; target age group 18-24) has been recession proof/resistant. The new CEO SCHULTZ started last month. Growing by acquisitions.
Pg 30, EMERGING MARKETS. POLAND has all of the issues typical in Europe – high inflation (+16%), rising rates (0.1% to 6.5% in 10 months), government crackdown on businesses, influx of refugees (1+ million; temporarily solving its tight labor market). Government is allowing public to skip 8 mortgage payments (90% adjustable) this and the next year and that will stress its banks. Luckily, it has switched from Russian natural gas to Norwegian LNG, but now faces high prices. The EU is providing assistance for Covid-19 and Ukrainian refugees. Attractive are tech, consumer and retail sectors. ETF is EPOL.
Pg 31, OPTIONS. Beneficiaries of higher funding for the IRS would be H&R Block/HRB (+96% YTD) and Intuit/INTU (-24% YTD). HRB is also diversifying into banking (partnership with current MetaBank/to be Pathward/CASH) and accounting (invoices, payrolls). Recommended is a call-spread for HRB with an exit point.
(SP500 VIX 19.53, Nasdaq 100 VXN 25.18 (high), options SKEW 129.34 (rising), bond MOVE 106.28 (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 32, COMMODITIES. Orange juice/OJ and FCOJ prices are rising. Inventories are low and any bad weather or hurricane (June-November) in Florida could cause shortages. Brazil (the largest global producer of OJ) is also having weather issues (3rd year of La Nina). (It’s old news that OJ consumption WAS declining. It went up during the pandemic and now there are supply issues.)
Pg 45: A good week in EUROPE (Spain +3.00%, Switzerland +0.22%) and an up week in ASIA (Philippines +4.43%, New Zealand -0.27%).
TREASURY* 3-mo yield 2.63%, 1-yr 3.26%, 2-yr 3.25%, 5-yr 2.97%, 10-yr 2.84%, 30-yr 3.12%. REAL yields 5-yr 0.30%, 10-yr 0.37%, 30-yr 0.89%.
DOLLAR fell, ^DXY 105.67, -0.9% (pg 50). GOLD rose to $1,792, +1% (Handy & Harman spot, Thursday) (pg 52); the gold-miners rose. (^XAU was at 111.62, +3.35% for the week)
Top FDIC insured savings deposit rates** (This feature has been 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 14: COVER STORY, “Clean Energy’s Future Has Arrived/6 Stocks to Play the Rush for Renewable ENERGY”. AES, BE, FCX, LG Energy (S Korea), PLUG, RUN, etc; ETF TAN
TRANSITION from wood to coal took200 years, from coal to oil 100 years, but that from fossil fuels to RENEWABLES (solar, wind, batteries, hydrogen) to be in only a few years? Global renewable power was 29% in 2020, and by 2030, may be 60% in Europe, 38% in the US, 38% in China. Both the US and Europe, each, are adding 30 GW of renewable power capacity now and that may be 80 GW/yr by 2030. There are transition TAX CREDITS/INCENTIVES everywhere. Russia-Ukraine war has set back some current efforts (coal has come back and natural-gas is scarce) but has accelerated the push for future transitions. Europe has committed $200 billion, the US Inflation Reduction Act will have $370 billion, and private investments will kick in $1.2 trillion. This may be the end of boom-and-bust energy cycles. Many countries have NET-ZERO carbon emission goals by 2050+. However, be very selective on companies in the renewable energy area. Besides the companies mentioned earlier, other beneficiaries may include VWDRY, NLLSF, XOM, CVX (old energy companies won’t be sitting still).
Pg 5, UP & DOWN WALL STREET. RIP, Bear Market.
The Summer RALLY continued as investors cheered CPI of +8.5% (and PPI of +9.8%) – but it’s all relative. From the mid-June lows, theSP500 (-10% YTD) has recovered 50%+ of the high-to-low decline; DJIA -7% YTD is no longer a big deal; Nasdaq Comp -16.6% YTD still hurts but is up +20% from the low and speculative stocks are moving (ARKK +40%); meme stocks are back. Skeptics abound and point to this or that. But investors know roughly where the FED is going by the yearend (3.50-3.75%) and DOLLAR may finally weaken. In the November midterm ELECTIONS, Democrats may hang on to the Senate, but the House may flip.
BRK-A/B (fwd P/E 22; P/B 1.3; modest buybacks) is attractive. Focus on operating income (ignore currency effects and unrealized mark-to-market losses on stock portfolio). Warren BUFFETT, who turns 92 in August, is still looking for an “elephant” to buy and that may be OXY that is now 20% owned by BRK (WB can just dip in his pockets for the needed $60 or so billion).
Progressive (PGR; fwd P/E 25; P/B 4; #3 auto insurer) is now an example of good-company-bad-stock. Costs are rising as driving is back and claim/repair costs have gone up (inflation), but rate increases are slow to come; CA has a 2-yr moratorium on rate increases.
Pg 7, STREETWISE. Duke Energy/DUK CEO Lynn GOOD thinks that NUCLEAR energy has a good future. The new Inflation Reduction Act has incentives for EXISTING nuclear plants to motivate reopening of some shut plants and to extend the usable life of the current plants (they were under competitive pressures from other sources of energy and from environmentalists). The US isn’t building any new nuclear plants, but several countries are (China, India, etc). DUK intends to run its nuclear plants for 80 years. DUK, ED, etc are also planning to sell their renewable businesses at attractive prices.
LUMBER has had crazy moves: $400 (pre-pandemic)-$1,600-$500-$1,400-$600 (now). TREX is attractive after the selloff; it supplies HD, LOW, etc and also has a direct-sales channel.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
It has been a good Q2 with 90% of the SP500 companies reporting. But the guidance has been poor for Q3, the rest of 2022 and 2023. As stocks had sold off (fwd P/E bottomed at 15 from 21 peak on Jan 1), they have rebounded (fwd P/E 17). Companies that missed were punished (NVDA, MU, WMT, TGT, etc). Stocks may struggle going forward.
Coinbase/COIN is bouncing like a meme stock. Short interest is high at 18%. This when COIN is more than just cryptos trading – it is also broker-dealer, custodian and has partnered with BlackRock/BLK, etc. However, it is burning cash and faces regulatory scrutiny.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
10th & 11th rate hikes, FOMC 9/21/22+ (50 bps hike possible)
12th & 13th rate hikes, FOMC 11/2/22+ (50 bps hike possible)
14th, FOMC 12/14/22+ (3.50-3.75%)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +2.92%, SP500 +3.26%, Nasdaq Comp +3.08%, R2000 +4.93%. DJ Transports +3.74%; DJ Utilities +2.72%. (Rotating spot R2000 +4.93%) US$ index (spot) -0.86%, oil/WTI futures +3.69%, gold futures +1.45%.
YTD (index changes only), DJIA -7.09%, SP500 -10.20%, Nasdaq Comp -16.60%. (Rotating spot R2000 -10.19%)
Pg 40: NYSE cumulative (5-day) A/D line rose for the 4th week (but NOT at a new high like for the SP500 A/D).
Pg 30, EUROPE. UK retailer JD Sports Fashion (JDSPY; fwd P/E 10.5; target age group 18-24) has been recession proof/resistant. The new CEO SCHULTZ started last month. Growing by acquisitions.
Pg 30, EMERGING MARKETS. POLAND has all of the issues typical in Europe – high inflation (+16%), rising rates (0.1% to 6.5% in 10 months), government crackdown on businesses, influx of refugees (1+ million; temporarily solving its tight labor market). Government is allowing public to skip 8 mortgage payments (90% adjustable) this and the next year and that will stress its banks. Luckily, it has switched from Russian natural gas to Norwegian LNG, but now faces high prices. The EU is providing assistance for Covid-19 and Ukrainian refugees. Attractive are tech, consumer and retail sectors. ETF is EPOL.
Pg 31, OPTIONS. Beneficiaries of higher funding for the IRS would be H&R Block/HRB (+96% YTD) and Intuit/INTU (-24% YTD). HRB is also diversifying into banking (partnership with current MetaBank/to be Pathward/CASH) and accounting (invoices, payrolls). Recommended is a call-spread for HRB with an exit point.
(SP500 VIX 19.53, Nasdaq 100 VXN 25.18 (high), options SKEW 129.34 (rising), bond MOVE 106.28 (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 32, COMMODITIES. Orange juice/OJ and FCOJ prices are rising. Inventories are low and any bad weather or hurricane (June-November) in Florida could cause shortages. Brazil (the largest global producer of OJ) is also having weather issues (3rd year of La Nina). (It’s old news that OJ consumption WAS declining. It went up during the pandemic and now there are supply issues.)
Pg 45: A good week in EUROPE (Spain +3.00%, Switzerland +0.22%) and an up week in ASIA (Philippines +4.43%, New Zealand -0.27%).
TREASURY* 3-mo yield 2.63%, 1-yr 3.26%, 2-yr 3.25%, 5-yr 2.97%, 10-yr 2.84%, 30-yr 3.12%. REAL yields 5-yr 0.30%, 10-yr 0.37%, 30-yr 0.89%.
DOLLAR fell, ^DXY 105.67, -0.9% (pg 50). GOLD rose to $1,792, +1% (Handy & Harman spot, Thursday) (pg 52); the gold-miners rose. (^XAU was at 111.62, +3.35% for the week)
Top FDIC insured savings deposit rates** (This feature has been 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 14: COVER STORY, “Clean Energy’s Future Has Arrived/6 Stocks to Play the Rush for Renewable ENERGY”. AES, BE, FCX, LG Energy (S Korea), PLUG, RUN, etc; ETF TAN
TRANSITION from wood to coal took200 years, from coal to oil 100 years, but that from fossil fuels to RENEWABLES (solar, wind, batteries, hydrogen) to be in only a few years? Global renewable power was 29% in 2020, and by 2030, may be 60% in Europe, 38% in the US, 38% in China. Both the US and Europe, each, are adding 30 GW of renewable power capacity now and that may be 80 GW/yr by 2030. There are transition TAX CREDITS/INCENTIVES everywhere. Russia-Ukraine war has set back some current efforts (coal has come back and natural-gas is scarce) but has accelerated the push for future transitions. Europe has committed $200 billion, the US Inflation Reduction Act will have $370 billion, and private investments will kick in $1.2 trillion. This may be the end of boom-and-bust energy cycles. Many countries have NET-ZERO carbon emission goals by 2050+. However, be very selective on companies in the renewable energy area. Besides the companies mentioned earlier, other beneficiaries may include VWDRY, NLLSF, XOM, CVX (old energy companies won’t be sitting still).
Pg 5, UP & DOWN WALL STREET. RIP, Bear Market.
The Summer RALLY continued as investors cheered CPI of +8.5% (and PPI of +9.8%) – but it’s all relative. From the mid-June lows, theSP500 (-10% YTD) has recovered 50%+ of the high-to-low decline; DJIA -7% YTD is no longer a big deal; Nasdaq Comp -16.6% YTD still hurts but is up +20% from the low and speculative stocks are moving (ARKK +40%); meme stocks are back. Skeptics abound and point to this or that. But investors know roughly where the FED is going by the yearend (3.50-3.75%) and DOLLAR may finally weaken. In the November midterm ELECTIONS, Democrats may hang on to the Senate, but the House may flip.
BRK-A/B (fwd P/E 22; P/B 1.3; modest buybacks) is attractive. Focus on operating income (ignore currency effects and unrealized mark-to-market losses on stock portfolio). Warren BUFFETT, who turns 92 in August, is still looking for an “elephant” to buy and that may be OXY that is now 20% owned by BRK (WB can just dip in his pockets for the needed $60 or so billion).
Progressive (PGR; fwd P/E 25; P/B 4; #3 auto insurer) is now an example of good-company-bad-stock. Costs are rising as driving is back and claim/repair costs have gone up (inflation), but rate increases are slow to come; CA has a 2-yr moratorium on rate increases.
Pg 7, STREETWISE. Duke Energy/DUK CEO Lynn GOOD thinks that NUCLEAR energy has a good future. The new Inflation Reduction Act has incentives for EXISTING nuclear plants to motivate reopening of some shut plants and to extend the usable life of the current plants (they were under competitive pressures from other sources of energy and from environmentalists). The US isn’t building any new nuclear plants, but several countries are (China, India, etc). DUK intends to run its nuclear plants for 80 years. DUK, ED, etc are also planning to sell their renewable businesses at attractive prices.
LUMBER has had crazy moves: $400 (pre-pandemic)-$1,600-$500-$1,400-$600 (now). TREX is attractive after the selloff; it supplies HD, LOW, etc and also has a direct-sales channel.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).