Post by Admin/YBB on Sept 3, 2022 5:19:23 GMT -6
Pg 28, TRADER. 3rd weekly decline after failure at 200-dMA isn’t good for SP500. JOB creation and wage growth are too strong for the FED to change its course (rate hikes, QT). TADESSE (Societe Generale) thinks that QT will almost double the effects of rate hikes (that estimate is much higher than by others). We are already in a bear market and none of this helps.
Sell-side analysts try to hide their skepticism with terms such as hold, neutral, market perform, underperform, etc. Basically, there is just buy or don’t buy. But analysts don’t want to offend the companies they cover and don’t want to be embarrassed with wrong negative calls (but wrong bullish calls are OK). Most buy-side analysts just want to know what the sell-side analysts are thinking and why? They don’t care about buy/hold/sell recommendations, and nor should retail investors.
Some RETAILERS (WMT, BBY) had decent Q2 reports. However, most retailers are struggling with excess inventory (or wrong inventory), supply-chain issues, lower margins. This holiday season may be weak. Retailers will get hurt by RECESSION, so be cautious with XRT, XLY (top 2 holdings are AMAZ, TSLA).
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 & 12th rate hikes, FOMC 9/21/22+ (75 bps hike possible)
13th rate hikes, FOMC 11/2/22+
14th rate hike, FOMC 12/14/22+ (rate 3.50-3.75%)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -2.99%, SP500 -3.29%, Nasdaq Comp -4.21%, R2000 -4.74%. DJ Transports -4.47%; DJ Utilities -1.22%. (Rotating spot low-volatility -2.04%) US$ index (spot) +0.74%, oil/WTI futures -6.65%, gold futures -1.52%.
YTD (index changes only), DJIA -13.81%, SP500 -17.66%, Nasdaq Comp -25.66%. (Rotating spot low-volatility SPLV -8.12%)
Pg 40: NYSE cumulative (5-day) A/D line fell for the 3rd week; ratio of losers:winners 5:1 (Friday AM, people were guessing if it would be another 90% upside-volume day, but by Friday PM, guesses shifted to whether it might turn into another 90% downside-volume day; it was neither. That is how the reaction flipped on the strong jobs report).
Note. Although bond indexes are not tracked here, it was notable that the global bond index fell into a bear market (down more than 20%) for the 1st time ever.
Pg 31, EUROPE. TOBACCO companies may be good inflation hedges. Mentioned are Imperial Brands (IMBBY; yield 7.4%, fwd P/E 6.8; new CEO) and British American Tobacco (BTI; yield 6.3%; fwd P/E 9.5).
Pg 31, EMERGING MARKETS. EM BONDS are attractive after a global selloff in bonds after the Fed conference in Jackson Hole. The EM bond SPREADS over the US Treasuries are quite wide. China doesn’t dominate EM bonds as it does EM equities. Several EMs (Brazil, Mexico) are ahead of the US and Europe in their inflation fighting. The IMF may help struggling EMs/FMs (Egypt, Ghana, Vietnam) with loans. Bonds from EM oil/gas producers are especially attractive.
Pg 32, OPTIONS. Don’t fight the FED. It may be too early to buy the dips but OK to sell the rallies. Use protective puts.
(SP500 VIX 25.47, Nasdaq 100 VXN 32.32, options SKEW 119.81, bond MOVE 120.72 (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 33, COMMODITIES. OPEC production cuts may drive oil prices higher; the next OPEC/OPEC+ meetings start on 9/5/22. Russian oil continues to flow despite sanctions. Nuclear agreement with Iran may lead to more Iranian oil. The US SPR draws will continue through October. But oil demand is also weakening with slowdown in global economies. Oil capex hasn’t kept up and it is difficult to suddenly boost production. Oil prices are expected to be volatile with a range of $50-200.
Pg 45: A bad week in EUROPE (Germany +0.62%, Netherlands -4.49%, Greece -6.20%) and a bad week in ASIA (Indonesia +1.62%, Australia -4.08%).
TREASURY* 3-mo yield 2.94%, 1-yr 3.47%, 2-yr 3.40%, 5-yr 3.30%, 10-yr 3.20%, 30-yr 3.35%. REAL yields 5-yr 0.75%, 10-yr 0.73%, 30-yr 1.01%.
DOLLAR rose, ^DXY 109.61, +0.7% (pg 50). GOLD fell to $1,713, -2.2% (Handy & Harman spot, Thursday) (pg 52); the gold-miners fell sharply. (^XAU was at 98.07, -5.56% 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, ”The JOBS SHORTAGES Will Get Worse and May Last for Decades”. Job openings now far exceed the number of unemployed workers. Many candidates don’t even show up for job interviews. Employers are offering better pay and benefits to attract qualified applicants. Working age POPULATION in the US is growing very slowly at +0.2%. Net IMMIGRATION peaked in 2016. There are fewer migratory workers from Mexico. The US LABOR-FORCE participation has been declining; the percentage of RETIREES is increasing. Covid made these issues worse and the COVID shock on the job market may last for years. Most affected are STEM professions, healthcare, construction, agriculture; they will also limit in-person and round-the-clock SERVICES. Congress is working on some proposals, but immigration reforms may offer quicker solutions.
Pg 17:Companies that will be less affected or benefit from worker shortages and rising wages include automation/robotics ABB, Fanuc, Kuka, Yaskawa Electric; users of AI/robotics ALK, AMZN, CMG, CWST, MKC, MRNA, NSC, SHAK, UPS, WING; recruiting, staffing and executive search firms KFY, MAN, RHI.
Pg 6, UP & DOWN WALL STREET. It was a BAD week; Friday ended as down day in spite of good economic data. Jerry GRANTHAM (GMO) is warning again about a super-bubble (in stocks, bonds, housing) that is about to burst. On the other hand, Jim PAULSEN (Leuthold) thinks that the move-up from mid-June is intact. 1-yr breakeven inflation is around the Fed’s +2% average target (it peaked at 6.3% in March).
Facebook/META revolutionized SOCIAL-MEDIA but now it is in a slump. Social-media hasn’t been profitable for others (SNAP, TWTR, PINS). Social-media is basically an ad-business and several companies that have tried to use it for other businesses have struggled (WE, TDOC, PTON). META started out strong with the first-mover advantage but then competition from TikTok and a change in the privacy policy by AAPL have disrupted META; its metaverse ambitions are also misguided.
(Eule substituted for Forsyth who is still on a long vacation)
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
Sell-side analysts try to hide their skepticism with terms such as hold, neutral, market perform, underperform, etc. Basically, there is just buy or don’t buy. But analysts don’t want to offend the companies they cover and don’t want to be embarrassed with wrong negative calls (but wrong bullish calls are OK). Most buy-side analysts just want to know what the sell-side analysts are thinking and why? They don’t care about buy/hold/sell recommendations, and nor should retail investors.
Some RETAILERS (WMT, BBY) had decent Q2 reports. However, most retailers are struggling with excess inventory (or wrong inventory), supply-chain issues, lower margins. This holiday season may be weak. Retailers will get hurt by RECESSION, so be cautious with XRT, XLY (top 2 holdings are AMAZ, TSLA).
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 & 12th rate hikes, FOMC 9/21/22+ (75 bps hike possible)
13th rate hikes, FOMC 11/2/22+
14th rate hike, FOMC 12/14/22+ (rate 3.50-3.75%)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -2.99%, SP500 -3.29%, Nasdaq Comp -4.21%, R2000 -4.74%. DJ Transports -4.47%; DJ Utilities -1.22%. (Rotating spot low-volatility -2.04%) US$ index (spot) +0.74%, oil/WTI futures -6.65%, gold futures -1.52%.
YTD (index changes only), DJIA -13.81%, SP500 -17.66%, Nasdaq Comp -25.66%. (Rotating spot low-volatility SPLV -8.12%)
Pg 40: NYSE cumulative (5-day) A/D line fell for the 3rd week; ratio of losers:winners 5:1 (Friday AM, people were guessing if it would be another 90% upside-volume day, but by Friday PM, guesses shifted to whether it might turn into another 90% downside-volume day; it was neither. That is how the reaction flipped on the strong jobs report).
Note. Although bond indexes are not tracked here, it was notable that the global bond index fell into a bear market (down more than 20%) for the 1st time ever.
Pg 31, EUROPE. TOBACCO companies may be good inflation hedges. Mentioned are Imperial Brands (IMBBY; yield 7.4%, fwd P/E 6.8; new CEO) and British American Tobacco (BTI; yield 6.3%; fwd P/E 9.5).
Pg 31, EMERGING MARKETS. EM BONDS are attractive after a global selloff in bonds after the Fed conference in Jackson Hole. The EM bond SPREADS over the US Treasuries are quite wide. China doesn’t dominate EM bonds as it does EM equities. Several EMs (Brazil, Mexico) are ahead of the US and Europe in their inflation fighting. The IMF may help struggling EMs/FMs (Egypt, Ghana, Vietnam) with loans. Bonds from EM oil/gas producers are especially attractive.
Pg 32, OPTIONS. Don’t fight the FED. It may be too early to buy the dips but OK to sell the rallies. Use protective puts.
(SP500 VIX 25.47, Nasdaq 100 VXN 32.32, options SKEW 119.81, bond MOVE 120.72 (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 33, COMMODITIES. OPEC production cuts may drive oil prices higher; the next OPEC/OPEC+ meetings start on 9/5/22. Russian oil continues to flow despite sanctions. Nuclear agreement with Iran may lead to more Iranian oil. The US SPR draws will continue through October. But oil demand is also weakening with slowdown in global economies. Oil capex hasn’t kept up and it is difficult to suddenly boost production. Oil prices are expected to be volatile with a range of $50-200.
Pg 45: A bad week in EUROPE (Germany +0.62%, Netherlands -4.49%, Greece -6.20%) and a bad week in ASIA (Indonesia +1.62%, Australia -4.08%).
TREASURY* 3-mo yield 2.94%, 1-yr 3.47%, 2-yr 3.40%, 5-yr 3.30%, 10-yr 3.20%, 30-yr 3.35%. REAL yields 5-yr 0.75%, 10-yr 0.73%, 30-yr 1.01%.
DOLLAR rose, ^DXY 109.61, +0.7% (pg 50). GOLD fell to $1,713, -2.2% (Handy & Harman spot, Thursday) (pg 52); the gold-miners fell sharply. (^XAU was at 98.07, -5.56% 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, ”The JOBS SHORTAGES Will Get Worse and May Last for Decades”. Job openings now far exceed the number of unemployed workers. Many candidates don’t even show up for job interviews. Employers are offering better pay and benefits to attract qualified applicants. Working age POPULATION in the US is growing very slowly at +0.2%. Net IMMIGRATION peaked in 2016. There are fewer migratory workers from Mexico. The US LABOR-FORCE participation has been declining; the percentage of RETIREES is increasing. Covid made these issues worse and the COVID shock on the job market may last for years. Most affected are STEM professions, healthcare, construction, agriculture; they will also limit in-person and round-the-clock SERVICES. Congress is working on some proposals, but immigration reforms may offer quicker solutions.
Pg 17:Companies that will be less affected or benefit from worker shortages and rising wages include automation/robotics ABB, Fanuc, Kuka, Yaskawa Electric; users of AI/robotics ALK, AMZN, CMG, CWST, MKC, MRNA, NSC, SHAK, UPS, WING; recruiting, staffing and executive search firms KFY, MAN, RHI.
Pg 6, UP & DOWN WALL STREET. It was a BAD week; Friday ended as down day in spite of good economic data. Jerry GRANTHAM (GMO) is warning again about a super-bubble (in stocks, bonds, housing) that is about to burst. On the other hand, Jim PAULSEN (Leuthold) thinks that the move-up from mid-June is intact. 1-yr breakeven inflation is around the Fed’s +2% average target (it peaked at 6.3% in March).
Facebook/META revolutionized SOCIAL-MEDIA but now it is in a slump. Social-media hasn’t been profitable for others (SNAP, TWTR, PINS). Social-media is basically an ad-business and several companies that have tried to use it for other businesses have struggled (WE, TDOC, PTON). META started out strong with the first-mover advantage but then competition from TikTok and a change in the privacy policy by AAPL have disrupted META; its metaverse ambitions are also misguided.
(Eule substituted for Forsyth who is still on a long vacation)
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).