Post by Admin/YBB on Sept 17, 2022 5:24:12 GMT -6
Pg 32, TRADER. A BAD WEEK! If there were any doubts about the times being bad, FDX removed them – it reported terrible earnings, withdrew guidance, and all that was a week early (why? To send a message to the FOMC?). This followed a bad/hot CPI report. DIP BUYERS beware that the market can remain super-oversold for a while if bad news keeps trickling in, e.g. in 1973-74, 1987, 1998. Then there is the FED suddenly waking up and raising rates furiously. A new bull market may not start until the Fed starts to cut rates (who knows now when that will be) and any rally in the interim may be just a bear-rally. Stick with quality stocks, control portfolio risks, don’t try to be a hero with your money.
Are CONSUMER-STAPLES really safer in recession? There is already quite a divergence with winners (CPB, KDP, KO, STZ, etc) and losers (SPB, COTY, NWL, SAM, etc). This inflationary recession may be different from others as consumers may switch from expensive products to cheaper alternatives, often generic or store brands, or cut usage.
It has been a lousy year for stocks (and bonds). But there are some BARGAINS where the fwd P/Es have collapsed but the business prospects remain good: CAG, CVS, DLTR, EIX, FMC, HUM, IBM, NRG, ORLY, PM, RTX, UNH.
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 , 14th & 15th rate hikes, FOMC 11/2/22+ (75 bps hike possible)
16th rate hike, FOMC 12/14/22+ (rate 4.00-4.25%)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -4.13%, SP500 -4.77%, Nasdaq Comp -5.48%, R2000 -4.50%. DJ Transports -8.79%; DJ Utilities -3.57%. (Rotating spot FedEx FDX -22.98%) US$ index (spot) +0.62%, oil/WTI futures -1.94%, gold futures -2.59%.
YTD (index changes only), DJIA -15.18%, SP500 -18.73%, Nasdaq Comp -26.82%. (Rotating spot FedEx FDX -37.74%)
Pg 44: NYSE cumulative (5-day) A/D line fell; ratio of winners:losers 1:5. (Tuesday was 95% down-volume day)
Pg 35, EUROPE. IRISH Ryanair (RYAAY; fwd P/E 11.6; strong balance sheet) kept most of its operational workers on payroll through the pandemic and is now in a good position for rebound. It also hedged 80% of its fuel costs. The stock still sold off like other airlines (during Covid, then after Russia-Ukraine war) but is a buying opportunity. It operates in 36 countries with focus on Europe.
Pg 35, EMERGING MARKETS. Presidents PUTIN (Russia) and XI (China) met on the sidelines of the SCO 2022 in Uzbekistan. While publicly supporting Putin, Xi also indicated the limits of his support privately (the amount of Russian oil/gas imported; no Chinese money to buy out the US and European oil/gas interests in Russia; following Western sanctions, etc). Putin tersely acknowledged Xi’s “balanced” approach on Ukraine. China does have global ambitions, but it doesn’t want to act like Russia did. Russia and China share 2,500-mile land border and have decided to be cooperative neighbors (there have been tensions in the past); both have a common rival, the US.
Pg 36, OPTIONS. Use half-and-half for stocks you want to buy, i.e. buy half-position right away and sell put for the other half (HRL, etc).
(SP500 VIX 26.30, Nasdaq 100 VXN 32.83, options SKEW 117.71, bond MOVE 124.95 (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 37, COMMODITIES. Crude OIL peaked on March 8. There are concerns and uncertainties about both the supply (Russia-Ukraine war, disciplined OPEC and US frackers) and demand (recession fears, China Covid policies, alternative energy) and prices now are in $80s. Futures prices (in backwardation) have decoupled from the physical oil markets. There may be the OPEC put around $90 (and SPR/BIDEN put around $80). Oil companies remain highly profitable even at these oil price levels (and energy producers XLE and crude oil WTIC are diverging).
Pg 49: A bad week in EUROPE (Italy +0.98%, Denmark -3.46%) and a down week in ASIA (Indonesia +1.82%, China -2.20%).
TREASURY* 3-mo yield 3.20%, 1-yr 3.96%, 2-yr 3.85%, 5-yr 3.62%, 10-yr 3.45%, 30-yr 3.52%. REAL yields 5-yr 1.13%, 10-yr 1.07%, 30-yr 1.25%.
DOLLAR declined, ^DXY 109.64, +0.6% (Japanese yen was at 24-yr low; pg 54). GOLD fell to $1,665, -2.8% (2-yr low; Handy & Harman spot, Thursday) (pg 56); the gold-miners fell sharply. (^XAU was at 99.76, -4.99% 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 18: COVER STORY, ”Netflix and Disney+ Are About to Get Ads. What it Means for STREAMING Stocks”. Netflix/NFLX and Disney/DIS are getting into AD-SUPPORTED streaming, following the old TV-model. A concern is that high ad-loads may frustrate consumers. Targeted online ads are possible but AAPL and GOOGL have restrictions due to privacy. Companies may have to develop in-house data-mining capabilities based on credit card use and other data. A new approach is “data clean rooms” from intermediaries on sharing limited consumer information. There is consolidation in streaming – Discovery + WarnerMedia (new WBD), AMZN + MGM Studios with more to come. Ad buyers include TTD, GOOGL, etc.
Pg 7, UP & DOWN WALL STREET. First there was the bad CPI report, and then FDX had poor earnings, suspended guidance because we may be heading into recession. BONDS faced the headwinds of 75-100 bps hike on Wednesday (9/21/22); real rates would still be negative. It seems that the Fed will be raising rates aggressively in 2022 and may pause sometime in 2023; but forget about any Fed flip. Stock investors may not get relief even in 2023.
INCOME ideas for rising rate environment from LEIBERMAN (Advisors Capital): T-Bills (1-yr was at 4%), energy MLPs (MPLX, SUN, CAPL), REITs (OFI, SBRA, LTC), mREITs (STWD, BXMT), mREIT preferreds (AGNCO, NLY-I), BDCs (ARCC, HTGC, TSLX).
Pg 11, STREETWISE. Workers have gotten used to WORK-FROM-HOME and are resisting demands to return to offices. This is bad for OFFICE REITs which now have high yields (but dividends may be cut), low P/FFO, low occupancy rates. HYBRID office-home plans are the compromise solutions. Attractive office REIT is HIW, but avoid VNO, OPI. In fact, look beyond REITs for income, e.g dividend-stocks (FE, ABBV, CFG, PM, etc).
Disney D23 Expo (really a new products event for DIS) had expensive tickets. Disney event tickets everywhere are also up, and one now pays extra for expedited access to park rides (with Genie+, Lightening Lanes); the bus to/from airport isn’t free anymore. Call this Mickeyflation. Why? Because DIS can. The CEO’s new nickname is Bob Paycheck. HOUGH (journalist-humorist) notes that his family vacation to Disney World had 40% more cost, 20% less fun, and kids’ whining was up by 15%; then there were awful plane rides. Next time, he may just visit local attractions, or stay home.
Supplement, TOP 100 INDEPENDENT ADVISORS has features on picking advisors; mass-affluent clients; ultrawealthy clients; all-services advising. These are followed by a listing of Top 100 RIA firms and Top 100 Independent Advisors
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
Are CONSUMER-STAPLES really safer in recession? There is already quite a divergence with winners (CPB, KDP, KO, STZ, etc) and losers (SPB, COTY, NWL, SAM, etc). This inflationary recession may be different from others as consumers may switch from expensive products to cheaper alternatives, often generic or store brands, or cut usage.
It has been a lousy year for stocks (and bonds). But there are some BARGAINS where the fwd P/Es have collapsed but the business prospects remain good: CAG, CVS, DLTR, EIX, FMC, HUM, IBM, NRG, ORLY, PM, RTX, UNH.
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 , 14th & 15th rate hikes, FOMC 11/2/22+ (75 bps hike possible)
16th rate hike, FOMC 12/14/22+ (rate 4.00-4.25%)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -4.13%, SP500 -4.77%, Nasdaq Comp -5.48%, R2000 -4.50%. DJ Transports -8.79%; DJ Utilities -3.57%. (Rotating spot FedEx FDX -22.98%) US$ index (spot) +0.62%, oil/WTI futures -1.94%, gold futures -2.59%.
YTD (index changes only), DJIA -15.18%, SP500 -18.73%, Nasdaq Comp -26.82%. (Rotating spot FedEx FDX -37.74%)
Pg 44: NYSE cumulative (5-day) A/D line fell; ratio of winners:losers 1:5. (Tuesday was 95% down-volume day)
Pg 35, EUROPE. IRISH Ryanair (RYAAY; fwd P/E 11.6; strong balance sheet) kept most of its operational workers on payroll through the pandemic and is now in a good position for rebound. It also hedged 80% of its fuel costs. The stock still sold off like other airlines (during Covid, then after Russia-Ukraine war) but is a buying opportunity. It operates in 36 countries with focus on Europe.
Pg 35, EMERGING MARKETS. Presidents PUTIN (Russia) and XI (China) met on the sidelines of the SCO 2022 in Uzbekistan. While publicly supporting Putin, Xi also indicated the limits of his support privately (the amount of Russian oil/gas imported; no Chinese money to buy out the US and European oil/gas interests in Russia; following Western sanctions, etc). Putin tersely acknowledged Xi’s “balanced” approach on Ukraine. China does have global ambitions, but it doesn’t want to act like Russia did. Russia and China share 2,500-mile land border and have decided to be cooperative neighbors (there have been tensions in the past); both have a common rival, the US.
Pg 36, OPTIONS. Use half-and-half for stocks you want to buy, i.e. buy half-position right away and sell put for the other half (HRL, etc).
(SP500 VIX 26.30, Nasdaq 100 VXN 32.83, options SKEW 117.71, bond MOVE 124.95 (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 37, COMMODITIES. Crude OIL peaked on March 8. There are concerns and uncertainties about both the supply (Russia-Ukraine war, disciplined OPEC and US frackers) and demand (recession fears, China Covid policies, alternative energy) and prices now are in $80s. Futures prices (in backwardation) have decoupled from the physical oil markets. There may be the OPEC put around $90 (and SPR/BIDEN put around $80). Oil companies remain highly profitable even at these oil price levels (and energy producers XLE and crude oil WTIC are diverging).
Pg 49: A bad week in EUROPE (Italy +0.98%, Denmark -3.46%) and a down week in ASIA (Indonesia +1.82%, China -2.20%).
TREASURY* 3-mo yield 3.20%, 1-yr 3.96%, 2-yr 3.85%, 5-yr 3.62%, 10-yr 3.45%, 30-yr 3.52%. REAL yields 5-yr 1.13%, 10-yr 1.07%, 30-yr 1.25%.
DOLLAR declined, ^DXY 109.64, +0.6% (Japanese yen was at 24-yr low; pg 54). GOLD fell to $1,665, -2.8% (2-yr low; Handy & Harman spot, Thursday) (pg 56); the gold-miners fell sharply. (^XAU was at 99.76, -4.99% 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 18: COVER STORY, ”Netflix and Disney+ Are About to Get Ads. What it Means for STREAMING Stocks”. Netflix/NFLX and Disney/DIS are getting into AD-SUPPORTED streaming, following the old TV-model. A concern is that high ad-loads may frustrate consumers. Targeted online ads are possible but AAPL and GOOGL have restrictions due to privacy. Companies may have to develop in-house data-mining capabilities based on credit card use and other data. A new approach is “data clean rooms” from intermediaries on sharing limited consumer information. There is consolidation in streaming – Discovery + WarnerMedia (new WBD), AMZN + MGM Studios with more to come. Ad buyers include TTD, GOOGL, etc.
Pg 7, UP & DOWN WALL STREET. First there was the bad CPI report, and then FDX had poor earnings, suspended guidance because we may be heading into recession. BONDS faced the headwinds of 75-100 bps hike on Wednesday (9/21/22); real rates would still be negative. It seems that the Fed will be raising rates aggressively in 2022 and may pause sometime in 2023; but forget about any Fed flip. Stock investors may not get relief even in 2023.
INCOME ideas for rising rate environment from LEIBERMAN (Advisors Capital): T-Bills (1-yr was at 4%), energy MLPs (MPLX, SUN, CAPL), REITs (OFI, SBRA, LTC), mREITs (STWD, BXMT), mREIT preferreds (AGNCO, NLY-I), BDCs (ARCC, HTGC, TSLX).
Pg 11, STREETWISE. Workers have gotten used to WORK-FROM-HOME and are resisting demands to return to offices. This is bad for OFFICE REITs which now have high yields (but dividends may be cut), low P/FFO, low occupancy rates. HYBRID office-home plans are the compromise solutions. Attractive office REIT is HIW, but avoid VNO, OPI. In fact, look beyond REITs for income, e.g dividend-stocks (FE, ABBV, CFG, PM, etc).
Disney D23 Expo (really a new products event for DIS) had expensive tickets. Disney event tickets everywhere are also up, and one now pays extra for expedited access to park rides (with Genie+, Lightening Lanes); the bus to/from airport isn’t free anymore. Call this Mickeyflation. Why? Because DIS can. The CEO’s new nickname is Bob Paycheck. HOUGH (journalist-humorist) notes that his family vacation to Disney World had 40% more cost, 20% less fun, and kids’ whining was up by 15%; then there were awful plane rides. Next time, he may just visit local attractions, or stay home.
Supplement, TOP 100 INDEPENDENT ADVISORS has features on picking advisors; mass-affluent clients; ultrawealthy clients; all-services advising. These are followed by a listing of Top 100 RIA firms and Top 100 Independent Advisors
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).