Post by Admin/YBB on Oct 1, 2022 6:00:55 GMT -6
Pg 23, TRADER. The FED wants to break things (as POWELL in a China shop) and stocks are trying but hesitating to make a bottom (and that was an 8-day long failed June-low-test). There may not be much selling left to do as indicated by scant percentages of stocks above 50-dMA or 200-dMA. The fear gauge VIX is above 30 (the bond volatility MOVE rose to crisis level 159 on Wednesday, closed at 142 on Friday). A blow up of the UK PENSION FUNDS was avoided only by a decisive intervention (QE) in the UK bond/gilt market by the BOE. If such problems are happening in the UK, more will also surface elsewhere. The BoA CREDIT-STRESS index is nearing the critical zone. The SP500 fwd P/E of 15 may not be low enough for a bottom yet and downside may be to 3,090-3,300 (-13.8% to -8.0% from Friday’s close).
Russia-Ukraine war and US-China tensions are benefitting the US defense stocks (NOC, LMT, GD, LHX, LDOS) and they are attractive long-term. Critics say that lot of good news is already in these stocks and there is risk if peace breaks out.
Challenger “LULA” da Silva is expected to defeat incumbent Jair BOLSONARO in Oct 2 presidential elections in BRAZIL. Petrobras (PBR; fwd P/E 3 only) has sold off due to feared price controls and other possible restrictions but those are already reflected in its depressed stock price. It is unlikely that Lula will kill the golden goose.
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.
13th , 14th & 15th rate hikes, FOMC 11/2/22+ (75 bps hike possible)
16th & 17th rate hike, FOMC 12/14/22+ (50 bps hike possible) (rate 4.25-4.50%)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -2.92%, SP500 -2.91%, Nasdaq Comp -2.69%, R2000 -0.89%. DJ Transports -0.59%; DJ Utilities -9.2% (wow!). (Rotating spot small-cap R2000 -0.89%) US$ index (spot) -0.90%, oil/WTI futures +0.95%, gold futures +1.04%.
YTD (index changes only), DJIA -20.95%, SP500 -24.77%, Nasdaq Comp -32.40%. (Rotating spot small-cap R2000 -25.86%)
Pg 35: NYSE cumulative (5-day) A/D line fell again; ratio of winners:losers 3:4. (Wednesday rounded to 90% up-volume day, 89.8% for the picky ones; there were no 90% down-volume days by the market closes)
Pg 26, EUROPE. Deutsche Post DHL (DPSGY; fwd P/E 8) is benefitting from the troubles of FedEx/FDX. Its DHL Express unit (air, sea, ground) has 40% market share of cross-border deliveries and has good future prospects. Buy on dips.
Pg 26, EMERGING MARKETS. INDIA’s manufacturing push is working. It is benefiting from the shift away from China. Apple/AAPL has started iPhone production and assembly in India. There are incentives for semis, pharma, auto parts, IT. Import substitution is a big theme.
Pg 27, OPTIONS. The long era of low rates and easy money is over. As the FED rushes to tighten, the US and global markets have reacted negatively. The bullish sentiment over the Summer has soured. But this is a good time for patient long-term investors who can benefit from the general fear in the market. With VIX over 30, sell puts on blue chips you want to buy.
(SP500 VIX 31.62 (high), Nasdaq 100 VXN 36.61 (high), options SKEW 123.59, bond MOVE 141.89 (high) (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 28, COMMODITIES. LITHIUM demand from EVs and electrical grid storage is bullish. It takes several years to bring new supply on line. China is a dominant producer, processor and (battery) manufacturer. ETF is BNE.
Pg 40: A down week in EUROPE (Switzerland +1.17%, Spain -3.01%) and an ugly week in ASIA (India -1.45%, Philippines -7.95%).
TREASURY* 3-mo yield 3.33%, 1-yr 4.05%, 2-yr 4.22%, 5-yr 4.06%, 10-yr 3.83%, 30-yr 3.79%. REAL yields 5-yr 1.92%, 10-yr 1.68%, 30-yr 1.74%.
DOLLAR fell, ^DXY 112.17, -1% (+7% for Q3; pg 45). GOLD rose to $1,672, +1.7% (Handy & Harman spot, Thursday) (pg 47); the gold-miners rose sharply. (^XAU was at 100.91, +7.57% 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 & November 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 S2: COVER STORY, ”(In GUIDE TO WEALTH Supplement) Turbulent Times Are Here to Stay. How to Invest for the Next Decade”. Both STOCKS (-22%) and BONDS (-14%) have tumbled this year. The 60-40 HYBRIDS (VBINX, VSMGX, etc) have been awful but may have better future prospects; even better may be multi-asset 55-35-10 stocks-bonds-alternatives portfolios (FMSDX, VPGDX, etc). For long-term investors, now may be good time to start buying, despite the risks of further downside (hopefully, limited). Leaders of the past may lag (the first may be the last and the last may be the first). Value, cyclicals (JPM, BAC, CVS, UNH, DE, CMG, WING, etc), small/mid-caps may do better. Big themes will include energy transitions (gradual and over time; ICLN, XLE, IEO, etc), renewables, tech-users/utilizers, deglobalization-regionalization-multisourcing (to also benefit several EMs ex-China, EMXC etc). And don’t forget about bonds with meaningful yields now.
Pg 5, UP & DOWN WALL STREET. Alarm bells rang globally on the BOE purchases (QE) of $65 billion pounds of UK bonds/gilts and that was only a few days after the announcement of a QT program. The crisis was forced by the new UK Government’s unfunded tax cuts; that caused solvency problems for the UK PENSION FUNDS that had used complex bond derivatives to fund/manage their liabilities. Can similar problems happen in the euro-zone (with new EU-Italy issues) or the US (possible liquidity freeze in the Treasury market)? Several economists have noted that FED’s rapid tightening (rate hikes + QT) is a policy error when the US and global economies are slowing and Russian-Ukraine war is continuing; the suspected sabotage of Nord Stream 1 and 2 pipelines has added more geopolitical risks.
The CEFs at good discounts: Muni MHF, NMCO, NZF, SBI; preferreds FPF, LDP; multisector bonds TSI; multi-asset GOF, GUG. (Barron’s loves yields and discounts)
Pg 7, STREETWISE. HOUSING PRICES are cooling but that may not lead to a housing crash/bust (like 15 years ago); the house price index declined slightly from June to July, but it was up in double-digits y-o-y. Average 30-yr MORTGAGE RATES rose from 3.1% last year to 6.7% now and monthly mortgage payments for similar borrowed amounts have gone up significantly. That is acting as a big restraint on housing DEMAND by hurting housing AFFORDABILITY. Some changes in housing prices may also be from seasonality (strong in Summer, weak in Winter). The SUPPLY of houses is more stable, and net of obsolescence, there is actually a housing shortage based on demographic trends. Local community restrictions vary widely and also slow new housing developments. The HOMEBUILDER stocks have sold off but are attractive for long-term: DHI, MTH, CCS; manufactured-housing companies CVCO, SKY.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
Russia-Ukraine war and US-China tensions are benefitting the US defense stocks (NOC, LMT, GD, LHX, LDOS) and they are attractive long-term. Critics say that lot of good news is already in these stocks and there is risk if peace breaks out.
Challenger “LULA” da Silva is expected to defeat incumbent Jair BOLSONARO in Oct 2 presidential elections in BRAZIL. Petrobras (PBR; fwd P/E 3 only) has sold off due to feared price controls and other possible restrictions but those are already reflected in its depressed stock price. It is unlikely that Lula will kill the golden goose.
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.
13th , 14th & 15th rate hikes, FOMC 11/2/22+ (75 bps hike possible)
16th & 17th rate hike, FOMC 12/14/22+ (50 bps hike possible) (rate 4.25-4.50%)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -2.92%, SP500 -2.91%, Nasdaq Comp -2.69%, R2000 -0.89%. DJ Transports -0.59%; DJ Utilities -9.2% (wow!). (Rotating spot small-cap R2000 -0.89%) US$ index (spot) -0.90%, oil/WTI futures +0.95%, gold futures +1.04%.
YTD (index changes only), DJIA -20.95%, SP500 -24.77%, Nasdaq Comp -32.40%. (Rotating spot small-cap R2000 -25.86%)
Pg 35: NYSE cumulative (5-day) A/D line fell again; ratio of winners:losers 3:4. (Wednesday rounded to 90% up-volume day, 89.8% for the picky ones; there were no 90% down-volume days by the market closes)
Pg 26, EUROPE. Deutsche Post DHL (DPSGY; fwd P/E 8) is benefitting from the troubles of FedEx/FDX. Its DHL Express unit (air, sea, ground) has 40% market share of cross-border deliveries and has good future prospects. Buy on dips.
Pg 26, EMERGING MARKETS. INDIA’s manufacturing push is working. It is benefiting from the shift away from China. Apple/AAPL has started iPhone production and assembly in India. There are incentives for semis, pharma, auto parts, IT. Import substitution is a big theme.
Pg 27, OPTIONS. The long era of low rates and easy money is over. As the FED rushes to tighten, the US and global markets have reacted negatively. The bullish sentiment over the Summer has soured. But this is a good time for patient long-term investors who can benefit from the general fear in the market. With VIX over 30, sell puts on blue chips you want to buy.
(SP500 VIX 31.62 (high), Nasdaq 100 VXN 36.61 (high), options SKEW 123.59, bond MOVE 141.89 (high) (Yahoo Finance data)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 28, COMMODITIES. LITHIUM demand from EVs and electrical grid storage is bullish. It takes several years to bring new supply on line. China is a dominant producer, processor and (battery) manufacturer. ETF is BNE.
Pg 40: A down week in EUROPE (Switzerland +1.17%, Spain -3.01%) and an ugly week in ASIA (India -1.45%, Philippines -7.95%).
TREASURY* 3-mo yield 3.33%, 1-yr 4.05%, 2-yr 4.22%, 5-yr 4.06%, 10-yr 3.83%, 30-yr 3.79%. REAL yields 5-yr 1.92%, 10-yr 1.68%, 30-yr 1.74%.
DOLLAR fell, ^DXY 112.17, -1% (+7% for Q3; pg 45). GOLD rose to $1,672, +1.7% (Handy & Harman spot, Thursday) (pg 47); the gold-miners rose sharply. (^XAU was at 100.91, +7.57% 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 & November 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 S2: COVER STORY, ”(In GUIDE TO WEALTH Supplement) Turbulent Times Are Here to Stay. How to Invest for the Next Decade”. Both STOCKS (-22%) and BONDS (-14%) have tumbled this year. The 60-40 HYBRIDS (VBINX, VSMGX, etc) have been awful but may have better future prospects; even better may be multi-asset 55-35-10 stocks-bonds-alternatives portfolios (FMSDX, VPGDX, etc). For long-term investors, now may be good time to start buying, despite the risks of further downside (hopefully, limited). Leaders of the past may lag (the first may be the last and the last may be the first). Value, cyclicals (JPM, BAC, CVS, UNH, DE, CMG, WING, etc), small/mid-caps may do better. Big themes will include energy transitions (gradual and over time; ICLN, XLE, IEO, etc), renewables, tech-users/utilizers, deglobalization-regionalization-multisourcing (to also benefit several EMs ex-China, EMXC etc). And don’t forget about bonds with meaningful yields now.
Pg 5, UP & DOWN WALL STREET. Alarm bells rang globally on the BOE purchases (QE) of $65 billion pounds of UK bonds/gilts and that was only a few days after the announcement of a QT program. The crisis was forced by the new UK Government’s unfunded tax cuts; that caused solvency problems for the UK PENSION FUNDS that had used complex bond derivatives to fund/manage their liabilities. Can similar problems happen in the euro-zone (with new EU-Italy issues) or the US (possible liquidity freeze in the Treasury market)? Several economists have noted that FED’s rapid tightening (rate hikes + QT) is a policy error when the US and global economies are slowing and Russian-Ukraine war is continuing; the suspected sabotage of Nord Stream 1 and 2 pipelines has added more geopolitical risks.
The CEFs at good discounts: Muni MHF, NMCO, NZF, SBI; preferreds FPF, LDP; multisector bonds TSI; multi-asset GOF, GUG. (Barron’s loves yields and discounts)
Pg 7, STREETWISE. HOUSING PRICES are cooling but that may not lead to a housing crash/bust (like 15 years ago); the house price index declined slightly from June to July, but it was up in double-digits y-o-y. Average 30-yr MORTGAGE RATES rose from 3.1% last year to 6.7% now and monthly mortgage payments for similar borrowed amounts have gone up significantly. That is acting as a big restraint on housing DEMAND by hurting housing AFFORDABILITY. Some changes in housing prices may also be from seasonality (strong in Summer, weak in Winter). The SUPPLY of houses is more stable, and net of obsolescence, there is actually a housing shortage based on demographic trends. Local community restrictions vary widely and also slow new housing developments. The HOMEBUILDER stocks have sold off but are attractive for long-term: DHI, MTH, CCS; manufactured-housing companies CVCO, SKY.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).