From Barron’s, October 24, 2022 (Part 1, Market Week+)
Oct 22, 2022 4:23:34 GMT -6
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Post by Admin/YBB on Oct 22, 2022 4:23:34 GMT -6
Pg 27, TRADER. A Great week for stocks but they haven’t done much in a month. Stock volatility (VIX) is high, but bond volatility (MOVE) is very high. Stocks may be bottoming if the FED moderated (WSJ). Stocks without profits remain under pressure.
Quality stocks include TGT, XOM, JNJ, MA, KO.
Home Internet company Stary (STRY; early-2022 IPO; offers broadband over wireless, bypassing expensive fiber-optic cables) is slashing jobs to improve its balance sheet. It is burning cash at $50 million/qtr; it takes 3-4 qtrs for new customers to become profitable. It is issuing new stock that is dilutive. Higher rates are making it difficult for startups to raise financing.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
13th , 14th & 15th rate hikes, FOMC 11/2/22+ (75 bps hike possible)
16th , 17th & 18th rate hike, FOMC 12/14/22+ (75 bps hike possible) (rate 4.50-4.75%)
(The WSJ rumors of step-down ahead of the Fed’s quiet period didn’t have time to adjust the CME Data)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +4.89%, SP500 +4.74%, Nasdaq Comp +5.22%, R2000 +3.56%. DJ Transports +1.51%; DJ Utilities +2.05%. (Rotating spot Treasury TLT -5.48%) US$ index (spot) -1.25%, oil/WTI futures -0.65%, gold futures +0.57%.
YTD (index changes only), DJIA -14.46%, SP500 -21.26%, Nasdaq Comp -30.59%. (Rotating spot Treasury TLT -37.13%)
Pg 40: NYSE cumulative (5-day) A/D line rose; ratio of winners:losers 2:1. (Monday was 93% up-volume day; Friday was 80% up-volume day.)
Pg 30, EUROPE. German auto-chips producer (for ICEs, hybrids, EVs) Infineon/IFNNY is attractive.
Pg 30, EMERGING MARKETS. CHINA has spent a lot of money ($800 billion in 147 countries) on its Belt and Road Initiatives (BRI) but most of the projects are losing money; some may be in default. Times are different since 2008 when BRI was launched. Future BRIs will be joint projects between China and host countries. China doesn’t share information on its BRI lending.
Pg 31, OPTIONS. Recommended are selling puts on stocks one would like to buy at lower prices.
(SP500 VIX 29.69 (high), Nasdaq 100 VXN 35.25 (high), options SKEW 116.19, bond MOVE 156.95 (high) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 32, COMMODITIES. PALLADIUM supply is tight due to sanctions on Russia. Prices have been very volatile as it is thinly traded; a golden-cross is ahead. The ICE and hybrid cars will sustain demand.
Pg 45: A good week in EUROPE (Netherlands +5.27%, Denmark -0.82%) and a down week in ASIA (Malaysia +3.58%, Singapore -2.52%).
TREASURY* 3-mo yield 4.09%, 1-yr 4.58%, 2-yr 4.49%, 5-yr 4.34%, 10-yr 4.21%, 30-yr 4.33%. REAL yields 5-yr 1.65%, 10-yr 1.69%, 30-yr 1.82%.
DOLLAR fell, ^DXY 111.8, -1.25% (pg 50). GOLD rose +1.2% (Handy & Harman spot, Thursday) (pg 52); the gold-miners were up. (^XAU was at 103.69, +0.35% 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 & November 1 (Nov 1 estimates 6.47-8.02% based on fixed rates of 0-1.5%).
*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/marketable-securities/
(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, ”Big Oil’s Surprisingly Bright Future. The Case for BP and XOM”. Crude OIL has been soft, but oil companies are doing well (BP, XOM, CVX, COP, SHEL, TTE, EQNR). Prices above $80 support strong cash flows and profits. They are also investing in RENEWABLES. But investors remain skeptical.
Pg 5, UP & DOWN WALL STREET. JAPAN has bigger problems than the UK. The BOJ has been intervening in the currency markets by selling Treasuries and that has led to higher Treasury yields. The is no coordination among the central banks. The events in the UK have also been dramatic – the BOE interventions; PM Truss’ quick resignation; new leader to be selected in a week. Some now guess that the FED may hike rate by 75 bps in November but only 25-50 bps in December (a step-back but not pause, WSJ). It was a good week for the US stocks, but bonds continued to suffer; m-mkt funds are now attractive.
For income, mentioned are T-Bills, corporates, HY, munis.
Pg 7, STREETWISE. SEMIS (index ^SOX, fwd P/E 14; ETF SOXX) have sunk -42% YTD. There was demand but that couldn’t be met due to supply-chain issues. Now, rising RATES threaten recession. Earnings estimates haven’t bottomed but semis may be attractive at these depressed levels (LCRX, AMAT, AMSL, MXL, MTSI). The US is pushing for alliance among it and Taiwan, S Korea, Japan, Europe to exclude China from advanced chips. There are US-China and China-Taiwan tensions.
EXTRA. OFF-PRICE retailers (TJX, ROST, BURL, etc) are expensive now – these buy excess inventories from regular stores (M, DDS, JWN, KSS, etc) and sell at discount. Direct-to-consumer online retailers (ONON, CPRI, Michael Kors, DECK, GIL, etc) are more attractive.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
Quality stocks include TGT, XOM, JNJ, MA, KO.
Home Internet company Stary (STRY; early-2022 IPO; offers broadband over wireless, bypassing expensive fiber-optic cables) is slashing jobs to improve its balance sheet. It is burning cash at $50 million/qtr; it takes 3-4 qtrs for new customers to become profitable. It is issuing new stock that is dilutive. Higher rates are making it difficult for startups to raise financing.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
13th , 14th & 15th rate hikes, FOMC 11/2/22+ (75 bps hike possible)
16th , 17th & 18th rate hike, FOMC 12/14/22+ (75 bps hike possible) (rate 4.50-4.75%)
(The WSJ rumors of step-down ahead of the Fed’s quiet period didn’t have time to adjust the CME Data)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +4.89%, SP500 +4.74%, Nasdaq Comp +5.22%, R2000 +3.56%. DJ Transports +1.51%; DJ Utilities +2.05%. (Rotating spot Treasury TLT -5.48%) US$ index (spot) -1.25%, oil/WTI futures -0.65%, gold futures +0.57%.
YTD (index changes only), DJIA -14.46%, SP500 -21.26%, Nasdaq Comp -30.59%. (Rotating spot Treasury TLT -37.13%)
Pg 40: NYSE cumulative (5-day) A/D line rose; ratio of winners:losers 2:1. (Monday was 93% up-volume day; Friday was 80% up-volume day.)
Pg 30, EUROPE. German auto-chips producer (for ICEs, hybrids, EVs) Infineon/IFNNY is attractive.
Pg 30, EMERGING MARKETS. CHINA has spent a lot of money ($800 billion in 147 countries) on its Belt and Road Initiatives (BRI) but most of the projects are losing money; some may be in default. Times are different since 2008 when BRI was launched. Future BRIs will be joint projects between China and host countries. China doesn’t share information on its BRI lending.
Pg 31, OPTIONS. Recommended are selling puts on stocks one would like to buy at lower prices.
(SP500 VIX 29.69 (high), Nasdaq 100 VXN 35.25 (high), options SKEW 116.19, bond MOVE 156.95 (high) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 32, COMMODITIES. PALLADIUM supply is tight due to sanctions on Russia. Prices have been very volatile as it is thinly traded; a golden-cross is ahead. The ICE and hybrid cars will sustain demand.
Pg 45: A good week in EUROPE (Netherlands +5.27%, Denmark -0.82%) and a down week in ASIA (Malaysia +3.58%, Singapore -2.52%).
TREASURY* 3-mo yield 4.09%, 1-yr 4.58%, 2-yr 4.49%, 5-yr 4.34%, 10-yr 4.21%, 30-yr 4.33%. REAL yields 5-yr 1.65%, 10-yr 1.69%, 30-yr 1.82%.
DOLLAR fell, ^DXY 111.8, -1.25% (pg 50). GOLD rose +1.2% (Handy & Harman spot, Thursday) (pg 52); the gold-miners were up. (^XAU was at 103.69, +0.35% 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 & November 1 (Nov 1 estimates 6.47-8.02% based on fixed rates of 0-1.5%).
*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/marketable-securities/
(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, ”Big Oil’s Surprisingly Bright Future. The Case for BP and XOM”. Crude OIL has been soft, but oil companies are doing well (BP, XOM, CVX, COP, SHEL, TTE, EQNR). Prices above $80 support strong cash flows and profits. They are also investing in RENEWABLES. But investors remain skeptical.
Pg 5, UP & DOWN WALL STREET. JAPAN has bigger problems than the UK. The BOJ has been intervening in the currency markets by selling Treasuries and that has led to higher Treasury yields. The is no coordination among the central banks. The events in the UK have also been dramatic – the BOE interventions; PM Truss’ quick resignation; new leader to be selected in a week. Some now guess that the FED may hike rate by 75 bps in November but only 25-50 bps in December (a step-back but not pause, WSJ). It was a good week for the US stocks, but bonds continued to suffer; m-mkt funds are now attractive.
For income, mentioned are T-Bills, corporates, HY, munis.
Pg 7, STREETWISE. SEMIS (index ^SOX, fwd P/E 14; ETF SOXX) have sunk -42% YTD. There was demand but that couldn’t be met due to supply-chain issues. Now, rising RATES threaten recession. Earnings estimates haven’t bottomed but semis may be attractive at these depressed levels (LCRX, AMAT, AMSL, MXL, MTSI). The US is pushing for alliance among it and Taiwan, S Korea, Japan, Europe to exclude China from advanced chips. There are US-China and China-Taiwan tensions.
EXTRA. OFF-PRICE retailers (TJX, ROST, BURL, etc) are expensive now – these buy excess inventories from regular stores (M, DDS, JWN, KSS, etc) and sell at discount. Direct-to-consumer online retailers (ONON, CPRI, Michael Kors, DECK, GIL, etc) are more attractive.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).