Post by Admin/YBB on Nov 26, 2022 6:35:35 GMT -6
Pg 29, TRADER. CASH has been king. But after a difficult 2023/H1 for stocks, there may be a good rebound in 2013/H2. Attractive now may be healthcare (XLV) and consumer-staples (XLP) but switch into cyclicals later. Also take advantage of tax-loss harvesting (TLH) by the yearend.
Attractive PREFERREDs include JPM-L, WFC-Z, T-C, F-D, LNC-D, BDC PSEC-A; ETF is PFF.
CRYPTOS may be bottoming after a spectacular collapse of FTX – its aftermath hasn’t caused significant aftershocks (yet). Bitcoin seems to have stabilized around $16,000 and may trade in $14,000-18,000 range for a while. Coinbase/COIN (the US-based regulated crypto exchange, broker-dealer, custodian) may have bottomed at $40. Cryptos produce extreme views/opinions, from Cathie WOOD’s (ARK) $1 million projection for Bitcoin by 2030 (elementary math will show that as 67.7% annualized return over 8 years) to Charlie MUNGER (BRK) who has called them a combination of fraud and delusion. The reality may be somewhere in between.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
16th & 17th rate hikes, FOMC 12/14/22+ (50 bps hike possible) (rate 4.25-4.50%)
Good riddance, 2022
1st & 2nd rate hikes of 2023, FOMC 2/1/23+ (50 bps hike possible)
3rd rate hike, FOMC 3/22/23+ 25 bps (rate 5.00-5.25%; likely cycle peak)
Remarkably, no change from last week.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +1.78%, SP500 +1.53%, Nasdaq Comp +0.72%, R2000 +1.05%. DJ Transports +1.32%; DJ Utilities +3.48%. (Rotating spot healthcare XLV +1.92%) US$ index (spot) -0.82%, oil/WTI futures -4.98%, gold futures +0.37%.
YTD (index changes only), DJIA -5.48%, SP500 -15.53%, Nasdaq Comp -28.24%. (Rotating spot healthcare XLV -2.65%)
Pg 42: NYSE cumulative (5-day) A/D line rose (it bottomed in October); ratio of winners:losers 2:1.
Pg 32, EUROPE. GERMAN consumer demand has been strong despite Russia-Ukraine war, high energy costs, inflation, the ECB tightening, Covid in China; Q3 GDP growth of +0.3% was better than expected. A mild RECESSION is still expected, but it seems that Germany, Europe’s largest economy accounting for 33% of the euro-zone, will weather these difficult times.
Pg 32, EMERGING MARKETS. The OIL/GAS PRICE-CAPs by the G7, EU and UK may be just a lot of bark, but not bite. Negotiations continue on price LEVELS ($65-70) and when to TRIGGER them – right away or after months-long violations? PUTIN is laughing all the way to his missile launchers (not humorous but sadly true). Recall the early posturing by the Western world about total ban on Russian oil by December and it was counting on its shipping insurers for enforcement (i.e. high insurance rates or no insurance at all). The US came up with its creative late idea of letting Russia sell as much oil/gas as it wants but only with Western price-caps; countries can then buy Russian oil, refine it and export the refined products at profit. Oil prices have fallen as the market saw these actions as relaxation of SANCTIONS. As for Russia, it will just shift its oil/gas exports to ASIA where domestic energy consumption is very high (and Asian countries may not care for exporting the refined oil products). The global shipping will require some time to make adjustments for these massive logistics shifts (by changing shipping routes, ship types, developing new shipping rates).
Pg 33, OPTIONS. CHINA has growing Covid epidemic again and that has led to widespread lockdowns/shutdowns and massive quarantine camps. Global supply-chains (involving China) have been impacted. There are other global issues such as Russia-Ukraine war, Fed tightening, etc. But these issues won’t last forever. Watch for China reopening and turnaround in 2023. Recommended are calls on China large-cap ETF FXI that has rebounded some already.
(SP500 VIX 20.50, Nasdaq 100 VXN 26.79 (high), options SKEW 128.11 (rising), bond MOVE 129.60 (high)) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 34, COMMODITIES. There has been an epic selloff in COFFEE (-34% since 8/25/22 high) due to collapsing Vietnamese (#2 producer) currency (that motivates producers there to sell more coffee for more local currency) and optimistic outlook for Brazilian coffee crop. But this may be reversing soon as the supply-demand situation will just be returning to normal (not oversupply); play potential rebound with futures or the ETN JO. Risks include weather, currencies, geopolitics.
Pg 47: A good week in EUROPE (Greece +3.36%, Spain +3.23%, Italy +0.30%) (all European markets were positive) and an up week in ASIA (Malaysia +3.58%, China -1.88%).
TREASURY* 3-mo yield 4.41%, 1-yr 4.76%, 2-yr 4.42%, 5-yr 3.85%, 10-yr 3.68%, 30-yr 3.74%. REAL yields 5-yr 1.51%, 10-yr 1.36%, 30-yr 1.42%.
DOLLAR fell, ^DXY 106.06, -0.85% (pg 54). GOLD fell a bit (Handy & Harman spot, Thursday; pg 56); the gold-miners rose. (^XAU was at 118.26, +3.92% for the week)
Top FDIC insured savings deposit rates** (This feature has been discontinued)
US SAVINGS I-Bonds^, current rate 6.89% (annualized); fixed/base rate +0.40%. 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/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 18: COVER STORY, ”The QUANTUM COMPUTING Revolution is Coming”. A radical shift in computing is coming – quantum computing that is still in the R&D stages. This year’s Nobel Prize for physics was for quantum information science (“quantum entanglement” in particular). Quantum computers use advanced OPTICS, PHOTONICS and TRAPPED-ION concepts; they will require supercooling. Instead of binary-bits (with 0 and 1 states), they use QBITs (quantum-bits) with 0, 1 and hybrid/probabilistic states. Rather than standalones, they will serve as supplements for conventional computers. Quantum computing will be very suitable for very large multivariate problems by greatly accelerating PARALLEL COMPUTING. As error/fault rates will be high, enormous redundancies will be needed to ensure accuracy. Newer companies in this area (most became public via SPC mergers) include IONQ, ARQQ, QBTS, QUBT, RGTI, etc; ETF QTUM. Big techs active in R&D include IBM, INTC, AAPL, AMZN, GOOGL, MSFT, etc. There are 250+ startups (the largest are PsiQuantum, Xanadu, IQM). Potential application will be in biopharma, chemicals, transportation, EVs, financials, etc. There may be adverse impacts on CYBERSECURITY as bad actors will exploit these new tools for hacking. Also, beware of the cycle of overhype and disappointments associated with several new technologies (AMARA’s Law).
Pg 5, UP & DOWN WALL STREET. BEAR market over? At least the worst may be behind. Both stocks and bonds have shown strength; the 10-yr is just ignoring the FED. The DJIA is only 5.5% away from its high (it is closer on TR basis, and so are the dividend ETFs SCHD, VYM, NOBL). The SP500 is near its May level and has fwd P/E 17; bulls see 4,800-5,000 in 2023 (bears see pain first).
Beware of high-yielding CONVERTIBLEs (many are “busted”, i.e. trading only on their bond value). However, some convertibles may be better than their company stocks, if the company survives. Consider funds PACIX, ETF CWB. (convertible funds may have growth or income objectives)
Strange that OIL prices have declined (near YTD low; peaked in March) but ENERGY STOCKS (ETFs XLE, IYE) are up (near all-time high) – that divergence cannot go on forever. One explanation is that energy companies (SHEL, XOM, etc) remain very profitable even at these lower oil prices.
Joe ROSENBERG (89; retired as CIO/CIS in 2018 from Loews/L) now likes GOOGL and PFE.
Pg 7, STREETWISE. Issues with Disney/DIS are deeper than its CEO (a sudden change from Chapek to Igor again). Once hot streaming is now producing large losses (the initial catchup with NFLX was fast, but now the realities of high costs and lower profitability of streaming). Parks are profitable again. Some recent cost cutting moves have generated complaints from staff and public (no more free bus to/from airport; extra payments for priority access to rides, etc) and may be reversed or modified. Stock is down sharply but seems fair value at the current levels. (Not mentioned was that Barron’s has been bullish/positive on DIS in multiple stories, most recently in 09/2022)
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
Attractive PREFERREDs include JPM-L, WFC-Z, T-C, F-D, LNC-D, BDC PSEC-A; ETF is PFF.
CRYPTOS may be bottoming after a spectacular collapse of FTX – its aftermath hasn’t caused significant aftershocks (yet). Bitcoin seems to have stabilized around $16,000 and may trade in $14,000-18,000 range for a while. Coinbase/COIN (the US-based regulated crypto exchange, broker-dealer, custodian) may have bottomed at $40. Cryptos produce extreme views/opinions, from Cathie WOOD’s (ARK) $1 million projection for Bitcoin by 2030 (elementary math will show that as 67.7% annualized return over 8 years) to Charlie MUNGER (BRK) who has called them a combination of fraud and delusion. The reality may be somewhere in between.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
16th & 17th rate hikes, FOMC 12/14/22+ (50 bps hike possible) (rate 4.25-4.50%)
Good riddance, 2022
1st & 2nd rate hikes of 2023, FOMC 2/1/23+ (50 bps hike possible)
3rd rate hike, FOMC 3/22/23+ 25 bps (rate 5.00-5.25%; likely cycle peak)
Remarkably, no change from last week.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +1.78%, SP500 +1.53%, Nasdaq Comp +0.72%, R2000 +1.05%. DJ Transports +1.32%; DJ Utilities +3.48%. (Rotating spot healthcare XLV +1.92%) US$ index (spot) -0.82%, oil/WTI futures -4.98%, gold futures +0.37%.
YTD (index changes only), DJIA -5.48%, SP500 -15.53%, Nasdaq Comp -28.24%. (Rotating spot healthcare XLV -2.65%)
Pg 42: NYSE cumulative (5-day) A/D line rose (it bottomed in October); ratio of winners:losers 2:1.
Pg 32, EUROPE. GERMAN consumer demand has been strong despite Russia-Ukraine war, high energy costs, inflation, the ECB tightening, Covid in China; Q3 GDP growth of +0.3% was better than expected. A mild RECESSION is still expected, but it seems that Germany, Europe’s largest economy accounting for 33% of the euro-zone, will weather these difficult times.
Pg 32, EMERGING MARKETS. The OIL/GAS PRICE-CAPs by the G7, EU and UK may be just a lot of bark, but not bite. Negotiations continue on price LEVELS ($65-70) and when to TRIGGER them – right away or after months-long violations? PUTIN is laughing all the way to his missile launchers (not humorous but sadly true). Recall the early posturing by the Western world about total ban on Russian oil by December and it was counting on its shipping insurers for enforcement (i.e. high insurance rates or no insurance at all). The US came up with its creative late idea of letting Russia sell as much oil/gas as it wants but only with Western price-caps; countries can then buy Russian oil, refine it and export the refined products at profit. Oil prices have fallen as the market saw these actions as relaxation of SANCTIONS. As for Russia, it will just shift its oil/gas exports to ASIA where domestic energy consumption is very high (and Asian countries may not care for exporting the refined oil products). The global shipping will require some time to make adjustments for these massive logistics shifts (by changing shipping routes, ship types, developing new shipping rates).
Pg 33, OPTIONS. CHINA has growing Covid epidemic again and that has led to widespread lockdowns/shutdowns and massive quarantine camps. Global supply-chains (involving China) have been impacted. There are other global issues such as Russia-Ukraine war, Fed tightening, etc. But these issues won’t last forever. Watch for China reopening and turnaround in 2023. Recommended are calls on China large-cap ETF FXI that has rebounded some already.
(SP500 VIX 20.50, Nasdaq 100 VXN 26.79 (high), options SKEW 128.11 (rising), bond MOVE 129.60 (high)) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 34, COMMODITIES. There has been an epic selloff in COFFEE (-34% since 8/25/22 high) due to collapsing Vietnamese (#2 producer) currency (that motivates producers there to sell more coffee for more local currency) and optimistic outlook for Brazilian coffee crop. But this may be reversing soon as the supply-demand situation will just be returning to normal (not oversupply); play potential rebound with futures or the ETN JO. Risks include weather, currencies, geopolitics.
Pg 47: A good week in EUROPE (Greece +3.36%, Spain +3.23%, Italy +0.30%) (all European markets were positive) and an up week in ASIA (Malaysia +3.58%, China -1.88%).
TREASURY* 3-mo yield 4.41%, 1-yr 4.76%, 2-yr 4.42%, 5-yr 3.85%, 10-yr 3.68%, 30-yr 3.74%. REAL yields 5-yr 1.51%, 10-yr 1.36%, 30-yr 1.42%.
DOLLAR fell, ^DXY 106.06, -0.85% (pg 54). GOLD fell a bit (Handy & Harman spot, Thursday; pg 56); the gold-miners rose. (^XAU was at 118.26, +3.92% for the week)
Top FDIC insured savings deposit rates** (This feature has been discontinued)
US SAVINGS I-Bonds^, current rate 6.89% (annualized); fixed/base rate +0.40%. 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/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 18: COVER STORY, ”The QUANTUM COMPUTING Revolution is Coming”. A radical shift in computing is coming – quantum computing that is still in the R&D stages. This year’s Nobel Prize for physics was for quantum information science (“quantum entanglement” in particular). Quantum computers use advanced OPTICS, PHOTONICS and TRAPPED-ION concepts; they will require supercooling. Instead of binary-bits (with 0 and 1 states), they use QBITs (quantum-bits) with 0, 1 and hybrid/probabilistic states. Rather than standalones, they will serve as supplements for conventional computers. Quantum computing will be very suitable for very large multivariate problems by greatly accelerating PARALLEL COMPUTING. As error/fault rates will be high, enormous redundancies will be needed to ensure accuracy. Newer companies in this area (most became public via SPC mergers) include IONQ, ARQQ, QBTS, QUBT, RGTI, etc; ETF QTUM. Big techs active in R&D include IBM, INTC, AAPL, AMZN, GOOGL, MSFT, etc. There are 250+ startups (the largest are PsiQuantum, Xanadu, IQM). Potential application will be in biopharma, chemicals, transportation, EVs, financials, etc. There may be adverse impacts on CYBERSECURITY as bad actors will exploit these new tools for hacking. Also, beware of the cycle of overhype and disappointments associated with several new technologies (AMARA’s Law).
Pg 5, UP & DOWN WALL STREET. BEAR market over? At least the worst may be behind. Both stocks and bonds have shown strength; the 10-yr is just ignoring the FED. The DJIA is only 5.5% away from its high (it is closer on TR basis, and so are the dividend ETFs SCHD, VYM, NOBL). The SP500 is near its May level and has fwd P/E 17; bulls see 4,800-5,000 in 2023 (bears see pain first).
Beware of high-yielding CONVERTIBLEs (many are “busted”, i.e. trading only on their bond value). However, some convertibles may be better than their company stocks, if the company survives. Consider funds PACIX, ETF CWB. (convertible funds may have growth or income objectives)
Strange that OIL prices have declined (near YTD low; peaked in March) but ENERGY STOCKS (ETFs XLE, IYE) are up (near all-time high) – that divergence cannot go on forever. One explanation is that energy companies (SHEL, XOM, etc) remain very profitable even at these lower oil prices.
Joe ROSENBERG (89; retired as CIO/CIS in 2018 from Loews/L) now likes GOOGL and PFE.
Pg 7, STREETWISE. Issues with Disney/DIS are deeper than its CEO (a sudden change from Chapek to Igor again). Once hot streaming is now producing large losses (the initial catchup with NFLX was fast, but now the realities of high costs and lower profitability of streaming). Parks are profitable again. Some recent cost cutting moves have generated complaints from staff and public (no more free bus to/from airport; extra payments for priority access to rides, etc) and may be reversed or modified. Stock is down sharply but seems fair value at the current levels. (Not mentioned was that Barron’s has been bullish/positive on DIS in multiple stories, most recently in 09/2022)
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).