Post by Admin/YBB on Jan 7, 2023 5:33:42 GMT -6
Pg 23, TRADER. This stock bounce from October/November will face the reality test of bad Q4 EARNINGS SEASON starting on Friday; the CPI is also due on Thursday. Energy and industrials may show the best profits, while materials, communications, consumer-discretionary, tech the worst. For 2022, earnings grew +5.6% ($219.80) but revenues grew +11.2%, so there were pressures on profit MARGINS. For 2023, earnings may range from down -2.7% ($214) to up +4.4% ($229.52) and margins will remain under pressure.
Schwab/SCHW had a poor 2022/H1, good 2022/H2, a flat 2022, but may have a better 2023.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
1st rate hike of 2023, FOMC 2/1/23+ 25 bps
2nd rate hike, FOMC 3/22/23+ 25 bps (rate 5.00-5.25%; likely cycle peak)
FOMC 5/3/23+ Hold
FOMC 6/14/23+ Hold
Hold continues and then a cut is indicated at FOMC 12/13/23.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +1.46%, SP500 +1.45%, Nasdaq Comp +0.98%, R2000 +1.79%. DJ Transports +3.62%; DJ Utilities +1.43%. (Rotating spot bank KBE +2.44%) US$ index (spot) +0.39%, oil/WTI futures -8.09%, gold futures +2.45%.
52-WK (index changes only), DJIA -7.18%, SP500 -16.72%, Nasdaq Comp -29.24%. (Rotating spot bank KBE -21.98%) (Note shift to 52-wk until YTD becomes meaningful again in a few weeks)
Pg 35: NYSE cumulative (5-day) A/D line rose; ratio of winners:losers 7:2. (Wednesday was 87% upside-volume day; Friday was 84% (only) upside-volume day)
Pg 26, EUROPEAN TRADER. UK food/healthcare service accessories/equipment distributor Bunzl (BZLFY; yield 2.1%; fwd P/E 15) is inflation resistant; it is growing via acquisitions.
Pg 26, EMERGING MARKETS. BRAZILIAN BONDS (10-yr at 13%) may be better than stocks. Since elections, the stocks are down, EWZ -17%; the real is down -4%. President LULA has formed an inclusive government but investors were disappointed by some key appointments; he also favors investments in state enterprises. Inflation is moderating and rate cuts may be coming. Not much will happen until the Carnivals are over. Brazil will also be impacted by China reopening.
Pg 28, OPTIONS. Options (calls, puts) allow market exposure with lower capital commitments.
(SP500 VIX 21.13 (high), Nasdaq 100 VXN 26.96 (high), options SKEW 113.86, bond MOVE 113.87) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 29, COMMODITIES. This GOLD rally may have legs as dollar is weakening, the Fed rate hikes are moderating, and economic uncertainties are high. Targets for 2023 are 2,010-2,100-3,000.
Pg 40: A great week in EUROPE (Netherlands +7.10%, Norway -0.21%) and a good week in ASIA (China +7.29%, Indonesia -2.77%).
TREASURY* 3-mo yield 4.67%, 1-yr 4.71%, 2-yr 4.24%, 5-yr 3.69%, 10-yr 3.55%, 30-yr 3.67%. REAL yields 5-yr 1.51%, 10-yr 1.34%, 30-yr 1.43%.
DOLLAR rose, ^DXY 103.91, +0.4% (pg 42). GOLD rose to $1,852, +2.2% (Handy & Harman spot, Thursday; pg 44); the gold-miners rallied. (^XAU was at 132.04, +9.25% 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 16: COVER STORY, “TECH’s Bill is Coming Due. Investors Aren’t the only ones who will Pay”. Techs bet wrongly on post-pandemic recovery by boosting hiring and capex but then came the FED rate hikes and CHINA Covid hiccups. Now they are slashing payrolls and cutting costs. The Nasdaq slumped, the IPOs and venture-capital dried up. Due to uncertainties about RECESSION and GEOPOLITICS, the techs have yet to bottom. RESHORING should eventually reduce future supply-chain bottlenecks, but costs will rise and margins will shrink. Pay more attention to GAAP earnings (instead, the techs love non-GAAP or creative earnings) as investors focus on profitable growth. 2023 may be a turnaround year for the techs.
Pg 5, UP AND DOWN WALL STREET. The HOUSE SPEAKER drama (McCarthy was finally elected in the 15th round) is just a prelude to the DEBT-CEILING fight later in Summer or Fall (a replay of 2011?). While most agree on the goal of deficit reduction, concrete steps needed (tax hikes, spending cuts, reducing entitlements) cause widespread disagreements. Debt-servicing costs will also go up with higher rates. Treasury default or too-creative workarounds may jeopardize the status of DOLLAR as a reserve currency at a time when many countries are already looking into dollar alternatives.
Markets don’t believe that the FED is really serious about 2% average inflation target. The jobs report wasn’t strong. The CME FedWatch is showing 2 more 25-bps hikes to 4.75-5.00% terminal fed fund range. So, the markets expect weak H1, Fed PIVOT in mid-2023, and strong rebound in H2. The CPI next week will be followed closely.
Pg 7, STREETWISE. BIOTECHs haven’t done well. Several have changed their names: Respira to Onovia, CyTRx to LadRx/LADX, Bone Therapeutics to Biosenic, etc. Meacham (BAC) now likes PHARMA Lilly/LLY and Merck/MRK over Pfizer/PFE.
Raymond James remains bullish on WTIC crude with target $100-110 and on shale producer Devon/DVN.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
Schwab/SCHW had a poor 2022/H1, good 2022/H2, a flat 2022, but may have a better 2023.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
1st rate hike of 2023, FOMC 2/1/23+ 25 bps
2nd rate hike, FOMC 3/22/23+ 25 bps (rate 5.00-5.25%; likely cycle peak)
FOMC 5/3/23+ Hold
FOMC 6/14/23+ Hold
Hold continues and then a cut is indicated at FOMC 12/13/23.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +1.46%, SP500 +1.45%, Nasdaq Comp +0.98%, R2000 +1.79%. DJ Transports +3.62%; DJ Utilities +1.43%. (Rotating spot bank KBE +2.44%) US$ index (spot) +0.39%, oil/WTI futures -8.09%, gold futures +2.45%.
52-WK (index changes only), DJIA -7.18%, SP500 -16.72%, Nasdaq Comp -29.24%. (Rotating spot bank KBE -21.98%) (Note shift to 52-wk until YTD becomes meaningful again in a few weeks)
Pg 35: NYSE cumulative (5-day) A/D line rose; ratio of winners:losers 7:2. (Wednesday was 87% upside-volume day; Friday was 84% (only) upside-volume day)
Pg 26, EUROPEAN TRADER. UK food/healthcare service accessories/equipment distributor Bunzl (BZLFY; yield 2.1%; fwd P/E 15) is inflation resistant; it is growing via acquisitions.
Pg 26, EMERGING MARKETS. BRAZILIAN BONDS (10-yr at 13%) may be better than stocks. Since elections, the stocks are down, EWZ -17%; the real is down -4%. President LULA has formed an inclusive government but investors were disappointed by some key appointments; he also favors investments in state enterprises. Inflation is moderating and rate cuts may be coming. Not much will happen until the Carnivals are over. Brazil will also be impacted by China reopening.
Pg 28, OPTIONS. Options (calls, puts) allow market exposure with lower capital commitments.
(SP500 VIX 21.13 (high), Nasdaq 100 VXN 26.96 (high), options SKEW 113.86, bond MOVE 113.87) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 29, COMMODITIES. This GOLD rally may have legs as dollar is weakening, the Fed rate hikes are moderating, and economic uncertainties are high. Targets for 2023 are 2,010-2,100-3,000.
Pg 40: A great week in EUROPE (Netherlands +7.10%, Norway -0.21%) and a good week in ASIA (China +7.29%, Indonesia -2.77%).
TREASURY* 3-mo yield 4.67%, 1-yr 4.71%, 2-yr 4.24%, 5-yr 3.69%, 10-yr 3.55%, 30-yr 3.67%. REAL yields 5-yr 1.51%, 10-yr 1.34%, 30-yr 1.43%.
DOLLAR rose, ^DXY 103.91, +0.4% (pg 42). GOLD rose to $1,852, +2.2% (Handy & Harman spot, Thursday; pg 44); the gold-miners rallied. (^XAU was at 132.04, +9.25% 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 16: COVER STORY, “TECH’s Bill is Coming Due. Investors Aren’t the only ones who will Pay”. Techs bet wrongly on post-pandemic recovery by boosting hiring and capex but then came the FED rate hikes and CHINA Covid hiccups. Now they are slashing payrolls and cutting costs. The Nasdaq slumped, the IPOs and venture-capital dried up. Due to uncertainties about RECESSION and GEOPOLITICS, the techs have yet to bottom. RESHORING should eventually reduce future supply-chain bottlenecks, but costs will rise and margins will shrink. Pay more attention to GAAP earnings (instead, the techs love non-GAAP or creative earnings) as investors focus on profitable growth. 2023 may be a turnaround year for the techs.
Pg 5, UP AND DOWN WALL STREET. The HOUSE SPEAKER drama (McCarthy was finally elected in the 15th round) is just a prelude to the DEBT-CEILING fight later in Summer or Fall (a replay of 2011?). While most agree on the goal of deficit reduction, concrete steps needed (tax hikes, spending cuts, reducing entitlements) cause widespread disagreements. Debt-servicing costs will also go up with higher rates. Treasury default or too-creative workarounds may jeopardize the status of DOLLAR as a reserve currency at a time when many countries are already looking into dollar alternatives.
Markets don’t believe that the FED is really serious about 2% average inflation target. The jobs report wasn’t strong. The CME FedWatch is showing 2 more 25-bps hikes to 4.75-5.00% terminal fed fund range. So, the markets expect weak H1, Fed PIVOT in mid-2023, and strong rebound in H2. The CPI next week will be followed closely.
Pg 7, STREETWISE. BIOTECHs haven’t done well. Several have changed their names: Respira to Onovia, CyTRx to LadRx/LADX, Bone Therapeutics to Biosenic, etc. Meacham (BAC) now likes PHARMA Lilly/LLY and Merck/MRK over Pfizer/PFE.
Raymond James remains bullish on WTIC crude with target $100-110 and on shale producer Devon/DVN.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).