Post by Admin/YBB on Jan 14, 2023 8:03:07 GMT -6
Pg 10-11. The BOJ policy decision on WEDNESDAY.
REVIEW. The meme crowd latched on to BBBY despite warnings about bankruptcy by the company itself; BBBY is in talks with its creditors. It could be that the meme crowd is the only remaining vs shorts (52% of float) as institutions fled. There are no signs of short squeeze yet.
PREVIEW. Samsung Electronics is the new #1 in the US PATENTS, IBM is now #2 after 29 years; IBM patents fell sharply because it focused more on AI, cloud-computing, quantum-computing, security. The US patents issued were the lowest since 2018. However, the number of patent applications were at an all-time record and there was a backlog of 700,000 patents pending.
DATA THIS WEEK. PPI (+6.8%, core +5.4%), Fed beige book on 12 Fed districts, retail sales, housing market index, capacity utilization, industrial production, business inventories on WEDNESDAY; housing starts on THURSDAY; existing home sales on FRIDAY.
CLOSED. The US stock and bond markets are closed on MONDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Small-cap Endava (DAVA; fwd P/E 22.3; PEG < 1; stock is down sharply; provides IT software and infrastructure support for move to cloud; recession resistant; has pricing power; pg 15).
BEARISH.
Pg 12: Who’s Who at the Fed and FOMC. The basic structure is explained. Most important are the Fed Chair POWELL, Fed Vice Chair BRAINARD, FOMC Vice Chair and NY Fed President WILLIAMS. At the FOMC, all 7 Fed Governors vote (full strength after several years); only 5 of the 12 Fed President vote on a rotating annual basis. So, pay attention to who is talking in the media.
Pg 30: The US regulators are looking at private crypto firm/exchange BINANCE led by “CZ” that has been blamed for triggering the collapse of FTX-ALAMEDA complex. This entire article focuses on a network of Binance Angels/Ambassadors who are volunteers in a program run by Binance and who hope to be employed by Binance one day. The recruitment videos for the Angels program allude to this employment possibility although very few (5%?) Angels get hired. There is a training and probation period before they become official Angels. While unpaid, these Angels get several benefits such as trading discounts, free Binance souvenirs and online classes; they also have obligations to promote Binance in social-media (some run channels/groups), manage customer relations (using scripts provided by Binance) and plan and participate in local meetings and events; expectations are for 12+ hours/week of time commitments. There are quarterly evaluations and Angels may be terminated for poor performance. It is unclear if some labor laws are being violated by Binance in using this free labor pool. As Binance is not a US company, and many of these Angles are overseas, the US labor laws obviously don’t apply; it does have a US partner/affiliate called Binance-US that has a parallel US Angels program. The UN-ILO has only guidelines for fair international labor practices. There are concerns about for-profit companies exploiting unpaid labor under false promises of jobs. Binance says that it has only cyber presence and claims not be located anywhere although it has offices in Dubai, Paris, etc. But Binance is the largest global crypto exchange handling crypto transactions of $65 billion/day and competes with the US companies such Coinbase/COIN and several other foreign crypto companies.
Pg 33, TECH TRADER. A divided Congress may not provide relief for tech regulations. The Supremes act on Section 230 in early-2023; the DOJ vs Alphabet/GOOGL on search is in Fall, 2023; the FTC has antitrust case against Amazon/AMZN; new privacy rules; CA mess on Proposition 22 related to ridesharing and the DOL may also act; the DOJ may sue LiveNation/LYV; DC may look again to ban TikTok.
Pg 34, FUNDS. FOREIGN SMALL-CAPS are attractive (fwd P/E 12.2). Like all foreign funds, they also benefit from weakening dollar. Mentioned are CVISX, DRIOX, HIISX, RISAX; ETF SCZ. (by poster @lewisbraham at MFO)
Pg 34, INCOME INVESTING. The 10-yr Treasuries are attractive now (IEF). There may be 1-2 more rate hikes by the FED. Intermediate-term corporates and munis are also attractive. RECESSION is a wild card.
Pg 35, ECONOMY. The news on INFLATION seems good. The latest core CPI slowed to +5.7% from +6.7% in September. Markets like slower pace of Fed rate hikes and are even hoping for cut(s) later in 2023. But the Fed says its target of +2% average inflation remains. Atlanta Fed’s sticky inflation is still at +6.7% and Cleveland Fed’s median CPI is at +6.9%. The PPI is due this week (see above, est +6.8%, core +5.4%). A new-new thing is tracking of core services ex-housing that is at +4.6%. Quarterly employment costs index remains strong (ECI +5.0% on 9/30/22; the next report on 1/31/23, during the next FOMC meeting) and the JOLTS reports continue to show tight labor markets. Productivity gains have been sluggish (high productivity can offset wage gains). The unemployment rate is just 3.5%. So, the market expectations of FED PIVOT to pause and cut rates may just be too optimistic, or wishful thinking. (A long way of saying that the Fed and markets don’t agree and only one can be right)
Pg 62, OTHER VOICES. Christopher WEAFER, Macro-Advisory (consulting). Russia is now only #2 global oil exporter, but it is getting more oil export revenues. While there is European (and the US) ban on RUSSIAN OIL, other countries can buy it under PRICE-CAPS, process it and then export products. Russia needs to adjust logistics for oil shipments and deliveries to Asia. Russian oil producers are nationalized and don’t pay attention to profits. However, Russia has scaled down its previous ambitious economic plans.
(EXTRAS from online Friday that didn’t make the weekend paper version)
None
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
REVIEW. The meme crowd latched on to BBBY despite warnings about bankruptcy by the company itself; BBBY is in talks with its creditors. It could be that the meme crowd is the only remaining vs shorts (52% of float) as institutions fled. There are no signs of short squeeze yet.
PREVIEW. Samsung Electronics is the new #1 in the US PATENTS, IBM is now #2 after 29 years; IBM patents fell sharply because it focused more on AI, cloud-computing, quantum-computing, security. The US patents issued were the lowest since 2018. However, the number of patent applications were at an all-time record and there was a backlog of 700,000 patents pending.
DATA THIS WEEK. PPI (+6.8%, core +5.4%), Fed beige book on 12 Fed districts, retail sales, housing market index, capacity utilization, industrial production, business inventories on WEDNESDAY; housing starts on THURSDAY; existing home sales on FRIDAY.
CLOSED. The US stock and bond markets are closed on MONDAY.
www.barrons.com/magazine?mod=BOL_TOPNAV
BULLISH. Small-cap Endava (DAVA; fwd P/E 22.3; PEG < 1; stock is down sharply; provides IT software and infrastructure support for move to cloud; recession resistant; has pricing power; pg 15).
BEARISH.
Pg 12: Who’s Who at the Fed and FOMC. The basic structure is explained. Most important are the Fed Chair POWELL, Fed Vice Chair BRAINARD, FOMC Vice Chair and NY Fed President WILLIAMS. At the FOMC, all 7 Fed Governors vote (full strength after several years); only 5 of the 12 Fed President vote on a rotating annual basis. So, pay attention to who is talking in the media.
Pg 30: The US regulators are looking at private crypto firm/exchange BINANCE led by “CZ” that has been blamed for triggering the collapse of FTX-ALAMEDA complex. This entire article focuses on a network of Binance Angels/Ambassadors who are volunteers in a program run by Binance and who hope to be employed by Binance one day. The recruitment videos for the Angels program allude to this employment possibility although very few (5%?) Angels get hired. There is a training and probation period before they become official Angels. While unpaid, these Angels get several benefits such as trading discounts, free Binance souvenirs and online classes; they also have obligations to promote Binance in social-media (some run channels/groups), manage customer relations (using scripts provided by Binance) and plan and participate in local meetings and events; expectations are for 12+ hours/week of time commitments. There are quarterly evaluations and Angels may be terminated for poor performance. It is unclear if some labor laws are being violated by Binance in using this free labor pool. As Binance is not a US company, and many of these Angles are overseas, the US labor laws obviously don’t apply; it does have a US partner/affiliate called Binance-US that has a parallel US Angels program. The UN-ILO has only guidelines for fair international labor practices. There are concerns about for-profit companies exploiting unpaid labor under false promises of jobs. Binance says that it has only cyber presence and claims not be located anywhere although it has offices in Dubai, Paris, etc. But Binance is the largest global crypto exchange handling crypto transactions of $65 billion/day and competes with the US companies such Coinbase/COIN and several other foreign crypto companies.
Pg 33, TECH TRADER. A divided Congress may not provide relief for tech regulations. The Supremes act on Section 230 in early-2023; the DOJ vs Alphabet/GOOGL on search is in Fall, 2023; the FTC has antitrust case against Amazon/AMZN; new privacy rules; CA mess on Proposition 22 related to ridesharing and the DOL may also act; the DOJ may sue LiveNation/LYV; DC may look again to ban TikTok.
Pg 34, FUNDS. FOREIGN SMALL-CAPS are attractive (fwd P/E 12.2). Like all foreign funds, they also benefit from weakening dollar. Mentioned are CVISX, DRIOX, HIISX, RISAX; ETF SCZ. (by poster @lewisbraham at MFO)
Pg 34, INCOME INVESTING. The 10-yr Treasuries are attractive now (IEF). There may be 1-2 more rate hikes by the FED. Intermediate-term corporates and munis are also attractive. RECESSION is a wild card.
Pg 35, ECONOMY. The news on INFLATION seems good. The latest core CPI slowed to +5.7% from +6.7% in September. Markets like slower pace of Fed rate hikes and are even hoping for cut(s) later in 2023. But the Fed says its target of +2% average inflation remains. Atlanta Fed’s sticky inflation is still at +6.7% and Cleveland Fed’s median CPI is at +6.9%. The PPI is due this week (see above, est +6.8%, core +5.4%). A new-new thing is tracking of core services ex-housing that is at +4.6%. Quarterly employment costs index remains strong (ECI +5.0% on 9/30/22; the next report on 1/31/23, during the next FOMC meeting) and the JOLTS reports continue to show tight labor markets. Productivity gains have been sluggish (high productivity can offset wage gains). The unemployment rate is just 3.5%. So, the market expectations of FED PIVOT to pause and cut rates may just be too optimistic, or wishful thinking. (A long way of saying that the Fed and markets don’t agree and only one can be right)
Pg 62, OTHER VOICES. Christopher WEAFER, Macro-Advisory (consulting). Russia is now only #2 global oil exporter, but it is getting more oil export revenues. While there is European (and the US) ban on RUSSIAN OIL, other countries can buy it under PRICE-CAPS, process it and then export products. Russia needs to adjust logistics for oil shipments and deliveries to Asia. Russian oil producers are nationalized and don’t pay attention to profits. However, Russia has scaled down its previous ambitious economic plans.
(EXTRAS from online Friday that didn’t make the weekend paper version)
None
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).