From Barron’s, January 30, 2023 (Part 1, Market Week+)
Jan 28, 2023 6:13:11 GMT -6
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Post by Admin/YBB on Jan 28, 2023 6:13:11 GMT -6
Pg 35, TRADER. Ignore the FED at your own peril – that is lesson the market may soon learn as the rally from October lows continues. The INFLATION has been falling, but not enough for Fed pivot. POWELL after the FOMC meeting on Wednesday may bluntly address this. The SP500 faces resistance at 4,100; its fwd P/E is 17.9 now.
With CHINESE market rebounding, consider the US companies with significant exposure to China: APH, EL, EMR, LVS, NATI, NKE, NVDA, QRVO, TEL, TXN, WYNN.
HR and finance software company Workday (WDAY; fwd P/E 39 (high), EV/EBITDA 23) is attractive in stagnant software market. Critics point to company projections as too optimistic.
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
FOMC 7/26/23+ Hold
FOMC 9/20/23+ Hold
FOMC 11/1/23+ Hold
FOMC 12/13/23+ Cut
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +1.81%, SP500 +2.47%, Nasdaq Comp +4.32%, R2000 +2.36%. DJ Transports +0.88%; DJ Utilities +0.75%. (Rotating spot consumer-discretionary XLY +6.41%) US$ index (spot) -0.07%, oil/WTI futures -2.00%, gold futures +0.11%.
52-WK (index changes only), DJIA -2.15%, SP500 -8.15%, Nasdaq Comp -15.60%. (Rotating spot consumer-discretionary XLY -16.96%) (Note shift to 52-wk until YTD becomes meaningful again in a few weeks)
Pg 47: NYSE cumulative (5-day) A/D line rose for a 4th week; ratio of winners:losers 3:2.
Pg 38, EUROPEAN TRADER. Deutsche Telecom (DTEGY; yield 3.4%; fwd P/E 12.5) gets most of its revenues from 43% owned US T-Mobile/TMUS; it also owns 12% of UK BT group/BTSGY. The German Government owns 14% of DTEGY, and indirectly via state bank KfW 17%, Japanese SoftBank/SFTBY owns 4.5%. (Most of its market value is from its TMUS stake)
Pg 38, EMERGING MARKETS. INDIAN purchases of Russian CRUDE OIL have gone up dramatically. India imports 90% of its crude oil and it has been buying Russian crude at deep discounts (and recently, under the price-caps). India also has large refining capacity and can export oil products to Europe and the US; India has imposed WINDFALL TAXES on oil refiners. However, CHINA reopening may drive crude oil prices above the price-caps and put a dent in this lucrative Indian oil import/export business. Prime Minister MODI’s actions will be watched closely as India has assumed the presidency of G-20 this year (it’s by annual rotation).
Pg 39, OPTIONS. Use COVERED CALLS to enhance portfolio income. Risk is that the stock may be called away if it rises significantly.
(SP500 VIX 18.51, Nasdaq 100 VXN 24.57 (high), options SKEW 121.97, bond MOVE 100.70) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 40, COMMODITIES. The upcoming EU ban on February 5 on Russian OIL PRODUCTS will lead to higher prices for DIESEL and other distillates; these are not deep markets. The December 5 PRICE-CAP on Russian crude oil has had limited effect; but new price-caps on Russian oil products kick in on February 5. European WINTER has been mild. Global energy companies, including in the US, have benefitted from these European restrictions.
Pg 53: An up week in EUROPE (Greece +3.48%, Netherlands +2.90%, Denmark -1.77%) and a good week in ASIA (S Korea +1.80%, India -3.12%).
TREASURY* 3-mo yield 4.73%, 1-yr 4.68%, 2-yr 4.19%, 5-yr 3.62%, 10-yr 3.52%, 30-yr 3.64%. REAL yields 5-yr 1.29%, 10-yr 1.19%, 30-yr 1.33%.
DOLLAR fell, ^DXY 101.92, -0.07% (Barron’s has -0.7% but that has a misplaced decimal; pg 58). GOLD was flat at $1,923, UNCH (Handy & Harman spot, Thursday; pg 60); the gold-miners fell. (^XAU was at 134.79, -0.65% 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. NOTE – With half the data in, the outlook for I-Bond rate on 5/1/23 is poor and it may be 0-2% only.
*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 22: COVER STORY, “CHINA’s Big Comeback is Just Getting Started. How to Play It”. China’s turnabout on Covid policy has led to optimism and start of a strong stock RALLY (+50% since 10/2022; fwd P/E 12 only). The government is also providing STIMULUS, including in the property sector. ATTRACTIVE are consumer, tech (AI, automation/robotics), energy (renewables, EVs, batteries) sectors and big companies aligned with government policies. RISKS include high debt, declining population, US-China frictions, President XI’s mood changes. Mentioned are MCHI, CHIQ; DREGX, GBFAX, RNWOX; several stocks (BABA, JD, YUMC, etc); indirect plays include European, Japanese and S Korean companies with exposure to China.
Pg 6, UP AND DOWN WALL STREET. Losers of 2022 are sprinting ahead in 2023. The market isn’t following the script of bad H1, followed by good H2. Instead, there is a risk-on RALLY with techs, entertainment, banks, commodities leading; the defensive sectors are lagging (utilities, consumer-staples, healthcare). The market is expecting 2 more 25-bps hikes, then pause, then rate cut(s) by the yearend. But that isn’t the message from the FED and the bond market. Dollar has weakened. China is reopening.
With falling INFLATION, TIPS yields and I-Bond rates (under 2% on May 1?) are also expected to fall.
NATURAL GAS has crashed, -70% from 08/2022 high, -35% YTD. The US and Europe are having mild Winters. Production is up, inventories are high. Oversupply may persist in 2023-24. Natural gas stocks have done relatively better (EQT, CHK); futures-based ETF is UNG.
Hedge-fund Greenlight Capital (David EINHORN) had a great 2022, +36.6% net. It was short techs and highflyers, and long energy and Twitter. Einhorn also manages the portfolio of reinsurer Greenlight Re/GLRE. Reinsurance premiums are also rising.
Pg 9, STREETWISE. Superbowl 2023 will be on Fox TV, but it doesn’t have any streaming. For that you may have to go to subscriptions-based Amazon Prime, Hulu+, YouTube TV, fuboTV, etc.
Netflix/NFLX and Disney/DIS are winning the streaming wars by including live TV.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
With CHINESE market rebounding, consider the US companies with significant exposure to China: APH, EL, EMR, LVS, NATI, NKE, NVDA, QRVO, TEL, TXN, WYNN.
HR and finance software company Workday (WDAY; fwd P/E 39 (high), EV/EBITDA 23) is attractive in stagnant software market. Critics point to company projections as too optimistic.
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
FOMC 7/26/23+ Hold
FOMC 9/20/23+ Hold
FOMC 11/1/23+ Hold
FOMC 12/13/23+ Cut
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +1.81%, SP500 +2.47%, Nasdaq Comp +4.32%, R2000 +2.36%. DJ Transports +0.88%; DJ Utilities +0.75%. (Rotating spot consumer-discretionary XLY +6.41%) US$ index (spot) -0.07%, oil/WTI futures -2.00%, gold futures +0.11%.
52-WK (index changes only), DJIA -2.15%, SP500 -8.15%, Nasdaq Comp -15.60%. (Rotating spot consumer-discretionary XLY -16.96%) (Note shift to 52-wk until YTD becomes meaningful again in a few weeks)
Pg 47: NYSE cumulative (5-day) A/D line rose for a 4th week; ratio of winners:losers 3:2.
Pg 38, EUROPEAN TRADER. Deutsche Telecom (DTEGY; yield 3.4%; fwd P/E 12.5) gets most of its revenues from 43% owned US T-Mobile/TMUS; it also owns 12% of UK BT group/BTSGY. The German Government owns 14% of DTEGY, and indirectly via state bank KfW 17%, Japanese SoftBank/SFTBY owns 4.5%. (Most of its market value is from its TMUS stake)
Pg 38, EMERGING MARKETS. INDIAN purchases of Russian CRUDE OIL have gone up dramatically. India imports 90% of its crude oil and it has been buying Russian crude at deep discounts (and recently, under the price-caps). India also has large refining capacity and can export oil products to Europe and the US; India has imposed WINDFALL TAXES on oil refiners. However, CHINA reopening may drive crude oil prices above the price-caps and put a dent in this lucrative Indian oil import/export business. Prime Minister MODI’s actions will be watched closely as India has assumed the presidency of G-20 this year (it’s by annual rotation).
Pg 39, OPTIONS. Use COVERED CALLS to enhance portfolio income. Risk is that the stock may be called away if it rises significantly.
(SP500 VIX 18.51, Nasdaq 100 VXN 24.57 (high), options SKEW 121.97, bond MOVE 100.70) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 40, COMMODITIES. The upcoming EU ban on February 5 on Russian OIL PRODUCTS will lead to higher prices for DIESEL and other distillates; these are not deep markets. The December 5 PRICE-CAP on Russian crude oil has had limited effect; but new price-caps on Russian oil products kick in on February 5. European WINTER has been mild. Global energy companies, including in the US, have benefitted from these European restrictions.
Pg 53: An up week in EUROPE (Greece +3.48%, Netherlands +2.90%, Denmark -1.77%) and a good week in ASIA (S Korea +1.80%, India -3.12%).
TREASURY* 3-mo yield 4.73%, 1-yr 4.68%, 2-yr 4.19%, 5-yr 3.62%, 10-yr 3.52%, 30-yr 3.64%. REAL yields 5-yr 1.29%, 10-yr 1.19%, 30-yr 1.33%.
DOLLAR fell, ^DXY 101.92, -0.07% (Barron’s has -0.7% but that has a misplaced decimal; pg 58). GOLD was flat at $1,923, UNCH (Handy & Harman spot, Thursday; pg 60); the gold-miners fell. (^XAU was at 134.79, -0.65% 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. NOTE – With half the data in, the outlook for I-Bond rate on 5/1/23 is poor and it may be 0-2% only.
*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 22: COVER STORY, “CHINA’s Big Comeback is Just Getting Started. How to Play It”. China’s turnabout on Covid policy has led to optimism and start of a strong stock RALLY (+50% since 10/2022; fwd P/E 12 only). The government is also providing STIMULUS, including in the property sector. ATTRACTIVE are consumer, tech (AI, automation/robotics), energy (renewables, EVs, batteries) sectors and big companies aligned with government policies. RISKS include high debt, declining population, US-China frictions, President XI’s mood changes. Mentioned are MCHI, CHIQ; DREGX, GBFAX, RNWOX; several stocks (BABA, JD, YUMC, etc); indirect plays include European, Japanese and S Korean companies with exposure to China.
Pg 6, UP AND DOWN WALL STREET. Losers of 2022 are sprinting ahead in 2023. The market isn’t following the script of bad H1, followed by good H2. Instead, there is a risk-on RALLY with techs, entertainment, banks, commodities leading; the defensive sectors are lagging (utilities, consumer-staples, healthcare). The market is expecting 2 more 25-bps hikes, then pause, then rate cut(s) by the yearend. But that isn’t the message from the FED and the bond market. Dollar has weakened. China is reopening.
With falling INFLATION, TIPS yields and I-Bond rates (under 2% on May 1?) are also expected to fall.
NATURAL GAS has crashed, -70% from 08/2022 high, -35% YTD. The US and Europe are having mild Winters. Production is up, inventories are high. Oversupply may persist in 2023-24. Natural gas stocks have done relatively better (EQT, CHK); futures-based ETF is UNG.
Hedge-fund Greenlight Capital (David EINHORN) had a great 2022, +36.6% net. It was short techs and highflyers, and long energy and Twitter. Einhorn also manages the portfolio of reinsurer Greenlight Re/GLRE. Reinsurance premiums are also rising.
Pg 9, STREETWISE. Superbowl 2023 will be on Fox TV, but it doesn’t have any streaming. For that you may have to go to subscriptions-based Amazon Prime, Hulu+, YouTube TV, fuboTV, etc.
Netflix/NFLX and Disney/DIS are winning the streaming wars by including live TV.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).