Post by Admin/YBB on Mar 4, 2023 6:21:02 GMT -6
Note. Like a merry-go-round, all columnists did other columns than their regular columns. They read noticeably different.
Pg 36, TRADER. Jupiter and Venus are aligned but the FED and the STOCK market are not. Interest RATES have risen. Stocks had good January but bad February. The BoA yearend target for SP500 is close to here and it is recommending selected cyclicals (energy, materials, housing) and bonds.
Private-equity firm Apollo/APO has made a bid for aluminum products company Arconic/ARNC that was spun out from Alcoa/AA in 2016 and was split from Howmet Aerospace/HWM in 2020. ARNC has run up on deal news, but the stock is vulnerable if the deal falls through and there is also a recession.
Goldman Sachs (GS; fwd P/E 10; P/B 1.1) has become just a mediocre firm. Its consumer business is struggling, has large loan-losses, and it is unclear whether it would be dumped or “fixed” (or, “fixed” first and then dumped). Wait for a better entry point.
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.
2nd rate hike, FOMC 3/22/23+ 25 bps
3rd rate hike, FOMC 5/3/23+ 25 bps
4th rate hike, FOMC 6/14/23+ 25 bps (rate 5.25-5.50%; likely cycle peak)
FOMC 7/26/23+ Hold
FOMC 9/20/23+ Hold
FOMC 11/1/23+ Hold
FOMC 12/13/23+ Hold
Rate cuts now pushed into 2024 (POWELL/FOMC should like this).
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +1.75%, SP500 +1.90%, Nasdaq Comp +2.58%, R2000 +2.00%. DJ Transports +3.31%; DJ Utilities -1.32%. (Rotating spot bank KBE -0.81%) US$ index (spot) -0.64%, oil/WTI futures +4.40%, gold futures +2.15%.
52-WK (index changes only), DJIA -0.67%, SP500 -6.54%, Nasdaq Comp -12.20%. (Rotating spot bank KBE -10.63%) (Note shift to 52-wk until YTD becomes meaningful again in a few weeks)
Pg 48: NYSE cumulative (5-day) A/D line rose for 2nd week; ratio of winners:losers 2:1.
Pg 39, EUROPEAN TRADER. FRENCH Sodexo (SDXAY; fwd P/E 14.4) offers integrated services for catering (60% of revenues), office management, maintenance, and cleaning in one-stop, multiyear contracts. It also offers a reward program via employers to encourage returning to offices. Its stock has been weak due to concerns about inflation and recession.
Pg 39, EMERGING MARKETS. CHINA’s Two Sessions this weekend, a joint meeting of the Chinese People’s Congress and the Chinese People’s Consultative Conference, may rollout new government policies favorable to big business and stocks (ETF MCHI). Missing will be Jack MA/BABA and Fan BAO/China Renaissance; it may be a mistake to exclude business elites from the new initiatives as there are limits to what state-owned/controlled enterprises can do. A government watchdog issued a report ahead of the Two Sessions that was very critical of big businesses. (Mark MOBIUS is complaining on Twitter that he cannot move money out of HSBC-Shanghai as some new rules for capital control have kicked in; no similar issues for HK.)
Pg 40, OPTIONS. Covered-calls are mentioned (again) as an income generating strategy.
(SP500 VIX 18.49, Nasdaq 100 VXN 24.36 (high), options SKEW 118.14, bond MOVE 122.52) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 41, COMMODITIES. NUCLEAR power is gaining acceptance. But with much of Russian URANIUM out of the market (even without formal sanctions), uranium and producers’ (stock) prices are rising. Japan’s 3-11, the Fukushima accident is now far into the memory and sentiment is now favorable even in Japan.
Pg 53: A good week in EUROPE (Italy +2.96%, Switzerland +0.38%) and a good week in ASIA (China +3.74%, Thailand -1.57%).
TREASURY* 3-mo yield 4.91%, 1-yr 5.03%, 2-yr 4.86%, 5-yr 4.26%, 10-yr 3.97%, 30-yr 3.90%. REAL yields 5-yr 1.55%, 10-yr 1.45%, 30-yr 1.49%.
DOLLAR fell, ^DXY 104.53, -0.65% (pg 58). GOLD rose to $1,841, +1.7% (Handy & Harman spot, Thursday; pg 60); the gold-miners rose. (^XAU was at 118.90, +6.31% 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 4/6 datapoints in, the outlook for I-Bond rate on 5/1/23 is poor and it may be 1-2% 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 16, COVER STORY (ECONOMY) “The Boom Time for FARMERS Can Last. Who Will Reap the Rewards”. AG-TECH is booming (biotech, AI, mechanization, hybrids, crop rotations). Higher grain prices and wind energy installations are helping. Farmland prices are up; institutions including pension funds are active in farmland. Grains are used for human consumption, animal feed, biofuels. But farm labor is hard to find, and many are turning to immigrants. Mentioned are AGCO, CNHI, CTVA, DE, TITN; farmland REIT FPI.
Pg 6, UP AND DOWN WALL STREET. SILICON VALLEY is struggling to deal with the end of the growth era, lower capex and consumer spending, and increased scrutiny for M&A and antitrust. The way forward for many techs seems to be by slashing costs and jobs. EFFICIENCY is the new buzz/code word for lower capex and layoffs. Demand for semi-CHIPS is low due to lower demand for PCs, phones, streaming, consumer electronics products. Techs are also focusing on BUYBACKS even with 1% tax (President BIDEN wants to raise it to 4%). Many M&A are in limbo due to the DOJ or FTC challenges. The M&A are so unpopular that former growth-by-acquisition champion Salesforce/CRM disbanded its M&A committee – Founder/ Chairman/ CEO BENIOFF is fighting with 5 activists. The venture-capital market has no exit strategy as the IPO market is shut.
In believe-it-or-not, Marxist Malcom HARRIS’ book, Palo Alto: A History of California, Capitalism, and the World, 02/2023, reviews the bubbly history of tech in the Silicon Valley, and suggests that the Stanford University be shut down and its endowment and land be given away.
The ChatGPT craze keeps spreading as many companies are incorporating it into their software. Microsoft/MSFT is benefitting from its controlling stake in OpenAI, and also from incorporating ChatGPT into its Bing search; the advanced chip maker Nvidia/NVDA should also benefit.
Pg 9, STREETWISE. Elon MUSK’s master plan (#3) on Tesla/TSLA investor-day was underwhelming; Tesla is beginning to trade with high correlations with the other automakers. He talked about renewable energy production and storage, and a world of robots. Investors had higher expectations for company specifics.
Hormel/HRL has been weak as demand is slipping for its meat and nut products.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
Pg 36, TRADER. Jupiter and Venus are aligned but the FED and the STOCK market are not. Interest RATES have risen. Stocks had good January but bad February. The BoA yearend target for SP500 is close to here and it is recommending selected cyclicals (energy, materials, housing) and bonds.
Private-equity firm Apollo/APO has made a bid for aluminum products company Arconic/ARNC that was spun out from Alcoa/AA in 2016 and was split from Howmet Aerospace/HWM in 2020. ARNC has run up on deal news, but the stock is vulnerable if the deal falls through and there is also a recession.
Goldman Sachs (GS; fwd P/E 10; P/B 1.1) has become just a mediocre firm. Its consumer business is struggling, has large loan-losses, and it is unclear whether it would be dumped or “fixed” (or, “fixed” first and then dumped). Wait for a better entry point.
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.
2nd rate hike, FOMC 3/22/23+ 25 bps
3rd rate hike, FOMC 5/3/23+ 25 bps
4th rate hike, FOMC 6/14/23+ 25 bps (rate 5.25-5.50%; likely cycle peak)
FOMC 7/26/23+ Hold
FOMC 9/20/23+ Hold
FOMC 11/1/23+ Hold
FOMC 12/13/23+ Hold
Rate cuts now pushed into 2024 (POWELL/FOMC should like this).
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +1.75%, SP500 +1.90%, Nasdaq Comp +2.58%, R2000 +2.00%. DJ Transports +3.31%; DJ Utilities -1.32%. (Rotating spot bank KBE -0.81%) US$ index (spot) -0.64%, oil/WTI futures +4.40%, gold futures +2.15%.
52-WK (index changes only), DJIA -0.67%, SP500 -6.54%, Nasdaq Comp -12.20%. (Rotating spot bank KBE -10.63%) (Note shift to 52-wk until YTD becomes meaningful again in a few weeks)
Pg 48: NYSE cumulative (5-day) A/D line rose for 2nd week; ratio of winners:losers 2:1.
Pg 39, EUROPEAN TRADER. FRENCH Sodexo (SDXAY; fwd P/E 14.4) offers integrated services for catering (60% of revenues), office management, maintenance, and cleaning in one-stop, multiyear contracts. It also offers a reward program via employers to encourage returning to offices. Its stock has been weak due to concerns about inflation and recession.
Pg 39, EMERGING MARKETS. CHINA’s Two Sessions this weekend, a joint meeting of the Chinese People’s Congress and the Chinese People’s Consultative Conference, may rollout new government policies favorable to big business and stocks (ETF MCHI). Missing will be Jack MA/BABA and Fan BAO/China Renaissance; it may be a mistake to exclude business elites from the new initiatives as there are limits to what state-owned/controlled enterprises can do. A government watchdog issued a report ahead of the Two Sessions that was very critical of big businesses. (Mark MOBIUS is complaining on Twitter that he cannot move money out of HSBC-Shanghai as some new rules for capital control have kicked in; no similar issues for HK.)
Pg 40, OPTIONS. Covered-calls are mentioned (again) as an income generating strategy.
(SP500 VIX 18.49, Nasdaq 100 VXN 24.36 (high), options SKEW 118.14, bond MOVE 122.52) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 41, COMMODITIES. NUCLEAR power is gaining acceptance. But with much of Russian URANIUM out of the market (even without formal sanctions), uranium and producers’ (stock) prices are rising. Japan’s 3-11, the Fukushima accident is now far into the memory and sentiment is now favorable even in Japan.
Pg 53: A good week in EUROPE (Italy +2.96%, Switzerland +0.38%) and a good week in ASIA (China +3.74%, Thailand -1.57%).
TREASURY* 3-mo yield 4.91%, 1-yr 5.03%, 2-yr 4.86%, 5-yr 4.26%, 10-yr 3.97%, 30-yr 3.90%. REAL yields 5-yr 1.55%, 10-yr 1.45%, 30-yr 1.49%.
DOLLAR fell, ^DXY 104.53, -0.65% (pg 58). GOLD rose to $1,841, +1.7% (Handy & Harman spot, Thursday; pg 60); the gold-miners rose. (^XAU was at 118.90, +6.31% 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 4/6 datapoints in, the outlook for I-Bond rate on 5/1/23 is poor and it may be 1-2% 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 16, COVER STORY (ECONOMY) “The Boom Time for FARMERS Can Last. Who Will Reap the Rewards”. AG-TECH is booming (biotech, AI, mechanization, hybrids, crop rotations). Higher grain prices and wind energy installations are helping. Farmland prices are up; institutions including pension funds are active in farmland. Grains are used for human consumption, animal feed, biofuels. But farm labor is hard to find, and many are turning to immigrants. Mentioned are AGCO, CNHI, CTVA, DE, TITN; farmland REIT FPI.
Pg 6, UP AND DOWN WALL STREET. SILICON VALLEY is struggling to deal with the end of the growth era, lower capex and consumer spending, and increased scrutiny for M&A and antitrust. The way forward for many techs seems to be by slashing costs and jobs. EFFICIENCY is the new buzz/code word for lower capex and layoffs. Demand for semi-CHIPS is low due to lower demand for PCs, phones, streaming, consumer electronics products. Techs are also focusing on BUYBACKS even with 1% tax (President BIDEN wants to raise it to 4%). Many M&A are in limbo due to the DOJ or FTC challenges. The M&A are so unpopular that former growth-by-acquisition champion Salesforce/CRM disbanded its M&A committee – Founder/ Chairman/ CEO BENIOFF is fighting with 5 activists. The venture-capital market has no exit strategy as the IPO market is shut.
In believe-it-or-not, Marxist Malcom HARRIS’ book, Palo Alto: A History of California, Capitalism, and the World, 02/2023, reviews the bubbly history of tech in the Silicon Valley, and suggests that the Stanford University be shut down and its endowment and land be given away.
The ChatGPT craze keeps spreading as many companies are incorporating it into their software. Microsoft/MSFT is benefitting from its controlling stake in OpenAI, and also from incorporating ChatGPT into its Bing search; the advanced chip maker Nvidia/NVDA should also benefit.
Pg 9, STREETWISE. Elon MUSK’s master plan (#3) on Tesla/TSLA investor-day was underwhelming; Tesla is beginning to trade with high correlations with the other automakers. He talked about renewable energy production and storage, and a world of robots. Investors had higher expectations for company specifics.
Hormel/HRL has been weak as demand is slipping for its meat and nut products.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).