Post by Admin/YBB on Mar 11, 2023 8:08:01 GMT -6
Pg 36, TRADER. The STOCK market has been hit by rising RATE expectations (after POWELL’s 2-day testimony) and falling BANKS/financials (after the failures of SI and SIVB). The problem faced by SIVB – a forced sale of Treasuries at huge loss – isn’t that unusual for banks facing runs (if there is no help from the Fed, FHLB, etc). These events may cause the FED to go slow on rate hikes. In a soft-landing scenario, the SP500 of 4,600 is possible.
Despite 1% tax, BUYBACKS remain popular; BIDEN’s proposal to raise tax to 4% is just that. But large buybacks ahead of possible recession may cause problems for companies. Buyback ETF is PKW.
Software company OKTA has rallied after a strong earnings report but there may be more upside.
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+ 50 bps
FOMC 6/14/23+ Hold
FOMC 7/26/23+ Hold
FOMC 9/20/23+ Hold
FOMC 11/1/23+ ?
FOMC 12/13/23+ ?
The fed fund futures were confused by the tough talk by Powell and then 2 bank failures (SI, SIVB). They were jumping around a lot after the September FOMC, so they are just marked ?.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -4.44%, SP500 -4.55%, Nasdaq Comp -4.71%, R2000 -8.07%. DJ Transports -5.96%; DJ Utilities -3.33%. (Rotating spot bank KBE (again) -14.12%) US$ index (spot) +0.12%, oil/WTI futures -3.77%, gold futures +0.77%.
52-WK (index changes only), DJIA -3.14%, SP500 -8.15%, Nasdaq Comp -13.27%. (Rotating spot bank KBE (again) -20.88%) (Note shift to 52-wk until YTD becomes meaningful again in a few weeks)
Pg 48: NYSE cumulative (5-day) A/D LINE fell; ratio of winners:losers 1:7. (Thursday was 93% downside-volume day; Friday was 88.5% downside volume day; the so-called “bullish thrusts” from January/February may have been done/spent.)
SENTIMENT (NEW FEATURE). AAII Bull-Bear Spread -16.9% (very low); Delta MSI 46.7% (low).
Pg 36, EUROPEAN TRADER. GERMAN online fashion retailer (apparel, shoes, accessories) Zalando/ZLNDY wants to beat Amazon/AMZN. But fashion retailing has its own problems, including high merchandise returns. It isn’t a low-cost provider but prides on providing a breadth of choices in one-stop online shopping experience. Demand boomed during the pandemic but cooled post-pandemic. It is cutting headcount as profits have declined due to high inflation and energy costs.
Pg 36, EMERGING MARKETS. VIETNAM’s economy is hotter than its stock market (ETF VNM) that is dominated by retail investors. There are issues of overleveraged real estate and unpredictable policy shifts by its communist government. There are also infrastructure limitations that prevent rapid industrial growth.
Pg 38, OPTIONS. BID-ASK spreads on options can be wide except for those on popular stocks and indexes. Displayed bid-ask may not be what one may experience. Use limit-orders near middle-prices. (Enter buy-limit at ask, sell-limit at bid for immediate fill most of the time)
(SP500 VIX 24.80 (high), Nasdaq 100 VXN 27.94 (high), options SKEW 130.27 (high), bond MOVE 140.06 (high)) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 39, COMMODITIES. PLATINUM is becoming more attractive than palladium for applications in auto catalytic converters, fuel-cells, EVs, jewelry, investments. Platinum has been in supply deficit situation and that may continue for years. South Africa, a major producer, has problems. ETF is PLTM.
Pg 50: A bad week in EUROPE (Germany -0.01%, Switzerland -2.06%, Greece -3.94%) and a flat week in ASIA (Japan +2.49%, China -5.37%).
TREASURY* 3-mo yield 5.01%, 1-yr 4.90%, 2-yr 4.60%, 5-yr 3.96%, 10-yr 3.70%, 30-yr 3.70%. REAL yields 5-yr 1.62%, 10-yr 1.44%, 30-yr 1.45%.
DOLLAR rose, ^DXY 104.62, +0.1% (pg 58). GOLD rose to $1,861, +1.1% (Handy & Harman spot, Thursday; pg 60); the gold-miners fell sharply. (^XAU was at 111.59, -6.15% 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 20, COVER STORY “Marc BENIOFF is Fighting to Put Salesforce Back on Top. The Ultimate Salesman Has to Learn a New Game”. Marc Benioff (58) of SaaS Salesforce/CRM is now focusing on profits. The sales growth has slowed, and the company is facing several activists (6). It bulked up during the pandemic and its pace for M&A picked up. Now with layoffs and other cost-cutting moves, the profits rose more than expected, the M&A program has been terminated, and buybacks have been boosted. The annual Dreamforce conference attracts about 150,000 with several celebrity invitees; the enterprise SaaS being a boring business, Benioff makes the company and himself the primary attractions. He is a man with a large frame, not publicity shy, a bit of showman, and he also has a large philanthropic effort.
Pg 7, UP AND DOWN WALL STREET. Silicon Valley Bank/SIVB is the 2nd largest bank failure in history; it was in part due to losses on forced sale of a huge portfolio of Treasuries. The fed fund futures projections were all over – up after POWELL’s 2-day testimony, and then down on the failure of 2 CA banks, the crypto-friendly Silvergate/SI and the venture-capital (VC)-friendly SIVB. The financials were stressed (KRE, KBE, XLF); credit conditions have tightened. As SIVB lent to tech startups and others burning cash, the prospects of those companies became gloomy. The 2-yr fell 48 bps from Wednesday and similar moves were seen in the past during 10/1987 crash, Lehman failure in 09/2008, 9-11 terrorist attacks. In all this drama, the jobs report was a minor sideshow. But coming are the CPI (Tuesday) and PPI (Wednesday).
US DOLLAR’s global reserve status may not last long. The huge benefits to the US include easy financing of its deficits and various stimulus programs, and cheaper imported goods for American consumers that unfortunately hollowed out many domestic industries. Onshoring (or, localization/regionalization) is growing now to fix recent supply-chain problems. There are now also the issues of dollar diplomacy that are causing other countries to look for dollar alternatives. The current DEBT-CEILING debate adds to foreigners’ doubt about the dollar. The dollar index DXY has had long up and down cycles.
Pg 9, STREETWISE. Think long-term (10+ years) for STOCKS and have reasonable expectations. The current conditions will blow over – high T-Bill rates won’t last; yield-curve inversions are temporary; recession(s) will come and go. Attractive would be consumer, healthcare, energy stocks.
INSURERS are among those benefitting from higher rates. Mentioned are EQH, MET, AFL.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
Despite 1% tax, BUYBACKS remain popular; BIDEN’s proposal to raise tax to 4% is just that. But large buybacks ahead of possible recession may cause problems for companies. Buyback ETF is PKW.
Software company OKTA has rallied after a strong earnings report but there may be more upside.
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+ 50 bps
FOMC 6/14/23+ Hold
FOMC 7/26/23+ Hold
FOMC 9/20/23+ Hold
FOMC 11/1/23+ ?
FOMC 12/13/23+ ?
The fed fund futures were confused by the tough talk by Powell and then 2 bank failures (SI, SIVB). They were jumping around a lot after the September FOMC, so they are just marked ?.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -4.44%, SP500 -4.55%, Nasdaq Comp -4.71%, R2000 -8.07%. DJ Transports -5.96%; DJ Utilities -3.33%. (Rotating spot bank KBE (again) -14.12%) US$ index (spot) +0.12%, oil/WTI futures -3.77%, gold futures +0.77%.
52-WK (index changes only), DJIA -3.14%, SP500 -8.15%, Nasdaq Comp -13.27%. (Rotating spot bank KBE (again) -20.88%) (Note shift to 52-wk until YTD becomes meaningful again in a few weeks)
Pg 48: NYSE cumulative (5-day) A/D LINE fell; ratio of winners:losers 1:7. (Thursday was 93% downside-volume day; Friday was 88.5% downside volume day; the so-called “bullish thrusts” from January/February may have been done/spent.)
SENTIMENT (NEW FEATURE). AAII Bull-Bear Spread -16.9% (very low); Delta MSI 46.7% (low).
Pg 36, EUROPEAN TRADER. GERMAN online fashion retailer (apparel, shoes, accessories) Zalando/ZLNDY wants to beat Amazon/AMZN. But fashion retailing has its own problems, including high merchandise returns. It isn’t a low-cost provider but prides on providing a breadth of choices in one-stop online shopping experience. Demand boomed during the pandemic but cooled post-pandemic. It is cutting headcount as profits have declined due to high inflation and energy costs.
Pg 36, EMERGING MARKETS. VIETNAM’s economy is hotter than its stock market (ETF VNM) that is dominated by retail investors. There are issues of overleveraged real estate and unpredictable policy shifts by its communist government. There are also infrastructure limitations that prevent rapid industrial growth.
Pg 38, OPTIONS. BID-ASK spreads on options can be wide except for those on popular stocks and indexes. Displayed bid-ask may not be what one may experience. Use limit-orders near middle-prices. (Enter buy-limit at ask, sell-limit at bid for immediate fill most of the time)
(SP500 VIX 24.80 (high), Nasdaq 100 VXN 27.94 (high), options SKEW 130.27 (high), bond MOVE 140.06 (high)) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 39, COMMODITIES. PLATINUM is becoming more attractive than palladium for applications in auto catalytic converters, fuel-cells, EVs, jewelry, investments. Platinum has been in supply deficit situation and that may continue for years. South Africa, a major producer, has problems. ETF is PLTM.
Pg 50: A bad week in EUROPE (Germany -0.01%, Switzerland -2.06%, Greece -3.94%) and a flat week in ASIA (Japan +2.49%, China -5.37%).
TREASURY* 3-mo yield 5.01%, 1-yr 4.90%, 2-yr 4.60%, 5-yr 3.96%, 10-yr 3.70%, 30-yr 3.70%. REAL yields 5-yr 1.62%, 10-yr 1.44%, 30-yr 1.45%.
DOLLAR rose, ^DXY 104.62, +0.1% (pg 58). GOLD rose to $1,861, +1.1% (Handy & Harman spot, Thursday; pg 60); the gold-miners fell sharply. (^XAU was at 111.59, -6.15% 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 20, COVER STORY “Marc BENIOFF is Fighting to Put Salesforce Back on Top. The Ultimate Salesman Has to Learn a New Game”. Marc Benioff (58) of SaaS Salesforce/CRM is now focusing on profits. The sales growth has slowed, and the company is facing several activists (6). It bulked up during the pandemic and its pace for M&A picked up. Now with layoffs and other cost-cutting moves, the profits rose more than expected, the M&A program has been terminated, and buybacks have been boosted. The annual Dreamforce conference attracts about 150,000 with several celebrity invitees; the enterprise SaaS being a boring business, Benioff makes the company and himself the primary attractions. He is a man with a large frame, not publicity shy, a bit of showman, and he also has a large philanthropic effort.
Pg 7, UP AND DOWN WALL STREET. Silicon Valley Bank/SIVB is the 2nd largest bank failure in history; it was in part due to losses on forced sale of a huge portfolio of Treasuries. The fed fund futures projections were all over – up after POWELL’s 2-day testimony, and then down on the failure of 2 CA banks, the crypto-friendly Silvergate/SI and the venture-capital (VC)-friendly SIVB. The financials were stressed (KRE, KBE, XLF); credit conditions have tightened. As SIVB lent to tech startups and others burning cash, the prospects of those companies became gloomy. The 2-yr fell 48 bps from Wednesday and similar moves were seen in the past during 10/1987 crash, Lehman failure in 09/2008, 9-11 terrorist attacks. In all this drama, the jobs report was a minor sideshow. But coming are the CPI (Tuesday) and PPI (Wednesday).
US DOLLAR’s global reserve status may not last long. The huge benefits to the US include easy financing of its deficits and various stimulus programs, and cheaper imported goods for American consumers that unfortunately hollowed out many domestic industries. Onshoring (or, localization/regionalization) is growing now to fix recent supply-chain problems. There are now also the issues of dollar diplomacy that are causing other countries to look for dollar alternatives. The current DEBT-CEILING debate adds to foreigners’ doubt about the dollar. The dollar index DXY has had long up and down cycles.
Pg 9, STREETWISE. Think long-term (10+ years) for STOCKS and have reasonable expectations. The current conditions will blow over – high T-Bill rates won’t last; yield-curve inversions are temporary; recession(s) will come and go. Attractive would be consumer, healthcare, energy stocks.
INSURERS are among those benefitting from higher rates. Mentioned are EQH, MET, AFL.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).