Post by Admin/YBB on Mar 25, 2023 5:05:43 GMT -6
Pg 28, TRADER. Stocks may be range bound in 2023, but there may also be a big downside. There have been rolling crises – (pandemic, Russia-Ukraine war) cryptos, banking, and next? (CRE?, private-equity? leveraged credits?). The yield-curve is inverted. Stay defensive. It’s hard to get excited by prospects of the market being sideways or down, but not up.
Ford/F is losing money on EVs now but that should change in the future. Ford started reporting 3 business lines separately – Ford Blue (cars), Ford Pro (commercial), Ford Model e (EVs). The loss was $21,875/EV, or -40% of the sales price! lot of it from R&D. Things should improve as EV production is scaled up. Some analysts downgraded the stock. But Ford is profitable overall.
In techs, CYBERSECURITY firms are attractive: PANW, CHKP, CYBR, TENB, ZS, CRWD; related ETF is IHAK.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
FOMC 5/3/23+ Hold (cycle peak 4.75-5.00%)
FOMC 6/14/23+ Hold
FOMC 7/26/23+ Cut
FOMC 9/20/23+ Cut
FOMC 11/1/23+ Cut
FOMC 12/13/23+ Cut
(But Powell said – no cuts in 2023!)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +1.18%, SP500 +1.39%, Nasdaq Comp +1.66%, R2000 +0.52%. DJ Transports -0.49%; DJ Utilities -1.36%. (Rotating spot bank KBE +0.36%) US$ index (spot) -0.58%, oil/WTI futures +3.78%, gold futures +0.62%.
YTD (index changes only), DJIA -2.74%, SP500 +3.42%, Nasdaq Comp +12.97%. (Rotating spot bank KBE -20.47%) (YTD resumes)
Pg 40: NYSE cumulative (5-day) A/D LINE rose; ratio of winners:losers 1+:1.
SENTIMENT. AAII Bull-Bear Spread -28.0% (very low); Delta MSI 26.0% (very low).
Pg 30, EUROPEAN TRADER. Dutch online grocer FreshDirect (parent ADRNY; fwd P/E 11.5; buybacks; brands Food Lion, Stop & Shop, Giant Food, FreshDirect, etc) is a defensive play that can also do fine with inflation. The US sales are 63%.
Pg 31, EMERGING MARKETS. The EM BANKS have held up better during this banking crisis in the developed world (the US, Europe) – Brazilian BBD, ITUB; Indian HDB, IBN; Indonesian PBCRY; Mexican GBOOY; Singaporean DBSDY. Past EM shocks have led to more cautions and tighter regulations in the EM banks/financials. There is also natural growth as the previously unbanked population moves into the banking system. They hold more floating rate assets of shorter duration. The number of banks is also smaller – India has only 34 banks, the US has 4,000+. However, if the banking crisis spreads further in the developed world, the EM banks will also be affected.
Pg 32, OPTIONS. There is a regional banking crisis in the US as they escaped lot of regulations that focused on larger banks (the SIBs). While the banking rescue efforts have helped, the confusing statements from the federal officials haven’t (on rates, the FDIC insurance, etc). Recommended is to sell puts on the regional banking ETF KRE.
(SP500 VIX 21.74 (high), Nasdaq 100 VXN 25.78 (high), options SKEW 126.88, bond MOVE 173.66 (high) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 33, COMMODITIES. Declining DIESEL demand is an indication of weakening industrial, transportation, construction and agricultural sectors. The FED tightening (rate hikes, QT) is starting to affect the economy. Diesel prices peaked on 6/19/22. But the diesel market now is tighter than pre-Russia-Ukraine war with crack-spreads now of $30/barrel. Independents are attractive – E&P PARR, refiner and distributor MPC.
Pg 45: An up week in EUROPE (Denmark +3.72%, Norway -0.92%) and an up week in ASIA (Taiwan +3.03%, New Zealand -1.27%).
TREASURY* 3-mo yield 4.74%, 1-yr 4.32%, 2-yr 3.76%, 5-yr 3.41%, 10-yr 3.38%, 30-yr 3.64%. REAL yields 5-yr 1.20%, 10-yr 1.16%, 30-yr 1.45%.
DOLLAR fell, ^DXY 103.32, -0.6% (pg 50). GOLD rose to $1,994, +1.8% (Handy & Harman spot, Thursday; pg 52); the gold-miners rose. (^XAU was at 127.03, +2.56% 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 5/6 datapoints in, the outlook for I-Bond rate on 5/1/23 is poor and it may be 2-3% only (this estimate has been creeping up).
*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 “At Dollar General (DG), a Stable for Many, a Record of OVERCHARGING”. Dollar-store DG has been fined by several states (LA, MS, NC, OH) for overcharging at cash registers after consumer COMPLAINTS and failed state INSPECTIONS; most states allow 2% failure rate for price-verifications. There are also CLASS-ACTION lawsuits in several states (NJ, NY, OH). It has been cited for safety violations. DG blames mistakes on its rapid growth; store-shelves price update lags (its cash registers get updated prices centrally on Tuesdays, but it takes time to change in-store labels); understaffing at minimum wages (sometimes, there is no one at the registers as the staff on duty are busy with stocking and price changes). Wall Street loves dollar-stores for profitability but that may change if fines make cutting corners more expensive.
Pg 7, UP AND DOWN WALL STREET. The stock market has been RESILIENT despite the BANKING crisis, FED rate hike, worsening financial conditions, slowing economy and rising distressed HY (10.6% of the total HY). The Fed may be almost done with rate hikes but there is disagreement on when there may be cuts.
The US is becoming less appealing to FOREIGN investors. There is rising debt and the strange debt-ceiling drama/routine; dollar-diplomacy; arbitrary interventions by the state and federal governments (on oil/gas, ESG, big-techs, banking crisis and ad-hoc bank rescues). Foreign holdings of the US Treasuries are declining, and GOLD is benefiting as a neutral asset (bullion ETF GLD +9.5% YTD). For the US investors, the foreign markets also appear undervalued.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
Ford/F is losing money on EVs now but that should change in the future. Ford started reporting 3 business lines separately – Ford Blue (cars), Ford Pro (commercial), Ford Model e (EVs). The loss was $21,875/EV, or -40% of the sales price! lot of it from R&D. Things should improve as EV production is scaled up. Some analysts downgraded the stock. But Ford is profitable overall.
In techs, CYBERSECURITY firms are attractive: PANW, CHKP, CYBR, TENB, ZS, CRWD; related ETF is IHAK.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
FOMC 5/3/23+ Hold (cycle peak 4.75-5.00%)
FOMC 6/14/23+ Hold
FOMC 7/26/23+ Cut
FOMC 9/20/23+ Cut
FOMC 11/1/23+ Cut
FOMC 12/13/23+ Cut
(But Powell said – no cuts in 2023!)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +1.18%, SP500 +1.39%, Nasdaq Comp +1.66%, R2000 +0.52%. DJ Transports -0.49%; DJ Utilities -1.36%. (Rotating spot bank KBE +0.36%) US$ index (spot) -0.58%, oil/WTI futures +3.78%, gold futures +0.62%.
YTD (index changes only), DJIA -2.74%, SP500 +3.42%, Nasdaq Comp +12.97%. (Rotating spot bank KBE -20.47%) (YTD resumes)
Pg 40: NYSE cumulative (5-day) A/D LINE rose; ratio of winners:losers 1+:1.
SENTIMENT. AAII Bull-Bear Spread -28.0% (very low); Delta MSI 26.0% (very low).
Pg 30, EUROPEAN TRADER. Dutch online grocer FreshDirect (parent ADRNY; fwd P/E 11.5; buybacks; brands Food Lion, Stop & Shop, Giant Food, FreshDirect, etc) is a defensive play that can also do fine with inflation. The US sales are 63%.
Pg 31, EMERGING MARKETS. The EM BANKS have held up better during this banking crisis in the developed world (the US, Europe) – Brazilian BBD, ITUB; Indian HDB, IBN; Indonesian PBCRY; Mexican GBOOY; Singaporean DBSDY. Past EM shocks have led to more cautions and tighter regulations in the EM banks/financials. There is also natural growth as the previously unbanked population moves into the banking system. They hold more floating rate assets of shorter duration. The number of banks is also smaller – India has only 34 banks, the US has 4,000+. However, if the banking crisis spreads further in the developed world, the EM banks will also be affected.
Pg 32, OPTIONS. There is a regional banking crisis in the US as they escaped lot of regulations that focused on larger banks (the SIBs). While the banking rescue efforts have helped, the confusing statements from the federal officials haven’t (on rates, the FDIC insurance, etc). Recommended is to sell puts on the regional banking ETF KRE.
(SP500 VIX 21.74 (high), Nasdaq 100 VXN 25.78 (high), options SKEW 126.88, bond MOVE 173.66 (high) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 33, COMMODITIES. Declining DIESEL demand is an indication of weakening industrial, transportation, construction and agricultural sectors. The FED tightening (rate hikes, QT) is starting to affect the economy. Diesel prices peaked on 6/19/22. But the diesel market now is tighter than pre-Russia-Ukraine war with crack-spreads now of $30/barrel. Independents are attractive – E&P PARR, refiner and distributor MPC.
Pg 45: An up week in EUROPE (Denmark +3.72%, Norway -0.92%) and an up week in ASIA (Taiwan +3.03%, New Zealand -1.27%).
TREASURY* 3-mo yield 4.74%, 1-yr 4.32%, 2-yr 3.76%, 5-yr 3.41%, 10-yr 3.38%, 30-yr 3.64%. REAL yields 5-yr 1.20%, 10-yr 1.16%, 30-yr 1.45%.
DOLLAR fell, ^DXY 103.32, -0.6% (pg 50). GOLD rose to $1,994, +1.8% (Handy & Harman spot, Thursday; pg 52); the gold-miners rose. (^XAU was at 127.03, +2.56% 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 5/6 datapoints in, the outlook for I-Bond rate on 5/1/23 is poor and it may be 2-3% only (this estimate has been creeping up).
*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 “At Dollar General (DG), a Stable for Many, a Record of OVERCHARGING”. Dollar-store DG has been fined by several states (LA, MS, NC, OH) for overcharging at cash registers after consumer COMPLAINTS and failed state INSPECTIONS; most states allow 2% failure rate for price-verifications. There are also CLASS-ACTION lawsuits in several states (NJ, NY, OH). It has been cited for safety violations. DG blames mistakes on its rapid growth; store-shelves price update lags (its cash registers get updated prices centrally on Tuesdays, but it takes time to change in-store labels); understaffing at minimum wages (sometimes, there is no one at the registers as the staff on duty are busy with stocking and price changes). Wall Street loves dollar-stores for profitability but that may change if fines make cutting corners more expensive.
Pg 7, UP AND DOWN WALL STREET. The stock market has been RESILIENT despite the BANKING crisis, FED rate hike, worsening financial conditions, slowing economy and rising distressed HY (10.6% of the total HY). The Fed may be almost done with rate hikes but there is disagreement on when there may be cuts.
The US is becoming less appealing to FOREIGN investors. There is rising debt and the strange debt-ceiling drama/routine; dollar-diplomacy; arbitrary interventions by the state and federal governments (on oil/gas, ESG, big-techs, banking crisis and ad-hoc bank rescues). Foreign holdings of the US Treasuries are declining, and GOLD is benefiting as a neutral asset (bullion ETF GLD +9.5% YTD). For the US investors, the foreign markets also appear undervalued.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).