Post by Admin/YBB on Jan 16, 2021 7:46:45 GMT -6
[Italics within the brackets are my additions/elaborations]
Pg M1, Trader: A down week as economic data were poor and investors contemplated post-Inauguration realities. More and more stimulus coming. There has been good news on Covid-19 vaccines. Rising inflation expectations and bond yields may be bad news for speculative highflyers and good news for economically sensitive cyclicals.
Industrial 3M/MMM is attractive on reopening of economy; stimulus; low inventory levels in economy; capex from cash rich companies. 3M does face liabilities from its former chemical businesses.
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.
ZIRP [0-0.25% fed fund rate] through September 2021 FOMC meeting.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html ]
For the week [index changes only], DJIA -0.91%, SP500 -1.48%, Nasdaq Comp -1.54%, Russell 2000 +1.51%. DJ Transports +0.55%; DJ Utilities +1.15%. US$ index (spot) +0.76%, oil/WTI futures +0.23%, gold futures -0.26%.
52-weeks [index changes only], DJIA +5.00%, SP500 +13.17%, Nasdaq Comp +38.44%. [Rotating spot industrial XLI +5.24%]
Pg M4, Europe: Ad giant WPP has been hurt by Covid-19. It has now expanded into helping clients build e-commerce platforms and has acquired related capabilities through acquisitions. Subsidiaries include Ogilvy, Grey, Finsbury.
Pg M4, Emerging Markets: With Brazil struggling economically [GDP -4% in 2020; national debt 100% of GDP after stimulus] and politically, its stocks may be bottoming [EWZ -20% in 2020]. Central bank has cut rates; 10-yr yield is 7.5%; currency outlook is stable. US-China trade frictions have benefitted Brazilian ag sector. Next general elections are in 2022.
Pg M6, Commodities: Oil rally should continue with potential range of $55-65 as producers [OPEC+, etc] restrain output. Demand will continue to rise. Weak dollar will also benefit oil. But watch the output from the US shale producers. Recommended are WTI June futures CLM21.NYM and futures-based ETF DBO.
Pg M5, Options: At these high market levels, with more stimulus coming, recommended are selling puts on stocks you would like to own and/or buy calls.
[SP500 VIX 24.34, SKEW 136.70] [Yahoo Finance data]
finance.yahoo.com/quotes/%5EVIX,%5ESKEW?.tsrc=fin-srch
Pg M23, M28: A down week in Europe [Netherlands +1.52%, Spain -2.12%, Greece -2.63%] and a flat week in Asia [Singapore +1.93%, New Zealand -4.67%]. The equity CEF index [data to Thursday] outperformed the DJIA and its discount was -6.5% [wide fluctuations between -4% to -16% over the last few months].
Treasury rates 3-mo yield 0.09%, 2-yr 0.13%, 5-yr 0.46%, 10-yr 1.11%, 30-yr 1.85% [Treasury data*]. Dollar rose, DXY 90.78, +0.8% [M31]. Gold [Handy & Harman spot, Thursday] fell to $1,839 -1.3% [M34]; the gold-miners tanked. [^XAU was at 137.51, -6.61% for the week]
*Treasury Yield-Curve www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
Top FDIC insured savings deposit rates*: Money-market accounts 0.61%; 3-mo Jumbo CD 0.40% [most are 0.25% or below], 1-yr CDs 0.70%; 5-yr CDs 1.00% [M29].
*For local rates www.depositaccounts.com/banks/rates-map/
Bonus from Part 2 include Cover Story (now only in online designation), Up and Down Wall Street, Streetwise and these won’t be repeated in Part 2.
Pg 24: Cover Story “Roundtable: Welcome to the Roaring ‘20s, but May be Not for Stocks”. 1st of 3 parts started with general discussions. Highlighted points from 10 panelists are listed below without noting who said what.
Recent events may provide a boost for ESG. Attention may also focus on innovation and tech disruptions. Social unrest is growing in the West, including in the US, and may continue to grow until there are some structural changes. Taxes and regulations will rise. Opinions were mixed on rotation from growth to cyclicals. Consumer health/wealth will remain good. Huge monetary & fiscal stimulus [including infrastructure bills] and alarming deficits may become concerns; limits of MMT may be tested. Impact of immigration on labor force and of government-supported R&D on economic development should be reviewed. Covid-19 vaccinations would be widespread in the US by Q2, but in the EMs only by 2022. Lockdown risks will remain in some areas and countries. Lack of in-person schooling during Covid-19 has been harmful to students. Education will play a critical role. Work, living, leisure patterns will change. Remote working will promote spreading out of the workforce. Productivity will rise. E-commerce and social-media use will continue to accelerate.
US GDP growth in 2021 may be +4% to +6%. Weak dollar may reduce foreign fund flows into the US and would provide boost to foreign returns. Role of Asia will grow. US-China relations will improve. China will continue to move towards self-sufficiency; its consumer sector may grow from 45% of GDP to 60%. Inflation expectations and yields will rise; stock P/Es will contract. SP500 targets are in wide range from +6% to +14%, with strong H1 but weak H2. SP500 earnings $165. Volatility may remain high; there may be deep corrections. EV/EBITDA ratio have risen, EV has risen from growing debt, EBITDA has collapsed due to Covid-19 related business slowdowns/shutdowns. Divergence among stocks and sectors will remain high due to uneven recoveries.
Priest/Epoch Investment Partners: TMUS, AMGN, NEP, NKE, ANET, DIS
Whitmer/Eagle Capital Partners: VTRS, HMHC, LafargeHolcim/LHN.sw
Pg 7, Up and Down Wall Street: So far inflation is seen in penny stocks [under $5 now], options, cryptocurrencies, lottery. City’s/C Panic & Euphoria Gauge is wildly bullish. Small-cap R2000 has been led to new records by the likes of CZR, PENN. It is those yutes trading stimulus money commission-free with apps. Another Stimulus3 is coming by February/March. The negative effects of Stimulus1 ending in December are beginning to show in economic data. Inflation is creeping up. There are supply shortages but lots of cash to go around. Inflation expectations and bond yields are rising and that will negatively impact high fwd P/Es [23 for SP500]. 10-yr in 1.25-1.5% range won’t bother investors [except the core bond fund investors] and the Fed but beyond that soon may be a problem.
Preferreds are attractive: Banks COF-K, WFC-Z; mREIT NLY-G [more suitable for retirement accounts]; ETF PFF; CEFs JPS, FPF.
Pg 11, Streetwise: Celebrity endorsement caused Zomedia [ZOM] to rise multiple times within the penny stock range. Is that the bubble Jeremy Grantham talking about? He points to TSLA [valued at $1.25 million per vehicle sold]; number of IPOs in 2020 exceeding those in dot. com bubble peak year 2000; almost 50% of those IPOs via loosely scrutinized SPAC/ blank-check route; number of small companies tripling; options trading volume 8x normal. But JG has called bubbles before and most of the times nothing happened [although he was only 3 years too early on 1989 Nikkei 225 bubble]. So, does one sell or have faith in the Fed put and the Fed promise of easy money for as far as eyes can see? At these high market levels, the economic fundamentals suck [new technical term?]. Markets may peak when the news cannot get any better. Optimistic strategists are looking for good 2021 as the economy reopens and stocks like DIS, FIVE, PG, SNA, GOOGL may do well; also look overseas.
More later….
Pg M1, Trader: A down week as economic data were poor and investors contemplated post-Inauguration realities. More and more stimulus coming. There has been good news on Covid-19 vaccines. Rising inflation expectations and bond yields may be bad news for speculative highflyers and good news for economically sensitive cyclicals.
Industrial 3M/MMM is attractive on reopening of economy; stimulus; low inventory levels in economy; capex from cash rich companies. 3M does face liabilities from its former chemical businesses.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes.
ZIRP [0-0.25% fed fund rate] through September 2021 FOMC meeting.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html ]
For the week [index changes only], DJIA -0.91%, SP500 -1.48%, Nasdaq Comp -1.54%, Russell 2000 +1.51%. DJ Transports +0.55%; DJ Utilities +1.15%. US$ index (spot) +0.76%, oil/WTI futures +0.23%, gold futures -0.26%.
52-weeks [index changes only], DJIA +5.00%, SP500 +13.17%, Nasdaq Comp +38.44%. [Rotating spot industrial XLI +5.24%]
Pg M4, Europe: Ad giant WPP has been hurt by Covid-19. It has now expanded into helping clients build e-commerce platforms and has acquired related capabilities through acquisitions. Subsidiaries include Ogilvy, Grey, Finsbury.
Pg M4, Emerging Markets: With Brazil struggling economically [GDP -4% in 2020; national debt 100% of GDP after stimulus] and politically, its stocks may be bottoming [EWZ -20% in 2020]. Central bank has cut rates; 10-yr yield is 7.5%; currency outlook is stable. US-China trade frictions have benefitted Brazilian ag sector. Next general elections are in 2022.
Pg M6, Commodities: Oil rally should continue with potential range of $55-65 as producers [OPEC+, etc] restrain output. Demand will continue to rise. Weak dollar will also benefit oil. But watch the output from the US shale producers. Recommended are WTI June futures CLM21.NYM and futures-based ETF DBO.
Pg M5, Options: At these high market levels, with more stimulus coming, recommended are selling puts on stocks you would like to own and/or buy calls.
[SP500 VIX 24.34, SKEW 136.70] [Yahoo Finance data]
finance.yahoo.com/quotes/%5EVIX,%5ESKEW?.tsrc=fin-srch
Pg M23, M28: A down week in Europe [Netherlands +1.52%, Spain -2.12%, Greece -2.63%] and a flat week in Asia [Singapore +1.93%, New Zealand -4.67%]. The equity CEF index [data to Thursday] outperformed the DJIA and its discount was -6.5% [wide fluctuations between -4% to -16% over the last few months].
Treasury rates 3-mo yield 0.09%, 2-yr 0.13%, 5-yr 0.46%, 10-yr 1.11%, 30-yr 1.85% [Treasury data*]. Dollar rose, DXY 90.78, +0.8% [M31]. Gold [Handy & Harman spot, Thursday] fell to $1,839 -1.3% [M34]; the gold-miners tanked. [^XAU was at 137.51, -6.61% for the week]
*Treasury Yield-Curve www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
Top FDIC insured savings deposit rates*: Money-market accounts 0.61%; 3-mo Jumbo CD 0.40% [most are 0.25% or below], 1-yr CDs 0.70%; 5-yr CDs 1.00% [M29].
*For local rates www.depositaccounts.com/banks/rates-map/
Bonus from Part 2 include Cover Story (now only in online designation), Up and Down Wall Street, Streetwise and these won’t be repeated in Part 2.
Pg 24: Cover Story “Roundtable: Welcome to the Roaring ‘20s, but May be Not for Stocks”. 1st of 3 parts started with general discussions. Highlighted points from 10 panelists are listed below without noting who said what.
Recent events may provide a boost for ESG. Attention may also focus on innovation and tech disruptions. Social unrest is growing in the West, including in the US, and may continue to grow until there are some structural changes. Taxes and regulations will rise. Opinions were mixed on rotation from growth to cyclicals. Consumer health/wealth will remain good. Huge monetary & fiscal stimulus [including infrastructure bills] and alarming deficits may become concerns; limits of MMT may be tested. Impact of immigration on labor force and of government-supported R&D on economic development should be reviewed. Covid-19 vaccinations would be widespread in the US by Q2, but in the EMs only by 2022. Lockdown risks will remain in some areas and countries. Lack of in-person schooling during Covid-19 has been harmful to students. Education will play a critical role. Work, living, leisure patterns will change. Remote working will promote spreading out of the workforce. Productivity will rise. E-commerce and social-media use will continue to accelerate.
US GDP growth in 2021 may be +4% to +6%. Weak dollar may reduce foreign fund flows into the US and would provide boost to foreign returns. Role of Asia will grow. US-China relations will improve. China will continue to move towards self-sufficiency; its consumer sector may grow from 45% of GDP to 60%. Inflation expectations and yields will rise; stock P/Es will contract. SP500 targets are in wide range from +6% to +14%, with strong H1 but weak H2. SP500 earnings $165. Volatility may remain high; there may be deep corrections. EV/EBITDA ratio have risen, EV has risen from growing debt, EBITDA has collapsed due to Covid-19 related business slowdowns/shutdowns. Divergence among stocks and sectors will remain high due to uneven recoveries.
Priest/Epoch Investment Partners: TMUS, AMGN, NEP, NKE, ANET, DIS
Whitmer/Eagle Capital Partners: VTRS, HMHC, LafargeHolcim/LHN.sw
Pg 7, Up and Down Wall Street: So far inflation is seen in penny stocks [under $5 now], options, cryptocurrencies, lottery. City’s/C Panic & Euphoria Gauge is wildly bullish. Small-cap R2000 has been led to new records by the likes of CZR, PENN. It is those yutes trading stimulus money commission-free with apps. Another Stimulus3 is coming by February/March. The negative effects of Stimulus1 ending in December are beginning to show in economic data. Inflation is creeping up. There are supply shortages but lots of cash to go around. Inflation expectations and bond yields are rising and that will negatively impact high fwd P/Es [23 for SP500]. 10-yr in 1.25-1.5% range won’t bother investors [except the core bond fund investors] and the Fed but beyond that soon may be a problem.
Preferreds are attractive: Banks COF-K, WFC-Z; mREIT NLY-G [more suitable for retirement accounts]; ETF PFF; CEFs JPS, FPF.
Pg 11, Streetwise: Celebrity endorsement caused Zomedia [ZOM] to rise multiple times within the penny stock range. Is that the bubble Jeremy Grantham talking about? He points to TSLA [valued at $1.25 million per vehicle sold]; number of IPOs in 2020 exceeding those in dot. com bubble peak year 2000; almost 50% of those IPOs via loosely scrutinized SPAC/ blank-check route; number of small companies tripling; options trading volume 8x normal. But JG has called bubbles before and most of the times nothing happened [although he was only 3 years too early on 1989 Nikkei 225 bubble]. So, does one sell or have faith in the Fed put and the Fed promise of easy money for as far as eyes can see? At these high market levels, the economic fundamentals suck [new technical term?]. Markets may peak when the news cannot get any better. Optimistic strategists are looking for good 2021 as the economy reopens and stocks like DIS, FIVE, PG, SNA, GOOGL may do well; also look overseas.
More later….