Post by Admin/YBB on Apr 22, 2023 5:15:03 GMT -6
From Barron’s, April 24, 2023 (Part 1, Market Week+)
Pg 35, TRADER. EARNINGS reports so far have been fine. The SP00 earnings for 2023 ($218) may be flat vs 2022 ($216). A recession would change this situation. But the stock market isn’t worried even with fwd P/E 18.3 (high). Some company earnings may be revised upwards.
Beneficiaries of declining DOLLAR would be companies with huge sales abroad: NVDA, MU, CAT, PM, EL.
Caterpillar/CAT (fwd P/E 14) looks attractive ahead of its earnings report on Thursday, 4/27/23. It has been hurt by supply-chain issues but that is improving.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
FOMC 5/3/23+ +25 bps (cycle peak 5.00-5.25%)
FOMC 6/14/23+ hold
FOMC 7/26/23+ hold
FOMC 9/20/23+ hold
FOMC 11/1/23+ cut
FOMC 12/13/23+ cut
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -0.23%, SP500 -0.10%, Nasdaq Comp -0.42%, R2000 +1.58%. DJ Transports +1.17%; DJ Utilities +1.35%. (Rotating spot equal-weight SP500 RSP +0.19%) US$ index (spot) +0.17%, oil/WTI futures -5.64%, gold futures -1.13%.
YTD (index changes only), DJIA +2.00%, SP500 +7.66%, Nasdaq Comp +15.34%. (Rotating spot equal-weight SP500 RSP +2.60%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE fell; ratio of winners:losers 1:1+.
AAII Bull-Bear Spread -7.9% (below average).
%Above 50-dMA for NYSE-listed stocks 44.86% (low) (StockCharts $NYA50R; $SPXA50R for the SP500 is also included in the bottom panel),
stockcharts.com/h-sc/ui?s=%24NYA50R&p=D&b=5&g=0&id=p91704957718 .
Delta MSI 54.1% (positive) (a proprietary index for %Above 75-dMA for selected 1,800 stocks). The all-cap $NYA50R is typically closer to it than the large-cap $SPXA50R.
Pg 38, INTERNATIONAL TRADER. Foreign investors are ignoring INDIA’s new tough social-media regulations/controls that became effective on 4/6/23. Foreign company CEOs are eager to meet with Prime Minister MODI – the most recent being Apple CEO COOK (some may remember that a couple of years ago, Amazon CEO BEZOS was unable to meet ANY Central Government minister during his month-long trip to India). Some think that, at least for now, Modi’s heavy hand is good for economic development and tearing up the old bureaucracy. On the other hand, the BBC is paying a price for not heeding the Government’s urgings/directives in the past. And the opposition leader was kicked out of the Parliament (Lower House) for having a history of being too critical of the Government. Beware that Indian stock P/Es are high.
EMERGING MARKETS. (It has become clear now that the NEW “International Trader” has replaced the OLD “European Trader” and “Emerging Markets”)
Pg 39, OPTIONS. Rising RATES have added to the anxieties of the EARNINGS season. A pattern shift has been noted in the options market – normally, the options traders make early bets with bullish calls or bearish puts on stocks ahead of earnings releases, but now, they seem to trade on the options of others in the industry based on those that have reported already. The VIX around 17 is calm (long-term average is 19). The SP500 has not broken through the February high.
(SP500 VIX 16.77, Nasdaq 100 VXN 21.29 (high), options SKEW 132.94 (high), bond MOVE 120.84 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
EXTRA, COMMODITIES. The OPEC can only influence oil supplies. The demand is slowing now as concerns grow about recession. This is hurting the oil stocks (XOP, XLE). Inventories are growing everywhere except in the US (where the DC policy is to drain oil reserves (SPR) to keep domestic prices low). (This column may be on the chopping block too)
Pg 53: An up week in EUROPE (Switzerland +1.16%, Finland -1.90%) and a flat week in ASIA (Japan +1.01%, Thailand -1.93%).
TREASURY* 3-mo yield 5.14%, 1-yr 4.78%, 2-yr 4.17%, 5-yr 3.66%, 10-yr 3.57%, 30-yr 3.78% (1m-3m spread widened to 179 bps; see Up and Down Wall Street). REAL yields 5-yr 1.36%, 10-yr 1.29%, 30-yr 1.53%.
DOLLAR rose, ^DXY 101.73, +0.2% (pg 58). GOLD fell to $1,974, -2.3% (Handy & Harman spot, Thursday; pg 60); the gold-miners fell sharply. (^XAU was at 134.21, -5.18% for the week)
Top FDIC insured savings deposit rates** (This feature has been discontinued)
US SAVINGS I-Bonds^, current rate 6.89% (annualized) is valid until 4/28/23 (unless changed by Treasury); the fixed/base rate +0.40%. Rates change on May 1 & November 1. New semiannual variable rate from May 1 will be 1.694% ( the needed 6-mo of the CPI data are all in); based on the fixed rate of +0.40% to +1.00%, the 4/12/23 estimates for the combined rate on May 1 are 3.79-4.40%.
*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 18, COVER STORY “The Battle for the Future of the CAR is Under Way. Investors Won’t have to Pick a Side”. Your car will soon become your biggest computing platform. EVs, autonomous-driving and AI will change cars as we know them today (as machines). Future auto UPGRADES would just be over-the-air. Large digital SCREENS are replacing old buttons/knobs/switches. After initially welcoming Apple, Google, etc, the auto manufacturers (GM, Mercedez, etc) are now developing in-house software capabilities and want to limit Apple and Google to phone-related functions. Apple and Google have responded by offering customizable auto platforms that let auto manufacturers add features. Semi CHIP makers will have prominent roles – NVDA, QCOM, MU, AMBA, Arm; these may be the best way for investors to participate in the emerging auto technologies. The next generation chips will be multifunctional rather than the dedicated microcontrollers and ECUs (ECM, PCM, TCM, BCM, CCM, GEM, etc). Auto SERVICES will include over-the-air software updates, some software updates at dealers, subscriptions packages (to turn on and use features already on cars), power boost modes for-pay, road services, payments, insurance, gaming (while parked). An example of overreach that backfired was BMW’s subscription-based heated seats and that feature was dumped. (More related stories in Part 2)
Pg 7, UP AND DOWN WALL STREET. For the STOCK market, it’s the calm before the storm. April has been too quiet despite several uncertainties – rates, Fed pivot, debt-ceiling, recession, earnings (so far so good). The fear gauge VIX is low at 16.77, but the realized (actual) volatility is even lower at 9.4%. In 2 years, the SP500 has delivered just -1% (with lots of interim volatility). This do-nothing pattern could be the future if there is stagflation.
DEBT-CEILING deadline may now be in mid-June (vs August before) due to lower TAX receipts. Kevin McCARTHY is rushing some solution by 4/28/23 that may not even have full GOP support; if it somehow clears the House, it would be DOA in the Senate. That may leave just enough time for bitter Senate revisions to be sent back to the House for take-it-or-leave-it, and with partial Government shutdown and debt default looming. The 1m-3m T-Bill spread of 179 bps is showing a potential liquidity stress; it seems that the new deadline is within 1-3 months (or, even within 1-2 months), and a popular trade is to buy 1m T-Bills and short 3m T-Bills (or, short 2m T-Bills); traders hope to gain from the chaos (that may not happen). Anyway, expect the current market calm to turn into a storm soon.
Pg 11, STREETWISE. Expedia (EXPE; -50% over 1 yr; fwd P/E 6 only; earnings report 5/4/23) is attractive on the prospects of its vacation-rental unit Vrbo (2015- ; it’s like a mini-Airbnb). Expedia now has 75% of its revenues from lodging. There are no signs yet of a downturn in the travel industry – airlines, cruises, online bookings.
(EXTRAS from online Friday that didn’t make the weekend paper version)
See Column Topics. It seems some consolidation/rearrangement of Columns is going on.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).
Pg 35, TRADER. EARNINGS reports so far have been fine. The SP00 earnings for 2023 ($218) may be flat vs 2022 ($216). A recession would change this situation. But the stock market isn’t worried even with fwd P/E 18.3 (high). Some company earnings may be revised upwards.
Beneficiaries of declining DOLLAR would be companies with huge sales abroad: NVDA, MU, CAT, PM, EL.
Caterpillar/CAT (fwd P/E 14) looks attractive ahead of its earnings report on Thursday, 4/27/23. It has been hurt by supply-chain issues but that is improving.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
FOMC 5/3/23+ +25 bps (cycle peak 5.00-5.25%)
FOMC 6/14/23+ hold
FOMC 7/26/23+ hold
FOMC 9/20/23+ hold
FOMC 11/1/23+ cut
FOMC 12/13/23+ cut
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -0.23%, SP500 -0.10%, Nasdaq Comp -0.42%, R2000 +1.58%. DJ Transports +1.17%; DJ Utilities +1.35%. (Rotating spot equal-weight SP500 RSP +0.19%) US$ index (spot) +0.17%, oil/WTI futures -5.64%, gold futures -1.13%.
YTD (index changes only), DJIA +2.00%, SP500 +7.66%, Nasdaq Comp +15.34%. (Rotating spot equal-weight SP500 RSP +2.60%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE fell; ratio of winners:losers 1:1+.
AAII Bull-Bear Spread -7.9% (below average).
%Above 50-dMA for NYSE-listed stocks 44.86% (low) (StockCharts $NYA50R; $SPXA50R for the SP500 is also included in the bottom panel),
stockcharts.com/h-sc/ui?s=%24NYA50R&p=D&b=5&g=0&id=p91704957718 .
Delta MSI 54.1% (positive) (a proprietary index for %Above 75-dMA for selected 1,800 stocks). The all-cap $NYA50R is typically closer to it than the large-cap $SPXA50R.
Pg 38, INTERNATIONAL TRADER. Foreign investors are ignoring INDIA’s new tough social-media regulations/controls that became effective on 4/6/23. Foreign company CEOs are eager to meet with Prime Minister MODI – the most recent being Apple CEO COOK (some may remember that a couple of years ago, Amazon CEO BEZOS was unable to meet ANY Central Government minister during his month-long trip to India). Some think that, at least for now, Modi’s heavy hand is good for economic development and tearing up the old bureaucracy. On the other hand, the BBC is paying a price for not heeding the Government’s urgings/directives in the past. And the opposition leader was kicked out of the Parliament (Lower House) for having a history of being too critical of the Government. Beware that Indian stock P/Es are high.
EMERGING MARKETS. (It has become clear now that the NEW “International Trader” has replaced the OLD “European Trader” and “Emerging Markets”)
Pg 39, OPTIONS. Rising RATES have added to the anxieties of the EARNINGS season. A pattern shift has been noted in the options market – normally, the options traders make early bets with bullish calls or bearish puts on stocks ahead of earnings releases, but now, they seem to trade on the options of others in the industry based on those that have reported already. The VIX around 17 is calm (long-term average is 19). The SP500 has not broken through the February high.
(SP500 VIX 16.77, Nasdaq 100 VXN 21.29 (high), options SKEW 132.94 (high), bond MOVE 120.84 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
EXTRA, COMMODITIES. The OPEC can only influence oil supplies. The demand is slowing now as concerns grow about recession. This is hurting the oil stocks (XOP, XLE). Inventories are growing everywhere except in the US (where the DC policy is to drain oil reserves (SPR) to keep domestic prices low). (This column may be on the chopping block too)
Pg 53: An up week in EUROPE (Switzerland +1.16%, Finland -1.90%) and a flat week in ASIA (Japan +1.01%, Thailand -1.93%).
TREASURY* 3-mo yield 5.14%, 1-yr 4.78%, 2-yr 4.17%, 5-yr 3.66%, 10-yr 3.57%, 30-yr 3.78% (1m-3m spread widened to 179 bps; see Up and Down Wall Street). REAL yields 5-yr 1.36%, 10-yr 1.29%, 30-yr 1.53%.
DOLLAR rose, ^DXY 101.73, +0.2% (pg 58). GOLD fell to $1,974, -2.3% (Handy & Harman spot, Thursday; pg 60); the gold-miners fell sharply. (^XAU was at 134.21, -5.18% for the week)
Top FDIC insured savings deposit rates** (This feature has been discontinued)
US SAVINGS I-Bonds^, current rate 6.89% (annualized) is valid until 4/28/23 (unless changed by Treasury); the fixed/base rate +0.40%. Rates change on May 1 & November 1. New semiannual variable rate from May 1 will be 1.694% ( the needed 6-mo of the CPI data are all in); based on the fixed rate of +0.40% to +1.00%, the 4/12/23 estimates for the combined rate on May 1 are 3.79-4.40%.
*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 18, COVER STORY “The Battle for the Future of the CAR is Under Way. Investors Won’t have to Pick a Side”. Your car will soon become your biggest computing platform. EVs, autonomous-driving and AI will change cars as we know them today (as machines). Future auto UPGRADES would just be over-the-air. Large digital SCREENS are replacing old buttons/knobs/switches. After initially welcoming Apple, Google, etc, the auto manufacturers (GM, Mercedez, etc) are now developing in-house software capabilities and want to limit Apple and Google to phone-related functions. Apple and Google have responded by offering customizable auto platforms that let auto manufacturers add features. Semi CHIP makers will have prominent roles – NVDA, QCOM, MU, AMBA, Arm; these may be the best way for investors to participate in the emerging auto technologies. The next generation chips will be multifunctional rather than the dedicated microcontrollers and ECUs (ECM, PCM, TCM, BCM, CCM, GEM, etc). Auto SERVICES will include over-the-air software updates, some software updates at dealers, subscriptions packages (to turn on and use features already on cars), power boost modes for-pay, road services, payments, insurance, gaming (while parked). An example of overreach that backfired was BMW’s subscription-based heated seats and that feature was dumped. (More related stories in Part 2)
Pg 7, UP AND DOWN WALL STREET. For the STOCK market, it’s the calm before the storm. April has been too quiet despite several uncertainties – rates, Fed pivot, debt-ceiling, recession, earnings (so far so good). The fear gauge VIX is low at 16.77, but the realized (actual) volatility is even lower at 9.4%. In 2 years, the SP500 has delivered just -1% (with lots of interim volatility). This do-nothing pattern could be the future if there is stagflation.
DEBT-CEILING deadline may now be in mid-June (vs August before) due to lower TAX receipts. Kevin McCARTHY is rushing some solution by 4/28/23 that may not even have full GOP support; if it somehow clears the House, it would be DOA in the Senate. That may leave just enough time for bitter Senate revisions to be sent back to the House for take-it-or-leave-it, and with partial Government shutdown and debt default looming. The 1m-3m T-Bill spread of 179 bps is showing a potential liquidity stress; it seems that the new deadline is within 1-3 months (or, even within 1-2 months), and a popular trade is to buy 1m T-Bills and short 3m T-Bills (or, short 2m T-Bills); traders hope to gain from the chaos (that may not happen). Anyway, expect the current market calm to turn into a storm soon.
Pg 11, STREETWISE. Expedia (EXPE; -50% over 1 yr; fwd P/E 6 only; earnings report 5/4/23) is attractive on the prospects of its vacation-rental unit Vrbo (2015- ; it’s like a mini-Airbnb). Expedia now has 75% of its revenues from lodging. There are no signs yet of a downturn in the travel industry – airlines, cruises, online bookings.
(EXTRAS from online Friday that didn’t make the weekend paper version)
See Column Topics. It seems some consolidation/rearrangement of Columns is going on.
(More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook (“at”yogibearbull), Twitter (“at”YBB_Finance).