Post by Admin/YBB on Apr 29, 2023 5:12:07 GMT -6
From Barron’s, May 1, 2023 (Part 1, Market Week+)
Pg 24, TRADER. While the market INDEXES remain steady and elevated, several STOCKS are attractively valued. This is due to concerns about the economy, banking (another shoe to drop this weekend?), Fed hike(s), debt-ceiling. Consider defensive stocks (ADBE, HUM, KO, V, etc).
The market is sleepwalking through many RISKS out there. Even with a regional BANKING crisis, the VIX has been falling; the realized volatility is also declining. But VIX-of-VIX (VVIX) and bond volatility MOVE are telling quite different stories. Hide in defensive names – JNJ, KO, MCD, MRK, PEP, PG, WM. For speculative volatility plays, look at CBOE, CME, ICE, MKTX, VIRT.
AIR TRAVEL is booming, but airline stocks are mixed due to higher costs of fuel, labor, etc. Instead, consider indirect beneficiaries, the card companies V, MA; the leasing companies FTAI, AL.
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+ hike +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 -25 bps
FOMC 12/13/23+ cut -25 bps
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +0.86%, SP500 +0.87%, Nasdaq Comp +1.28%, R2000 -1.26%. DJ Transports -2.72%; DJ Utilities -1.00%. (Rotating spot airline companies JETS -0.99%) US$ index (spot) -0.15%, oil/WTI futures -1.40%, gold futures +0.54%.
YTD (index changes only), DJIA +2.87%, SP500 +8.59%, Nasdaq Comp +16.82%. (Rotating spot airline companies JETS +5.80%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE fell a bit; ratio of winners:losers 1+:1.
AAII Bull-Bear Spread -14.4% (low).
%Above 50-dMA for NYSE-listed stocks 48.13% (marginal) (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 43.1% (low) (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 27, INTERNATIONAL TRADER. LITHIUM is critical for EV batteries. CHILE is #2 producer after AUSTRALIA. But Chile has had high taxes/royalties, and on 4/20/23, it did a soft nationalization of the lithium industry – that still needs approval by the legislature. Chilean President BORIC’s proposed constitution and tax overhaul proposals were rejected by the legislature. But if the soft nationalization for lithium sticks, an immediate beneficiary may be ARGENTINA, but it uses an unproven technology for lithium extraction; there are also currency issues. AUSTRALIA, that relies on lithium mining, may be a long-term winner.
EMERGING MARKETS. (Place holder)
Pg 28, OPTIONS. Options started trading at the CBOE 50 years ago (4/26/1973). A lot has happened since then: The Black-Sholes pricing model came and went; Thomas PETERFFY’s (at Timber Hill then, now at Interactive Brokers/IBKR) first options trading software was banned by the CBOE; UBS and GS bought options startups; options trading went global; trading floors were replaced by electronic trading; William BRODSKY, an early leader at the CBOE, is still around at Options Solutions (and is author SEARS’ boss); the VIX started in 1993 (and now we have a variety of “VIXs” with the most recent being VIX1D).
(SP500 VIX 15.78, Nasdaq 100 VXN 20.12, options SKEW 138.44 (high), bond MOVE 122.46 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
COMMODITIES. (Place holder)
Pg 42: A down week in EUROPE (Sweden +1.30%, Italy -2.33%, Greece -2.83%) and an up week in ASIA (India +2.36%, Thailand -1.99%).
TREASURY* 3-mo yield 5.10%, 1-yr 4.80%, 2-yr 4.04%, 5-yr 3.51%, 10-yr 3.44%, 30-yr 3.67% (1m-3m spread was 75 bps, down but still elevated). REAL yields 5-yr 1.31%, 10-yr 1.26%, 30-yr 1.51%.
DOLLAR fell, ^DXY 101.67, -0.15% (pg 50). GOLD rose to $1,983, +0.50% (Handy & Harman spot, Thursday; pg 52); the gold-miners fell a bit. (^XAU was at 133.98, -0.17% for the week)
Top FDIC insured savings deposit rates** (This feature has been discontinued)
US SAVINGS I-Bonds^, NEW rate from May 1, 2023, is 4.30%; the fixed rate is 0.90%, the semiannual inflation is 1.69%. In a surprise, it was released EARLY, on 4/28/23.
*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 14, COVER STORY “The FED Has No Good Options. The Risk of a Misstep is Growing”. The Fed’s rapid RATE hikes and the QT are hurting several parts of the economy (housing, banking, businesses from tight credit conditions), but they haven’t cooled down the INFLATION (especially, the sticky inflation). Another rate hike is expected on May 3, but the debate is growing whether the Fed should continue rate HIKES or PAUSE to let higher rates have their effect; and whether its +2% average inflation TARGET is still realistic. Much of the data is backward-looking. The question is whether the Fed going too fast now can fix its prior errors in going too slow for too long?
Pg 5, UP AND DOWN WALL STREET. A selloff in the stock market may help to resolve the DEBT-CEILING impasse. The House proposal would be DOA in the Senate but will at least get the negotiations going. The drop-dead date would depend on TAX receipts. The market VOLATILITY would spike; the T-Bills maturing ahead of the (uncertain) drop-dead date are in high demand now (high 1m-3m spread); the CDS on the US sovereign debt are also high. The SESONALITY will also turn poor for May 1-October 31. The 2nd shoe in the regional banking crisis may be imminent – the rescue of FRC; but the problems are limited to a handful of regional banks. Don’t be fooled by the current calm in the stock market; be prepared for SP500 of at least 3,800 (or lower).
Pg 7, STREETWISE. The generative AI is benefiting BIG TECHs (MSFT, GOOGL, AMZN, META, NVDA, CRM, etc) and that makes the current market leadership even narrower. ChatGPT can mimic people’s mannerisms and voices. Big techs are also laying off thousands citing weaker sales and higher “efficiency”. Some market ideas from ChatGPT that were also run by some humans – avoid “sell in May and go away”; look for values abroad (Europe, Japan); buy some bonds (yields are attractive).
(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 24, TRADER. While the market INDEXES remain steady and elevated, several STOCKS are attractively valued. This is due to concerns about the economy, banking (another shoe to drop this weekend?), Fed hike(s), debt-ceiling. Consider defensive stocks (ADBE, HUM, KO, V, etc).
The market is sleepwalking through many RISKS out there. Even with a regional BANKING crisis, the VIX has been falling; the realized volatility is also declining. But VIX-of-VIX (VVIX) and bond volatility MOVE are telling quite different stories. Hide in defensive names – JNJ, KO, MCD, MRK, PEP, PG, WM. For speculative volatility plays, look at CBOE, CME, ICE, MKTX, VIRT.
AIR TRAVEL is booming, but airline stocks are mixed due to higher costs of fuel, labor, etc. Instead, consider indirect beneficiaries, the card companies V, MA; the leasing companies FTAI, AL.
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+ hike +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 -25 bps
FOMC 12/13/23+ cut -25 bps
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +0.86%, SP500 +0.87%, Nasdaq Comp +1.28%, R2000 -1.26%. DJ Transports -2.72%; DJ Utilities -1.00%. (Rotating spot airline companies JETS -0.99%) US$ index (spot) -0.15%, oil/WTI futures -1.40%, gold futures +0.54%.
YTD (index changes only), DJIA +2.87%, SP500 +8.59%, Nasdaq Comp +16.82%. (Rotating spot airline companies JETS +5.80%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE fell a bit; ratio of winners:losers 1+:1.
AAII Bull-Bear Spread -14.4% (low).
%Above 50-dMA for NYSE-listed stocks 48.13% (marginal) (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 43.1% (low) (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 27, INTERNATIONAL TRADER. LITHIUM is critical for EV batteries. CHILE is #2 producer after AUSTRALIA. But Chile has had high taxes/royalties, and on 4/20/23, it did a soft nationalization of the lithium industry – that still needs approval by the legislature. Chilean President BORIC’s proposed constitution and tax overhaul proposals were rejected by the legislature. But if the soft nationalization for lithium sticks, an immediate beneficiary may be ARGENTINA, but it uses an unproven technology for lithium extraction; there are also currency issues. AUSTRALIA, that relies on lithium mining, may be a long-term winner.
EMERGING MARKETS. (Place holder)
Pg 28, OPTIONS. Options started trading at the CBOE 50 years ago (4/26/1973). A lot has happened since then: The Black-Sholes pricing model came and went; Thomas PETERFFY’s (at Timber Hill then, now at Interactive Brokers/IBKR) first options trading software was banned by the CBOE; UBS and GS bought options startups; options trading went global; trading floors were replaced by electronic trading; William BRODSKY, an early leader at the CBOE, is still around at Options Solutions (and is author SEARS’ boss); the VIX started in 1993 (and now we have a variety of “VIXs” with the most recent being VIX1D).
(SP500 VIX 15.78, Nasdaq 100 VXN 20.12, options SKEW 138.44 (high), bond MOVE 122.46 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
COMMODITIES. (Place holder)
Pg 42: A down week in EUROPE (Sweden +1.30%, Italy -2.33%, Greece -2.83%) and an up week in ASIA (India +2.36%, Thailand -1.99%).
TREASURY* 3-mo yield 5.10%, 1-yr 4.80%, 2-yr 4.04%, 5-yr 3.51%, 10-yr 3.44%, 30-yr 3.67% (1m-3m spread was 75 bps, down but still elevated). REAL yields 5-yr 1.31%, 10-yr 1.26%, 30-yr 1.51%.
DOLLAR fell, ^DXY 101.67, -0.15% (pg 50). GOLD rose to $1,983, +0.50% (Handy & Harman spot, Thursday; pg 52); the gold-miners fell a bit. (^XAU was at 133.98, -0.17% for the week)
Top FDIC insured savings deposit rates** (This feature has been discontinued)
US SAVINGS I-Bonds^, NEW rate from May 1, 2023, is 4.30%; the fixed rate is 0.90%, the semiannual inflation is 1.69%. In a surprise, it was released EARLY, on 4/28/23.
*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 14, COVER STORY “The FED Has No Good Options. The Risk of a Misstep is Growing”. The Fed’s rapid RATE hikes and the QT are hurting several parts of the economy (housing, banking, businesses from tight credit conditions), but they haven’t cooled down the INFLATION (especially, the sticky inflation). Another rate hike is expected on May 3, but the debate is growing whether the Fed should continue rate HIKES or PAUSE to let higher rates have their effect; and whether its +2% average inflation TARGET is still realistic. Much of the data is backward-looking. The question is whether the Fed going too fast now can fix its prior errors in going too slow for too long?
Pg 5, UP AND DOWN WALL STREET. A selloff in the stock market may help to resolve the DEBT-CEILING impasse. The House proposal would be DOA in the Senate but will at least get the negotiations going. The drop-dead date would depend on TAX receipts. The market VOLATILITY would spike; the T-Bills maturing ahead of the (uncertain) drop-dead date are in high demand now (high 1m-3m spread); the CDS on the US sovereign debt are also high. The SESONALITY will also turn poor for May 1-October 31. The 2nd shoe in the regional banking crisis may be imminent – the rescue of FRC; but the problems are limited to a handful of regional banks. Don’t be fooled by the current calm in the stock market; be prepared for SP500 of at least 3,800 (or lower).
Pg 7, STREETWISE. The generative AI is benefiting BIG TECHs (MSFT, GOOGL, AMZN, META, NVDA, CRM, etc) and that makes the current market leadership even narrower. ChatGPT can mimic people’s mannerisms and voices. Big techs are also laying off thousands citing weaker sales and higher “efficiency”. Some market ideas from ChatGPT that were also run by some humans – avoid “sell in May and go away”; look for values abroad (Europe, Japan); buy some bonds (yields are attractive).
(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).