Post by Admin/YBB on May 6, 2023 4:17:11 GMT -6
From Barron’s, May 8, 2023 (Part 1, Market Week+)
Pg 28, TRADER. If the FED pauses but keeps RATES higher for longer, that may not be good for the stock market. BANK stocks are collapsing because of fading hopes that the rescue of 3 failed regional banks will contain the crisis. The Fed is also unconcerned (uninterested?) about the DEBT-CEILING issue that may be just weeks away (that is a fiscal issue for the Congress, the Treasury and the White House to handle, and don’t expect the Fed to protect from the consequences of failure, so said Powell). The US sovereign debt CDS rose sharply and 1m T-Bill yields also spiked (the only explanation may be that the market now thinks that 1m maturity will be beyond the drop-dead date; previously, large 1m-3m spread had developed in the expectation that the drop-dead date was within 1-3 months). A strong JOBS report may lead to further Fed tightening. The SP500 is stuck in the trading range of 3,800-4,200.
The FED is about done but may keep rates high for a while. The DEFENSIVE stocks may do better: Consumer-staples (CAG, KDP, SJM; XLP), healthcare (BMY, JNJ, UNH; XLV), etc.
Starbucks (SBUX; fwd P/E 27) selloff after its earnings release is a buying opportunity. Earnings report wasn’t bad, but the guidance was cautious and that spooked the investors.
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 6/14/23+ hold (cycle peak 5.00-5.25%)
FOMC 7/26/23+ hold
FOMC 9/20/23+ cut -25 bps
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 -1.24%, SP500 -0.80%, Nasdaq Comp +0.07%, R2000 -0.51%. DJ Transports +0.72%; DJ Utilities +0.28%. (Rotating spot regional bank KRE -10.10%) US$ index (spot) -0.37%, oil/WTI futures -7.09%, gold futures +1.37%.
YTD (index changes only), DJIA +1.59%, SP500 +7.73%, Nasdaq Comp +16.90%. (Rotating spot regional bank KRE -34.71%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE fell; ratio of winners:losers 1:2.
AAII Bull-Bear Spread -20.8% (low).
%Above 50-dMA for NYSE-listed stocks 44.26% (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 44.5% (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 31, INTERNATIONAL TRADER. The European BANKS look better now than the US banks despite the failure of Credit Suisse. The ECB and BOE are tightening (and that is good for banks for a while). Europe has fewer banks (only 3 in Netherlands) and cross-border money movement is restricted. There is also no analog of the US HTM accounting, so all is marked-to-market. But Europe may also be in recession. The regional banking crisis/contagion in the US has claimed 3 banks (SVB, Signature, First Republic; the 4th, Silvergate is in voluntary liquidation) and the crisis may not be over.
EMERGING MARKETS. (Place holder)
Pg 32, OPTIONS. Sell puts while others panic. Do this on things you want to buy and hold as there may be assignments on declines; you pocket the premiums if there are no declines.
(SP500 VIX 17.19, Nasdaq 100 VXN 20.36, options SKEW 134.32 (high), bond MOVE 130.21 (high) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
COMMODITIES. (Place holder)
Pg 45: A down week in EUROPE (Greece +1.41%, Switzerland +1.09%, Norway -2.21%,) and an up week in ASIA (Philippines +0.88%, Indonesia -1.57%).
TREASURY* 3-mo yield 5.26%, 1-yr 4.73%, 2-yr 3.92%, 5-yr 3.41%, 10-yr 3.44%, 30-yr 3.76% (1m-3m spread inverted to -33 bps). REAL yields 5-yr 1.22%, 10-yr 1.23%, 30-yr 1.53%.
DOLLAR fell, ^DXY 101.28, -0.4% (pg 50). GOLD rose to $2,001, +0.90% (Handy & Harman spot, Thursday; pg 52); the gold-miners rose. (^XAU was at 140.59, +4.93% 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%.
*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 “It’s Not Just Bud Light. How Companies Are Fighting Back the War Over Woke”. Several companies (BLK, BUD, DIS, HSY, KO, NKE, etc) have been caught up in the CULTURAL WARS. Bud Light (BUD) learned that going too far out on progressive issues can backfire. The ESG has become very controversial, even toxic. Election rhetoric is also heating up. Some companies are switching to hush/quiet mode on many social issues; even the loudest mouth on the ESG, FINK of BLK, has gone quiet. However, their regulatory disclosures indicate that they are staying-the-course, not just talking about them. The Inflation Reduction Act will also promote sustainability.
Pg 7, UP AND DOWN WALL STREET. MEDIA business has become complex and difficult. DIGITAL revolution and political polarization have made the media business risky – TV, movies, theme parks, journalism, news, etc. Search, social-media, generative AI have all played a role in this. Media funds have lagged the SP500 badly since 06/2005. But investors continue to pour money into media startups even as there have been spectacular collapses (BuzzFeed that bought HuffPost, Complex Media, etc; Vice Media, Mashable, Gawker, etc). Warren BUFFETT soured on the media. Mario GABELLI laments huge tech-induced changes in the media. Don’t just look at numbers when businesses are changing dramatically. Advertisers now focus on targeted audiences, and subscription services must be well-differentiated and highly valued. But there are some success stories – WWE/EDR, IMAX, TRI, Politico (owned by Axel Springer/KKR).
(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 28, TRADER. If the FED pauses but keeps RATES higher for longer, that may not be good for the stock market. BANK stocks are collapsing because of fading hopes that the rescue of 3 failed regional banks will contain the crisis. The Fed is also unconcerned (uninterested?) about the DEBT-CEILING issue that may be just weeks away (that is a fiscal issue for the Congress, the Treasury and the White House to handle, and don’t expect the Fed to protect from the consequences of failure, so said Powell). The US sovereign debt CDS rose sharply and 1m T-Bill yields also spiked (the only explanation may be that the market now thinks that 1m maturity will be beyond the drop-dead date; previously, large 1m-3m spread had developed in the expectation that the drop-dead date was within 1-3 months). A strong JOBS report may lead to further Fed tightening. The SP500 is stuck in the trading range of 3,800-4,200.
The FED is about done but may keep rates high for a while. The DEFENSIVE stocks may do better: Consumer-staples (CAG, KDP, SJM; XLP), healthcare (BMY, JNJ, UNH; XLV), etc.
Starbucks (SBUX; fwd P/E 27) selloff after its earnings release is a buying opportunity. Earnings report wasn’t bad, but the guidance was cautious and that spooked the investors.
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 6/14/23+ hold (cycle peak 5.00-5.25%)
FOMC 7/26/23+ hold
FOMC 9/20/23+ cut -25 bps
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 -1.24%, SP500 -0.80%, Nasdaq Comp +0.07%, R2000 -0.51%. DJ Transports +0.72%; DJ Utilities +0.28%. (Rotating spot regional bank KRE -10.10%) US$ index (spot) -0.37%, oil/WTI futures -7.09%, gold futures +1.37%.
YTD (index changes only), DJIA +1.59%, SP500 +7.73%, Nasdaq Comp +16.90%. (Rotating spot regional bank KRE -34.71%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE fell; ratio of winners:losers 1:2.
AAII Bull-Bear Spread -20.8% (low).
%Above 50-dMA for NYSE-listed stocks 44.26% (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 44.5% (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 31, INTERNATIONAL TRADER. The European BANKS look better now than the US banks despite the failure of Credit Suisse. The ECB and BOE are tightening (and that is good for banks for a while). Europe has fewer banks (only 3 in Netherlands) and cross-border money movement is restricted. There is also no analog of the US HTM accounting, so all is marked-to-market. But Europe may also be in recession. The regional banking crisis/contagion in the US has claimed 3 banks (SVB, Signature, First Republic; the 4th, Silvergate is in voluntary liquidation) and the crisis may not be over.
EMERGING MARKETS. (Place holder)
Pg 32, OPTIONS. Sell puts while others panic. Do this on things you want to buy and hold as there may be assignments on declines; you pocket the premiums if there are no declines.
(SP500 VIX 17.19, Nasdaq 100 VXN 20.36, options SKEW 134.32 (high), bond MOVE 130.21 (high) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
COMMODITIES. (Place holder)
Pg 45: A down week in EUROPE (Greece +1.41%, Switzerland +1.09%, Norway -2.21%,) and an up week in ASIA (Philippines +0.88%, Indonesia -1.57%).
TREASURY* 3-mo yield 5.26%, 1-yr 4.73%, 2-yr 3.92%, 5-yr 3.41%, 10-yr 3.44%, 30-yr 3.76% (1m-3m spread inverted to -33 bps). REAL yields 5-yr 1.22%, 10-yr 1.23%, 30-yr 1.53%.
DOLLAR fell, ^DXY 101.28, -0.4% (pg 50). GOLD rose to $2,001, +0.90% (Handy & Harman spot, Thursday; pg 52); the gold-miners rose. (^XAU was at 140.59, +4.93% 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%.
*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 “It’s Not Just Bud Light. How Companies Are Fighting Back the War Over Woke”. Several companies (BLK, BUD, DIS, HSY, KO, NKE, etc) have been caught up in the CULTURAL WARS. Bud Light (BUD) learned that going too far out on progressive issues can backfire. The ESG has become very controversial, even toxic. Election rhetoric is also heating up. Some companies are switching to hush/quiet mode on many social issues; even the loudest mouth on the ESG, FINK of BLK, has gone quiet. However, their regulatory disclosures indicate that they are staying-the-course, not just talking about them. The Inflation Reduction Act will also promote sustainability.
Pg 7, UP AND DOWN WALL STREET. MEDIA business has become complex and difficult. DIGITAL revolution and political polarization have made the media business risky – TV, movies, theme parks, journalism, news, etc. Search, social-media, generative AI have all played a role in this. Media funds have lagged the SP500 badly since 06/2005. But investors continue to pour money into media startups even as there have been spectacular collapses (BuzzFeed that bought HuffPost, Complex Media, etc; Vice Media, Mashable, Gawker, etc). Warren BUFFETT soured on the media. Mario GABELLI laments huge tech-induced changes in the media. Don’t just look at numbers when businesses are changing dramatically. Advertisers now focus on targeted audiences, and subscription services must be well-differentiated and highly valued. But there are some success stories – WWE/EDR, IMAX, TRI, Politico (owned by Axel Springer/KKR).
(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).