Post by Admin/YBB on May 13, 2023 4:01:12 GMT -6
From Barron’s, May 15, 2023 (Part 1, Market Week+)
Pg 28, TRADER. With almost everyone expecting the STOCK market to sell off as the DEBT-CEILING fiasco nears, what if it goes up instead? The INFLATION data has been good. The fed fund FUTURES market is projecting Fed pause (likely) and then rate cuts (but not according to Powell). There is a lot of CASH on the sidelines. But there is also a small risk of the worst possible outcome from the debt-ceiling crisis – a US default. This market wants to go up unless there is a disaster.
HEALTHCARE (ETF XLV) has lagged YTD but is attractive. Mentioned are Stryker/SYK, Pfizer/PFE.
Icahn Enterprises/IEP plunged on a negative report by Hindenburg Research. IEP has high distributions (funded by portfolio sales; Icahn takes his in stock) and Carl ICAHN (87) owns 84%. The US Attorney from SDNY is also investigating governance and valuations. Icahn refuted the report and is fighting back.
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 -1.11%, SP500 -0.29%, Nasdaq Comp +0.40%, R2000 -1.08%. DJ Transports -2.41%; DJ Utilities -0.32%. (Rotating spot healthcare XLV -1.05%) US$ index (spot) +1.47%, oil/WTI futures –1.82%, gold futures -0.14%.
YTD (index changes only), DJIA +0.46%, SP500 +7.41%, Nasdaq Comp +17.37%. (Rotating spot healthcare XLV -2.69%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE fell; ratio of winners:losers 2:3.
AAII Bull-Bear Spread -11.8% (low).
%Above 50-dMA for NYSE-listed stocks 41.58% (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 42.9% (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 32, INTERNATIONAL TRADER. CHINA has drafted legislation to give its AI developers greenlight on generative AI. BABA, BIDU, SenseTime are cooperating on a generative AI project; other players include Tencents/TCEHY, ByteDance (parent of TikTok). But don’t look for anything comparable to ChatGPT, Bard, etc, from the information-controlled country (where the only correct answer is from the Party). Chinese techs also face Western restrictions on accessing advanced semi chips.
EMERGING MARKETS. (Place holder)
EXTRA, COMMODITIES. SUGAR prices have surged (the highest since 10/2011) due to bad weather (heat and/or drought) and poor harvests in sugar producing countries (Brazil, India, EU, Thailand, Mexico). 80% of sugar is produced from sugar cane, 20% from beets. Some countries have also imposed export restrictions. The fertilizer supplies are tight due to Russia-Ukraine war. Global sugar inventories are low. But demand remains strong from consumers and raw materials demand from ethanol producers (they can use corn too). (I thought that this column was restored, but not so. It will return to “Place Holder” status next week)
Pg 33, OPTIONS. The DEBT-CEILING issue will create a lot of drama and volatility. The regional bank KRE would be very vulnerable, and a put-spread is recommended. Also consider selling puts on blue-chips you want to buy on declines.
(SP500 VIX 17.03, Nasdaq 100 VXN 19.53, options SKEW 138.18 (high), bond MOVE 120.52 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 45: A flat week in EUROPE (Denmark +5.12%, Belgium -1.95%,) and an up week in ASIA (Thailand +1.63%, HK -2.64%).
TREASURY* 3-mo yield 5.25%, 1-yr 4.75%, 2-yr 3.98%, 5-yr 3.45%, 10-yr 3.46%, 30-yr 3.78%. REAL yields 5-yr 1.34%, 10-yr 1.28%, 30-yr 1.54%.
DOLLAR rose, ^DXY 102.71, +1.5% (pg 50). GOLD rose to $2,020, +0.90% (Handy & Harman spot, Thursday; pg 52); the gold-miners fell. (^XAU was at 133.52, -5.03% 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 16, COVER STORY “How a SpaceX IPO Could End MUSK’s Uncomfortable Tesla-Twitter/X Dance”. Musk owns/controls Tesla/TSLA, SpaceX, Nuralink, Boring, Twitter/X, etc. But he has had to sell lot of (public) TSLA to fund (the money-sink) Twitter/X. There will be a big relief to Musk if SpaceX, or its Starlink unit (like a space-based Wi-Fi), has an IPO. The IPO market is almost dead now. SpaceX is pursuing partially reusable launch systems although its most recent launch failed. Competitors haven’t done well – Virgin Orbit/VORBQ, Virgin Galactic/SPCE, Blue Origin/AMZN; SPACs mergers Momentus/MNTS, Astra Space/ASTR, Spite Global/SPIR. (Big story Friday morning was that Musk appointed a new CEO for Twitter/X, Linda YACCARINO, formerly, NBC Universal Ad Chief. This news should be covered in other Barron’s stories yet to be filed.)
Pg 7, UP AND DOWN WALL STREET. Wall Street thinks that bad news may cause the FED to pivot early. But the UM consumer SENTIMENT was poor – probably due to consumer worries about the slowing economy, sticky inflation, debt-ceiling impasse. Consumers also mistrust the low inflation-expectations (2.14% for 5 years, 2.20% for 10 years) as measured by the difference in the yields of nominal Treasuries and TIPS. The fed fund FUTURES see rate holds, and then, rate cuts. But the JOBs report was strong, and it is unlikely that the Fed would cut rates when the unemployment rate is below 4%. The Wall Street and the Main Street have divergent expectations and outlooks.
GOLD may benefit from DEBT-CEILING chaos (by June 1). The Treasury yield-curve is very distorted on the short end. The US debt serving costs have been rising. The central banks have been buying gold for diversification. (Barron’s past calls on gold haven’t worked out)
Pg 9, STREETWISE. Ford/F (yield 5.1%; fwd EV/EBITDA 5) will celebrate its 120th anniversary next month, but its stock is just where it was 37 years ago on split/spinoff-adjusted basis. Production is at 90% level due to parts shortages (before, there were chips shortages). Dealer margins are coming down. EV production has doubled. It had to cut EV prices to match Tesla’s/TSLA price cuts. In EVs, F is focusing on SUVs/pickups and vans where Tesla doesn’t have much presence. Its driver-assist system BlueCruise was top rated by Consumer Reports. Its R&D costs for EVs remain very high and it is investing profits and cash flows from its ICE business into EVs. Hopefully this business shift will also move its stock price.
(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. With almost everyone expecting the STOCK market to sell off as the DEBT-CEILING fiasco nears, what if it goes up instead? The INFLATION data has been good. The fed fund FUTURES market is projecting Fed pause (likely) and then rate cuts (but not according to Powell). There is a lot of CASH on the sidelines. But there is also a small risk of the worst possible outcome from the debt-ceiling crisis – a US default. This market wants to go up unless there is a disaster.
HEALTHCARE (ETF XLV) has lagged YTD but is attractive. Mentioned are Stryker/SYK, Pfizer/PFE.
Icahn Enterprises/IEP plunged on a negative report by Hindenburg Research. IEP has high distributions (funded by portfolio sales; Icahn takes his in stock) and Carl ICAHN (87) owns 84%. The US Attorney from SDNY is also investigating governance and valuations. Icahn refuted the report and is fighting back.
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 -1.11%, SP500 -0.29%, Nasdaq Comp +0.40%, R2000 -1.08%. DJ Transports -2.41%; DJ Utilities -0.32%. (Rotating spot healthcare XLV -1.05%) US$ index (spot) +1.47%, oil/WTI futures –1.82%, gold futures -0.14%.
YTD (index changes only), DJIA +0.46%, SP500 +7.41%, Nasdaq Comp +17.37%. (Rotating spot healthcare XLV -2.69%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE fell; ratio of winners:losers 2:3.
AAII Bull-Bear Spread -11.8% (low).
%Above 50-dMA for NYSE-listed stocks 41.58% (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 42.9% (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 32, INTERNATIONAL TRADER. CHINA has drafted legislation to give its AI developers greenlight on generative AI. BABA, BIDU, SenseTime are cooperating on a generative AI project; other players include Tencents/TCEHY, ByteDance (parent of TikTok). But don’t look for anything comparable to ChatGPT, Bard, etc, from the information-controlled country (where the only correct answer is from the Party). Chinese techs also face Western restrictions on accessing advanced semi chips.
EMERGING MARKETS. (Place holder)
EXTRA, COMMODITIES. SUGAR prices have surged (the highest since 10/2011) due to bad weather (heat and/or drought) and poor harvests in sugar producing countries (Brazil, India, EU, Thailand, Mexico). 80% of sugar is produced from sugar cane, 20% from beets. Some countries have also imposed export restrictions. The fertilizer supplies are tight due to Russia-Ukraine war. Global sugar inventories are low. But demand remains strong from consumers and raw materials demand from ethanol producers (they can use corn too). (I thought that this column was restored, but not so. It will return to “Place Holder” status next week)
Pg 33, OPTIONS. The DEBT-CEILING issue will create a lot of drama and volatility. The regional bank KRE would be very vulnerable, and a put-spread is recommended. Also consider selling puts on blue-chips you want to buy on declines.
(SP500 VIX 17.03, Nasdaq 100 VXN 19.53, options SKEW 138.18 (high), bond MOVE 120.52 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 45: A flat week in EUROPE (Denmark +5.12%, Belgium -1.95%,) and an up week in ASIA (Thailand +1.63%, HK -2.64%).
TREASURY* 3-mo yield 5.25%, 1-yr 4.75%, 2-yr 3.98%, 5-yr 3.45%, 10-yr 3.46%, 30-yr 3.78%. REAL yields 5-yr 1.34%, 10-yr 1.28%, 30-yr 1.54%.
DOLLAR rose, ^DXY 102.71, +1.5% (pg 50). GOLD rose to $2,020, +0.90% (Handy & Harman spot, Thursday; pg 52); the gold-miners fell. (^XAU was at 133.52, -5.03% 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 16, COVER STORY “How a SpaceX IPO Could End MUSK’s Uncomfortable Tesla-Twitter/X Dance”. Musk owns/controls Tesla/TSLA, SpaceX, Nuralink, Boring, Twitter/X, etc. But he has had to sell lot of (public) TSLA to fund (the money-sink) Twitter/X. There will be a big relief to Musk if SpaceX, or its Starlink unit (like a space-based Wi-Fi), has an IPO. The IPO market is almost dead now. SpaceX is pursuing partially reusable launch systems although its most recent launch failed. Competitors haven’t done well – Virgin Orbit/VORBQ, Virgin Galactic/SPCE, Blue Origin/AMZN; SPACs mergers Momentus/MNTS, Astra Space/ASTR, Spite Global/SPIR. (Big story Friday morning was that Musk appointed a new CEO for Twitter/X, Linda YACCARINO, formerly, NBC Universal Ad Chief. This news should be covered in other Barron’s stories yet to be filed.)
Pg 7, UP AND DOWN WALL STREET. Wall Street thinks that bad news may cause the FED to pivot early. But the UM consumer SENTIMENT was poor – probably due to consumer worries about the slowing economy, sticky inflation, debt-ceiling impasse. Consumers also mistrust the low inflation-expectations (2.14% for 5 years, 2.20% for 10 years) as measured by the difference in the yields of nominal Treasuries and TIPS. The fed fund FUTURES see rate holds, and then, rate cuts. But the JOBs report was strong, and it is unlikely that the Fed would cut rates when the unemployment rate is below 4%. The Wall Street and the Main Street have divergent expectations and outlooks.
GOLD may benefit from DEBT-CEILING chaos (by June 1). The Treasury yield-curve is very distorted on the short end. The US debt serving costs have been rising. The central banks have been buying gold for diversification. (Barron’s past calls on gold haven’t worked out)
Pg 9, STREETWISE. Ford/F (yield 5.1%; fwd EV/EBITDA 5) will celebrate its 120th anniversary next month, but its stock is just where it was 37 years ago on split/spinoff-adjusted basis. Production is at 90% level due to parts shortages (before, there were chips shortages). Dealer margins are coming down. EV production has doubled. It had to cut EV prices to match Tesla’s/TSLA price cuts. In EVs, F is focusing on SUVs/pickups and vans where Tesla doesn’t have much presence. Its driver-assist system BlueCruise was top rated by Consumer Reports. Its R&D costs for EVs remain very high and it is investing profits and cash flows from its ICE business into EVs. Hopefully this business shift will also move its stock price.
(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).