Post by Admin/YBB on May 27, 2023 4:04:43 GMT -6
From Barron’s, May 29, 2023 (Part 1, Market Week+)
Pg 33, TRADER. On the strength of AI and techs, the Nasdaq Comp (growthy) has been outperforming the DJIA (more cyclical). The equal-weight SP500 RSP is lagging the market-cap SPY (indicating a lag by small/mid-caps). However, things may change after the resolution of the DEBT-CEILING crisis. A flood of Treasury issuances will drive YIELDS up and may also enhance the effects of the ongoing Fed QT. CYCLICALS may start to outperform growth.
HEDGE-funds are bullish on selected stocks, but bearish on the market overall. They sold techs, banks/financials; but bought cyclicals (industrials, materials), defensive healthcare. Their short interest is at historical lows.
CHINA is struggling with Covid again and that has hurt the trading and shipping company Genco/GNK. It improved balance sheet from the shipping boom during the pandemic and implemented a dividend policy related to cash flows. Stock has sold off but has done much better than dry-bulk shipping ETF BDRY. GNK is attractive for long-term.
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+ hike +25 bps (cycle peak 5.25-5.50%)
FOMC 7/26/23+ hold
FOMC 9/20/23+ hold
FOMC 11/1/23+ cut -25 bps
FOMC 12/13/23+ hold
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -1.00%, SP500 +0.32%, Nasdaq Comp +2.51%, R2000 -0.04%. DJ Transports -0.04%; DJ Utilities -2.30% (large move). (Rotating spot tech XLK +4.64%) US$ index (spot) +1.00% (large move on debt-ceiling deal expectation), oil/WTI futures +1.57%, gold futures -1.75% (debt-ceiling deal expectation; cryptos are back in the game).
YTD (index changes only), DJIA -0.16%, SP500 +9.53%, Nasdaq Comp +23.97%. (Rotating spot tech XLK +32.42%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE fell; ratio of winners:losers 1:1+.
AAII Bull-Bear Spread -12.3% (below average).
%Above 50-dMA for NYSE-listed stocks 41.01% (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 38.6% (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 36, INTERNATIONAL TRADER. Italian markets like the new Italian Prime Minister Giorgia MELONI (46 only). Since her Fall 2022 election, she hasn’t delivered on her populist promises (cut taxes, reduce immigration, anti-EU) and has become a moderate, middle-of-the-road politician. Italian stocks have rallied (EWI +42%), interest rates are lower, credit rating is stable. Italy has also tapped into the EU (Covid) Recovery Fund. Her coalition controls 60% of legislative votes.
EMERGING MARKETS. (Place holder)
EXTRA, COMMODITIES. Ahead of the Memorial Day weekend, propane prices are down sharply; beef and pork prices are down a bit; but chicken, turkey and poultry prices remain high.
Pg 37, OPTIONS. Investors skeptical of debt-ceiling negotiations may sell puts on defensive utilities (XLU), or use half-and-half, i.e. buy half-position right away and sell puts for the remaining half.
(SP500 VIX 17.95, Nasdaq 100 VXN 22.21 (high), options SKEW 146.46 (high), bond MOVE 145.37 (high) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 50: A bad week in EUROPE (Greece +5.65%, Norway -0.64%, Italy -3.98%,) and a down week in ASIA (Thailand +1.37%, China -3.50%).
TREASURY* 3-mo yield 5.34%, 1-yr 5.25%, 2-yr 4.54%, 5-yr 3.92%, 10-yr 3.80%, 30-yr 3.96%. REAL yields 5-yr 1.79%, 10-yr 1.57%, 30-yr 1.64%.
DOLLAR rose, ^DXY 104.23, +1% (pg 58). GOLD fell to $1,948, -0.7% (Handy & Harman spot, Thursday; pg 60); the gold-miners fell. (^XAU was at 121.71, -4.80% 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 22, COVER STORY, “CRYPTO is Back in Business. What’s Keeping it Alive”. After the ice age, the $1.1 trillion crypto industry has recovered a lot (Bitcoin, Ethereum; COIN; ETF BKCH, etc). This may have been a fast boom-bust-boom cycle, all in about 2 years. It is attracting investment funds and capital. VENTURE-CAPITAL is looking at long-term prospects of cryptos and likes the higher and quicker payoff (vs the normal company startups and IPOs). Several big US companies remain interested in cryptos and/or blockchains – GOOGL, MA, PYPL, JPM (despite what Dimon says), Fidelity, TROW, WT, BEN, etc. In the US, cryptos faces tough and uncertain regulations (COIN, etc), but they have friendlier receptions elsewhere – the EU, the HK, Bahamas, Middle East, etc. Many crypto companies are foreign based (some claim to have no physical headquarters), and even the US-based COIN is now expanding globally. The crypto industry is hoping that the US Congress will intervene in a more favorable way then GENSLER’s SEC.
Pg 7, UP AND DOWN WALL STREET. AI is hot, especially the generative AI (ChatGPT, Bard, etc), and it may leave several big techs behind (if they ignore AI). Growth of AI has been exponential, and its adoption has been very fast. AI may initially lead to higher economic growth, higher bond yields, higher productivity, but eventually, job replacements and deflation.
BIG TECHS and GROWTH stocks are leading again, like the dot. com boom of 1999, or the Nifty Fifty boom of 1972. The market-cap SPY is +8.1% YTD vs the equal-weight RSP -1.2% YTD. Narrow markets are really weak markets. The FED has been tightening. The EARNINGS are under pressure. Big techs and growth stocks are benefitting from the DEBT-CEILING chaos, but that may be resolved soon (hopefully). Subsequently, YIELDS would rise as the Treasury replenishes its coffers. The CME FedWatch is now indicating +25 bps hike at the June FOMC meeting. The economic data remains strong, and the JOBS report this Friday should also be strong. POWELL’s favorite core PCE has been rising. These conditions are not supportive of growth stocks and their current runup may end badly, like in 1972 or 2000.
Pg 11, STREETWISE. Apple’s/AAPL upcoming mixed-reality headset will be virtual with a price tag of $3,000; GOOGL and MSFT also offer those. VR is in a formative stage, but mixed reality (physical + virtual worlds) may have more practical applications.
EXTRA. Do you believe Wall Street odds on DEBT-CEILING outcomes? Deal, 70%; short-term extension, 15%; no deal, 6%; Treasury just ignoring the limit, 4%, etc. The statuary debt-limit of $31.381 trillion was reached in January, and the Treasury has been using extraordinary measures to continue so far. It doesn’t matter whether the drop-dead date is June 1 or 5 or 8 or 9. The Treasury can also prioritize payments but won’t say or do so. In the case of the US default, technical or not, the SP500 may crash by -30%. The stock market is eerily calm now (but not so for bond MOVE, 145.37). It isn’t a good idea to make drastic portfolio changes over this uncertain (but manufactured issue).
(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 33, TRADER. On the strength of AI and techs, the Nasdaq Comp (growthy) has been outperforming the DJIA (more cyclical). The equal-weight SP500 RSP is lagging the market-cap SPY (indicating a lag by small/mid-caps). However, things may change after the resolution of the DEBT-CEILING crisis. A flood of Treasury issuances will drive YIELDS up and may also enhance the effects of the ongoing Fed QT. CYCLICALS may start to outperform growth.
HEDGE-funds are bullish on selected stocks, but bearish on the market overall. They sold techs, banks/financials; but bought cyclicals (industrials, materials), defensive healthcare. Their short interest is at historical lows.
CHINA is struggling with Covid again and that has hurt the trading and shipping company Genco/GNK. It improved balance sheet from the shipping boom during the pandemic and implemented a dividend policy related to cash flows. Stock has sold off but has done much better than dry-bulk shipping ETF BDRY. GNK is attractive for long-term.
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+ hike +25 bps (cycle peak 5.25-5.50%)
FOMC 7/26/23+ hold
FOMC 9/20/23+ hold
FOMC 11/1/23+ cut -25 bps
FOMC 12/13/23+ hold
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -1.00%, SP500 +0.32%, Nasdaq Comp +2.51%, R2000 -0.04%. DJ Transports -0.04%; DJ Utilities -2.30% (large move). (Rotating spot tech XLK +4.64%) US$ index (spot) +1.00% (large move on debt-ceiling deal expectation), oil/WTI futures +1.57%, gold futures -1.75% (debt-ceiling deal expectation; cryptos are back in the game).
YTD (index changes only), DJIA -0.16%, SP500 +9.53%, Nasdaq Comp +23.97%. (Rotating spot tech XLK +32.42%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE fell; ratio of winners:losers 1:1+.
AAII Bull-Bear Spread -12.3% (below average).
%Above 50-dMA for NYSE-listed stocks 41.01% (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 38.6% (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 36, INTERNATIONAL TRADER. Italian markets like the new Italian Prime Minister Giorgia MELONI (46 only). Since her Fall 2022 election, she hasn’t delivered on her populist promises (cut taxes, reduce immigration, anti-EU) and has become a moderate, middle-of-the-road politician. Italian stocks have rallied (EWI +42%), interest rates are lower, credit rating is stable. Italy has also tapped into the EU (Covid) Recovery Fund. Her coalition controls 60% of legislative votes.
EMERGING MARKETS. (Place holder)
EXTRA, COMMODITIES. Ahead of the Memorial Day weekend, propane prices are down sharply; beef and pork prices are down a bit; but chicken, turkey and poultry prices remain high.
Pg 37, OPTIONS. Investors skeptical of debt-ceiling negotiations may sell puts on defensive utilities (XLU), or use half-and-half, i.e. buy half-position right away and sell puts for the remaining half.
(SP500 VIX 17.95, Nasdaq 100 VXN 22.21 (high), options SKEW 146.46 (high), bond MOVE 145.37 (high) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 50: A bad week in EUROPE (Greece +5.65%, Norway -0.64%, Italy -3.98%,) and a down week in ASIA (Thailand +1.37%, China -3.50%).
TREASURY* 3-mo yield 5.34%, 1-yr 5.25%, 2-yr 4.54%, 5-yr 3.92%, 10-yr 3.80%, 30-yr 3.96%. REAL yields 5-yr 1.79%, 10-yr 1.57%, 30-yr 1.64%.
DOLLAR rose, ^DXY 104.23, +1% (pg 58). GOLD fell to $1,948, -0.7% (Handy & Harman spot, Thursday; pg 60); the gold-miners fell. (^XAU was at 121.71, -4.80% 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 22, COVER STORY, “CRYPTO is Back in Business. What’s Keeping it Alive”. After the ice age, the $1.1 trillion crypto industry has recovered a lot (Bitcoin, Ethereum; COIN; ETF BKCH, etc). This may have been a fast boom-bust-boom cycle, all in about 2 years. It is attracting investment funds and capital. VENTURE-CAPITAL is looking at long-term prospects of cryptos and likes the higher and quicker payoff (vs the normal company startups and IPOs). Several big US companies remain interested in cryptos and/or blockchains – GOOGL, MA, PYPL, JPM (despite what Dimon says), Fidelity, TROW, WT, BEN, etc. In the US, cryptos faces tough and uncertain regulations (COIN, etc), but they have friendlier receptions elsewhere – the EU, the HK, Bahamas, Middle East, etc. Many crypto companies are foreign based (some claim to have no physical headquarters), and even the US-based COIN is now expanding globally. The crypto industry is hoping that the US Congress will intervene in a more favorable way then GENSLER’s SEC.
Pg 7, UP AND DOWN WALL STREET. AI is hot, especially the generative AI (ChatGPT, Bard, etc), and it may leave several big techs behind (if they ignore AI). Growth of AI has been exponential, and its adoption has been very fast. AI may initially lead to higher economic growth, higher bond yields, higher productivity, but eventually, job replacements and deflation.
BIG TECHS and GROWTH stocks are leading again, like the dot. com boom of 1999, or the Nifty Fifty boom of 1972. The market-cap SPY is +8.1% YTD vs the equal-weight RSP -1.2% YTD. Narrow markets are really weak markets. The FED has been tightening. The EARNINGS are under pressure. Big techs and growth stocks are benefitting from the DEBT-CEILING chaos, but that may be resolved soon (hopefully). Subsequently, YIELDS would rise as the Treasury replenishes its coffers. The CME FedWatch is now indicating +25 bps hike at the June FOMC meeting. The economic data remains strong, and the JOBS report this Friday should also be strong. POWELL’s favorite core PCE has been rising. These conditions are not supportive of growth stocks and their current runup may end badly, like in 1972 or 2000.
Pg 11, STREETWISE. Apple’s/AAPL upcoming mixed-reality headset will be virtual with a price tag of $3,000; GOOGL and MSFT also offer those. VR is in a formative stage, but mixed reality (physical + virtual worlds) may have more practical applications.
EXTRA. Do you believe Wall Street odds on DEBT-CEILING outcomes? Deal, 70%; short-term extension, 15%; no deal, 6%; Treasury just ignoring the limit, 4%, etc. The statuary debt-limit of $31.381 trillion was reached in January, and the Treasury has been using extraordinary measures to continue so far. It doesn’t matter whether the drop-dead date is June 1 or 5 or 8 or 9. The Treasury can also prioritize payments but won’t say or do so. In the case of the US default, technical or not, the SP500 may crash by -30%. The stock market is eerily calm now (but not so for bond MOVE, 145.37). It isn’t a good idea to make drastic portfolio changes over this uncertain (but manufactured issue).
(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).