Post by Admin/YBB on Jun 3, 2023 4:28:53 GMT -6
From Barron’s, June 5, 2023 (Part 1, Market Week+)
Pg 26, TRADER. Everybody, come to the stock market PARTY! The debt-ceiling issue was resolved, and Wall Street is expecting the FED to hold rates at the June FOMC. What recession? The JOB market is very strong. INFLATION is moderating. All sectors were up this week. But Dollar General/DG tanked on disappointing report indicating that consumers may be tapped out; credit card delinquencies rose.
BANK stocks are attractive now with sector fwd P/E 7 only – JPM, C, BAC, USB, STT, regionals (CFG, CMA; ETF KRE). Deposits have stabilized. Banks will face more regulations but the fears of earnings collapse are overblown.
Some tech (software, cybersecurity, communication services) and energy (ETF XLE) areas have now become DEFENSIVE plays while conventional defensive plays (utilities, consumer-staples, healthcare, dividend-stocks) have become overvalued.
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
FOMC 7/26/23+ hike +25 bps (cycle peak 5.25-5.50%)
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 +2.02%, SP500 +1.83%, Nasdaq Comp +2.04%, R2000 +3.26%. DJ Transports +1.78%; DJ Utilities +0.70%. (Rotating spot regional bank KRE +4.77%) US$ index (spot) -0.16%, oil/WTI futures -1.28%, gold futures +0.43%.
YTD (index changes only), DJIA +1.86%, SP500 +11.53%, Nasdaq Comp +26.51%. (Rotating spot regional bank KRE -28.14%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE rose; ratio of winners:losers 4:1.
AAII Bull-Bear Spread -7.7% (below average) (significant improvement vs-20.8% on 5/3/23).
%Above 50-dMA for NYSE-listed stocks 58.85% (good; much of the move was on Friday; vs 41.01% (low) last week) (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 31.8% (low; probably not updated for Friday) (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 29, INTERNATIONAL TRADER. GERMANY may be in a (technical) recession (2023/Q1 -0.3% after negative 2022/Q4) although its job market remains strong. It’s relatively cheap at fwd P/E of 11 vs Europe at 13, the US at 18. Deglobalization is hurting Germany. It has fallen behind in newer areas such as EVs, etc. China, a major market for Germany, is also sputtering. The European rally since Fall 2022 may stall; the Euro zone inflation is +6% and the ECB may continue tightening.
EMERGING MARKETS. (Place holder)
COMMODITIES. (Place holder)
(It looks like these columns are gone. Barron’s page count is lower too, but it still costs $5 per issue. Long-term subscription prices may be lower with promos.)
Pg 30, OPTIONS. Nvidia/NVDA is hot on the prospects of AI. Play with calls or call spreads.
(SP500 VIX 14.60, Nasdaq 100 VXN 19.29, options SKEW 151.98 (high), bond MOVE 120.95 (vs 145.37 (high) last week; the debt-ceiling is just awaiting Biden’s signature now) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 43: An up week in EUROPE (Sweden +1.26%, Denmark -2.31%) and a good week in ASIA (S Korea +1.93%, Singapore -1.07%).
TREASURY* 3-mo yield 5.50%, 1-yr 5.22%, 2-yr 4.50%, 5-yr 3.84%, 10-yr 3.69%, 30-yr 3.88%. REAL yields 5-yr 1.71%, 10-yr 1.51%, 30-yr 1.66%.
DOLLAR fell, ^DXY 104.04, -0.2% (+2.6% in May; pg 50). GOLD rose to $1,963, +0.8% (Handy & Harman spot, Thursday; pg 52); the gold-miners fell. (^XAU was at 125.34, +2.98% 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 17, COVER STORY, “SHADOW BANKS”. After the recent sudden failures of 3 regional banks, attention is being focused on NONBANK FINANCIALS (NBFs – sovereign wealth funds, pension funds, insurers, hedge funds, mutual funds, fintechs, private credit funds, etc) that have 49.2% of the global assets. Many are unregulated or variously regulated and there is no central monitoring of the total picture. Often, things that banks can no longer do shift to the NBFs, but that risk doesn’t just disappear. Some may be highly leveraged (e.g. hedge funds troubles have caused several financial crises). Some may have links to the banking system (an aspect that is hopefully monitored by banking regulators). Subprime mortgage crisis originated from the NBFs and cascaded into the banking system. There are dangers of liquidity crisis in the NBFs, but they don’t have access to government funding (e.g. the Fed or FHLBs, etc). The FSOC is considering subjecting some large NBFs to federal oversight.
Three major types of NBFs are PRIVATE CREDIT providers, open-end BOND FUNDs and NONBANK MORTGAGE lenders. PRIVATE CREDITs serve small businesses with revenues of $10 million to $1 billion. The credit terms may have a variety of covenants. Many institutions invest in private credits, but these are illiquid investments with long lockup periods. Some private funds such as nontraded BCRED have reached their maximum monthly/quarterly redemption limits. Publicly traded BDCs do offer some insights into this area. BOND mutual funds and ETFs offer liquid wrappers for some illiquid holdings. If there are large redemptions during credit crisis or market panic, this becomes a problem. But the fund trade association ICI opposes any federal oversight for these. (There are some structures such as CEFs and interval-funds that are more suitable for illiquid holdings) NONBANK LENDERS accounted for 64.5% of all mortgage originations in 2022; the recent peak was 70.3% in 2021; it was almost nil pre-2010. There are some publicly traded companies (RKT, UWMC, etc), but most are private. These lenders may not have much capital base, may use high leverage, and may rely on short-term funding sources. This industry is also resisting federal oversights. (Notably, several large financials didn’t like the SIFI designations by the Fed in the past and a few (GE, MET) did everything possible to get out of that designation ASAP)
Pg 5, UP AND DOWN WALL STREET. How to play AI for investing? New technologies (and financial innovations) have led to prior market booms and busts. AI may be the next big thing. It will rewrite almost everything, including investing. There is an AI ETF AIEQ. AI is still in the experimental stages and doesn’t yet provide reliable answers for businesses – it may provide different answers to the same question on different days. It may be helpful in going through lots of text and data quickly. Many banks and broker-dealers are rushing into the generative AI, but some are cautious. ChatGPT has been available only since 11/30/22 and its database is up to date only to 09/2021. In many areas, it won’t provide answers or just some boilerplate answers. Generative AI isn’t ready for prime time yet.
Pg 7, STREETWISE. NYU Professor Aswath DAMODARAN (also called the Dean of Valuation) has sold Nvidia/NVDA, the 1st chip stock to hit $1 trillion market-cap. As a semi hardware company, it doesn’t have an ecosystem like Apple/AAPL. This is also a very narrow market with leaders overvalued, but he owns some big stocks that are reasonably valued (META, C, etc). Cryptos bounce is for speculators to play. He thinks that professional sports team valuations are in a bubble zone, driven by owner vanity instead of cash flow or growth. But with so many billionaires around, this bubble can remain afloat.
(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 26, TRADER. Everybody, come to the stock market PARTY! The debt-ceiling issue was resolved, and Wall Street is expecting the FED to hold rates at the June FOMC. What recession? The JOB market is very strong. INFLATION is moderating. All sectors were up this week. But Dollar General/DG tanked on disappointing report indicating that consumers may be tapped out; credit card delinquencies rose.
BANK stocks are attractive now with sector fwd P/E 7 only – JPM, C, BAC, USB, STT, regionals (CFG, CMA; ETF KRE). Deposits have stabilized. Banks will face more regulations but the fears of earnings collapse are overblown.
Some tech (software, cybersecurity, communication services) and energy (ETF XLE) areas have now become DEFENSIVE plays while conventional defensive plays (utilities, consumer-staples, healthcare, dividend-stocks) have become overvalued.
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
FOMC 7/26/23+ hike +25 bps (cycle peak 5.25-5.50%)
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 +2.02%, SP500 +1.83%, Nasdaq Comp +2.04%, R2000 +3.26%. DJ Transports +1.78%; DJ Utilities +0.70%. (Rotating spot regional bank KRE +4.77%) US$ index (spot) -0.16%, oil/WTI futures -1.28%, gold futures +0.43%.
YTD (index changes only), DJIA +1.86%, SP500 +11.53%, Nasdaq Comp +26.51%. (Rotating spot regional bank KRE -28.14%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE rose; ratio of winners:losers 4:1.
AAII Bull-Bear Spread -7.7% (below average) (significant improvement vs-20.8% on 5/3/23).
%Above 50-dMA for NYSE-listed stocks 58.85% (good; much of the move was on Friday; vs 41.01% (low) last week) (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 31.8% (low; probably not updated for Friday) (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 29, INTERNATIONAL TRADER. GERMANY may be in a (technical) recession (2023/Q1 -0.3% after negative 2022/Q4) although its job market remains strong. It’s relatively cheap at fwd P/E of 11 vs Europe at 13, the US at 18. Deglobalization is hurting Germany. It has fallen behind in newer areas such as EVs, etc. China, a major market for Germany, is also sputtering. The European rally since Fall 2022 may stall; the Euro zone inflation is +6% and the ECB may continue tightening.
EMERGING MARKETS. (Place holder)
COMMODITIES. (Place holder)
(It looks like these columns are gone. Barron’s page count is lower too, but it still costs $5 per issue. Long-term subscription prices may be lower with promos.)
Pg 30, OPTIONS. Nvidia/NVDA is hot on the prospects of AI. Play with calls or call spreads.
(SP500 VIX 14.60, Nasdaq 100 VXN 19.29, options SKEW 151.98 (high), bond MOVE 120.95 (vs 145.37 (high) last week; the debt-ceiling is just awaiting Biden’s signature now) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 43: An up week in EUROPE (Sweden +1.26%, Denmark -2.31%) and a good week in ASIA (S Korea +1.93%, Singapore -1.07%).
TREASURY* 3-mo yield 5.50%, 1-yr 5.22%, 2-yr 4.50%, 5-yr 3.84%, 10-yr 3.69%, 30-yr 3.88%. REAL yields 5-yr 1.71%, 10-yr 1.51%, 30-yr 1.66%.
DOLLAR fell, ^DXY 104.04, -0.2% (+2.6% in May; pg 50). GOLD rose to $1,963, +0.8% (Handy & Harman spot, Thursday; pg 52); the gold-miners fell. (^XAU was at 125.34, +2.98% 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 17, COVER STORY, “SHADOW BANKS”. After the recent sudden failures of 3 regional banks, attention is being focused on NONBANK FINANCIALS (NBFs – sovereign wealth funds, pension funds, insurers, hedge funds, mutual funds, fintechs, private credit funds, etc) that have 49.2% of the global assets. Many are unregulated or variously regulated and there is no central monitoring of the total picture. Often, things that banks can no longer do shift to the NBFs, but that risk doesn’t just disappear. Some may be highly leveraged (e.g. hedge funds troubles have caused several financial crises). Some may have links to the banking system (an aspect that is hopefully monitored by banking regulators). Subprime mortgage crisis originated from the NBFs and cascaded into the banking system. There are dangers of liquidity crisis in the NBFs, but they don’t have access to government funding (e.g. the Fed or FHLBs, etc). The FSOC is considering subjecting some large NBFs to federal oversight.
Three major types of NBFs are PRIVATE CREDIT providers, open-end BOND FUNDs and NONBANK MORTGAGE lenders. PRIVATE CREDITs serve small businesses with revenues of $10 million to $1 billion. The credit terms may have a variety of covenants. Many institutions invest in private credits, but these are illiquid investments with long lockup periods. Some private funds such as nontraded BCRED have reached their maximum monthly/quarterly redemption limits. Publicly traded BDCs do offer some insights into this area. BOND mutual funds and ETFs offer liquid wrappers for some illiquid holdings. If there are large redemptions during credit crisis or market panic, this becomes a problem. But the fund trade association ICI opposes any federal oversight for these. (There are some structures such as CEFs and interval-funds that are more suitable for illiquid holdings) NONBANK LENDERS accounted for 64.5% of all mortgage originations in 2022; the recent peak was 70.3% in 2021; it was almost nil pre-2010. There are some publicly traded companies (RKT, UWMC, etc), but most are private. These lenders may not have much capital base, may use high leverage, and may rely on short-term funding sources. This industry is also resisting federal oversights. (Notably, several large financials didn’t like the SIFI designations by the Fed in the past and a few (GE, MET) did everything possible to get out of that designation ASAP)
Pg 5, UP AND DOWN WALL STREET. How to play AI for investing? New technologies (and financial innovations) have led to prior market booms and busts. AI may be the next big thing. It will rewrite almost everything, including investing. There is an AI ETF AIEQ. AI is still in the experimental stages and doesn’t yet provide reliable answers for businesses – it may provide different answers to the same question on different days. It may be helpful in going through lots of text and data quickly. Many banks and broker-dealers are rushing into the generative AI, but some are cautious. ChatGPT has been available only since 11/30/22 and its database is up to date only to 09/2021. In many areas, it won’t provide answers or just some boilerplate answers. Generative AI isn’t ready for prime time yet.
Pg 7, STREETWISE. NYU Professor Aswath DAMODARAN (also called the Dean of Valuation) has sold Nvidia/NVDA, the 1st chip stock to hit $1 trillion market-cap. As a semi hardware company, it doesn’t have an ecosystem like Apple/AAPL. This is also a very narrow market with leaders overvalued, but he owns some big stocks that are reasonably valued (META, C, etc). Cryptos bounce is for speculators to play. He thinks that professional sports team valuations are in a bubble zone, driven by owner vanity instead of cash flow or growth. But with so many billionaires around, this bubble can remain afloat.
(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).