Post by Admin/YBB on Jul 8, 2023 3:55:39 GMT -6
From Barron’s, July 10, 2023 (Part 1, Market Week+)
Pg 22, TRADER. 2023/Q2 earnings season may be good for banks but bad for techs. The Fed may stop raising rates soon. SP500 fwd P/E is 19.5 due to leading techs, and that is high for 10-yr Treasuries at 4.1%. Equal-weight SP500 RSP is lagging. The bank KBE fwd P/E is only 7.7 and banks may do well in 2023/H2. Look for other lagging sectors.
PHARMA is a high-risk business, so buy a bunch of sold off pharma – BMY, PFE, AMGN, GILD.
Online DATING apps from 2021 IPO BMBL are attractive (yet unprofitable) – Bumble, Badoo. Stock sold off on secondaries and a sudden resignation by its President. Competition is from MTCH – Tinder.
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 7/26/23+ hike +25 bps (cycle peak 5.25-5.50%)
FOMC 9/20/23+ hold
FOMC 11/1/23+ hold
FOMC 12/13/23+ hold
(Cuts from mid-2024)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -1.96%, SP500 -1.16%, Nasdaq Comp -0.92%, R2000 -1.27%. DJ Transports +0.19%; DJ Utilities -0.10%. (Rotating spot bank KBE +0.97%) US$ index (spot) -0.62%, oil/WTI futures +4.56%%, gold futures +0.27%.
YTD (index changes only), DJIA +1.77%, SP500 +14.57%, Nasdaq Comp +30.52%. (Rotating spot bank KBE -19.49%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE fell; ratio of winners:losers 2:3.
AAII Bull-Bear Spread +23.9% (above average).
%Above 50-dMA for NYSE-listed stocks 67.80% (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 69.6% (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 25, INTERNATIONAL TRADER. AUSTRALIA wants to be the great green hope for supplying raw materials for EVs and energy transitions. Its mines produce lithium, nickel, cobalt, rare earth metals, etc. It is trying to develop materials processing capabilities; it exports the raw materials now, mostly to China. But the new funding planned is only $402 million (more than twice may be adequate; its government pension fund can also invest). The population is only 26 million. The US ALB is expanding production facilities.
Pg 26, OPTIONS. In hot markets like this, don’t forget to take some profits. Replace sold stocks with calls or call-spreads. Beware that calls have become too popular (yet, the SKEW is elevated).
(SP500 VIX 14.83, Nasdaq 100 VXN 20.60 (high), options SKEW 148.13 (high), bond MOVE 130.41 (sharp rise) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 45: A bad week in EUROPE (Greece -0.53%, Norway -0.93%, France -3.80%) and a bad week in ASIA (India +0.77%, HK -3.17%).
TREASURY* 3-mo yield 5.46%, 1-yr 5.41%, 2-yr 4.94%, 5-yr 4.35%, 10-yr 4.06%, 30-yr 4.05%. REAL yields 5-yr 2.13%, 10-yr 1.79%, 30-yr 1.78%.
DOLLAR fell, ^DXY 102.27, -0.6% (pg 42). GOLD rose to $1,922, +0.5% (Handy & Harman spot, Thursday; pg 52); the gold-miners fell. (^XAU was at 117.11, -2.43% 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, “Walmart/WMT is Quietly Growing into a Retail tech Titan. The stock is a Buy.” After stumbling early in e-commerce (12.7% of sales now), WMT (fwd P/E 25) is a giant retail-tech – drone deliveries, AI, warehouse automation/robotics, fintech. Its model is to enter new businesses, refine/tweak them until things click, and then look at related earnings; groceries now account for 60% of sales. It’s offering omnichannel experience combined with value, a hybrid model with online and in-store purchases/pickups. It benefited from the pandemic. Its capex for future developments should now be modest. It’s attracting younger as well as wealthier customers; $100/yr subscription Walmart+ also offers free deliveries. Sam’s Clubs are being remodeled and more stores are planned. There is also a growing online ad business. WMT has changed a lot, but Wall Street’s perception has not.
Pg 6, UP AND DOWN WALL STREET. Will the FED stop rate hikes soon? The jobs report was below estimates. YoY core CPI is now larger than CPI due to the transient effects of energy.
The QQQ/Nasdaq-100 surge of +38.8% YTD has surpassed all similar runs in 1990s (including the dot. com bubble). What about 2023/H2? Continuing rally or 1987-like crash? Several regional banks have failed. Inflation remains high. New home sales and auto sales are up. Beware of high rates and market overvaluation.
(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 + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).
Pg 22, TRADER. 2023/Q2 earnings season may be good for banks but bad for techs. The Fed may stop raising rates soon. SP500 fwd P/E is 19.5 due to leading techs, and that is high for 10-yr Treasuries at 4.1%. Equal-weight SP500 RSP is lagging. The bank KBE fwd P/E is only 7.7 and banks may do well in 2023/H2. Look for other lagging sectors.
PHARMA is a high-risk business, so buy a bunch of sold off pharma – BMY, PFE, AMGN, GILD.
Online DATING apps from 2021 IPO BMBL are attractive (yet unprofitable) – Bumble, Badoo. Stock sold off on secondaries and a sudden resignation by its President. Competition is from MTCH – Tinder.
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 7/26/23+ hike +25 bps (cycle peak 5.25-5.50%)
FOMC 9/20/23+ hold
FOMC 11/1/23+ hold
FOMC 12/13/23+ hold
(Cuts from mid-2024)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -1.96%, SP500 -1.16%, Nasdaq Comp -0.92%, R2000 -1.27%. DJ Transports +0.19%; DJ Utilities -0.10%. (Rotating spot bank KBE +0.97%) US$ index (spot) -0.62%, oil/WTI futures +4.56%%, gold futures +0.27%.
YTD (index changes only), DJIA +1.77%, SP500 +14.57%, Nasdaq Comp +30.52%. (Rotating spot bank KBE -19.49%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE fell; ratio of winners:losers 2:3.
AAII Bull-Bear Spread +23.9% (above average).
%Above 50-dMA for NYSE-listed stocks 67.80% (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 69.6% (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 25, INTERNATIONAL TRADER. AUSTRALIA wants to be the great green hope for supplying raw materials for EVs and energy transitions. Its mines produce lithium, nickel, cobalt, rare earth metals, etc. It is trying to develop materials processing capabilities; it exports the raw materials now, mostly to China. But the new funding planned is only $402 million (more than twice may be adequate; its government pension fund can also invest). The population is only 26 million. The US ALB is expanding production facilities.
Pg 26, OPTIONS. In hot markets like this, don’t forget to take some profits. Replace sold stocks with calls or call-spreads. Beware that calls have become too popular (yet, the SKEW is elevated).
(SP500 VIX 14.83, Nasdaq 100 VXN 20.60 (high), options SKEW 148.13 (high), bond MOVE 130.41 (sharp rise) (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 45: A bad week in EUROPE (Greece -0.53%, Norway -0.93%, France -3.80%) and a bad week in ASIA (India +0.77%, HK -3.17%).
TREASURY* 3-mo yield 5.46%, 1-yr 5.41%, 2-yr 4.94%, 5-yr 4.35%, 10-yr 4.06%, 30-yr 4.05%. REAL yields 5-yr 2.13%, 10-yr 1.79%, 30-yr 1.78%.
DOLLAR fell, ^DXY 102.27, -0.6% (pg 42). GOLD rose to $1,922, +0.5% (Handy & Harman spot, Thursday; pg 52); the gold-miners fell. (^XAU was at 117.11, -2.43% 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, “Walmart/WMT is Quietly Growing into a Retail tech Titan. The stock is a Buy.” After stumbling early in e-commerce (12.7% of sales now), WMT (fwd P/E 25) is a giant retail-tech – drone deliveries, AI, warehouse automation/robotics, fintech. Its model is to enter new businesses, refine/tweak them until things click, and then look at related earnings; groceries now account for 60% of sales. It’s offering omnichannel experience combined with value, a hybrid model with online and in-store purchases/pickups. It benefited from the pandemic. Its capex for future developments should now be modest. It’s attracting younger as well as wealthier customers; $100/yr subscription Walmart+ also offers free deliveries. Sam’s Clubs are being remodeled and more stores are planned. There is also a growing online ad business. WMT has changed a lot, but Wall Street’s perception has not.
Pg 6, UP AND DOWN WALL STREET. Will the FED stop rate hikes soon? The jobs report was below estimates. YoY core CPI is now larger than CPI due to the transient effects of energy.
The QQQ/Nasdaq-100 surge of +38.8% YTD has surpassed all similar runs in 1990s (including the dot. com bubble). What about 2023/H2? Continuing rally or 1987-like crash? Several regional banks have failed. Inflation remains high. New home sales and auto sales are up. Beware of high rates and market overvaluation.
(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 + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).