Post by Admin/YBB on Jul 29, 2023 3:46:50 GMT -6
From Barron’s, July 31, 2023 (Part 1, Market Week+)
Pg 22, TRADER. For stocks, EARNINGS are the key, and most have been good so far. About half of the SP500 companies have reported and those earnings are up +3% YoY; anyway, earnings aren’t collapsing, in fact, not even declining, as had been expected for Q2. Some companies in the same industry have reported divergent earnings (GE vs RTX, TSM vs INTC, etc). SP500 at a new 52-wk high is up +28% from its low on 10/12/22; YTD, SP500 +20% but equal-weight RSP +9% only. So, this bull run continues.
After UPS, the next major strike target is GM. Its stock has lagged since the UAW authorized the strike in June and may fall more during the strike. Labor contracts at F and STLA also expire in September, but all may deal along the lines of the GM deal (when it happens). Look at this as buying opportunity for automakers.
Out of favor cyclical Alcoa (AA; fwd P/EBITDA 4 only) is attractive. Aluminum prices have been weak but may improve as the global economy recovers.
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 9/20/23+ hold (cycle peak 5.25-5.50%)
FOMC 11/1/23+ hold
FOMC 12/13/23+ hold
(Cuts in 2024)
(Powell was noncommittal on hold or hike at the next FOMC. Watch the news from Fed Jackson Hole Conf, August 24-26.)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +0.66%, SP500 +1.01%, Nasdaq Comp +2.02%, R2000 1.09%. DJ Transports +2.85%; DJ Utilities -1.68%. (Rotating spot equal-weight SP500 RSP +0.19%) US$ index (spot) +0.61%, oil/WTI futures +4.55%%, gold futures -0.20%.
YTD (index changes only), DJIA +6.98%, SP500 +19.34%, Nasdaq Comp +36.79%. (Rotating spot equal-weight SP500 RSP +9.81%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE rose for 3rd week; ratio of winners:losers 1+:1.
AAII Bull-Bear Spread +20.7% (above average).
%Above 50-dMA for NYSE-listed stocks 78.31% (overbought) (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 86.1% (overbought) (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. Safe grain-corridor deal expiry for Ukraine followed by non-Basmati RICE export restrictions by India (#1 exporter) will cause global grain prices to rise. Global rice inventories are at 6-yr low. Thailand (#2) and Vietnam (#3) are at their maximum rice exports; Pakistan (#4) has major flooding issues.
EXTRA, COMMODITIES. With crude oil prices rising, the GASOLINE prices are also rising – national RBOB average is $3.7137/gallon. Reasons may be refinery outages and maintenance.
Pg 32, OPTIONS. Even the rich are feeling financial pressures when delinquencies are rising at AXP. This may be an early warning for otherwise strong consumer spending. Use hedging with put-collar-spread, etc.
(SP500 VIX 13.33 (low), Nasdaq 100 VXN 18.92, options SKEW 143.48 (high), bond MOVE 109.76 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 45: A good week in EUROPE (Netherlands +3.67%, Denmark -3.29%) and a good week in ASIA (China +3.64%, Indonesia -0.47%).
TREASURY* 3-mo yield 5.52%, 1-yr 5.37%, 2-yr 4.87%, 5-yr 4.18%, 10-yr 3.96%, 30-yr 4.03%. REAL yields 5-yr 1.90%, 10-yr 1.58%, 30-yr 1.72%.
DOLLAR rose, ^DXY 101.70, +0.60% (pg 50). GOLD fell to $1,964, -0.4% (Handy & Harman spot, Thursday; pg 52); the gold-miners fell. (^XAU was at 124.27, -1.75% 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, “The Disney/DIS Magic Will Return. It’s Time to Buy the Stock”. DIS (yield 0% but dividends may resume soon; fwd P/E 17.1) has been hit with multiple issues – expensive streaming; problems with FL Governor; management changes, etc. Returning CEO IGER is cutting costs and considering restructuring; an outright sale is also possible (to AAPL or META?).
Pg 6, UP AND DOWN WALL STREET. Emmanuel “Manny” ROMAN, Pimco CEO is featured, although some others are also quoted. While the STOCK and LABOR markets party on, this week’s FED +25 bps hike was almost a nonevent. BONDS are another matter. Manny says that this stock rally has been very narrow, but there are plenty of opportunities now in bonds – MBS, ABS, corporates, REITs, EMs. The supply of Treasuries is also up and that is putting pressure on rates. But as the Fed rate hike cycle nears the end, bonds with higher duration would benefit. REITs would be attractive once the Fed starts cutting rates. The EM debt would benefit from the Fed rate cuts and weakening dollar. Pimco managers are expected to deliver alpha but that doesn’t always happen.
What if former Presidents could run companies or nonprofits? Unlikely, but let us speculate anyway (was it a slow news week?). Jimmy CARTER, a model ex-President, could run Habitat for Humanity or homebuilders (KBH or TOL or LEN). George W BUSH could run oil company XOM or be a commissioner of baseball. How about Barack OBAMA, the storyteller, running NFLX or AMZN or he could buy Chicago Bulls (with Michael JORDAN). Donald TRUMP is OK with his Trump Organization. Bill CLINTON could run DIS. If Ronald REAGAN was around, he could be an arbitrator for Screenwriters and Actors Guild, notwithstanding his harsh handling of the air traffic controllers.
Pg 8, STREETWISE. Time may be now for badly lagging small-cap stocks. This rally has been very narrow in a handful of mega-techs and a new generation of meme stocks. But small-caps may benefit if/when this rally broadens. Selective SP SC 600 (IJR, SPSM) is a good start (problems have been noted elsewhere for IWM/R2000) but take a note of these small-caps – KN, FUL, PLAY, PRO, RBC, GWRE, JJSF, AL, EEFT.
(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. For stocks, EARNINGS are the key, and most have been good so far. About half of the SP500 companies have reported and those earnings are up +3% YoY; anyway, earnings aren’t collapsing, in fact, not even declining, as had been expected for Q2. Some companies in the same industry have reported divergent earnings (GE vs RTX, TSM vs INTC, etc). SP500 at a new 52-wk high is up +28% from its low on 10/12/22; YTD, SP500 +20% but equal-weight RSP +9% only. So, this bull run continues.
After UPS, the next major strike target is GM. Its stock has lagged since the UAW authorized the strike in June and may fall more during the strike. Labor contracts at F and STLA also expire in September, but all may deal along the lines of the GM deal (when it happens). Look at this as buying opportunity for automakers.
Out of favor cyclical Alcoa (AA; fwd P/EBITDA 4 only) is attractive. Aluminum prices have been weak but may improve as the global economy recovers.
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 9/20/23+ hold (cycle peak 5.25-5.50%)
FOMC 11/1/23+ hold
FOMC 12/13/23+ hold
(Cuts in 2024)
(Powell was noncommittal on hold or hike at the next FOMC. Watch the news from Fed Jackson Hole Conf, August 24-26.)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +0.66%, SP500 +1.01%, Nasdaq Comp +2.02%, R2000 1.09%. DJ Transports +2.85%; DJ Utilities -1.68%. (Rotating spot equal-weight SP500 RSP +0.19%) US$ index (spot) +0.61%, oil/WTI futures +4.55%%, gold futures -0.20%.
YTD (index changes only), DJIA +6.98%, SP500 +19.34%, Nasdaq Comp +36.79%. (Rotating spot equal-weight SP500 RSP +9.81%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE rose for 3rd week; ratio of winners:losers 1+:1.
AAII Bull-Bear Spread +20.7% (above average).
%Above 50-dMA for NYSE-listed stocks 78.31% (overbought) (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 86.1% (overbought) (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. Safe grain-corridor deal expiry for Ukraine followed by non-Basmati RICE export restrictions by India (#1 exporter) will cause global grain prices to rise. Global rice inventories are at 6-yr low. Thailand (#2) and Vietnam (#3) are at their maximum rice exports; Pakistan (#4) has major flooding issues.
EXTRA, COMMODITIES. With crude oil prices rising, the GASOLINE prices are also rising – national RBOB average is $3.7137/gallon. Reasons may be refinery outages and maintenance.
Pg 32, OPTIONS. Even the rich are feeling financial pressures when delinquencies are rising at AXP. This may be an early warning for otherwise strong consumer spending. Use hedging with put-collar-spread, etc.
(SP500 VIX 13.33 (low), Nasdaq 100 VXN 18.92, options SKEW 143.48 (high), bond MOVE 109.76 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 45: A good week in EUROPE (Netherlands +3.67%, Denmark -3.29%) and a good week in ASIA (China +3.64%, Indonesia -0.47%).
TREASURY* 3-mo yield 5.52%, 1-yr 5.37%, 2-yr 4.87%, 5-yr 4.18%, 10-yr 3.96%, 30-yr 4.03%. REAL yields 5-yr 1.90%, 10-yr 1.58%, 30-yr 1.72%.
DOLLAR rose, ^DXY 101.70, +0.60% (pg 50). GOLD fell to $1,964, -0.4% (Handy & Harman spot, Thursday; pg 52); the gold-miners fell. (^XAU was at 124.27, -1.75% 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, “The Disney/DIS Magic Will Return. It’s Time to Buy the Stock”. DIS (yield 0% but dividends may resume soon; fwd P/E 17.1) has been hit with multiple issues – expensive streaming; problems with FL Governor; management changes, etc. Returning CEO IGER is cutting costs and considering restructuring; an outright sale is also possible (to AAPL or META?).
Pg 6, UP AND DOWN WALL STREET. Emmanuel “Manny” ROMAN, Pimco CEO is featured, although some others are also quoted. While the STOCK and LABOR markets party on, this week’s FED +25 bps hike was almost a nonevent. BONDS are another matter. Manny says that this stock rally has been very narrow, but there are plenty of opportunities now in bonds – MBS, ABS, corporates, REITs, EMs. The supply of Treasuries is also up and that is putting pressure on rates. But as the Fed rate hike cycle nears the end, bonds with higher duration would benefit. REITs would be attractive once the Fed starts cutting rates. The EM debt would benefit from the Fed rate cuts and weakening dollar. Pimco managers are expected to deliver alpha but that doesn’t always happen.
What if former Presidents could run companies or nonprofits? Unlikely, but let us speculate anyway (was it a slow news week?). Jimmy CARTER, a model ex-President, could run Habitat for Humanity or homebuilders (KBH or TOL or LEN). George W BUSH could run oil company XOM or be a commissioner of baseball. How about Barack OBAMA, the storyteller, running NFLX or AMZN or he could buy Chicago Bulls (with Michael JORDAN). Donald TRUMP is OK with his Trump Organization. Bill CLINTON could run DIS. If Ronald REAGAN was around, he could be an arbitrator for Screenwriters and Actors Guild, notwithstanding his harsh handling of the air traffic controllers.
Pg 8, STREETWISE. Time may be now for badly lagging small-cap stocks. This rally has been very narrow in a handful of mega-techs and a new generation of meme stocks. But small-caps may benefit if/when this rally broadens. Selective SP SC 600 (IJR, SPSM) is a good start (problems have been noted elsewhere for IWM/R2000) but take a note of these small-caps – KN, FUL, PLAY, PRO, RBC, GWRE, JJSF, AL, EEFT.
(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).