Post by Admin/YBB on Aug 12, 2023 4:02:57 GMT -6
From Barron’s, August 14, 2023 (Part 1, Market Week+)
Pg 28, TRADER. August has been bad for stocks and for techs in particular. It may be the pause that refreshes. The Fed has raised rates rapidly and the yield-curve has been inverted. Investors should use this time to reposition portfolios by deploying profits (from techs, etc) into some lagging sectors (healthcare, utilities, cyclicals). (Why is energy sprinting? It is featured in the rotating spot but without any related comments.)
After Moody’s downgrade of several regional BANKS, there are selected opportunities – regional bank ETF KRE; collaterally damaged JPM, BAC and banking ETF KBE. Regulators issued tougher capital rules. The banks have absorbed lot of bad news recently.
H&R Block (HRB; fwd P/E 8.7; buybacks) now does more than individual tax filings. It has expanded into banking (including mobile banking with Spruce), payroll services, small business accounting and taxes (via Wave). It has partnered with MSFT for Azure OpenAI services.
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)
(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 +0.62%, SP500 -0.31%, Nasdaq Comp -1.90%, R2000 -1.65%. DJ Transports -0.67%; DJ Utilities +0.90%. (Rotating spot energy XLE +3.43%) US$ index (spot) +0.81%, oil/WTI futures +0.45%, gold futures -1.38%.
YTD (index changes only), DJIA +6.44%, SP500 +16.27%, Nasdaq Comp +30.37%. (Rotating spot energy +2.78%)
SENTIMENTS
In hindsight, several sentiment indicators PEAKED around 7/20/23.
NYSE cumulative (5-day) A/D LINE fell for the 2nd week; ratio of winners:losers 1:1+.
AAII Bull-Bear Spread +19.2% (above average).
%Above 50-dMA for NYSE-listed stocks 56.55% (still positive, but has been declining); Scale: < 30 oversold, < 50 negative, > 50 positive, > 70 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 66.9% (positive; declining); < 30 oversold, Scale: < 50 negative, > 50 positive, > 70 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. SHIPPING boom of 2021 is over and now comes the shipping glut/bust. Shipping rates are falling/collapsing, and the worst may not be over yet. De-globalization is also hurting global shipping. Newer ships are huge (bigger than aircraft carriers; 18,000 container capacity) and fuel-efficient but their delivery times are long.
Pg 32, OPTIONS. When bears and market skeptics capitulate, be wary (examples include Mike Wilson/MS, Carl Icahn/IEP, etc). There was a great short-covering Summer rally. Earnings growth is slowing; Fitch downgraded the US; Moody’s downgraded the US regional banks; bond yields are rising; troubles are brewing in the CREs. But the VIX remains subdued (although the SKEW is high). Be careful when the bulls get exhausted and there is no support underneath.
(SP500 VIX 14.89, Nasdaq 100 VXN 20.48 (high), options SKEW 136.58 (high), bond MOVE 108.64 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 45: A flat week in EUROPE (Norway +7.80% (large move; related to NVO?), Netherlands -2.02%) and a down week in ASIA (Japan +1.29%, China -3.49% (large move; the US-China relations worsening).
TREASURY* 3-mo yield 5.54%, 1-yr 5.36%, 2-yr 4.89%, 5-yr 4.31%, 10-yr 4.16%, 30-yr 4.27%. REAL yields 5-yr 2.01%, 10-yr 1.80%, 30-yr 1.96%.
DOLLAR rose, ^DXY 102.85, +0.80% (pg 50). GOLD fell to $1,916, -1.4% (Handy & Harman spot, Thursday; pg 52); the gold-miners fell. (^XAU was at 119.28, -0.29% 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 18, COVER STORY, “DraftKings and Other SPORTS GAMBLING Apps are Hitting the Jackpot with “Parlay” Bets. As They Win, YOU LOSE”. Online sports betting is a losing proposition for the public. The “parlay” bets (combo bets) have the worst odds. The public may be fooled by the AI-assist that is available. As a result, many online gambling firms have become profitable much sooner than expected. In the US, the Supremes have allowed sports gambling since 2018 IF the states allow it. Mentioned are DraftKings/DKNG, Flutter/PDYPY, Cesars/CZR, PENN, ESPN/DIS.
Pg 6, UP AND DOWN WALL STREET. Some stock pullback will be healthy. There are many issues now – problems with regional banks and their downgrade by Moody’s; an aggressive Fed; geopolitical tensions (Europe, Asia, Africa, etc); peaking sentiments; harsh weather (globally), etc. The fear gauge VIX is low and could spike quickly; but SUBRAMANIAN/BoA thinks that VIX may bottom only in early-2024. Stick with quality stocks and GARP stocks – JPM, PANW, DAL, GWW, GOOGL, VMC, etc.
The inversion of 2y-10y portion of the YIELD-CURVE has decreased from -87 bps (8/1/23) to -73 bps (8/11/23). The reason is that 2-yr yield isn’t rising much as the Fed is near the tail end of its hikes, but the 10-yr yield may be rising for one of the 2 reasons – economy is improving or there is just too much supply of 10-yr. This (slight) yield-curve flattening (Barron’s calls it steepening but remember that the yield curve is already inverted) may be meaningful with negative implications for future Fed actions. (This could also be reading too much into rate wiggles)
(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 28, TRADER. August has been bad for stocks and for techs in particular. It may be the pause that refreshes. The Fed has raised rates rapidly and the yield-curve has been inverted. Investors should use this time to reposition portfolios by deploying profits (from techs, etc) into some lagging sectors (healthcare, utilities, cyclicals). (Why is energy sprinting? It is featured in the rotating spot but without any related comments.)
After Moody’s downgrade of several regional BANKS, there are selected opportunities – regional bank ETF KRE; collaterally damaged JPM, BAC and banking ETF KBE. Regulators issued tougher capital rules. The banks have absorbed lot of bad news recently.
H&R Block (HRB; fwd P/E 8.7; buybacks) now does more than individual tax filings. It has expanded into banking (including mobile banking with Spruce), payroll services, small business accounting and taxes (via Wave). It has partnered with MSFT for Azure OpenAI services.
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)
(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 +0.62%, SP500 -0.31%, Nasdaq Comp -1.90%, R2000 -1.65%. DJ Transports -0.67%; DJ Utilities +0.90%. (Rotating spot energy XLE +3.43%) US$ index (spot) +0.81%, oil/WTI futures +0.45%, gold futures -1.38%.
YTD (index changes only), DJIA +6.44%, SP500 +16.27%, Nasdaq Comp +30.37%. (Rotating spot energy +2.78%)
SENTIMENTS
In hindsight, several sentiment indicators PEAKED around 7/20/23.
NYSE cumulative (5-day) A/D LINE fell for the 2nd week; ratio of winners:losers 1:1+.
AAII Bull-Bear Spread +19.2% (above average).
%Above 50-dMA for NYSE-listed stocks 56.55% (still positive, but has been declining); Scale: < 30 oversold, < 50 negative, > 50 positive, > 70 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 66.9% (positive; declining); < 30 oversold, Scale: < 50 negative, > 50 positive, > 70 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. SHIPPING boom of 2021 is over and now comes the shipping glut/bust. Shipping rates are falling/collapsing, and the worst may not be over yet. De-globalization is also hurting global shipping. Newer ships are huge (bigger than aircraft carriers; 18,000 container capacity) and fuel-efficient but their delivery times are long.
Pg 32, OPTIONS. When bears and market skeptics capitulate, be wary (examples include Mike Wilson/MS, Carl Icahn/IEP, etc). There was a great short-covering Summer rally. Earnings growth is slowing; Fitch downgraded the US; Moody’s downgraded the US regional banks; bond yields are rising; troubles are brewing in the CREs. But the VIX remains subdued (although the SKEW is high). Be careful when the bulls get exhausted and there is no support underneath.
(SP500 VIX 14.89, Nasdaq 100 VXN 20.48 (high), options SKEW 136.58 (high), bond MOVE 108.64 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 45: A flat week in EUROPE (Norway +7.80% (large move; related to NVO?), Netherlands -2.02%) and a down week in ASIA (Japan +1.29%, China -3.49% (large move; the US-China relations worsening).
TREASURY* 3-mo yield 5.54%, 1-yr 5.36%, 2-yr 4.89%, 5-yr 4.31%, 10-yr 4.16%, 30-yr 4.27%. REAL yields 5-yr 2.01%, 10-yr 1.80%, 30-yr 1.96%.
DOLLAR rose, ^DXY 102.85, +0.80% (pg 50). GOLD fell to $1,916, -1.4% (Handy & Harman spot, Thursday; pg 52); the gold-miners fell. (^XAU was at 119.28, -0.29% 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 18, COVER STORY, “DraftKings and Other SPORTS GAMBLING Apps are Hitting the Jackpot with “Parlay” Bets. As They Win, YOU LOSE”. Online sports betting is a losing proposition for the public. The “parlay” bets (combo bets) have the worst odds. The public may be fooled by the AI-assist that is available. As a result, many online gambling firms have become profitable much sooner than expected. In the US, the Supremes have allowed sports gambling since 2018 IF the states allow it. Mentioned are DraftKings/DKNG, Flutter/PDYPY, Cesars/CZR, PENN, ESPN/DIS.
Pg 6, UP AND DOWN WALL STREET. Some stock pullback will be healthy. There are many issues now – problems with regional banks and their downgrade by Moody’s; an aggressive Fed; geopolitical tensions (Europe, Asia, Africa, etc); peaking sentiments; harsh weather (globally), etc. The fear gauge VIX is low and could spike quickly; but SUBRAMANIAN/BoA thinks that VIX may bottom only in early-2024. Stick with quality stocks and GARP stocks – JPM, PANW, DAL, GWW, GOOGL, VMC, etc.
The inversion of 2y-10y portion of the YIELD-CURVE has decreased from -87 bps (8/1/23) to -73 bps (8/11/23). The reason is that 2-yr yield isn’t rising much as the Fed is near the tail end of its hikes, but the 10-yr yield may be rising for one of the 2 reasons – economy is improving or there is just too much supply of 10-yr. This (slight) yield-curve flattening (Barron’s calls it steepening but remember that the yield curve is already inverted) may be meaningful with negative implications for future Fed actions. (This could also be reading too much into rate wiggles)
(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).