Post by Admin/YBB on Aug 19, 2023 4:59:51 GMT -6
From Barron’s, August 21, 2023 (Part 1, Market Week+)
Pg 33, TRADER. REAL YIELDS have risen; the 10-yr real yield (for TIPS) was near +2%. Inflation-expectation is the difference between nominal and real yields, so for 10-yr +2.32%, 5-yr +2.22%. If yields continue to rise, that will hurt stocks (and bonds).
OIL prices have rebounded. The OPEC has cut production. Oil E&P stocks (PXD, CVX, MTDR, PR) are better than midstream energy and refiners (MPC, DINO, MGY).
Generac (GNRC; fwd P/E 16) has sold off on high inventories and declining revenues and earnings. But its business picks up after natural disasters – it has 75% market share in standby power generators, and their use is low in many disaster prone areas.
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
FOMC 11/1/23+ hike +25 bps (cycle peak 5.50-5.75%)
FOMC 12/13/23+ hold
(Cuts mid-2024) (site seems a bit unstable showing different results at different times)
(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 -2.21%, SP500 -2.11%, Nasdaq Comp -2.59%, R2000 -3.41%. DJ Transports -3.14%; DJ Utilities -1.79%. (Rotating spot long bond TLT -0.67%) US$ index (spot) +0.57%, oil/WTI futures -2.33%, gold futures -1.40%.
YTD (index changes only), DJIA +4.08%, SP500 +13.81%, Nasdaq Comp +26.98%. (Rotating spot long bond TLT -1.28%)
SENTIMENTS
In hindsight, several sentiment indicators PEAKED around 7/20/23.
NYSE cumulative (5-day) A/D LINE fell for the 3rd week; ratio of winners:losers 1:5.
AAII Bull-Bear Spread +5.8% (below average).
%Above 50-dMA for NYSE-listed stocks 37.54% (negative); 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 60.8% (positive; declining); Scale: < 30 oversold, < 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 36, INTERNATIONAL. CHINA now exports most cars globally, not Japan or Germany. But 70% of Chinese auto exports are ICE gas guzzlers. The share of Chinese EVs for exports will rise, but most of the EV production now goes to its hot domestic market; BTW, China is also a top global EV producer. Top destinations for Chinese auto exports are Russia, Mexico, Saudi Arabia, Belgium, etc (so, one can be a top global auto exporter without even tapping into the US market). All this news if you had too much of the other negative news on China – collapsing property sector, high debt, high youth unemployment, etc.
Pg 37, OPTIONS. Use options to PROTECT portfolios in case of DC SHUTDOWN in October. FY 2022 ends on September 30 and Congress will need to pass 12 appropriations bills to keep the government running. There is Labor Day recess in early-September. China is sputtering, Russia-Ukraine war continues. Q2 earnings season will soon end with -8.3% vs 2022/Q2. Luckily, the short-term yields are attractive. Buy puts or put-spreads.
(SP500 VIX 17.30, Nasdaq 100 VXN 22.01 (high), options SKEW 134.77 (high), bond MOVE 120.51 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 50: A bad week in EUROPE (Denmark -0.82%, Netherlands -4.51%) and a bad week in ASIA (Malaysia -0.14%, Singapore -5.62%.
TREASURY* 3-mo yield 5.55%, 1-yr 5.35%, 2-yr 4.92%, 5-yr 4.38%, 10-yr 4.26%, 30-yr 4.38%. REAL yields 5-yr 2.16%, 10-yr 1.94%, 30-yr 2.08%.
DOLLAR rose, ^DXY 103.43, +0.80% (pg 58). GOLD fell to $1,919 (?), -1.4% (Handy & Harman spot, Thursday; pg 60); the gold-miners fell. (^XAU was at 111.68, -6.37% 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, “AI ROUNDTABLE”. Panelists – Dario GILL/IBM; Irene SOLAIMAN/Hugging Face; Cathy GAO/Sapphire Ventures; Mark MOERDLER/Goldman Sachs.
Generative AI came on the scene like a storm (public wasn’t familiar with it before Fall 2022 when ChatGPT came along). IBM was early with AI conference co-sponsorships (Dartmouth, 1956) and Watson software (Watson Healthcare was spun off). The old AI was very different from the NEW AI that is made possible by huge computing power and storage/memory. The new generative AI is for text/languages, images, audios. Commercial future lies in special, applications-oriented generative AI (the general generative AI is fun but is hard to commercialize). Just having data or databases won’t be enough but it will be important how the data are represented, manipulated and used. For widespread global use, keyboard languages will be important.
Generative AI may favor large incumbents (MSFT, GOOGL, AMZN, META, etc; NVDA, MRVL, etc); the losers may be me-too latecomers with superficial AI exposures. Nvidia/NVDA specializes in developing custom processors that integrate many software aspects into the hardware. STARTUPS may have more difficult times; the IPO window is frozen anyway. But as with many other technologies, the early entrants may not be the eventual dominant ones. The impact of generative AI on JOBS will be uncertain, but many routine jobs will be eliminated. There are REGULATORY concerns too – IP and privacy issues; fake “news” or “facts”; industry-specific AI regulations may be needed than some overall AI regulation.
Pg 6, UP AND DOWN WALL STREET. With INFLATION getting stuck around +3%, the 10-yr Treasury yields may rise to 5%+, or even 6%. The economy wasn’t affected by the regional BANKING CRISIS. Projections now are for SOFT LANDING, not recession. But the CME FedWatch (based on fed fund futures market) is marching to its own drums by projecting rate cuts in mid-2024. The FOMC Minutes indicated the Fed readiness to continue tightening. The QT continues but it will take a long time to reverse the previous QEs.
EARNINGS expectations were low for 2023, but they have been better than expected so far (if not good on an absolute basis). Expectations for SP500 earnings for 2023 now are $219, for 2024 $246 (a bearish analyst is at $210). The FED conference at Jackson Hole is August 24-26. Remember that earnings disappointment will kill this bull market, not Powell’s rate hikes (the current SP500 pullback of -5.15% from recent high is really nothing; Nasdaq comp -8%).
Pg 8, STREETWISE. Koka SNEAKERS from Deckers/DECK are popular. Swiss On brand from On Holding/ONON is up and coming. On the other hand, Adidas/ADDDYY had had many problems. As the columnist-humorist HOUGH has to buy new sneakers, he also looked at Samba, Gazelle, Spezial, Campus. He also has to like the company stock, so he ruled out Nike/NKE, Crocs/CROX. (Looks like a slow week at Barron’s. I also didn’t see any humor.)
(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 33, TRADER. REAL YIELDS have risen; the 10-yr real yield (for TIPS) was near +2%. Inflation-expectation is the difference between nominal and real yields, so for 10-yr +2.32%, 5-yr +2.22%. If yields continue to rise, that will hurt stocks (and bonds).
OIL prices have rebounded. The OPEC has cut production. Oil E&P stocks (PXD, CVX, MTDR, PR) are better than midstream energy and refiners (MPC, DINO, MGY).
Generac (GNRC; fwd P/E 16) has sold off on high inventories and declining revenues and earnings. But its business picks up after natural disasters – it has 75% market share in standby power generators, and their use is low in many disaster prone areas.
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
FOMC 11/1/23+ hike +25 bps (cycle peak 5.50-5.75%)
FOMC 12/13/23+ hold
(Cuts mid-2024) (site seems a bit unstable showing different results at different times)
(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 -2.21%, SP500 -2.11%, Nasdaq Comp -2.59%, R2000 -3.41%. DJ Transports -3.14%; DJ Utilities -1.79%. (Rotating spot long bond TLT -0.67%) US$ index (spot) +0.57%, oil/WTI futures -2.33%, gold futures -1.40%.
YTD (index changes only), DJIA +4.08%, SP500 +13.81%, Nasdaq Comp +26.98%. (Rotating spot long bond TLT -1.28%)
SENTIMENTS
In hindsight, several sentiment indicators PEAKED around 7/20/23.
NYSE cumulative (5-day) A/D LINE fell for the 3rd week; ratio of winners:losers 1:5.
AAII Bull-Bear Spread +5.8% (below average).
%Above 50-dMA for NYSE-listed stocks 37.54% (negative); 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 60.8% (positive; declining); Scale: < 30 oversold, < 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 36, INTERNATIONAL. CHINA now exports most cars globally, not Japan or Germany. But 70% of Chinese auto exports are ICE gas guzzlers. The share of Chinese EVs for exports will rise, but most of the EV production now goes to its hot domestic market; BTW, China is also a top global EV producer. Top destinations for Chinese auto exports are Russia, Mexico, Saudi Arabia, Belgium, etc (so, one can be a top global auto exporter without even tapping into the US market). All this news if you had too much of the other negative news on China – collapsing property sector, high debt, high youth unemployment, etc.
Pg 37, OPTIONS. Use options to PROTECT portfolios in case of DC SHUTDOWN in October. FY 2022 ends on September 30 and Congress will need to pass 12 appropriations bills to keep the government running. There is Labor Day recess in early-September. China is sputtering, Russia-Ukraine war continues. Q2 earnings season will soon end with -8.3% vs 2022/Q2. Luckily, the short-term yields are attractive. Buy puts or put-spreads.
(SP500 VIX 17.30, Nasdaq 100 VXN 22.01 (high), options SKEW 134.77 (high), bond MOVE 120.51 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 50: A bad week in EUROPE (Denmark -0.82%, Netherlands -4.51%) and a bad week in ASIA (Malaysia -0.14%, Singapore -5.62%.
TREASURY* 3-mo yield 5.55%, 1-yr 5.35%, 2-yr 4.92%, 5-yr 4.38%, 10-yr 4.26%, 30-yr 4.38%. REAL yields 5-yr 2.16%, 10-yr 1.94%, 30-yr 2.08%.
DOLLAR rose, ^DXY 103.43, +0.80% (pg 58). GOLD fell to $1,919 (?), -1.4% (Handy & Harman spot, Thursday; pg 60); the gold-miners fell. (^XAU was at 111.68, -6.37% 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, “AI ROUNDTABLE”. Panelists – Dario GILL/IBM; Irene SOLAIMAN/Hugging Face; Cathy GAO/Sapphire Ventures; Mark MOERDLER/Goldman Sachs.
Generative AI came on the scene like a storm (public wasn’t familiar with it before Fall 2022 when ChatGPT came along). IBM was early with AI conference co-sponsorships (Dartmouth, 1956) and Watson software (Watson Healthcare was spun off). The old AI was very different from the NEW AI that is made possible by huge computing power and storage/memory. The new generative AI is for text/languages, images, audios. Commercial future lies in special, applications-oriented generative AI (the general generative AI is fun but is hard to commercialize). Just having data or databases won’t be enough but it will be important how the data are represented, manipulated and used. For widespread global use, keyboard languages will be important.
Generative AI may favor large incumbents (MSFT, GOOGL, AMZN, META, etc; NVDA, MRVL, etc); the losers may be me-too latecomers with superficial AI exposures. Nvidia/NVDA specializes in developing custom processors that integrate many software aspects into the hardware. STARTUPS may have more difficult times; the IPO window is frozen anyway. But as with many other technologies, the early entrants may not be the eventual dominant ones. The impact of generative AI on JOBS will be uncertain, but many routine jobs will be eliminated. There are REGULATORY concerns too – IP and privacy issues; fake “news” or “facts”; industry-specific AI regulations may be needed than some overall AI regulation.
Pg 6, UP AND DOWN WALL STREET. With INFLATION getting stuck around +3%, the 10-yr Treasury yields may rise to 5%+, or even 6%. The economy wasn’t affected by the regional BANKING CRISIS. Projections now are for SOFT LANDING, not recession. But the CME FedWatch (based on fed fund futures market) is marching to its own drums by projecting rate cuts in mid-2024. The FOMC Minutes indicated the Fed readiness to continue tightening. The QT continues but it will take a long time to reverse the previous QEs.
EARNINGS expectations were low for 2023, but they have been better than expected so far (if not good on an absolute basis). Expectations for SP500 earnings for 2023 now are $219, for 2024 $246 (a bearish analyst is at $210). The FED conference at Jackson Hole is August 24-26. Remember that earnings disappointment will kill this bull market, not Powell’s rate hikes (the current SP500 pullback of -5.15% from recent high is really nothing; Nasdaq comp -8%).
Pg 8, STREETWISE. Koka SNEAKERS from Deckers/DECK are popular. Swiss On brand from On Holding/ONON is up and coming. On the other hand, Adidas/ADDDYY had had many problems. As the columnist-humorist HOUGH has to buy new sneakers, he also looked at Samba, Gazelle, Spezial, Campus. He also has to like the company stock, so he ruled out Nike/NKE, Crocs/CROX. (Looks like a slow week at Barron’s. I also didn’t see any humor.)
(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).
