Post by Admin/YBB on Aug 26, 2023 4:14:27 GMT -6
From Barron’s, August 28, 2023 (Part 1, Market Week+)
Pg 28, TRADER. Nvidia/NVDA had a blowout Q2 report and POWELL didn’t say anything new at Jackson Hole. Stocks had a muted reaction to this positive news and may now be getting ready for a correction. SP500 kissed the 50-dMA and backed off. Investors aren’t buying the dips but are selling the rallies. The next SP500 support may be 4,300, then 4,135 near the 200-dMA. By Fall, we should know how the economy is doing with the expected lag – too weak or strong enough. Dip buyers should be patient and wait for the 1st correction of this bull move.
CHINESE government stimulus during and after the pandemic has been tepid. Its economy is weak; it has stopped releasing youth unemployment data (it’s so bad). The US companies with exposures to China have been hit. Be selective; attractive are ALB, AVY, EL, QCOM (lagging in the US); avoid AMD, INTC, TSLA.
Best Buy (BBY; yield 4.93%; fwd P/E 11.3) is attractive on expected earnings beat on Tuesday. Inventory imbalances are now behind. It has been lagging the retail XRT and should catch up.
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 in 2024)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -0.45%, SP500 +0.82%, Nasdaq Comp +2.26%, R2000 -0.31%. DJ Transports -0.55%; DJ Utilities +0.53%. (Rotating spot China MCHI +1.02%) US$ index (spot) +0.60%, oil/WTI futures -1.75%, gold futures +1.33% (unusual for the week when $ was up).
YTD (index changes only), DJIA +3.62%, SP500 +14.75%, Nasdaq Comp +29.85%. (Rotating spot China MCHI -7.87%)
SENTIMENTS
In hindsight, several sentiment indicators PEAKED around 7/20/23.
NYSE cumulative (5-day) A/D LINE fell for the 4th week; ratio of winners:losers 1:1+.
AAII Bull-Bear Spread -3.6% (below average). (Positive Bull-Bear spread lasted only 2+ months)
%Above 50-dMA for NYSE-listed stocks 36.04% (negative); Scale: oversold < 30, negative < 50, positive > 50, overbought > 70 (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 50.1% (neutral; declining); Scale: oversold < 30, negative < 50, positive > 50, overbought > 70 (a proprietary index for %Above 75-dMA for selected 1,800 stocks). Unclear what day of the week it is released, but it seems to lag other sentiment indicators (Barron’s updates it on late-Fridays). The all-cap $NYA50R is typically closer to it than the large-cap $SPXA50R.
Pg 31, INTERNATIONAL. CHINESE regulators are making reforms (longer trading hours, lower transaction fees, encouraging buybacks, more T+0 settlements, easing IPO rules, etc) to attract retail investors but those steps may not be enough. Chinese savings are high, but investors are avoiding troubled sectors such as property. Many Chinese investors are paying down debt/mortgage instead. Onshore ETF CNYA has done a roundtrip back to where it was a few years ago.
Pg 32, OPTIONS. Suggested is putting 80-90% in bonds and 10-20% in selling puts on the blue-chips one would like to own. Any put assignments would be financed from the bond portion. Risk is if the 10-yr keeps rising (now 4.25%).
EXTRA. Graphics chipmaker Nvidia/NVDA had a blowout Q2 report. It’s up +220% YTD. Options traders have made lot of money on NVDA, but now what? Expect high volatility until the next Q3 earnings report as speculations grow about another beat or miss.
(SP500 VIX 15.68, Nasdaq 100 VXN 20.88 (high), options SKEW 132.48 (high), bond MOVE 117.56 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 45: An up week in EUROPE (Denmark +2.33%, Norway -0.62%) and a good week in ASIA (Thailand +2.92%, Philippines -1.92%).
TREASURY* 3-mo yield 5.61%, 1-yr 5.44%, 2-yr 5.03%, 5-yr 4.44%, 10-yr 4.25%, 30-yr 4.30%;
REAL yields 5-yr 2.19%, 10-yr 1.92%, 30-yr 1.99%;
FRNs Index** 5.37% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR rose, ^DXY 104.19, +0.60% (pg 50; hawkish Powell at Jackson Hole). GOLD rose to $1,916, +1.1% (Handy & Harman spot, Thursday; pg 52); the gold-miners rose. (^XAU was at 114.40, +2.44% for the week; despite weakness in Friday, it was unusual for the week when $ was up)
Top FDIC insured savings deposit rates*** (This feature has been discontinued but see the link below)
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
**Treasury Direct (I-Bonds + T-Bills/Notes/Bonds, FRNs, TIPS)
www.treasurydirect.gov/auctions/announcements-data-results/frn-daily/
www.treasurydirect.gov/marketable-securities/
***For local rates www.depositaccounts.com/banks/rates-map/
(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, “Catastrophic Weather Is Wreaking Havoc with INSURANCE. These Companies Can Handle the Storm”. Natural DISASTERS are causing financial stress for insurers. Many homeowners and businesses have taken protective steps to minimize damage from disasters, but find that their premiums go up sharply, or policies cancelled, when insurers act en masse in some regions or states (CA, FL, etc). Only the financially strong insurers can handle sudden and/or multiple disaster claims. Some home policies are being capped (vs replacement coverage). Several insurers are using AI for disaster projections as actuarial projections have limits. There are suggestions for some states to form high-risk property insurance pools (similar to high-risk auto insurance). (But the states may have to do something to prevent people from resettling in flood zones, etc). Mentioned are ALL, ACGL, RYAN, GWRE.
Pg 6, UP AND DOWN WALL STREET. Private-equity firm L Catterton has pumped new life into 250-yr old German private shoe company Birkenstock to make it a hot upcoming IPO; brothers Alex and Christian will own 40%. Post-IPO, the company will have high debt. Old Catterton-Simon (yes, that was the former and late US Treasury Secretary William SIMON) changed its name in 2001, merged with the private-equity arm of Bernard ARNAULT’s LVMHF/LVMUY and that gave its name the distinctive “L”. Birkenstock sandals/footwear have been worn by Reese WITHERSPOON, Leonardo DiCAPRIO, Ketty PERRY, Usher, late Steve JOBS (his estate sold the pair for $218K). The company has partnerships with Dior, Manolo Blahnik, Valentino, and it is featured in the movie Barbie (she wore pink Birkenstock Arizona Big Buckle Nubuck Leather Sandal). In other words, Birkenstock are “in” and “hot”. Good luck finding desired sizes and colors.
SDNY indicted the UK billionaire Joe LEWIS (86), Tavistock Group, last month for insider trading; trial may be in 2025 when he will be almost 90 (he quit school at 15 to help with his father’s business). He is charged with tipping his copilots and a former girlfriend on companies such as SLDB, MRTX, etc in which he has/had interests; he even lent money to them for trades. He himself is not accused of direct insider trading. It all seems so idiotic – why would a billionaire do this? Who tipped the SDNY? Speculation has been that this is tied to SBF and FTX crypto cases, but then, Barron’s says that is unlikely. For the background, Lewis was part of the group along with George SOROS that broke the pound in 1992. He controls Tottenham Hotspur (soccer, English Premier League); developed FL golf courses Isleworth and Lake Nona; co-owns (with Tiger Woods and Justine Timberlake, etc) Bahama’s Albany Resorts; owns 321-ft superyacht Aviva, etc.
(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. Nvidia/NVDA had a blowout Q2 report and POWELL didn’t say anything new at Jackson Hole. Stocks had a muted reaction to this positive news and may now be getting ready for a correction. SP500 kissed the 50-dMA and backed off. Investors aren’t buying the dips but are selling the rallies. The next SP500 support may be 4,300, then 4,135 near the 200-dMA. By Fall, we should know how the economy is doing with the expected lag – too weak or strong enough. Dip buyers should be patient and wait for the 1st correction of this bull move.
CHINESE government stimulus during and after the pandemic has been tepid. Its economy is weak; it has stopped releasing youth unemployment data (it’s so bad). The US companies with exposures to China have been hit. Be selective; attractive are ALB, AVY, EL, QCOM (lagging in the US); avoid AMD, INTC, TSLA.
Best Buy (BBY; yield 4.93%; fwd P/E 11.3) is attractive on expected earnings beat on Tuesday. Inventory imbalances are now behind. It has been lagging the retail XRT and should catch up.
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 in 2024)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -0.45%, SP500 +0.82%, Nasdaq Comp +2.26%, R2000 -0.31%. DJ Transports -0.55%; DJ Utilities +0.53%. (Rotating spot China MCHI +1.02%) US$ index (spot) +0.60%, oil/WTI futures -1.75%, gold futures +1.33% (unusual for the week when $ was up).
YTD (index changes only), DJIA +3.62%, SP500 +14.75%, Nasdaq Comp +29.85%. (Rotating spot China MCHI -7.87%)
SENTIMENTS
In hindsight, several sentiment indicators PEAKED around 7/20/23.
NYSE cumulative (5-day) A/D LINE fell for the 4th week; ratio of winners:losers 1:1+.
AAII Bull-Bear Spread -3.6% (below average). (Positive Bull-Bear spread lasted only 2+ months)
%Above 50-dMA for NYSE-listed stocks 36.04% (negative); Scale: oversold < 30, negative < 50, positive > 50, overbought > 70 (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 50.1% (neutral; declining); Scale: oversold < 30, negative < 50, positive > 50, overbought > 70 (a proprietary index for %Above 75-dMA for selected 1,800 stocks). Unclear what day of the week it is released, but it seems to lag other sentiment indicators (Barron’s updates it on late-Fridays). The all-cap $NYA50R is typically closer to it than the large-cap $SPXA50R.
Pg 31, INTERNATIONAL. CHINESE regulators are making reforms (longer trading hours, lower transaction fees, encouraging buybacks, more T+0 settlements, easing IPO rules, etc) to attract retail investors but those steps may not be enough. Chinese savings are high, but investors are avoiding troubled sectors such as property. Many Chinese investors are paying down debt/mortgage instead. Onshore ETF CNYA has done a roundtrip back to where it was a few years ago.
Pg 32, OPTIONS. Suggested is putting 80-90% in bonds and 10-20% in selling puts on the blue-chips one would like to own. Any put assignments would be financed from the bond portion. Risk is if the 10-yr keeps rising (now 4.25%).
EXTRA. Graphics chipmaker Nvidia/NVDA had a blowout Q2 report. It’s up +220% YTD. Options traders have made lot of money on NVDA, but now what? Expect high volatility until the next Q3 earnings report as speculations grow about another beat or miss.
(SP500 VIX 15.68, Nasdaq 100 VXN 20.88 (high), options SKEW 132.48 (high), bond MOVE 117.56 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 45: An up week in EUROPE (Denmark +2.33%, Norway -0.62%) and a good week in ASIA (Thailand +2.92%, Philippines -1.92%).
TREASURY* 3-mo yield 5.61%, 1-yr 5.44%, 2-yr 5.03%, 5-yr 4.44%, 10-yr 4.25%, 30-yr 4.30%;
REAL yields 5-yr 2.19%, 10-yr 1.92%, 30-yr 1.99%;
FRNs Index** 5.37% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR rose, ^DXY 104.19, +0.60% (pg 50; hawkish Powell at Jackson Hole). GOLD rose to $1,916, +1.1% (Handy & Harman spot, Thursday; pg 52); the gold-miners rose. (^XAU was at 114.40, +2.44% for the week; despite weakness in Friday, it was unusual for the week when $ was up)
Top FDIC insured savings deposit rates*** (This feature has been discontinued but see the link below)
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
**Treasury Direct (I-Bonds + T-Bills/Notes/Bonds, FRNs, TIPS)
www.treasurydirect.gov/auctions/announcements-data-results/frn-daily/
www.treasurydirect.gov/marketable-securities/
***For local rates www.depositaccounts.com/banks/rates-map/
(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, “Catastrophic Weather Is Wreaking Havoc with INSURANCE. These Companies Can Handle the Storm”. Natural DISASTERS are causing financial stress for insurers. Many homeowners and businesses have taken protective steps to minimize damage from disasters, but find that their premiums go up sharply, or policies cancelled, when insurers act en masse in some regions or states (CA, FL, etc). Only the financially strong insurers can handle sudden and/or multiple disaster claims. Some home policies are being capped (vs replacement coverage). Several insurers are using AI for disaster projections as actuarial projections have limits. There are suggestions for some states to form high-risk property insurance pools (similar to high-risk auto insurance). (But the states may have to do something to prevent people from resettling in flood zones, etc). Mentioned are ALL, ACGL, RYAN, GWRE.
Pg 6, UP AND DOWN WALL STREET. Private-equity firm L Catterton has pumped new life into 250-yr old German private shoe company Birkenstock to make it a hot upcoming IPO; brothers Alex and Christian will own 40%. Post-IPO, the company will have high debt. Old Catterton-Simon (yes, that was the former and late US Treasury Secretary William SIMON) changed its name in 2001, merged with the private-equity arm of Bernard ARNAULT’s LVMHF/LVMUY and that gave its name the distinctive “L”. Birkenstock sandals/footwear have been worn by Reese WITHERSPOON, Leonardo DiCAPRIO, Ketty PERRY, Usher, late Steve JOBS (his estate sold the pair for $218K). The company has partnerships with Dior, Manolo Blahnik, Valentino, and it is featured in the movie Barbie (she wore pink Birkenstock Arizona Big Buckle Nubuck Leather Sandal). In other words, Birkenstock are “in” and “hot”. Good luck finding desired sizes and colors.
SDNY indicted the UK billionaire Joe LEWIS (86), Tavistock Group, last month for insider trading; trial may be in 2025 when he will be almost 90 (he quit school at 15 to help with his father’s business). He is charged with tipping his copilots and a former girlfriend on companies such as SLDB, MRTX, etc in which he has/had interests; he even lent money to them for trades. He himself is not accused of direct insider trading. It all seems so idiotic – why would a billionaire do this? Who tipped the SDNY? Speculation has been that this is tied to SBF and FTX crypto cases, but then, Barron’s says that is unlikely. For the background, Lewis was part of the group along with George SOROS that broke the pound in 1992. He controls Tottenham Hotspur (soccer, English Premier League); developed FL golf courses Isleworth and Lake Nona; co-owns (with Tiger Woods and Justine Timberlake, etc) Bahama’s Albany Resorts; owns 321-ft superyacht Aviva, etc.
(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).