Post by Admin/YBB on Sept 2, 2023 3:35:36 GMT -6
From Barron’s, September 4, 2023 (Part 1, Market Week+)
Pg 28, TRADER. The JOBS report, downward revisions for previous jobs reports and higher unemployment rate showed that the job market was cooling. Bond yields declined. The next CPI report will be 1 week before the FOMC meeting. All this may cause the FED to pause. Both stocks and bonds may have a good September. (Strength on Friday ahead of 3-day long weekend was notable)
Avoid the risks of hit-or-miss PHARMA by investing in pharma picks-and-shovels that provide lab equipment and supplies to pharma companies, including for R&D. Mentioned are DHR, ABCM (just bought by DHR), TMO, RGEN.
Fabless chipmaker Allegro MicroSystems (ALGM; fwd P/E 37) is a late-2020 spinoff from Japanese SANJF (still owns 51%). It owns 30% of Polar, one of its chips suppliers. ALGM has strong earnings growth and great margins but some question related-party transactions among ALGM-SANJF-Polar. Short interest is 8% of market-cap. Avoid.
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)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +1.43%, SP500 +2.50%, Nasdaq Comp +3.25%, R2000 +3.63%. DJ Transports +1.41%; DJ Utilities -1.82%. (Rotating spot Treasury 3y-7y IEI +0.07%) US$ index (spot) +0.28%, oil/WTI futures +7.17% (large move), gold futures +1.50% (unusual for the week when $ was up, again).
YTD (index changes only), DJIA +5.10%, SP500 +17.61%, Nasdaq Comp +34.06%. (Rotating spot Treasury 3y-7y IEI -0.22%)
SENTIMENTS
In hindsight, several sentiment indicators PEAKED around 7/20/23.
NYSE cumulative (5-day) A/D LINE rose; ratio of winners:losers 4:1.
AAII Bull-Bear Spread -1.4% (below average). (Positive Bull-Bear spread lasted only 2+ months)
%Above 50-dMA for NYSE-listed stocks 50.75% (neutral); 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 51.2% (barely positive); 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. Going to the moon doesn’t make INDIA a top industrial power. There is genuine pride that the Indian space program is entirely home-grown with local scientists and engineers and local suppliers; this moon mission cost only $75 million. But Prime Minister MODI’s 2014 “Make in India” program has stumbled. Indian manufacturing contributes only 18% to the GDP, well short of his 25% goal by 2025. There are issues of infrastructure, tariffs, taxes.
Pg 32, OPTIONS. With so many uncertainties around, pair buying calls with buying puts. Healthcare XLV is used as an example.
(SP500 VIX 13.09, Nasdaq 100 VXN 18.41, options SKEW 144.70 (high), bond MOVE 102.92 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 45: An up week in EUROPE (Finland +3.28%, Denmark -0.86%) and a good week in ASIA (Japan +2.88%, Philippines +0.11%).
TREASURY* 3-mo yield 5.53%, 1-yr 5.36%, 2-yr 4.87%, 5-yr 4.29%, 10-yr 4.18%, 30-yr 4.29%;
REAL yields 5-yr 2.12%, 10-yr 1.92%, 30-yr 2.04%;
FRNs Index** 5.41% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR rose, ^DXY 104.26, +0.30% (pg 50; rising since mid-July). GOLD rose (Handy & Harman spot, Thursday; pg 52); the gold-miners rose. (^XAU was at 117.38, +2.61% for the week; unusual rise for the week, again, and since late-August, while $ has been rising since mid-July)
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, “Warner Brothers Discovery/WBD Has Big Challenges. The Barbie Movie Won’t Solve Them”. The Barbie movie is a blockbuster hit but the pure-play media company WBD CEO Zaslav “Zas”, who is paid exceptionally well, has lots of things to fix. Debt/EBITDA of 4.6 is high; the company uses EBITDA instead of profits (none). The stock has been underperforming. WBD properties include movie studios, TV networks (CNN, etc), streaming Max, and games. It has focused on developing content. The Writers’ and Actors’ strike is helping in the short-term as it has reduced expenses (but there will be long-term negative consequences). WBD bondholders may benefit more than stockholders.
Pg 5, UP AND DOWN WALL STREET. SEPTEMBER is known for bad events (9/11 in 2001; Lehman in 2008 (not 2007), etc), but this year may be an exception. BULLS for new highs in September point to: September’s losing streak should end in 2023; strong January-August are followed by strong September and the rest of the year; the FED may pause; the Q2 earnings were OK, and earnings recession may end in Q2. But BEARS have an opposite view: Poor market leadership; companies borrowing long and putting proceeds in higher rate short-term instruments. Enjoy while the going is good.
MEDIA companies are affected by Writers’ and Actors’ STRIKE that may last until early-2024. But NFLX is benefiting from the streaming of old Suits TV series; strange considering that Suits was already being streamed by AMZN Prime Video and NBC/CMCSA Peacock. It’s unclear why recycled TV shows are suddenly popular (Grey’s Anatomy, NCIS, etc). NFLX has a library of unreleased movies and TV shows. Consumers are also going to YouTube, TikTok, videogames. Eventually, the lack of new programming will hurt the industry when consumers question why they are paying high subscription fees for recycled old stuff. NFLX stock is attractive for now.
(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. The JOBS report, downward revisions for previous jobs reports and higher unemployment rate showed that the job market was cooling. Bond yields declined. The next CPI report will be 1 week before the FOMC meeting. All this may cause the FED to pause. Both stocks and bonds may have a good September. (Strength on Friday ahead of 3-day long weekend was notable)
Avoid the risks of hit-or-miss PHARMA by investing in pharma picks-and-shovels that provide lab equipment and supplies to pharma companies, including for R&D. Mentioned are DHR, ABCM (just bought by DHR), TMO, RGEN.
Fabless chipmaker Allegro MicroSystems (ALGM; fwd P/E 37) is a late-2020 spinoff from Japanese SANJF (still owns 51%). It owns 30% of Polar, one of its chips suppliers. ALGM has strong earnings growth and great margins but some question related-party transactions among ALGM-SANJF-Polar. Short interest is 8% of market-cap. Avoid.
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)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +1.43%, SP500 +2.50%, Nasdaq Comp +3.25%, R2000 +3.63%. DJ Transports +1.41%; DJ Utilities -1.82%. (Rotating spot Treasury 3y-7y IEI +0.07%) US$ index (spot) +0.28%, oil/WTI futures +7.17% (large move), gold futures +1.50% (unusual for the week when $ was up, again).
YTD (index changes only), DJIA +5.10%, SP500 +17.61%, Nasdaq Comp +34.06%. (Rotating spot Treasury 3y-7y IEI -0.22%)
SENTIMENTS
In hindsight, several sentiment indicators PEAKED around 7/20/23.
NYSE cumulative (5-day) A/D LINE rose; ratio of winners:losers 4:1.
AAII Bull-Bear Spread -1.4% (below average). (Positive Bull-Bear spread lasted only 2+ months)
%Above 50-dMA for NYSE-listed stocks 50.75% (neutral); 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 51.2% (barely positive); 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. Going to the moon doesn’t make INDIA a top industrial power. There is genuine pride that the Indian space program is entirely home-grown with local scientists and engineers and local suppliers; this moon mission cost only $75 million. But Prime Minister MODI’s 2014 “Make in India” program has stumbled. Indian manufacturing contributes only 18% to the GDP, well short of his 25% goal by 2025. There are issues of infrastructure, tariffs, taxes.
Pg 32, OPTIONS. With so many uncertainties around, pair buying calls with buying puts. Healthcare XLV is used as an example.
(SP500 VIX 13.09, Nasdaq 100 VXN 18.41, options SKEW 144.70 (high), bond MOVE 102.92 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 45: An up week in EUROPE (Finland +3.28%, Denmark -0.86%) and a good week in ASIA (Japan +2.88%, Philippines +0.11%).
TREASURY* 3-mo yield 5.53%, 1-yr 5.36%, 2-yr 4.87%, 5-yr 4.29%, 10-yr 4.18%, 30-yr 4.29%;
REAL yields 5-yr 2.12%, 10-yr 1.92%, 30-yr 2.04%;
FRNs Index** 5.41% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR rose, ^DXY 104.26, +0.30% (pg 50; rising since mid-July). GOLD rose (Handy & Harman spot, Thursday; pg 52); the gold-miners rose. (^XAU was at 117.38, +2.61% for the week; unusual rise for the week, again, and since late-August, while $ has been rising since mid-July)
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, “Warner Brothers Discovery/WBD Has Big Challenges. The Barbie Movie Won’t Solve Them”. The Barbie movie is a blockbuster hit but the pure-play media company WBD CEO Zaslav “Zas”, who is paid exceptionally well, has lots of things to fix. Debt/EBITDA of 4.6 is high; the company uses EBITDA instead of profits (none). The stock has been underperforming. WBD properties include movie studios, TV networks (CNN, etc), streaming Max, and games. It has focused on developing content. The Writers’ and Actors’ strike is helping in the short-term as it has reduced expenses (but there will be long-term negative consequences). WBD bondholders may benefit more than stockholders.
Pg 5, UP AND DOWN WALL STREET. SEPTEMBER is known for bad events (9/11 in 2001; Lehman in 2008 (not 2007), etc), but this year may be an exception. BULLS for new highs in September point to: September’s losing streak should end in 2023; strong January-August are followed by strong September and the rest of the year; the FED may pause; the Q2 earnings were OK, and earnings recession may end in Q2. But BEARS have an opposite view: Poor market leadership; companies borrowing long and putting proceeds in higher rate short-term instruments. Enjoy while the going is good.
MEDIA companies are affected by Writers’ and Actors’ STRIKE that may last until early-2024. But NFLX is benefiting from the streaming of old Suits TV series; strange considering that Suits was already being streamed by AMZN Prime Video and NBC/CMCSA Peacock. It’s unclear why recycled TV shows are suddenly popular (Grey’s Anatomy, NCIS, etc). NFLX has a library of unreleased movies and TV shows. Consumers are also going to YouTube, TikTok, videogames. Eventually, the lack of new programming will hurt the industry when consumers question why they are paying high subscription fees for recycled old stuff. NFLX stock is attractive for now.
(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).