Post by Admin/YBB on Nov 4, 2023 4:14:58 GMT -6
From Barron’s, November 6, 2023 (Part 1, Market Week+)
Pg 28, TRADER. Stocks rallied this week (the best for 2023) on Fed and economic news, but earnings reports have been mixed. Fear gauge VIX fell to 14.91 and 10-yr yield fell to 4.577%. The stock rally is assuming optimistic earnings growth for 2024 and 2025 but those may not materialize. Fasten seat belts for a bumpy ride.
META (fwd P/E 18) is attractive among the Big Tech. Its businesses are strong and growing. Its costs are in check.
Mantra cash-is-king will soon be history. Investors have shifted some equity into cash – BoA private accounts have cash high at 13%. Instead, consider defensive sectors with good dividends (utilities, consumer-staples, communications, healthcare).
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 12/13/23+ hold (cycle peak 5.25-5.50%)
FOMC 1/31/24+ hold
FOMC 3/20/24+ hold
FOMC 5/1/24+ cut
FOMC 6/12/24+ hold
(Cuts in mid/late-2024) (Probabilities for some rate-ranges aren’t high, so there can be some unexpected moves.)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +5.07%, SP500 +5.85%, Nasdaq Comp +6.61%, R2000 +7.56%. DJ Transports +7.06%; DJ Utilities +5.80%. (Rotating spot long Treasury TLT +3.86%) US$ index (spot) -1.40% (remains too strong over 100), oil/WTI futures -5.88%, gold futures +0.15%.
YTD (index changes only), DJIA +2.76%, SP500 +13.51%, Nasdaq Comp +28.78%. (Rotating spot long Treasury -11.98%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE rose; ratio of winners:losers 8:1.
FUND INFLOWS/OUTFLOWS (4-weekMA) (NEW). OUTFLOWS from stocks, taxable bonds, munis, money-market funds. However, 4-wMAs of outflows were significantly reduced due to strong WEEKLY inflows.
AAII Bull-Bear Spread -26.0% (very low). (Thursday-Wednesday)
%Above 50-dMA for NYSE-listed stocks 52.33% (positive; huge change from oversold); (StockCharts $NYA50R for NYSE; $SPXA50R for the SP500 in the bottom panel),
stockcharts.com/h-sc/ui?s=%24NYA50R&p=D&b=5&g=0&id=p91704957718 .
Delta MSI 15.5% (oversold); a proprietary index for %Above 75-dMA for selected 1,800 stocks that is published midweek but is updated by Barron’s only on late-Fridays (so, it typically LAGS). The all-cap $NYA50R is typically closer to it than the large-cap $SPXA50R.
(Common Scale: oversold < 30, negative < 50, positive > 50, overbought > 70)
Pg 31, INTERNATIONAL TRADER. JAPAN is making a comeback as chipmaker. It has “2022 Economic Security & Promotion Act” that will support production of chips for electronics and auto industries – these tend not to be the most advanced chips. The “US Chips & Science Act” is more ambitious. The current leader for advanced chips is TSM (Taiwan) and it is collaborating with the US and Japanese companies. Japan also leads in some chip manufacturing aspects (chemicals, testing, equipment).
Pg 32, OPTIONS. MSFT is riding on 2 hot trends – cloud-computing and AI. Recommended is pairing put-selling with call-buying.
(SP500 VIX 14.95, Nasdaq 100 VXN 18.64, options SKEW 133.80 (high), bond MOVE 118.74 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 45: A good week in EUROPE (Denmark +5.72%, Norway +2.07%) and a good week in ASIA (New Zealand +4.27%, Philippines +0.45%). (A GLOBAL RALLY week)
TREASURY* 3-mo yield 5.53%, 1-yr 5.29%, 2-yr 4.83%, 5-yr 4.49%, 10-yr 4.57%, 30-yr 4.77%;
REAL yields 5-yr 2.17%, 10-yr 2.18%, 30-yr 2.28%;
FRNs Index** 5.40% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR fell, ^DXY 105.7, -1.4% (pg 50). GOLD rose to $1,994, +0.6% (Handy & Harman spot, Thursday; pg 52); the gold-miners rose. (^XAU was at 116.25, +1.03% for the week)
Top FDIC insured savings deposit rates*** (This feature has been discontinued but see the link below)
US SAVINGS I-Bonds**, NEW rate from November 1, 2023, is 5.27%; the fixed rate is +1.30%, the semiannual inflation is +1.97%.
(NOTE – The Social Security COLA for 2024, based on the Q3 average of CPI-W, is +3.2%)
*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 16, COVER STORY “AI is About to Remake the PC”. PC sales are now rebounding from the AI hype; the previous pandemic boost fizzled out quickly. AI-PCs will include CPU, GPU, NPU. Critics doubt that serious AI can be run on PCs, but the combo of AI-PCs and cloud-AI looks promising. MSFT is also ending support for W10 in 2025 and that may start a PC upgrade cycle. Beneficiaries will be PC makers DELL, HPQ, LNVGY (& AAPL); chipmakers/designers NVDA, INTC, AMD, ARM, QCOM, MU.
Pg 7, UP AND DOWN WALL STREET. Both stocks and bonds rallied this week – thanks to Yellen/Treasury (refunding plan was OK), Powell/Fed (rate hold) and the BLS (job market cooling). Bond yields fell. Soft landing is likely, not recession. But if the stock and bond markets remain strong, don’t expect Fed rate cuts in 2024.
BOND guru Dan FUSS (90), Loomis Sayles, is concerned by geopolitics, energy, climate change, domestic politics, US-China friction, etc. These exogeneous factors are affecting his investment outlook. He thinks that the Fed is done raising rates and may cut them in 2014 – in line with the CME FedWatch. High debt may cause persistent inflation. He suggests a 50-50 hybrid portfolio with longer-duration fixed income. He likes intermediate duration, discounted bonds, selected HY.
Pg 9, STREETWISE. Disney/DIS is seeking partners for its cash cow ESPN. A leader in sports broadcasting, ESPN has outbid others for large contracts. It is focusing on developing streaming ESPN+ in partnership with others (for distribution, equity stakes). DIS is buying out Comcast’s/CMCSA 33.3% stake in Hulu.
(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. Stocks rallied this week (the best for 2023) on Fed and economic news, but earnings reports have been mixed. Fear gauge VIX fell to 14.91 and 10-yr yield fell to 4.577%. The stock rally is assuming optimistic earnings growth for 2024 and 2025 but those may not materialize. Fasten seat belts for a bumpy ride.
META (fwd P/E 18) is attractive among the Big Tech. Its businesses are strong and growing. Its costs are in check.
Mantra cash-is-king will soon be history. Investors have shifted some equity into cash – BoA private accounts have cash high at 13%. Instead, consider defensive sectors with good dividends (utilities, consumer-staples, communications, healthcare).
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 12/13/23+ hold (cycle peak 5.25-5.50%)
FOMC 1/31/24+ hold
FOMC 3/20/24+ hold
FOMC 5/1/24+ cut
FOMC 6/12/24+ hold
(Cuts in mid/late-2024) (Probabilities for some rate-ranges aren’t high, so there can be some unexpected moves.)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +5.07%, SP500 +5.85%, Nasdaq Comp +6.61%, R2000 +7.56%. DJ Transports +7.06%; DJ Utilities +5.80%. (Rotating spot long Treasury TLT +3.86%) US$ index (spot) -1.40% (remains too strong over 100), oil/WTI futures -5.88%, gold futures +0.15%.
YTD (index changes only), DJIA +2.76%, SP500 +13.51%, Nasdaq Comp +28.78%. (Rotating spot long Treasury -11.98%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE rose; ratio of winners:losers 8:1.
FUND INFLOWS/OUTFLOWS (4-weekMA) (NEW). OUTFLOWS from stocks, taxable bonds, munis, money-market funds. However, 4-wMAs of outflows were significantly reduced due to strong WEEKLY inflows.
AAII Bull-Bear Spread -26.0% (very low). (Thursday-Wednesday)
%Above 50-dMA for NYSE-listed stocks 52.33% (positive; huge change from oversold); (StockCharts $NYA50R for NYSE; $SPXA50R for the SP500 in the bottom panel),
stockcharts.com/h-sc/ui?s=%24NYA50R&p=D&b=5&g=0&id=p91704957718 .
Delta MSI 15.5% (oversold); a proprietary index for %Above 75-dMA for selected 1,800 stocks that is published midweek but is updated by Barron’s only on late-Fridays (so, it typically LAGS). The all-cap $NYA50R is typically closer to it than the large-cap $SPXA50R.
(Common Scale: oversold < 30, negative < 50, positive > 50, overbought > 70)
Pg 31, INTERNATIONAL TRADER. JAPAN is making a comeback as chipmaker. It has “2022 Economic Security & Promotion Act” that will support production of chips for electronics and auto industries – these tend not to be the most advanced chips. The “US Chips & Science Act” is more ambitious. The current leader for advanced chips is TSM (Taiwan) and it is collaborating with the US and Japanese companies. Japan also leads in some chip manufacturing aspects (chemicals, testing, equipment).
Pg 32, OPTIONS. MSFT is riding on 2 hot trends – cloud-computing and AI. Recommended is pairing put-selling with call-buying.
(SP500 VIX 14.95, Nasdaq 100 VXN 18.64, options SKEW 133.80 (high), bond MOVE 118.74 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 45: A good week in EUROPE (Denmark +5.72%, Norway +2.07%) and a good week in ASIA (New Zealand +4.27%, Philippines +0.45%). (A GLOBAL RALLY week)
TREASURY* 3-mo yield 5.53%, 1-yr 5.29%, 2-yr 4.83%, 5-yr 4.49%, 10-yr 4.57%, 30-yr 4.77%;
REAL yields 5-yr 2.17%, 10-yr 2.18%, 30-yr 2.28%;
FRNs Index** 5.40% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR fell, ^DXY 105.7, -1.4% (pg 50). GOLD rose to $1,994, +0.6% (Handy & Harman spot, Thursday; pg 52); the gold-miners rose. (^XAU was at 116.25, +1.03% for the week)
Top FDIC insured savings deposit rates*** (This feature has been discontinued but see the link below)
US SAVINGS I-Bonds**, NEW rate from November 1, 2023, is 5.27%; the fixed rate is +1.30%, the semiannual inflation is +1.97%.
(NOTE – The Social Security COLA for 2024, based on the Q3 average of CPI-W, is +3.2%)
*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 16, COVER STORY “AI is About to Remake the PC”. PC sales are now rebounding from the AI hype; the previous pandemic boost fizzled out quickly. AI-PCs will include CPU, GPU, NPU. Critics doubt that serious AI can be run on PCs, but the combo of AI-PCs and cloud-AI looks promising. MSFT is also ending support for W10 in 2025 and that may start a PC upgrade cycle. Beneficiaries will be PC makers DELL, HPQ, LNVGY (& AAPL); chipmakers/designers NVDA, INTC, AMD, ARM, QCOM, MU.
Pg 7, UP AND DOWN WALL STREET. Both stocks and bonds rallied this week – thanks to Yellen/Treasury (refunding plan was OK), Powell/Fed (rate hold) and the BLS (job market cooling). Bond yields fell. Soft landing is likely, not recession. But if the stock and bond markets remain strong, don’t expect Fed rate cuts in 2024.
BOND guru Dan FUSS (90), Loomis Sayles, is concerned by geopolitics, energy, climate change, domestic politics, US-China friction, etc. These exogeneous factors are affecting his investment outlook. He thinks that the Fed is done raising rates and may cut them in 2014 – in line with the CME FedWatch. High debt may cause persistent inflation. He suggests a 50-50 hybrid portfolio with longer-duration fixed income. He likes intermediate duration, discounted bonds, selected HY.
Pg 9, STREETWISE. Disney/DIS is seeking partners for its cash cow ESPN. A leader in sports broadcasting, ESPN has outbid others for large contracts. It is focusing on developing streaming ESPN+ in partnership with others (for distribution, equity stakes). DIS is buying out Comcast’s/CMCSA 33.3% stake in Hulu.
(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).