Post by Admin/YBB on Nov 11, 2023 5:17:19 GMT -6
From Barron’s, November 13, 2023 (Part 1, Market Week+)
Pg 34, TRADER. Recent stock market volatility has been caused by the BOND market. Interest rates rose rapidly but have pulled back lately. The 30-yr auction was poor due to low demand (some blame it on a cyberattack on Chinese ICBC Bank, but it isn’t a primary dealer for Treasuries). There may be a government shutdown if there isn’t some budget deal or extension by Friday, 11/17/23 (Moody’s/MCO on Friday revised the outlook for US debt to negative). The Fed is tightening monetary policy, but the Congress has the fiscal tap open. Rates will rise again and 10-yr will soon be above 5%.
Beware of cheap and falling energy stocks – FANG, TRGP, RRC, SWN, etc. Oil prices are down despite Russia-Ukraine and Israel-Hamas. OPEC has cut production but that by the US is up. Global economies are slowing (US, Europe, China). Energy companies have good cash flows, but their earnings are under pressure; higher rates also mean lower P/Es.
Barron’s now regrets its too-early bullish call in 09/2023 on small-cap defense contractor Mercury/MRCY. Its EBITDA has collapsed, and stock has slumped. Its M&A, turnaround and R&D growth strategies have (suddenly?) gone sour. Barron’s now recommends “hold” for patient investors.
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+ hold
FOMC 6/12/24+ cut
(Cuts in mid/late-2024) (Probabilities for some rate-ranges aren’t high, so there can be some unexpected moves.) (Powell/Fed doesn’t think that cuts would be in 2024)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +0.65%, SP500 +1.31%, Nasdaq Comp +2.37%, R2000 -3.15%. DJ Transports -0.59%; DJ Utilities -2.57%. (Rotating spot long Treasury TLT +0.41%) US$ index (spot) +0.74% (remains too strong over 100), oil/WTI futures -4.15%, gold futures -2.96%.
YTD (index changes only), DJIA +3.43%, SP500 +15.00%, Nasdaq Comp +31.83%. (Rotating spot long Treasury -11.62%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE fell; ratio of winners:losers 1:2.
FUND INFLOWS +/OUTFLOWS - (4-weekMA) (NEW). Stocks -, taxable bonds +, munis -, money-market funds -. All flows trending up.
AAII Bull-Bear Spread +15.4% (above average; flip-flop from last week, -26.0% (very low)). (Thursday-Wednesday)
%Above 50-dMA for NYSE-listed stocks 44.66% (negative); (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 35.6% (negative); 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; note that Delta MSI itself uses all in/out using 50% neutral value, but the same graduated scale is used here for both sources of %Above.)
Pg 37, INTERNATIONAL TRADER. UNIONS and strikes are in the news in the US. But in Europe, after some big wins, unions have gone quiet. Worries are possible recession and the energy situation in Winter. Unions in Europe are just happy to hold on to their recent gains.
Pg 38, OPTIONS. Double up and sell the old lot after 30 days is a TLH strategy that can be used by 11/28/23. Double up can be via stock or call option. (Alternate TLH is to swap into something similar but not identical anytime up to 12/29/23 market close)
(SP500 VIX 14.17, Nasdaq 100 VXN 17.95, options SKEW 139.28 (high), bond MOVE 116.79 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 51: A down week in EUROPE (Netherlands +1.84%, Belgium -1.22%, Greece -2.27%) and an up week in ASIA (Philippines +2.58%, HK -3.52%). (APEC summit in San Francisco)
TREASURY* 3-mo yield 5.53%, 1-yr 5.38%, 2-yr 5.04%, 5-yr 4.65%, 10-yr 4.61%, 30-yr 4.73%;
REAL yields 5-yr 2.37%, 10-yr 2.29%, 30-yr 2.30%;
FRNs Index** 5.36% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR fell, ^DXY 105.8, -0.7% (pg 58). GOLD fell to $1,942, -0.7% (Handy & Harman spot, Thursday; pg 60); the gold-miners tanked. (^XAU was at 107.89, -7.19% 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 18, COVER STORY “CLEAN-ENERGY Stocks Have Collapsed. What Comes Next”. After the collapse of clean-energy Stocks (ETF PBW), only some may survive or rebound. The ESG is suddenly unpopular. EV sales are down. Wind and solar projects are being delayed or cancelled. Issues are high interest rates, supply-chain issues, high inventories, poor transmission infrastructure, high costs of energy transition, competition from China. The US may miss its goals for 2030. However, private funds are flowing into renewables and there are several US Government initiatives. So, the developments may only be delayed. Mentioned are (with varying prospects) utilities and suppliers AES, NEE, FSLR; residential solar stocks RUN, NOVA, SPWR; solar equipment makers ENPH, SEDG; offshore wind power DNNGY.
Pg 7, UP AND DOWN WALL STREET. EARNINGS recession is over in 2023/Q3 due to strength in tech, manufacturing, consumer spending. But the economy is slowing due to higher interest rates, drop in money supply, tight bank lending, declining job creations. Evercore ISI thinks that recession, not soft landing, is coming in 2024. Investors can get ready with defensive sectors – utilities, consumer-staples, low-volatility ETFs; goal should be portfolio risk reduction.
Presidential ELECTION cycle is kicking in. Election years can be tough for stocks due to uncertainty. There may be a post-election bounce. The US economy should be fine.
Pg 11, STREETWISE. EUROPEAN stocks (fwd P/E 12.6 only) have been undervalued for quite a while. The US stocks with dominant Big Techs have been leading for a long time. Some investors are waiting for mean reversion. David HERRO of international OAKIX likes LYG (UK), CNHI (UK), BAYRY (Germany).
(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 34, TRADER. Recent stock market volatility has been caused by the BOND market. Interest rates rose rapidly but have pulled back lately. The 30-yr auction was poor due to low demand (some blame it on a cyberattack on Chinese ICBC Bank, but it isn’t a primary dealer for Treasuries). There may be a government shutdown if there isn’t some budget deal or extension by Friday, 11/17/23 (Moody’s/MCO on Friday revised the outlook for US debt to negative). The Fed is tightening monetary policy, but the Congress has the fiscal tap open. Rates will rise again and 10-yr will soon be above 5%.
Beware of cheap and falling energy stocks – FANG, TRGP, RRC, SWN, etc. Oil prices are down despite Russia-Ukraine and Israel-Hamas. OPEC has cut production but that by the US is up. Global economies are slowing (US, Europe, China). Energy companies have good cash flows, but their earnings are under pressure; higher rates also mean lower P/Es.
Barron’s now regrets its too-early bullish call in 09/2023 on small-cap defense contractor Mercury/MRCY. Its EBITDA has collapsed, and stock has slumped. Its M&A, turnaround and R&D growth strategies have (suddenly?) gone sour. Barron’s now recommends “hold” for patient investors.
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+ hold
FOMC 6/12/24+ cut
(Cuts in mid/late-2024) (Probabilities for some rate-ranges aren’t high, so there can be some unexpected moves.) (Powell/Fed doesn’t think that cuts would be in 2024)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +0.65%, SP500 +1.31%, Nasdaq Comp +2.37%, R2000 -3.15%. DJ Transports -0.59%; DJ Utilities -2.57%. (Rotating spot long Treasury TLT +0.41%) US$ index (spot) +0.74% (remains too strong over 100), oil/WTI futures -4.15%, gold futures -2.96%.
YTD (index changes only), DJIA +3.43%, SP500 +15.00%, Nasdaq Comp +31.83%. (Rotating spot long Treasury -11.62%)
SENTIMENTS
NYSE cumulative (5-day) A/D LINE fell; ratio of winners:losers 1:2.
FUND INFLOWS +/OUTFLOWS - (4-weekMA) (NEW). Stocks -, taxable bonds +, munis -, money-market funds -. All flows trending up.
AAII Bull-Bear Spread +15.4% (above average; flip-flop from last week, -26.0% (very low)). (Thursday-Wednesday)
%Above 50-dMA for NYSE-listed stocks 44.66% (negative); (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 35.6% (negative); 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; note that Delta MSI itself uses all in/out using 50% neutral value, but the same graduated scale is used here for both sources of %Above.)
Pg 37, INTERNATIONAL TRADER. UNIONS and strikes are in the news in the US. But in Europe, after some big wins, unions have gone quiet. Worries are possible recession and the energy situation in Winter. Unions in Europe are just happy to hold on to their recent gains.
Pg 38, OPTIONS. Double up and sell the old lot after 30 days is a TLH strategy that can be used by 11/28/23. Double up can be via stock or call option. (Alternate TLH is to swap into something similar but not identical anytime up to 12/29/23 market close)
(SP500 VIX 14.17, Nasdaq 100 VXN 17.95, options SKEW 139.28 (high), bond MOVE 116.79 (Yahoo Finance data).
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 51: A down week in EUROPE (Netherlands +1.84%, Belgium -1.22%, Greece -2.27%) and an up week in ASIA (Philippines +2.58%, HK -3.52%). (APEC summit in San Francisco)
TREASURY* 3-mo yield 5.53%, 1-yr 5.38%, 2-yr 5.04%, 5-yr 4.65%, 10-yr 4.61%, 30-yr 4.73%;
REAL yields 5-yr 2.37%, 10-yr 2.29%, 30-yr 2.30%;
FRNs Index** 5.36% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR fell, ^DXY 105.8, -0.7% (pg 58). GOLD fell to $1,942, -0.7% (Handy & Harman spot, Thursday; pg 60); the gold-miners tanked. (^XAU was at 107.89, -7.19% 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 18, COVER STORY “CLEAN-ENERGY Stocks Have Collapsed. What Comes Next”. After the collapse of clean-energy Stocks (ETF PBW), only some may survive or rebound. The ESG is suddenly unpopular. EV sales are down. Wind and solar projects are being delayed or cancelled. Issues are high interest rates, supply-chain issues, high inventories, poor transmission infrastructure, high costs of energy transition, competition from China. The US may miss its goals for 2030. However, private funds are flowing into renewables and there are several US Government initiatives. So, the developments may only be delayed. Mentioned are (with varying prospects) utilities and suppliers AES, NEE, FSLR; residential solar stocks RUN, NOVA, SPWR; solar equipment makers ENPH, SEDG; offshore wind power DNNGY.
Pg 7, UP AND DOWN WALL STREET. EARNINGS recession is over in 2023/Q3 due to strength in tech, manufacturing, consumer spending. But the economy is slowing due to higher interest rates, drop in money supply, tight bank lending, declining job creations. Evercore ISI thinks that recession, not soft landing, is coming in 2024. Investors can get ready with defensive sectors – utilities, consumer-staples, low-volatility ETFs; goal should be portfolio risk reduction.
Presidential ELECTION cycle is kicking in. Election years can be tough for stocks due to uncertainty. There may be a post-election bounce. The US economy should be fine.
Pg 11, STREETWISE. EUROPEAN stocks (fwd P/E 12.6 only) have been undervalued for quite a while. The US stocks with dominant Big Techs have been leading for a long time. Some investors are waiting for mean reversion. David HERRO of international OAKIX likes LYG (UK), CNHI (UK), BAYRY (Germany).
(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).