Post by Admin/YBB on Dec 2, 2023 5:00:23 GMT -6
From Barron’s, December 4, 2023 (Part 1, Market Week+)
Pg 28, TRADER. What’s driving this RALLY? Lower RATES? Lower DOLLAR? Those, and Q3 EARNINGS that ended the earnings recession. The SP500 company “Es” were up +4.1%, but the SP500 index “E” was up +7.1% with additional kick from buybacks. The outlook for earnings growth is murky, but there may be good earnings growth for healthcare (XLV). Worry about 2024 earnings when we get there.
As GOLD approaches a new high, buy (relatively) lagging gold-miners (GDX, GDXJ, etc). But this is trading idea, not for buy-and-hold.
CELL-TOWER REITs are attractive after a sharp selloff – CCI, AMT, SBAC. Activist Elliott has latched on to CCI. REITs as bond proxies are interest rate sensitive, but also offer some growth.
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+ cut
FOMC 5/1/24+ cut
FOMC 6/12/24+ hold
(Cuts in early-2024) (Probabilities for some rate-ranges aren’t high, so there can be some unexpected moves.) (Powell/Fed is on a different page than the market, and only one of them will be correct.)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +2.42%, SP500 +0.77%, Nasdaq Comp +0.38%, R2000 +3.05%. DJ Transports +2.45%; DJ Utilities +1.16%. (Rotating spot Healthcare XLV +0.53%) US$ index (spot) -0.16% (remains too strong over 100), oil/WTI futures -1.95%, gold futures +3.44%.
YTD (index changes only), DJIA +9.35%, SP500 +19.67%, Nasdaq Comp +36.67%. (Rotating spot Healthcare XLV -2.96%)
SENTIMENTS
(ALL sentiments are GOOD now. Crowds may be right sometimes. But watch for some Sentiments to reach extreme levels.)
NYSE cumulative (5-day) A/D LINE rose for a 3rd week; ratio of winners:losers 3:1.
FUND INFLOWS +/OUTFLOWS - (4-weekMA) (NEW). Stocks +, taxable bonds +, munis +, money-market funds +. (All +)
AAII Bull-Bear Spread +29.2% (high). (Thursday-Wednesday)
%Above 50-dMA for NYSE-listed stocks 79.49% (overbought); (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 66.2% (positive); 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 31, INTERNATIONAL TRADER. Attractive ITALIAN stocks include UniCredit/UNCRY (bank), Eni/E (energy), Stellantis/STLA (cars), Ferrari/RACE (racing cars).
Pg 32, OPTIONS. With ongoing geopolitical events, it’s strange that the fear gauge VIX is near 3-yr low. Techs have rallied. Recommended is stock replacement with calls (if holding stock), or buying calls (if not holding stock), with AMZN used as an example.
(SP500 VIX 12.63 (low), Nasdaq 100 VXN 16.21 (low), options SKEW 144.54 (high), bond MOVE 111.51 (Yahoo Finance data).
(Low VIX, high SKEW combo is a sign of nervous bulls)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 45: A good week in EUROPE (Germany +2.13%, Norway -0.82%) and a down week in ASIA (India +2.55%, HK -4.05%).
TREASURY* 3-mo yield 5.43%, 1-yr 5.05%, 2-yr 4.56%, 5-yr 4.14%, 10-yr 4.22%, 30-yr 4.40%;
REAL yields 5-yr 2.02%, 10-yr 2.00%, 30-yr 2.12%;
FRNs Index** 5.35% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR fell, ^DXY 103.19, -0.2% (pg 50). GOLD rose to $2,047, +2.5% (Handy & Harman spot, Thursday; pg 52); the gold-miners rallied. (^XAU was at 125.80, +7.83% 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, “Nvidia and 2 Smaller AI Stocks That Look Undervalued”. Nvidia/NVDA with its CUDA ecosystem is a clear winner for AI, but it’s pricey. So, look at Super Micro Computer/SMCI (high-end servers) and Vertiv Holdings/VRT (cooling systems for data centers); they collaborate with NVDA, not compete with it on AI chips.
Pg 7, UP AND DOWN WALL STREET. BONDS had their best month since the 1980s as the rates pulled back a bit (contrary to expectations). This despite Treasury refunding announcement (that turned out to be well-planned and gradual) and sticky inflation (so, the Fed may not be done). Bond spreads have shrunk too. So, suddenly, bonds are less attractive. The MBS and some bond CEFs still remain attractive.
This everything-RALLY from a slide in RATES was driven by market expectations of rate cuts in March. But will the FED do that? There will be JOBS REPORT on Friday, and then signals from the FOMC meeting, December 12-13 (and January 30-31 FOMC).
Pg 11, STREETWISE. Add another to your BUBBLE list – weight loss drugs bubble! It’s not Magnificent 7, but Obesity 2 – NVO, LLY. But if you missed those, it’s too late to chase them. So, look for other potential blockbusters. Note that weight loss is only a side effect of these new diabetes drugs. So, see what else is in the pipeline for diabetes, heart disease, cholesterol, NASH from PFE (news Friday was that it’s dropping twice/day dose trials for oral GLP-1 agonist due to serious side effects, and only once/day dose trial will continue), AMGN, VKTX, MDGL, and bet on the next obesity blockbuster.
(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. What’s driving this RALLY? Lower RATES? Lower DOLLAR? Those, and Q3 EARNINGS that ended the earnings recession. The SP500 company “Es” were up +4.1%, but the SP500 index “E” was up +7.1% with additional kick from buybacks. The outlook for earnings growth is murky, but there may be good earnings growth for healthcare (XLV). Worry about 2024 earnings when we get there.
As GOLD approaches a new high, buy (relatively) lagging gold-miners (GDX, GDXJ, etc). But this is trading idea, not for buy-and-hold.
CELL-TOWER REITs are attractive after a sharp selloff – CCI, AMT, SBAC. Activist Elliott has latched on to CCI. REITs as bond proxies are interest rate sensitive, but also offer some growth.
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+ cut
FOMC 5/1/24+ cut
FOMC 6/12/24+ hold
(Cuts in early-2024) (Probabilities for some rate-ranges aren’t high, so there can be some unexpected moves.) (Powell/Fed is on a different page than the market, and only one of them will be correct.)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +2.42%, SP500 +0.77%, Nasdaq Comp +0.38%, R2000 +3.05%. DJ Transports +2.45%; DJ Utilities +1.16%. (Rotating spot Healthcare XLV +0.53%) US$ index (spot) -0.16% (remains too strong over 100), oil/WTI futures -1.95%, gold futures +3.44%.
YTD (index changes only), DJIA +9.35%, SP500 +19.67%, Nasdaq Comp +36.67%. (Rotating spot Healthcare XLV -2.96%)
SENTIMENTS
(ALL sentiments are GOOD now. Crowds may be right sometimes. But watch for some Sentiments to reach extreme levels.)
NYSE cumulative (5-day) A/D LINE rose for a 3rd week; ratio of winners:losers 3:1.
FUND INFLOWS +/OUTFLOWS - (4-weekMA) (NEW). Stocks +, taxable bonds +, munis +, money-market funds +. (All +)
AAII Bull-Bear Spread +29.2% (high). (Thursday-Wednesday)
%Above 50-dMA for NYSE-listed stocks 79.49% (overbought); (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 66.2% (positive); 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 31, INTERNATIONAL TRADER. Attractive ITALIAN stocks include UniCredit/UNCRY (bank), Eni/E (energy), Stellantis/STLA (cars), Ferrari/RACE (racing cars).
Pg 32, OPTIONS. With ongoing geopolitical events, it’s strange that the fear gauge VIX is near 3-yr low. Techs have rallied. Recommended is stock replacement with calls (if holding stock), or buying calls (if not holding stock), with AMZN used as an example.
(SP500 VIX 12.63 (low), Nasdaq 100 VXN 16.21 (low), options SKEW 144.54 (high), bond MOVE 111.51 (Yahoo Finance data).
(Low VIX, high SKEW combo is a sign of nervous bulls)
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW,%5EMOVE,%5EXAU/view/v1
Pg 45: A good week in EUROPE (Germany +2.13%, Norway -0.82%) and a down week in ASIA (India +2.55%, HK -4.05%).
TREASURY* 3-mo yield 5.43%, 1-yr 5.05%, 2-yr 4.56%, 5-yr 4.14%, 10-yr 4.22%, 30-yr 4.40%;
REAL yields 5-yr 2.02%, 10-yr 2.00%, 30-yr 2.12%;
FRNs Index** 5.35% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR fell, ^DXY 103.19, -0.2% (pg 50). GOLD rose to $2,047, +2.5% (Handy & Harman spot, Thursday; pg 52); the gold-miners rallied. (^XAU was at 125.80, +7.83% 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, “Nvidia and 2 Smaller AI Stocks That Look Undervalued”. Nvidia/NVDA with its CUDA ecosystem is a clear winner for AI, but it’s pricey. So, look at Super Micro Computer/SMCI (high-end servers) and Vertiv Holdings/VRT (cooling systems for data centers); they collaborate with NVDA, not compete with it on AI chips.
Pg 7, UP AND DOWN WALL STREET. BONDS had their best month since the 1980s as the rates pulled back a bit (contrary to expectations). This despite Treasury refunding announcement (that turned out to be well-planned and gradual) and sticky inflation (so, the Fed may not be done). Bond spreads have shrunk too. So, suddenly, bonds are less attractive. The MBS and some bond CEFs still remain attractive.
This everything-RALLY from a slide in RATES was driven by market expectations of rate cuts in March. But will the FED do that? There will be JOBS REPORT on Friday, and then signals from the FOMC meeting, December 12-13 (and January 30-31 FOMC).
Pg 11, STREETWISE. Add another to your BUBBLE list – weight loss drugs bubble! It’s not Magnificent 7, but Obesity 2 – NVO, LLY. But if you missed those, it’s too late to chase them. So, look for other potential blockbusters. Note that weight loss is only a side effect of these new diabetes drugs. So, see what else is in the pipeline for diabetes, heart disease, cholesterol, NASH from PFE (news Friday was that it’s dropping twice/day dose trials for oral GLP-1 agonist due to serious side effects, and only once/day dose trial will continue), AMGN, VKTX, MDGL, and bet on the next obesity blockbuster.
(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).