Post by Admin/YBB on Dec 9, 2023 5:03:50 GMT -6
From Barron’s, December 11, 2023 (Part 1, Market Week+)
Pg 36, TRADER. A BORING week again. The market is waiting for the FOMC on Wednesday and/or Q4 earnings (a month away) that are expected to be up modestly. Concerns are growing that a slowing economy may go into a recession. But if the economy remains fine, 2024 could be a good year for stocks with new highs.
Some QUALITY-stocks are attractive after a pause – ADBE, PSMT, FIZZ, NOW, CI (merger talks with HUM?).
Pharma Vertex/VRTX is down on questions about its nonopioid painkiller VX-548 trials. But those should be resolved, and its prospects are good.
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+ cut
(Cuts in mid-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 +0.01%, SP500 +0.21%, Nasdaq Comp +0.69%, R2000 +0.98%. DJ Transports -1.63%; DJ Utilities -0.23%. (Rotating spot Quality QUAL +0.42%) US$ index (spot) +0.69% (remains too strong over 100), oil/WTI futures -3.83%, gold futures -3.51%.
YTD (index changes only), DJIA +9.35%, SP500 +19.92%, Nasdaq Comp +37.62%. (Rotating spot Quality QUAL +25.05%)
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 4th week; ratio of winners:losers NA.
FUND INFLOWS +/OUTFLOWS - (4-weekMA) (NEW). Stocks +, taxable bonds -, munis +, money-market funds +.
AAII Bull-Bear Spread +19.9% (above average). (Thursday-Wednesday)
%Above 50-dMA for NYSE-listed stocks 77.08% (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 75.9% (overbought); 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 39, INTERNATIONAL TRADER. EUROPE has weaned itself from Russian NATURAL GAS, but it has been costly. The EU governments have provided huge consumer subsidies for gas. In another Winter since Russia-Ukraine war, the European gas storages are 95% full. Several LNG facilities have been built. A new development is floating gas storage and regasification units. But the industries that relied on cheap natural gas previously are suffering the most, and German industries have been hit the hardest (consumer subsidies or preferences don’t apply to industries). There will be lasting damage from this energy shock. Much of the Russian gas is also stranded as it isn’t easy to just ship it to Asia (as with the crude oil). (Left unsaid is that natural gas is too expensive for the developing world, and some have resorted to dirtier coal or other fossil fuels).
Pg 40, OPTIONS. In this frothy market (its reasons don’t matter), use options to generate income from blue-chips. Sell calls (risk is that stock may be called away) and/or puts (risk is that one is obligated to buy on declines).
(SP500 VIX 12.35 (low), Nasdaq 100 VXN 15.94 (low), options SKEW 134.10 (high), bond MOVE 121.65 (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 53: A good week in EUROPE (Sweden +3.25%, Denmark -1.97%) and a down week in ASIA (India +3.10%, China -3.26%).
TREASURY* 3-mo yield 5.44%, 1-yr 5.13%, 2-yr 4.71%, 5-yr 4.24%, 10-yr 4.23%, 30-yr 4.31%;
REAL yields 5-yr 2.13%, 10-yr 2.02%, 30-yr 2.05%;
FRNs Index** 5.32% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR rose, ^DXY 103.98, +0.7% (pg 58). GOLD fell sharply (Handy & Harman spot, Thursday; pg 60); the gold-miners tanked. (^XAU was at 118.09, -6.13% 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 20, COVER STORY, “Higher Interest RATES Are Here to Stay. What It Means for the Economy”. Sticky inflation, reduced global trade, higher government deficits and strong consumer demand will keep rates higher for longer. The next FOMC is on 12/13/23 and watch for its rate outlook (that has diverged from that of the fed fund traders). The long-term estimate for fed funds is 2% (average inflation target) + 0.5% (neutral rate) = 2.5%, but it may settle in 3-4% range; 2% may now be a floor. Savers and retirees benefit from higher rates; fixed-income will become important again. Covid has changed the economic environment. Climate issues, energy transition and reshoring will be costly and contribute to inflation. Healthcare expenses for the aging population will rise. Military expenditures are rising due to geopolitical tensions. Rising labor costs will lead to more automation. The housing market will be impacted negatively. Startups will have a difficult time getting funding.
Pg 7, UP AND DOWN WALL STREET. SP500 with +/- 1% moves over 3 weeks is boring, but that is good; the fwd P/E is 19.7. Stock volatility/fear gauge VIX is low. Rates have pulled back. The bond volatility MOVE is calm. The Q3 earnings were OK. The sentiment is a bit optimistic. But the risks haven’t disappeared. Sharp moves often follow such quiet periods, hopefully up this time.
GOLD has been frustrating, but it may be attractive for the next 10 years. It recently was at a record $2,152; the inflation-adjusted early-1980 high is $3,333. The end of FED monetary tightening will benefit gold although recently, gold has risen unusually even with rising rates. Geopolitics may be playing a role, so may the moves away from dollar for trading by several countries. Global central banks bought a record 1,180 metric tons of gold in 2023 YTD. The next hurdle for gold is $2,400.
Pg 11, STREETWISE. Left-for-dead Intel/INTC is awakening – will that continue or disappoint? INTC is a shadow of its former self with a market-cap of $174 billion that is even below that for AMD; it has a lot of catching up to do with the likes of global semi powerhouse TSM. CEO GELSINGER’s (02/2021- ) turnaround is taking hold and should reflect in earnings and cashflows by 2026 once the high capex is out of the way. New AI-chips are coming. For patient investors only.
(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 36, TRADER. A BORING week again. The market is waiting for the FOMC on Wednesday and/or Q4 earnings (a month away) that are expected to be up modestly. Concerns are growing that a slowing economy may go into a recession. But if the economy remains fine, 2024 could be a good year for stocks with new highs.
Some QUALITY-stocks are attractive after a pause – ADBE, PSMT, FIZZ, NOW, CI (merger talks with HUM?).
Pharma Vertex/VRTX is down on questions about its nonopioid painkiller VX-548 trials. But those should be resolved, and its prospects are good.
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+ cut
(Cuts in mid-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 +0.01%, SP500 +0.21%, Nasdaq Comp +0.69%, R2000 +0.98%. DJ Transports -1.63%; DJ Utilities -0.23%. (Rotating spot Quality QUAL +0.42%) US$ index (spot) +0.69% (remains too strong over 100), oil/WTI futures -3.83%, gold futures -3.51%.
YTD (index changes only), DJIA +9.35%, SP500 +19.92%, Nasdaq Comp +37.62%. (Rotating spot Quality QUAL +25.05%)
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 4th week; ratio of winners:losers NA.
FUND INFLOWS +/OUTFLOWS - (4-weekMA) (NEW). Stocks +, taxable bonds -, munis +, money-market funds +.
AAII Bull-Bear Spread +19.9% (above average). (Thursday-Wednesday)
%Above 50-dMA for NYSE-listed stocks 77.08% (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 75.9% (overbought); 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 39, INTERNATIONAL TRADER. EUROPE has weaned itself from Russian NATURAL GAS, but it has been costly. The EU governments have provided huge consumer subsidies for gas. In another Winter since Russia-Ukraine war, the European gas storages are 95% full. Several LNG facilities have been built. A new development is floating gas storage and regasification units. But the industries that relied on cheap natural gas previously are suffering the most, and German industries have been hit the hardest (consumer subsidies or preferences don’t apply to industries). There will be lasting damage from this energy shock. Much of the Russian gas is also stranded as it isn’t easy to just ship it to Asia (as with the crude oil). (Left unsaid is that natural gas is too expensive for the developing world, and some have resorted to dirtier coal or other fossil fuels).
Pg 40, OPTIONS. In this frothy market (its reasons don’t matter), use options to generate income from blue-chips. Sell calls (risk is that stock may be called away) and/or puts (risk is that one is obligated to buy on declines).
(SP500 VIX 12.35 (low), Nasdaq 100 VXN 15.94 (low), options SKEW 134.10 (high), bond MOVE 121.65 (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 53: A good week in EUROPE (Sweden +3.25%, Denmark -1.97%) and a down week in ASIA (India +3.10%, China -3.26%).
TREASURY* 3-mo yield 5.44%, 1-yr 5.13%, 2-yr 4.71%, 5-yr 4.24%, 10-yr 4.23%, 30-yr 4.31%;
REAL yields 5-yr 2.13%, 10-yr 2.02%, 30-yr 2.05%;
FRNs Index** 5.32% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR rose, ^DXY 103.98, +0.7% (pg 58). GOLD fell sharply (Handy & Harman spot, Thursday; pg 60); the gold-miners tanked. (^XAU was at 118.09, -6.13% 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 20, COVER STORY, “Higher Interest RATES Are Here to Stay. What It Means for the Economy”. Sticky inflation, reduced global trade, higher government deficits and strong consumer demand will keep rates higher for longer. The next FOMC is on 12/13/23 and watch for its rate outlook (that has diverged from that of the fed fund traders). The long-term estimate for fed funds is 2% (average inflation target) + 0.5% (neutral rate) = 2.5%, but it may settle in 3-4% range; 2% may now be a floor. Savers and retirees benefit from higher rates; fixed-income will become important again. Covid has changed the economic environment. Climate issues, energy transition and reshoring will be costly and contribute to inflation. Healthcare expenses for the aging population will rise. Military expenditures are rising due to geopolitical tensions. Rising labor costs will lead to more automation. The housing market will be impacted negatively. Startups will have a difficult time getting funding.
Pg 7, UP AND DOWN WALL STREET. SP500 with +/- 1% moves over 3 weeks is boring, but that is good; the fwd P/E is 19.7. Stock volatility/fear gauge VIX is low. Rates have pulled back. The bond volatility MOVE is calm. The Q3 earnings were OK. The sentiment is a bit optimistic. But the risks haven’t disappeared. Sharp moves often follow such quiet periods, hopefully up this time.
GOLD has been frustrating, but it may be attractive for the next 10 years. It recently was at a record $2,152; the inflation-adjusted early-1980 high is $3,333. The end of FED monetary tightening will benefit gold although recently, gold has risen unusually even with rising rates. Geopolitics may be playing a role, so may the moves away from dollar for trading by several countries. Global central banks bought a record 1,180 metric tons of gold in 2023 YTD. The next hurdle for gold is $2,400.
Pg 11, STREETWISE. Left-for-dead Intel/INTC is awakening – will that continue or disappoint? INTC is a shadow of its former self with a market-cap of $174 billion that is even below that for AMD; it has a lot of catching up to do with the likes of global semi powerhouse TSM. CEO GELSINGER’s (02/2021- ) turnaround is taking hold and should reflect in earnings and cashflows by 2026 once the high capex is out of the way. New AI-chips are coming. For patient investors only.
(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).