Post by Admin/YBB on Dec 23, 2023 5:17:03 GMT -6
From Barron’s, December 25, 2023 (Part 1, Market Week+)
Pg 28, TRADER. STOCKS are soaring (SP500 +23% YTD; now 8-wk Santa Claus RALLY) but it isn’t too late to join the party. There is $6.1 trillion in money-market funds, 29% higher than pre-Covid levels. Institutions are holding 4.5% cash (vs peak 6% in 2022, and historic lows around 3%). Lot of cash on the sidelines will flow into the market if/when the FED cuts rates. The economic growth is moderate, inflation is lower. Stocks should benefit from higher earnings, higher P/Es and rising dividends.
Several dividend-stocks (consumer-staples, healthcare, utilities) will benefit from lower RATES – ABBV, AMGN, CL, ED, HSY, KO, PM; they have current dividends and dividend growth.
(Note: %TR = %Dividend_yield + %Dividend_growth + %Change_in_P/D)
Biotech Gilead (GILD; yield 4%; fwd P/E 11) may finally have a breakout year. It blew up in 2016 after a runup from its hepatitis C cure. It is dominant in HIV and has a strong pipeline in oncology. Costs have been controlled.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
FOMC 1/31/24+ hold (cycle peak 5.25-5.50%)
FOMC 3/20/24+ cut
FOMC 5/1/24+ cut
FOMC 6/12/24+ cut
FOMC 7/31/24+ cut
(Cuts in early-2024) (Probabilities for some rate-ranges aren’t high, so there can be some unexpected moves.) (Powell/Fed signaled pivot in 2024, but market expectations now are far ahead of the Fed.)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +0.22%, SP500 +0.75%, Nasdaq Comp +1.21%, R2000 +2.46%. DJ Transports +0.30%; DJ Utilities -0.99%. (Rotating spot high-dividend SPYD +0.15%) US$ index (spot) -0.82% (remains too strong over 100), oil/WTI futures +2.98%, gold futures +1.78%.
YTD (index changes only), DJIA +12.79%, SP500 +23.83%, Nasdaq Comp +43.25%. (Rotating spot high-dividend SPYD -1.62%)
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 6th week; ratio of winners:losers NA.
FUND INFLOWS +/OUTFLOWS - (4-weekMA) (NEW). Stocks -, taxable bonds -, munis - (borderline), money-market funds +.
AAII Bull-Bear Spread +32.0% (very high). (Thursday-Wednesday)
ybbpersonalfinance.proboards.com/thread/141/aaii-sentiment-survey-weekly?page=12&scrollTo=1285
%Above 50-dMA for NYSE-listed stocks 85.86% (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 86.7% (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 31, INTERNATIONAL TRADER. EM BONDS are attractive, especially the local-currency EM bonds (LEMB). Dollar-denominated is EMB.
Pg 10, EMERGING MARKETS. EMs lagged SP500 badly in 2023; EM-ex-China did better but also lagged SP500. Several EM central banks have paused rate hikes, or even cut. EMs vary a lot in valuations with P/Es India 20, Lat Am 9, China 9. They will benefit from the weakening dollar. EMs have better prospects in 2024.
Pg 32, OPTIONS. Don’t chase rallies. But if you must (due to FOMO or TINA urges), use call options. Volatility is low, so options are cheap. If you guess wrong, only a small amount of option premium is lost, but the payoff can be huge.
(SP500 VIX 13.03 (low), Nasdaq 100 VXN 16.62 (low), options SKEW 134.46 (high), bond MOVE 111.38 (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: An up week in EUROPE (Denmark +3.45%, Netherlands -1.77%) and a down week in ASIA (New Zealand +1.66%, China -3.53%).
TREASURY* 3-mo yield 5.44%, 1-yr 4.82%, 2-yr 4.31%, 5-yr 3.87%, 10-yr 3.90%, 30-yr 4.05%;
REAL yields 5-yr 1.71%, 10-yr 1.71%, 30-yr 1.89%;
FRNs Index** 5.33% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR fell, ^DXY 101.71, -0.8% (pg 50). GOLD was at $2,066 (Handy & Harman spot, Thursday; pg 52); the gold-miners rose. (^XAU was at 127.94, +3.38% 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 14, COVER STORY, “Apple/AAPL Needs New Growth to Justify Its Soaring Stock. It Won’t be Easy”. YTD +50%; fwd P/E 30; buybacks; market-cap $3 trillion, on the way to $4 trillion? Sales have declined over the 4 quarters and that may continue. Growth has disappeared. The new VR and AR products are far from sure hits – there are similar lackluster products from others (META, MSFT, etc). There is nothing “insanely great” in the pipeline. iPhone is now a teenager at 16, iPad at 14. Services offer modest growth, but without growing product sales, services cannot grow faster. In wearables, there is a patent dispute over watches. How long will the optimistic analysts ignore lack of growth in this high multiple stock? It doesn’t have a history of growth by acquisitions despite all sorts of rumors. If it is doing anything in AI, it must be a top secret; for now, it’s just happy offering GOOGL search and AI on the iPhone and Safari platforms, but that relationship is under DOJ scrutiny.
Pg 5, UP AND DOWN WALL STREET. Several prominent business leaders passed away in 2023: Byron WIEN, Gordon MOORE, Charlie MUNGER, Ted LERNER, Billy Joe “Red” McCOMB, Tom LEE, James CROWN, Clearance AVANT, Laszlo BIRINYI, Florine MARK, Ray DIRKS. (More details are included for each)
Pg 8, STREETWISE. Small SNACK food company UTZ (fwd P/E 27; pronounce with a soft u) Is growing fast. It started 50 years ago in Hanover, PA with potato chips, but now makes tortilla chips, popcorn, cheese balls, pretzels, etc. Brands include Zapp’s, Boulder Creek, On the Border, etc. It sells through grocery stores, supermarkets, and convenience stores. While dieting is hurting sweet snacks, candies, cookies, salty snacks are on a growth path. As it has grown with acquisitions, its debt is high. Big players are PEP (Frito Lay, Ruffles, Doritos, Cheetos), MDLZ (Ritz), HSY, but beyond those, there are 1,300 tiny players in this fragmented snack industry.
A SOLAR idea from Jefferies is First Solar/FSLR that sells solar modules to utilities, not to homeowners. The backlog is high to 2026 and beyond and there are cancellation fees of up to 20% unless there is a default. There are federal incentives for US-based solar products.
(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 are soaring (SP500 +23% YTD; now 8-wk Santa Claus RALLY) but it isn’t too late to join the party. There is $6.1 trillion in money-market funds, 29% higher than pre-Covid levels. Institutions are holding 4.5% cash (vs peak 6% in 2022, and historic lows around 3%). Lot of cash on the sidelines will flow into the market if/when the FED cuts rates. The economic growth is moderate, inflation is lower. Stocks should benefit from higher earnings, higher P/Es and rising dividends.
Several dividend-stocks (consumer-staples, healthcare, utilities) will benefit from lower RATES – ABBV, AMGN, CL, ED, HSY, KO, PM; they have current dividends and dividend growth.
(Note: %TR = %Dividend_yield + %Dividend_growth + %Change_in_P/D)
Biotech Gilead (GILD; yield 4%; fwd P/E 11) may finally have a breakout year. It blew up in 2016 after a runup from its hepatitis C cure. It is dominant in HIV and has a strong pipeline in oncology. Costs have been controlled.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
FOMC 1/31/24+ hold (cycle peak 5.25-5.50%)
FOMC 3/20/24+ cut
FOMC 5/1/24+ cut
FOMC 6/12/24+ cut
FOMC 7/31/24+ cut
(Cuts in early-2024) (Probabilities for some rate-ranges aren’t high, so there can be some unexpected moves.) (Powell/Fed signaled pivot in 2024, but market expectations now are far ahead of the Fed.)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +0.22%, SP500 +0.75%, Nasdaq Comp +1.21%, R2000 +2.46%. DJ Transports +0.30%; DJ Utilities -0.99%. (Rotating spot high-dividend SPYD +0.15%) US$ index (spot) -0.82% (remains too strong over 100), oil/WTI futures +2.98%, gold futures +1.78%.
YTD (index changes only), DJIA +12.79%, SP500 +23.83%, Nasdaq Comp +43.25%. (Rotating spot high-dividend SPYD -1.62%)
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 6th week; ratio of winners:losers NA.
FUND INFLOWS +/OUTFLOWS - (4-weekMA) (NEW). Stocks -, taxable bonds -, munis - (borderline), money-market funds +.
AAII Bull-Bear Spread +32.0% (very high). (Thursday-Wednesday)
ybbpersonalfinance.proboards.com/thread/141/aaii-sentiment-survey-weekly?page=12&scrollTo=1285
%Above 50-dMA for NYSE-listed stocks 85.86% (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 86.7% (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 31, INTERNATIONAL TRADER. EM BONDS are attractive, especially the local-currency EM bonds (LEMB). Dollar-denominated is EMB.
Pg 10, EMERGING MARKETS. EMs lagged SP500 badly in 2023; EM-ex-China did better but also lagged SP500. Several EM central banks have paused rate hikes, or even cut. EMs vary a lot in valuations with P/Es India 20, Lat Am 9, China 9. They will benefit from the weakening dollar. EMs have better prospects in 2024.
Pg 32, OPTIONS. Don’t chase rallies. But if you must (due to FOMO or TINA urges), use call options. Volatility is low, so options are cheap. If you guess wrong, only a small amount of option premium is lost, but the payoff can be huge.
(SP500 VIX 13.03 (low), Nasdaq 100 VXN 16.62 (low), options SKEW 134.46 (high), bond MOVE 111.38 (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: An up week in EUROPE (Denmark +3.45%, Netherlands -1.77%) and a down week in ASIA (New Zealand +1.66%, China -3.53%).
TREASURY* 3-mo yield 5.44%, 1-yr 4.82%, 2-yr 4.31%, 5-yr 3.87%, 10-yr 3.90%, 30-yr 4.05%;
REAL yields 5-yr 1.71%, 10-yr 1.71%, 30-yr 1.89%;
FRNs Index** 5.33% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR fell, ^DXY 101.71, -0.8% (pg 50). GOLD was at $2,066 (Handy & Harman spot, Thursday; pg 52); the gold-miners rose. (^XAU was at 127.94, +3.38% 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 14, COVER STORY, “Apple/AAPL Needs New Growth to Justify Its Soaring Stock. It Won’t be Easy”. YTD +50%; fwd P/E 30; buybacks; market-cap $3 trillion, on the way to $4 trillion? Sales have declined over the 4 quarters and that may continue. Growth has disappeared. The new VR and AR products are far from sure hits – there are similar lackluster products from others (META, MSFT, etc). There is nothing “insanely great” in the pipeline. iPhone is now a teenager at 16, iPad at 14. Services offer modest growth, but without growing product sales, services cannot grow faster. In wearables, there is a patent dispute over watches. How long will the optimistic analysts ignore lack of growth in this high multiple stock? It doesn’t have a history of growth by acquisitions despite all sorts of rumors. If it is doing anything in AI, it must be a top secret; for now, it’s just happy offering GOOGL search and AI on the iPhone and Safari platforms, but that relationship is under DOJ scrutiny.
Pg 5, UP AND DOWN WALL STREET. Several prominent business leaders passed away in 2023: Byron WIEN, Gordon MOORE, Charlie MUNGER, Ted LERNER, Billy Joe “Red” McCOMB, Tom LEE, James CROWN, Clearance AVANT, Laszlo BIRINYI, Florine MARK, Ray DIRKS. (More details are included for each)
Pg 8, STREETWISE. Small SNACK food company UTZ (fwd P/E 27; pronounce with a soft u) Is growing fast. It started 50 years ago in Hanover, PA with potato chips, but now makes tortilla chips, popcorn, cheese balls, pretzels, etc. Brands include Zapp’s, Boulder Creek, On the Border, etc. It sells through grocery stores, supermarkets, and convenience stores. While dieting is hurting sweet snacks, candies, cookies, salty snacks are on a growth path. As it has grown with acquisitions, its debt is high. Big players are PEP (Frito Lay, Ruffles, Doritos, Cheetos), MDLZ (Ritz), HSY, but beyond those, there are 1,300 tiny players in this fragmented snack industry.
A SOLAR idea from Jefferies is First Solar/FSLR that sells solar modules to utilities, not to homeowners. The backlog is high to 2026 and beyond and there are cancellation fees of up to 20% unless there is a default. There are federal incentives for US-based solar products.
(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).