Post by Admin/YBB on Dec 30, 2023 5:11:53 GMT -6
From Barron’s, January 1, 2024 (Part 1, Market Week+)
Pg 28, TRADER. A dud market closing for 2023 on the last trading day. The new highs for SP500 would have to wait for early-2024 (cyclical DJIA did make a new high in 12/2023). Overall, 2023 was a good year for stocks and bonds, driven by AI hype, good earnings and cancelation / postponement of recession.
T-Mobile/TMUS paid $7.6 billion in stock (4% dilution) to SoftBank/SFTBY as certain growth targets after Sprint acquisition were met. That payout was about half of its annual buyback. It started paying dividends in 12/2023 at the annual rate of 1.6%; fwd P/E 16. It continues to be an attractive telecom for 2024.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
FOMC 1/31/24+ hold (cycle peak 5.25-5.50%)
FOMC 3/20/24+ cut
FOMC 5/1/24+ cut
FOMC 6/12/24+ cut
FOMC 7/31/24+ cut
(Cuts in early-2024) (Probabilities for some rate-ranges aren’t high, so there can be some unexpected moves.) (Powell/Fed signaled pivot in 2024, but market expectations now are far ahead of the Fed.)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +0.81%, SP500 +0.32%, Nasdaq Comp +0.12%, R2000 -0.34%. DJ Transports -1.03%; DJ Utilities +0.98%. (Rotating spot small-cap R2000 -0.34%) US$ index (spot) -0.32% (remains too strong over 100), oil/WTI futures -2.60%, gold futures +0.26%.
YTD (index changes only), DJIA +13.70%, SP500 +24.23%, Nasdaq Comp +43.42%. (Rotating spot small-cap R2000 +15.09%)
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 7th week; ratio of winners:losers NA.
FUND INFLOWS +/OUTFLOWS - (4-weekMA) (NEW). Stocks +, taxable bonds -, munis - (borderline), money-market funds +.
AAII Bull-Bear Spread +21.2% (above average). (Thursday-Wednesday)
ybbpersonalfinance.proboards.com/thread/141/aaii-sentiment-survey-weekly?page=12&scrollTo=1285
%Above 50-dMA for NYSE-listed stocks 86.01% (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 87.1% (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. JAPAN’s scandals (bribery, corruption, political) have involved several cabinet ministers and may even compromise the Prime Minister KISHIDA (10/2021- ). The BOJ continues on an easy money path. But inflation and deficit spending are becoming problems. Consumer spending remains weak. There have been some investor-friendly changes in the markets. Investors may not have realized these political risks.
EXTRA, EMERGING MARKETS. TURKEY maybe a turnaround EM in 2024. The new central banker is Hafize ERKAN (there was an X/Twitter thread that she cannot afford her own place in Turkey now, but she may be playing coy as she has seen central bankers come and go). Rates have fallen; foreign currency reserves are up. The era of unorthodox economic policies may be over, but skeptics don’t think that populist ERDOGAN will be patient when things get tough. ETF is TUR (fwd P/E 3.9); lira has lost much of its value, but the bet is that the local markets can rise more than the lira depreciation.
Pg 32, OPTIONS. 2023 turned out to be a great year despite several domestic and geopolitical issues. But what worked in 2023 may not work in 2024. This is especially so for those who jumped in late-2023 to chase index rallies with options to catchup. Unrealized gains are not real or tangible – they can come and go easily. Just remember dot.com bubble (or 2020 pandemic selloff).
(SP500 VIX 12.45 (low), Nasdaq 100 VXN 16.20 (low), options SKEW 138.05 (high), bond MOVE 114.62 (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 +0.68%, Switzerland -0.73%) and a good week in ASIA (China +3.83%, Malaysia +0.21%).
TREASURY* 3-mo yield 5.40%, 1-yr 4.79%, 2-yr 4.23%, 5-yr 3.84%, 10-yr 3.88%, 30-yr 4.03%;
REAL yields 5-yr 1.72%, 10-yr 1.72%, 30-yr 1.90%;
FRNs Index** 5.33% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR fell, ^DXY 101.38, -0.3% (pg 50). GOLD was flat (Handy & Harman spot, Thursday; pg 52); the gold-miners fell. (^XAU was at 125.69, -1.76% 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, “Inside SAUDI ARABIA’s $3 Trillion Plan to Move Past Oil”. Saudi Arabia (population 36 million; about 50% under 35) is on an investment and building binge to diversify away from oil. It’s also benefitting from the move away from China. But this transformation won’t be easy although the UAE and Norway have done that. Saudi Arabia wants to be an important player in high-tech, energy, global business and leisure, etc (Vision 2030 was launched in 2016). A “Davos in Desert” conference drew many global CEOs. It’s emerging as a leader in the Middle East; it has working relations with the US, Russia, Iran, China, etc. The backdrop is unstable and volatile Middle East. Oil still accounts for 40% of its economic activity and 70% of its government revenues; the government needs $80+ oil to breakeven. Power is in the hands of MBS and the Royal Family. Human right issues remain. But the morality-police have been sidelined as more women join the workforce. The stock market is small; it’s only 4% of the MSCI EM index now, but that should grow; the ETF is KSA (fwd P/E 17.5). Qualified foreigners can own up to 49% of local companies. It requires Saudi regional HQs for foreign companies to be eligible for government contracts.
Pg 6, UP AND DOWN WALL STREET. AI is a child now (still?). Some experts speculate what it might be when grown up. It may evolve into a general superintelligent entity (with human-like intelligence), or field-specific knowledge databases. The latter is more likely commercially. For AI picks-and-shovels, use AMD and TSM besides expensive NVDA; the secondary beneficiaries may be CALX, CIEN, CRTO, LULU, ANET, AVGO, MDB. Some private companies are also attractive (as potential IPOs) – OpenAI, Rain AI, Hugging Face. General AI chatbots such as ChatGPT, Bard, Claude will continue to generate publicity (but not much revenue or profits). Generative AI will also find uses in the investment area. There may eventually be an AI bubble (so, this isn’t it?).
2024 may be a good year for tech IPOs. Several venture-capital-backed unicorns are looking for public market exists. There may also be more M&A, including the SPAC merger route.
Pg 8, STREETWISE. AD BUSINESS picks up during the ELECTION years and that benefits radio, TV, cable and streaming. Trade Desk/TTD (2009- ; IPO in 2016) works with ad agencies and has real-time pricing for ad placements. It has also started working directly with some large companies such as WMT, TGT, etc. One concern is that many companies are phasing out cookies for ad-tracking from their software (browsers, phones, social-media) and it may take time for another technology UID2 to evolve. Another idea is Amazon/AMZN with its growing ad business (now 33%).
(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. A dud market closing for 2023 on the last trading day. The new highs for SP500 would have to wait for early-2024 (cyclical DJIA did make a new high in 12/2023). Overall, 2023 was a good year for stocks and bonds, driven by AI hype, good earnings and cancelation / postponement of recession.
T-Mobile/TMUS paid $7.6 billion in stock (4% dilution) to SoftBank/SFTBY as certain growth targets after Sprint acquisition were met. That payout was about half of its annual buyback. It started paying dividends in 12/2023 at the annual rate of 1.6%; fwd P/E 16. It continues to be an attractive telecom for 2024.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
FOMC 1/31/24+ hold (cycle peak 5.25-5.50%)
FOMC 3/20/24+ cut
FOMC 5/1/24+ cut
FOMC 6/12/24+ cut
FOMC 7/31/24+ cut
(Cuts in early-2024) (Probabilities for some rate-ranges aren’t high, so there can be some unexpected moves.) (Powell/Fed signaled pivot in 2024, but market expectations now are far ahead of the Fed.)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +0.81%, SP500 +0.32%, Nasdaq Comp +0.12%, R2000 -0.34%. DJ Transports -1.03%; DJ Utilities +0.98%. (Rotating spot small-cap R2000 -0.34%) US$ index (spot) -0.32% (remains too strong over 100), oil/WTI futures -2.60%, gold futures +0.26%.
YTD (index changes only), DJIA +13.70%, SP500 +24.23%, Nasdaq Comp +43.42%. (Rotating spot small-cap R2000 +15.09%)
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 7th week; ratio of winners:losers NA.
FUND INFLOWS +/OUTFLOWS - (4-weekMA) (NEW). Stocks +, taxable bonds -, munis - (borderline), money-market funds +.
AAII Bull-Bear Spread +21.2% (above average). (Thursday-Wednesday)
ybbpersonalfinance.proboards.com/thread/141/aaii-sentiment-survey-weekly?page=12&scrollTo=1285
%Above 50-dMA for NYSE-listed stocks 86.01% (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 87.1% (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. JAPAN’s scandals (bribery, corruption, political) have involved several cabinet ministers and may even compromise the Prime Minister KISHIDA (10/2021- ). The BOJ continues on an easy money path. But inflation and deficit spending are becoming problems. Consumer spending remains weak. There have been some investor-friendly changes in the markets. Investors may not have realized these political risks.
EXTRA, EMERGING MARKETS. TURKEY maybe a turnaround EM in 2024. The new central banker is Hafize ERKAN (there was an X/Twitter thread that she cannot afford her own place in Turkey now, but she may be playing coy as she has seen central bankers come and go). Rates have fallen; foreign currency reserves are up. The era of unorthodox economic policies may be over, but skeptics don’t think that populist ERDOGAN will be patient when things get tough. ETF is TUR (fwd P/E 3.9); lira has lost much of its value, but the bet is that the local markets can rise more than the lira depreciation.
Pg 32, OPTIONS. 2023 turned out to be a great year despite several domestic and geopolitical issues. But what worked in 2023 may not work in 2024. This is especially so for those who jumped in late-2023 to chase index rallies with options to catchup. Unrealized gains are not real or tangible – they can come and go easily. Just remember dot.com bubble (or 2020 pandemic selloff).
(SP500 VIX 12.45 (low), Nasdaq 100 VXN 16.20 (low), options SKEW 138.05 (high), bond MOVE 114.62 (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 +0.68%, Switzerland -0.73%) and a good week in ASIA (China +3.83%, Malaysia +0.21%).
TREASURY* 3-mo yield 5.40%, 1-yr 4.79%, 2-yr 4.23%, 5-yr 3.84%, 10-yr 3.88%, 30-yr 4.03%;
REAL yields 5-yr 1.72%, 10-yr 1.72%, 30-yr 1.90%;
FRNs Index** 5.33% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR fell, ^DXY 101.38, -0.3% (pg 50). GOLD was flat (Handy & Harman spot, Thursday; pg 52); the gold-miners fell. (^XAU was at 125.69, -1.76% 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, “Inside SAUDI ARABIA’s $3 Trillion Plan to Move Past Oil”. Saudi Arabia (population 36 million; about 50% under 35) is on an investment and building binge to diversify away from oil. It’s also benefitting from the move away from China. But this transformation won’t be easy although the UAE and Norway have done that. Saudi Arabia wants to be an important player in high-tech, energy, global business and leisure, etc (Vision 2030 was launched in 2016). A “Davos in Desert” conference drew many global CEOs. It’s emerging as a leader in the Middle East; it has working relations with the US, Russia, Iran, China, etc. The backdrop is unstable and volatile Middle East. Oil still accounts for 40% of its economic activity and 70% of its government revenues; the government needs $80+ oil to breakeven. Power is in the hands of MBS and the Royal Family. Human right issues remain. But the morality-police have been sidelined as more women join the workforce. The stock market is small; it’s only 4% of the MSCI EM index now, but that should grow; the ETF is KSA (fwd P/E 17.5). Qualified foreigners can own up to 49% of local companies. It requires Saudi regional HQs for foreign companies to be eligible for government contracts.
Pg 6, UP AND DOWN WALL STREET. AI is a child now (still?). Some experts speculate what it might be when grown up. It may evolve into a general superintelligent entity (with human-like intelligence), or field-specific knowledge databases. The latter is more likely commercially. For AI picks-and-shovels, use AMD and TSM besides expensive NVDA; the secondary beneficiaries may be CALX, CIEN, CRTO, LULU, ANET, AVGO, MDB. Some private companies are also attractive (as potential IPOs) – OpenAI, Rain AI, Hugging Face. General AI chatbots such as ChatGPT, Bard, Claude will continue to generate publicity (but not much revenue or profits). Generative AI will also find uses in the investment area. There may eventually be an AI bubble (so, this isn’t it?).
2024 may be a good year for tech IPOs. Several venture-capital-backed unicorns are looking for public market exists. There may also be more M&A, including the SPAC merger route.
Pg 8, STREETWISE. AD BUSINESS picks up during the ELECTION years and that benefits radio, TV, cable and streaming. Trade Desk/TTD (2009- ; IPO in 2016) works with ad agencies and has real-time pricing for ad placements. It has also started working directly with some large companies such as WMT, TGT, etc. One concern is that many companies are phasing out cookies for ad-tracking from their software (browsers, phones, social-media) and it may take time for another technology UID2 to evolve. Another idea is Amazon/AMZN with its growing ad business (now 33%).
(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).