Post by Admin/YBB on Jan 6, 2024 5:15:11 GMT -6
From Barron’s, January 8, 2024 (Part 1, Market Week+)
Pg 26, TRADER. Despite some market folklore, a poor start for 2024 doesn’t mean how the whole year will go. But it should be time for investors to reassess their holdings. This pullback/ correction may not be over yet. The jobs data was strong but the 2 previous months were revised down. The Q4 earnings report and guidance will determine the course for the year.
2023/Q4 EARNINGS SEASON starts with big banks reporting (JPM, C, BAC, WFC). A pause and then some pullback in rates has been a relief to banks. Some banks would be adding reserves to account for rising credit delinquencies. As bank stocks have run up already, their stocks may perform differently after earnings reports. A slimmed-down GS may be ready for rebound.
Disney (DIS; fwd P/E 19.8) has 4+ activists. It has made an information sharing deal with ValueAct, but Trian and Blackwells are pushing for board seats. DIS has cut costs, may resume dividends, and isn’t going for growth at any cost anymore. While proxy fights are distracting and expensive, they will keep pressure on DIS management.
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 -0.59%, SP500 -1.52%, Nasdaq Comp -3.25%, R2000 -3.75%. DJ Transports -2.45%; DJ Utilities +1.93%. (Rotating spot bank KBE -0.78%) US$ index (spot) +1.08% (remains too strong over 100), oil/WTI futures +3.02%, gold futures -0.97%.
52-Week (index changes only), DJIA +11.40%, SP500 +20.59%, Nasdaq Comp +37.42%. (Rotating spot bank KBE -1.25%) (SWITCHED to 52-week until YTD becomes meaningful)
SENTIMENTS
(ALL sentiments remain GOOD)
NYSE cumulative (5-day) A/D LINE fell (after rising for 2 months); ratio of winners:losers 1:2.
FUND INFLOWS +/OUTFLOWS - (4-weekMA). Stocks +, taxable bonds + (borderline), munis -, money-market funds +.
AAII Bull-Bear Spread +25.1% (high). (Thursday-Wednesday)
ybbpersonalfinance.proboards.com/thread/141/aaii-sentiment-survey-weekly?page=12&scrollTo=1285
%Above 50-dMA for NYSE-listed stocks 80.42% (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 89.3% (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 29, INTERNATIONAL TRADER. CHILEAN new 50-50 public-private joint-venture deal between SQM and Codelco should provide boost to its LITHIUM production. The US Albemarle/ALB also has important facilities there. Chile has huge potential for lithium production, but an old law declared it a strategic material for nuclear energy that comes in the way of new or foreign operations; lithium is more useful now for EV batteries. In the meantime, Australia and Argentina have expanded their lithium operations. Lithium prices have been very volatile.
Pg 30, OPTIONS. Skeptical bulls should pair call-buying with put-selling for blue-chips; SP500 SPY is used for example.
(SP500 VIX 13.35 (low), Nasdaq 100 VXN 17.13 (low), options SKEW 132.68 (high), bond MOVE 116.19 (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 43: A down week in EUROPE (Denmark +2.67%, Netherlands -3.00%) and a down week in ASIA (Philippines +2.72%, HK -3.75%). (Europe probing Chinese EV imports, China probing European brandy imports (luxury goods))
TREASURY* 3-mo yield 5.47%, 1-yr 4.84%, 2-yr 4.40%, 5-yr 4.02%, 10-yr 4.05%, 30-yr 4.21%;
REAL yields 5-yr 1.83%, 10-yr 1.83%, 30-yr 2.02%;
FRNs Index** 5.32% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR rose, ^DXY 102.4, +1.1% (pg 46). GOLD fell (Handy & Harman spot, Thursday; pg 48); the gold-miners fell. (^XAU was at 120.30, -4.29% 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, “The POWER GRID is Changing. What it Means for Utility Stocks – and Your Electricity Bill”. ENERGY TRANSFORMATION will have a huge impact on future power generation and grid (transmission, distribution). Renewable energy works both ways – consumers tap into the grid as needed, but also sell back excess energy they produce or store. Smart meters and thermostats will become more common. Consumers will get lots of energy related alerts/updates on phones. Energy demand has been stagnant in the US. In 2022, the US energy production sources were fossil fuels 59.6% (natural gas, coal), nuclear 18.2%, wind 10.3%, hydro 6%, solar 3.4%, and other 2.5%. Not much has changed for power grids, transformers, etc in decades. There will be higher energy demand from EVs, data centers, AI, etc, and there will be more on-demand production. Mentioned are AEP, ETN, EIX, HUBB, NEE, PWR, SBGSY, STRL. Solar industry (SPWR, NOVA, etc) may not benefit as much as solar will remain only a tiny part of the total US production; on the other hand, FSLR is doing better because of its commercial solar business.
Pg 7, UP AND DOWN WALL STREET. The fed fund futures market is far ahead of the FED on rate cuts. Strong jobs report and +4.1% wage gain meant that the Fed may not act until H2. This should favor value over growth – some would call it rotation or consolidation.
TREASURY’s gradual refunding plans in 11/2023 fueled the yearend rally in stocks and bonds that is now reversing; there were other factors too such as the FED, etc. But now the economic factors will dominate. The next major event will be the Fed cutting rates and reducing QTs, but that may be only in H2.
Pg 9, STREETWISE. For ugly stocks with generous dividends, look at TFC (yield 5.6%; fwd P/E 10.8) and VZ (yield 6.7%; fwd P/E 8.5). In this AI-hype-driven market, only 27% of the SP500 stock have outperformed the index.
(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.
(MUTUAL FUND QUARTERLY will be posted separately) (More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).
Pg 26, TRADER. Despite some market folklore, a poor start for 2024 doesn’t mean how the whole year will go. But it should be time for investors to reassess their holdings. This pullback/ correction may not be over yet. The jobs data was strong but the 2 previous months were revised down. The Q4 earnings report and guidance will determine the course for the year.
2023/Q4 EARNINGS SEASON starts with big banks reporting (JPM, C, BAC, WFC). A pause and then some pullback in rates has been a relief to banks. Some banks would be adding reserves to account for rising credit delinquencies. As bank stocks have run up already, their stocks may perform differently after earnings reports. A slimmed-down GS may be ready for rebound.
Disney (DIS; fwd P/E 19.8) has 4+ activists. It has made an information sharing deal with ValueAct, but Trian and Blackwells are pushing for board seats. DIS has cut costs, may resume dividends, and isn’t going for growth at any cost anymore. While proxy fights are distracting and expensive, they will keep pressure on DIS management.
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 -0.59%, SP500 -1.52%, Nasdaq Comp -3.25%, R2000 -3.75%. DJ Transports -2.45%; DJ Utilities +1.93%. (Rotating spot bank KBE -0.78%) US$ index (spot) +1.08% (remains too strong over 100), oil/WTI futures +3.02%, gold futures -0.97%.
52-Week (index changes only), DJIA +11.40%, SP500 +20.59%, Nasdaq Comp +37.42%. (Rotating spot bank KBE -1.25%) (SWITCHED to 52-week until YTD becomes meaningful)
SENTIMENTS
(ALL sentiments remain GOOD)
NYSE cumulative (5-day) A/D LINE fell (after rising for 2 months); ratio of winners:losers 1:2.
FUND INFLOWS +/OUTFLOWS - (4-weekMA). Stocks +, taxable bonds + (borderline), munis -, money-market funds +.
AAII Bull-Bear Spread +25.1% (high). (Thursday-Wednesday)
ybbpersonalfinance.proboards.com/thread/141/aaii-sentiment-survey-weekly?page=12&scrollTo=1285
%Above 50-dMA for NYSE-listed stocks 80.42% (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 89.3% (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 29, INTERNATIONAL TRADER. CHILEAN new 50-50 public-private joint-venture deal between SQM and Codelco should provide boost to its LITHIUM production. The US Albemarle/ALB also has important facilities there. Chile has huge potential for lithium production, but an old law declared it a strategic material for nuclear energy that comes in the way of new or foreign operations; lithium is more useful now for EV batteries. In the meantime, Australia and Argentina have expanded their lithium operations. Lithium prices have been very volatile.
Pg 30, OPTIONS. Skeptical bulls should pair call-buying with put-selling for blue-chips; SP500 SPY is used for example.
(SP500 VIX 13.35 (low), Nasdaq 100 VXN 17.13 (low), options SKEW 132.68 (high), bond MOVE 116.19 (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 43: A down week in EUROPE (Denmark +2.67%, Netherlands -3.00%) and a down week in ASIA (Philippines +2.72%, HK -3.75%). (Europe probing Chinese EV imports, China probing European brandy imports (luxury goods))
TREASURY* 3-mo yield 5.47%, 1-yr 4.84%, 2-yr 4.40%, 5-yr 4.02%, 10-yr 4.05%, 30-yr 4.21%;
REAL yields 5-yr 1.83%, 10-yr 1.83%, 30-yr 2.02%;
FRNs Index** 5.32% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR rose, ^DXY 102.4, +1.1% (pg 46). GOLD fell (Handy & Harman spot, Thursday; pg 48); the gold-miners fell. (^XAU was at 120.30, -4.29% 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, “The POWER GRID is Changing. What it Means for Utility Stocks – and Your Electricity Bill”. ENERGY TRANSFORMATION will have a huge impact on future power generation and grid (transmission, distribution). Renewable energy works both ways – consumers tap into the grid as needed, but also sell back excess energy they produce or store. Smart meters and thermostats will become more common. Consumers will get lots of energy related alerts/updates on phones. Energy demand has been stagnant in the US. In 2022, the US energy production sources were fossil fuels 59.6% (natural gas, coal), nuclear 18.2%, wind 10.3%, hydro 6%, solar 3.4%, and other 2.5%. Not much has changed for power grids, transformers, etc in decades. There will be higher energy demand from EVs, data centers, AI, etc, and there will be more on-demand production. Mentioned are AEP, ETN, EIX, HUBB, NEE, PWR, SBGSY, STRL. Solar industry (SPWR, NOVA, etc) may not benefit as much as solar will remain only a tiny part of the total US production; on the other hand, FSLR is doing better because of its commercial solar business.
Pg 7, UP AND DOWN WALL STREET. The fed fund futures market is far ahead of the FED on rate cuts. Strong jobs report and +4.1% wage gain meant that the Fed may not act until H2. This should favor value over growth – some would call it rotation or consolidation.
TREASURY’s gradual refunding plans in 11/2023 fueled the yearend rally in stocks and bonds that is now reversing; there were other factors too such as the FED, etc. But now the economic factors will dominate. The next major event will be the Fed cutting rates and reducing QTs, but that may be only in H2.
Pg 9, STREETWISE. For ugly stocks with generous dividends, look at TFC (yield 5.6%; fwd P/E 10.8) and VZ (yield 6.7%; fwd P/E 8.5). In this AI-hype-driven market, only 27% of the SP500 stock have outperformed the index.
(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.
(MUTUAL FUND QUARTERLY will be posted separately) (More later….)
Accessible from Morningstar (M*), PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).