Post by Admin/YBB on Feb 6, 2021 8:15:18 GMT -6
[Italics within the brackets are my additions/elaborations]
Pg M1, Trader: A good week! Economic data were good except for weak jobs report. Stimulus3 will soon be approved via budget reconciliation process. News on Covid-19 vaccines was good with new ones coming from J&J/JNJ [1-dose regime] and Novavax/NVAX [2-dose regime]. Investors are looking for strong economy by H2 and strong 2021 overall; financial XLF and energy XLE rallied. Stocks of some at-home beneficiaries fell. But pay attention to the bond market as yield-curve is steepening [2yr-10yr spread is 110 bps]. Too fast and too much steepening of the yield-curve may cause problems for stocks and the Fed.
Renewable energy AES is benefitting from recent bounces/rallies in low-quality small-caps.
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.
ZIRP [0-0.25% fed fund rate] through December 2021 FOMC meeting.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html ]
For the week [index changes only], DJIA +3.89%, SP500 +4.65%, Nasdaq Comp +6.01%, Russell 2000 +7.70%. DJ Transports +5.80%; DJ Utilities +2.33%. [Rotating spot retail R2000 +7.70%] US$ index (spot) +0.46%, oil/WTI futures +8.91%, gold futures -1.97%.
52-weeks [index changes only], DJIA +7.03%, SP500 +16.80%, Nasdaq Comp +45.54%. [Rotating spot retail R2000 +34.80%]
Pg M4, Europe: French Danone/DANOY has attracted the attention of the activist fund Bluebell Capital. It alleges that the current CEO Faber [2014- ] has focused too much on ESG to the detriment of shareholders. Danone has recently announced restructuring to address the issues raised by Bluebell. French Government has protected its big businesses from hostile foreign takeovers, so there is no takeover pressure.
Pg M4, Emerging Markets: Military coup in Myanmar [former Burma] may cause temporary supply-chain disruptions [energy industry, luggage, apparel, footwear, etc]. Its neighbors include India and China, and both are developing ports there. US sanctions may cause further complications.
Pg M6, Commodities: Recent wild action in silver aside, silver remains undervalued. Gold:silver ratio is 68 [recent range 65-125]; prior peaks were $49.45 in 09/1979 [attempted corner by Hunt brothers], $48.60 in 04/2011, and a 3rd bull run may take it above $50. Industrial demand [solar power, 5G, electronics] and investment demand [bars, coins] are strong. Storming of the US Capitol triggered global buying in gold and silver, and then came the app-trading frenzy. Continuing stimulus [US at #3 now] and falling dollar are bullish for precious metals.
Pg M5, Options: Options volume is at all-time high. For aggressive options trading, follow some guidelines: Be cautious with options and margin; take rare/spectacular profits [e.g. +100% in an few days], or at least take out your initial investment; ladder calls; watch volume before entering the order.
[SP500 VIX 20.87, SKEW 135.09] [Yahoo Finance data]
finance.yahoo.com/quotes/%5EVIX,%5ESKEW?.tsrc=fin-srch
Pg M27, M32: A great week in Europe [Italy +6.78% (new Mario Draghi Government), Finland +1.12%] and a great week in Asia [India +7.51%, New Zealand -0.66%]. The equity CEF index [data to Thursday] outperformed the DJIA and its discount was -5.5% [wide fluctuations between -4% to -16% over the last few months].
Treasury rates 3-mo yield 0.03%, 2-yr 0.09%, 5-yr 0.47%, 10-yr 1.19%, 30-yr 1.97% [Treasury data*]. Dollar rose, DXY 91.00, +0.5% [M35]. Gold [Handy & Harman spot, Thursday] fell to $1,803 -3.3% [M38]; the gold-miners rose. [^XAU was at 141.52, +2.11% for the week]
*Treasury Yield-Curve www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
Top FDIC insured savings deposit rates*: Money-market accounts 0.61%; 3-mo Jumbo CD 0.40% [most are 0.25% or below], 1-yr CDs 0.70%; 5-yr CDs 1.00% [M33].
*For local rates www.depositaccounts.com/banks/rates-map/
Bonus from Part 2 include Cover Story (now only in online designation), Up and Down Wall Street, Streetwise and these won’t be repeated in Part 2.
Pg 22: Cover Story, “The Coming Alzheimer’s Crisis – and what to do About It.” Covid-19 related isolation and emotional distress have worsened the Alzheimer crisis. Many caregivers had to reduce or cut services. Situation deteriorated in long-term care facilities where more than half of the patients have Alzheimer or other forms of dementia; more than 33% of the US Covid-19 deaths have been in long-term care facilities. Many long-term care facilities are in financial distress and may not survive; employee retention is also a problem due to low wages and high-risk work environment. Among the top 10 causes of death globally, only Alzheimer has no cure. Patients live with this progressive disease for 4-8 years, but some may live for 20+ years. Health insurance doesn’t cover much of caregiver costs and many patients don’t have long-term care insurance [LTCI]. Besides healthcare costs for patients, there are costs related to time and wages lost by family members whose physical and emotional wellbeing are also affected. Research on Alzheimer has lagged due to lack of funding; Alzheimer related drug trials also take longer. Early diagnosis is still key to slow the progression and doctors are being urged to include cognition tests in their standard protocols. There are some preliminary proposals to help Alzheimer patients, caregivers and affected family members.
Pg 6, Up and Down Wall Street: Stocks are at new highs [SP500, Nasdaq Comp, R2000], VIX fell to 20.87, and Treasury yield-curve steepened. Stimulus3 will be approved soon via budget reconciliation and that should provide a strong boost to the economy in H2.
Fed’s purchases of mortgages under the current QE are keeping housing sector strong in spite of Powell attributing that to the pandemic. While the housing demand has gone up, the supply takes a while to catchup and the pace varies by regions. Inflation indices [CPI, PCE] don’t capture the rise in housing prices. The Fed now holds $2.07 trillion in MBS. Eventually, when the Fed starts to taper [in 2022/H2?], it may start with MBS.
Pg 9, Streetwise: Fast-growing e-commerce is driving demand for warehouses [REITs PLD, DRE, etc]. Avoid office REITs as work-from home [WFH] trend will remain strong post-pandemic.
Peloton [PTON] fell even after reporting high subscription growth. It beat revenue estimates only by a small amount; it is increasing capex to speed up shipment of its exercise machines. Competition in connected-fitness is growing from companies that sell exercise machines and/or apps/software.
Reporting from Polar Vortex in the Midwest. More later….
Pg M1, Trader: A good week! Economic data were good except for weak jobs report. Stimulus3 will soon be approved via budget reconciliation process. News on Covid-19 vaccines was good with new ones coming from J&J/JNJ [1-dose regime] and Novavax/NVAX [2-dose regime]. Investors are looking for strong economy by H2 and strong 2021 overall; financial XLF and energy XLE rallied. Stocks of some at-home beneficiaries fell. But pay attention to the bond market as yield-curve is steepening [2yr-10yr spread is 110 bps]. Too fast and too much steepening of the yield-curve may cause problems for stocks and the Fed.
Renewable energy AES is benefitting from recent bounces/rallies in low-quality small-caps.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes.
ZIRP [0-0.25% fed fund rate] through December 2021 FOMC meeting.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html ]
For the week [index changes only], DJIA +3.89%, SP500 +4.65%, Nasdaq Comp +6.01%, Russell 2000 +7.70%. DJ Transports +5.80%; DJ Utilities +2.33%. [Rotating spot retail R2000 +7.70%] US$ index (spot) +0.46%, oil/WTI futures +8.91%, gold futures -1.97%.
52-weeks [index changes only], DJIA +7.03%, SP500 +16.80%, Nasdaq Comp +45.54%. [Rotating spot retail R2000 +34.80%]
Pg M4, Europe: French Danone/DANOY has attracted the attention of the activist fund Bluebell Capital. It alleges that the current CEO Faber [2014- ] has focused too much on ESG to the detriment of shareholders. Danone has recently announced restructuring to address the issues raised by Bluebell. French Government has protected its big businesses from hostile foreign takeovers, so there is no takeover pressure.
Pg M4, Emerging Markets: Military coup in Myanmar [former Burma] may cause temporary supply-chain disruptions [energy industry, luggage, apparel, footwear, etc]. Its neighbors include India and China, and both are developing ports there. US sanctions may cause further complications.
Pg M6, Commodities: Recent wild action in silver aside, silver remains undervalued. Gold:silver ratio is 68 [recent range 65-125]; prior peaks were $49.45 in 09/1979 [attempted corner by Hunt brothers], $48.60 in 04/2011, and a 3rd bull run may take it above $50. Industrial demand [solar power, 5G, electronics] and investment demand [bars, coins] are strong. Storming of the US Capitol triggered global buying in gold and silver, and then came the app-trading frenzy. Continuing stimulus [US at #3 now] and falling dollar are bullish for precious metals.
Pg M5, Options: Options volume is at all-time high. For aggressive options trading, follow some guidelines: Be cautious with options and margin; take rare/spectacular profits [e.g. +100% in an few days], or at least take out your initial investment; ladder calls; watch volume before entering the order.
[SP500 VIX 20.87, SKEW 135.09] [Yahoo Finance data]
finance.yahoo.com/quotes/%5EVIX,%5ESKEW?.tsrc=fin-srch
Pg M27, M32: A great week in Europe [Italy +6.78% (new Mario Draghi Government), Finland +1.12%] and a great week in Asia [India +7.51%, New Zealand -0.66%]. The equity CEF index [data to Thursday] outperformed the DJIA and its discount was -5.5% [wide fluctuations between -4% to -16% over the last few months].
Treasury rates 3-mo yield 0.03%, 2-yr 0.09%, 5-yr 0.47%, 10-yr 1.19%, 30-yr 1.97% [Treasury data*]. Dollar rose, DXY 91.00, +0.5% [M35]. Gold [Handy & Harman spot, Thursday] fell to $1,803 -3.3% [M38]; the gold-miners rose. [^XAU was at 141.52, +2.11% for the week]
*Treasury Yield-Curve www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
Top FDIC insured savings deposit rates*: Money-market accounts 0.61%; 3-mo Jumbo CD 0.40% [most are 0.25% or below], 1-yr CDs 0.70%; 5-yr CDs 1.00% [M33].
*For local rates www.depositaccounts.com/banks/rates-map/
Bonus from Part 2 include Cover Story (now only in online designation), Up and Down Wall Street, Streetwise and these won’t be repeated in Part 2.
Pg 22: Cover Story, “The Coming Alzheimer’s Crisis – and what to do About It.” Covid-19 related isolation and emotional distress have worsened the Alzheimer crisis. Many caregivers had to reduce or cut services. Situation deteriorated in long-term care facilities where more than half of the patients have Alzheimer or other forms of dementia; more than 33% of the US Covid-19 deaths have been in long-term care facilities. Many long-term care facilities are in financial distress and may not survive; employee retention is also a problem due to low wages and high-risk work environment. Among the top 10 causes of death globally, only Alzheimer has no cure. Patients live with this progressive disease for 4-8 years, but some may live for 20+ years. Health insurance doesn’t cover much of caregiver costs and many patients don’t have long-term care insurance [LTCI]. Besides healthcare costs for patients, there are costs related to time and wages lost by family members whose physical and emotional wellbeing are also affected. Research on Alzheimer has lagged due to lack of funding; Alzheimer related drug trials also take longer. Early diagnosis is still key to slow the progression and doctors are being urged to include cognition tests in their standard protocols. There are some preliminary proposals to help Alzheimer patients, caregivers and affected family members.
Pg 6, Up and Down Wall Street: Stocks are at new highs [SP500, Nasdaq Comp, R2000], VIX fell to 20.87, and Treasury yield-curve steepened. Stimulus3 will be approved soon via budget reconciliation and that should provide a strong boost to the economy in H2.
Fed’s purchases of mortgages under the current QE are keeping housing sector strong in spite of Powell attributing that to the pandemic. While the housing demand has gone up, the supply takes a while to catchup and the pace varies by regions. Inflation indices [CPI, PCE] don’t capture the rise in housing prices. The Fed now holds $2.07 trillion in MBS. Eventually, when the Fed starts to taper [in 2022/H2?], it may start with MBS.
Pg 9, Streetwise: Fast-growing e-commerce is driving demand for warehouses [REITs PLD, DRE, etc]. Avoid office REITs as work-from home [WFH] trend will remain strong post-pandemic.
Peloton [PTON] fell even after reporting high subscription growth. It beat revenue estimates only by a small amount; it is increasing capex to speed up shipment of its exercise machines. Competition in connected-fitness is growing from companies that sell exercise machines and/or apps/software.
Reporting from Polar Vortex in the Midwest. More later….