Post by Admin/YBB on May 4, 2024 4:10:28 GMT -6
From Barron’s, May 6, 2024 (Part 1, Market Week+)
Pg 28, TRADER. Despite POWELL’s indication of no rate hike(s), he shouldn’t be seen as friendly to the stock market. The SP500 is struggling near its 50-dMA and has support at 5,000 and 4,700 (200-dMA). It’s not time to buy dips.
Peaking rates should benefit housing stocks. The ETF XHB includes homebuilders as well as home improvement businesses (A pure play homebuilders ETF is ITB).
PAINT maker and distributor Sherwin-Williams (SHW; fwd P/E 25.7) is attractive on HOUSING rebound. It has pricing power. Its businesses cover new homes, existing homes/home improvements, architectural paints.
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 6/12/24+ hold (cycle peak 5.25-5.50%)
FOMC 7/31/24+ hold
FOMC 9/18/24+ cut
FOMC 11/7/24+ hold
FOMC 12/18/24+ cut
(Probabilities for some rate-ranges aren’t high, so there can be some unexpected moves.)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +1.14%, SP500 +0.55%, Nasdaq Comp +1.43%, R2000 +1.68%. DJ Transports +1.17%; DJ Utilities +3.40%. (Rotating spot Homebuilders XHB +1.45%) US$ index (spot) -0.84% (remains too strong over 100), oil/WTI futures -6.85%, gold futures -1.53%.
YTD (index changes only), DJIA +2.62%, SP500 +7.50%, Nasdaq Comp +7.63%. (Rotating spot Homebuilders XHB +9.99%)
SENTIMENTS
Sentiments peaked in mid-December and a minor peak was at March-end.
NYSE cumulative (5-day) A/D LINE rose for a 2nd week; ratio of winners:losers 2:1
FUND INFLOWS +/OUTFLOWS-: Stocks -|-, taxable bonds +|-, munis -|+, money-market funds -|-. (NEW FORMAT: 4wMA|weekly change)
AAII Bull-Bear Spread +6% (average; flip-flop). (Thursday-Wednesday)
(Sentiment Scale: v low << avg - 1*SD; low < avg - 1*SD; below avg, avg, above avg for in-between; high > avg + 1*SD, v high >> avg + 1*SD)
ybbpersonalfinance.proboards.com/thread/141/aaii-sentiment-survey-weekly?page=12&scrollTo=1285
%Above 50-dMA for NYSE-listed stocks 51.61% (positive); (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 49.3% (negative, barely); 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 for %Above: oversold < 30-; 30 < negative < 50-; 50 < positive < 70-; 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. CHINA is the clear leader now in EV batteries and renewable energy storage. Chinese companies are expanding in the EU but have only done some licensing in the US (F; even that has generated political opposition). The US players include Power electronics, FLNC, AES, NEE.
Pg 32, OPTIONS. In these uncertain markets, sell puts on blue-chips that one want to buy at lower prices.
SP500 VIX 13.49 (low), Nasdaq 100 VXN 17.40 (low), options SKEW 135.18 (high), bond MOVE 95.96 (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: A down week in EUROPE (Finland +1.20%, Spain -2.71%) and a good week in ASIA (HK +5.42%, Philippines -0.30%). (HK rally since mid-January)
TREASURY* 3-mo yield 5.45%, 1-yr 5.12%, 2-yr 4.81%, 5-yr 4.48%, 10-yr 4.50%, 30-yr 4.66%;
REAL yields 5-yr 2.13%, 10-yr 2.15%, 30-yr 2.31%;
FRNs Index** 5.32% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR fell ^DXY 105.04, -0.9% (pg 50). GOLD fell to $2,294, -2% (Handy & Harman spot, Thursday; pg 52); the gold-miners fell. (^XAU was at 134.56, -2.97% for the week)
Top FDIC insured savings deposit rates*** (This feature has been discontinued but see the link below)
US SAVINGS I-Bonds**, Rate from 5/1/24 – 10/31/24 is 4.28%; the fixed rate is 1.30%, the semiannual inflation is 1.48%.
(NOTE – The Social Security COLA for 2025, based on the Q3 average of CPI-W, is ?, est +3%)
*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, “Inside a $10 Billion Bet on the World’s Longest HEATED Oil PIPELINE”. The 900-mile EACOP megaproject (2013- ) stretching from Uganda to Tanzania will have the ultimate crude oil capacity of 246,000 bbl/day; the officials claim that only 1,000 people have been displaced but they have been accommodated. The waxy oil must be heated to keep it flowing. The Project involves French TotalEnergies/TTE (majority owner; provided much of the initial capital that has been spent; project failure risk is $3/share) and Chinese and Persian Gulf financiers. But the debt financing has been difficult due to geopolitics, the ESG issues and concerns about oil/gas spills. Due to its domestic problems, China has scaled back its financial commitments and those from Middle East have been slow to warm up on it. However, the megaproject now may be at a point of no return, so there are strong motivations to somehow continue with the Project. Lot of the related infrastructure has yet to be developed – power plants, refineries, roads, railroads, ports, airports, homes. Sufficient insurance has yet to be secured for the Project.
Pg 6, UP & DOWN WALL STREET. Rising YEN (or, falling DOLLAR) will be good for the US stocks. Weak currency is initially beneficial for exports, but a collapse (in yen or yuan) can point to other serious problems. The BOJ took meek steps to support yen, but it spent 6 trillion yen for only -5 yen move, and that was 2x higher intervention per yen than in the past. But weaker US economic data may naturally lead to a weaker dollar, and Powell also signaled no more US rate hike(s). Yen is your friend if you own software, semis, utilities, multinationals, EMs (but the US investors of foreign funds will get gains from currency translation).
The week that started badly ended fine. April was bad with SP500 down -4.2% and sentiment souring. But Powell said (as in December) that no rate hike(s). Some recent economic data have been weak. At one point, SP500 was down 4.5% from its high, and it remains to be seen whether this is a pullback (5-10% drop) or a correction (10-20% drop).
Pg 8, STREETWISE. End game at Paramount Global/PARA – get rid of the obstinate CEO Bob BAKISH, install an executive trium-invertebrate of people compliant with the big owner Shari REDSTONE (small economic stake, but huge voting stake), and proceed “as told”. Bakish did get a generous parting gift of $50 million. There are other players in this drama. Charter Communications/CHTR which is now going with Disney/DIS for streaming only (vs all with DIS) and may go with PARA for TV (a deal that Shari wants to make quickly). Then, there are 2 bidders for PARA – Apollo Global/APO + Sony/SONY and Skydance (run by David ELLISON with access to unlimited money from Dad Larry Ellison). The bidder who pays the most to Shari’s huge voting block will win. PARA shareholders are getting screwed royally.
A bidding war has broken out for basketball rights (NBA) among ESPN/DIS, TNT/WBD and new bid entrants AMZN, NBC/CMCSA. Commentator Charles BARKLEY has a 10-yr contract with TNT that has an escape clause.
(More later….)
Accessible from PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).
Pg 28, TRADER. Despite POWELL’s indication of no rate hike(s), he shouldn’t be seen as friendly to the stock market. The SP500 is struggling near its 50-dMA and has support at 5,000 and 4,700 (200-dMA). It’s not time to buy dips.
Peaking rates should benefit housing stocks. The ETF XHB includes homebuilders as well as home improvement businesses (A pure play homebuilders ETF is ITB).
PAINT maker and distributor Sherwin-Williams (SHW; fwd P/E 25.7) is attractive on HOUSING rebound. It has pricing power. Its businesses cover new homes, existing homes/home improvements, architectural paints.
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 6/12/24+ hold (cycle peak 5.25-5.50%)
FOMC 7/31/24+ hold
FOMC 9/18/24+ cut
FOMC 11/7/24+ hold
FOMC 12/18/24+ cut
(Probabilities for some rate-ranges aren’t high, so there can be some unexpected moves.)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +1.14%, SP500 +0.55%, Nasdaq Comp +1.43%, R2000 +1.68%. DJ Transports +1.17%; DJ Utilities +3.40%. (Rotating spot Homebuilders XHB +1.45%) US$ index (spot) -0.84% (remains too strong over 100), oil/WTI futures -6.85%, gold futures -1.53%.
YTD (index changes only), DJIA +2.62%, SP500 +7.50%, Nasdaq Comp +7.63%. (Rotating spot Homebuilders XHB +9.99%)
SENTIMENTS
Sentiments peaked in mid-December and a minor peak was at March-end.
NYSE cumulative (5-day) A/D LINE rose for a 2nd week; ratio of winners:losers 2:1
FUND INFLOWS +/OUTFLOWS-: Stocks -|-, taxable bonds +|-, munis -|+, money-market funds -|-. (NEW FORMAT: 4wMA|weekly change)
AAII Bull-Bear Spread +6% (average; flip-flop). (Thursday-Wednesday)
(Sentiment Scale: v low << avg - 1*SD; low < avg - 1*SD; below avg, avg, above avg for in-between; high > avg + 1*SD, v high >> avg + 1*SD)
ybbpersonalfinance.proboards.com/thread/141/aaii-sentiment-survey-weekly?page=12&scrollTo=1285
%Above 50-dMA for NYSE-listed stocks 51.61% (positive); (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 49.3% (negative, barely); 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 for %Above: oversold < 30-; 30 < negative < 50-; 50 < positive < 70-; 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. CHINA is the clear leader now in EV batteries and renewable energy storage. Chinese companies are expanding in the EU but have only done some licensing in the US (F; even that has generated political opposition). The US players include Power electronics, FLNC, AES, NEE.
Pg 32, OPTIONS. In these uncertain markets, sell puts on blue-chips that one want to buy at lower prices.
SP500 VIX 13.49 (low), Nasdaq 100 VXN 17.40 (low), options SKEW 135.18 (high), bond MOVE 95.96 (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: A down week in EUROPE (Finland +1.20%, Spain -2.71%) and a good week in ASIA (HK +5.42%, Philippines -0.30%). (HK rally since mid-January)
TREASURY* 3-mo yield 5.45%, 1-yr 5.12%, 2-yr 4.81%, 5-yr 4.48%, 10-yr 4.50%, 30-yr 4.66%;
REAL yields 5-yr 2.13%, 10-yr 2.15%, 30-yr 2.31%;
FRNs Index** 5.32% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR fell ^DXY 105.04, -0.9% (pg 50). GOLD fell to $2,294, -2% (Handy & Harman spot, Thursday; pg 52); the gold-miners fell. (^XAU was at 134.56, -2.97% for the week)
Top FDIC insured savings deposit rates*** (This feature has been discontinued but see the link below)
US SAVINGS I-Bonds**, Rate from 5/1/24 – 10/31/24 is 4.28%; the fixed rate is 1.30%, the semiannual inflation is 1.48%.
(NOTE – The Social Security COLA for 2025, based on the Q3 average of CPI-W, is ?, est +3%)
*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, “Inside a $10 Billion Bet on the World’s Longest HEATED Oil PIPELINE”. The 900-mile EACOP megaproject (2013- ) stretching from Uganda to Tanzania will have the ultimate crude oil capacity of 246,000 bbl/day; the officials claim that only 1,000 people have been displaced but they have been accommodated. The waxy oil must be heated to keep it flowing. The Project involves French TotalEnergies/TTE (majority owner; provided much of the initial capital that has been spent; project failure risk is $3/share) and Chinese and Persian Gulf financiers. But the debt financing has been difficult due to geopolitics, the ESG issues and concerns about oil/gas spills. Due to its domestic problems, China has scaled back its financial commitments and those from Middle East have been slow to warm up on it. However, the megaproject now may be at a point of no return, so there are strong motivations to somehow continue with the Project. Lot of the related infrastructure has yet to be developed – power plants, refineries, roads, railroads, ports, airports, homes. Sufficient insurance has yet to be secured for the Project.
Pg 6, UP & DOWN WALL STREET. Rising YEN (or, falling DOLLAR) will be good for the US stocks. Weak currency is initially beneficial for exports, but a collapse (in yen or yuan) can point to other serious problems. The BOJ took meek steps to support yen, but it spent 6 trillion yen for only -5 yen move, and that was 2x higher intervention per yen than in the past. But weaker US economic data may naturally lead to a weaker dollar, and Powell also signaled no more US rate hike(s). Yen is your friend if you own software, semis, utilities, multinationals, EMs (but the US investors of foreign funds will get gains from currency translation).
The week that started badly ended fine. April was bad with SP500 down -4.2% and sentiment souring. But Powell said (as in December) that no rate hike(s). Some recent economic data have been weak. At one point, SP500 was down 4.5% from its high, and it remains to be seen whether this is a pullback (5-10% drop) or a correction (10-20% drop).
Pg 8, STREETWISE. End game at Paramount Global/PARA – get rid of the obstinate CEO Bob BAKISH, install an executive trium-invertebrate of people compliant with the big owner Shari REDSTONE (small economic stake, but huge voting stake), and proceed “as told”. Bakish did get a generous parting gift of $50 million. There are other players in this drama. Charter Communications/CHTR which is now going with Disney/DIS for streaming only (vs all with DIS) and may go with PARA for TV (a deal that Shari wants to make quickly). Then, there are 2 bidders for PARA – Apollo Global/APO + Sony/SONY and Skydance (run by David ELLISON with access to unlimited money from Dad Larry Ellison). The bidder who pays the most to Shari’s huge voting block will win. PARA shareholders are getting screwed royally.
A bidding war has broken out for basketball rights (NBA) among ESPN/DIS, TNT/WBD and new bid entrants AMZN, NBC/CMCSA. Commentator Charles BARKLEY has a 10-yr contract with TNT that has an escape clause.
(More later….)
Accessible from PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).