Post by Admin/YBB on May 11, 2024 4:38:20 GMT -6
From Barron’s, May 13, 2024 (Part 1, Market Week+)
Pg 24, TRADER. DJIA is very close to 40,000 25 years after books touting that milestone were written. Financials are driving the DJIA lately. Rates have come down a bit, and utilities are smoking. Investors believe that rates have peaked, and the Fed-put is back. Watch the next CPI report as a hot inflation report would delay the prospects of a Fed rate cut.
For uncertain markets, consider DEFENSIVE consumer-staples (XLP, equal-weight RSPS).
Canadian CVE, CNQ, MEGEF, STHRF would benefit from 715-mile Alberta-Vancouver Trans Mountain PIPELINE. It will triple the capacity now from a small pipeline. The tar-sands oil can then be shipped to the US and Asia. Discount for the Western Canadian Select crude vs the US WTI has declined from $20+ to $13 and that may go even lower.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
FOMC 6/12/24+ hold (cycle peak 5.25-5.50%)
FOMC 7/31/24+ hold
FOMC 9/18/24+ cut
FOMC 11/7/24+ hold
FOMC 12/18/24+ hold
(Probabilities for some rate-ranges aren’t high, so there can be some unexpected moves.)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +2.16%, SP500 +1.85%, Nasdaq Comp +1.14%, R2000 +1.18%. DJ Transports +1.62%; DJ Utilities +3.07%. (Rotating spot utilities XLU +4.18%) US$ index (spot) +0.29% (remains too strong over 100), oil/WTI futures +0.19%, gold futures +2.97%.
YTD (index changes only), DJIA +4.84%, SP500 +9.49%, Nasdaq Comp +8.86%. (Rotating spot utilities XLU +12.54%)
SENTIMENTS
Sentiments peaked in mid-December and a minor peak was at March-end. A minor bottom was in mid-April.
NYSE cumulative (5-day) A/D LINE rose for a 3rd 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 +17.0% (above average). (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 59.10% (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 55.8% (positive); 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 27, INTERNATIONAL. SAUDI ARABIA under MBS (38) has ambitious plans for diversification beyond oil. The IPOs are booming on Saudi Exchange; bond issuance is up (+200 bps spreads over the US Treasuries). The grandiose Neom Project (The Line) has been scaled down to only $500 billion from $1.5 trillion. According to the IMF, Saudi non-oil economy should grow by +4%. Politically, Saudi Arabia is playing a delicate balancing game with the US, Russia, China, Iran.
Pg 28, OPTIONS. Discipline is important for this event-driven up-trending market. Consider the following “Rules”: Use short 1-2 week options expirations; take profits quickly (options aren’t for buy-and-hold); risks exist 24/7 (even when the markets aren’t trading), so use option rolls; study chart patterns with short 5-dMA (200-dMA may be OK for funds, not options); monitor important events during the options cycle; use limit-orders except for very liquid options; have a probabilistic view of options profits and losses.
SP500 VIX 12.55 (low), Nasdaq 100 VXN 16.46 (low), options SKEW 137.30 (high), bond MOVE 94.23 (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 42: A good week in EUROPE (Switzerland +3.81%, Spain +2.40%, Greece +2.34%) and an up week in ASIA (HK +3.55%, India -2.28%).
TREASURY* 3-mo yield 5.47%, 1-yr 5.17%, 2-yr 4.87%, 5-yr 4.52%, 10-yr 4.50%, 30-yr 4.64%;
REAL yields 5-yr 2.18%, 10-yr 2.16%, 30-yr 2.29%;
FRNs Index** 5.32% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR rose ^DXY 105.30, +0.3% (pg 50). GOLD rose to $2,372, +3.4% (Handy & Harman spot, Thursday; pg 52); the gold-miners rose. (^XAU was at 142.24, +5.71% 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 14, COVER STORY, “Trump Wants to End Bidenomics. It’s Here to Stay”. The 2021 Infrastructure Deal, 2022 Inflation Reduction Act, and 2022 Chips and Science Act are benefitting states (both blue and red) and companies, and these will remain in place regardless of the new President. Read more about election politics online or in the paper copy.
Pg 6, UP & DOWN WALL STREET. Stocks are rising toward their highs. Earnings have been good so far but may disappoint for the whole year. However, the UM Sentiment fell sharply; inflation-expectations rose. Typically, the early movers after a Fed rate cut are defensive stocks, but utilities have jumped the gun. With the yield for XLU now well below that for the 10-yr, it may be time to pull the plug.
While there is a lot of talk of higher rates for longer, Cliff NOREEN (MassMutual, semi-retired) says that rates are just normalizing. The ZIRP during and after the GFC 2008-09 had been difficult for insurers, pension funds and endowments (and savers). The 60-yr average for 10-yr is 5.93% and we aren’t even there; real rates for 10-yr are still low (historically 3%+). He likes corporates – investment-grade, HY and private credits. He likes the barbell approach for credit. His concerns are growing PIKs for private HY and the rush by retail into these illiquid and risky areas. He thinks that CEFs are better suited for these illiquid areas and serves on the boards of 2 MassMutual CEFs.
Pg 9, STREETWISE. AI is boosting demand for edge-computing – a combo of CPU and memory, or the AI accelerator NPUs. AI PCs will need 40+ TOPS (trillion operations per second) and only a few PCs now have that capability. Beneficiaries would be AMD, NVDA, QCOM, TSM; ASML, LRCX; WDC; AMZN, MSFT; oh, and PG has toilet paper with “edges” (humor). AAPL may also benefit as it hints of secret AI plans (because it’s a master of coming late but developing great user-friendly devices).
(More later….)
Accessible from PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).
Pg 24, TRADER. DJIA is very close to 40,000 25 years after books touting that milestone were written. Financials are driving the DJIA lately. Rates have come down a bit, and utilities are smoking. Investors believe that rates have peaked, and the Fed-put is back. Watch the next CPI report as a hot inflation report would delay the prospects of a Fed rate cut.
For uncertain markets, consider DEFENSIVE consumer-staples (XLP, equal-weight RSPS).
Canadian CVE, CNQ, MEGEF, STHRF would benefit from 715-mile Alberta-Vancouver Trans Mountain PIPELINE. It will triple the capacity now from a small pipeline. The tar-sands oil can then be shipped to the US and Asia. Discount for the Western Canadian Select crude vs the US WTI has declined from $20+ to $13 and that may go even lower.
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
FOMC 6/12/24+ hold (cycle peak 5.25-5.50%)
FOMC 7/31/24+ hold
FOMC 9/18/24+ cut
FOMC 11/7/24+ hold
FOMC 12/18/24+ hold
(Probabilities for some rate-ranges aren’t high, so there can be some unexpected moves.)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA +2.16%, SP500 +1.85%, Nasdaq Comp +1.14%, R2000 +1.18%. DJ Transports +1.62%; DJ Utilities +3.07%. (Rotating spot utilities XLU +4.18%) US$ index (spot) +0.29% (remains too strong over 100), oil/WTI futures +0.19%, gold futures +2.97%.
YTD (index changes only), DJIA +4.84%, SP500 +9.49%, Nasdaq Comp +8.86%. (Rotating spot utilities XLU +12.54%)
SENTIMENTS
Sentiments peaked in mid-December and a minor peak was at March-end. A minor bottom was in mid-April.
NYSE cumulative (5-day) A/D LINE rose for a 3rd 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 +17.0% (above average). (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 59.10% (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 55.8% (positive); 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 27, INTERNATIONAL. SAUDI ARABIA under MBS (38) has ambitious plans for diversification beyond oil. The IPOs are booming on Saudi Exchange; bond issuance is up (+200 bps spreads over the US Treasuries). The grandiose Neom Project (The Line) has been scaled down to only $500 billion from $1.5 trillion. According to the IMF, Saudi non-oil economy should grow by +4%. Politically, Saudi Arabia is playing a delicate balancing game with the US, Russia, China, Iran.
Pg 28, OPTIONS. Discipline is important for this event-driven up-trending market. Consider the following “Rules”: Use short 1-2 week options expirations; take profits quickly (options aren’t for buy-and-hold); risks exist 24/7 (even when the markets aren’t trading), so use option rolls; study chart patterns with short 5-dMA (200-dMA may be OK for funds, not options); monitor important events during the options cycle; use limit-orders except for very liquid options; have a probabilistic view of options profits and losses.
SP500 VIX 12.55 (low), Nasdaq 100 VXN 16.46 (low), options SKEW 137.30 (high), bond MOVE 94.23 (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 42: A good week in EUROPE (Switzerland +3.81%, Spain +2.40%, Greece +2.34%) and an up week in ASIA (HK +3.55%, India -2.28%).
TREASURY* 3-mo yield 5.47%, 1-yr 5.17%, 2-yr 4.87%, 5-yr 4.52%, 10-yr 4.50%, 30-yr 4.64%;
REAL yields 5-yr 2.18%, 10-yr 2.16%, 30-yr 2.29%;
FRNs Index** 5.32% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR rose ^DXY 105.30, +0.3% (pg 50). GOLD rose to $2,372, +3.4% (Handy & Harman spot, Thursday; pg 52); the gold-miners rose. (^XAU was at 142.24, +5.71% 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 14, COVER STORY, “Trump Wants to End Bidenomics. It’s Here to Stay”. The 2021 Infrastructure Deal, 2022 Inflation Reduction Act, and 2022 Chips and Science Act are benefitting states (both blue and red) and companies, and these will remain in place regardless of the new President. Read more about election politics online or in the paper copy.
Pg 6, UP & DOWN WALL STREET. Stocks are rising toward their highs. Earnings have been good so far but may disappoint for the whole year. However, the UM Sentiment fell sharply; inflation-expectations rose. Typically, the early movers after a Fed rate cut are defensive stocks, but utilities have jumped the gun. With the yield for XLU now well below that for the 10-yr, it may be time to pull the plug.
While there is a lot of talk of higher rates for longer, Cliff NOREEN (MassMutual, semi-retired) says that rates are just normalizing. The ZIRP during and after the GFC 2008-09 had been difficult for insurers, pension funds and endowments (and savers). The 60-yr average for 10-yr is 5.93% and we aren’t even there; real rates for 10-yr are still low (historically 3%+). He likes corporates – investment-grade, HY and private credits. He likes the barbell approach for credit. His concerns are growing PIKs for private HY and the rush by retail into these illiquid and risky areas. He thinks that CEFs are better suited for these illiquid areas and serves on the boards of 2 MassMutual CEFs.
Pg 9, STREETWISE. AI is boosting demand for edge-computing – a combo of CPU and memory, or the AI accelerator NPUs. AI PCs will need 40+ TOPS (trillion operations per second) and only a few PCs now have that capability. Beneficiaries would be AMD, NVDA, QCOM, TSM; ASML, LRCX; WDC; AMZN, MSFT; oh, and PG has toilet paper with “edges” (humor). AAPL may also benefit as it hints of secret AI plans (because it’s a master of coming late but developing great user-friendly devices).
(More later….)
Accessible from PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).
