Post by Admin/YBB on May 25, 2024 4:09:41 GMT -6
From Barron’s, May 27, 2024 (Part 1, Market Week+)
Pg 28, TRADER. Stocks may soon be in a SUMMER SLUMP. The Q1 earnings season is almost over, and several economic reports are pending (jobless claims, PCE index, etc). Sticky inflation may keep rates higher for longer. There are elections and geopolitics. The SP500 valuation is high at fwd P/E 22; support may be around 4,800, near the 200-dMA.
Nvidia/NVDA is red hot, but there are several alternatives that will benefit from AI boom: PCs DELL; chips MRVL, TXN, Samsung Electronics; chip designers NXPI; software CRM, ADSK, TEAM, NTNX, PCOR.
New CEO Tim COFER, formerly, COO briefly, at Keurig Dr Pepper (KDP; fwd P/E 18) will focus on growing its coffee/caffeine business. Its own brand is Green Mountain Coffee K-Cups, and it will add more coffee partners for variety. It owns 30% of the energy drink C4.
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+ hold
FOMC 11/7/24+ cut
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 -2.33%, SP500 +0.03%, Nasdaq Comp +1.41%, R2000 -1.24%. DJ Transports -2.70%; DJ Utilities -2.66%. (Rotating spot long Treasuries TLT -0.01%) US$ index (spot) +0.29% (remains too strong over 100), oil/WTI futures -2.92%, gold futures -3.30%.
YTD (index changes only), DJIA +3.66%, SP500 +11.21%, Nasdaq Comp +12.72%. (Rotating spot long Treasuries -7.58%)
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 fell; ratio of winners:losers 1:2 (poor action in the week when SP500 and Nasdaq Comp had new highs)
FUND INFLOWS +/OUTFLOWS-: Stocks +|+, taxable bonds +|+, munis +|-, money-market funds +|+. (NEW FORMAT: 4wMA|weekly change)
AAII Bull-Bear Spread +20.7% (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 53.72% (positive, barely); (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 64.6% (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 39, INTERNATIONAL. Worsening crime is hurting MEXICO’s growth (+2% to +3%) that is fueled by the US nearshoring. The crime situation is better controlled in the areas near the US border, so many foreign companies want to locate there. New elections are on June 2 when handpicked Claudia SHEINBAUM (former Mayor of Mexico City) may replace the outgoing AMLO.
Pg 40, OPTIONS. Low fear-gauge VIX is masking high stock volatility beneath. But VIX can bounce quickly from the lows. Suggested are index options and selling puts on stocks one wants to buy. Column author suggests the counterstrategy of selling when VIX is low, and buying when VIX is high.
SP500 VIX 11.93 (low), Nasdaq 100 VXN 15.66 (low), options SKEW 155.86 (high), bond MOVE 83.57 (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 53: A down week in EUROPE (Denmark +2.12%, Italy -2.45%) (UK elections July 4) and a flat week in ASIA (New Zealand +2.24%, HK -3.39%).
TREASURY* 3-mo yield 5.46%, 1-yr 5.21%, 2-yr 4.93%, 5-yr 4.53%, 10-yr 4.46%, 30-yr 4.57%;
REAL yields 5-yr 2.20%, 10-yr 2.14%, 30-yr 2.25%;
FRNs Index** 5.315% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR rose ^DXY 104.75, +0.3% (pg 58). GOLD fell to $2,343, -2.5% (Handy & Harman spot, Thursday; pg 60); the gold-miners fell. (^XAU was at 143.47, -3.86% 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, “CHINA’s Cheap EVs Aren’t a Threat to Tesla, Ford, and GM. Here’s What Is”. Diversified Chinese automaker BYD’s/BYDDY Seagull is small, underpowered, no-frills, cheap EV ($10K), but it isn’t a threat to the US EV makers (TSLA, GM, F). EV batteries are labor intensive and expensive. Among the US automakers, TSLA is most at risk from low-cost imports; it has wavered in its commitment to a cheaper EV model. BYD has integrated operations, lower costs and a full range of products from cheap to premium (competing with Land Rover, Mercedes). So, the fear is that one day, BYD can ship to the US market that Chinese automakers have ignored so far. That’s why the new 100% US tariffs on several Chinese products include EVs. But there are indirect Chinese exposures to the US market via Volvo (auto brand now owned by Chinese Geely), Polestar, Lotus, etc. There are also partnerships like between Stellantis/STLA and Chinese Leapmotor, etc.
Pg 9, UP & DOWN WALL STREET. With T-Bills above 5%, the stock market is expensive. In this narrow advance, 493 of SP500 without Magnificent 7 aren’t doing well. The transports are lagging while the DJIA has made a new high above 40,000, i.e. a nonconfirmation by the old Dow Theory. Some suggest that the semis are the new transports. Treasury yields rose and the CME FedWatch now projects only 1 rate cut in 2024 (for weeks it has been flipping between 1 or 2 cuts). The median target for SP500 by strategists is only 5,400 for 2024 and we are almost there. Bad seasonality is from May 1 – October 30.
YIELD-CURVE inverted in 11/2022 (19 months ago), but where is the recession? Often, recessions followed within several months of yield-curve inversions; late recessions were after 19 months in 11/1973, after 18 months in 12/2007, so we may not be out of the woods yet. The Fed is keeping short-term rates high and is also influencing the long-term rates through gradual QT (following massive QEs). There is high deficit spending and big banks that are too big to fail. But a good enough economy also means no Fed rate cuts.
Pg 12, STREETWISE. Google (with its Gemini AI slapped on) and others are incorporating AI into their searches. Startups like Perplexity.io are pitching their AI search engines. Search 3 years from now will be very different from that today – voice prompts, virtual assistants, etc. Publishers are making licensing deals to feed content into the AI search engines. But Google’s PR efforts for its AI have been frustrating or embarrassing. AI is benefiting the chipmakers now (growing demand from data centers and AI-PCs), but AI software will need further refinement. Some are turning off Microsoft Copilot because they find it annoying.
(More later….)
Accessible from PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).
Pg 28, TRADER. Stocks may soon be in a SUMMER SLUMP. The Q1 earnings season is almost over, and several economic reports are pending (jobless claims, PCE index, etc). Sticky inflation may keep rates higher for longer. There are elections and geopolitics. The SP500 valuation is high at fwd P/E 22; support may be around 4,800, near the 200-dMA.
Nvidia/NVDA is red hot, but there are several alternatives that will benefit from AI boom: PCs DELL; chips MRVL, TXN, Samsung Electronics; chip designers NXPI; software CRM, ADSK, TEAM, NTNX, PCOR.
New CEO Tim COFER, formerly, COO briefly, at Keurig Dr Pepper (KDP; fwd P/E 18) will focus on growing its coffee/caffeine business. Its own brand is Green Mountain Coffee K-Cups, and it will add more coffee partners for variety. It owns 30% of the energy drink C4.
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+ hold
FOMC 11/7/24+ cut
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 -2.33%, SP500 +0.03%, Nasdaq Comp +1.41%, R2000 -1.24%. DJ Transports -2.70%; DJ Utilities -2.66%. (Rotating spot long Treasuries TLT -0.01%) US$ index (spot) +0.29% (remains too strong over 100), oil/WTI futures -2.92%, gold futures -3.30%.
YTD (index changes only), DJIA +3.66%, SP500 +11.21%, Nasdaq Comp +12.72%. (Rotating spot long Treasuries -7.58%)
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 fell; ratio of winners:losers 1:2 (poor action in the week when SP500 and Nasdaq Comp had new highs)
FUND INFLOWS +/OUTFLOWS-: Stocks +|+, taxable bonds +|+, munis +|-, money-market funds +|+. (NEW FORMAT: 4wMA|weekly change)
AAII Bull-Bear Spread +20.7% (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 53.72% (positive, barely); (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 64.6% (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 39, INTERNATIONAL. Worsening crime is hurting MEXICO’s growth (+2% to +3%) that is fueled by the US nearshoring. The crime situation is better controlled in the areas near the US border, so many foreign companies want to locate there. New elections are on June 2 when handpicked Claudia SHEINBAUM (former Mayor of Mexico City) may replace the outgoing AMLO.
Pg 40, OPTIONS. Low fear-gauge VIX is masking high stock volatility beneath. But VIX can bounce quickly from the lows. Suggested are index options and selling puts on stocks one wants to buy. Column author suggests the counterstrategy of selling when VIX is low, and buying when VIX is high.
SP500 VIX 11.93 (low), Nasdaq 100 VXN 15.66 (low), options SKEW 155.86 (high), bond MOVE 83.57 (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 53: A down week in EUROPE (Denmark +2.12%, Italy -2.45%) (UK elections July 4) and a flat week in ASIA (New Zealand +2.24%, HK -3.39%).
TREASURY* 3-mo yield 5.46%, 1-yr 5.21%, 2-yr 4.93%, 5-yr 4.53%, 10-yr 4.46%, 30-yr 4.57%;
REAL yields 5-yr 2.20%, 10-yr 2.14%, 30-yr 2.25%;
FRNs Index** 5.315% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR rose ^DXY 104.75, +0.3% (pg 58). GOLD fell to $2,343, -2.5% (Handy & Harman spot, Thursday; pg 60); the gold-miners fell. (^XAU was at 143.47, -3.86% 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, “CHINA’s Cheap EVs Aren’t a Threat to Tesla, Ford, and GM. Here’s What Is”. Diversified Chinese automaker BYD’s/BYDDY Seagull is small, underpowered, no-frills, cheap EV ($10K), but it isn’t a threat to the US EV makers (TSLA, GM, F). EV batteries are labor intensive and expensive. Among the US automakers, TSLA is most at risk from low-cost imports; it has wavered in its commitment to a cheaper EV model. BYD has integrated operations, lower costs and a full range of products from cheap to premium (competing with Land Rover, Mercedes). So, the fear is that one day, BYD can ship to the US market that Chinese automakers have ignored so far. That’s why the new 100% US tariffs on several Chinese products include EVs. But there are indirect Chinese exposures to the US market via Volvo (auto brand now owned by Chinese Geely), Polestar, Lotus, etc. There are also partnerships like between Stellantis/STLA and Chinese Leapmotor, etc.
Pg 9, UP & DOWN WALL STREET. With T-Bills above 5%, the stock market is expensive. In this narrow advance, 493 of SP500 without Magnificent 7 aren’t doing well. The transports are lagging while the DJIA has made a new high above 40,000, i.e. a nonconfirmation by the old Dow Theory. Some suggest that the semis are the new transports. Treasury yields rose and the CME FedWatch now projects only 1 rate cut in 2024 (for weeks it has been flipping between 1 or 2 cuts). The median target for SP500 by strategists is only 5,400 for 2024 and we are almost there. Bad seasonality is from May 1 – October 30.
YIELD-CURVE inverted in 11/2022 (19 months ago), but where is the recession? Often, recessions followed within several months of yield-curve inversions; late recessions were after 19 months in 11/1973, after 18 months in 12/2007, so we may not be out of the woods yet. The Fed is keeping short-term rates high and is also influencing the long-term rates through gradual QT (following massive QEs). There is high deficit spending and big banks that are too big to fail. But a good enough economy also means no Fed rate cuts.
Pg 12, STREETWISE. Google (with its Gemini AI slapped on) and others are incorporating AI into their searches. Startups like Perplexity.io are pitching their AI search engines. Search 3 years from now will be very different from that today – voice prompts, virtual assistants, etc. Publishers are making licensing deals to feed content into the AI search engines. But Google’s PR efforts for its AI have been frustrating or embarrassing. AI is benefiting the chipmakers now (growing demand from data centers and AI-PCs), but AI software will need further refinement. Some are turning off Microsoft Copilot because they find it annoying.
(More later….)
Accessible from PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).
