Post by Admin/YBB on Jun 1, 2024 4:02:44 GMT -6
From Barron’s, June 3, 2024 (Part 1, Market Week+)
Pg 21, TRADER. Fund managers have only 4% in cash; below 4% is considered a sell signal. Wall Street strategists are bullish and raising their 2024 targets. Investor Intelligence has 60% bulls. The market is reacting badly to news, good or bad. Bull market often dies of too much optimism that leaves little additional cash to be deployed. Watch $2.72 trillion Nvidia/NVDA, now 6% of SP500, that has sucked up all of the “oxygen”, and it may be time to “exhale”.
INDUSTRIALS remain attractive – DE, ETN, PH, WM; industrials ETF XLI fwd P/E 21.
Airbnb/ABNB has weathered the pandemic and travel turbulence. The alternative-accommodation segment is growing much faster than traditional hotels.
Pg 22: Several bank preferreds are attractive – from C, MTB, CFG; ETFs PFF, FPEI. (Preferreds are popular with banks because they can be counted as capital IF they are noncumulative.)
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
FOMC 6/12/24+ hold (cycle peak 5.25-5.50%)
FOMC 7/31/24+ hold
FOMC 9/18/24+ cut
FOMC 11/7/24+ hold
FOMC 12/18/24+ hold
(Probabilities for some rate-ranges aren’t high, so there can be some unexpected moves.)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -0.98%, SP500 -0.51%, Nasdaq Comp -1.10%, R2000 +0.02%. DJ Transports +1.03%; DJ Utilities +2.19%. (Rotating spot momentum MTUM -2.09%) US$ index (spot) -0.09% (remains too strong over 100), oil/WTI futures -0.94%, gold futures -0.4%.
YTD (index changes only), DJIA +2.64%, SP500 +10.64%, Nasdaq Comp +11.48%. (Rotating spot momentum MTUM +18.94%)
SENTIMENTS
Sentiments are deteriorating.
NYSE cumulative (5-day) A/D LINE rose; ratio of winners:losers 1+:1 .
FUND INFLOWS +/OUTFLOWS-: Stocks +|0, taxable bonds +|0, munis +|-, money-market funds +|-. (NEW FORMAT: 4wMA|weekly change)
AAII Bull-Bear Spread +12.3% (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 57.06% (positive, 42.64% intra-week low); (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 52.5% (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 24, INTERNATIONAL. With lots of M&A, the EUROPEAN TELECOMS are attractive. Consolidation should benefit margins in the slow-growing cellular and broadband businesses. There is high debt from the 5G build-out. But Government stakes in several telecoms limit cost cutting with deep job reductions. Still, the regulatory hurdles remain for M&A. Mentioned are KKPNY (Netherlands), TLTZY (Sweden), DTEGY (Germany; owns the US TMUS), BT Group (UK), Telecom Italia.
Pg 25, OPTIONS. Pair selling-puts with buying calls on hot utilities – some have caught the AI bug. In a roundabout way, AI will benefit chip manufactures and data centers, and those will need lot of electricity, so some utilities will benefit from AI – if you don’t know which, stick with ETF XLU.
SP500 VIX 12.92 (low), Nasdaq 100 VXN 16.70 (low), options SKEW 148.10 (high), bond MOVE 91.14 (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 37: A down week in EUROPE (Spain +0.87%, Belgium -1.83%, Greece -1.94%) and a bad week in ASIA (Singapore -0.35%, Indonesia -4.08%).
TREASURY* 3-mo yield 5.46%, 1-yr 5.18%, 2-yr 4.89%, 5-yr 4.52%, 10-yr 4.51%, 30-yr 4.65%;
REAL yields 5-yr 2.18%, 10-yr 2.16%, 30-yr 2.30%;
FRNs Index** 5.326% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR fell ^DXY 104.63, -0.9% (pg 42). GOLD rose to $2,351, +0.3% (Handy & Harman spot, Thursday; pg 44); the gold-miners rose. (^XAU was at 145.16, +1.18% 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, “The Fed Won’t Cut Rates This Year”. Due to sticky inflation and elections-related calendar quirks, the Fed may not cut rates in 2024. It may just hold rates (07/2023- ) until inflation nears the 2% average target. It has reduced the QT. The fiscal policy has been opposite to the monetary policy. The job market remains strong. Household wealth is rising. Stocks should do fine with the soft-landing scenario.
Pg 5, UP & DOWN WALL STREET. The stock market’s biggest strength Nvidia/NVDA may turn into its biggest liability. On AI hype, NVDA has left all other AI-players far behind. There are huge AI winners and losers with a large dull middle. Recent AI disasters include PATH, DELL. Fear gauge VIX is low but rising. The DJIA without much AI benefit has been lagging, but it may be the place to be (vs Nasdaq Comp or SP500; stated another way, money may shift from growth to cyclicals).
Conviction of the former President TRUMP by a NYC jury adds more uncertainties to the November elections; see political analysis online or in the paper copy.
Pg 8, STREETWISE. INSURANCE prices have gone up a lot. People in disaster-prone areas face many hurdles. In some states (CA, FL, etc), people cannot get insurance easily. Insurance underwriting is unprofitable in 18 states, but regulators in those states won’t approve rate increases, so the insurance premiums go up for people in rest of the states. There is also social-inflation, an industry term for escalating court judgements, settlements, fines. The auto insurance market is much larger than the home insurance market (and many companies offer attractive bundles, including umbrella coverages). Key for insurers is the combined ratio, the ratio of claims and expenses divided by the premiums received; the goal is to keep the combined ratio well under 100. Insurers can also keep the gains from the float. But in some unlucky years, they have to payout huge claims, and those are hits on their equity or capital and surplus. Mentioned are insurance brokers AJG, BRO, and insurers CINF, HIG, AON, ACGL.
(More later….)
Accessible from PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).
Pg 21, TRADER. Fund managers have only 4% in cash; below 4% is considered a sell signal. Wall Street strategists are bullish and raising their 2024 targets. Investor Intelligence has 60% bulls. The market is reacting badly to news, good or bad. Bull market often dies of too much optimism that leaves little additional cash to be deployed. Watch $2.72 trillion Nvidia/NVDA, now 6% of SP500, that has sucked up all of the “oxygen”, and it may be time to “exhale”.
INDUSTRIALS remain attractive – DE, ETN, PH, WM; industrials ETF XLI fwd P/E 21.
Airbnb/ABNB has weathered the pandemic and travel turbulence. The alternative-accommodation segment is growing much faster than traditional hotels.
Pg 22: Several bank preferreds are attractive – from C, MTB, CFG; ETFs PFF, FPEI. (Preferreds are popular with banks because they can be counted as capital IF they are noncumulative.)
www.barrons.com/magazine?mod=BOL_TOPNAV
The CME FedWatch tool is based on current fed fund futures quotes around the FOMC meetings and the assumption of gradual fed fund rate changes (+/- 0.25%). In the list below, more than 50% probability is used to indicate rate hike; “+” is shown after the FOMC date to indicate that rate hike can be at that or a later FOMC.
FOMC 6/12/24+ hold (cycle peak 5.25-5.50%)
FOMC 7/31/24+ hold
FOMC 9/18/24+ cut
FOMC 11/7/24+ hold
FOMC 12/18/24+ hold
(Probabilities for some rate-ranges aren’t high, so there can be some unexpected moves.)
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
FOR THE WEEK (index changes only), DJIA -0.98%, SP500 -0.51%, Nasdaq Comp -1.10%, R2000 +0.02%. DJ Transports +1.03%; DJ Utilities +2.19%. (Rotating spot momentum MTUM -2.09%) US$ index (spot) -0.09% (remains too strong over 100), oil/WTI futures -0.94%, gold futures -0.4%.
YTD (index changes only), DJIA +2.64%, SP500 +10.64%, Nasdaq Comp +11.48%. (Rotating spot momentum MTUM +18.94%)
SENTIMENTS
Sentiments are deteriorating.
NYSE cumulative (5-day) A/D LINE rose; ratio of winners:losers 1+:1 .
FUND INFLOWS +/OUTFLOWS-: Stocks +|0, taxable bonds +|0, munis +|-, money-market funds +|-. (NEW FORMAT: 4wMA|weekly change)
AAII Bull-Bear Spread +12.3% (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 57.06% (positive, 42.64% intra-week low); (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 52.5% (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 24, INTERNATIONAL. With lots of M&A, the EUROPEAN TELECOMS are attractive. Consolidation should benefit margins in the slow-growing cellular and broadband businesses. There is high debt from the 5G build-out. But Government stakes in several telecoms limit cost cutting with deep job reductions. Still, the regulatory hurdles remain for M&A. Mentioned are KKPNY (Netherlands), TLTZY (Sweden), DTEGY (Germany; owns the US TMUS), BT Group (UK), Telecom Italia.
Pg 25, OPTIONS. Pair selling-puts with buying calls on hot utilities – some have caught the AI bug. In a roundabout way, AI will benefit chip manufactures and data centers, and those will need lot of electricity, so some utilities will benefit from AI – if you don’t know which, stick with ETF XLU.
SP500 VIX 12.92 (low), Nasdaq 100 VXN 16.70 (low), options SKEW 148.10 (high), bond MOVE 91.14 (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 37: A down week in EUROPE (Spain +0.87%, Belgium -1.83%, Greece -1.94%) and a bad week in ASIA (Singapore -0.35%, Indonesia -4.08%).
TREASURY* 3-mo yield 5.46%, 1-yr 5.18%, 2-yr 4.89%, 5-yr 4.52%, 10-yr 4.51%, 30-yr 4.65%;
REAL yields 5-yr 2.18%, 10-yr 2.16%, 30-yr 2.30%;
FRNs Index** 5.326% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR fell ^DXY 104.63, -0.9% (pg 42). GOLD rose to $2,351, +0.3% (Handy & Harman spot, Thursday; pg 44); the gold-miners rose. (^XAU was at 145.16, +1.18% 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, “The Fed Won’t Cut Rates This Year”. Due to sticky inflation and elections-related calendar quirks, the Fed may not cut rates in 2024. It may just hold rates (07/2023- ) until inflation nears the 2% average target. It has reduced the QT. The fiscal policy has been opposite to the monetary policy. The job market remains strong. Household wealth is rising. Stocks should do fine with the soft-landing scenario.
Pg 5, UP & DOWN WALL STREET. The stock market’s biggest strength Nvidia/NVDA may turn into its biggest liability. On AI hype, NVDA has left all other AI-players far behind. There are huge AI winners and losers with a large dull middle. Recent AI disasters include PATH, DELL. Fear gauge VIX is low but rising. The DJIA without much AI benefit has been lagging, but it may be the place to be (vs Nasdaq Comp or SP500; stated another way, money may shift from growth to cyclicals).
Conviction of the former President TRUMP by a NYC jury adds more uncertainties to the November elections; see political analysis online or in the paper copy.
Pg 8, STREETWISE. INSURANCE prices have gone up a lot. People in disaster-prone areas face many hurdles. In some states (CA, FL, etc), people cannot get insurance easily. Insurance underwriting is unprofitable in 18 states, but regulators in those states won’t approve rate increases, so the insurance premiums go up for people in rest of the states. There is also social-inflation, an industry term for escalating court judgements, settlements, fines. The auto insurance market is much larger than the home insurance market (and many companies offer attractive bundles, including umbrella coverages). Key for insurers is the combined ratio, the ratio of claims and expenses divided by the premiums received; the goal is to keep the combined ratio well under 100. Insurers can also keep the gains from the float. But in some unlucky years, they have to payout huge claims, and those are hits on their equity or capital and surplus. Mentioned are insurance brokers AJG, BRO, and insurers CINF, HIG, AON, ACGL.
(More later….)
Accessible from PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).
