Post by Admin/YBB on Jun 22, 2024 4:06:08 GMT -6
From Barron’s, June 24, 2024 (Part 1, Market Week+)
Pg 34, TRADER. This head scratching stock rally may have run far enough. The economic growth is slow, inflation has moderated, rates are elevated. The SP500 fwd P/E is 21. Beware of many spoilers – stubborn Fed that doesn’t cut rates (i.e. no Fed put); high energy and utility prices; higher rents; rising US debt; cracks in Big Tech. The tech XLK +19% YTD and that is lagging other tech ETFs (it’s also in the news because of rebalancing). Earnings misses may be punished severely. Many sectors are pulling back.
Long-lagging SMALL-CAPS may benefit from the return of M&A. Attractive sectors include biotech (IONS, INCY, IOVA, etc), healthcare, software (AI, etc).
FedEx (FDX; yield 2.2%; fwd P/E 11.7; buybacks) has been volatile and has underperformed, but it’s next earnings report on 6/25/24 should show significant improvements. Transports are highly cyclical and should do better when the economy is strong.
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 7/31/24+ hold (cycle peak 5.25-5.50%)
FOMC 9/18/24+ cut
FOMC 11/7/24+ hold
FOMC 12/18/24+ cut
FOMC 1/29/25+ 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 +1.45%, SP500 +0.61%, Nasdaq Comp 0.00%, R2000 +0.79%. DJ Transports +2.07%; DJ Utilities -0.79%. (Rotating spot semi SOXX -0.90%) US$ index (spot) +0.27% (remains too strong over 100), oil/WTI futures +2.91%, gold futures -0.64%.
YTD (index changes only), DJIA +3.88%, SP500 +14.57%, Nasdaq Comp +17.84%. (Rotating spot semi SOXX +30.07%)
SENTIMENTS
Sentiments are mixed.
NYSE cumulative (5-day) A/D LINE rose; ratio of winners:losers 4:3 . (Not good when SP500 and Nasdaq Comp made new highs on Monday, and NVDA on Tuesday)
FUND INFLOWS +/OUTFLOWS-: Stocks -|-, taxable bonds +|-, munis +|+, money-market funds +|-. (NEW FORMAT: 4wMA|weekly change) (Stock funds had outflows)
AAII Bull-Bear Spread +21.9% (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 48.08% (negative); (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 46.3% (negative); 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 37, INTERNATIONAL. DRONE deliveries and FLYING CARS are taking off in CHINA. These eVTOLs fly at low altitudes of 3,200’-13,000’ and avoid commercial and military airspaces. Chinese government has identified these as key emerging industries and government funding is available for R&D. Related infrastructure is also being developed – air-traffic management, communications, landing facilities, etc. There is competition from Japan, Australia, UK. The US is focused on restrictive legislation such as Countering CCP Drones Act.
Pg 38, OPTIONS. With the sell-side generally bullish on markets and creating a hysteria for AI, investors are becoming skeptical. The fear gauge VIX remains low (and SKEW is high, indicating popularity of puts). Suggested are stock-replacements with calls, and to avoid CG taxes, bull-spreads on positions held; AVGO is used for example.
SP500 VIX 13.20 (low), Nasdaq 100 VXN 16.95 (low), options SKEW 151.79 (high), bond MOVE 94.09 (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 51: An up week in EUROPE (Italy +1.86%, Switzerland -0.39%) and an up week in ASIA (Indonesia +3.61%, Philippines -3.25%).
TREASURY* 3-mo yield 5.49%, 1-yr 5.10%, 2-yr 4.70%, 5-yr 4.26%, 10-yr 4.25%, 30-yr 4.39%;
REAL yields 5-yr 2.07%, 10-yr 2.02%, 30-yr 2.15%;
FRNs Index** 5.32% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR rose, ^DXY 105.83, +0.3% (pg 58). GOLD rose to $2,335, +0.2% (Handy & Harman spot, Thursday; pg 60); the gold-miners rose. (^XAU was at 137.66, +1.96% 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 16, COVER STORY, “Top CEOs”. 9 of 25 that I could recognize: CATZ/ORCL, COOK/AAPL, CULP/GE, DIMON/JPM, HUANG/NVDA, KHOSROWSHAHI/UBER, NADELLA/MSFT, SU/AMD, ZUCKERBERG/META. All 25 have short profiles. A table shows 1 year returns and cumulative returns under their tenure (if curious, NVDA isn’t the top performer on either list).
Pg 6, UP & DOWN WALL STREET. Battered FRENCH stocks look attractive, according to David HERRO (OAKIX, OAKGX). French CAC40 sold off after a sudden call for elections. However, large companies aren’t affected much by the domestic economy or politics. A related ETF is EWQ. Among the foreign markets, Herro is underweight JAPAN.
Presidential DEBATE will be at 9:00 PM Eastern, THURSDAY, June 27 in Atlanta, GA.
Pg 8, STREETWISE. With pandemic and tough mergers behind, Delta/DAL is attractive. Its reward card program is the biggest at American Express/AXP. Employee benefits are good. Its credit rating may be upgraded to investment-grade by the yearend.
Many big electronics retailers are gone, but Best Buy (BBY; yield 4%; fwd P/E 14.5) remains and is competing with superstores (COST, WMT, TGT, virtual AMZN). It may benefit from housing rebound; replacements of Covid era electronics purchases; boost from AI; new products such as electric bikes.
(More later….)
Accessible from PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).
Pg 34, TRADER. This head scratching stock rally may have run far enough. The economic growth is slow, inflation has moderated, rates are elevated. The SP500 fwd P/E is 21. Beware of many spoilers – stubborn Fed that doesn’t cut rates (i.e. no Fed put); high energy and utility prices; higher rents; rising US debt; cracks in Big Tech. The tech XLK +19% YTD and that is lagging other tech ETFs (it’s also in the news because of rebalancing). Earnings misses may be punished severely. Many sectors are pulling back.
Long-lagging SMALL-CAPS may benefit from the return of M&A. Attractive sectors include biotech (IONS, INCY, IOVA, etc), healthcare, software (AI, etc).
FedEx (FDX; yield 2.2%; fwd P/E 11.7; buybacks) has been volatile and has underperformed, but it’s next earnings report on 6/25/24 should show significant improvements. Transports are highly cyclical and should do better when the economy is strong.
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 7/31/24+ hold (cycle peak 5.25-5.50%)
FOMC 9/18/24+ cut
FOMC 11/7/24+ hold
FOMC 12/18/24+ cut
FOMC 1/29/25+ 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 +1.45%, SP500 +0.61%, Nasdaq Comp 0.00%, R2000 +0.79%. DJ Transports +2.07%; DJ Utilities -0.79%. (Rotating spot semi SOXX -0.90%) US$ index (spot) +0.27% (remains too strong over 100), oil/WTI futures +2.91%, gold futures -0.64%.
YTD (index changes only), DJIA +3.88%, SP500 +14.57%, Nasdaq Comp +17.84%. (Rotating spot semi SOXX +30.07%)
SENTIMENTS
Sentiments are mixed.
NYSE cumulative (5-day) A/D LINE rose; ratio of winners:losers 4:3 . (Not good when SP500 and Nasdaq Comp made new highs on Monday, and NVDA on Tuesday)
FUND INFLOWS +/OUTFLOWS-: Stocks -|-, taxable bonds +|-, munis +|+, money-market funds +|-. (NEW FORMAT: 4wMA|weekly change) (Stock funds had outflows)
AAII Bull-Bear Spread +21.9% (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 48.08% (negative); (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 46.3% (negative); 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 37, INTERNATIONAL. DRONE deliveries and FLYING CARS are taking off in CHINA. These eVTOLs fly at low altitudes of 3,200’-13,000’ and avoid commercial and military airspaces. Chinese government has identified these as key emerging industries and government funding is available for R&D. Related infrastructure is also being developed – air-traffic management, communications, landing facilities, etc. There is competition from Japan, Australia, UK. The US is focused on restrictive legislation such as Countering CCP Drones Act.
Pg 38, OPTIONS. With the sell-side generally bullish on markets and creating a hysteria for AI, investors are becoming skeptical. The fear gauge VIX remains low (and SKEW is high, indicating popularity of puts). Suggested are stock-replacements with calls, and to avoid CG taxes, bull-spreads on positions held; AVGO is used for example.
SP500 VIX 13.20 (low), Nasdaq 100 VXN 16.95 (low), options SKEW 151.79 (high), bond MOVE 94.09 (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 51: An up week in EUROPE (Italy +1.86%, Switzerland -0.39%) and an up week in ASIA (Indonesia +3.61%, Philippines -3.25%).
TREASURY* 3-mo yield 5.49%, 1-yr 5.10%, 2-yr 4.70%, 5-yr 4.26%, 10-yr 4.25%, 30-yr 4.39%;
REAL yields 5-yr 2.07%, 10-yr 2.02%, 30-yr 2.15%;
FRNs Index** 5.32% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
DOLLAR rose, ^DXY 105.83, +0.3% (pg 58). GOLD rose to $2,335, +0.2% (Handy & Harman spot, Thursday; pg 60); the gold-miners rose. (^XAU was at 137.66, +1.96% 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 16, COVER STORY, “Top CEOs”. 9 of 25 that I could recognize: CATZ/ORCL, COOK/AAPL, CULP/GE, DIMON/JPM, HUANG/NVDA, KHOSROWSHAHI/UBER, NADELLA/MSFT, SU/AMD, ZUCKERBERG/META. All 25 have short profiles. A table shows 1 year returns and cumulative returns under their tenure (if curious, NVDA isn’t the top performer on either list).
Pg 6, UP & DOWN WALL STREET. Battered FRENCH stocks look attractive, according to David HERRO (OAKIX, OAKGX). French CAC40 sold off after a sudden call for elections. However, large companies aren’t affected much by the domestic economy or politics. A related ETF is EWQ. Among the foreign markets, Herro is underweight JAPAN.
Presidential DEBATE will be at 9:00 PM Eastern, THURSDAY, June 27 in Atlanta, GA.
Pg 8, STREETWISE. With pandemic and tough mergers behind, Delta/DAL is attractive. Its reward card program is the biggest at American Express/AXP. Employee benefits are good. Its credit rating may be upgraded to investment-grade by the yearend.
Many big electronics retailers are gone, but Best Buy (BBY; yield 4%; fwd P/E 14.5) remains and is competing with superstores (COST, WMT, TGT, virtual AMZN). It may benefit from housing rebound; replacements of Covid era electronics purchases; boost from AI; new products such as electric bikes.
(More later….)
Accessible from PB-Big Bang, Facebook + Threads (“at”yogibearbull), Twitter (“at”YBB_Finance).
