From Barron’s, March 11, 2024 (Part 1, Market Week+)
Mar 9, 2024 12:35:06 GMT
chang, rhythmmethod, and 8 more like this
Post by yogibearbull on Mar 9, 2024 12:35:06 GMT
From Barron’s, March 11, 2024 (Part 1, Market Week+)
NOTE. The digital issue is NOT online & I haven’t received the paper copy yet. So, the page numbers are missing, and some weekly data are marked as STALE. These will be updated later.
Pg ?, TRADER. There is a lot of reshuffling going on even among BIG STOCKS. AAPL, GOOGL, TSLA are down, while NVDA, LLY are up. This is good because it became boring to look at AAPL, AMZN, GOOGL, MSFT in the top lists year after year since 2018. The US economy is strong. The SP500 fwd P/E of 21 won’t go much higher with rates at the current levels – even now, rates affect stocks more than AI.
The drama of former rescuer NYCB getting rescued by private investors (vultures?), if successful, may mean a bottom for the long-suffering regional banks (KRE, fwd P/E 11). Look at the positive – only 3 out of 4,700 regional banks got into trouble, so what kind of crisis was that? The negative headlines about CRE exposures will keep many investors away from them (but what about last year’s issues of HTM/AWS accounting fiction/tricks?). Attractive in the rubble are USB, TFC, SNV, ONB, IBTX, PNFP, WAL.
Insurer Progressive (PGR; yield 0.6%; fwd P/E 17.7) is attractive for its good risk-adjusted returns.
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 3/20/24+ hold (cycle peak 5.25-5.50%)
FOMC 5/1/24+ hold
FOMC 6/12/24+ cut
FOMC 7/31/24+ cut
FOMC 9/18/24+ 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
STALE/FOR THE WEEK (index changes only), DJIA -0.11%, SP500 +0.95%, Nasdaq Comp +1.74% (new high; what would be a bull market without a Nasdaq high? SCs next?), R2000 +2.96%. DJ Transports -0.56%; DJ Utilities -1.89%. (Rotating spot rotting AAPL -1.57%) US$ index (spot) UNCH (remains too strong over 100), oil/WTI futures +4.55%, gold futures +2.37%.
STALE/YTD (index changes only), DJIA +3.71%, SP500 +7.70%, Nasdaq Comp +8.42%. (Rotating spot rotting AAPL -6.68%)
SENTIMENTS
(ALL sentiments remain good and steady, but they peaked in mid-December)
NYSE cumulative (5-day) A/D LINE rose for a 6th week; ratio of winners:losers 3:2
FUND INFLOWS +/OUTFLOWS: Stocks -|0, taxable bonds +|0, munis -|-, money-market funds +|+. (NEW FORMAT: 4wMA|Weekly change)
(Observation in the TRADER that “Sideline money is rushing into the market now…” isn’t seen in the fund flows)
AAII Bull-Bear Spread +29.9% (high). (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 67.14% (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 74.2% (overbought); 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 ?, INTERNATIONAL TRADER. FARMERS in EUROPE are mad and they may elect many far-right representatives to fill 25% of seats in the EU in the upcoming elections. Farmers are most adversely affected by the EU Green Deal. Then, the Russia-Ukraine war made things worse by high prices for energy, fertilizers, pesticides; and cheap Ukrainian imports intended to help Ukraine (some are supposed to be in transit only, but they find a way into the local markets). Farmers have just about had it and they are ready to shake the Geen Deal, the free trade, the EU itself, anything in its way. Suddenly the EU politicians have changed their tunes, some by 180 degrees (politicians fear the power of vote).
Pg ?, OPTIONS. A contentious US election may benefit both Bitcoin and gold. Both are accessible via ETFs. Software company MSTR is another play on Bitcoin as it keeps lots of Bitcoin on its balance sheet; selling puts on MSTR is almost like selling puts on Bitcoin.
SP500 VIX 14.74 (low), Nasdaq 100 VXN 19.04, options SKEW 141.18 (high), bond MOVE 100.88 (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
STALE/Pg ?: An up week in EUROPE (Sweden +1.53%, Belgium -1.47%) and an up week in ASIA (New Zealand +2.19%, Thailand -2.41%) (Japan had more new highs).
TREASURY* 3-mo yield 5.46%, 1-yr 4.92%, 2-yr 4.48%, 5-yr 4.06%, 10-yr 4.09%, 30-yr 4.26%;
REAL yields 5-yr 1.72%, 10-yr 1.81%, 30-yr 2.01%;
FRNs Index** 5.31% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
STALE/DOLLAR fell ^DXY 103.89, -0.05% (pg 50). GOLD rose to 2,050 (Handy & Harman spot, Thursday; pg 52); the gold-miners rose. (^XAU was at 117.36, +8.02% for the week)
Top FDIC insured savings deposit rates*** (This feature has been discontinued but see the link below)
US SAVINGS I-Bonds**, NEW rate from November 1, 2023, is 5.27%; the fixed rate is +1.30%, the semiannual inflation is +1.97%.
(NOTE – The Social Security COLA for 2024, based on the Q3 average of CPI-W, is +3.2%)
*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 ?, COVER STORY, “Will the STOCK MARKET Keep Goin Up? What to Know as the SP500 Hits New Highs”. The scenario for stock market BULLS has shifted from FED rate cuts to a strong economy (basically, earnings growth: 2023 +2%, 2024 +11% est, 2025 +13% est). The SP500 fwd P/E is 21 (vs long-term 16) and it’s up +130% since 03/2020. Instead of a US recession, most now see just a slowdown. Much of the performance has been from the Magnificent 7 (world champions in AI, cloud computing, other new techs). But rising bond yields are a concern with the Fed on hold for now. Corrections haven’t been repealed and one may be soon. A prudent bet would be on market breadth improving, so look at equal-weight SP500 RSP.
Pg ?, UP AND DOWN WALL STREET. The FED may CUT rates in June (6/12/24), November (11/7/24; post-election) and December (12/18/24). The economy and household wealth are in good shape. But conditions for some families are stressful. Financial conditions aren’t tight now, and a June rate cut may fuel FOMO rallies. The two FOMC meetings before June will be used to set up the framework for June cut, and one talking point may be the shrinking Fed balance sheet ($7.5 trillion now vs peak 9 trillion in mid-2022). The Fed may want to avoid policy actions during the election season. Of course, the data on inflations and jobs must cooperate. (Not mentioned is whether these are Fed leaks via N.T./WSJ)
FUNDS. After GOLD at new all-time highs, the badly lagging gold-miners may follow. The market-cap of all gold-miners is only $300 billion. They have high fixed costs and profit a lot from gold rallies. There have been some fantastic gold-miner rallies over short periods in the past (fast & furious). Central banks have been buying gold for dollar diversification. Some of the Bitcoin rally may have rubbed off on gold (there have been reports of some Middle Eastern money that may have gone into Bitcoin and gold simultaneously).
Pg ?, STREETWISE. What is Bitcoin really worth? Author HOUGH has been writing about Bitcoin since 2011, but he laments that had he instead put some money into Bitcoin plunges, he won’t be writing these Barron’s column now. Several well-known firms are into Bitcoin ETFs – BlackRock (iShares), Fidelity, Invesco, Franklin, WisdomTree, etc. Having missed the Bitcoin boat, he consulted Bitcoin experts. One said it’s digital gold (is that good or bad?). Bitcoin-halving in April will make Bitcoin “mining” more expensive and Bitcoin scarcer. Bitcoin charts look out of this world. One model is gobble-gobble where Bitcoin sucks investment premiums from all investment vehicles and that causes a global collapse. Another model based on CDS (credit default swaps) on the US Treasuries puts Bitcoin pricing in the range of $75K-100K. (Author Hough is a columnist-humorist)
(More later….)
LINK
NOTE. The digital issue is NOT online & I haven’t received the paper copy yet. So, the page numbers are missing, and some weekly data are marked as STALE. These will be updated later.
Pg ?, TRADER. There is a lot of reshuffling going on even among BIG STOCKS. AAPL, GOOGL, TSLA are down, while NVDA, LLY are up. This is good because it became boring to look at AAPL, AMZN, GOOGL, MSFT in the top lists year after year since 2018. The US economy is strong. The SP500 fwd P/E of 21 won’t go much higher with rates at the current levels – even now, rates affect stocks more than AI.
The drama of former rescuer NYCB getting rescued by private investors (vultures?), if successful, may mean a bottom for the long-suffering regional banks (KRE, fwd P/E 11). Look at the positive – only 3 out of 4,700 regional banks got into trouble, so what kind of crisis was that? The negative headlines about CRE exposures will keep many investors away from them (but what about last year’s issues of HTM/AWS accounting fiction/tricks?). Attractive in the rubble are USB, TFC, SNV, ONB, IBTX, PNFP, WAL.
Insurer Progressive (PGR; yield 0.6%; fwd P/E 17.7) is attractive for its good risk-adjusted returns.
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 3/20/24+ hold (cycle peak 5.25-5.50%)
FOMC 5/1/24+ hold
FOMC 6/12/24+ cut
FOMC 7/31/24+ cut
FOMC 9/18/24+ 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
STALE/FOR THE WEEK (index changes only), DJIA -0.11%, SP500 +0.95%, Nasdaq Comp +1.74% (new high; what would be a bull market without a Nasdaq high? SCs next?), R2000 +2.96%. DJ Transports -0.56%; DJ Utilities -1.89%. (Rotating spot rotting AAPL -1.57%) US$ index (spot) UNCH (remains too strong over 100), oil/WTI futures +4.55%, gold futures +2.37%.
STALE/YTD (index changes only), DJIA +3.71%, SP500 +7.70%, Nasdaq Comp +8.42%. (Rotating spot rotting AAPL -6.68%)
SENTIMENTS
(ALL sentiments remain good and steady, but they peaked in mid-December)
NYSE cumulative (5-day) A/D LINE rose for a 6th week; ratio of winners:losers 3:2
FUND INFLOWS +/OUTFLOWS: Stocks -|0, taxable bonds +|0, munis -|-, money-market funds +|+. (NEW FORMAT: 4wMA|Weekly change)
(Observation in the TRADER that “Sideline money is rushing into the market now…” isn’t seen in the fund flows)
AAII Bull-Bear Spread +29.9% (high). (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 67.14% (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 74.2% (overbought); 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 ?, INTERNATIONAL TRADER. FARMERS in EUROPE are mad and they may elect many far-right representatives to fill 25% of seats in the EU in the upcoming elections. Farmers are most adversely affected by the EU Green Deal. Then, the Russia-Ukraine war made things worse by high prices for energy, fertilizers, pesticides; and cheap Ukrainian imports intended to help Ukraine (some are supposed to be in transit only, but they find a way into the local markets). Farmers have just about had it and they are ready to shake the Geen Deal, the free trade, the EU itself, anything in its way. Suddenly the EU politicians have changed their tunes, some by 180 degrees (politicians fear the power of vote).
Pg ?, OPTIONS. A contentious US election may benefit both Bitcoin and gold. Both are accessible via ETFs. Software company MSTR is another play on Bitcoin as it keeps lots of Bitcoin on its balance sheet; selling puts on MSTR is almost like selling puts on Bitcoin.
SP500 VIX 14.74 (low), Nasdaq 100 VXN 19.04, options SKEW 141.18 (high), bond MOVE 100.88 (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
STALE/Pg ?: An up week in EUROPE (Sweden +1.53%, Belgium -1.47%) and an up week in ASIA (New Zealand +2.19%, Thailand -2.41%) (Japan had more new highs).
TREASURY* 3-mo yield 5.46%, 1-yr 4.92%, 2-yr 4.48%, 5-yr 4.06%, 10-yr 4.09%, 30-yr 4.26%;
REAL yields 5-yr 1.72%, 10-yr 1.81%, 30-yr 2.01%;
FRNs Index** 5.31% (Treasury updates it on Tuesdays following the Monday 13-wk T-Bill Auctions).
STALE/DOLLAR fell ^DXY 103.89, -0.05% (pg 50). GOLD rose to 2,050 (Handy & Harman spot, Thursday; pg 52); the gold-miners rose. (^XAU was at 117.36, +8.02% for the week)
Top FDIC insured savings deposit rates*** (This feature has been discontinued but see the link below)
US SAVINGS I-Bonds**, NEW rate from November 1, 2023, is 5.27%; the fixed rate is +1.30%, the semiannual inflation is +1.97%.
(NOTE – The Social Security COLA for 2024, based on the Q3 average of CPI-W, is +3.2%)
*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 ?, COVER STORY, “Will the STOCK MARKET Keep Goin Up? What to Know as the SP500 Hits New Highs”. The scenario for stock market BULLS has shifted from FED rate cuts to a strong economy (basically, earnings growth: 2023 +2%, 2024 +11% est, 2025 +13% est). The SP500 fwd P/E is 21 (vs long-term 16) and it’s up +130% since 03/2020. Instead of a US recession, most now see just a slowdown. Much of the performance has been from the Magnificent 7 (world champions in AI, cloud computing, other new techs). But rising bond yields are a concern with the Fed on hold for now. Corrections haven’t been repealed and one may be soon. A prudent bet would be on market breadth improving, so look at equal-weight SP500 RSP.
Pg ?, UP AND DOWN WALL STREET. The FED may CUT rates in June (6/12/24), November (11/7/24; post-election) and December (12/18/24). The economy and household wealth are in good shape. But conditions for some families are stressful. Financial conditions aren’t tight now, and a June rate cut may fuel FOMO rallies. The two FOMC meetings before June will be used to set up the framework for June cut, and one talking point may be the shrinking Fed balance sheet ($7.5 trillion now vs peak 9 trillion in mid-2022). The Fed may want to avoid policy actions during the election season. Of course, the data on inflations and jobs must cooperate. (Not mentioned is whether these are Fed leaks via N.T./WSJ)
FUNDS. After GOLD at new all-time highs, the badly lagging gold-miners may follow. The market-cap of all gold-miners is only $300 billion. They have high fixed costs and profit a lot from gold rallies. There have been some fantastic gold-miner rallies over short periods in the past (fast & furious). Central banks have been buying gold for dollar diversification. Some of the Bitcoin rally may have rubbed off on gold (there have been reports of some Middle Eastern money that may have gone into Bitcoin and gold simultaneously).
Pg ?, STREETWISE. What is Bitcoin really worth? Author HOUGH has been writing about Bitcoin since 2011, but he laments that had he instead put some money into Bitcoin plunges, he won’t be writing these Barron’s column now. Several well-known firms are into Bitcoin ETFs – BlackRock (iShares), Fidelity, Invesco, Franklin, WisdomTree, etc. Having missed the Bitcoin boat, he consulted Bitcoin experts. One said it’s digital gold (is that good or bad?). Bitcoin-halving in April will make Bitcoin “mining” more expensive and Bitcoin scarcer. Bitcoin charts look out of this world. One model is gobble-gobble where Bitcoin sucks investment premiums from all investment vehicles and that causes a global collapse. Another model based on CDS (credit default swaps) on the US Treasuries puts Bitcoin pricing in the range of $75K-100K. (Author Hough is a columnist-humorist)
(More later….)
LINK
