Post by yogibearbull on Apr 10, 2021 12:58:39 GMT
Pg M1, TRADER. So far so good for CYCLICALS and VALUE. But GROWTH did better than value over 1 week [RPG +3.2%, RPV +0.6% only] and 1 month [RPG +9.2%, RPV +1.6% only]. The fly in the ointment for cyclicals seems to be Europe and its problems with Covid-19. 10-yr yield also stalled. The ISM manufacturing index at 64.7 was at 37-yr high, so are the US economic growth and cyclicals peaking/stalling? New earnings season is starting with big banks and financials are 40% of the value index. Hope is that the FED will keep its word on loose monetary policy.
It may be different this time [after many false starts for cyclicals]. The new INFRASTRUCTURE bill will boost industrial stocks. Add to that the strong post-pandemic economic RECOVERY and the ESG push for RENEWABLE energy. ETF PAVE is up +44% since October and there is more upside for cyclicals.
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.
ZIRP [0-0.25% fed fund rate] through December 2021 FOMC meeting. After a long time, the probability of rate increase for December FOMC is now 11.3%, not high, but not negligible either.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html ]
FOR THE WEEK [index changes only], DJIA +1.95%, SP500 +2.71%, Nasdaq Comp +3.12%, R2000 -0.46%. DJ Transports +1.15%; DJ Utilities +1.38%. [Rotating spot value RPV +0.43%] US$ index (spot) -0.89%, oil/WTI futures -3.47%, gold futures +0.97%.
YTD [index changes only], DJIA +10.44%, SP500 +9.92%, Nasdaq Comp +7.85%. [Rotating spot value RPV +21.93%]
Pg M4, EUROPE. Swiss banking giant Credit Suisse is not attractive yet [CS; fwd P/E 6; P/tBV 0.6]. Buybacks are suspended and dividend may be cut. New CEO Gottstein [2020- ] has fired several risk-control and other executives; a new Chairman starts this year who may or may not get along with the new CEO. Its long list of problems include Archegos [most recent], Greensill, York Capital, Wirecard, internal spying, fines from financial crisis era MBS.
Pg M4, EMERGING MARKETS. With things looking bleak in BRAZIL politically, economically and coronavirusly [forget spellcheck, but that fits], its stock market may be bottoming. Attractive areas include consumer, oil and tech stocks.
Pg M6, COMMODITIES. After peaking in August 2020, physical GOLD fell in Q4, its worst quarter since 2016, and then it fell -9.5% in 2021/Q1. Rising dollar [lately] and cryptocurrencies have been negative for gold. But conditions are becoming favorable for gold. [It may have formed a double-bottom in March after hi-to-lo drop of -19.91% (August-March)].
Pg M5, OPTIONS. Q1 earnings season kicks off with big banks reporting. Pairing put-selling with call-buying is recommended for Citigroup/C ahead of its report on April 15 [positive environment for banks; Fed easing pandemic-relates pressure on banks on June 30 if they passes stress-test; $900 million wire-error; new CEO Jane FRASER].
[SP500 VIX 16.69, Nasdaq 100 VXN 23.23, SKEW 132.88] [Yahoo Finance data]
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW?.tsrc=fin-srch
Pg M23, M28: A good week in EUROPE [Sweden +2.76%, Italy -1.04%] and a flat week in ASIA [Australia +2.51%, Thailand -1.88%]. The equity CEF index [data to Thursday] outperformed the DJIA and its discount was -3%.
TREASURY* 3-mo yield 0.02%, 2-yr 0.16%, 5-yr 0.87%, 10-yr 1.67%, 30-yr 2.34%. DOLLAR fell, DXY 92.18, -0.9% [M31]. GOLD [Handy & Harman spot, Thursday] was up to $1,755, +2% [M34]; the gold-miners rose. [^XAU was at 143.76, +2.74% for the week]
*Treasury Yield-Curve www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
Top FDIC insured savings deposit rates*: Money-market accounts 0.61%; 3-mo Jumbo CD 0.40% [most are 0.25% or below], 1-yr CDs 0.70%; 5-yr CDs 1.00% [M29].
*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]
NOTE: This is a series on CRYPTOS in the SUPPLEMENT – Guide to Wealth [with listing of top advisors and RIAs by states] and elsewhere. Such Supplements typically have fluff features, but this one required heavy reading. With so many pages and column spaces devoted to cryptos that have limited access, there is quite a bit of duplication on the coverage that follows. I have collected all crypto stories below. It seems that Barron’s wants to make its own splash on cryptos.
Pg S4: COVER STORY. BITCOIN [21 million total, 18.6 million mined] is having its day in the Sun. After 1,000% surge last year, Bitcoin market value is $1+ trillion. Bitcoin futures trade on CME. Companies such as MS, PYPL, SQ, V, BK, TSLA, Fidelity, MassMutual, Coinbase [IPO in April] handle cryptocurrencies to varying degrees. Fidelity, VanEck, Grayscale have applied for crypto-ETFs that the SEC has resisted for several years [some foreign crypto-ETFs do exist]. There are thousands of cryptocurrencies. As digital-gold, they are pressuring real yellow gold. But cryptos face obstacles that include technology, energy intensive “mining”, price instability, illiquidity, illicit use, government policies/restrictions, central bank digital currencies [CBDC].
Pg S7: How do retail customers invest in CRYPTOCURRENCIES? Through financial advisors; separately managed accounts [SMAs]; wealth management services [Fidelity, JPM, BK, NTRS]; Grayscale trusts GBTC, ETHE; Bitwise crypto index funds BITW; Coinbase accounts.
Pg S11: Companies that deal with cryptos [now, or soon] to some extent include PYPL, V, BK, SQ, TSLA, MSTR, MARA, RIOT, MassMutual, Coinbase, BlockFi. There is also a block chain ETF BLOK.
Pg S13: Financial advisors and wealth management advisors [WMAs] are starting to offer cryptocurrencies [Bitcoin, Ethereum, Litecoin, etc] at special/sub- AUM fees. Current fund options have high fees, premiums/discounts and liquidity limitations [GBTC, ETHE, BITW]. Applications for crypto-ETFs are pending from Fidelity, VanEck, Grayscale. The new SEC Chairman GENSLER is knowledgeable about cryptos.
Pg 27: ETFs. Until a genuine crypto-ETF is approved by the SEC, here are some options: Funds that hold cryptos or crypto-futures [GBTC, GDLC, OBTC, BITW], funds that hold some cryptos [ARKW], blockchain technology ETFs [BLOK], companies that hold some cryptos [MSTR, SQ, TSLA].
Pg 34: OTHER VOICES. JOYCE LAI, New York Angels [an investment group] and ConsenSys Mesh [Attorneys]. Is this crypto-art or crypto/decentralized-finance [DeFi]? A “ghost” game NFT Aavegotchi allows one to create own NFT “ghost” from NFT pixel-art-pieces. Aave protocol is used for digital-lending/borrowing and fungible receipts [aTokens or aETHs]. One injects aTokens “spirits” into the ghost to keep it going. New Ethereum blockchain technology standard is used to mix fungible aTokens and nonfungible “ghost” [NFT “ghost”]. This combination is guaranteed-verifiable and transferable. While this is a game, think of its implications for structured financial products [mREITs, etc]. It can also be used to create digital-assets without analog/real world corollaries, e.g. a crypto-universe with digital-land. [NFT = Nonfungible Token] [FT = Fungible Token (e.g. current money)] [All this is very vague to me, so my summary is also super vague].
Pg 7, UP & DOWN WALL STREET. Spring is associated with growth [of plants] and the hope is that MONETARY and FISCAL stimulus and widespread VACCINATIONS will do the same for economy and stocks. The NY FED model is showing +6% GDP growth. Stock indexes are at/near new highs and the fear gauge VIX has retreated into teens. SENTIMENT indicators are bullish. The next JOBS report may show a huge job surge [+3 million?] and the FED may start tapering in 2022/Q1. New TAXES in 2022 may also be negative. For now, enjoy this Spring.
ROBERT MUNDELL [Economics Nobel 1999] passed away last week. Considered the father of euro and a supporter supply-side economics, his great insight was that among interest rates, exchange rates and capital flows, countries can only control 2 out of the 3. His preferred approach was to fix exchange rates and promote economic growth through tax cuts and fiscal stimulus – basis of supply-side economics.
The US has benefitted greatly from DOLLAR’s status as a global reserve currency. During the pandemic, the US budget DEFICIT and national DEBT have ballooned, and FED’s balance sheet rose dramatically. Money supply M2 has exploded. Dollar fell although it has recovered some lately. At some point, the Fed may use yield-curve control [i.e. cap long-term rates]. Cryptocurrencies have been flying high and some called it digital-gold. But physical GOLD itself peaked in August 2020 and has fallen 13.6% since then and looks attractive as dollar hedge.
Pg 11, STREETWISE. The EV growth hype aside, they will represent only 3.5% of the US auto market by yearend [vs 2.5% in 2020]. Incentives for the EVs phaseout after 200,000 EVs per company [not much for GM, TSLA]. Americans also prefer SUVs and light-trucks and the EV choices for those are still limited. By 2030, almost 33% of the US autos may be EVs and 33% hybrids. On the other hand, Europe has strong EV incentives in place, and EVs are already 14% of the European auto market, 23% if hybrids are also included. Auto-parts/systems maker BorgWarner [BWA] will benefit from EVs. Its cash flow is 10% of the market value [strange reference, but about the same % of revenues; yield 1.5%; EV/EBITDA 8.4]. It acquired DELPHI Technologies last year and German AKASOL [batteries] this year. Stock has rebounded but has yet to reach 2018 high. Bears say that the gains in the EV side of the business will be at the expense of its ICE side. But BWA thinks that hybrids will be around for a long time and both EV and ICE sides of its business will do fine.
[More later….]
LINK
It may be different this time [after many false starts for cyclicals]. The new INFRASTRUCTURE bill will boost industrial stocks. Add to that the strong post-pandemic economic RECOVERY and the ESG push for RENEWABLE energy. ETF PAVE is up +44% since October and there is more upside for cyclicals.
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.
ZIRP [0-0.25% fed fund rate] through December 2021 FOMC meeting. After a long time, the probability of rate increase for December FOMC is now 11.3%, not high, but not negligible either.
www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html ]
FOR THE WEEK [index changes only], DJIA +1.95%, SP500 +2.71%, Nasdaq Comp +3.12%, R2000 -0.46%. DJ Transports +1.15%; DJ Utilities +1.38%. [Rotating spot value RPV +0.43%] US$ index (spot) -0.89%, oil/WTI futures -3.47%, gold futures +0.97%.
YTD [index changes only], DJIA +10.44%, SP500 +9.92%, Nasdaq Comp +7.85%. [Rotating spot value RPV +21.93%]
Pg M4, EUROPE. Swiss banking giant Credit Suisse is not attractive yet [CS; fwd P/E 6; P/tBV 0.6]. Buybacks are suspended and dividend may be cut. New CEO Gottstein [2020- ] has fired several risk-control and other executives; a new Chairman starts this year who may or may not get along with the new CEO. Its long list of problems include Archegos [most recent], Greensill, York Capital, Wirecard, internal spying, fines from financial crisis era MBS.
Pg M4, EMERGING MARKETS. With things looking bleak in BRAZIL politically, economically and coronavirusly [forget spellcheck, but that fits], its stock market may be bottoming. Attractive areas include consumer, oil and tech stocks.
Pg M6, COMMODITIES. After peaking in August 2020, physical GOLD fell in Q4, its worst quarter since 2016, and then it fell -9.5% in 2021/Q1. Rising dollar [lately] and cryptocurrencies have been negative for gold. But conditions are becoming favorable for gold. [It may have formed a double-bottom in March after hi-to-lo drop of -19.91% (August-March)].
Pg M5, OPTIONS. Q1 earnings season kicks off with big banks reporting. Pairing put-selling with call-buying is recommended for Citigroup/C ahead of its report on April 15 [positive environment for banks; Fed easing pandemic-relates pressure on banks on June 30 if they passes stress-test; $900 million wire-error; new CEO Jane FRASER].
[SP500 VIX 16.69, Nasdaq 100 VXN 23.23, SKEW 132.88] [Yahoo Finance data]
finance.yahoo.com/quotes/%5EVIX,%5EVXN,%5ESKEW?.tsrc=fin-srch
Pg M23, M28: A good week in EUROPE [Sweden +2.76%, Italy -1.04%] and a flat week in ASIA [Australia +2.51%, Thailand -1.88%]. The equity CEF index [data to Thursday] outperformed the DJIA and its discount was -3%.
TREASURY* 3-mo yield 0.02%, 2-yr 0.16%, 5-yr 0.87%, 10-yr 1.67%, 30-yr 2.34%. DOLLAR fell, DXY 92.18, -0.9% [M31]. GOLD [Handy & Harman spot, Thursday] was up to $1,755, +2% [M34]; the gold-miners rose. [^XAU was at 143.76, +2.74% for the week]
*Treasury Yield-Curve www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
Top FDIC insured savings deposit rates*: Money-market accounts 0.61%; 3-mo Jumbo CD 0.40% [most are 0.25% or below], 1-yr CDs 0.70%; 5-yr CDs 1.00% [M29].
*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]
NOTE: This is a series on CRYPTOS in the SUPPLEMENT – Guide to Wealth [with listing of top advisors and RIAs by states] and elsewhere. Such Supplements typically have fluff features, but this one required heavy reading. With so many pages and column spaces devoted to cryptos that have limited access, there is quite a bit of duplication on the coverage that follows. I have collected all crypto stories below. It seems that Barron’s wants to make its own splash on cryptos.
Pg S4: COVER STORY. BITCOIN [21 million total, 18.6 million mined] is having its day in the Sun. After 1,000% surge last year, Bitcoin market value is $1+ trillion. Bitcoin futures trade on CME. Companies such as MS, PYPL, SQ, V, BK, TSLA, Fidelity, MassMutual, Coinbase [IPO in April] handle cryptocurrencies to varying degrees. Fidelity, VanEck, Grayscale have applied for crypto-ETFs that the SEC has resisted for several years [some foreign crypto-ETFs do exist]. There are thousands of cryptocurrencies. As digital-gold, they are pressuring real yellow gold. But cryptos face obstacles that include technology, energy intensive “mining”, price instability, illiquidity, illicit use, government policies/restrictions, central bank digital currencies [CBDC].
Pg S7: How do retail customers invest in CRYPTOCURRENCIES? Through financial advisors; separately managed accounts [SMAs]; wealth management services [Fidelity, JPM, BK, NTRS]; Grayscale trusts GBTC, ETHE; Bitwise crypto index funds BITW; Coinbase accounts.
Pg S11: Companies that deal with cryptos [now, or soon] to some extent include PYPL, V, BK, SQ, TSLA, MSTR, MARA, RIOT, MassMutual, Coinbase, BlockFi. There is also a block chain ETF BLOK.
Pg S13: Financial advisors and wealth management advisors [WMAs] are starting to offer cryptocurrencies [Bitcoin, Ethereum, Litecoin, etc] at special/sub- AUM fees. Current fund options have high fees, premiums/discounts and liquidity limitations [GBTC, ETHE, BITW]. Applications for crypto-ETFs are pending from Fidelity, VanEck, Grayscale. The new SEC Chairman GENSLER is knowledgeable about cryptos.
Pg 27: ETFs. Until a genuine crypto-ETF is approved by the SEC, here are some options: Funds that hold cryptos or crypto-futures [GBTC, GDLC, OBTC, BITW], funds that hold some cryptos [ARKW], blockchain technology ETFs [BLOK], companies that hold some cryptos [MSTR, SQ, TSLA].
Pg 34: OTHER VOICES. JOYCE LAI, New York Angels [an investment group] and ConsenSys Mesh [Attorneys]. Is this crypto-art or crypto/decentralized-finance [DeFi]? A “ghost” game NFT Aavegotchi allows one to create own NFT “ghost” from NFT pixel-art-pieces. Aave protocol is used for digital-lending/borrowing and fungible receipts [aTokens or aETHs]. One injects aTokens “spirits” into the ghost to keep it going. New Ethereum blockchain technology standard is used to mix fungible aTokens and nonfungible “ghost” [NFT “ghost”]. This combination is guaranteed-verifiable and transferable. While this is a game, think of its implications for structured financial products [mREITs, etc]. It can also be used to create digital-assets without analog/real world corollaries, e.g. a crypto-universe with digital-land. [NFT = Nonfungible Token] [FT = Fungible Token (e.g. current money)] [All this is very vague to me, so my summary is also super vague].
Pg 7, UP & DOWN WALL STREET. Spring is associated with growth [of plants] and the hope is that MONETARY and FISCAL stimulus and widespread VACCINATIONS will do the same for economy and stocks. The NY FED model is showing +6% GDP growth. Stock indexes are at/near new highs and the fear gauge VIX has retreated into teens. SENTIMENT indicators are bullish. The next JOBS report may show a huge job surge [+3 million?] and the FED may start tapering in 2022/Q1. New TAXES in 2022 may also be negative. For now, enjoy this Spring.
ROBERT MUNDELL [Economics Nobel 1999] passed away last week. Considered the father of euro and a supporter supply-side economics, his great insight was that among interest rates, exchange rates and capital flows, countries can only control 2 out of the 3. His preferred approach was to fix exchange rates and promote economic growth through tax cuts and fiscal stimulus – basis of supply-side economics.
The US has benefitted greatly from DOLLAR’s status as a global reserve currency. During the pandemic, the US budget DEFICIT and national DEBT have ballooned, and FED’s balance sheet rose dramatically. Money supply M2 has exploded. Dollar fell although it has recovered some lately. At some point, the Fed may use yield-curve control [i.e. cap long-term rates]. Cryptocurrencies have been flying high and some called it digital-gold. But physical GOLD itself peaked in August 2020 and has fallen 13.6% since then and looks attractive as dollar hedge.
Pg 11, STREETWISE. The EV growth hype aside, they will represent only 3.5% of the US auto market by yearend [vs 2.5% in 2020]. Incentives for the EVs phaseout after 200,000 EVs per company [not much for GM, TSLA]. Americans also prefer SUVs and light-trucks and the EV choices for those are still limited. By 2030, almost 33% of the US autos may be EVs and 33% hybrids. On the other hand, Europe has strong EV incentives in place, and EVs are already 14% of the European auto market, 23% if hybrids are also included. Auto-parts/systems maker BorgWarner [BWA] will benefit from EVs. Its cash flow is 10% of the market value [strange reference, but about the same % of revenues; yield 1.5%; EV/EBITDA 8.4]. It acquired DELPHI Technologies last year and German AKASOL [batteries] this year. Stock has rebounded but has yet to reach 2018 high. Bears say that the gains in the EV side of the business will be at the expense of its ICE side. But BWA thinks that hybrids will be around for a long time and both EV and ICE sides of its business will do fine.
[More later….]
LINK
