Traders Market Weekly: Rates, Banks and Herd Mentality

Viewing 15 posts - 16 through 30 (of 35 total)
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    China’s December New Loans CNY1.13 trln (expected CNY1.25 trln; last CNY1.27 trln) and December total social financing CNY2.37 trln (expected CNY2.45 trln; last CNY2.61 trln). December CPI -0.3% m/m (expected 0.2%; last 0.4%); 1.5% yr/yr (expected 1.8%; last 2.3%). December PPI 10.3% yr/yr (expected 11.1%; last 12.9%)
    Japan’s December Economy Watchers Current Index 56.4 (expected 56.5; last 56.3). January Reuters Tankan Index 17 (last 22). Adjusted November Current Account surplus JPY1.37 trln (expected CNY1.05 trln; last CNY1.03 trln)
    South Korea’s December Unemployment Rate 3.8% (last 3.1%)


    Mega-caps shows Tesla (TSLA 1094.28, +29.96, +2.8%), Alphabet (GOOG 2839.92, +39.57, +1.4%), and Microsoft (MSFT 319.09, +4.12, +1.3%) outperforming with gains between 1-3%, while Meta Platforms (FB 333.37, -1.06, -0.3%) trades slightly lower.


    Europe major indices closed on a higher note. Germany’s DAX gained 0.4%, UK’s FTSE gained 0.8%, and France’s CAC gained 0.8%. The Europe Stoxx 600 advanced 0.6%.


    Notable movers:

    Applied Materials (AMAT 155.92, +3.47, +2.3%): best performer in the sector, rallied to a one-week high before narrowing its gain.
    KLA Corp (KLAC 435.36, +9.75, +2.3%): rising toward its December high (442.44).
    Microsoft (MSFT 319.77, +4.79, +1.5%): rising to a one-week high. The U.K.’s CMA announced a March 9 deadline for phase 1 decision in the investigation of Microsoft’s acquisition of Nuance (NUAN 55.37, +0.13, +0.2%).
    Accenture (ACN 379.37, +5.23, +1.4%): rising back above its 50-day moving average (378.45). Stock went ex-dividend today.
    Salesforce (CRM 237.71, +2.87, +1.2%): rising to a one-week high.
    Lam Research (LRCX 679.29, +6.08, +0.9%): returning to levels from Friday.
    Visa (V 216.26, +1.88, +0.9%): rising above Friday’s low.
    NVIDIA (NVDA 280.47, +2.30, +0.8%): seeking its third consecutive gain.
    Mastercard (MA 369.02, +2.73, +0.7%): hit a fresh high for the week before narrowing its gain.
    Qualcomm (QCOM 186.47, +1.07, +0.6%): touched a one-week high before narrowing its gain.
    Texas Instruments (TXN 185.70, +1.06, +0.6%): trading near yesterday’s high.
    Apple (AAPL 175.99, +0.91, +0.5%): seeking its third consecutive gain.
    Cisco (CSCO 62.25, -0.12, -0.2%): on track for its first loss in a week.
    Oracle (ORCL 88.03, -0.45, -0.5%): slipping back toward its 200-day moving average (86.83).
    Intel (INTC 55.52, -0.38, -0.7%): touched its best level since late July before turning negative.
    PayPal (PYPL 187.60, -3.92, -2.1%): slipping into the lower half of yesterday’s range. Jefferies downgraded the stock to Hold from Buy with a $200 target.
    Paycom Software (PAYC 357.02, -10.18, -2.8%): weakest performer in the sector, slipping to the midpoint of its range from Monday.


    Biogen (BIIB) -9% is getting hit after the Centers for Medicare & Medicaid Services draft decision to cover monoclonal antibodies directed against amyloid for the treatment of Alzheimer’s disease only under Coverage with Evidence Development (CED), which could require patients to be enrolled in CMS approved trials, or trials supported by the NIH in order to be covered. This would dramatically limit the commercial opportunity for Aduhelm.

    A final decision is expected by April 12 and could change (a preliminary CED proposal regarding CAR-T therapy was broadened to FDA-approved indications in 2019, so a reversal is possible), but this initial decision by the CMS effectively reverses the controversial FDA approval by severely limiting coverage by Medicare. Needham cut Aduhelm’s probability for success to 20% from 75% to reflect this preliminary decision, cutting the value of the drug to $13/share from $48.

    Needham defended the stock, cutting its target to $292 from $328, but the rest of the company’s prospects aren’t very favorable in my view. Another bull at Oppenheimer reiterated its $350 target, citing a $272/share floor valuation ex-$78 in Aduhelm value (this appears to be a bull that is somewhat out of touch). The ~11x EV/EBITDA multiple seems fair. I had a felling that the takeover rumor pop late last year was a good time to dump shares and I should have listened to my gut.


    Snowflake (SNOW) upgrade to Buy at Barclays after the stock its 200-DMA on Monday.

    The stock closed yesterday with an enterprise value that was just under 50x net twelve-month sales estimates, making it the most expensive software stock in the market. Clearly, this stock remains expensive, but the “consensus” is that this is one of the most attractive enterprise software stocks in the market worth paying up for as the company will continue to grow into its valuation.


    Volatility crushed back to levels prior to the swoon while Put length high gives us a clue to positioning $VXX $VIX $ES_F


    Dow 36,290.32 38.30 0.11%
    S&P 500 4,726.35 13.28 0.28%
    Nasdaq 15,188.39 34.94 0.23%
    GlobalDow 4,299.69 43.69 1.03%
    Gold 1,827.00 8.50 0.47%
    Oil 82.68 1.46 1.81%


    S&P Futures vs Fair Value: +3.0
    10 yr Note: 1.751%
    USD/JPY: 114.53 -0.11
    EUR/USD: 1.1469 +0.0026
    Europe: FTSE: 0.0% DAX: -0.1% CAC: -0.3%
    Asia: Hang Seng: +0.1% Shanghai: -1.1% Nikkei: -1.0%
    Gold (1823.10 -4.20) Silver (23.20 -0.01) Crude (82.68 +0.04)


    DAL, KBH, and TSM beat EPS estimates
    Treasury yields edge higher
    COIN makes acquisition, 737 MAX could resume flights in China this month
    Ratings changes for DAL, MTCH, MAT, HD, UAL, BIIB, SNAP, SAVE, LUV


    The December Producer Price Index showed that the index for final demand increased 0.2% month-over-month ( consensus 0.4%) while the index for final demand, less foods and energy, increased 0.5% (consensus 0.4%). That left the year-over-year increases on an unadjusted basis at 9.7% and 8.3%, respectively.

    The key takeaway from the report is that most categories that saw decreases in December were due to a sharp drop in the price of oil at the end of November. That drop was reversed entirely in December and early January, so these savings will prove to be temporary.

    The index for final demand services rose 0.5%


    Initial claims for the week ending January 8 increased by 23,000 to 230,000 consensus 202,000 from last week’s unrevised level while continuing claims decreased by 194,000 to 1.559 million from last week’s revised level of 1.753 mln (from 1.754 mln).

    The key takeaway from the report is that roughly half of last week’s increase in claims was owed to higher claims in states like New York, Pennsylvania, Connecticut, Washington, and Michigan. These increases took place as new coronavirus cases in these areas reached record highs.


    2-yr: +2 bps to 0.91%
    3-yr: UNCH at 1.21%
    5-yr: +1 bp to 1.50%
    10-yr: UNCH at 1.73%
    30-yr: UNCH at 2.07%


    Keeping an eye on Earnings beats
    Delta Air Lines $DAL 42.21▲ 1.60 3.94%
    KB Home $KBH 48.33▲ 5.95 14.04%

    After they tested and held the first gap with $SPX bouncing after PPI and Brainard shake and bake

    KB Home (KBH) on Wednesday reported fiscal fourth-quarter earnings of $174.2 million. The Los Angeles-based company said it had net income of $1.91 per share. The results beat Wall Street expectations. The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of $1.77 per share.

    Note $KBH provided upbeat commentary on the housing market which surprised many with Lumber prices, copper prices etc via #MoneyNeverSleeps

    Watching homebuilders:


    Thankful for “eye in the sky” that watches over us & may God bless USA in 2022 🙂

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