The pot boils over
"The value of a prediction is to sort out the uncertainty."
- Spencer Dale, BP economist, on Bloomberg Radio.
Some very large moves in widely held stocks have initiated some margin calls. It will be traced to one trader who theoretically manages the accounts of only 16 families. The market opening would be closely watched on Monday.
A long-discussed cycle shift seems underway from technology to value – but it is neither neat nor perfectly symmetrical. The rotation saw a shift in sentiment, as much as anything, with a rise in yields the immediate impetus. Utilities did well last week as they have some aspects of bonds, and had room to improve.
An outlier in the tech down draw may or may not be Applied Materials, which viewers see as something of an industrial infrastructure or commodity play – a miner in the age of digital transformation.
Berkshire Hathaway with broad exposure to economy especially appears a good play, with plenty of value to offer, and a big railroad thrown in. Diversified folios are bet again – tho they may be boring and requiring patience – and the bond part of the folio is not expected to thrive along with equities as the odd pattern of the recent past has seen.
Dividend play are risky too, as attic stocks like AT+T and IBM may fail to spin out dividends and their share prices may decline on the exchange. But 2.5 to 3.5% steady as she goes can help buttress the retiree’s cookie jar in an age when savings accounts do not.
The overall market shows some ruggedness, but influential events (GameStop runs, CBS Viacom shorting, yield surges) threaten the placidity. The next domino could be emerging markets.
Emerging Market Bonds are cited as candidates for froth cleansing. Gaverkal’s Tom Holland points to issues there with equity margin debt levels, and localized illiquidity as US interest rates inch up and the emergent ones must adjust. Too high emergent fliers Baidu and Tencent are under an antimonopoly gun in China, their transparency is questioned in the US. Showing up in the portfolio of the Disgraced Trader of the Week’s portfolio – not helpful either.
YTD (4 days short of New Quarter)
Dow +8.06% | S&P +5.82% | Ndq +1.94% | Au -8.26% | Rus +10.48%
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