By YBB Personal Finance
SENTIMENTS
AAII Bull-Bear Spread +27.5% (high)
$NYA50R, NYSE %Above 50-dMA 68.97% (positive)
$SPXA50R, SP500 %Above 50-dMA 70.20% (high, barely)
Delta MSI 47.9% (negative)
ICI Fund Allocations (Cumulative)
OEFs & ETFs: Stocks 60.59%, Hybrids 4.53%, Bonds 17.88%, M-Mkt 17.01%
INTEREST RATES
CME FedWatch
FOMC 7/31/24+ hold (cycle peak 5.25-5.50%)
FOMC 9/18/24+ cut
Treasury
T-Bills 3-mo yield 5.43%, 1-yr 4.87%; T-Notes 2-yr 4.45%, 5-yr 4.10%, 10-yr 4.18%; T-Bonds 30-yr 4.39%
Real yields 5-yr 1.95%, 10-yr 1.94%, 30-yr 2.12%
FRNs Index 5.30%
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%.
For current banking rates, see www.depositaccounts.com/
Stable-Value (SV) Rates, 7/1/24
TIAA Traditional Annuity (Accumulation) Rates
Restricted RC 5.50%, RA 5.25%
Flexible RCP 4.75%, SRA 4.50%, Newer IRAs 4.75%
TSP G Fund 4.500% (previous 4.635%).
MARKETS
The US stock market continues to rally & there is also some broadening. Several global markets are also rallying – INDIA, Australia, Singapore, Japan, EAFE index, EM index.
Barron’s Midyear ROUNDTABLE features Todd AHLSTEN, Parnassus CIO & PRBLX; Scott BLACK, Delphi Management; Abby COHEN, Columbia U; Sonal DESAI, Franklin Templeton; Henry ELLENBOGEN, Durable Capital Partners; Mario GABELLI, Gabelli Funds; David GIROUX, T Rowe Price CIO & PRWCX (PRCFX, TCAF); Rajiv JAIN, GQG Partners; William PRIEST, Epoch; John ROGERS, Ariel Investments; Meryl WITMER, Eagle Capital Partners.
SOUTH AFRICAN stocks (ETF EZA) are attractive with reforms likely under the new coalition government (ANC + DA). Global investors may return if the government can control crime, corruption & keep the economy growing at +2%.
ARGENTIAN President MILEI (The “Chainsaw”) has followed unconventional political & economic policies under limited emergency powers. He has chopped off government departments, considered privatizations, ignored foreign creditors (bonds trade at 40c). But the budget has a small surplus. Argentinians are hoarding dollars for protection from inflation (it fell to 4% from 25%) & local currency controls. An ETF is ARGT.
ECONOMY
STEEL TARIFFS will hurt the US steel industry (NUE, CLF, X, etc) & the US consumers as lot of imported steel is used in American products. China may avoid tariffs by routing its steel via Asia & Lat Am. Top global steel producers now are #1 China, #2 INDIA, #3 Japan, #4 US; if Nippon Steel buys X (deal in limbo), Japan will become #2, India #3.
DOLLAR, a reserve currency, is high & is expected to weaken. Lot of the US stock market outperformance vs the foreign markets has been due to dollar strength. While the Fed policy is in limbo, most other countries are cutting rates, except Japan. Several countries are reducing their exposure to the dollar by adding gold to their reserves & by trading more in regional & local currencies.
By revoking “Chevron”, the SUPREMES have put regulating AGENCIES (Fed, FTC, EPA, SEC, etc) on notice. The statutes of limitation for regulatory challenges have been set aside, deference to agencies won’t be the norm, & precedences won’t hold routinely. But new tech regulations (AI, data privacy, etc) won’t be easy. So, uncertainties may linger for quite a while hurting the business sentiments & planning.
RETIREMENT
Cooling inflation is good, but it may reduce the SOCIAL SECURITY COLA for 2025 – used is the Q3 average data for CPI-W (pending) & the current estimate is +2.7% (vs +3.2% in 2024).
FUNDS
MUNI BONDS are attractive for investors in higher tax brackets. Inflation is moderating & expectations for Fed rate cuts are rising. State & local governments finances are in good shape due to stimulus during the pandemic & stronger economy. TCJA is expiring in 2025, & if not extended, income taxes will rise. Higher-quality munis are MUB, VMLTX; lower-quality FAARX, CGMU.
In 2024/Q2, funds with exposure to Nvidia/NVDA &/or Eli Lilly/LLY did well, especially the large-cap growth (LCG) – HCMGX, FOCPX, VPMCX, VIGRX; ETFs QQQ, IWY, VUG. Other fund categories that did well include INDIA, precious metals, utilities. The top performing ACTIVE funds in categories were US large-caps GQEPX, US small-caps AVALX, HFCGX, NEAGX; balanced/hybrids DGIFX, FPURX; international GSINX, BISAX, MSMLX; bonds LCTRX, FAGIX.
ROTATION from large-caps to small-caps may be taking shape. The popular SMALL-CAP (SC) R2000 / IWM is more cyclical after its June 28 rebalancing. Better passive SC ETFs are IJR, SPSM, & an active SC-quality ETF is DFAS. Hot SC-growth (SCG) funds are CTASX, JSJAX, CWSAX, HRSRX, HISGX.
For more information, see ybbpersonalfinance.proboards.com/