The Market Perspective

NS Rallies /Cusp of DJIA Rally

Wed May 17 2023

 

Monday I entered a ladder of orders for NS Preferred B, each lower at 

22.01

21.91

21.81

all were executed at 200 shares, the Pref B finished at  21.70 for the day. Today it finished  higher at 22.40. Most brokers just want the trade and enter all at once. Using a ladder of orders each lower can result in a better purchase.

% Over  150 Day MA

Notice this indicator jumped  10% to the upside today, and the markets, jumped as well take a look

 

no one is expecting a rally and so that is probably what we will get

 

BUY Nustar common  NSS and Pref B

 

Office Slump Here to Stay / Personal Debt on the Rise

Tuesday May 16 2023

Rise i Distressed Sales WSJ

Property owners are starting to unload troubled office buildings at fire-sale prices, a sign that the office market slump is moving into a new phase where more landlords are ready to capitulate. 

In recent weeks, Blackstone sold the Griffin Towers office complex in Santa Ana for $82 million, or about 36% less than the firm paid in 2014, say people familiar with the matter. Principal Financial Group sold a Parsippany, N.J., office building for $14.3 million, down from the $52 million it paid in 2008, according to participants in the sale. 

 

The tower at 350 California in San Francisco, valued at $300 million in 2019, is expected to trade at about $60 million, or roughly 80% below that previous valuation. 

Office building values have steadily declined during the pandemic as shifting workplace strategies reduced demand for space and vacancies rose. Higher interest rates have also hammered the sector, making it much more difficult for landlords to refinance a property or fund the building improvements and amenities needed to attract tenants.

________________________

 

This is how it starts

More Americans are having a harder time keeping up with their car, credit-card and mortgage payments compared with a year ago. 

The share of debt balances that became at least 90 days delinquent in the first quarter of 2023 was 1.08%, up from 0.71% a year earlier, according to a report from the Federal Reserve Bank of New York released Monday. 

 

About 4.57% of consumers’ credit-card debt transitioned to 90-plus days delinquent last quarter, compared with 3.04% in the first quarter of 2022. That transition rate also increased year-over-year for auto-loan debt, to 2.33% from 1.61%, and mortgage debt, to 0.59% from 0.34%. 

Big Indexes in Downtrends

Weekend ay 14, 2023

Again the strength of eight stocks has kept the NASD NDX very strong masking the weakness of other major indexes.Here is the S &  P small cap which peaked in early ƒebruary as did these nest two.

The Dow  COmposite includes Inudustrial, Transports and Utilities

Transports Lead and the lead is to the downside.

The last two are testing 200 day MAs and willl surely fal below them. Wee patiently await this to unfold.

It would be interesting to see the Intel briefing that Putin and Xi are getting on the US. Consider that once beautiful San Francisco is now more or less a shambles.

 

Hedge is a fund that advances when major indexes fall. Here is a weekly update. It is challenging its downtrend line. It has rallied since the February top shown in the first three charts above. .IT is attempting to overcome threee of its four MAs.

GOing back two years eight months the  200 week MA is at 36.68. ONe can see Hedge has ben bottoming since early 2021, the high for all stock indexes. It is just now challenging those indexes again, 2022 was not successful. THe three MAs are coming together which usuallypreceeds a change in trend.

Weekend May 12  2023

 

We Don’t Vote on the EPA

 

Anyone can predict what will happen next week but only  a true prophet can forsee what will happen in ten years

Paraphrasing Mark Twain

Politicians and University Presidents Love to make future predictions and goals. The reason is simple. They cannot be held accountable today because it is so far in the  future. And many years from now no one will remember the prediction or goal and they will be out of office.

Having failed in the courts Team Biden via the EPA has issued new power plant regulations. The claim is that it will eliminate greenhouse gases and at negligible cost. But the article plainly states this will cost billions of dollars.

This is a continuation of Biden’s war on anything carbon based.  Targets range from   2030 .to  2042.  Officials claim utility bills will only rise by 2% by 2030.  Consumers in Germany which is pursuing similar goals are learning otherwise.

The plan will eliminate natural gas and coal as power plant fuels. What to use instead, peanut butter and jelly?  And  we hear the usual pie in the sky phrases like carbon capture. Presumably wind and solar will save the day. But wind turbines are already beaching whales and killing birds.  Ånd solar does not work in the rain or at night. Germany is now .going back to coal.

The usual suspects are so called environmentalists, read autocrats cloaed in climatology.  This will eliminate jobs in the energy industry, hello Texas, and threaten an already strained pow.er grid.

The worst of it is you and my inability to vote out the bureaucrats t the EPA who are accountable to no one.  And the same team plans to demand airlines pay passengers for canceled flights and or put them in hotels. How many handy hotel rooms are there when 500 flights are canceled?  And where does the money come from?  This will surely raise ticket prices. Ånd of course Pothole Pete who has never run an airline is demanding this blood from the airline turnip.

Regional bank stock prices are still falling. The KRE regional bank index is down from  42 to  36 in the last week or so.  PacWest has dropped from $10 to $4.70 in the last two weeks.

Energy stocks led the market rally last year, this year not so much.  See the EPA discussion for a fundamental reason. 

Crude oil prices jumped from the low 60s but seem stuck for now around $70-72. 

A handful of tech stocks still support the market. Overall breadth continues to decline.

Be careful and take advantage of 4%+ T bill rates

The Big Averages

Friday May 12 2023

This computer at school is not storing captured images. Let me try from home tomorrow but

 

the broad averages NYSE Dow Composite Transports all peaked in early February and are now trending down.

HDGE bottomed at  21 in February and is now at  27.  T over weighting of a few tech stocks is making the public believe the rally continues across the board, but it is not doing so. The coming sell off will surprise them.

 

Banks, Commercial Real Estate, Pensions, or All of the Above?

Friday May 12, 2023

 

Is a Pension Fund Crisis Next?
"U.S. pension funds are on the brink of implosion"

By Elliott Wave International

Did you get a heads-up from the financial media that the U.S. banking system was vulnerable before the failures of Silicon Valley, Signature and First Republic banks?

There may have been outlier articles here and there but no real warnings.

By contrast, the 2021 edition of Robert Prechter's book Conquer the Crash, Last Chance to Conquer the Crash, reminded readers that:

In a crash and depression, we will see falling asset values, massive layoffs, high unemployment, corporate and municipal bankruptcies, pension fund implosions, bank and insurance company failures and ultimately social and political crises.

As you know, some of these things have recently been unfolding.

Let's focus on pension funds for a few moments. Yes, some recent articles have provided warnings, but they have not been widespread.

The headline of one of those news items is from the Washington Post (Feb. 14):

Time Bomb of Public Pension Funding Ticks Louder

Many public pensions suffer from funding shortfalls. In other words, they don't have nearly enough money to meet their obligations. More than that, investments are being made in potentially financially dangerous assets to boost returns, such as private equity.

Many people who are counting on a pension probably don't know that some private equity firms have invested pension-fund money in the housing market since the Great Recession -- yes, they bought actual houses. As the Atlanta Journal Constitution reported (Feb. 12):

Private equity firms like Blackstone Group, Pretium Partners and Amherst convinced public pension funds and other large institutional investors to bankroll their homebuying sprees.

If the housing market crashes, you guessed it, some pension funds will take a big hit.

Here's another headline from a British newspaper, the Guardian (Feb. 2):

US pension funds are on the brink of implosion -- and Wall Street is ignoring it

However, Elliott Wave International is not ignoring it.

As the Elliott Wave Theorist said in February [The Elliott Wave Theorist has published monthly since 1979 and covers major financial and cultural trends):

Unfunded liabilities of states’ pension funds in the U.S. stood at $1.3 trillion as of year-end 2022. Private pension funds are underfunded as well. The whole system has made promises it can’t fulfill.

And, getting back to the banking crisis, the FDIC may face challenges fulfilling its promises to depositors if bank failures become widespread. In other words, the FDIC can only “make whole” a limited number of depositors at one time (up to $250,000). Whether the federal government steps in is another matter. The point is: it may not be wise to count on the FDIC during a major banking panic.

So, the question arises: Are there viable alternatives to banks?

Yes!

Elliott Wave International is now offering a special report titled “Your 5 Top Alternatives to Banks,” which is excerpted from Robert Prechter’s Last Chance to Conquer the Crash.

You can access this special report for free when you join Club EWI, the world’s largest Elliott wave educational community. Just follow the link below:

Read "Your 5 Top Alternatives to Banks" now when you sign up for a FREE Club EWI account.

This article was syndicated by Elliott Wave International and was originally published under the headline Is a Pension Fund Crisis Next?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

 

NYA and NYSE A/D Line Heading Down

THursday May  1 2023

The advance decline line is heading down. At top the actual NYSE index is only gently declining. This is a divergence and the main graph will eventually win out.  It's a bear market.

Weekend May 7 2023

The stock market jumped higher projecting highs into early June, note that.

Our bond holdings did well. DSL has an  11.28% dividend.

DBL bounce and offers a 9.2% yield.

 

.Crude his a low of $63 Thursday which tok many issues lower but recovering Friday.

NS Mustar also sports a 10% dividend.

Never mind why just understand that QQQ is going up.

( went bullisj on oil two weeks early, now I am bullish again look at this

higher lows PMO trying to turn

NSS are Nustar notes due Jan 2043 THe rate is variable the three month libor plus 6.734 so here is the recent result

July 15, 2022 through October 15, 2022 9.24600 October 15, 2022 through January 15, 2023 10.81314 January 15, 2023 through April 15, 2023 11.52643 April 15, 2023 through July 15, 2023 11.99429

This May Do Trump In

Click Here

 

 

Lower Prices Ahead

Lower Prices for Oil and Banks

It’s no surprise the Russians have not down what they said they would do (cutting oil production).

Mizuho Securities

At the start of April the Saudis and the Russians announced a joint production cut. The market reacted by jumping four dollars above $80, leaving a four dollar gap on the chart. I turned bullish. That was a big mistake regarding oil.  Thursday WTIC dropped as low as $63.57 but closed at $68.56.

Putin’s bad gamble on Ukraine has put the Russian economy in dire straits. The rube is down in value, half his armored fleet is gone, and sanctions on his economy abound from the EU and the USA.  The result is ‘pumping and exporting huge volumes of oil to support the beleaguered economy.’ (WSJ). This has added to world supply when economies around the world are weakening. Recall our quote in a previous column that J B Hunt saw a ‘freight recession’ looming.

Bell weather ExxonMobil dropped from $118 to $106 this month and bounce to $107 today.  Likewise, Halliburton dropped from $35 to $29 and bounced to $30 today.

Still driving season is but three or four weeks away. Gasoline prices typically rise then. I commented on the www.marketperspective.com blog crude could return to $66 and it happened much faster than I thought.

Russia is desperate ..but  do not expect Saudi to be a swing producer to allow for Putin’s expanded production.  Natural gas prices do look like they are bottoming.

Meanwhile we have had three of the four largest bank collapse in the last two months.  Silicon Valley,  Signature, and First Republic were supposedly rescued by larger banks. Well when will Jerome and Janet run out of white knights to rescue their failure to supervise the banks they regulate?  Pretty soon I would guess.

Other zombie banks include Pac West, First Horizon, Metropolitan, and Western Alliance.  How bad is it?  In early March Pac West PACW fell from  $28 to $6. On Janet’s all clear assurance it popped back to $10. It currently trades at $6.

Most financial collapses, panics, bear markets sport early warning signs The  2000-2002 collapse had the dot.coms. The  2007-2009 had Bear Stearns. These bank failures are a prelude to  more serious problems ahead. We stated the stock markets topped between November 2021 and January 2022. The first collapse ended last summer or October.  The counter trend rally to the upside is ending now.  Even well regarded Frost  CFR is down from  $160to $100 since last November.

The air pocket drops seen in bank stocks and the rice of oil will soon spread to supposedly safe sectors, be prepared.