July 6: The shifting value of money (US Dollar stronger)

By Jeffrey P. Cohen
Investment Advisor Representative
​US Advanced Computing Infrastructure, Inc.

Here is our running commentary from this morning:

​Noncommittal on the direction of the market today. Weak signals pre-market.


Heard on the street: Housing getting weaker (at least in San Diego)


USD Stronger Today
Eurodollar below $1.02, at $1.0176
USD / CAD $1.3042
Mexican Peso heading to 21/USD
Gold at $1,763
Bitcoin at $20,000
Oil (West Texas Intermediate): $100.35
Interest rates are going lower.


Asian markets down (last night)
European markets up (this morning)


Silver at $19.21 (kinda low)
Copper at $3.42 (middle of the road)


People are buying fixed income (but not the ones at new lows…middle of the road and investment grade debt).




Bitcoin: another bankruptcy in the eco-system
Voyager Digital (lenders): $775M in loans are in default (2 lenders), 100,000 creditors. $700M is in a Singaporean 3 Arrows hedge fund.


Interest rates (long-maturity) at 10 years + are down.
Down 0.11% FRED/FED
Down 0.70% according to Mortgage Data Daily, down to 5.5%


Market Direction, Market Breadth:
1040 New Lows
31 New Highs (stocks)
33:1


Fixed Income (corporate):
736 New Lows
48 New Highs
15:1


Mixed global markets: Asia down, but now Europe is up.


Bitcoin at support level of $20k


Housing prices strongly higher: up 20% YoY May (CoreLogic Home Price Index (HPI TM)


MRVL scored better than all other money losing stocks, and it scored better than all money losing stocks. Marvell Technology Inc. Expected Return of 8.66% over the next year.


ETFs that model likes, in order:
TNA
QQQ
SPY
IWM


SPY Variance:


0.00015716
Money making company stock variance: All Stock Variance  =                


0.0001614
Expected return: Expected Return     =                4.76%


Riskfree rate                    =  1.50%
Actual SPY return                =  -10.39%
Use floor S&P500 rate            =  5.00%
Actual IWM return                =  -24.51%
Use floor Russell 2000 rate      =  5.00%
Actual QQQ return                =  -18.77%
Use floor NASDAQ 100 rate        =  5.00%
===========================================
Market return                    =  3.50%


Edge in our up-run is 0.000125
16 stocks to get there, evenly held..
Up to 22 stocks (roughly the same edge)
Up to 25 stocks for a similar edge (More return, less risk)


CLF is in the pick now.
The model is preferring the down-trodden stocks.


CQNS Down Run:
Avoid the usual suspects.


Down Run Variance:
All Stock Variance  =                -0.0004786
Expected Return     =                6.10%






If you invest in money-losing companies, then on average you hold 3x more risk, and you expect returns to climb from 4.8% to 6.1%.




Not as many stocks are trading pre-market. The ones that are trading are not moving as much *(smaller moves)


   1 FTDR    Frontdoor Inc.                                1985.7%
    2 CDK     CDK Global Inc                                1309.3%
    3 SWM     Schweitzer-Mauduit International  Inc.        624.0%
    4 PRPH    ProPhase Labs Inc                             480.8%
    5 CTO     CTO Realty Growth Inc                         468.3%
    6 CHEF    Chefs` Warehouse Inc                          447.4%
    7 USAK    USA Truck  Inc.                               425.6%
    8 KRO     Kronos Worldwide  Inc.                        422.7%
    9 REX     REX American Resources Corp                   407.6%
   10 EVI     EVI Industries Inc                            406.6%
   11 IMXI    International Money Express Inc.              390.2%
   12 AMRK    A-Mark Precious Metals Inc                    385.9%
   13 KNTK    Kinetik Holdings Inc                          340.1%
   14 ACI     Albertsons Companies Inc                      320.9%
   15 ACNB    ACNB Corp.                                    316.3%
   16 ORA     Ormat Technologies Inc                        310.1%
   17 TUP     Tupperware Brands Corporation                 308.9%
   18 EPAC    Enerpac Tool Group Corp.                      300.7%
   19 ENTG    Entegris Inc                                  300.4%

The FOMC minutes are a non-issue. Same thing Chairman Powell said in Mid-June. No new news.

I do notice US Treasury yields are rising, with 30-year bonds at 3.13% and 10-year notes at 2.92%.