1. Bond Index AGG is in 4 Year Drawdown…Was Yesterday Turnaround?
Nasdaq Dorsey Wright As of Thursday (6/6), AGG is roughly 19% below its all-time high reached in August 2020. Even if we use total return data (AGG.TR), including coupon reinvestment, the fund is still about 10% below its all-time highs.
What is more punchline worthy is that, as of yesterday, AGG has been in a drawdown for 1000 trading days…that’s nearly four years in real time.
2. SHY Short-Term Treasury Bond ETF.
50week thru 200week on long-term chart
3.U.S. Retail Gas Fails to Below 2023 Highs..Downward Trend.
https://ycharts.com/indicators/us_gas_price
4. What Happens to Names Added to S&P? CRWD, GDDY, and KKR Added.
Nasdaq Dorsey Wright by Will Gibson
The S&P 500 (SPX) will rebalance at the end of this month. Notable additions to the index include CrowdStrike (CRWD), GoDaddy (GDDY), and KKR (KKR).
Theoretically, a stock’s inclusion in an index should have no impact on its performance. However, being added to a major benchmark like the S&P 500 can increase demand for a stock. Passive funds that track the index must purchase the new addition(s) and being added to an index can also increase stock awareness, especially among retail investors. Although, the performance trends for new adds have not been what you might expect.
In the table below we summarized performance of stocks that were added to the S&P 500 since 2010. We did not include stocks removed from the index due to various nuances with delisting (M&A activity as one example).
In the month prior to joining the index the upcoming additions had an average return of 4% which was about 3.5% higher than S&P 500’s average return, yet most of the alpha-generation opportunity seemed to vanish as the index reconstitution date approaches. On average, the new constituents underperformed the index after their inclusion date. S&P Global has a more detailed study that confirms our observations.
This performance asymmetry seems counterintuitive, but some hedge funds and sophisticated investors have ways to reasonably predict which companies will join the index even before an announcement is made, essentially setting up an arbitrage/front-running strategy. In other words, by the time information is widely public the market has long priced in the potential effects.
That said, all three of the upcoming additions have been high technical attribute stocks on our system since the middle of 2023. So, we would not suggest dumping these names solely based off today’s data because the technical pictures still look constructive for the soon-to-be members.
5. Oracle Breakout Similar to Apple Chart from Yesterday.
ORCL breaks out of sideways pattern
6. $6 Trillion in Money Markets But Household Stock Allocations Still at Highs.
Is it time to be max bullish? (rbadvisors.com)
7. HIMS Compound Pharmacy $200 a Month Weight Loss Treatment Sends Stock Back to 2020 Highs
8. One Commodity has Held Up Versus Tech Heavy S&P for 5 Years…Water.
Water ETF PHO +87% 5 Years.
9. Bill Gates Backing Small Nuclear Reactor Build Out …Good Nuclear.
From Morningbrew Blog
ENERGY
The guy who helped construct the computer company in a garage-to-billionaire pipeline has put his money where his mouth is. Bill Gates, a proponent of competitive clean energy sources to combat climate change, broke ground on a next-gen nuclear power facility yesterday outside a small Wyoming town.
TerraPower, a company Gates co-founded in 2008 to boost private nuclear investment, is building a first-of-its-kind reactor that it thinks will usher in a new era of scalable clean energy.
What’s the big deal? TerraPower’s new reactor isn’t like old reactors—it’s smaller, cheaper, and may stand a shot at being finished…unlike new traditional reactors, whose death certificates are usually written before they even start running due to delays and cost overruns. The US has only built two reactors in the last 30 years, costing $35 billion, but TerraPower sees itself as #builtdifferent.
- The TerraPower design calls for liquid sodium rather than water to cool the reactor, meaning the power station won’t need extensive (and expensive) heavy piping.
- The reactor will also be able to adjust its output, making it easier to coexist with wind and solar sources and take advantage of selling energy to the grid.
Digging deep
Gates maintains that he’s not involved in the nuclear project to make more money. “I’m involved in TerraPower because we need to build a lot of these reactors,” he said in an interview.
The project still has plenty of unknowns, including whether the reactor will actually be cheaper to build (some critics say it won’t) and whether the Nuclear Regulatory Commission will approve its unorthodox engineering plan.
You need deep pockets to pull this off…but with some of the deepest pockets propping up the project, there’s a chance it can work. Gates has poured $1 billion into the project so far, raised another $830 million, and said he’s prepared to stand by it financially.—CC
Bad Nuclear
Russian Nuclear-powered Submarine Arrives In Cuba
A Russian nuclear-powered submarine and other naval vessels arrived in Cuba Wednesday for a five-day visit to the communist island off Florida’s coast in a show of force amid spiraling US-Russian tensions.
The submarine Kazan, which Cuba says is not carrying nuclear weapons, was accompanied by the frigate Admiral Gorshkov, as well as an oil tanker and a salvage tug.
The Kazan and Admiral Gorshkov, which is one of Russia’s most modern warships, could be seen just off Havana, which is about 90 miles (145 km) from the tip of Florida.
The tanker Pashin and the tug, flying the white, blue and red tricolor of Russia, entered the harbor early Wednesday morning, an AFP reporter said.
The Cuban government announced that Foreign Minister Bruno Rodriguez was meeting his Russian counterpart Sergei Lavrov in Moscow on Wednesday, as the two former Cold War allies further tighten their links.
The unusual deployment of the Russian military so close to the United States — particularly the powerful submarine — comes amid major tensions over the war in Ukraine, where the Western-backed government is fighting a Russian invasion.
Cuban President Miguel Diaz-Canel met with Russian counterpart Vladimir Putin last month for the annual May 9 military parade on Red Square outside the Kremlin.
During the Cold War, Cuba was an important client state for the Soviet Union. The deployment of Soviet nuclear missile sites on the island triggered the Cuban Missile Crisis of 1962, when Washington and Moscow came close to war.
Relations between Russia and Cuba have become closer since a 2022 meeting between Diaz-Canel and Putin.
https://www.barrons.com/news/russian-nuclear-powered-submarine-arrives-in-cuba-35f38414
10. Deaths Per Year Back to Pre-Covid Levels.
