The Long Term Investor

WELL......a very 'SOLID day to end the week. AND....the same....very solid in my account with GREEN....of course. A loss to the SP500 by .16%. BUT....I dont care.....the green is what I care about.

It was a battle today for the NASDAQ. It was up......than about mid morning turned negative.....than back positive.....than about 2:00 negative......and than a strong close. The markets just do not have the STRENGTH to fight the POSITIVE longer term trend even for one day....at least today. A very nice way to go into the weekend for investors.

DOW year to date +8.06%
DOW for the week +1.36%

SP500 year to date +5.82%
SP500 for the week +1.57%

NASDAQ100 year to date +0.70%
NASDAQ100 for the week +0.87%

NASDAQ year to date +1.94%
NASDAQ for the week (-0.58%)

RUSSELL 2000 year to date +12.49%
RUSSELL 2000 for the week (-2.89%)

Have a great weekend....EVERYONE.

 

This little article has some good points and some good news for long term investors......in spite of the negative sounding headline.

'We are in a bearish environment': veteran trader

https://finance.yahoo.com/news/we-are-in-a-bearish-environment-veteran-traders-104806942.html

(BOLD is my opinion OR what I consider important content)

"Bearish warning signs are flashing in the markets, but that doesn't mean U.S. stocks are in a bear market or even that one will develop.

"I'm not one to call for a bull market or a bear market, but we're in a bearish environment. It's easier for stocks to come in under pressure here," says Brian Shannon, founder of AlphaTrends.net.

Shannon breaks down how he reads the market to look for signals. "I don't look for a top in the market," he says. "I listen for the message of the market on a daily basis and see how that fits together in the weekly time frame, the monthly time frame."

Many of the current warning signals began surfacing toward the beginning of March. "it started to become a little bit more difficult to make money on the long side with just about anything. And then what we started to notice was that there were a lot less, actual official swing trading ideas... [T]hey were coming from groups that we don't normally consider growth-type names — names like Heinz (KHC), Weight Watchers (WW), blue chip-type names. And then... we started getting stopped out of our longs."

JC Parets, founder of allstarcharts.com, has also been documenting the increasingly "messy" market and defensive posture.

"When Consumer Staples bottomed out on March 1st relative to the rest of the market, that was one of the first signs of defensive rotation. At the time, we chalked it up as just one signal, of many that we monitor. But as the month has progressed, the soldiers continue to fall. Aussie/Yen has rolled over and we're even getting a bid in US Treasury Bonds," writes Parets.

The 10-year yield (^TNX) recently surged to 1.75%, a level not seen since January 2020. This reflected expectations for a successful reopening of the global economy and coincided with stocks in the value and cyclical sectors outperforming. Meanwhile, growth tech and momentum names that were the stars of 2020 took a back seat. Tellingly, the Dow Jones Industrial Average (^DJI) surged to fresh all-time highs thanks to a boost from names like Walgreens Boots (WBA), Caterpillar (CAT), Boeing (BA), JPMorgan (JPM), Goldman Sachs (GS), Dow Inc. (DOW) and Chevron (CVX). But the Nasdaq Composite (^IXIC) failed to notch a record, falling short by 5%.


A YFi Interactive heat map of the Dow Jones Industrial Average components reveals that stocks in the value and cyclical sectors are holding the biggest gains, as tech names stumble (with the notable exception of Intel).
None of this is to say risk markets are set to crash or that it's time to short everything.

Parets says, "As long as US Financials are above those 2007 highs, it’s tough to make a structurally bearish case. The weight-of-the-evidence suggests this is just a messy environment within a larger more macro advance for stocks."

He also highlights the bullish breadth thrusts in stocks over the last year, where large numbers of stocks all advance simultaneously. "This first wave off the lows last year was tremendous. All those breadth thrusts we've seen since June, and even through January this year are characteristic of early cycle behavior. These thrusts historically show up near the beginning of bull markets, not near the end of them. But one common denominator among all of these longer-term bullish environments, is that there were corrections along the way."

Markets can correct through both price and time — eventually working off excesses and settling into equilibrium, waiting for the next catalyst.

Parets doesn't know how long it will take for markets to set up for the next big move. However, he is looking at the energy sector for clues. "One tell will likely be how long it takes for Energy stocks to digest this overhead supply from those former lows in early 2016," he says, referencing a chart of the Energy Select Sector SPDR Fund (XLE). "We’re also looking for Small-caps, Mid-caps and Micros to get back above those February highs. But again, how long will that take?"


XLE recently bumped up against prior support, which is now resistance.
In the meantime, investors may reduce position size, raise stops on positions to limit risk, go bargain hunting for Buy and Hold names (reducing their cost basis) — or simply turn off the screens.

"It’s a frustrating time for trend followers, just like how in prior trending market, the mean reverting community got trampled. There’s a time and a place for everything. For me, it’s about first identifying the market environment, and then finding the tools and strategies that are best for that particular world," says Parets.

As always, know your time horizon and objectives, and have a plan.

"There are times to make money in the market, and then there are times to keep your money. In sports, you play offense and you play defense," says Parets. "Offense sells tickets, but defense wins championships.""

MY COMMENT

As a short term trader he has his style. Yet even he is seeing the markets as strongly POSITIVE going forward. I like the term......MESSY ENVIRONMENT....that is a good description of the recent past.....the last 4 or so weeks.

I like and agree with the comment:

"The weight-of-the-evidence suggests this is just a messy environment within a larger more macro advance for stocks."

AND......as mentioned above.....even in a very good market there will be corrections. We are lingering......after the recent little mini-correction......but that is normal.

 

The recent weakness in the BIG CAP tech names.........not a concern at all. Many like myself that have a concentrated portfolio with good exposure to names like........Amazon, Google, Microsoft, Tesla, Nvidia, Apple.........are LAGGING the averages right now.

BUT......I have ZERO concerns. I am content to sit and wait for the big cap tech side of things to come back. I am EVEN content to sit it out for a year or more if necessary. Although.....I doubt it will be that long. I am content....because.....I want the exposure to those companies and what they mean over the long term. I suspect it might take till first or second quarter earnings.....but who knows. I have NO reason to need to.......GUESS.......the short to medium term market.

At the same time I have just below 50% of my portfolio in the SP500 and fidelity Contra Fund.....so I am getting the average return of the markets through these vehicles......in addition to a very nice dividend yield that........will.......BOOST my total return.

TOO many investors get ANTSY.......they have to try to control the returns to match the averages. WELL....just invest in an INDEX. There is no need to start changing strategy to meet short to medium term Index returns. The companies above are going to be the......GUTS.....of the US economy for a long time.

I want to be fully in these stocks when they come back.......unexpectedly.......and for the long term future. It is NOT a competition.....it is NOT a sprint......it is a MARATHON.

 

A couple of little articles that illustrate........THIS MOMENT.......in time for the markets.

Stock market news live updates: S&P 500 jumps 1.7% for best day in three weeks amid tepid inflation data

https://finance.yahoo.com/news/stock-market-news-live-updates-march-26-2021-221843882.html

(BOLD is my opinion OR what I consider important content)
Stock market news live updates: S&P 500 jumps 1.7% for best day in three weeks amid tepid inflation data

"Stocks gained on Friday after a new print on core inflation in the U.S. came in milder than expected.

Each of the S&P 500, Dow and Nasdaq extended advances into afternoon trading, with each major index closing higher by more than 1%. The S&P 500's gain of 1.7% was its best in three weeks, and the index ended with a weekly gain of about 1%. Shares of big bank stocks increased after the Federal Reserve announced that most banks will be allowed to resume increasing their dividends and shares repurchases after June 30, ending a year of pandemic-related restrictions.

U.S. crude oil prices rose after dropping by more than 4% on Thursday as additional virus-related lockdowns in Europe and Asia raised demand concerns, outweighing supply issues due to an ongoing blockage of the Suez Canal. Treasury yields rose, and the benchmark 10-year yield increased to about 1.67%.

The past couple weeks have been marked by choppy equity trading, especially heading into some of the final sessions of the first quarter. But overall, the cyclical energy, financials and industrials sectors – or the biggest underperformers of 2020 – have outperformed strongly for the year-to-date, while last year's leading technology companies have lagged. Signs of improving economic growth have trickled in, with Thursday's bigger-than-expected drop in new unemployment claims to a pandemic-era low among the latest positive reports.

"We have seen that value has outperformed growth when actual GDP has been above [the] long term average," Lori Calvasina, RBC Capital Markets head of equity strategy, wrote in a recent note. "In other words, growth stocks tend to outperform when growth is scarce, but value tends to outperform when it is plentiful. The good news for the value trade is that current consensus forecasts expect GDP to remain above trend through the end of 2022. The thing to monitor is whether that changes."

A prevailing concern for many investors, however, has in fact been centered on the pace of economic expansion, and whether the stimulus-aided post-pandemic recovery might barrel forward even more vigorously than expected and stir up rapid inflation. For February, at least, core personal consumption expenditures – the Fed's preferred inflation gauge – rose just 1.5%, coming in well below the central bank's 2% target.

"It is hard to keep up with this economy," Bank of America economists wrote in a note Thursday. The firm raised its forecast for real gross domestic product growth this year to 7.0%, compared to the Federal Reserve's median forecast for a rise of 6.5% this year. "We expect a near-term burst of inflation not only reflecting base effects but also due to transient inflation bottlenecks as demand increases faster than supply for certain categories of spend."

Still, Federal Reserve policymakers have recently tried to assuage market participants' fears over a sharp rise in inflation. Richmond Fed President Thomas Barkin told Fox News on Thursday that he sees inflation returning "closer to normal next year" after a probable spike this year, which will come as a result of base effects as inflation data laps weak reports from 2020. Chicago Fed President Charles Evans said even a jump of inflation for six months "is not nearly enough" to warrant a pivot on monetary policy by the central bank. And on NPR's Morning Edition Thursday, Fed Chair Jerome Powell reaffirmed that the Fed remained strongly committed to targeting 2% average inflation over time, and said that any eventual pullback in Fed support would be done "gradually, over time, and with great transparency.""

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AND here is another one.....for those that just want to read more of the same.

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Stock Market Reverses Higher As Consumer Stocks Lead; S&P 500 Finds Key Support

https://www.investors.com/market-tr...nsumer-stocks-lead-sp-500-support/?src=A00220

MY COMMENT

EXACTLY.

 

SINCE....it is the weekend.....and since this article is from CNN......and since this article is from a non-political site....I will put it up on the topic of TAXES. We are going to hear a LOT about TAXES in the coming weeks. OBVIOUSLY.....much of the talk will be about issues that WILL directly impact investing, business, investors, and the economy.

Why Janet Yellen is wrong on corporate tax rates
Opinion by Daniel Bunn and Scott A. Hodge for CNN Business Perspectives

https://www.cnn.com/2021/03/26/perspectives/janet-yellen-minimum-global-tax-rate/index.html

(BOLD is my opinion OR what I consider important content)

"President Joe Biden said he hopes to have America nearly back to normal by July 4th. For that to happen, policymakers must continue to make progress on sparking a swift and sustainable economic recovery.

Some economists argue that a tax hike on multinational corporations could be just the cure. Joseph Stiglitz of Columbia University and other economists recently penned an open letter to President Biden saying the United States must support "a global minimum tax on multinationals," which would establish a floor for how low countries could set their corporate income tax rates. This would put "an end to harmful tax competition between countries" and reduce "the incentive for multinationals to shift profits to tax havens," they argued.

These economists have found backing from Treasury Secretary Janet Yellen who has said nations that lower their corporate tax rates are embarking on a destructive "race to the bottom."

But imposing a global minimum tax on the world's corporations would significantly curb countries' autonomy in using tax policy to stimulate investment, while also setting a ceiling for global productivity and the speed at which we can recover from today's pandemic-driven downturn.

As talks between policymakers and governments at the Organisation for Economic Cooperation and Development (OECD) — where over 130 countries are negotiating changes to international tax rules — continue, leaders must ask whether this is an appropriate response to a world trying to restart its engine.

The answer? Yellen and Stiglitz have it backwards. Most countries aren't racing to the bottom, they're racing to the middle. Tax Foundation research shows that, for the past decade, the worldwide average of corporate tax rates has plateaued in the mid-20% range. Moreover, the OECD has found that the corporate income tax is the most harmful tax for economic growth. Keeping tax rates competitive will help economies rebuild faster and stronger.

After 30 years with one of the highest corporate tax rates in the developed world, the United States sharply reduced the federal corporate tax rate to 21% from 35% in 2017. But the Tax Cuts and Jobs Act didn't start the race to zero; it simply brought our corporate tax more in line with that of our competitors, making the United States a more attractive place for business.
Supporters of a new global minimum tax point out that it's a way to level the playing field, but it's an excuse for the countries at the OECD to pick who wins and who loses new business as the world rebuilds. Imagine if the big tech companies decided to level the playing field with "minimum prices" that froze out lower-priced competition. Consumers would be the losers because companies would no longer be able to compete to produce good products cheaply, just as taxpayers would be the losers if governments set a global minimum tax. Competition is good in business and in tax policy.

A new global minimum tax and rewriting of other international tax rules would not impact each country equally. High-tax countries, like France, where their corporate rate is currently 28.4%, would stand to gain from this policy, while places like Ireland and the United States, which have lower, more competitive rates and are home to more large multinational companies, especially those earning high profits, would face larger tax hikes that could motivate companies to leave.

If one goal of the current OECD negotiations and Secretary Yellen is to raise new revenues to help address the global pandemic, a policy that redistributes revenues from one country to another and relies on increasing the tax burden on investment does not seem to fit the task.

Not to mention, the United States already has its own version of a minimum tax. The Global Intangible Low Tax Income (GILTI), enacted as part of the 2017 tax cuts, operates as a minimum tax on profits of US multinationals. Expanding that policy on a global scale will only burden the very businesses that stand to help the United States and the rest of the world rebuild.

One rationale behind a new global minimum tax is to stop tax avoidance — or what is known as "anti-base erosion." The United States worked to address this issue in the 2017 tax cuts by lowering the corporate tax rate and adopting rules like GILTI. While the approach wasn't perfect, it was progress in stopping base erosion. Companies brought revenues parked overseas back to the States, but the reform failed in making the tax code simpler.

These policies designed to enforce tax collection are burdensome and complex, throwing sand in the gears of cross-border investment by making it more expensive for businesses to expand and run global operations because they would face higher taxes. As talks at the OECD continue, leaders must ask whether this is an appropriate response to a world trying to restart its engine.

Last year tested the world's mettle and proved its resilience. But it also revealed fragilities within our economies. If countries want to promote competitiveness, we should do everything we can to encourage that, so we can all rebuild more quickly. The desire of leaders like Yellen and others across the world to set a new global minimum tax runs the risk of starting a different and much more harmful "race to the bottom" — slower economic growth."

MY COMMENT

TAXES are going to be front and center over the next 2-4 weeks. Anyone that has been a business owner......knows......the impact of regulation, taxes, and fees. In the past.......the recent past....we had one of the HIGHEST corporate income taxes in the world. Now.....we are about average. I have....NO DOUBT....that we are about to raise the corporate income taxes......in the middle of an attempted recovery from a world wide pandemic.

I ALSO.....have no doubt that we are going to RAISE the......personal income tax, the estate tax, the capital gains tax, the gas tax or as an alternative a miles driven tax, and many other taxes and fees. ALL of this additional tax burden on corporations........and small business......WILL.....be simply passed on to the end consumer. The raise in income taxes and capital gains taxes on the.....so called "RICH"......will lead to less job creation and less money going into stocks and business.......as usual.

The ATTEMPT to raise more money for GOVERNMENT.......WILL.....no doubt.....just as ALWAYS happens actually end up decreasing the amount of tax income to government.

The ESTATE TAX increase....being proposed......a 45% rate on anything over $3.5MIL or $7MIL........for a couple.......will hammer small business, farmers, and families that are FAR from "RICH". In addition the percentage will rise much higher when an estate EXCEEDS about $10MIL.

We are going to end up driving the economy into a BIG RECESSION..........or a DEPRESSION.......or another era of massive STAGFLATION....with this "stuff". This......INSANITY......is the ONE BIG BLACK SWAN.....that is siting in the corner of the room waiting to pounce on the economy and investors.

Just like the historic first....voluntary shut down of the entire economy......the coming tax policy will end up being a SELF IMPOSED DISASTER......by government......... for investors and business and AMERICANS.

BUT....it will certainly be fun to watch......ENJOY.

 

I appreciate your comment roadtonowhere08. I believe it is appropriate and thoughtful. On a state level.....I would like to see a higher sales tax....around 14-15% to fund schools INSTEAD of the property tax. Homeowners bear the......BRUNT........of funding the schools. I once calculated that in my state....a sales tax between 14-15% could replace the property tax that goes to schools.......and.......SIGNIFICANTLY reduce the burden on homeowners.....and people trying to buy a house. There would be an exemption for food, medical care, and a few items. It would capture the ENTIRE economy......the cash economy. People would end up being VERY surprised.......how much of the economy escapes taxation and is under the table.

I.......obviously......have VERY STRONG VIEWS on the state of the country and politics....but....I try to keep them out of this thread. So for any that want to discuss TAXES.....lets try to keep them focused on......investing, business, the economy, yields, stocks, the economic future, etc, etc. In other words NO POLITICS. In my opinion POLITICS.......especially in today's environment.......just leads to bad feelings, argument, and disruption of a site like this one.

BUT.....I am not a MOD....so it is not up to me to run this or any thread.....or....say what can and can not be discussed. AND......I dont intend to do so.....I just want to be a regular poster. So....the above is JUST a suggestion.

 

When you have BIG BUCKS......and......are a short term trader/professional.....things get REALLY messed up at times. Since this is the weekend......here is the story of the moment among the "professionals"....generating lots of gossip and speculation.

Goldman Sold $10.5 Billion of Stocks in Block-Trade Spree

https://news.yahoo.com/goldman-sold-10-5-billion-155401799.html

(BOLD is my opinion OR what I consider important content)

"Goldman Sachs Group Inc. liquidated $10.5 billion worth of stocks in block trades on Friday, part of an extraordinary spree of selling that erased $35 billion from the values of bellwether stocks ranging from Chinese technology giants to U.S. media conglomerates.

The Wall Street bank sold $6.6 billion worth of shares of Baidu Inc., Tencent Music Entertainment Group and Vipshop Holdings Ltd. before the market opened in the U.S, according to an email to clients seen by Bloomberg News.

That move was followed by the sale of $3.9 billion of shares in ViacomCBS Inc., Discovery Inc., Farfetch Ltd., iQiyi Inc. and GSX Techedu Inc., the email said.

More of the unregistered stock offerings were said to be managed by Morgan Stanley, according to people familiar with the matter, on behalf of one or more undisclosed shareholders. Some of the trades exceeded $1 billion in individual companies, calculations based on Bloomberg data show.

Wall Street is now collectively speculating on the identity of the mysterious seller or sellers. The liquidation triggered price swings for every stock involved in the high-volume transactions, rattling traders and prompting talk that a hedge fund or family office was in trouble and being forced to sell.

Several major investment banks with ties to hedge fund Archegos Capital Management LLC liquidated holdings, contributing to the slump in share prices of ViacomCBS and Discovery, IPO Edge reported, citing people it didn’t identify. CNBC reported forced sales by Archegos were probably related to margin calls on heavily leveraged positions. Archegos is controlled by former Julian Robertson protege and Tiger Management analyst Bill Hwang.

Maeve DuVally, a Goldman Sachs spokeswoman, declined to comment. A spokesperson for Morgan Stanley declined to comment. A person reached at Archegos’s New York office on Friday declined to comment. An email sent to Hwang seeking comment wasn’t returned.

Price Swings

In block trades, large volumes of securities are privately negotiated between parties, usually outside of open market.

Friday’s selloff dragged companies including Alibaba Group Holding Ltd. and NetEase Inc. lower. The peers later recovered after traders said word of the offerings lessened fears that a broader trade was unfolding throughout the sector.

That late rebound pushed up an index of companies engaged in internet-related businesses in China and the U.S., with the measure halting a three-day selloff while still notching a slide of about 6.5% for the week.

Chinese stocks have been under pressure after a warning from the Securities and Exchange Commission that it’s taking steps to force accounting firms to let U.S. regulators review the financial audits of overseas companies -- the penalty for non-compliance being ejection from exchanges. In addition to that, Bloomberg News reported that China’s government has proposed forming a joint venture with local technology giants that would oversee the lucrative data they collect."

Goldman sold US$10.5 billion of stocks in block trades, hitting Baidu, Tencent Music, iQiyi and US media amid ‘forced deleveraging’ by mystery fund

https://www.scmp.com/business/banki...old-us105-billion-stocks-block-trades-hitting

‘Unprecedented’: Wall Street Ponders Goldman’s Block-Trade Spree

https://news.yahoo.com/unprecedented-wall-street-ponders-goldman-232214658.html

MY COMMENT

YES.......the ultimate danger of being a short term trader/speculator. Looks like someone......one of the BIG BOYS......made some wrong calls and paid the price. UNFORTUNATELY.......they pulled a number of stocks down with their MESS. A big GOSSIP topic this weekend.

 

AND.....news that....might.....actually mean something.

U.S. Consumer Sentiment Climbs as Virus Restrictions Ease

https://www.bloomberg.com/news/arti...iment-in-u-s-continued-climbing-in-late-march

(BOLD is my opinion OR what I consider important content)

"U.S. consumer sentiment continued to improve in late March to a one-year high as more Americans got coronavirus vaccinations and business restrictions eased in many states.

The University of Michigan’s final sentiment index increased to 84.9 from a preliminary March reading of 83, according to data Friday. The median projection in a Bloomberg survey of economists called for 83.6.


The gauge of current conditions rose to 93 from a February reading of 86.2, while a measure of expectations increased 9 points to 79.7. The monthly advance in the outlook was the biggest since April 2009.

Consumers’ expectations for inflation over the longer term climbed to an almost six-year high.

The increase in sentiment shows Americans are growing more upbeat about an economic recovery fueled by vaccinations, business reopenings and warmer weather. The passage of the latest round of federal aid is also spurring confidence.

A gauge of the economic outlook over the next year jumped 25 points to a one-year high of 108 in March. Buying conditions for durable goods climbed, with the university’s gauge also advancing to a one-year high.

Still, consumer confidence is well below pre-pandemic levels, signaling that pandemic-related health concerns and a slowly recovering job market are still limiting the improvement.

Investors and policy makers are watching carefully for signs of inflation. Longer-term inflation expectations rose to 2.8% in March, the highest since July 2015, from 2.7% a month earlier.

Consumers expect prices to rise 3.1% in the next year, compared with 3.3% in February, according to the Michigan report.

The Michigan survey was conducted Feb. 24 to March 22."

MY COMMENT

Looks like someone is feeling good about the near term future. Of course......the data ALSO reflects the intense media coverage of inflation and interest rates. BUT.....the largest advance in Consumer Confidence since 2009.....must mean something.....right?

AND.....the GREAT NEWS......we are just in the EARLY STAGES of the reopening with some of the largest states STILL NOT doing anything. As people start to.....REVOLT.....against this situation and the reopening becomes NATIONWIDE......the BEST is yet to come. We have MASSIVE room to move UP from here in.......all.......the economic indicators.

 

WELL....for all you day traders and short term speculators......we may be looking at a WILD DAY tomorrow.

Large block trades tied to Archegos raise worries about trading this week

https://au.finance.yahoo.com/finance/news/large-block-trades-tied-archegos-211050253.html

(BOLD is my opinion OR what I consider important content)

"A number of large block trades on Friday which investors said caused big drops in the stocks of a clutch of companies were linked to an investment fund, Archegos Capital, a source familiar with the situation said, with the moves raising worries about volatile trading in the coming days.

Shares in ViacomCBS and Discovery tumbled around 27% each on Friday, while U.S.-listed shares of China-based Baidu and Tencent Music plunged during the week, dropping as much as 33.5% and 48.5%, respectively, from Tuesday's closing levels.

Investors and analysts cited blocks of Viacom and Discovery shares being put in the market on Friday for likely exacerbating the decline in those stocks. Viacom was also downgraded by Wells Fargo on Friday.

The block trades were linked to sales of holdings by Archegos, a source familiar with the situation said, confirming reports elsewhere. CNBC reported on Saturday that the selling pressure was due to liquidation of positions by family office Archegos Capital Management, citing a source with direct knowledge of the situation, and the Financial Times and Bloomberg reported the link earlier on Sunday. The link with Archegos was also earlier reported by IPO.

A person at Archegos who answered the phone on Saturday declined to comment. Archegos was founded by Bill Hwang, who founded and ran Tiger Asia, according to a page capture https://web.archive.org/web/20210124211426/https://www.archegoscapital.com/management of the fund's website. Tiger Asia was a Hong Kong-based fund fund https://www.reuters.com/article/tog...o-return-investor-money-idUKL4E8JE2XP20120814 that sought to profit on bets on securities in Asia.

Some market participants said last week's wild moves were likely to make investors increasingly cautious.

"It's insane," said Edward Moya, senior market analyst at OANDA. "When you consider how some of these companies have skyrocketed over the last few months, there will be concerns that we are over-levered."

Other market participants said potential unwinds would only have a limited impact on broader markets. The Nasdaq Composite and S&P 500 both surged over 1% on Friday despite the sharp selloffs in Viacom and other stocks.

"These stories around fund liquidations happen from time to time," said Michael Antonelli, market strategist at Baird. "Some of the names where big blocks were traded on Friday might see some near-term volatility as traders wonder whether the selling is complete."

Mike O'Rourke, chief market strategist at JonesTrading said he expected the trades to "largely be done."

"The prime brokers made lots of noise in marketing these blocks," O'Rourke said. "They knocked the stocks down aggressively in order to get the trades done."

O'Rourke added that prime brokers typically go long the remnants of the position, and he expected most of the names involved in the block trades to be "gapping up significantly higher" in premarket trading.

BANKS INVOLVED

A number of banks were involved in the block sales. A source familiar with the matter said on Saturday that Goldman Sachs Group Inc was involved in the large blocktrades. The Financial Times reported that Morgan Stanley sold $4billion worth of shares early on Friday, followed by another$4 billion in the afternoon.

A source familiar with the matter said Deutsche Bank was involved with the block trades as well.

Bloomberg and the Financial Times on Saturday reported that Goldman liquidated more than $10 billion worth of stocks in the block trades.

An email to clients seen by Bloomberg News said Goldman sold $6.6 billion worth of shares of Baidu Inc , Tencent Music Entertainment Group and Vipshop Holdings Ltd, before the U.S. market opened on Friday, the Bloomberg report on Saturday said.

Following this, Goldman sold $3.9 billion worth of shares inViacomCBS Inc, Discovery Inc, Farfetch Ltd, iQIYI Inc and GSX Techedu Inc, according to the report."

MY COMMENT

So nice......with this sort of insanity going on short term......to be a long term investor. ALSO.....very glad to NOT be a holder of anything from China. These trades ERASED.....$35BILLION......off stock values in one day.

 

Well.....we are about to open a new week tomorrow for investors. I am......stuck....in a little range right now. At the moment I am about 3.5% from an ALL TIME HIGH. Yet...I am just up a bit over 1% for the year. I have been stuck in the TECH weakness for about 6 weeks now.

Actually......I consider my position.....within 3.5% of an all time high......and considering the weakness of the tech side of my portfolio.....a pretty good result and a good starting point to go forward into the rest of the year. I have been bouncing back and forth between.......within 3% of the all time portfolio high.......and......somewhere around 5-7% of an all time portfolio high.

I think.....if my memory is right...that this weakness started about February 12. Kind of a very MILD.......lingering....... correction for TECH investors. Of course......my two mutual funds....SP500 Index and Fidelity Contra Fund....are helping to hold some account value........since the SP500 is UP by 5.82% year to date and the Contra Fund is performing nicely also. So....at the moment......my long term strategy of having the two funds in my account with somewhere around 43-45% of the account total is.......a good thing. The funds are doing EXACTLY what I like them to do....counterbalance the very concentrated stock side of the portfolio.

I am very patient and have NO PLANS to make any changes. I am content to wait for the Tech........BEHEMOTHS.......to pop back up and start to move again. As I have said before....I am thinking of the first or second quarter earnings being the catalyst for this to happen. There will come a time when investors just can not avoid these big cap tech stocks......as earnings make them more and more attractive going forward.

Of course......I remain fully invested for the long term as usual.

 

FOR....the inflation BULLS......here is another article on the topic. NO....I dont expect any ABNORMAL inflation. BIT....even if we got a bit.....thinking that it will be negative for stocks is not likely. In fact....whatever amount of inflation....good or bad....will PROBABLY be positive for stocks......and....by extension for the investors that own them.

A Q&A on Inflation
With prices up in some corners of the economy, we examine what inflation is—and isn’t.

https://www.fisherinvestments.com/en-us/marketminder/a-qa-on-inflation

(BOLD is my opinion OR what I consider important content)

"The Fed’s preferred inflation gauge—the Personal Consumption Expenditures (PCE) Price Index—hit the wires Friday morning, showing inflation ticked up from 1.4% y/y to 1.6% February. That is below the Fed’s 2% target. But if we have learned anything in our many years of covering economic developments, it is that this won’t do a thing to quell inflation chatter. Many still think rapid inflation is inevitable as more businesses reopen, especially with fiscal stimulus talk picking up again. This week, we have seen a fair few pieces arguing we are seeing the initial signs of this, which we think makes it worth a look at what is—and isn’t—inflation. Mind you, we don’t think rising inflation is inherently a risk for stocks, which have actually done quite well during such spells in the past. Trouble generally stems from the Fed being too late to rein in prices and then over correcting, an event we think defies prediction. Still, having a better understanding of the supposedly inflationary news today can help you keep a level head when making portfolio decisions, so off we go.

First off, what the heck is inflation, really?

Glad you asked. Inflation is a general rise in prices across the entire economy. Inflation measures use broad baskets of goods and services in hopes of capturing broad trends accurately. These include the aforementioned PCE index as well as the Consumer Price Index (CPI) and private-sector gauges like MIT’s Billion Prices Project. At any time, some items in these inflation baskets will rise while others will fall, but those outliers cancel each other out and let the broader trend emerge.

What causes inflation?

There are. various schools of thought, and this is really a topic for a book We generally subscribe to Nobel prizewinning economist Milton Friedman’s pithy view: Inflation is a monetary phenomenon—too much money chasing too few goods and services. Historically, the Fed has focused on the money part of this, adjusting interest rates and bank reserve requirements in hopes of keeping money supply and velocity (the rate at which money changes hands) growing fast enough to fuel economic expansion, but not too fast, lest the economy overheat. That is jargon for too much money sloshing around with no productive use and thus pushing prices higher.

Do high oil prices fuel inflation?[ii]

Energy is a component of CPI, PCE and most inflation indexes, so yes, it contributes to inflation. But oil prices, like food prices, are frequently subject to market forces that have less to do with monetary drivers, so there are “core” inflation measures that exclude them. The theory there is to give a clearer look at trends that big swings in commodities might be hiding. Note, however, that the Fed does NOT target core PCE. It targets headline PCE.

Some argue energy prices can bleed into other consumer goods and services by driving up businesses’ costs, forcing them to pass these costs onto consumers. This is possible on a case-by-case basis, but corporations that consume a lot of oil generally hedge using futures contracts so that they can avoid this outcome. (This is similar to companies that import parts and labor and hedge for currency swings to keep costs stable.) Companies also don’t pass every cost on to consumers—sometimes they elect to keep prices low to attract demand. When plunging oil prices pulled headline PCE near zero in 2015, core PCE didn’t budge much.[iii] Same goes for when rising energy prices temporarily lifted headline PCE in 2011 and the mid-2000s.[iv] Core PCE rose less. Now, the two moved much more in tandem in the 1970s, which is the period on everyone’s mind right now. But there were a lot of other things going on then, like the expiration of price controls and some ill-advised Fed policy, and the US economy was much less energy-efficient then.

I read a lot about semiconductor shortages driving up prices—not just for chips, but in the consumer goods made with them, like cars. Is that inflation? It sounds like an example of “too few goods.”

This gets into some interesting nuances, because yes, supply shortages contribute to higher prices. If a semiconductor shortage leads to shortages of cars, consumer electronics and the multitude of “smart” products using chips, that could drive those prices higher. But we are hesitant to call this inflation. We doubt it is something the Fed could address with interest rate hikes, for example. Plus, as ubiquitous as these goods are in everyday life, they aren’t an outsized chunk of the inflation basket. As mentioned earlier, the breadth of that basket helps even out niche, supply-driven developments like this.

Supply disruptions’ impact on prices is usually temporary. Today’s semiconductor supply shortage stems partly from production taking a hit during the pandemic. Rising demand has also played a role, but this imbalance probably isn’t permanent. Higher prices are a signal. They tell producers it is time to invest in new production. Semiconductor companies have received the message, with a major one announcing plans to build new foundries this week. Those construction projects take a while, so this isn’t an instant fix, but overall we see this as market forces working the way they are supposed to.

What about shipping costs? And that big tanker that got stuck in the Suez Canal? That can’t be good for prices.

We think this is another temporary factor, and the market seems to agree. They have seen through numerous shipping disruptions in recent years, from work stoppages at West Coast ports in the US to Brexit and the pandemic. All have caused backlogs of container ships (or, in Brexit’s case, trucks), much as we are seeing around the Suez Canal right now. But companies and the shipping industry adapted, and as the stranded ships eventually docked, longshoremen unloaded them at rapid speed and everything got where it needed to go. When shipping costs rise, companies do what they need to adapt. Everyone’s favorite shipping cost index, the Baltic Dry, has hit much higher levels than where it presently sits, without whacking global trade or causing a recession. When world trade did fall a few years ago, the global economy still grew and stocks’ bull market continued. And—you guessed it—inflation didn’t surge."

MY COMMENT

YES.........there is NO inflation. At least any that would be OVER what is normal and desirable. In my opinion WAGES are the BIG driver of inflation. We are......actually.....seeing investors and others being WORN OUT by all the inflation coverage and fear mongering. I dont see ANYONE very concerned about it anymore. This is just how the markets work with inflation, interest rates.....or....any other topic that is hammered day after day. Within a month or two investors get worn out by the topic and move on.

ANY.....comparisons to the inflation of the 1970's and early 1980's is simply WRONG. Having lived through those time what we are seeing now is......not even remotely similar. AND....having invested in various times of inflation fear mongering.....and....even some slight inflation......my view is that stocks and investors do very well.

 

This "little" article pretty well sums up the current outlook for investors.

What's ahead for the all-time high stock market?: Morning Brief

https://finance.yahoo.com/news/what...igh-stock-market-morning-brief-100506141.html

(BOLD is my opinion OR what I consider important content)

"With the S&P 500 (^GSPC) closing at an all-time high on Friday and the first quarter coming to a close this week, investors and traders are asking where the stock market is headed next. Though, when are they not?

Overall, the tone on Wall Street is a modestly bullish one thanks to bullish expectations for the economy.

At Barclays, the message is simple: stocks look better than bonds.

"Stay overweight equities, given the earnings outlook," Barclays Ajay Rajadhyaksha recommended on Thursday. "Yes, equity multiples have expanded over the past year, but much of the rally has been due to the absolutely stunning recovery in earnings."

Elevated valuations is probably the biggest source of consternation for investors. But Rajadhyaksha isn't alone in arguing that expectations for robust earnings growth and more upward revisions from analysts are why valuations appear overstated today.

"Consider the S&P 500, where consensus in the aftermath of COVID-19 was that earnings would not reach 2019 levels until at least late 2021," Rajadhyaksha said. "In reality, S&P earnings in Q4 2020 ended up being higher than in Q4 2019; a complete V-shaped earnings recovery within a year despite the backdrop of continued pandemic-related restrictions, and with the wider economy still in worse shape.

"What does this mean for valuations? Equity market valuations based on forward-looking earnings metrics do look elevated relative to history. However, the scale of positive news expected in coming quarters means that stocks still don’t look too expensive to us."

All that said, Barclays sees limited upside in the near term. The firm has a 4,000 year-end target for the S&P, which suggests less than a 1% gain from Friday's close.

Meanwhile at RBC Capital Markets, U.S. stocks are looking increasingly attractive due to uneven global progress in the COVID pandemic.

"We are shifting to a neutral stance on U.S. equities relative to non-U.S. equities, removing our prior preference for non-U.S. equities — primarily due to a better COVID backdrop in the U.S.," RBC Capital Market's Lori Calvasina said on Wednesday. "While there are some indications over the past few days that new cases in the U.S. may be entering a plateau, igniting worries about another wave in the U.S., they have fallen sharply in the U.S. over the last few months while new cases (and lockdowns) have been on the rise in Europe. At the same time, economic growth forecasts for the U.S. have been moving up sharply, while those for Europe have been falling."

Calvasina sees the S&P 500 climbing to 4,100 by year-end, with the possibility of getting as high as 4,600 should the circumstances of her bull case scenarios be met.

A dip before more gains?
Deutsche Bank strategists, too, expect the S&P to head to 4,100. But they warn it may not be a smooth ride higher.

"Though we expect equities to continue to move up near-term, we then expect a pullback as growth peaks in Q2 at a high level," the firm said in a presentation on Wednesday.

Some expect that dip could come in the next few days as portfolio managers rebalance their portfolios as the quarter ends. Since stock prices are up and bond prices are down year-to-date, the thinking is managers may sell some stock and buy some bonds to get back to their target allocations.

But not all pros think this.

JPMorgan quantitative strategist Marko Kolanovic notes that rebalancing doesn't happen just at the end of the month, which challenges the idea that portfolio managers will dump stocks this week because prices are up in the quarter.

"Multi-asset portfolios with fixed target weights can rebalance monthly, quarterly, based on specific weight triggers, and increasingly are done with discretion/opportunistically (e.g., few days after month-end as we saw last year)," Kolanovic wrote on Thursday. "In addition, increasing numbers of portfolios rebalance based on volatility targets, which often results in flow opposite to those of fixed weights. When looking at how many portfolios rebalance using monthly fixed weights vs. quarterly fixed (based on their impact on market), we find that fixed weight monthly rebalances are prevalent, while quarter-end rebalances effectively lost meaning and actually result in opposite flows (likely due to volatility target contributions to quarterly rebalance)."

Kolanovic gets into the weeds a bit to explain this, and ultimately concludes "there is no expected negative impact on equities from month-end."

In fact, he takes an even more contrarian view.

"Given broad advertising of some ‘massive month-end selling,' we caution investors that the impact on the market may be positive with a near-term upside move."

All that said, it can be treacherous to make big bets on what may happen in the short-term. You never know when some unexpected market rocking event emerges like a single ship running aground disrupting global trade or a big hedge fund liquidating causing all sorts of dislocations in the market."

MY COMMENT

YES....it is TREACHEROUS betting on the short term. Number one......there is NO WAY anyone can predict what will happen on any level over the short term. Number two.....even if you could.....market timing is just NOT effective or a realistic strategy......it NEVER works.

I will say it.......ANYONE that is investing around Europe and the emerging markets and the developing countries.......is.....in my personal opinion.....a MORON. Now if you are a short term speculator/trader.....ok. those markets tend to be more subject to manipulation and speculative FORCES. BUT....as a longer term investor.....a total waste of time and money.

We are under the SWAY of the......BIG HEDGE FUND......implosion today. The "professionals" are all goo-goo eyed and "tabloid" over the big block trades last Friday and over the weekend. FOR long term investors.......a total non-event. ACTUALLY.....confirmation that those with unlimited assets and power......can NOT trade the short term any better than the amateurs.

 

For those that JUST LOVE to invest in Chinese companies.......here is the latest BIG WARNING.

China warns firms not to engage in politics over Xinjiang

https://finance.yahoo.com/news/china-warns-companies-against-politicising-014220353.html

(BOLD is my opinion OR what I consider important content)

"Chinese officials on Monday said Sweden's H&M and other foreign brands should not make rash moves or step into politics after the companies raised concerns about forced labour in Xinjiang, sparking a furious online backlash and boycotts.

H&M, Burberry, Nike, Adidas and other Western brands have been hit by consumer boycotts in China since last week over comments about their sourcing of cotton in Xinjiang. The growing rift comes as the United States and other Western governments increase pressure on China over suspected human rights abuses in the Chinese province.

"I don't think a company should politicize its economic behaviour," said Xu Guixiang, a Xinjiang government spokesman, at a news conference on Monday morning. "Can H&M continue to make money in the Chinese market? Not anymore."

"To rush into this decision and get involved in the sanctions is not reasonable. It's like lifting a stone to drop it on one's own feet," he said.

H&M did not immediately respond to a request for comment.

In Geneva, U.N. human rights experts voiced concerns about alleged detention and forced labour of Muslim Uighurs in China and called for global and domestic companies to "closely scrutinise their supply chains".

They had received information that "connected over 150 domestic Chinese and foreign domiciled companies" to serious allegations of human rights abuses against Uighur workers, the experts said in a statement that did not name the companies.

“Uyghur workers have allegedly been forcibly employed in low-skilled, labour-intensive industries, such as agribusiness, textile and garment, automotive and technological sectors,” said Dante Pesce, chair of the U.N. working group on business and human rights, using a different spelling for the word Uighur.

Chinese social media users last week began circulating a 2020 statement by H&M announcing it would no longer source cotton from Xinjiang.

H&M said at the time the decision was due to difficulties conducting credible due diligence in the region and after media and human rights groups reported the use of forced labour in Xinjiang - a charge that Beijing has repeatedly denied.

Elijan Anayat, another Xinjiang government spokesman, said during the briefing that Chinese people did not want the products of companies such as H&M and Nike that have boycotted Xinjiang's cotton. He said he would welcome companies taking trips to the region's cotton fields to see them for themselves.

WESTERN SANCTIONS

Washington on Friday condemned what it called a state-led social media campaign in China against U.S. and other international companies for committing not to use cotton from Xinjiang.

The wave of consumer boycotts in China has coincided with a coordinated set of sanctions imposed by Britain, Canada, the European Union and the United States last week over what they say are human rights abuses taking place in Xinjiang. The U.S. government has publicly accused Beijing of genocide against the Uighur Muslim ethnic minorities in the region.

Xu repeatedly rejected accusations of genocide and human rights abuses in the region and accused the Western powers of engaging in political manipulation to destabilise China with the sanctions.

"They have lost their minds and their conscience, they are enthusiastic about political manipulation and the abuse of sanctions, to a level that is hysterical," said Xu.

Anayat said: "Their real purpose by fabricating the issue of genocide is to disrupt security and stability in China."

The United States in January announced an import ban on all cotton and tomato products from the area due to allegations of forced labour from detained Uighur Muslims.

Western governments and rights groups have previously accused authorities in the far-western region of detaining and torturing Uighurs in camps, where some former inmates have said they were subject to ideological indoctrination.

China has repeatedly denied all such charges and say the camps are for vocational training and combating religious extremism."

MY COMMENT

INVEST IN.....work in....manufacture in.....CHINA at your own risk. WE need to STILL....SIGNIFICANTLY decrease our reliance on China for cheap labor and manufacturing. It is a JOKE on shareholders that large companies are so intertwined with China. Human rights...ok. BUT....regardless of human rights.......they can NOT be trusted, their economy is a fraud, they steal technology and products, etc, etc, etc. AND....worst of all....there is NOT A SINGLE....market or business in CHINA....that is not under the thumb and ultimate control of the Chinese Communist government.

Sooner or later......YOU....or your MONEY.....will end up in a Chinese camp for a little.....personal or business......"vocational training".