The Long Term Investor

I was bored and ended up watching the movie........."Army of Darkness"....for the third or forth time over the weekend. I had not seen it for a long time. A classic.

Reminds me of the markets right now.

 

I agree with this little article and Goldman Sachs.

Stagflation fears overblown, Wall Street strategists say
Goldman Sachs says stagflation is not in its base case

https://www.foxbusiness.com/markets/stagflation-fears-overblown-wall-street-strategists-say

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

"Wall Street strategists say mounting concerns over stagflation are a good opportunity to buy the dip stocks.

Stagflation, which is typically defined as a period of inflation with declining economic output, was the most common word Goldman Sachs clients brought up this week.

"Stagflation is not our economists’ base case expectations," wrote David Kostin, chief U.S. equity strategist at Goldman Sachs.

The S&P 500 fell 5.2% from Sept. 2 through Oct. 4 amid concerns regarding lofty valuations amid a backdrop of supply chain disruptions and labor shortages that developed in the wake of COVID-19.


The supply chain and labor issues along with trillions of dollars of fiscal and monetary stimulus have resulted in the consumer price index rising 5.3% year over year in September, near the hottest pace in 13 years. That backdrop, along with concerns over slowing growth, has sparked talk that the U.S. is entering a stagflationary environment, the likes of which has not been seen since the 1970s.

However, many Wall Street economists, like the Federal Reserve, say pricing pressures are likely to ease in the months ahead as supply chain bottlenecks are alleviated.

Others say we are nowhere near the stagflation that was seen when Jimmy Carter was in the White House.

"If ‘stagflation’ means ‘the 1970s,’ a time of wage-price spirals and high unemployment, this clearly isn’t it," wrote Morgan Stanley strategist Andrew Sheets.

Still, a Deutsche Bank survey published Monday found 74% of more than 600 respondents worried that rising inflation/bond yields pose the biggest threat to market stability.

Sixty-three percent of respondents think there will be another 5% to 10% pullback in the S&P 500 while another 8% feared a steeper decline.

But Wall Street is mostly on board with the idea that the current pullback represents a buying opportunity.

"Despite near-term uncertainty we expect the equity market will continue to rally as investors gain confidence that the current pace of inflation is ‘transitory,’" Goldman Sachs’ Kostin wrote. "We believe this dip will prove a good buying opportunity, as 5% pullbacks usually have in the past.""

MY COMMENT

Having lived and invested in the 1970's.....what we are seeing now is NOTHING like what was going on back than. I get so tired of the references to the 1970's and investing today. Inflation is NOTHING like it was than.....the potential for Stagflation is NOTHING like it was than. I very clearly remember the........WAGE PRICE SPIRAL....situation back than. NOT happening now.

 

Absolutely TYPICAL open today. First green....now red. The markets are stuck in a....news driven.....RUT lately. That is how it works....until you look at a long term chart of the SP500. When you do that all these little time periods of DRAMA disappear.

As an investing and money.....hunter/gatherer........today I am making money. I will take money anywhere I can get it. In fact money that will compound for the rest of my life. I am talking about the raise in Social Security.

Social Security COLA largest in decades as inflation jumps

https://www.yahoo.com/lifestyle/soc...est-decades-124121157.html?fr=yhssrp_catchall

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

"Millions of retirees on Social Security will get a 5.9% boost in benefits for 2022. The biggest cost-of-living adjustment in 39 years follows a burst in inflation as the economy struggles to shake off the drag of the coronavirus pandemic.

The COLA, as it's commonly called, amounts to $92 a month for the average retired worker, according to estimates released Wednesday by the Social Security Administration. That marks an abrupt break from a long lull in inflation that saw cost-of-living adjustments averaging just 1.65% a year over the past 10 years.

With the increase, the estimated average Social Security payment for a retired worker will be $1,657 a month next year. A typical couple’s benefits would rise by $154 to $2,753 per month.

But that's just to help make up for rising costs that recipients are already paying for food, transportation and other goods and services.

“It goes pretty quickly,” retiree Cliff Rumsey said of the cost-of-living increases he's seen. After a career in sales for a leading steel manufacturer, Rumsey lives near Hilton Head Island, South Carolina. He cares at home for his wife of nearly 60 years, Judy, who has advanced Alzheimer's disease. Since the coronavirus pandemic, Rumsey said he has noted price increases for food, wages paid to caregivers who occasionally spell him and personal care products for Judy, not to mention energy costs.

The COLA affects household budgets for about 1 in 5 Americans. That includes Social Security recipients, disabled veterans and federal retirees, nearly 70 million people in all. For baby boomers who embarked on retirement within the past 15 years, it will be the biggest increase they've seen.

"It's going to be welcome," said analyst Mary Johnson of the nonpartisan Senior Citizens League advocacy group. “But what we are hearing is that even with the COLA, buying power will still be eroded because price increases are still going up.”

AARP CEO Jo Ann Jenkins called the government payout increase “crucial for Social Security beneficiaries and their families as they try to keep up with rising costs.”

Policymakers say the COLA was designed as a safeguard to protect Social Security benefits against the loss of purchasing power, and not a pay bump for retirees. About half of seniors live in households where Social Security benefits provide at least 50% of their income, and one-quarter rely on their monthly payment for all or nearly all their income.

“Regardless of the size of the COLA, you never want to minimize the importance of the COLA,” said retirement policy expert Charles Blahous, a former public trustee helping to oversee Social Security and Medicare finances. “What people are able to purchase is very profoundly affected by the number that comes out. We are talking the necessities of living in many cases.”

This year’s Social Security trustees report amplified warnings about the long-range financial stability of the program, but there’s little talk about fixes in Congress with lawmakers’ attention consumed by President Joe Biden’s massive domestic legislation and partisan machinations over the national debt. Social Security cannot be addressed through the budget reconciliation process Democrats are attempting to use to deliver Biden’s promises.

But Social Security’s turn will come, said Rep. John Larson, D-Conn., chairman of the House Social Security subcommittee and author of legislation to tackle looming shortfalls that would leave the program unable to pay full benefits in less than 15 years. His bill would raise payroll taxes while also changing the COLA formula to give more weight to health care expenses and other costs that weigh more heavily on the elderly. Larson said he intends to press ahead next year.

“This one-time shot of COLA is not the antidote,” he said.

Although Biden’s domestic package includes a major expansion of Medicare to cover dental, hearing and vision care, Larson said he hears from constituents that seniors are feeling neglected by the Democrats.

“In town halls and tele-town halls they’re saying, ‘We are really happy with what you did on the child tax credit, but what about us?’” Larson added. “In a midterm election, this is a very important constituency.”

The COLA is only one part of the annual financial equation for seniors. An announcement about Medicare’s Part B premium for outpatient care is expected soon. It’s usually an increase, so at least some of any Social Security raise goes for health care. The Part B premium is now $148.50 a month, and the Medicare trustees report estimated a $10 increase for 2022.

Economist Marilyn Moon, who also served as public trustee for Social Security and Medicare, said she believes the current spurt of inflation is an adjustment to highly unusual economic circumstances and the pattern of restraint on prices will reassert itself with time.

“I would think there is going to be an increase this year that you won’t see reproduced in the future,” Moon said.

Policymakers should not delay getting to work on retirement programs, she said.

“We’re at a point in time where people don’t react to policy needs until there is a sense of desperation, and both Social Security and Medicare are programs that benefit from long-range planning rather short-range machinations,” she said.

Social Security is financed by payroll taxes collected from workers and their employers. Each pays 6.2% on wages up to a cap, which is adjusted each year for inflation. Next year the maximum amount of earnings subject to Social Security payroll taxes will increase to $147,000.

The financing scheme dates to the 1930s, the brainchild of President Franklin D. Roosevelt, who believed a payroll tax would foster among average Americans a sense of ownership that would protect the program from political interference."

MY COMMENT

As a self employed business owner I paid about 15.2% on Social Security and Medicare out of my earnings. NOW....I am seeing some pay back of the money that I put in.

I will see about $2500 in additional benefit starting in 2022. I will also SAVE about $2500 on my Medicare and Drug coverage premiums that are paid to the GOVERNMENT. Since I planed my tax situation in retirement and am now in a very low tax bracket......my EXTRA premium for Medicare and Drug coverage will now be the MINIMUM. No more extra premiums for me. So.....with my cost of living increase and premium savings.....i will see about $5000 per year.

The GOOD NEWS......over time the increase this year and ALL the prior increases that I have gotten.....will COMPOUND as increases happen in each future year. Over time this money will add up to significant increases in my benefit.

So.....the markets today......who cares.....I just made some good money today.......and.......every year for the rest of my life.

 

This headline is not exactly true since the DOW and SP500 are now negative......but we have a lng way to go till the close today.
Stock market news live updates: Stocks rise as investors eye bank earnings, inflation data

https://finance.yahoo.com/news/stock-market-news-live-updates-october-13-2021-221448905.html

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

"Stocks gained on Wednesday as investors digested new earnings data and a key inflation report, which showed a faster-than-expected rise in inflation across a broad range of goods. Each of the S&P 500, Dow and Nasdaq opened slightly higher, with the indexes looking to shake off three consecutive sessions of losses.

Third-quarter earnings season also picked up, with notable companies including JPMorgan Chase (JPM) and BlackRock (BLK) posting results before market open. JPMorgan Chase, the largest U.S. bank by assets, posted results that topped estimates on both the top and bottom lines, boosted by a larger-than-expected release of credit reserves and strong sales in the firm's investment banking and equities trading divisions.

Investors have been trimming their outlooks for overall S&P 500 earnings growth for the third quarter, given that rising input prices, higher labor costs and other supply-side headwinds likely weighed on margins and chipped away at profitability.

Recent developments for a plethora of companies across industries have already reflected the impacts of supply chain shortages and shipping challenges. The Wall Street Journal reported that firms from Costco (COST) to Walmart (WMT) have resorted to chartering their own ships to import goods ahead of the holiday season. And Bloomberg reported Tuesday that Apple (AAPL) was set to cut its iPhone production targets for this year by as many as 10 million units due to ongoing chip shortages.

The latest batch of economic data due Wednesday confirmed that these supply and demand mismatches translated to ongoing inflationary pressures at the start of the fall. In the Labor Department's Consumer Price Index, core prices, excluding food and energy, rose by 4.0% in September over last year, coming down only slightly from June's 30-year high of 4.5%. And a broader measure of consumer prices including all categories rose 5.4% in September compared to last year, coming in at the fastest pace since 2008.

Wall Street analysts are looking for third-quarter earnings growth of about 27% on a year-over-year basis, according to FactSet data. Though this would still be the third-fastest earnings growth rate since 2010, it would be a marked slowdown from the second quarter's nearly 90% pace.

Savita Subramanian, Bank of America's head of U.S. equity and quantitative strategy, wrote in a note this week that this "will be a make-or-break quarter with all eyes on margins and supply chains.

Other strategists agreed.

"We think investors should fasten their seatbelts because this is going to be one rocky earnings season,” Wall Street Alliance Group’s Aadil Zaman told Yahoo Finance Live on Tuesday. “Supply chain issues are going to be dominating the earnings, and some companies, we are going to see, are going to give us an early Halloween shock.”

However, given that issues around materials shortages, port congestion and labor scarcities have already been well-known among investors, traders should focus more closely on company commentary and outlooks as a signal of future resilience, some pundits noted.

“The message that I’m giving to our investors is focus not necessarily on what the third-quarter print is, but more importantly focus on what companies are saying about visibility going forward,” John Lynch, chief investment officer for Comerica Wealth Management, told Yahoo Finance Live. “And we think that we’re going to see good visibility from some of the value and cyclical players going forward.”

• 10-year Treasury (^TNX): -2.9 bps to yield 1.551.

8:30 a.m. ET: Consumer prices rose more than expected in September as energy prices advanced for a fourth straight month
Consumer prices posted a faster-than-expected rise in September compared to August and the same month last year, with a broad jump in food, housing and energy prices contributing to the gain.

The Bureau of Labor Statistics' Consumer Price Index (CPI) increased at a 0.4% monthly rate in September, accelerating from August's 0.3% pace. On a year-over-year basis, the CPI jumped 5.4%, also speeding compared to the prior month's 5.3% increase and coming in at the fastest pace since 2008. Consensus economists were looking for the CPI to increase by 0.3% and 5.3% on a month-over-month and annual basis, respectively.

Price increases across food and shelter contributed to more than half of the monthly increase in CPI, the BLS said in its report. Grocery store food prices increased for an array of products including meats, nonalcoholic beverages, fruits, vegetables and bakery goods. The energy index also increased 1.3% in a fourth straight monthly gain, led in turn by a 3.9% monthly surge in fuel oil prices.

Excluding the more volatile food and energy categories, the CPI still rose 0.2% on a month-over-month basis, coming in a tick faster than August's 0.1% increase. Over last year, the CPI excluding food and energy prices increased by 4.0%, matching August's rate. Though this metric has slowed from June's 30-year high of 4.5%, it remains elevated on a historical basis."

MY COMMENT

Well the Ten Year Yield is now down to WELL below where it had been for the past week or so. We are now back to the low 1.5% range. Looks like the few earnings we have so far are coming in as BEATS. BUT.....all that is going to matter to the markets is the forward looking statements. If there is any hint of negativity projected for the future...that is all that will matter.

Unfortunately......many companies will hedge their bets and make conservative projections of the future.

We will be in FULL ON DOOM & GLOOM regarding earnings for the next month or two.

 

Looks like Zukodany is making some good money on his recent NIKE buy. Time will tell.....but he may have bought at just the right time.

 

I dont own JP Morgan Chase.......but here are their earnings.....they will set the tome for the start of earnings.

JPMorgan exceeds profit expectations on $1.5 billion boost from better-than-expected loan losses

https://www.cnbc.com/2021/10/13/jpmorgan-jpm-earnings-q3-2021.html

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

"Key Points

• Here are the numbers: earnings of $3.74 per share vs. $3 per share estimate of analysts surveyed by Refinitiv.
• Revenue: $30.44 billion vs, $29.8 billion estimate.

"JPMorgan Chase on Wednesday posted third-quarter results that exceeded expectations on a $1.5 billion boost from better-than-expected loan losses.

The gain came after the bank released $2.1 billion in reserves and had $524 million of charge-offs in the quarter, New York-based JPMorgan said in a release.

The bank produced $3.74 per share in earnings, which includes a 52 cent per share boost from reserve releases and a 19 cent per share benefit tied to a tax filing. JPMorgan shares dipped 2.7%, giving up gains in premarket trading.

Here are the numbers:

• Earnings: $3.74 per share vs. $3 per share estimate of analysts surveyed by Refinitiv.
• Revenue: $30.44 billion vs $29.8 billion estimate.

The bank “delivered strong results as the economy continues to show good growth - despite the dampening effect of the Delta variant and supply chain disruptions,” CEO Jamie Dimon said in the statement. “We released credit reserves of $2.1 billion as the economic outlook continues to improve and our scenarios have improved accordingly.”

Dimon reiterated a message from previous quarters, which also benefited from reserve releases, that managers didn’t consider the gain to be fundamental to their business. The firm set aside billions of dollars for losses last year after the onset of the coronavirus pandemic, and this year has been releasing those funds after the losses didn’t arrive.

Indeed, analysts have said that banks have exhausted most of the benefit from releases and must now rely on core activities like growing loans and rising interest rates to boost profits.

Companywide revenue rose 2% to $30.4 billion, mostly driven by booming fees in the firm’s investment banking and asset and wealth management divisions. Net interest income of $13.2 billion edged out the $12.98 billion StreetAccount estimate on higher rates and balance sheet growth.

Fixed income revenue dropped 20% to $3.67 billion, below the $3.73 billion StreetAccount estimate. But equities trading revenue more than made up the shortfall, producing $2.6 billion, beating the $2.16 billion estimate.

Robust levels of mergers and IPO issuance in the quarter helped the firm’s investment bank. The company posted a 50% increase in investment banking fees to a record $3.28 billion, exceeding the estimate by half a billion dollars.

For most of the pandemic, booming trading revenue across Wall Street has benefited JPMorgan’s investment bank. But that was expected to moderate in the third quarter. Last month, JPMorgan executive Marianne Lake said that trading revenue will be 10% lower than a year ago, which was an unusually strong quarter.

The firm’s asset and wealth management division posted a 21% increase in revenue to $4.3 billion on higher management fees and growth in balances. Assets under management rose 17% to $3 trillion on rising equity markets.

Companywide loan growth has stabilized and should pick up next year, driven by higher spending and increased revolving of debts by credit-card users, CFO Jeremy Barnum told analysts during a conference call.

Executives were asked about the bank’s acquisition strategy after a string of recent deals. Last month, it acquired restaurant review service the Infatuation and college planning platform Frank. That followed three acquisitions of fintech start-ups in the past year.

Barnum hinted that the bank’s deals will likely continue, saying that “acquisitions are still potentially on the horizon” next year.

Shares of JPMorgan have climbed 30% this year before Wednesday, trailing the 37% increase of the KBW Bank Index."

MY COMMENT

A good start to earnings season. LETS GO........from here.

 

WELL.....Capt Kirk did it.....back on earth. Our PRIVATE space programs are amazing businesses. REALLY...making NASA look bad. The collapse of NASA was EPIC. BUT....at this point....who cares.

 

Biotechs....yes. I avoid them....along with auto companies, insurance companies, drug companies, banks, financials, and a few othrs that I am not remembering right now.

 

YES.....same for me....a GREEN day. Actually a NICE green day. I as UP today except for....COSTCO and APPLE. I got a good beat on the SP500 by 0.41%.

So far the markets are hanging in there as we SLOWLY move toward the end of the year. the gain on the SP500 year to date......+16.18%.......an outstanding gain for about 9 months.

 

NICE to see the markets UP today.....at least most of them. Even Bitcoin is on a run UP right now....being about $57,000.

Stock market news live updates: Stocks end higher, ending three-day losing streak as investors eye bank earnings, inflation data

https://finance.yahoo.com/news/stock-market-news-live-updates-october-13-2021-221448905.html

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

"2:11 p.m. ET: FOMC meeting minutes show participants believe tapering could begin in November or December
The Federal Open Market Committee released the minutes from its September meeting on Wednesday, which went into further detail around policymakers' thinking about the timing of asset-purchase tapering and progress in the economic recovery.

The meeting minutes showed that policymakers saw tapering beginning in mid-November or mid-December this year, with this process likely continuing through the middle of next year. The minutes. also detailed the still-divergent views among policymakers over whether the threshold of "substantial further progress" had yet been met in the labor market's recovery.

"A number of participants assessed that the standard of substantial further progress toward the goal of maximum employment had not yet been attained but that, if the economy proceeded roughly as they anticipated, it may soon be reached," the minutes said. However, other participants said they believed the threshold had been met.

"Some of these participants also suggested that labor supply constraints were the main impediments to further improvement in labor market conditions rather than lack of demand," the minutes said "They noted that adding monetary policy accommodation at this time would not address such constraints or that the costs of continuing asset purchases might be beginning to exceed their benefits.""

MY COMMENT

The above is what might be important in the above article. BUT....tapering.....please, not going to matter one bit to actual stock and fund investors. the ONLY impact will simply be whatever fear and panic the financial media will be able to drum up from this issue. There is NOTHING inherent in tapering that is relevant to investors.

The markets today otherwise......nothing new.....just the same old "STUFF" that has been in the news for the past 6 months. You would think that people would be sick of this stuff by now......but.....it appears to STILL have power to drive and shake the markets.

 

A full slate of BIG BANK earnings are going to hit tomorrow. Bank of America.....Citigroup.....Wells Fargo.....and Morgan Stanley. On Friday we have Goldman Sachs. Of course there are a number of lesser companies also reporting over the next couple of days.

 

I think you are right Tom. I suspect that many of the banks will be able to release reserves like JP Morgan did and that is going to give them really nice earnings for the third quarter.