The Long Term Investor

Here is the reality of the housing market......for buyers.

Is owning a home possible without a lucky break, some buyers wonder

https://finance.yahoo.com/news/is-owning-a-home-still-possible-204144343.html

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

"When Adbul Malik and his wife, Iqra, first learned that they were expecting a second child, they knew they were going to need a bigger home than the small townhouse they were renting. Knowing the Ontario, Canada market was a competitive one, they didn’t waste any time putting in offers, but after being outbid on some 20 homes by $30,000 to $80,000 each, they quickly become discouraged.

Malik reached his breaking point in April last year after losing the bidding war on two homes that each sold for $150,000 over asking price.

“It was heartbreaking, particularly since my wife fell in love with one of those homes," said Malik, a 34-year old account executive. "It was too stressful so we decided to take a break.”

That summer, Malik and his wife paid off their student loans to become stronger candidates, and after their mortgage broker re-qualified them for more money at a better rate, he offered them something they couldn’t refuse: first dibs on his home, which he was considering listing.

“We were incredibly lucky,” said Malik, who closed on the home shortly after the birth of his second child.

Many other buyers haven’t been so fortunate given the lack of supply and the unceasing demand for U.S. real estate, which have "pushed average home values over seven figures in hundreds of cities for the first time," said Jeff Tucker, senior economist at Zillow. That's made would-be buyers like 43-year old Shaun Martin of Denver Colorado start to lose confidence.

“Last summer, we made a ‘terribly strong’ offer on a house we were certain we would get and it was demoralizing when we didn’t,” he said. “Prices are still skyrocketing to unimaginable heights and I am really starting to wonder if owning a home is in the cards for us if we choose to stay in Denver.”

This attitude is prevalent in many markets, said Jeff Lichtenstein, president and founder of Echo Fine Properties in Palm Beach Gardens, Florida. “There’s a lot of anger and frustration over prices right now.”

Lichtenstein said he spends a lot of time educating buyers so they can better understand why the market is the way it is and what they’re up against. “The market is being set by the ‘must buy,' someone who needs shelter because they sold their home, for example, or got kicked out of a rental,” he said.

“I tell buyers that in a normal market, you might get 85% of what you want. In this market, you’re only going to get 50% of what you want and if you get 50%, you’re going to be thrilled," he said. "There will be all sorts of things wrong with the house and you won’t like it, but the ‘win’ of the deal is getting the house.”

Alyssa Regan, an agent who works with Lichtenstein at Echo, knows this firsthand.

Anxious to dodge a 20% rent increase for the renewal of her townhouse in Palm Beach Gardens and looking to capitalize on low mortgage rates (now up to nearly 4%), she started looking for a place in Jupiter Farms, Florida, about six months ago.

After losing a couple of bidding wars, Regan made a blind offer on a single-family home in a less expensive area she previously hadn’t considered — Palm City. She even waived the inspection to get the deal done. “When I went to see it, it wasn’t as good as I thought.”

Nevertheless, Regan just signed the closing documents. “The floor plan and layout work for me, but I’ve got to redo two bathrooms,” she said. “I was just in there scrubbing grout for six hours, but it’ll be nice when it’s done.”

“I’m just thrilled to have my own place.”"

MY COMMENT

What a shame for buyers.......a terrible market situation. This is the exact situation in my little area of 4200 homes. Houses are selling over market in just a few days after listing. We are NOW at the start of March.....peak selling and buying season.......and....there are ONLY THREE houses actively for sale. There is a single house for $650,000. The other two homes for sale are $1.3MILLION and $2.4MILLION. This is horrible for buyers trying to get into their first home.

 

Here are my Costco earnings that I have been waiting for all day.

Costco: Fiscal Q2 Earnings Snapshot

https://apnews.com/article/business...olesale-corp-05a2d9c0be0af385904fbda37ba12b59

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

"ISSAQUAH, Wash. (AP) _ Costco Wholesale Corp. (COST) on Thursday reported fiscal second-quarter earnings of $1.3 billion.

The Issaquah, Washington-based company said it had net income of $2.92 per share.

The results exceeded Wall Street expectations. The average estimate of 12 analysts surveyed by Zacks Investment Research was for earnings of $2.69 per share.

The warehouse club operator posted revenue of $51.9 billion in the period, also surpassing Street forecasts. Eight analysts surveyed by Zacks expected $51.31 billion."

MY COMMENT

More on this later. I looked at the raw numbers when they were first reported at Costco Investor Relations. Looks like a good earnings beat. SO.....no doubt the stock will be DOWN tomorrow.....the usual good earnings punishment. (just kidding)

 

Here is more detail on the Costco earnings.

Costco (COST) Beats Q2 Earnings and Revenue Estimates

https://finance.yahoo.com/news/costco-cost-beats-q2-earnings-223510291.html?fr=yhssrp_catchall

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

"Costco (COST) came out with quarterly earnings of $2.92 per share, beating the Zacks Consensus Estimate of $2.69 per share. This compares to earnings of $2.14 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 8.55%. A quarter ago, it was expected that this warehouse club operator would post earnings of $2.59 per share when it actually produced earnings of $2.97, delivering a surprise of 14.67%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Costco , which belongs to the Zacks Retail - Discount Stores industry, posted revenues of $51.9 billion for the quarter ended February 2022, surpassing the Zacks Consensus Estimate by 1.17%. This compares to year-ago revenues of $44.77 billion. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Costco shares have lost about 7% since the beginning of the year versus the S&P 500's decline of -8%.

What's Next for Costco?

While Costco has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Costco: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $2.95 on $49.23 billion in revenues for the coming quarter and $12.72 on $219 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Retail - Discount Stores is currently in the bottom 12% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1."

MY COMMENT

Of course....the stock is down by nearly 3% after-hours. This was a HUGE earnings BEAT. No doubt the media and others will give the excuse that the guidance is the cause of the stock being down on HUGE earnings. A total joke. We hear this time after time on stock after stock. Yet....next earnings.....end up as another HUGE beat time after time.

It is a total joke that the media and others jawbone stocks down after earnings on FANTASY analysis. BUT.....that is just the way it is......life in the modern media era........PRICELESS.

 

A Friday down market. No one wants to hold stocks over the weekend......if they are any sort of short term trader or investor.

I have no clue how we end the day....but my feeling is.....we will end the day solidly in the red. It is just the way it is in the short term markets right now.

 

One thing that I am very thankful for.......is the fact that I do NOT do any sort of international or emerging market investing. Even though the Ukraine invasion is not going to have much ACTUAL economic impact on the USA......it is going to be a good short term hit on our markets. The impact on foreign markets especially anything to do with Europe or the EU.......will be much more significant and much longer lasting. This sort of world event is exactly why I do not want exposure to companies or businesses outside the safety of the worlds leader in business and finance.....the USA.

 

NOTHING matters at this point for investors.....the total focus is on the very short term environment. BUT.....earnings were GREAT and our economy is slowly working its way out of the Covid disruptions.

January Pointed Positively for the US Economy
Rounding up the latest—and largely overshadowed—positive US economic data.

https://www.fisherinvestments.com/en-us/marketminder/january-pointed-positively-for-the-us-economy

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

"In some non-Russia-Ukraine financial news, January numbers came out for several widely watched US economic datasets last Friday. Despite worries ranging from rising prices to Omicron, the results largely exceeded expectations. January’s growthy figures suggest the US economy is on solid footing and remains more resilient than many appreciate—useful perspective given all of today’s alleged economic headwinds.

The latest personal consumption expenditures (PCE) price data led most headlines, as the Bureau of Economic Analysis’s (BEA’s) headline price index is the Fed’s preferred gauge. That measure rose 6.1% y/y in January, its fastest rate since 1982. The “core” PCE price index (which excludes volatile food and energy prices) accomplished a similar feat, rising 5.2% y/y—its quickest pace since 1983.[ii] On a monthly basis, the PCE price index climbed 0.6%, in line with its growth rate over the past three months.[iii] Now, the BEA’s price data don’t reveal much new since other gauges, including January’s CPI and PPI, paint a similar picture.

However, the BEA did find January consumer spending held up despite rising prices. January retail sales (3.8% m/m) hinted at this, though some questions remained. The Census Bureau doesn’t apply inflation adjustments to retail sales, and retail trade doesn’t include most services spending, which comprise the lion’s share of household expenditures.[iv] PCE rounds out the picture. January’s real (i.e., inflation-adjusted) PCE rose 1.5% m/m, with goods spending (4.3%) stronger than services (0.1%).[v] The split isn’t a big surprise, given the Omicron variant kept workers and consumers home. That weighed on people-facing services industries in particular, including restaurants and bars (-1.3% m/m), hotels and motels (-3.5%) and air travel (-0.9%).[vi] While one month of data, positive or negative, doesn’t make a trend, growth in the face of higher prices reveals strong consumer demand—and counters worries elevated prices are an automatic negative for a large swath of US economic activity.

January’s personal savings rate drop from December’s 8.2% to 6.4%—the lowest since 2013—also grabbed eyeballs.[vii] That spurred concerns the COVID-driven savings boom may be ending—which could have implications for consumer spending. However, fretting over the savings rate’s economic impact seems misplaced, in our view. Consider some methodology quirks in determining the personal savings rate, which the BEA defines as the percentage of people’s disposable income they save after taxes and personal spending. However, the BEA doesn’t count realized capital gains (which result from selling an investment at a higher price than what you paid for it) as income even though capital gains taxes subtract. Since many people—particularly retirees—use invested savings and realize capital gains to meet cash flow needs, the official savings rate likely understates actual savings, in our view. Moreover, the dip in January’s number was likely tied partially to a one-time factor: the expiration of monthly Child Tax Credit payments.

The savings rate also doesn’t predict consumer spending, as some recent history illustrates. From January 2015 – January 2020, the monthly personal savings rate averaged 7.4% while consumer spending climbed.[viii] (Exhibit 1) In early 2020, the savings rate spiked and consumer spending plummeted—both due to the first COVID lockdown. While COVID-related skew left the past 25 months looking wonky, both measures appear to be returning to their pre-pandemic trends. Savings and consumer spending may move in opposite directions at times—particularly during recessions and stretches of economic stress—but the historical record doesn’t support the notion the savings rate foretells consumption.

Exhibit 1: The Personal Savings Rate and Consumer Spending, January 2015 – January 2022


Source: St. Louis Federal Reserve, as of 2/28/2022. US personal savings rate and real personal consumption expenditures in billions of chained 2012 US dollars at seasonally adjusted annual rates, January 2015 – January 2022.

Rounding out the latest US economic data, January durable goods orders rose 1.6% m/m, well ahead of expectations of 0.7%.[ix] Widely watched nondefense capital goods orders, excluding aircraft, (also referred to as core capital goods orders) rose 0.9% m/m, continuing a positive streak starting in March 2021.[x] Many economists treat core capital goods orders (think computer equipment or industrial machinery) as a proxy for business investment, which is often the swing factor for GDP. Yet capital goods are just one part of business investment, which also includes software, research & development, and structure spending. Though core capital goods orders can shed some insight on a segment of business spending, it isn’t necessarily a leading indicator for the broader economy. Now, focusing on orders alone risks overlooking production issues, especially since many companies still face supply-related headwinds, from shortages to bottlenecks. But new orders’ growth over the past 10 months indicates capital spending’s resiliency—a sign of strong domestic demand.

As with most widely watched economic measures, these data confirm what recently happened—old news to forward-looking stocks. But given the rampant worries over economic headwinds from inflation to geopolitical conflict, solid growth out of the world’s largest economy offers a reminder that the global bull market stands on firm fundamental footing."

MY COMMENT

As a long term investor the focus at the moment should be on two things. First....doing nothing. Second fundamentals.....which continue to pile up positively as show by the past four quarters of earnings.

The economic data will.....sooner or later....work out the kinks. I continue to say we are 12-18 months away from the economy recovering from the hit it took from the government programs and disruptions from Covid. We are slowly making very erratic progress.....but....we are being limited by the total incompetence and tone deaf nature of our government and those in positions of power.....people have ZERO confidence in institutions at the moment and it is a big drag on the psychological health of the country and the economy. SO.....focus on the business fundamentals.....ignore.....everything else.

 

The other day I mentioned that we are seeing some of the factors that....."could".....lead to STAGFLATION. I was talking about a wage/price spiral.

Beware the ‘Wage-Price Spiral’

https://americanconsequences.com/dr-david-eifrig-beware-the-wage-price-spiral/

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

"A “wage-price spiral” can become a vicious cycle. And today, we’re starting to see signs of just that…

You see, prices started to rise back in the late 1960s. At the time, President Lyndon Johnson was spending aggressively on social welfare programs and also on the Vietnam War. This high rate of spending persisted during the first few years of the 1970s with Richard Nixon at the helm.

With all of this cash flooding the economy, folks had more money to spend. It led to more demand for goods and services. And that pushed overall prices higher.

As a result of higher prices, workers demanded more pay from their employers. They wanted to be able to afford their groceries and other necessities…

Employers had no choice but to raise wages. And to help offset that cost, they had to pass it on to consumers in the form of higher prices.


Then as prices rose again, workers demanded higher wages. And on and on it went…

Both wage growth and inflation spiked more than 10% during the 1970s..

The chart below shows the relationship between wages and inflation. You can see how they moved in tandem over that decade…


Today, we’re seeing something similar.

With so many people leaving the workforce as a result of COVID-19 (many folks have simply retired early), we’re in a competitive job market. As a result, wages have been on the rise.

U.S. nominal wage growth is now the highest we’ve seen in more than two decades. Take a look…


And of course, inflation is running wild. The consumer price index (“CPI”) rose 0.6% in January, driving up annual inflation by 7.5%. That marked the biggest gain since February 1982. And it was higher than what most folks on Wall Street expected.

Plus, if you strip out food and energy costs, which can be volatile, the CPI increased 6%. That also beat expectations.

The early signs of a wage-price spiral are all present. So it’s possible that it could occur… And we could see much higher inflation readings over the next few quarters.

The good news is, it’s unlikely that it would ever get as bad as the 1970s. Back then, the Fed was asleep at the wheel to let inflation spike as high as it did. Although I don’t have much trust in the Fed today (or faith in any government operation), it isn’t unaware of what’s going on.

The Fed has signaled that it’s going to be aggressive in getting inflation under control. Some forecasters are predicting the Fed will increase interest rates five, six, or even seven times over the course of 2022.

Only time will tell how aggressive or effective the Fed will be.


For now, we’re in a time of high inflation. We have to sit back and watch how the Fed responds over the next few months. We’ll soon find out if inflation will slow… or if this vicious cycle will spin out of control.

 

If this little start to the year drop.....which is not even a correction at the moment.....has you starting to feel a bit of panic or fear or unease.....you might want to dial down the risk and volatility of your portfolio a little. Here are some ideas.

4 Ways to Create a Less Volatile Portfolio

https://awealthofcommonsense.com/2022/03/4-ways-to-create-a-less-volatile-portfolio/

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

"A reader asks:

You guys have been absolutely wonderful in teaching us some valuable lessons. Hate to admit this, I’m absolutely terrible at investing. My ability to withstand a down market is just awful. Don’t want to save cash my entire life but I also have such little risk tolerance. Age 31. Goals include getting married/buying a nice house, etc. In a weird position. Any thoughts?

This is the opposite tone of most questions I receive from young investors these days. For the past few years my inbox and DMs have been full of young people asking for my blessing to invest all of their money in crypto, growth stocks or 3x leveraged stock market funds.

It’s understandable young people want to take more risk considering the environment we’ve lived through. Before the recent correction there were insane gains across a wide variety of investments and markets.

Plus, young people these days seem to have a higher threshold for risk. I’m not saying that’s good or bad but how markets behave in your formative years can have an outsized impact on your relationship with risk.

Of course, there are a number of other factors at play that determine risk appetite.

Creating the right portfolio requires some balance between your willingness, ability and need to take risk.1 The hard part is sometimes these factors aren’t aligned with one another.

Our reader here is 31 years old. When it comes to retirement savings they have plenty of ability to take risk.

They not only have 30-40 years until retirement age but also an additional 20-30 years to invest during retirement. The time horizon for a 31-year-old could be 50-70 years.

A combination of a long time horizon and plenty of human capital in the form of future savings from your income growth makes investing in stocks a no-brainer.

However, sometimes your ability to take risk is at odds with your willingness to accept risk.

Some people simply don’t have the personality to live through bone-crushing stock market crashes. The good thing is this reader knows that. The worst thing you can do is invest your portfolio using someone else’s willingness to take risk.

To paraphrase George Goodman: The stock market is an expensive place to find out who you are.

Knowing yourself as an investor is a big first step. It takes many investors decades to learn this lesson. Some never do.

But you still have to invest your money in something. You can’t just bury it in your backyard and hope for the best.

Here are some thoughts on the different levers you can pull when you have a low tolerance for risk:

Asset allocation is important. At the onset of the pandemic in early-2020, the U.S. stock market fell roughly 35% in a little over a month.

Adding some bonds to your portfolio certainly helped during this volatile period. Here’s a look at some simple asset allocations fared during the crash going from 90/10 stocks to bonds all the way down to 40/60:


A portfolio with 40% in stocks and 60% in bonds only lost 15% in this crash while a 50/50 portfolio fell nearly 18%. So these more conservative portfolios did a nice job protecting investors on the downside.

Of course, a more conservative portfolio misses out on some gains when stocks are rising. The S&P 500 is up around 96% from the March 2020 lows. Here are the asset allocation returns in that time:


This is the trade-off when setting your asset allocation.

The more conservative funds — like high quality bonds and cash — the lower your drawdowns but also the lower your returns.2

And with bond yields so low you can’t expect to earn much in terms of returns.

But investing in bonds and cash can potentially help you hedge emotional decisions caused by stock market volatility. And while they may not provide much in the way of returns going forward, if they help keep you sane when the stock market is losing its mind, they can help reduce the odds that you make a big mistake at the wrong time.

I kept things very simple in my asset allocation examples. You can obviously diversify more than the total U.S. stock and bond index funds I used here.

The main point is that your allocation between risk assets and conservative assets can help control the volatility in your portfolio and your investment decisions.

Save more money.

A combination of low bond yields and an unwillingness to take a lot of risk means you’re probably going to need a higher savings rate.

A high savings rate is one of the best ways to reduce financial risk in your life. It’s also one of the best ways to reduce the stress involved with money decisions (many of which occur beyond your investment portfolio).

The great thing about having a higher-than-average savings rates is it decreases your need to take risk.

Consider your asset location.

One way to balance your desire to take less risk with your need to grow your money over time is to consider where you stash your savings. The asset location of your risk can help here.

When saving for things like a wedding or house down payment, you’re not going to want to take a lot of risk anyway since that money will need to be spent in a matter of years, not decades. Those goals are perfect places for more conservative investments just like your emergency savings.

Then keep your riskier asset like stocks in a retirement account that has higher barriers to poor investor behavior.

If you stash all of your stock market investments in a tax-deferred account like a 401(k), just treat that money as out of sight and out of mind.

Jack Bogle once said, “This is one of the most important rules of investing. If you never peek from the age of 20 to the age of 70, you’ll rip that first 401(k) statement open at age 70, and I recommend you have a doctor on hand because you’ll go into a dead faint. Your heart might even stop. You’re going to have an amount of money you can’t even imagine.”

Not looking at your retirement balance is a bit of a pipe dream these days but the idea here is to create a barbell.

On one end you have your more conservative investments for shorter-term goals and volatility reduction. On the other end you have riskier investments that you’re not going to touch for decades because that would require paying taxes and a 10% early withdrawal penalty.

All you have to do is decide what your allocation is going to be for each end of the barbell and invest accordingly.

Avoid peer pressure.

The last thing you have to do is avoid caring about how other people invest their money. Not caring is a financial superpower because it allows you to focus on your own risk profile and create a plan that fits your personality and circumstances.


Just remember, a good strategy you can stick with is vastly superior to a perfect strategy you can’t stick with."

MY COMMENT

Some very good points in this little article. This quote sums it all up when it comes to asset allocation and personal risk tolerance:

"The worst thing you can do is invest your portfolio using someone else’s willingness to take risk."

ALL.....investing is personal. You have to find the right balance for.....YOU. Ignore everyone else and what they are telling you to do. THEY.....are NOT.....YOU. It is your money and if you are not comfortable with how you are invested you will make mistake after mistake due to emotions. Do the right thing for YOU and ignore what the media, your friends, social media is telling you to do.

The above is exactly what I have done for 45+ years. I simply invest in my BIG CAP GROWTH way and I dont care how or what anyone else is doing. No matter how you invest.....the FACT is....most of the time you will not be doing what everyone else is doing. The latest FAD. Have the guts, confidence, and simplicity.....to simply do what you KNOW is right for you.

 

Here is the economic news of the day....that no one will care about....except for the FED and the short term traders (speculators).

February jobs report: Payrolls rise by 678,000 as unemployment rate falls to 3.8%

https://finance.yahoo.com/news/febr...or-department-unemployment-usa-200943212.html

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

"The U.S. economy added back the most jobs since July 2021 in February, with job growth accelerating even in the already-tight labor market as new Omicron cases from earlier this year came down.

The Labor Department released its February jobs report Friday at 8:30 a.m. ET. Here were the main metrics from the print, compared to consensus estimates compiled by Bloomberg:

• Non-farm payrolls: +678,000 vs. +423,000 expected and an upwardly revised +481,000 in January
• Unemployment rate: 3.8% vs.3.9% expected, 4.0% in January
• Average hourly earnings, month-over-month: 0.0% vs. 0.5% expected and a downwardly revised 0.6% in January
• Average hourly earnings, year-over-year: 5.1% vs.5.8% expected and a downwardly revised 5.5% in January

February's jobs report presented yet another upside surprise to investors, and marked a fourteenth consecutive month of payroll growth. Last month, January's jobs report also showed many more jobs returned than expected, with payrolls rising by 400,000 versus the 125,000 expected at the time. In Friday's report, January's job gains were also upwardly revised even further to show 481,000, compared to the 467,000 previously reported. And December's payrolls were upwardly revised again to 588,000, compared to the 510,000 posted in last month's revision.

The data for the past several months signaled that underlying labor market momentum remained strong even as a record surge in COVID-19 cases at the beginning of the year temporarily cooled demand for workers, especially in the high-contact services sector. The unemployment rate improved to 3.8% to reach the lowest level since February 2020 before the pandemic meaningfully dented the U.S. economy. And this came even as the labor force participation rate unexpectedly ticked up to 62.3%, signaling more individuals were returning to look for work or be placed in jobs.

February's also saw broad gains in employment across industries, especially since Omicron cases retreated further in the weeks since the last jobs report. The hard-hit services sector posted a notable increase in jobs last month. Leisure and hospitality employers added back 179,000 jobs to build on a jump of 167,000 from January, and education and health services jobs rose by 223,000. Transportation and warehousing job growth came in at almost 50,000 to nearly match January's gains.

And within the goods-producing sector, strength was likewise seen across manufacturing, construction and non-durable goods employment, with job growth accelerating in February compared to January. Only motor vehicles and parts manufacturing employers shed jobs on net during February, with these falling by 18,000.

Meanwhile, average hourly wage growth unexpectedly decelerated in February. On an annual basis, wages rose 5.1%, marking the slowest rate since December. And over last month, average hourly earnings were flat after rising by 0.6% in January.

But even with the slowdown, wages have risen at rates well above pre-pandemic trends for months now. This has, in turn, contributed to the overall rise in inflation seen across the U.S. economy, though wages have not kept pace with the rise in consumer price inflation. The Consumer Price Index last rose 7.5% in January over last year — the biggest jump in 40 years.

Taken together, evidence of much stickier-than-expected inflation and a consistently improving labor market have helped make the case for the Federal Reserve to begin raising interest rates and otherwise remove its pandemic-era support mechanisms for the U.S. economy. Federal Reserve Chair Jerome Powell offered an upbeat assessment of the U.S. economic backdrop during his semi-annual address before Congress earlier this week.

"The labor market is extremely tight ... improvements in labor market conditions have been widespread, including for workers at the lower end of the wage distribution as well as for African Americans and Hispanics," Powell said during his testimony before the House Financial Services Committee on Wednesday.

"Labor demand is very strong, and while labor force participation has ticked up, labor supply remains subdued," Powell said. "As a result, employers are having difficulties filling job openings, an unprecedented number of workers are quitting to take new jobs, and wages are rising at their fastest pace in many years."

Most Federal Open Market Committee members would agree the current labor situation is consistent with maximum employment, Powell added. And as a result, he said with unusual clarity that he would support a 25-basis point interest-rate hike after the Fed's next meeting concludes later this month, bringing the benchmark rate slightly above its current near-zero level."

MY COMMENT

NOTHING new here at all. The labor market is obviously very strong and there is STILL a severe shortage of workers. This report provides a little glimmer of hope that people are now going to participate in the labor markets. I suspect much of this gain is because of the end of the FREE MONEY being given out each month for having children. People....especially women...now have more incentive to go to work.

It is a good thing to see wage increases slow a little bit. NOW we need to get the supply chain and demand issues sorted out. this will simply take time.

As to the FED......they are going to do what everyone has expected for SIX MONTHS now....raise rates. Nothing new there. It is expected and necessary and a good thing for the economy. We HAVE to get rates back to normal.

 

TGIF......TGIF.

 

This is money in the bank for Costco shareholders when it happens. Sounds like soon.

Costco CFO: Membership fee increase will happen at some point

https://finance.yahoo.com/news/cost...ease-will-happen-at-some-point-185612841.html

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

"Warehouse club giant Costco (COST) has given its strongest signal yet that it's nearing a fee increase on its 63 million plus members.

"So, I think the question will continue to be asked to until we do or don't do something [on a fee increase]. But at the end of the day, we certainly feel very good about our member loyalty," Costco's long-time CFO Richard Galanti said on an earnings call Thursday night. "And so, you guys all know when and we'll tell you — and at some point it will happen, but stay tuned."

Costco's last membership fee increase kicked in on June 1, 2017. It took its Gold Star membership fee up $5 to $60. Executive membership fees increased by $10 to $120. At the time, the increases impacted about 35 million members.

The company generally raises membership fees every five years.

But with inflationary pressures in areas like labor and transportation still running hot, a hike in Costco's membership fees would go a long way to alleviating pressure on profit margins.

And it could also be very beneficial to Costco's stock price, if history is any predictor.

Guggenheim John Heinbockel's analysis of Costco's last three membership fee increases in 2006, 2011 and 2017 shows the stock rose on average 11% three months prior to the announcement. The stock gained on average 15% six months prior to the announcement.

Even without the fee increase, Costco continues to prove it could rack up big sales and profit gains as shoppers seek out ways to save.

Costco said second fiscal quarter comparable sales rose 14.4% from a year ago, paced by a 16% gain in Canada. Operating profits improved 35% to $1.8 billion.

Comparable sales in February rose 14%, led by a 17.4% increase in the U.S.

Costco shares fell slightly on the results. The stock was one of the top trending tickers on the Yahoo Finance through early afternoon Friday."

MY COMMENT

They have the power to raise member fees and STILL keep their loyal customers. Especially if it is only $5. A truly great business modal and execution by management. Very good employees also. Quality all the way around.

 

I was totally consistent today in my portfolio.....every position down in the red. Plus the SP500 beat me today by0.81%. On these down days I usually end up somewhere between the Nasdaq and the SP500. Totally expected......with what I hold in concentrated form in my portfolio and the fact that I triple up on most of my holdings between my ten stocks and my two funds.

 

ALL the averages got SMOKED today. The DOW is leading the pack....no doubt due to its holdings being more conservative stocks. I am surprised that the SP500 is doing as well as it is.

DOW year to date (-7.49%)
DOW for the week (-1.30%)

SP500 year to date (-9.18%)
SP500 for the week (-1.27%)

NASDAQ 100 year to date (-15.21%)
NASDAQ 100 for the week (-2.48%)

NASDAQ year to date (-14.90%)
NASDAQ for the week (-2.78%)

RUSSELL year to date (-10.89%)
RUSSELL for the week (-1.96%)

 

LOL....I hear the government talking about Russian oil. As if they are the one that is out there buying all the oil and refining it. NO....it is private business not government. AND....regardless of what the government says....we are approaching a point where many.......if not most......companies that are in the oil business are quickly divorcing themselves from anything Russian.

So....the government may not have the guts to mandate a boycott of Russian oil....but we are quickly going there anyway. American business is stepping up and refusing to do business with Russia on many fronts.....regardless of the government.

 

This is very good news for us Tesla shareholders. They will be producing about 500,000 cars and also batteries at this factory once it is up and going.

Tesla's long-delayed German gigafactory gets conditional green light

https://www.reuters.com/business/au...ditional-license-start-production-2022-03-04/

There are still some issues mentioned in the article....but it looks like they are finally on the way to getting this plant up and running.