The Long Term Investor

Well gtrudeau88......you never know till you try. Short term trading is a crap shoot. You never know when the market will turn on a dime up or down or against your position.

In my view for a retail investor short term trading is mostly LUCK. Or in many cases where the trader thinks they know what they are doing......simply getting carried along by a booming market. Sooner or later the reality hits.

You took a reasonable....thought out....shot at it. I am sure you still have one of the better gains for this little market correction.

Personally I am now at (-12.10%) year to date........but......I have no plans to change a thing since I believe the end of this correction is in sight some time over the next 2-12 weeks.

 

Another KILLER day today for my portfolio. My stocks were TOTALLY in the green again. Plus I got another beat on the SP500 by 0.42% today. the past couple of days have been a big help with my year to date loss.

My view is that we are well positioned in the markets for a nice GREEN close to the week over the next couple of days. Although sometimes the FED has a way of driving the markets down the day after they meet if the can not shut up and sit down.

 

I assume everyone is aware of this news....but....for those that are not here it is. (ALSO for context in this thread for future readers)
Fed raises interest rates for the first time since 2018

https://finance.yahoo.com/news/fed-fomc-monetary-policy-decision-march-2022-131719859.html

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

"The Federal Reserve on Wednesday raised short-term interest rates for the first time since 2018, as high inflation pushes the central bank to pull back on its extraordinary pandemic-era support.

The U.S. central bank lifted its benchmark Federal Funds Rate by 0.25%, to a target range of between 0.25% and 0.50%. The Fed also noted that the economic outlook remains “highly uncertain” in the face of the war in Ukraine.

By notching up rates, the Fed kicks off a process of raising borrowing costs in the hopes of quelling the demand that may be pushing prices higher.

Projections released by the policy-setting Federal Open Market Committee signal the likelihood of the Fed raising rates up to six more times this year (which would mean rates 1.75% higher at the end of this year than last).

That path is more aggressive than the Fed’s last round of projections (from December), when it predicted only three total rate hikes in 2022.

More rate hikes will be needed to pull inflation back down to its 2% target (as measured in Personal Consumption Expenditures). For comparison, PCE clocked in at 6.1% in February, the fastest yearly pace seen since 1982.

The Fed, however, is warning that inflation will not immediately abate in response to its initial interest rate hikes. The central bank now projects prices to rise by 4.3% over the course of 2022, well above the 2.6% pace it had projected in December. In 2023, the Fed hopes to bring that pace down to 2.7% and then to 2.3% in 2024.

“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures,” the FOMC statement says.

The median member of the FOMC projects a likelihood that the Fed will have the short-term interest rate between 2.5% to 3% by the end of 2024.


The Fed's updated summary of economic projections shows Fed policymakers' expectations for where interest rates could be in the next few years. Source: Federal Reserve
Policymakers have continually revised up their forecasts for inflation, acknowledging now that it may have been a mistake to brush off the early rise in inflation as a “transitory” phenomenon.

Fed Chairman Jerome Powell has left the possibility of larger rate hikes in future meetings. Although it has been standard over the last two decades to only raise interest rates in 0.25% increments at a time, the rapid pace of inflation has warmed up some policymakers to the idea of a “double” rate hike of 0.50%.

But uncertainty remains, as the Fed noted the geopolitical concerns out of Ukraine.

“The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The implications for the U.S. economy are highly uncertain, but in the near term the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity,” the Fed statement noted.

Another tool the Fed may likely deploy soon: a reduction in its massive $9 trillion balance sheet.

Since the depths of the pandemic, the Fed was snatching up trillions of dollars in U.S. Treasuries and agency mortgage-backed securities to signal its support to markets. Those purchases ended this month, raising the immediate question of when the central bank will start to offload its holdings.

The Fed advanced those discussions in this week’s meeting. Although no immediate announcements were made, the FOMC expects a reduction to begin “at a coming meeting.”

The decision to raise interest rates by 25 basis points was nearly unanimous; St. Louis Fed President James Bullard dissented because he preferred to move by 50 basis points.

The next policy-setting meeting is scheduled for May 3-4."

MY COMMENT

Thank goodness for the increases to begin. We need to get the economy back to normal. I have NO illusions that inflation is going to go away any time soon. In fact I think I will be celebrating another BIG cost of living increase in Social Security benefits in October.

The supply chain is STILL totally screwed up.....even more so due to the war. Supply and demand is also supremely screwed up due to the HUGE government stimulus of the past two years including all the FREE MONEY.

NOW....that this event has actually happened I believe over the next year or so it will be seen to be a NET POSITIVE for the markets and investors.

 

At least for today....the markets were cheering.

Stocks Rally on Powell’s Bullish Economic Remarks: Markets Wrap

https://finance.yahoo.com/news/asia-boost-easing-china-rout-222756209.html

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

"(Bloomberg) -- Stocks closed near session highs after Federal Reserve Chair Jerome Powell struck a more positive tone on the prospects for economic growth as the central bank raised interest rates for the first time since 2018. Bonds retreated.

The S&P 500 posted its biggest two-day rally since April 2020 as Powell said the “economy is very strong” to handle tighter policy and the probability of a recession is “not particularly elevated.” Treasury yields rose, led by rates at the front end of the curve. Swaps linked to policy announcement dates at one stage indicated at least 75 basis points of hikes would take place over the coming two meetings, suggesting one of the anticipated moves from the central bank might be bigger than the standard size of 25 basis points.

The Fed raised rates by a quarter percentage point Wednesday and signaled hikes at all six remaining meetings this year, launching a campaign to tackle the fastest inflation in four decades even as risks to economic growth mount. The central bank said it would begin allowing its $8.9 trillion balance sheet to shrink at a “coming meeting” without elaborating. Powell said officials had made good progress this week in nailing down their plans and could be in a position to begin the process at their May meeting.

“The Fed finally made it official -- no surprises there,” said Mike Loewengart, managing director of investment strategy at E*Trade from Morgan Stanley. “That said, the Fed raising rates means a vote of confidence that the economy is in shape enough to weather tighter policies.”

For Guggenheim Partners Chief Investment Officer Scott Minerd, the Fed is in an “inflation panic” as it begins to tighten monetary policy in response to inflation. The central bank has paid too much attention to financial markets at the expense of its job to control money supply and manage its balance sheet, he said during an interview on Bloomberg Television.

“The Fed has largely abandoned monetary orthodoxy,” he added. “It’s trying to be too cute in how it’s managing this.”

Traders also monitored the latest geopolitical developments. Ukrainian President Volodymyr Zelenskiy delivered an emotional address to the U.S. Congress while President Joe Biden offered hundreds of millions of dollars’ worth of new weaponry and called Russian President Vladimir Putin a “war criminal.” After talks between Russia and Ukraine, a Kremlin spokesman said that a neutral Ukraine with its own army could be a possible compromise in the current crisis, while Kyiv said it needed firm security guarantees in any outcome."

MY COMMENT

OK....we should be just fine as long as the FED does not get too carried away and aggressive raise rates sending the economy into a recession and boosting the potential for stagflation. There is way too much money....from all the excessive government stimulus......sloshing around in the economy at the moment. Add in the supply chain issues and our dependence on overseas manufacturing and......BINGO.....the current economy.

 

Well we are lightly in the green at the moment. I am sure this will be a soft day after the past couple of days of BIG gains. BUT.....there is good potential for a green close today. That would be very appropriate since it is St Patrick's Day.

 

Here is the first of two economic releases today.....that no one will care about.

Jobless claims: Another 214,000 Americans filed new claims last week

https://finance.yahoo.com/news/weekly-jobless-claims-week-ended-march-12-2022-202355584.html

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

"New unemployment claims improved more than expected last week, further reflecting a tight labor market and relatively low levels of firings and layoffs.

The Labor Department released its latest weekly jobless claims report Thursday at 8:30 a.m. ET. Here were the main metrics from the print, compared to consensus estimates compiled by Bloomberg:

• Initial jobless claims, week ended March 12: 214,000 vs. 220,000 expected, 227,000 during prior week
  
• Continuing claims, week ended March 5: 1.419 million vs. 1.480 million expected, 1.494 million during prior week

Jobless claims came in below 250,000 for a seventh consecutive week and hovered around pre-pandemic levels. And at 214,000, initial claims were at their lowest level of 2022.

Continuing claims, which track the total number of individuals claiming benefits across regular state programs, have held well below levels from even before the pandemic, coming in under 1.5 million for four consecutive weeks now. Throughout 2019, continuing claims averaged around 1.7 million per week.

The labor market has remained a bright spot in the U.S. economy, especially as a brief hit from the Omicron variant earlier this year unwound further in the most recent economic data.

Taken together, the weekly jobless claims data, monthly jobs reports and other surveys have shown an economy with near-record levels of job openings and a labor force participation rate that has steadily begun to creep back toward pre-virus standards.

However, with inflation running at a 40-year high, many economists have begun to wonder when rising prices ultimately begin to meaningfully dent demand — and in turn weigh on employers' desires to bring back more labor.
"Staggeringly high inflation is set to go higher in forthcoming reports because of impacts from Russia’s invasion of Ukraine and continuing supply chain disruptions including in China," Mark Hamrick, senior economic analyst at Bankrate, wrote in an email. "These higher costs crimping household budgets risk dampening consumer discretionary purchases. It remains to be seen how much this could negatively affect the job market in the months to come."

For now, however, the job market has remained robust — and key policymakers have also taken note. Members of the Federal Open Market Committee on Wednesday opted to raise interest rates for the first time since 2018, kicking off a process of dialing back monetary policies that had been kept supportive over the course of the pandemic to help prop up the virus-stricken economy.

And in explaining this decision and the Fed's likely path toward multiple additional rate hikes later this year, Federal Reserve Chair Jerome Powell highlighted the strength of the labor market in particular. He maintained that the economy in current form would be able to withstand a less accommodative tilt from the central bank.

"If you take a look at today's labor market, what you have is 1.7+ job openings for every unemployed person. So that is a very, very tight labor market — tight to an unhealthy level, I would say," Powell said during his press conference Wednesday afternoon. "We're hearing from companies that they can't hire enough people, they're having a hard time hiring. "

"Across the economy, we'd like to slow demand so that it's better aligned with supply," Powell added. "That over time should bring inflation down.""

MY COMMENT

The normalization of the labor and job markets comes down to one thing......FREE MONEY. The last of the money flow from government ended in January with the last of the monthly child payments. BUT....many people that got the HUGE stimulus payments saved a good chunk of that money. We are very slowly......seeing that money running out and people having to return to work.

Like nearly everything in the economy.....we are looking at 6-12 months for all this job and labor stuff to sort out and for the economy to start to resemble ....normal.

 

And....the second economic story of the day.

U.S. manufacturing output beats expectations in February

https://finance.yahoo.com/news/u-manufacturing-output-beats-expectations-135150497.html

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

"WASHINGTON (Reuters) - Production at U.S. factories accelerated in February, shrugging off a continued slump in motor vehicle output, pointing to sustained strength in manufacturing amid a healthy demand for goods even as consumer spending reverts to services.

Manufacturing output increased 1.2% last month after edging up 0.1% in January, the Federal Reserve said on Thursday.

Economists polled by Reuters had forecast factory production accelerating 0.6%. Output jumped 7.4% compared to February 2021.

Manufacturing, which accounts for 11.9% of the economy, has benefited from a shift in spending to goods from services during the COVID-19 pandemic.

But manufacturers have struggled to cope with the strong demand amid an acute worker shortage, caused by the coronavirus, on factory floors and other places along the supply chain.

Supply bottlenecks had shown signs of easing in recent months, but that progress is likely to be stalled by Russia's war against Ukraine as well as new lockdowns in China following a resurgence in COVID-19 infections.

Production at auto plants fell 3.5% last month, marking the third straight monthly decline. Motor vehicle production continues to be restrained by a global shortage of electronic components.

February's surge in manufacturing output combined with a 0.1% gain in mining to lift industrial production 0.5%. That followed a 1.4% jump in January. Utilities production dropped 2.7% after vaulting 10.4% in January amid freezing temperatures in many parts of the country.

Capacity utilization for the manufacturing sector, a measure of how fully firms are using their resources, increased 0.9 percentage point to 78.0% in February. It is 2.5 percentage points higher than its pre-pandemic level but 0.1 percentage point below its long-run average.

Overall capacity use for the industrial sector rose 0.3 percentage point to 77.6% last month. It is 1.9 percentage points below its 1972-2021 average.

Officials at the Fed tend to look at capacity use measures for signals of how much "slack" remains in the economy — how far growth has room to run before it becomes inflationary."

MY COMMENT

This is good news. We slowly slog back from the pandemic chaos. You never see much about the shipping issues anymore in the news....but....I am sure we are slowly improving the supply chain issues as time moves forward. The war is going to impact our progress....a little bit. As usual........we are STILL looking at a minimum of 12 months or more to get the economy back to.......some semblance......of normal.

What makes it very difficult for the economy is the fact that many different aspects of the economy are all SCREWED UP at once. If we were just dealing with one issue....that is easy. BUT....we are dealing with multiple areas of the economy that are all screwed up at the same time. Add in the fact that government does not really control any of this stuff......it is all about private business.....especially small business....which was devastated by the pandemic responses.....and you have the reason that progress.......while somewhat steady.......is very slow.

 

We have lost the green at he moment. The mid-morning dip coming a bit early in the day.

You know in real life......I dont hear or see anyone talking about interest rates or the stock markets. I think that is actually a good thing. Some people I know are CONSUMED with politics.....but not the majority. Most people I know....actually....dont care about any of the issues being pushed by the media at the moment.......at least to the point that they are talking about them in public.

 

One topic that.....IS....talked abut is the rise in house prices. Fr those that are looking for a home.....you still have some time before the great mortgage rates rise.....but not a lot.

Here's how the Fed's rate hike could impact mortgages
The Mortgage Bankers Association expects mortgage rates will rise to around 4.5% over the next year

https://www.foxbusiness.com/economy/mortgages-federal-reserve-interest-rate-hike

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

"Following the Federal Reserve's widely expected interest rate hike Wednesday, the housing market will likely see an impact in the form of higher mortgage rates.

Though mortgage rates do not follow the federal funds rate, they do typically follow the yield on the 10-year Treasury. Following the Fed's announcement, the 10-year Treasury yield spiked as high as 2.246%, its highest level since May 2019.

Given recent economic uncertainty exacerbated by rising inflation, supply chain disruptions and the ongoing conflict in Russia-Ukraine, Thru the Cycle President John Lonski believes that anyone considering buying a home and taking out a fixed-rate mortgage should do so as soon as possible.

‘Don’t dawdle'

"If I'm thinking of buying that home and I want to get a fixed-rate mortgage, don't dawdle. Otherwise, who knows what you're going to be looking at in the future," Lonski told FOX Business. "If you want the home, go ahead and buy it and if you wait long enough, you're probably going to have that 10-year yield come down again, though it may not come down under 2% until the next economic downturn or recession."

In addition to Wednesday's rate hike, the U.S. central bank's policymakers signaled that six more hikes could be coming by the end of 2022.

According to the Mortgage Bankers Association, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.27% from 4.09% for the week ending March 11, with points rising to 0.54 from 0.44, including the origination fee, for loans with a 20% down payment. Applications to refinance a home loan fell 3% from the previous week and were 49% lower than the same week a year ago.

Diminish volatility?

"With the unemployment rate below 4%, inflation nearing 8%, and the war in Ukraine likely to put even more upward pressure on prices, this is what the Fed needs to do to bring inflation under control,"MBA Chief Economist Mike Fratantoni said in a statement. "Mortgage rates have been exceptionally volatile in recent weeks, given the profound uncertainties both with respect to the geopolitical situation and monetary policy. Hopefully, the Fed’s actions and explanations can help to reduce the policy uncertainty, which would then diminish some of the current volatility."

Looking ahead, the MBA forecasts that mortgage rates will rise to around 4.5% over the next year. Beyond the rate hike, Fratantoni emphasized that the MBA will be looking for details regarding the Fed's plans to shrink its balance sheet, in which treasuries and mortgage-backed securities will be allowed to passively roll off.

"Although we anticipate that shrinking the balance sheet will begin this summer, we will be looking for details regarding the pace of the runoff and whether they would consider active MBS sales at some point to return to an all-Treasury portfolio," Fratantoni said."

MY COMMENT

I do believe that this article is correct....we are looking at mortgage rates in the 4.5% to 5.0% over the next year. If rates get to 4.5% that would represent the low end of a normal mortgage rate range in my view. The "normal" range for a 30 year fixed mortgage would be 4.5% to 6.5%. Rates back at the 6.5% level are going to substantially increase the monthly payment for buyers. We are ....nearing....the end of the GLORY DAYS of extreme low mortgage rates.

At the higher end of the market........I still am seeing much buying activity for.....all cash.

 

Markets are bouncing around like a ping pong ball. Not a lot of conviction either way. SO....perhaps we will see some clarity as we get into the afternoon. I am seeing very light gains and losses in my various stocks today. Everyone......including the......markets seems to be taking a breather after the past couple of days. Or.....everyone is waiting to see if the next shoe is going to drop and what the short term direction is for the markets.

I obviously dont care about the short term.....but.....that is what I am seeing today.

I continue to be fully invested for the long term as usual.

 

BINGO.....another really nice day today in the markets. Lets do the same tomorrow and end the week with a nice four day RALLY.

I was GREEN across the board today. Plus....I got a tiny beat on the SP500 by 0.06%. The last three days have pulled my year to date loss down to between MINUS 10 - 11%.

 

Here is the.....hindsight....markets today.

Stock market news live updates: Stocks extend winning streak following Fed rate increase

https://finance.yahoo.com/news/stock-market-news-live-updates-march-17-2022-224200703.html

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

"U.S. stocks rallied for a third consecutive day as investors warmed up to the Federal Reserve’s long-anticipated move to hike short-term interest rates for the first time in three years. Oil prices jumped back up, with investors turning their attention back to the war in Ukraine and its potential impacts on the global economy.

The S&P 500 climbed 1.2% to 4,411.65 to log its first three-day winning streak since Feb. 2, and the Dow Jones Industrial Average advanced 1.2% to 34,480.30, also notching its first four-day rally in six weeks. The Nasdaq Composite advanced 1.3% to 13,614.78. Meanwhile, WTI Crude Oil futures and Brent Crude Oil each jumped about 9% to $103.64 and $106.79 per barrel, respectively.

St. Patrick’s Day historically tends to be one of the "most green" days of the year for stocks, according to data from LPL Financial going back to 1950. The S&P 500 is up 0.37% on average, making it one of the best days of the year.

At the end of its two-day policy-setting meeting, the U.S. central bank revealed Wednesday that it will lift its benchmark Federal Funds Rate by 0.25%, to a target range of 0.25% to 0.50%. The move was in line with what market participants had anticipated after Fed Chair Jerome Powell indicated in Congressional testimony earlier this month a 25 basis-point bump was distinctly possible.

“By raising interest rates, the Federal Reserve has begun the process of unwinding their pandemic-era stimulus measures in an effort to tame inflation,” Bankrate chief financial analyst Greg McBride said in a note. “This isn’t a one-and-done but the start of a series of rate hikes for the remainder of this year and well into next.”

The Fed also unveiled in its updated Summary of Economic Projections, or "dot plot," which reflects the individual economic projections of policymakers on the Federal Open Market Committee, that the median member anticipates up to six more rate hikes in 2022, which would bring rates 1.75% higher at the end of this year. Before Wednesday’s decision, the benchmark interest rate was deliberately held near zero since mid-2020 as part of the Fed’s easy-money policies used to keep financial conditions running smoothly during the pandemic.

“The Fed didn’t rock the boat much,” LPL Financial chief market strategist Ryan Detrick said. “Yes, they lowered economic expectations in 2022 while also increasing inflation, but much of that was already priced into things. Overall, they still see strong growth, which helps support the recovery.”

Although the key decision provided some clarity to investors who for months have awaited for the central bank to take steps forward on tightening monetary conditions, the Fed’s path forward remains muddied by geopolitical turmoil in Eastern Europe. War in Ukraine and penalizing sanctions against Russia for its invasion of the country have raised uncertainty in recent weeks over the conflict’s toll on the global economic picture.

The Fed acknowledged in a statement that came out of its meeting that implications for the U.S. economy are “highly uncertain” but likely to worsen already decades-high inflationary pressures.

“Playing catch up is the theme that Fed officials signaled to markets today as the narrative has shifted from normalizing monetary policy to laying the groundwork for a more restrictive policy and moving beyond neutral,” Allianz Investment Management senior market strategist Charlie Ripley said in commentary.

Elsewhere in markets, shares of Warren Buffett's Berkshire Hathaway closed at $500,000 for the first time on Wednesday. The price underscored Berkshire's status as a defensive stock at a time markets have been roiled by economic and geopolitical uncertainty. The company also purchased 18.1 million additional shares of Occidental Petroleum Corp. (OXY) this week, bringing the company’s stake in the oil giant to 14.6%. The move comes as soaring oil prices amid the war in Ukraine buoy the U.S. oil conglomerate.

Berkshire's Class A shares have advanced 10% in 2022, even as the S&P 500 is down about 12% year-to-date. Prior to a relief rally that extended into Thursday, the benchmark index on Tuesday (the 50th trading day of the year) locked in its 6th worst start to a year ever, data from LPL financial reflected. The silver lining? The previous five worst starts were followed by notable gains, with an average gain for the rest of the year of 36%, with the exception of only 2001.

“Although we aren’t expecting 36% gains the rest of this year, it does suggest that things might be quite bad now, but we’ve been here before and we’ve seen stocks come back way more than expected,” LPL’s Detrick said.

4:14 p.m. ET: U.S. House seeks to strip Russia, Belarus 'most-favored' trade status

The U.S. House of Representatives supported legislation that would rid Russia and Belarus of their "most favored nation" trade status over the invasion of Ukraine. The move would allow higher tariffs on imports from the two countries.

With voting still underway, the Democratic-controlled House tallied 320 to five in favor of removing Permanent Normal Trade Relations (PNTR) status in the latest Congressional effort to place further economic pressure on Moscow and close ally Belarus.

A two-thirds majority is needed for the legislation to pass in the 435-member House.

11:13 a.m. ET: Mortgage rates top 4%

Mortgage rates soared to their highest level since May 2019 this week, following a sharp increase in 10-year Treasury yield.

The rate on the average 30-year fixed rate mortgage jumped to 4.16 %, up from 3.85% a week ago, according to Freddie Mac. The 15-year fixed rate — a common refinance option — also surged, averaging 3.39% from 3.09% last week.

The more than quarter-point hike in rates dealt s a blow to homeowners who may have waited too long to refinance their loan and presents an additional setback for buyers who are facing some of the worst affordability conditions as prices grow higher amid low inventory on homes for sale.

"The potent fuel that propelled real estate markets to new highs over the past couple of years is evaporating,” George Ratiu, Realtor.com manager of economic research, said.

10:49 a.m. ET: Amazon closes purchase of MGM movie studio

Amazon (AMZN) announced Thursday that the online retail giant has closed a $8.5 billion deal to buy MGM as the company works to draw in consumers through more video streaming.

"We welcome MGM employees, creators, and talent to Prime Video and Amazon Studios, and we look forward to working together to create even more opportunities to deliver quality storytelling to our customers," the company said in a statement, signaling there would be no layoffs following the transaction.

The decision to close comes after a deadline passed for the U.S. Federal Trade Commission to challenge the deal. Amazon first announced plans to buy the company in May 2021, indicating MGM offered a trove of content to draw consumers to its fast-shipping and streaming club Prime.

Amazon was up 0.7% to $3,082.58 per share as of 10:45 a.m. ET.

10:37 a.m. ET: Buffett snaps up more shares of Occidental Petroleum

Warren Buffett’s Berkshire Hathaway Inc. purchased 18.1 million additional shares of Occidental Petroleum Corp. (OXY), bringing the company’s stake in the oil giant to 14.6%.

Berkshire bought shares between Monday and Wednesday at prices ranging from $52.99 to $55.38, according to a company filing.

The move comes as soaring oil prices amid the war in Ukraine buoy the U.S. oil conglomerate.

OXY shares were up more than 7% to trade at $56.73 a piece as of 10:34 a.m. ET. Meanwhile, Berkshire Hathaway’s Class A shares were priced at about $508,135.34 after closing at $500,000 for the first time on Wednesday."

MY COMMENT

The markets are in a mini-boom....as they should be.

It is interesting that as noted above this is the 6th WORST start to a year for the SP500. It is even more interesting that following the other......5 bad starts.....the SP500 ended the year UP by an average gain for the year of......36%. there is PLENTY of room for stocks to run up this year considering the past 4 quarters or BIG earnings reports.

I also find it interesting the St Patrick's Day is one of the most green days of the year historically for stocks. Why? Because everyone is drinking and partying on Wall Street?

I AGREE with the FED that there is still good potential for STRONG GROWTH going forward......in spite of the rate increases. Again the fundamentals....earnings......have been kicking ass lately and that is what matters.

Nice to see Amazon close their deal for MGM.....and....add to the business conglomerate that they have going.

 

You are so right RG. The best single investment for the long term in my view.....the SP500. BUY it.....add to it as much as you can over your life.......and simply hold it through thick and thin for the long term. This is the simple investment plan I have for all my family members whose portfolios I manage. I constantly tell them......If something happens to me......put everything in the SP500 and hold it forever.

Unfortunately.....it is very difficult for people to do something this simple. They get bombarded by those around them with advice on how to invest......and....end up doing something else with the money. The power of persuasion by well meaning......and not so well meaning......people around them leads them away from this simple yet supremely successful long term strategy. There is a reason that Warren Buffett directs that his heirs money be invested this way after he is gone.

I have no illusions that my family members will follow my advice. I have already seen the inability of some of the younger people in the family to invest this way......no matter how much you explain it to them.......or......show them actual results.

 

I am doing very nicely today....so far. Especially considering that it is a mixed market. I see good potential for a GREEN close today to continue the gains of the past three days. When I looked a few minutes ago I had a nice gain in spite of the fact that half of my positions were UP and half were DOWN.

 

THIS is a big issue for investors....in my view it is a very good thing that to date it is NOT HAPPENING.

It Still Isn’t Easy to Pass a Global Minimum Tax
More delays show how local politics could sink a global minimum tax.

https://www.fisherinvestments.com/en-us/marketminder/it-still-isnt-easy-to-pass-a-global-minimum-tax

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

DISCLOSURE......I post this under the same basis as the editors note to the article:

"Editors’ Note: This article touches on politics, so we remind you that MarketMinder favors no politician nor any political party and assesses developments solely for their potential impact on markets, economies or personal finance."

NOW......the article:

"Last fall, when 137 nations including tax havens Ireland, Estonia and Hungary agreed to sign onto a global minimum corporate tax deal, many observers presumed the years-long process had taken its toughest step—the path to passage was now clear! We never really agreed, though, and have long harbored doubts that this process will deliver results. If it does, it won’t happen fast, limiting the market impact. We got more evidence supporting that skepticism Tuesday.

For the uninitiated, the global corporate minimum tax is an Organization for Economic Cooperation and Development-led initiative to ensure countries get a slice of revenue generated within their borders and arrest “a race to the bottom” in which countries try to lure large corporations to domicile within their borders using lower and lower tax rates. The deal signed last fall has two prongs, or “pillars.” The first aims to resolve fairness disputes about which country gets what tax revenue. It exclusively governs companies with global sales exceeding €20 billion ($22 billion) and “profitability” above 10%, transferring taxing rights over these firms from their home countries to those where the sales actually took place. Given the parameters, “Pillar One” would presently affect about 100 companies globally, half of which are US-based.

Pillar Two is far broader. It installs a 15% global corporate minimum tax rate, which applies to any company with more than €750 million ($825 million) in revenue. That will cast a very wide net and rope in many more firms outside America.

When President Joe Biden took office early last year, his administration backed the global minimum tax effort, with Treasury Secretary Janet Yellen initially pushing for a 21% minimum tax rate. Considering Pillar One tilts heavily toward taxing US firms, many proponents saw his administration’s stance as a watershed moment that would usher in the eventual deal.

But it still hasn’t proven to be a slam dunk. First opposition was about the rate. The 21% rate was just too high for countries like EU members Ireland (12.5% corporate tax rate), Estonia (20% tax rate on distributed profits only) and Hungary (9%).[ii] In order to get these nations on board, proponents slashed the proposed global rate to 15%. After those three signed up, only Kenya, Nigeria, Pakistan and Sri Lanka remained in opposition. All these carry corporate rates exceeding 20%, so their omission from a deal wouldn’t be a huge negative, in the OECD’s eyes. The October deal looked like the framework for legislation all the (sufficiently democratic) countries would have to pass in order to enact this tax.

While loads of people—including us—strongly doubt whether the US could pass such legislation today, most assumed the EU would do so easily. Getting Ireland, Estonia and Hungary on board meant all 27 members agreed to the framework deal. So the EU’s finance ministers have been pressing forward in recent weeks in an effort to craft that legislation at the union level. But it seems this won’t be as easy as assumed, either.

All 27 EU nations must approve the legislation for it to take effect. On Tuesday, Malta, Poland, Sweden and Estonia put the brakes on talks. It seems almost all their concerns center on Pillar Two, which isn’t a shock considering it has far more breadth. Poland wants firm legal assurances that both Pillars will be enacted. Others have concerns around implementation and methodology, including the timeline—the EU plan would require the provisions to be enacted in national laws in 2023, which some of these nations think is too aggressive.

French Finance Minister Bruno Le Maire—a staunch supporter of the global minimum tax—says they will revisit the issues in the coming weeks and is optimistic an EU deal can be reached. Perhaps. But the fact is, the longer this takes, the more opposition is likely to arise.

This is doubly true given the political backdrop. France has a presidential election in April. Though Le Maire’s boss, President Emmanuel Macron, is the favorite to win, that isn’t assured. A new administration may not prioritize this proposal to the extent Macron and Le Maire have.

But the even bigger issue: The clock is ticking on November’s US midterm elections. Biden’s Democrats currently have one of history’s smallest edges in the House and the smallest possible edge in the Senate. The president’s party normally loses seats in midterm elections, and Biden’s approval numbers aren’t great. Just 41% of respondents said they had a favorable view of his administration’s performance in Gallup’s February poll.[iii] That is the second-lowest rating for any president at this point in their tenure since Ike. (It edges former President Donald Trump by two percentage points.) If history and polling are any indication, control of Congress could flip this fall.

If that happens, the global minimum corporate tax will look even less likely to become a reality in America. Given Pillar One mostly targets American firms, how will the EU view this? Will hesitancy like Poland’s grow? Will other nations get cold feet and choose alternative routes? In this sense, the US midterms could kill or greatly impair passage of a global corporate minimum tax.

There is some good and some bad to this for stocks. On the good side, major changes that happen slowly (or not at all) won’t sneak up on stocks, limiting surprise power. That is good for markets, as surprises tend to move stocks most. On the bad side? The framework, if implemented in a clear way, could have ended piecemeal attempts like France’s and the UK’s to tax digital services. If it falls apart, one could reasonably see those fractured efforts moving forward more broadly, adding to uncertainty somewhat. Now, this is all speculative and distant—nothing to sweat in the here and now. But it is worth keeping an eye on how this debate plays out and how local politics could sink a global tax."

MY COMMENT

I am very happy that this attempt at a global tax has failed so far. What a MONSTER this would be for American business over the short and long term. Once this sort of global law comes in it will get worse and worse over the long term and will NEVER go away. American business will end up paying a huge price for any sort of plan like this over the long term as it evolves and evolves.

The power to tax is the power to destroy and subjugate.