The Long Term Investor

Pretty good Emmett. So......you had to let my secret out of the bag.

 

OK......another BIG, EXCITING week coming up in the markets. Here is a little bit of a preview.

Federal Reserve meeting, April jobs report: What to know in markets this week

https://finance.yahoo.com/news/may-...t-to-know-in-markets-this-week-142459870.html

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

"After a brutal month for equity investors in April, May is kicking off with a host of major market events that could further stoke volatility across risk assets.

One of the focal points this week will be the Federal Reserve's May monetary policy meeting, which will take place Tuesday and Wednesday. Market participants expect at the conclusion of this meeting, central bank officials will opt to raise interest rates by 50 basis points, representing the first hike of more than 25 basis points since 2000. Investors also expect the Fed to formally announce plans to start rolling assets off the central bank's balance sheet, beginning the process of quantitative tightening.

As of Friday, Fed funds futures showed traders were pricing in a more than 99% probability that the Fed would increase rates by 50 basis points, bringing the target range for the federal funds rate to between 0.75% and 1.00%.

These expectations came after weeks of remarks from key Fed officials including Fed Chair Jerome Powell and Fed Vice Chair Lael Brainard, which suggested the Fed was warming to the idea of raising rates more aggressively in the near-term.

“We really are committed to using our tools to get 2% inflation back," Powell said during a public appearance with the International Monetary Fund earlier this month."It is appropriate in my view to be moving a little more quickly. And I also think there is something in the idea of front-end loading … that points to the direction of 50 basis points being on the table.”

Such a move would accelerate the Fed's path toward bringing down inflation, which has persisted for a longer period of time and at a higher rate than many monetary policymakers initially anticipated. Last week, government data showed core personal consumptions expenditures (PCE) — the Fed's preferred inflation gauge — rose at a 5.2% annual rate in March.

This nearly matching February's rate for the fastest since 1983. And consumer prices soared last month by the most since December 1981 with an 8.5% annual surge.

“They’re behind the curve – they know they’re behind the curve," Jim Smigiel, SEI Investments chief investment officer, told Yahoo Finance Live last week. "We’re plus-8% on inflation and [the Fed funds rate] is at a quarter point. They’re going to come in at 50 [basis points]. They’re going to do 50 again. And they’re going to start talking down the balance sheet."

"From the Fed’s perspective, they at this stage are willing to trade a little GDP and a little bit of unemployment to get the inflation rate down," Smigiel added. "I think they feel as though they’re backed into a bit of a corner. Nothing that’s happening today is going to set them off course. They’re going to be coming in early and guns blazing a bit.”

At the same time, Powell also suggested he believes the central bank will succeed in tightening monetary policy while maintaining the economic expansion. Some pundits, however, have been more skeptical, especially after new data last week showed the U.S. economy contracted at a 1.4% annualized rate at the beginning of this year.

"They're in between rock and a hard place," David Stryzewski, Sound Planning Group CEO, told Yahoo Finance Live last week. "The two big things that they have to defend against right now, inflation and then this balance between, we want low cost for lending ... because there's a lot of people out trying to get mortgages. We've got a lot of our economy based on businesses with high debt. And it's been so easy to refinance it."

"The Fed's late to the table on trying to pull some of this back and make some of these changes," he added. "We were in such a strong economy. And that was really our moment where we could have maybe done some of this tightening. So we're a little bit late."

Still, borrowing costs remain low on a historical basis, and consumers have still shown a general propensity to spend. Whether that ultimately manages to continue as the cost of doing business rises alongside interest rates and as financial conditions tighten further, however, remains the key question.

"We think recession risks are low for now but elevated for 2023. The key risk is that inflation remains elevated next year, forcing the Fed to hike until it hurts," Ethan Harris, Bank of America global economist, wrote in a note Friday. "Besides inflation, investors should watch consumer spending, sentiment, labor supply and the front end of the yield curve to assess recession risks."

April jobs report

The Labor Department's latest monthly jobs report will round out the economic data docket this week, offering an updated snapshot of the strength of the labor market so far this year.

The report is due for release on Friday, and so will not be one of the datapoints considered during the Fed's deliberations earlier in the week. However, the data likely would have played an only marginal role in informing the Fed's decisions even if it were available, given the Fed has shifted its priorities to fighting inflation rather than maximizing employment in a labor market that has already shown copious signs of strength.

Consensus economists are looking for non-farm payrolls to rise by 391,000 in April, slowing just slightly from March's jump of 431,000. The unemployment is expected to improve further to 3.5%, which would match February 2020's level for the lowest rate of joblessness in about 50 years.

Average hourly earnings — a closely watched indicator of whether rising wages are reinforcing a cycle of higher prices — are expected to rise by 5.5% over last year, moderating just slightly from March's 5.6% annual rate. Still, these wage gains have not kept pace with inflation, given consumer prices most recently climbed by 8.5%.

Economic calendar

• Monday: S&P Global U.S. Manufacturing PMI, April (59.7 expected, 59.7 in prior print); Construction spending, month-over-month, March (0.8% expected, 0.5% in February); ISM Manufacturing, April (57.7 expected, 57.1 in March); ISM Prices Paid, April (87.1 in March); ISM New Orders, April (53.8 in March); ISM Employment (56.3. in March)
  
  
• Tuesday: Factory Orders, March (1.2% expected, -0.5% in February); JOLTS Job Openings, March (1.1266 million in February); Durable Goods Orders, March final (0.8% in prior print); Durable Goods excluding transportation, March final (1.1% in prior print); Non-defense Capital Goods Orders, excluding aircraft, March final (1.0% in prior print); Non-defense Capital Goods Shipments, excluding aircraft, March final (0.2% in prior print)
  
  
• Wednesday: MBA Mortgage Application, week ended April 29 (-8.3% during prior week); ADP Employment change, April (360,000 expected, 455,000 in March); Trade balance, March (-$86.7 billion expected, -$89.2 billion in February); S&P Global U.S. Services PMIM, April final (54.7 in prior print); S&P Global U.S. Composite PMI, April final (55.1 in prior print); FOMC monetary policy decision
  
  
• Thursday: Challenger Job Cuts, year-over-year, April (-30.1% in March); Non-farm Productivity, 1Q preliminary (-2.3% expected, 6.6% in 4Q); Unit Labor Costs, 1Q preliminary (6.7% expected, 0.9% in 4Q); Initial jobless claims, week ended April 30 (180,000 during prior week); Continuing claims, week ended April 23 (1.408 million during prior week)
  
  
• Friday: Change in non-farm payrolls, April (390,000 expected, 431,000 in March); Unemployment rate, April (3.6% expected, 3.6% in March); Average hourly earnings, month-over-month, April (0.4% expected, 0.4% in March); Labor Force Participation Rate, April (62.5% expected, 62.4% in March)
  

Earnings calendar
Monday

Before market open: Moody's Corp. (MCO), ON Semiconductor Corp. (ON)

After market close: Clorox (CLX), Devon Energy (DVN), Diamondback Energy (FANG), MGM Resorts International (MGM), Avis Budget Group (CAR), Expedia (EXPE), Chegg (CHGG), ZoomInfo Technologies (ZI)

Tuesday

Before market open: The Estee Lauder Co. (EL), Pfizer (PFE), Biogen (BIIB), Paramount Global (PARA), Hilton Worldwide Holdings (HLT), Molson Coors Beverage (TAP), Marathon Petroleum (MPC), KKR Inc. (KKR), S&P Global Inc. (SPGI)

After market close: Caesar's Entertainment (CZR), Airbnb (ABNB), Starbucks (SBUX), Advanced Micro Devices (AMD), Paycom Sofware (PAYC), Skyworks Solutions (SWKS), Revolve Group (RVLV), Match Group (MTCH), Lyft (LYFT)

Wednesday

Before market open: Wingstop (WING), AmerisourceBergen (ABC), CVS Health (CVS), Marriott International (MAR), Moderna (MRNA), Yum! Brands (YUM), Vulcan Materials Co. (VMC), Sinclair Broadcast Group (SBGI), Spirit Airlines (SAVE)

After market close: Booking Holdings (BKNG), GoDaddy (GDDY), Uber (UBER), Marathon Oil (MRO), Twilio (TWLO), Etsy (ETSY), TripAdvisor (TRIP)

Thursday

Before market open: Zoetis (ZTS), ConacoPhillips (COP), Apollo Global Management (APO), Nikola (NKLA), Wayfair (W), Penn National Gaming (PENN), Royal Caribbean Cruises (RCL), SeaWorld Entertainment (SEAS), Datadog (DDOG), Crocs (CROX), Dominion Energy (D), Kellogg's (K), Shopify (SHOP)

After market close: Block Inc. (SQ), Virgin Galactic Holdings (SPCE), DoorDash (DASH), Sweetgreen (SG), Opendoor Technologies (OPEN), Zillow Group (ZG), Luminar Technologies (LAZR), FuboTV (FUBO), Live Nation Entertainment (LYV), Corsair Gaming (CRSR), Lucid Group (LCID)

Friday

Before market open: Under Armour (UAA), Cigna (CI), DraftKings (DKNG)"

MY COMMENT

No earnings that I am specifically interested in this week.....although I am interested in the general progress of the earnings reports.

It is ABSOLUTELY CERTAIN.......that the FED is going to raise by 0.50%. So......that should be fully baked in to the markets. The wild card this week will be whatever the MORONS at the FED have to say and whether they will say something stupid that tanks the markets for another week.

At least.......we are in a new month. Good riddance to April.

Actually.......I dont think much about what the FED does or does not do. I dont think anything they do is going to matter much. As I have said before......I think their 2% inflation target is just superbly DUMB. The actual NORMAL rate would be in the 3-4% range.

 

Another Monday and another market looking around........with a blank look on its face.....for direction.

Looks like we are starting to find the direction for today.......and.....it is currently DOWN. Like many things in our current society......there is simply no leadership in the markets. People are tired of it all and simply tuning it out. Actually that is probably the best approach........focus on other things in life.......and simply ignore the business world and the markets.

 

Looking at Amazon today. With the earnings hit to the price the stock......now....... has very poor numbers for the past three years.

Three year change +27%.
One year change (-30.41%)

The five year number is still hanging in there at........+155%.

The trend at the moment is not a good thing. It is all going to come down to.....management, management, management. So far.......I am not seeing much from the new management that gives me much confidence. I view the stock as about a TWO YEAR hold.......at this point. Over that time it should become clear if this is a temporary weak spot......or.......if the company has lost the bubble.

 

Here is some analysis that is on the.......positive side.

Finding Flowers in Springtime Economic Data
Despite myriad economic concerns, the data aren’t as poor as feared.

https://www.fisherinvestments.com/en-us/marketminder/finding-flowers-in-springtime-economic-data

"Elevated inflation has dominated headlines over the past 12 months, and many now worry high prices along with the Russia-Ukraine war have delivered a big setback to the global economy. Last week the IMF reduced its 2022 and 2023 global growth projections, following the World Bank and other private forecasters. But the latest economic data add to what many executives have recently said, leading us to conclude reality likely isn’t as dire as feared.

The Latest PMIs Still Say Growth

S&P Global’s April “flash” purchasing managers’ indexes (PMIs) implied ongoing economic growth in major developed nations. (Exhibit 1) Readings above 50 suggest expansion, although they measure only growth’s breadth, not its magnitude.

Exhibit 1: The Latest PMIs


Source: FactSet and S&P Global, as of 4/25/2022.

In our view, April’s expansionary eurozone readings are most interesting since many economists are on German recession watch. Should the Federal Statistical Office announce a Q1 GDP contraction on Friday, Germany will meet the popular definition of recession (two or more consecutive quarterly GDP contractions).

However, the latest data suggest that isn’t a foregone conclusion. Despite longer-running supply constraints, February industrial production rose 0.2% m/m—though this doesn’t capture much fallout tied to the war in Ukraine.[ii] However, PMIs offer a timely snapshot of general business conditions, and they have generally pointed positively as the war has raged. German manufacturing has remained expansionary even as businesses noted headwinds, including uncertainty tied to sanctions and supply issues. German services and retail sales activity have also held relatively firm—especially as COVID restrictions have eased—and the country’s composite PMI, which aggregates services and manufacturing, has registered growth throughout Q1.[iii] We will see what Friday’s data show, but this doesn’t look like a sharp contraction in the making for now.

The focus on German soft patches overshadows some bright economic spots. France, the eurozone’s second-largest economy, registered its strongest composite PMI since January 2018, and its services PMI hit a 51-month high.[iv] Economic reopenings across the Continent have boosted the eurozone’s services sector, and a return to pre-pandemic trends implies services-led growth—a positive for the services-heavy eurozone economy.

Though the Continent theoretically is most vulnerable economically to Russia-Ukraine war fallout, PMIs are compelling evidence of the eurozone’s resilience. If Europe doesn’t enter a recession due to the conflict and dislocations from sanctions, we think it is unlikely a global one manifests, either.

The Message From UK and Canadian Retail Sales

After US March retail sales hinted at consumer demand weathering high prices, the UK and Canada offered additional color. March UK retail sales fell on both a value and volume basis (-0.2% m/m and -1.4% m/m, respectively).[v] Volume estimates remove price change impacts, giving a better idea of how much “stuff” businesses sold. Though elevated prices likely influenced UK consumers’ spending, a look under the hood reveals some interesting nuance.

Non-store retail sales volumes (-7.9% m/m) detracted most, falling again after February’s -6.9%.[vi] The Office for National Statistics highlighted affordability concerns, as the statistics agency’s March survey found 54% of adults reported spending less on non-essentials.[vii] But February and March’s declines also follow strong December and January non-store sales, when Omicron concerns likely boosted online buying as shoppers stayed home.[viii] Fuel and food store sales volumes also unsurprisingly detracted. For the former, high prices are regulating demand for fuel, which is how markets work. For the latter, food store sales volumes have been slipping since November 2021, partially due to higher spending in pubs and restaurants as COVID restrictions relaxed.

Canadian retail sales paint a similarly mixed picture. Many worry high prices will crimp Canadian consumer spending, as Canadian CPI rose 6.7% y/y in March, a 31-year high and well above analyst expectations of 6.1%.[ix] An advance estimate showed March retail sales rose 1.4% m/m in value terms, but without volumes (which aren’t available yet), inflation’s impact isn’t clear.[x]

However, February retail sales (0.1% m/m in value terms, -0.4% m/m in volume terms) suggest Canadian retail trends are in line with other developed nations.[xi] Auto industry categories detracted due in part to shortages rather than non-existent demand—similar to what we have seen in the US.[xii] Positively, clothing stores’ sales volumes jumped.[xiii] Some provinces’ relaxing of COVID restrictions in February likely prompted some consumers to spruce up their wardrobes.

While it is fair to say higher prices are creating winners and losers, we don’t think it is accurate to pin March’s ho-hum retail sales numbers on elevated inflation alone—other forces are at work, including the shift to a post-COVID reality. Moreover, retail sales shed limited insight since they don’t reflect most services spending, which tends to be less economically sensitive and comprises a larger portion of total consumer spending.

US LEI’s Positive Message

One reason to be optimistic about US growth: a high and rising Leading Economic Index (LEI). The Conference Board’s US LEI rose 0.3% m/m in March, its 11th rise in the past 12 months.[xiv] Of the 10 underlying components, 7 contributed positively.[xv] The yield spread added 0.24 percentage point while average weekly jobless claims added 0.18 point.[xvi] Though the latter isn’t useful on a forward-looking basis—jobs data are lagging economic indicators—the former bodes well. The difference between the 10-year Treasury yield and federal funds rate gives a sense of banks’ net interest margins—reflecting new lending’s profitability. The wider the spread, the more incentive banks have to lend, which helps money move through the economy. Positively, that spread widened over the past three months, from 1.68 percentage points in January to 1.93 points in March.[xvii] Yet few have noticed this positive economic development—queuing up upside surprise potential.

No traditional modern recession began while LEI was high and rising. LEI has declined for several months before every US recession since World War II, with 2020’s lockdown-driven downturn—an unusual recession with no precedent—the lone exception.[xviii] With experts predicting a US recession around the corner, LEI’s growthy signals today are worth keeping in mind."

MY COMMENT

The above is nice......but.....not especially compelling as a vote of confidence for the economy and those in control of the factors that impact the short term economy. When you have to dig this far down into the weeds to find the positive......things are not exactly booming.

The bottom line.....the economy is being held up by the consumer. Spending is booming. BUT....watch out below if the consumer turns negative or decides to pull back. I still put the odds of recession at about 50/50.

At the moment much of what is going on with stocks, funds and the economy comes down to one thing. Psychology. The mood of the country. How we do over the next few years is going to be very much dependent on whether we see any sort of.......positive leadership. By positive leadership I mean......leadership that.....celebrates the USA, supports capitalism and business, works for the good of the economy, puts the needs of our own country and people first, does the right things with business, energy, and the whole economy. Leadership that accepts that we ARE the greatest country in the world.

 

The markets are in a hand to hand, back alley, knife fight for direction today. NOW......we are nicely positive. I really dont see much or even.......any.....news today that matters. Nothing is changed and everything in the media is baked in.....long ago.

I actually consider it a good thing that the Ten Year Treasury yield is approaching 3%. It is about time we got back to more normal rates and off he bottom of the 100 year low of the Ten Year rate history.

 

I like this little article.........so simple.......yet so difficult for most people.

Warren Buffett reminds the world about 3 legendary investing tips: Morning Brief

https://finance.yahoo.com/news/warr...y-investing-tips-morning-brief-100010924.html

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

"If I had to grade this weekend’s "Woodstock of Capitalism" – aka the Berkshire Hathaway annual meeting – I would slap it with a solid B.

Was this Buffett’s most headline-grabbing annual meeting? I have listened to/watched enough of these spectacles in the past decade to say emphatically: No. Personally, I liked his annual meeting in the middle of the COVID-19 pandemic as he sought to rally the world.

Sure, Buffett railed against Wall Street (he hates paying fees to bankers, as seen once more in the Allegheny deal) by saying it’s a “gambling parlor” and bitcoin for it offering nothing of value. He scared the hell out of everyone (again) on potential nuclear war. Charlie Munger flipped the bird to Robinhood (more on that below).

But all of this felt very stale to me, just vintage Buffett and Munger. I would compare it to comedian Andrew Dice Clay going to his bag of nursery rhyme jokes to please long-time fans – they are proven winning lines. So from a headline standpoint, I give the annual meeting a solid C (tough grader I know, but whatever).

Where Buffett earned his A grade, however, was in the investing wisdom he imparted on the crowd. Nothing new per se, rather great reminders one day after the Dow Jones Industrial tanked 900 points and the Nasdaq Composite fell 4%.

Here are three lessons Buffett served up:

1. Do Your Research

Buffett’s explanation on how he upped his stake in Occidental Petroleum to 14% of the company, underscored the need to do your own research and make it extensive if possible. Buffett saw 60% of the top holders in Occidental being no more than passive investors unlikely to take advantage of a dislocation in the stock price. So, Buffett saw that passiveness and a dislocation in the stock price, and went to work buying up everyone else’s shares not in that 60% group. Savvy.

2. Buy When Others Are Fearful

Falling markets haven’t deterred Buffett. In fact, this is the perfect environment for him…and it could be for you as well, provided you can have a time horizon of more than one-day. Buffett spent $51 billion to buy stocks in the first quarter, notably HP, Chevron and the aforementioned Occidental.

Ask yourself this question this morning: What would Warren Buffett be doing after Friday’s big down day in the markets? The answer is probably not preparing for a stock market crash because a free newsletter is warning of one (not this one of course). No, Buffett is probably licking his chops as names he is watching have just gotten cheaper.

3. Buy Stock of Companies You Understand

Buffett mentioned he doesn’t know how to use email and has documents printed out for him. With that context, is it any surprise Buffett became the largest shareholder in printer maker HP in the first quarter? Nope. Meanwhile, Buffett has a unique view of demand for fossil fuels by way of his ownership of railroad Burlington Northern (and his other industrial companies). Is it any shock he's been plowing billions into Chevron and Occidental? Nope.

Bottom line is Buffett has long purchased stocks of companies he understands. It’s a wise course of action for you as well. If you don’t understand what that $2 biotech stock you just bought really does, why are you buying it?

Mesh the grades together, you get my solid B. Till next year Warren and Charlie (hopefully).

Happy Trading!"

MY COMMENT

Yes....we have all seen the above many times. We have also all seen the mechanics of investing.....stuff many times. Stuff like......hold for the long term, dont market time, dont short term trade, etc, etc, etc.

Amazing.....that one of the greatest investors in the world and a very wealthy individual........does not know how to use email and has someone else print his documents.

HERE is the rest of the above article.......which I think is some interesting stuff........but.....a little on the SNARKY side:

"Odds & Ends

Trash talking: Charlie Munger didn’t show his age (98) when wasting no time ripping Robinhood a new one at the celebration of two billionaire investors. "Wasn't that pretty obvious that something like that was going to happen?" Munger said after bringing up Robinhood's business troubles, later adding the company's business model "was disgusting... God is getting just. ... There's been some justice."

About seven hours after the comment, Robinhood’s head of public policy communications sent me this statement via email: “It is tiresome witnessing Mr. Munger mischaracterize a platform and customer base he knows nothing about. [No, Robinhood doesn’t charge commissions and does not allow day trading or short selling. We never did.] He should just say what he really means: unless you look, think, and act like him, you cannot and should not be an investor. We’re happy to share our educational tools, as it also seems he is lost on digital currencies.”

Maybe a touch of age-shaming in the crypto reference? You be the judge. Somehow I don’t think Munger will be invited on as a Robinhood board advisor anytime soon. But maybe he should: Robinhood’s stock has crashed 72% since hitting public markets in July 2021.

Thanks for nothing, Amazon: If Amazon’s first quarter loss were excluded, the S&P 500 would currently be sitting on double-digit percentage profit growth to start the year, points out FactSet. Including Amazon’s loss, the S&P 500’s first quarter earnings growth rate stands at 7.1% compared to 10.1% if Amazon were excluded.

On another note, my co-anchor Julie Hyman and I got into a fiery debate on live TV on whether Amazon will raise prices on Prime again to help offset inflation. Julie says no, I say it’s going to $200 a year by the middle of next year. One Wall Street analyst we spoke with thinks Amazon Prime is really worth $400 a year (at least). I am curious on your hot take on this one – drop us a tweet at @juleshyman, @briansozzi and @yahoofinance.

Stock stuff: Lots of interesting individual stock stories are on tap this week. Take for instance Restaurant Brands, which is holding a Tim Horton’s investor day on May 3. It’s not the norm for a company of Restaurant Brands’ size to hold an investor day for just one of its brands (others it owns include Burger King, Firehouse Subs and Popeyes).

However, I think CEO Jose Cil doesn’t think Tim Horton’s turnaround is getting appreciated by investors, hence the showcase of the brand. I do think this could be a signal Restaurant Brands is open to spinning out the division in some form and reinvesting proceeds in faster growing concepts.

It will also be interesting to see the market reception to Bausch & Lomb’s IPO on May 6. The company is nicely profitable, is a consumer staple (contact lenses which you need if you wear them…like I do) and has strong leadership.

Anything other than a positive response, given these favorable investing characteristics, would be another major red flag on the broader market’s near-term direction.

Starbucks CEO Howard Schultz better bring his oratory A-game on the company’s May 3 earnings call. The stock has cratered 18% in the past month – basically encompassing his time back as CEO of the coffee giant. I would expect a challenging quarter from Starbucks, notably in its key market of China due to COVID-19 lockdowns.

But the stock’s recent performance reflects more than challenges in the business – it reflects a view Schultz is another tone deaf, fat cat CEO who doesn’t understand the current real-world challenges facing his non-HQ workforce. Schultz has to do a better job here, his listening tours so far have been a social media nightmare for him.

Yahoo Finance Trending Tickers to Watch: It’s a big morning for all things touched by Warren Buffett on the Trending Tickers page. Chevron seeing a lot of interest as Buffett upped his stake in the oil giant. Buffett disclosed a 9.5% arbitrage stake in Activision Blizzard, and its stock is seeing strong interest on our platform.

Not much news on HP from the Buffett event, other than the fact he owns the stock and prefers printed documents because he doesn’t know how to email. Occidental Petroleum received more praise from Buffett, and finds itself on our list.

Robinhood is on the trending ticker page not for anything good, but because Charlie Munger gave the trading platform a middle finger (again) at the shareholder’s meeting.

China-based EV makers Nio and Xpeng — volatile names that are usually on the Trending Ticker pages — are back on this morning as traders assess sales updates from each. Nio said early Sunday it delivered 5,044 vehicles in April, down from 9,985 in March.

“In late March and April 2022, the Company’s vehicle production and delivery have been impacted by the supply chain volatilities and other constraints caused by a new wave of the COVID-19 outbreaks in certain regions in China. The vehicle production has been recovering gradually,” Nio said. Watch for a negative reaction in Tesla shares off these sales updates."

 

WOW.......the markets are STILL green. It will be interesting to see how we end the day.

 

For anyone on here......I highly recommend any of Emmett's short films. I have watched all of them. They are all well written and most have a surprise twist at the end. He is also the writer, producer and director of many of them.

Here is where you can watch all of them:

https://www.imdb.com/name/nm0243886/?ref_=ttfc_fc_cl_i47

 

While waiting for the markets to close.......here is a little article that is relevant at the moment. Anyone looking for a home is already very aware of this stuff.

Home affordability is nearly the worst on record as mortgage rates spike

https://www.cnbc.com/2022/05/02/mortgage-rates-surge-as-home-affordability-nears-record-worst.html

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

"Key Points

• The average rate on the popular 30-year fixed started this year at 3.29% and hit 5.55% on Monday, according to Mortgage News Daily.
• The vast majority, 95%, of the 100 largest U.S. housing markets are now less affordable than their long-term levels, up from just 6% at the start of the Covid pandemic, according to Black Knight data.
• If rates were to rise just 50 basis points more or home prices were to increase just 5% more, home affordability would be the worst on record.

Mortgage rates just hit their highest level since 2009, and home prices are continuing to experience double-digit gains. Now, nearly all of the major housing markets in the United States are less affordable than they have been historically, and affordability is near its worst point on record.

New calculations from Black Knight, a mortgage technology and data provider, show that 95% of the 100 biggest U.S. housing markets are less affordable than their long-term levels. That figure was at 6% at the start of the Covid pandemic. Thirty-seven markets are less affordable than they have ever been.

Home price gains did pull back slightly in March, but they were still up 19.9% year over year. Compared with February, prices rose 2.3%, the fifth time since the pandemic began when home prices rose more than 2% in a single month. Prices were up 5.9% in the first three months of the year. Consumers are grappling with rising prices across categories, from real estate to airfare to groceries.

The average rate on the popular 30-year fixed started this year at 3.29% and hit 5.55% on Monday, according to Mortgage News Daily. Rates could move even higher after Wednesday’s Federal Reserve meeting, when markets will get more commentary on the Fed’s drive to curb inflation.

Homebuying affordability has not been this bad since July 2006, when rates were around 6.75%. Then, it took about 34% of the median income to cover the monthly mortgage payment, including principal and interest, for a home purchased with a 20% down payment.

As of April 21, that payment-to-income ratio had reached 32.5%. Historically, a ratio above 21% has caused the housing market to cool off, with the exception of the last two years. The pandemic has created an anomaly in the housing market, because demand is so high and supply is so low.

If rates were to rise just 50 basis points more or home prices were to increase just 5% more, home affordability would be the worst on record, according to Black Knight. (Of those two factors, the 5% rise in prices would be more likely.)

It is often said in the housing market that consumers don’t buy the home price, they buy the monthly payment. That payment is at a new high, up $552 (an increase of 38%) year to date to $1,809, and up $790 (or 72%) since the onset of the pandemic.

In reaction to weaker affordability, consumers are suddenly turning to adjustable-rate mortgages, which offer a lower interest rate. The ARM share of rate locks from potential homebuyers jumped from 2.5% in December to nearly 8% in March, according to Black Knight. As of last week, that share was more than 9%, according to the Mortgage Bankers Association."

MY COMMENT

Everyone talks about the poor buyers. BUT.......if I was going to sell a home I would not delay. The real estate markets can turn on a dime. I have seen it happen many times. A hot market can turn cold in just a few weeks. Once it starts it snowballs very quickly.

It is a very challenging market for buyers as well as sellers and those thinking of selling. It is easy to second guess yourself........and wait too long or jump too fast.

 

This should help Amazon a little bit.......for now.

Amazon workers vote against unionizing second warehouse in defeat for organized labor

https://finance.yahoo.com/news/vote-count-starts-amazons-second-172151122.html

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

"NEW YORK (Reuters) -Amazon.com Inc workers voted against unionizing a second warehouse in New York City, a ballot count on Monday showed, representing a defeat for labor organizers just weeks after celebrating their first U.S. win at the retailing giant.

Employees at the company's sortation center in the borough of Staten Island, known as LDJ5, voted 618 to 380 against joining the Amazon Labor Union (ALU), according to a tally by U.S. National Labor Relations Board (NLRB) officials. Turnout was about 61%.

The rejection risks slowing momentum for labor advocates who since the pandemic have made greater progress organizing at Amazon in the United States than at any other time in the company's 27-year-old history.

As the second-largest U.S. private employer, the company has long been a focus for unions that consider Amazon's practices a threat to workers. Amazon instead says it offers more than double the federal minimum wage and "comprehensive" benefits and empowers staff to change its workplace for the better.

Earlier this year, some 55% of employees who voted from Amazon's JFK8 warehouse next door to LDJ5 had opted to become part of the ALU, which has argued for higher pay and job security under the leadership of former worker Christian Smalls. It marked the first time U.S. workers had decided to unionize at Amazon.

The retailer has called for a re-run of that election, saying the NLRB's Brooklyn office appeared to support the union drive and that labor organizers intimidated staff to vote in their favor. The ALU has dismissed the allegations, which the NLRB's Phoenix-based region will weigh in a hearing starting later this month.

The ALU's win had followed a streak of union victories at Starbucks Corp stores, in what some labor experts have described as a resurgence of worker interest in unions in the United States."

MY COMMENT

The stock today is down by about $25. It was down more earlier in the day. This story is not going to move the stock much......but.....it is an important issue for the company as it struggles.........short term, hopefully,....... to do business as a more mature company.

 

The markets managed to pull off a win today to start the week......a happy day for investors.

I ended with every stock position Up today except for COSTCO. Even Amazon and Apple were able to end the day in the green. I got a beat on the SP500 by 0.90% today.

A good start to the week. Lets carry through from here........and not waste it.

 

I hope this is accurate. It will take some of the pressure off TESLA stock.

Exclusive-Musk seeks to put in less money in new Twitter deal financing -sources

https://finance.yahoo.com/exclusive-musk-talks-twitter-financing-182716616.html

MY COMMENT

It would be nice to see TESLA stock be able to simply be a stock representing a business. It is so tied in with MUSK that all sorts of extraneous events and happenings carry over onto the company and the share price. STILL an amazing company and one of the best corporate leaders around.

 

I am pleased to see this happening. I dont like to see extremely abnormal rates. We have been sitting at or near the 100 year lows for interest rates on treasuries for way too long.....especially the Ten Year.

10-year Treasury yield tops 3% for first time since 2018

https://www.cnbc.com/2022/05/02/us-treasury-traders-look-ahead-to-fed-meeting.html

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

"U.S. Treasury yields continued their push higher on Monday, as investors monitored economic data and monetary policy on the first trading day of May.

The yield on the benchmark 10-year Treasury note rose more than 11 basis points to 3% in midday trading. The yield on the 30-year Treasury bond jumped more than 11 basis points to 3.062%. Yields move inversely to prices and 1 basis point is equal to 0.01%.

The 10-year’s move put the yield at its highest level since Dec. 3, 2018. The benchmark yield has risen rapidly this year after ending 2021 near 1.5%. It was trading near 2.33% at the end of March.

“It’s a very psychologically significant hurdle for the 10-year Treasury yield and yet it’s not really an important resistance level for it,” Fairlead Strategies founder and managing partner Katie Stockton said on CNBC’s “The Exchange.”

“We’d have to go back to the 2018 high, which is of course 3.25%. We, of course, have seen very positive or upside momentum behind Treasury yields, and that’s no change today … with it punching through that level but it is just a round number that we can see by another threshold being cleared by them.”

Investors are looking ahead to Wednesday, when the Federal Open Market Committee will issue a statement on monetary policy. The decision will be released at 2 p.m. ET, with Federal Reserve Chairman Jerome Powell holding a press conference at 2:30 p.m.

A hot inflation report Friday underscored the difficult macro environment. The core personal consumption expenditures price index — the Fed’s preferred inflation gauge — rose 5.2% from a year ago.

“The global nature of the current inflation outbreak makes the Federal Reserve’s job in reducing US inflation all the more difficult. With much of the inflationary pressure coming from exogenous factors (global oil prices, supply chain bottlenecks, Zero Covid tolerance in China) the Fed’s use of its main policy lever, raising its overnight borrowing rate to push up borrowing costs for businesses and consumers, gives it limited power to arrest these global inflationary pressures,” Oppenheimer chief investment strategist John Stoltzfus said in a note to clients.

There were some conflicting readings on the economic front Monday.

The US manufacturing PMI from S&P Global came in at 59.2, down slightly from a preliminary reading but higher than in March. The ISM manufacturing PMI, meanwhile, fell to 55.4, missing estimates."

MY COMMENT

As I said I like to see rates normalize. It is important to the economy to not be stuck in abnormally low rates. Many businesses....banks, insurance companies, etc, etc. Benefit from higher rates......and......they are necessary for healthy business in many areas of the economy.

I believe it is also important and needed to get rates up so people that want the safety of owning a CD or other non-stock investment.....have some options and a chance to have a decent income coming in.

 

As many people on here know.....I live from the income provided by Social Security and SIX lifetime income annuities that are for the life of me and my wife.....whichever of us is the last to die. That allows me to stay fully invested with.......and not need.....my stock market money. Since I was a self employed business owner till I retired in early 1999.......I have no pension.....so.....I created my own. I have basically lived off my earnings as a self employed business person since........a few years after college. Over that time I have never worked for anyone else. I have always survived from my own personal assets.

Every once in a while I run some figures on what income I could get from current annuities under the current Ten Year Yield. I put my annuities in place when I was age 65 and started drawing income from them at age 70. They are basic INCOME ANNUITIES.

Over the past 7.5 years of running numbers......... I have yet to run numbers that would pay out more than I am getting.

With the Ten Year hitting 3% today I decided to run the numbers today. If I bought today....... as 65 year old today with payments to start at age 70......the payment would be $16,812.......LESS per year.....than I am getting. I also ran the numbers today for annuities with an immediate income payout. The income was about $16,000......LESS per year......than what I get now.

So.........7 years ago......I guess I made the right decision to buy the annuities at that time. At least so far I am way ahead of the income I would get at the current Ten Year yield from identical annuities purchased today. Eventually.....as rates go up.......I will hit a time when the payouts will be better.......but.....that is not relevant to me since I needed/wanted to start the income 2.5 years ago. SO.......what I could get starting now or five years from now is not relevant.

I run the figures just out of.......curiosity. It is nice to see that I made the correct decision to buy when it did.....even if it was purely LUCK. Educated luck.....but still luck. I had no way to know what was going to happen with rates back than. I just knew that rates were trending soft for the long term.......and.....I could lock in what I needed for the rest of my life at that time. In other words I did not get......GREEDY.......and wait hoping for better rates.

 

File this one under........"lets hope so".

Has inflation reached a peak? Three signs that prices could soon come down

https://www.cnn.com/2022/05/01/investing/stocks-week-ahead/index.html

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

"New York (CNN Business) Inflation is at a 40-year high, and Americans are feeling it.

A gallon of gas costs about double what it cost in January 2021. Home prices were up a whopping 19.8% year-over-year in February. And, in March, groceries cost 10% more than they did a year earlier.

Thankfully some analysts think that the burden could soon ease, and that we've reached an inflationary top.
This week, the Federal Reserve will meet and likely announce plans to raise interest rates, a tool used to combat rampant inflation. However, investors fear that accelerating the pace of interest rate hikes could drag the economy into recession.

Ryan Detrick, chief market strategist for LPL Financial, thinks it's likely that inflation has already reached a peak on its own, and that the Fed could start to pull back on interest rates by the second half of the year.

The core personal consumption expenditures index, which the Federal Reserve closely watches to measure the price of goods and services, grew by 5.2% in March, excluding food and energy prices, coming in below economists' expectations and falling on a monthly basis for the first time since October 2020.

Analysts at UBS also said this month that they expect inflation will likely peak in March and then fall "sharply."

Detrick points to three key economic indicators for that belief: a drop in used car prices, a lack of "sticky" inflation, and a relative easing in supply chain chaos (though China's Covid-related shutdowns could put an end to that).

The chip shortage caused by supply chain kinks and Russia's invasion of Ukraine, has made getting a new car very difficult, and the prices of used cars and trucks have correspondingly soared. In February, the price of a used car was up about 45% year-over-year, according to the Manheim Used Car Value Index. But it has since come down to about 25%. Two months of declines show that the prices of used cars, which make up 4% of the consumer price index, could finally be reverting back to pre-pandemic levels.

The Federal Reserve Bank of Atlanta breaks inflation into two categories: sticky and flexible. Sticky inflation is a basket of goods that tends to change more slowly and permanently in price, things like the cost of education, public transportation and motor vehicle insurance. Flexible inflation includes items that move up and down in cost more quickly: gas, clothing, milk and cheese.

During the stagflation of the 1970s, both sticky and flexible inflation grew. But so far sticky inflation has remained relatively flat compared with flexible inflation, a good sign that this could still be temporary.

Of course, it could take some time for sticky inflation to play catch up, but Detrick says he's optimistic. Flexible inflation is like a rubber band, he said, you can stretch it pretty far and it will still snap back.

And though shutdowns in China could hurt the global supply chain, it does appear that problems are easing -- at least for now. If businesses can easily obtain more supplies, the prices of materials go down and consumers won't be charged as much for goods and services, said Detrick.

Shipping rates from Shanghai to Los Angeles, New York and Rotterdam are down 28% on average from the peak last year, according to LPL Financial's data. Schedule reliability for container ships is also continuing to improve, according to new data from analytics firm Sea-Intelligence. March also marked the third consecutive month of declines in average delays for container ships.

The move lower in inflation could be sudden as a result, especially for durable goods, said Detrick. Still, he warned, it's hard to tell if we're seeing the light at the end of the tunnel — or an oncoming train."

MY COMMENT

It would help a lot to see used cars drop back to prior prices. We will just have to wait and see if the above is true or not over the rest of the year.

 

Yep.....sounds like a good plan Emmett. Just dont tell her when it goes down......only up. I am sure you will do very well.