The Long Term Investor

Here is a little overview of the day today.

Stock market news live updates: Stocks rise as indexes aim to pare weekly losses

https://finance.yahoo.com/news/stock-market-news-live-updates-may-13-2022-221242098.html

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

"U.S. stocks gained Friday, shaking off some losses from earlier this week after concerns over persistent inflation and the resilience of the U.S. economy stirred up further volatility in recent sessions.

The S&P 500 rose by more than 1.5% intraday on Friday while the Nasdaq jumped by nearly 3%. The Dow added more than 350 points. The sharp move higher came after Federal Reserve Chair Jerome Powell reaffirmed in an interview with Marketplace public radio on Thursday that two more 50 basis point rate hikes were on the table for the next two Fed meetings, and that officials were not "actively considering" a more aggressive 75 basis point hike. His comments echoed what other Fed officials also said this week.

Just a day earlier, the S&P 500 had closed within striking distance of a bear market, typically defined as a close of at least 20% from a recent record high. The index has declined by just over 18% from its Jan. 3 record high through Thursday's close, and it paced toward a weekly drop of 4.7% if levels hold through the end of Friday's session.

The Dow Jones Industrial Average and Nasdaq Composite each also headed for weekly losses of 3.6% and 6.4%, respectively, based on Thursday's closing prices. Treasury yields have spiked and then pared gains back this week, with the benchmark 10-year Treasury yield hovering around 2.9% Friday morning. Bitcoin prices recovered to trade above $30,000 after setting the lowest level since Dec. 2020, as a cratering in prices of Luna further reverberated across the broader cryptocurrency market.

The market gyrations this week coincided with two major inflation reports that came in hotter-than-expected. Thursday's Producer Price Index showed an 11% year-over-year rise in wholesale prices last month, with this rate moderating only slightly from March's all-time high rate of 11.5%. And the Consumer Price Index released earlier this week showed a still-elevated 8.3% annual increase in prices paid by consumers last month.

"Inflation has certainly become not only topical, but a real issue for the broader market, as the Fed has also increased its outlook for the number of [interest rate] hikes needed," Sonali Pier, managing director and portfolio manager at Pimco, told Yahoo Finance Live on Thursday. "In terms of the effect of inflation, it's really at this point, we're going to see if the Fed raising rates, unwinding some of the balance sheet, can take off some of that inflation froth. Because it's quite high, and it's starting to impact companies — from their ability to push through from a pricing power perspective, as well as consumers, whether that's at the gas pump or as a result of food increases and the like."

Other strategists agreed that the Fed's response to inflation — and how well the economy holds up as the Fed tightens financial conditions to address inflation — will be the key factor to watch going forward for the markets.

"We're in an environment right now where inflation is high. The labor market is very tight. The Fed wants to bring inflation down. They want to sort of cool the overheating in the labor market, which means their bias is to tighten financial conditions and try and slow growth," Jason Draho, UBS Head of Asset Allocation, said on Thursday. "In that environment, it's not great for any sort of financial assets."

"[Once] we get some sort of real break on inflation that people become much more comfortable that it's moderating, and moderating [to] a sustainable level that the Fed could be more comfortable, and they don't have to hike more aggressively ... I think that's the key catalyst," Draho said. "Unfortunately, that might take a few more months before the data starts to clearly show inflation is definitely below its peak, and the Fed could achieve its target two years out."

"So I think for the time being, it's definitely a choppy market," he added.

10:15 a.m. ET: Consumer sentiment drops to lowest level since 2011: University of Michigan
Consumer sentiment fell to a more than decade low in early May, according to the University of Michigan, as concerns around inflation persisted.

The University of Michigan's closely watched Surveys of Consumers index dropped to 59.1 in the preliminary May report, declining sharply from April's reading of 65.2. The latest reading marked the lowest since 2011.

The sentiment declines "were broad based — for current economic conditions as well as consumer expectations, and visible across income, age, education, geography, and political affiliation—continuing the general downward trend in sentiment over the past year," Joanne Hsu, director of the Surveys of Consumers, said in a press statement. "Consumers' assessment of their current financial situation relative to a year ago is at its lowest reading since 2013, with 36% of consumers attributing their negative assessment to inflation."

Consumers' inflation expectations remained elevated in May, with the survey showing one-year inflation expectations were unchanged at 5.4%. However, some strategists suggested the drop in risk assets over the past several weeks played an even larger role in the drop in the headline index.

"I would argue that the drop was largely a function of the plunge in stock prices. We know U. Mich is more sensitive to markets," Neil Dutta, head of economics at Renaissance Macro Research, wrote in an email Friday morning. "Inflation is an issue sure but the inflation expectations series were unchanged."

7:54 a.m. ET: Tesla shares jump in early trading after Musk says Twitter deal on pause
Shares of Tesla (TSLA) jumped by more than 6% ahead of the opening bell Friday morning after CEO Elon Musk said his $44 billion plan to purchase Twitter (TWTR) was temporarily paused, pending more details over how much of Twitter's use base comprises bot accounts.

"Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users," Musk said in a Twitter post early Friday. He linked to a Reuters story suggesting Twitter filings showed fake or spam accounts made up fewer than 5% of the company's monetizable daily active users.

In announcing his deal to buy Twitter over the past month, Musk has suggested targeting bot accounts and authenticating users was one of his priorities for the company post-deal.

Twitter shares sank 11% in early trading to hover around $40 apiece.

7:45 a.m. ET Friday: Stock futures jump after Powell reaffirms 75 basis point rate hikes not currently under discussion

MY COMMENT

Way to go Elon Musk. He is now likely to drive the price way down that he will have to pay for Twitter. He is one smart business person.

I am also glad to see the consumer sentiment LOW. this is a contrary bullish indicator. The lower the better as far as I am concerned. I do agree that the cause of the consumer sentiment drop is likely people seeing their 401K and brokerage accounts drop.....rather than.....worry about inflation.

At this point it really does not matter what is the actual cause of the economic and market weakness. It is all about PSYCHOLOGY at this point.

 

I STILL find it amazing that with all the BIG DROPS we have seen this year in the markets and the DISMAL past five months.....that the SP500 is down by ONLY.....(15.74%) year to date. That is one powerful Index. I consider the performance of this Index exceptional considering the past......nearly....five months.

Obviously the Index is heavily weighted in the five or six BIG CAP TECH companies. Yet.....at the same time......the other 500+ companies in the Index are doing their job and balancing out those big tech losses and providing diversification, strength, and safety. The POWER and SAFETY of the iconic BIG CAP side of the USA business world.

It is my favorite Index.

 

I have not seen anything said about it lately.....but remember.....AMAZON is going to do their stock split on June 6. ONLY....about three weeks from now. The split will be.....drum roll please......TWENTY FOR ONE.

That is a big split. At the current price that will take the price for one share of AMAZON down to just a bit over $111 per share.

I am looking forward to this event. It will give the markets something to talk about that is POSITIVE.

 

I agree roadtonowhere......I have Amazon on a two year watch. I think another couple of years is enough time to see if they are going to thrive under the new leadership. They may end up like many BIG CAP darling companies. They may have to go through some management turmoil after the founder leaves before they find the right person an resume their big growth.

 

I needed a good day for once. I had a very good one today. I was TOTAL GREEN and beat the SP500 by 1.32%. As a result I was able to lower my year to date loss to (-22.4%).

 

Today being strongly green helped the markets to avoid a HUGE BLOW-OUT for the week. BUT......It was still a BLOW-OUT.

DOW year to date (-11.40%)
DOW for the week (-1.14%)

SP500 year to date (-15.57%)
SP500 for the week (-2.41%)

NASDAQ 100 year to date (-24.10%)
NASDAQ 100 for the week (-2.41%)

NASDAQ year to date (-24.54%)
NASDAQ for the week (-2.80%)

Russell year to date (-20.16%)
RUSSELL for the week (-2.55%)

A BRUTAL week for ALL the averages. We are past due for a couple of good days once in a while. Are we at the bottom....I doubt it. I still say another 5-10% to get there. I would be happy if we are within about 5% of the bottom.

 

ZUKODANY mentioned this earlier in the day. We could use this as a market driver for a while.......but buying this sort of junk? Insane.

Here's why meme stocks are hinting at another flashy rally for `junk stocks`

https://finance.yahoo.com/news/meme-stocks-rally-junk-stocks-201724064.html

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

"Meme stocks are perking up again, with GameStop (GME) and AMC Entertainment (AMC) rallying over 30% at one point on Thursday, and adding 10% and 5%, respectively, on Friday. Separately, the ARK Innovation ETF (ARKK) shot up 25% off Thursday's — testing price levels first seen in 2017.

While we've seen this movie before — only to watch dip-buyers get fleeced — a growing chorus of money managers are finding increasing reasons to wade into this unforgiving market.

"Almost everything I look at is screaming to buy," wrote Paul Schatz Friday morning after the S&P 500 had minted a fresh, 52-week low.

Schatz pointed out that investor sentiment is mired at historic lows as more and more stocks capitulate. The number of stocks listed on the NYSE making new 52-week lows surged above 1000 for the first time since the pandemic sell-off in 2020. Most pandemic darlings have round-tripped their gains and are now in the red since 2020 (or before).

"[T]he stock market is set up for a face-ripping short-covering rally over the coming weeks or so," wrote Schatz. "It is also possible the final bottom has been seen, but that is not something I am counting on right here."

Front and center are the high-growth names and meme stocks that have been pounded the most. "[T]he first bounce should see whatever fell the most rally the most," writes Schatz. Indeed, this is what some traders call a junk-off-the-bottom rally.

Of the 45 stocks in the informally-constructed meme stock basket compiled by Yahoo Finance, the median drawdown, or loss, from recent highs is 73% (the average is 65%). Peering inside ARKK, it's not quite as bad — but still not pretty. The median component in the Cathie Wood-sponsored disruption ETF has been cut in half (average 44%).

But even if stocks reward the dip buyers this time around, it's not necessarily the all-clear signal sought by longer-term investors.

"This will not be a 'V' bottom like 2020 and 2018 when the Fed quickly pivoted and 'risk on' returned overnight," Schatz wrote. "It is going to take some time."

Handicapping the next move by Jerome Powell and his cohort at the Federal Reserve is the biggest piece of the puzzle — and THE major unknown. Investors are still pricing in 50-basis-point hikes for the next three meetings, and the Fed is only beginning to sell bonds from its balance sheet — a pace that will soon reach $95 billion per month.

Any liftoff in risk assets will likely arise from the markets predicting another Powell pivot — this time to the dovish side with a concurrent easing of monetary policy. But that will take time to play out. In the meantime, tight financial conditions could easily cap any fledgling rally.

"The Fed can’t pivot yet, although they will later this year. Huge asset sales are still to come," Schatz wrote. "In other words, the markets have a [great] deal of repair left.""

MY COMMENT

There is a really nice chart in the article......that did not copy......of all the various MEME stocks and their 52 week low and how they performed today.

I do think that this little article points out some of the positives for the entire market. Stocks are starting to get close to the bottom. As I said.....I believe.....5-10% as of the close today. If I had money to invest I would probably be going all in at this point. I dont mind taking a possible 10% hit in order to be fully invested when the market starts to move back up.

BUT.....of course......I have no money to invest since I remain fully invested for the long term as usual. I will probably have some money in December.....so if the market rout continues that long I will be putting that money in at that time......rather than trying to time the markets.

 

Lets hope so.

Investors could get a reprieve from vicious stock sell-off in week ahead

https://www.cnbc.com/2022/05/13/inv...rom-vicious-stock-sell-off-in-week-ahead.html

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

"Key Points

• Stocks could see a reprieve from selling in the week ahead, after the past week’s sharp plunge and rebound.
• Retail sales and housing data are highlights of the economic calendar, and Fed Chairman Jerome Powell speaks at a conference Tuesday.
• The consumer is a focus when a few big retailers — Walmart, Home Depot, and Target — post earnings, the last big reports of the first-quarter earnings season.

Investors could get a reprieve in the week ahead from the vicious selling cycle that has gripped the stock market since late March.

Stocks bounced off of Thursday’s washout lows and were set to exit the week with reduced losses after Friday’s rally. Buyers on Friday hunted for bargains among small caps, biotechnology names, the Arkk Innovation ETF and other growth names that were hardest hit.

The S&P 500 jumped back above the key 4,000 level Friday, after touching 3,858 on Thursday — near the 3,800 to 3,850 area that chart analysts have been targeting for a bottom. But while it seems like the market could bounce temporarily, market technicians say that zone will likely be tested again later on.

“Does that mean the lows of the year are in? Probably not, but it could create an oversold bounce back to retest the 4,100 or 4,200 level in the S&P 500,” said T3Live.com’s Scott Redler, who follows the market’s short-term technicals. “In bull markets, you get weeks when you pull in. In bear markets, you get oversold bounces.

Redler said he expects traders to try to sell the rally. On Friday, the Nasdaq surged 3.8% though it was down 2.8% for the week, and the Dow was up 1.5% but down 2.1% for the week. The S&P 500 ended Friday at 4,023, up 2.4%, but down the same amount for the week.

“It has the ingredients for an oversold bounce that might last more than a week. I think this bounce is going to be led by all the oversold names that are down 70% to 80% from their highs,” he said. “It doesn’t mean you can blindly buy. Not everything is going to be created equally in this bounce.”

Redler said the fact that the Federal Reserve does not meet for a few weeks could add some support to stocks. Markets have been nervous that the Fed will raise interest rates too quickly and choke the economic recovery as it tries to snuff out hot inflation.

In the week ahead, investors will continue to look for clues on the course of the central bank’s interest rate hiking path in both economic reports and comments from Fed officials.

Fed Chairman Jerome Powell is slated to speak at a Wall Street Journal conference Tuesday afternoon. For now, the market expects a half-point interest rate hike at the June meeting and another in July, with possibly a third in September. The central bank raised its fed funds target rate by a half point this month, after a quarter point hike in March.

The health of the consumer will be a major focus in the coming week. The economic calendar includes April retail sales and also a look at the housing sector, with the National Association of Home Builders’ survey; both reports are set for release Tuesday, with housing starts coming on Wednesday and existing home sales Thursday.

Walmart, Home Depot and Target are set to report earnings next week, and of these big chain stores could provide good insight into the impact of inflation on consumer spending and attitudes.

Nearly a bear market

Perhaps the most telling thing for investors in the coming week will be just how the stock market trades after its effort to bounce back Friday.

The S&P 500′s dip to 3,858.87 on Thursday took the index to a decline of 19.55% from its high on an intraday basis — very close to the official 20% decline for a bear market.

The unrelenting run up in bond yields also slowed, after the 10-year yield peaked this past week at 3.2%. The 10-year was at 2.93% Friday.

“I think what’s most encouraging to me is the rate rout has stopped. All year long, short-term yields have been pushing up the 10-year yields,” said Jim Paulsen, chief investment strategist at Leuthold Group. He noted that inflation expectations in the bond market have also backed down, and the reduced pressure from the rates market could help stocks rally. Yields move opposite prices in the bond market.

Fairlead Strategies founder Katie Stockton said the slowdown in the 10-year yield’s climb is important. For the broader economy, the 10-year’s run from about 1.5% at the start of the year has already had a impact on housing, since home mortgages are influenced by it.

For stocks, technology and growth names have been most impacted by higher Treasury yields. That’s because higher rates make money more expensive, and cheap money is the fuel for stocks with high valuations.

“I think 10-year yields are just going to be stalled in here,” said Stockton, noting her view is purely based on chart analysis. “Such a steep uptrend is unsustainable. ... We believe there’s going to be consolidation in Treasury yields and in the dollar.” She said the support for the 10-year is at 2.55% and upward resistance is at 3.25%.

Paulsen noted that much speculation has been wrung from high-fliers and big cap tech. “Look at the FANG stocks going from 14% of market cap to 9%. A lot of the tech bleed is done,” he said.

Investors were also watching Apple this past week, after it broke support at $150. The stock has an outsized influence on the market, since it is the biggest U.S. company by market cap and is part of the Dow, the S&P 500 and Nasdaq.

Apple stock fell just below Stockton’s target of $139 on Thursday but recovered Friday, to close at $147.11 per share.

Stockton said her chart analysis is signaling the market could see around two weeks of stabilization, either with a bounce or sideways move. “It’s not a buy signal. I’m not recommending people buy.”

There could be an oversold bounce, “and we generally plan to use that oversold bounce to reduce exposure,” she said.

Her downside S&P 500 target had been 3,815, and she said it is still in play. “We have to assume it will be a retest,” Stockton said. “The retest has a higher chance of yielding a breakdown because the momentum is still to the downside.”

Week ahead calendar
Monday

Earnings: Warby Parker, Take-Two Interactive, Tencent Music, Ryanair, Weber

8:30 a.m. Empire State manufacturing

8:55 a.m. New York Fed President John Williams

4:00 p.m. TIC data

Tuesday

Earnings: Walmart, Home Depot, Vodafone, JD.com

8:00 a.m. St. Louis Fed President James Bullard

8:30 a.m. Retail sales

8:30 a.m. Business inventories

9:15 a.m. Philadelphia Fed President Patrick Harker

9:15 a.m. Industrial production

10:00 a.m. Business inventories

10:00 a.m. NAHB survey

2:00 p.m. Fed Chairman Jerome Powell at a conference sponsored by The Wall Street Journal

2:30 p.m. Cleveland Fed President Loretta Mester

6:45 p.m. Chicago Fed President Charles Evans

Wednesday

Earnings: Target, Cisco Systems, Lowe’s, TJX, Burberry, Tencent Holdings, Analog Devices, Shoe Carnival, Bath and Body Works, Synopsys

8:30 a.m. Housing starts

8:30 a.m. Building permits

4:00 p.m. Philadelphia Fed’s Harker

Thursday

Earnings: BJ’s Wholesale, Applied Materials, Deckers Outdoor, Ross Stores, Palo Alto Networks, VF Corp, Eagle Materials, Kohl’s, Grab Holdings, Vipshop

8:30 a.m. Initial claims

8:30 a.m. Philadelphia Fed manufacturing

10:00 a.m. Existing home sales

10:00 a.m. Leading index

4:00 p.m. Philadelphia Fed’s Harker

Friday

Earnings: Deere, Foot Locker, Booz Allen Hamilton"

MY COMMENT

Lets hope we get to rest for a week and see some gains.

The single thing that makes me the most nervous for next week.....all the FED people that will be shooting off their mouths. They will be talking every single day.....one on Monday.....five on Tuesday....one on Wednesday......one on Thursday......and thank God......none on Friday. Why in the world do we need to hear from....EIGHT......yes EIGHT.....FED officials next week? They need to all be banned from speaking out on any FED issue......with the exception of Powell. These people are simply media whores.

We do have some big retail earnings next week.....Walmart, Target and my holding Home Depot. Some good news from big retail could go a long way to making the week a success.

I am currently seeing mixed views on the markets. Some sources are saying that we have a long way to go. Other sources are saying the worst is over and we are in the final innings of the market drop. In other words no one knows.

 

Well said.....oldmanram.

 

I like this little article to get us in the right mood for the new week.

Bear markets and a truth about investing

https://finance.yahoo.com/news/bear-markets-and-a-truth-about-investing-140809216.html

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


"The stock market continues to trend lower.

Before rallying on Friday, the S&P 500 had a closing low of 3,930.08 on Thursday, down 18.1% from its all-time closing high of 4,796.56 on January 3.

If you consider the intraday market action, the S&P traded as low as 3,858.87 on Thursday, down 19.9% from its intraday high of 4,818.62 on January 4.

Technically speaking, stocks don’t enter a “bear market” until prices are down at least 20% from their highs. And for most market watchers, this calculation is based on closing prices. Frankly, this is all silly semantics about round numbers and rounding errors.

Any way you look at it, the stock market is down a lot.


Learning from history

We could debate all of the ways that the present day is and isn’t like history’s bull and bear markets, but that’s unlikely to end with a definitive conclusion.1 Nevertheless, let’s do a quick review of historical market performance.

Technically, we’re in year three of a bull market that began on March 23, 2020.

Ryan Detrick, chief market strategist at LPL Financial, reviewed the history and found that three of the 11 bull markets since World War II ended in year three. So from the perspective of duration, it wouldn’t be too unusual for stocks to be in a full-blown bear market some time before March 2023.


On the matter of duration, history’s stock market corrections (i.e., when the stock market falls by more than 10% but less than 20%) have had an average length of 133 days from market top to market bottom, according to data compiled by Detrick.

The current correction has run for 131 days as of Friday, which makes it pretty close to average assuming the market inflects upward soon.


And since we’re very close to being in a technical bear market, now is a good time to talk about history’s bear markets. Ben Carlson, director of institutional asset management at Ritholtz Wealth Management, reviewed the historical data.

Since 1950, the average bear market lasted 338 days (with a range of 33 to 929 days) and saw the S&P 500 fall an average 30.2% (with a maximum decline of 56.8%).

It’s worth noting that many — but not all — bear markets came with economic recessions. And as you might expect, the bear markets amid recessions tended to be worse.

Carlson observed that since 1929, recessionary bear markets lasted an average 390 days peak to trough, with stocks falling an average 39.4% during that period. Meanwhile, non-recessionary bear markets lasted an average 202 days with stocks falling an average 26.1%.

This is what investors signed up for

When talking to novices about investing in the stock market, I try to make it a point to say that you can get smoked in the short-term. In fact, TKer Stock Market Truth No. 2 is literally: “You can get smoked in the short-term.”2

Huge stock market sell-offs are normal. The S&P has historically seen an average annual max drawdown (i.e. the biggest intra-year sell-off) of 14%. Some years see milder sell-offs. Other years see worse ones.

This all speaks to two conflicting realities investors must cope with: In the long run, things almost always work out for the better, but in the short run, anything and everything can go wrong. This is what investing in the stock market is all about.

A note about the current moment…

The economic data continues to be very strong, and there continue to be massive tailwinds that suggest growth will persist.

Similarly, expectations for earnings growth have been improving. Taken with falling prices, valuations are increasingly attractive.

As of Friday, the forward P/E ratio on the S&P 500 was 16.6, according to FactSet. This is below its 10-year average of 16.9.

This combination of resilient economic growth, improving earnings expectations, and attractive valuations has at least some Wall Street pros advising clients to take on risk.

And history says that sell-offs like the one we’re experiencing now, are often followed by sharp recoveries.

According data from Benedek Vörös, director of index investment strategy at S&P Dow Jones Indices, “a decline of 15% or more [over a five-month period] for the S&P 500 has been followed by positive returns in the ensuing 12 months in all but two occasions over the past 65 years, with an average gain just shy of 20%.“


Of course, there’s no guarantee that metrics continue to move favorably, especially as the Federal Reserve actively moves to cool demand in the economy. And it’s certainly possible that stocks continue to fall, regardless of what the data justifies.

But on balance, overall conditions continue to appear favorable for investors who are able to put in the time."

MY COMMENT

All in all we are due for a good week. After all......we deserve it.

 

Here is what we are looking at this week.

Retail sales, Walmart earnings, More Fedspeak: What to know this week

https://finance.yahoo.com/news/reta...edspeak-what-to-know-this-week-160016668.html

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

"The retail sector will be in focus this week after a string of wild trading sessions on Wall Street. Quarterly financials from megastore Walmart (WMT) and other consumer giants are in the queue, in addition to April’s retail sales report scheduled for release Tuesday.

Investors will tune in for additional remarks from Federal Reserve officials, including Chair Jerome Powell in the week ahead, as inflation continues to run hot across the U.S. economy.

Friday capped the sixth straight down week for U.S. equities following a vicious streak of selling. Renewed concerns over consistent elevated price levels, and the prospect of an economic slowdown, stirred up further turbulence in markets. The major indexes rallied to turn positive in the last session, but remained near 2022 lows after the S&P 500 fell below 4,000 hovering near bear market territory for much of the week.

It was defined as a close of at least 20% from a recent record high.

“The question remains as to whether this rally signifies the end of the selling,” LPL Financial Chief Equity Strategist Quincy Krosby said in a note, adding analysts will be watching 200-day moving averages and whether resistance levels are pierced. “Moreover, although price action is key, volume to the upside would suggest buyer interest at these levels.”

“Given the history of bear markets, coupled with the fact that the Fed has just begun its rate hike cycle and would like to see financial conditions continue to tighten so that demand pulls back further, this rally will most likely weaken,” Krosby added.

Inflation and Fedspeak

Sharp gyrations across major indexes coincided with two key inflation reports last week. Concerns were aroused among market participants regarding possibility that surging price levels have shifted from being “transitory” to becoming “entrenched” in the U.S. economy.

The Producer Price Index (PPI) out Thursday showed an 11% year-over-year rise in wholesale prices last month, with the rate leveling only marginally from March's all-time high rate of 11.5%, while Wednesday’s Consumer Price Index (CPI) reflected another red-hot reading of 8.3% year-over-year.

"The markets have been volatile but we haven’t reached the bottom yet,” Bruderman Asset Management equity analyst Akshata Bailkeri told Yahoo Finance. “The Federal Reserve has already indicated that they have flexibility in dealing with inflation numbers as they come in."

The market digested a flurry of remarks from Fed officials in response to the latest inflationary snapshots out of Washington last week. In an exclusive interview with Yahoo Finance Live Wednesday, Federal Reserve Bank of St. Louis President James Bullard said high readings concern central bank policy makers and reinforce the need for higher interest rates.

“Inflation is broader and more persistent than many have thought and the Fed will have to act in order to keep inflation under control and we’ve got a plan in place,” Bullard said in the interview.

Last week, Atlanta Fed President Raphael Bostic and Cleveland Fed President Loretta Mester both told Yahoo Finance that 0.50% moves were their baseline expectations through at least the June and July meetings, and signaled a hike of 0.75% was on the table.

Investors will have more Fedspeak to mull in the coming days, with Fed chief Jerome Powell set to give remarks at a conference hosted by the Wall Street Journal Tuesday afternoon, Speaking engagements from other central bank officials is slated to take place through Friday.

“The inconvenient truth is the Fed is going to need to raise rates more quickly and to a higher level than many were hoping,” Independent Advisor Alliance Chief Investment Officer Chris Zaccarelli said recently in an emailed note. “There will be at least four 50 bps rate hikes this year and not three or less and we will continue to be cautious with risk assets.”

Retail in focus

On the earnings front, a bevy of quarterly reports from retail heavyweights are likely to offer insight on the state of U.S. inflation and how consumers are coping with rising prices.

Walmart, the biggest retailer in the U.S., is scheduled to release results before the market opens Tuesday. The company is expected to post adjusted earnings of $1.48 per share on revenue of $139.23 billion, a drop of 12% for its adjusted EPS with revenue up 1% from the same period last year, according to Bloomberg consensus estimates.

The mega retailer expects full-year net sales growth of about 3% and same-store sales of above 3% excluding fuel. Operating income growth of about 3% is expected, while e-commerce growth is expected to come in muted at about 1.9%, compared to 37% growth last year with more consumers shopping in physical stores amid a return to in-person activities.

The seven largest stocks in the S&P 500 as of the index’s all-time high on January 3 lost a combined $3.2 trillion in market cap since that date, according to data from Bespoke Investment Group. While most have seen big declines, Walmart has been one of few gainers – up 2.35% year-to-date as of Friday’s close.

Financials from other big retail names including Home Depot (HD), Target (TGT), Lowe's (LOW) and Macy's (M) are also on the calendar.

Elsewhere in a busy week for retail numbers, the Commerce Department’s monthly retail sales report for April set for release Tuesday is expected to show retail sales likely increased 1.0% last month compared to 0.5% in March, with the headline number excluding autos estimated to come in up 0.4%, compared to 1.1 during the prior month, per Bloomberg consensus data.

“There was a big sequential contraction in gas spending as prices leveled off from record high levels in March, which weighed down headline and excluding-auto measures,” Bank of America analysts wrote in a recent note. “Netting out auto, gas, building materials and restaurants, core control sales should jump by solidly, suggesting continued strength in goods spending.”"

MY COMMENT

With kind of a light news week next week.....at least on the financial front......if we can get some good earnings from the above companies and Walmart......we might have a good week. Sooner or later the markets are going to get tired of the same old same old negative news stories and quit reacting to them. Of course I am talking about the FED and inflation.

LETS START FRESH........AND HAVE A GOOD WEEK.

 

Looks like the typical open for 2022. We are all used to it now after the past 5 months.......so no big deal. The ten year yield is nicely down form the more recent highs, being down in the 2.8% range.

We should know more as to the short term market today about mid to late morning.

 

I like this little article.

Our Counsel After April’s CPI Slowdown
An inflection point in US inflation will only be clear in hindsight, so we suggest not trying to pinpoint it.

https://www.fisherinvestments.com/en-us/marketminder/our-counsel-after-aprils-cpi-slowdown

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

"Editors’ Note: Inflation is an increasingly politicized topic on both sides of the American political aisle. However, our look is focused on the data and what we think investors should glean—or not glean—from it.

April’s consumer price index (CPI) inflation data hit the wires Wednesday, and for the second month in a row, pundits seemed united in a quest to find signs inflation has peaked. At first blush, the headline rate’s deceleration from 8.5% y/y in March to 8.3% in April may seem to confirm that view. Ditto for the month-over-month rate’s slowing from 1.2% to 0.3%.[ii] We would love it if prices were really, truly offering American households some relief, and we do expect inflation to moderate as the year progresses. But this effort to pinpoint the start seems counterproductive to us. Markets aren’t myopic, and such inflection points will be clear only in hindsight anyway. In our view, keeping realistic expectations and a long-term perspective will be key to navigating the period ahead.

We say this because we can envision a world where April’s slight deceleration creates expectations that the worst is behind us. Pundits’ focus on the three-month slide in used car prices—which were a big inflation driver last year—and the steep drop in energy prices could also add to this. Meanwhile, national average gas prices hit a record-high $4.40 per gallon today, suggesting some energy prices will resume contributing positively to the inflation rate.[iii] Other supply chain issues, like the ongoing baby formula shortage that helped drive baby food prices up 3.0% m/m in April, could be a contributing factor again in May.[iv] We can see a risk that investors get too caught up in a the worst is over mindset and get blindsided if inflation remains stubbornly high, raising the temptation for knee-jerk portfolio moves. Four-plus months into a correction (sharp, sentiment-fueled drop of -10% to -20%), reacting to bad headlines is one of the most dangerous moves an investor can make.

So, let us offer some realism. Not pessimism—again, we still think inflation is likely to decelerate over the foreseeable future. But we also think it is impossible to know when and how high the inflation rate will peak. Note that while headline inflation decelerated in April, that was due almost entirely to what appears to be a pullback from extremely hot March energy prices. “Core” inflation, which omits food and energy, may have decelerated from 6.5% y/y in March to 6.2% y/y in April, but this seems due primarily to the base effect.[v] April 2021 is when inflation really got cooking as the prior winter’s lockdowns eased, raising the comparison point for the year-over-year calculation. Core prices rose 0.9% m/m that month. In April 2022, they accelerated from March’s 0.3% m/m to 0.6%. The base just rose more, creating a slower year-over-year rate. A more meaningful drop in the core inflation rate would be if the base effect and slower month-over-month price increases collided. That hasn’t happened yet.

Whether it happens in May, June, July or later is impossible to say. There are too many moving parts. The base effect will become an increasingly greater factor as we move through the year, especially once higher energy prices enter the denominator this autumn. But month-over-month changes are also fickle. Additionally, there was a noteworthy shift in April as services prices replaced goods as the main accelerant—a seemingly logical consequence of demand for travel and leisure services far outstripping supply. That could last through the summer travel boom. Service providers may not be through passing their cost increases to consumers. This could take time to work its way through our very large and decentralized economy.

Crucially, though, pain for households often doesn’t translate to pain for markets. Yes, stocks have seemingly reacted to inflation at times this year, but we think they are reacting to the fear, not prices themselves at a fundamental level. Perversely, rising consumer prices can actually be a positive signal for corporate earnings, which are what all stock investors own a stake in. They mean the market can bear it when companies charge more, which helps them preserve profit margins as their costs rise. In our view, this is a big reason why stocks have often risen through periods of above-average inflation, not hitting trouble until the Fed overshoots when trying to rein in prices. Earnings are similarly resilient this time: With over 90% of companies reporting, FactSet estimates S&P 500 earnings rose 9.1% y/y in Q1, driven by a 13.4% rise in revenues.[vi] Fear holds sway over markets for now, but in time stocks should resume weighing fundamentals. Those look rather strong.

As for the Fed, pundits also spilled countless pixels trying to divine what today’s report means for the path of rate hikes—always a fruitless endeavor, in our view, but especially today. Yes, a rate hike does look likely in the immediate future, based on all the Fed’s telegraphing thus far. But beyond that is far from clear, and the data today don’t help shed much light. The Fed doesn’t base monetary policy on CPI. Its preferred gauge is the headline Personal Consumption Expenditures (PCE) price index, which comes out toward the end of the month and is calculated rather differently. CPI and PCE have different category weights, and PCE also factors in the effect of substitution as consumers respond to price changes of individual goods and services. For instance, if they buy less gasoline as fuel prices rise, that shows up in real-time in the PCE basket. This is the main reason PCE comes out weeks after CPI—the census bureau can’t calculate it without consumer spending data. While CPI and PCE’s general trends often track each other, PCE tends to run lower.

Additionally, when the Fed next convenes it will have at least one new member. Lisa Cook just received a Senate confirmation vote yesterday. Philip Jefferson, who won the Senate Banking Committee’s vote at the same time as Cook, could win confirmation before mid-June’s meeting. Again, we doubt that sways things at the next meeting much given the current zeitgeist. But how one or two new voices will affect the consensus view on, say, summertime inflation data that aren’t out yet is unknowable.

At the same time, we don’t think near-term monetary policy moves are likely to be consequential. As we have detailed before, today’s price jumps stem from supply shortages, not monetary excess. Therefore, the Fed can’t do much about it with monetary tightening. If they keep trying anyway, they have plenty of bandwidth to do so without causing economic harm. The gap between 3-month and 10-year yields—the most meaningful segment of the yield curve, in our view—is presently over 2 percentage points.[vii] That is a very long way from inverted.

So take a deep breath. Stocks have spent the past four-plus months pricing inflation fears, and expectations are quite low today. Once that fear works its way through, markets should resume weighing reality against those expectations, and it shouldn’t take much positive surprise to help fuel the strong bounce that usually follows corrections.'

MY COMMENT

At this point investors have held through the worst. Going forward there may still be pain in store but the amount that the markets can drop from here is limited. Sooner or later this drop is going to lose strength and the markets will stabilize.

As to the risk of recession. People should keep in mind that even if we have a recession......which I think is already happening.....does not mean stocks will be impacted. I have seen many times when a recession causes little to no real impact on stock investors.

Sooner or later we are going to see FUNDAMENTALS take hold again and become the driver of the markets. At that point the markets will once again be rational. TILL THAN.......investors just have to live in an IRRATIONAL world.

 

My answer would be......no.

When your neighbor asks: 'Has the stock market bottomed yet?'

https://finance.yahoo.com/news/has-the-stock-market-bottomed-morning-brief-100046447.html

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

"So I am carrying my inflationary bag of groceries up the stairs on Sunday, trying to decompress for at least seven minutes, when I suddenly hear a neighbor call out: “Hey Sozzi, saw you on TV again. Has the stock market bottomed yet?”

My first thought: “I just can’t escape this sh*t, even for seven minutes."

I'm used to getting questions like this from a core group of neighbors (and others). This is partially because this particular person noticed, while flipping through Verizon FIOS (where Yahoo Finance lives 24/7 on channel 604), that I was doing live TV out of my kitchen (which happens to be above his kitchen) during the COVID-19 pandemic.

I concocted a quick reply in my head, then shouted back: “No idea bro, but I do know the stock market will open for business on Monday morning. Let me know when the co-op BBQ is happening.”

After the exchange, I walked into my place, unpacked those inflationary groceries (you see the prices for deli meat, insane!) and began writing this lovely newsletter for the investing masses.

My response to my neighbor was smart in that hucksters on the Street will be out in force trying to call a bottom for the bruised and battered stock market, even though folks have no clue either since they are the looking at the same market trends and data that you generally have access to.

All this is to say that you want to be very, very careful with bottom calls, given that market conditions will remain treacherous likely until the Federal Reserve signals a pause in rate hikes.

In any case, there are two opposing themes in the current market — and it’s up to you to figure out what fits with the analysis you are doing at this moment.

Theme one: Valuations are beginning to look attractive

The forward price-to-earnings multiple for the S&P 500 stands at 16.6 times. This is below the five-year average of 18.6 times and 10-year average of 16.9 times. At first blush, this would mark a good time to begin kicking the tires of stocks of well-run companies that are growing.

But keep this in mind — those five and ten-year averages don’t incorporate a major rate-hiking cycle from the Federal Reserve as we are about to witness. Therefore, I would argue valuations are not yet at super attractive levels (hence we may not be at a market bottom) — but it’s moving in that direction.

Although I do find it interesting that one-time growth juggernaut Netflix shares are trading at 15.2 times forward earnings, per Yahoo Finance Plus data. That is a below market multiple for a FAANG (Facebook, Apple, Amazon, Netflix, Google) stock, which is a rarity.

Theme two: Capitulation hasn’t happened yet

As I like to think of it, capitulation in the markets is when a large down move in a market occurs — one that wipes out all speculators. It’s at that point where a bullish base could start to be rebuilt in a stock or market. While we have seen a few large down days in the markets (and individual stocks, notably in tech such as Rivian, Netflix, and Upstart), the pros I chat with still aren’t seeing capitulation.

“Right now, I think investors are struggling with the bond market as much as the stock market. I think a balanced portfolio is becoming frustrating this year," John Hancock Investment Management co-chief investment strategist Matt Miskin said on Yahoo Finance Live. "Really what we are not hearing is that much capitalization on the volatility side. We had an 18-year run in the stock market."

In addition, Miskin mentioned investors are actually selling their defensive stocks.

"We are trying to say no, that’s not the answer," he added. "You want to look to add defense to the portfolio as we get to a later cycle. We are not seeing that capitulation yet.”

All in all, my advice to you today is this: Consider a second job to pay for your inflationary groceries, be nice to your neighbors, hit the gym, and beware of stock market bottom calls.

Happy Trading!"

MY COMMENT

Wait and watch. That is all I can do. There is nothing to be achieved in trying to call or anticipate anything to do with the markets. The recovery will start when it chooses to start.

I do NOT like the last two words in this little article......."happy trading". That is one of the problems with modern investing......all the constant emphasis on "trading". I am not a trader I am an investor. Most people are NOT traders......they are investors. Yet....the media, advisors, brokerages and the whole industry is now using that word....."trading".....to describe investing. This is a total distortion of reality and a not too subtle attempt to instill a certain mind set in people that want to invest in stocks and funds. I dont like it.....but.....that is just the way it is. I will never call what I do "trading".....and..... I will never call myself a "trader".

 

I see that the markets are starting to recover some from the initial drop of the day. Now the fight between the sellers and the buyers will begin for the day.

We continue to be in a very volatile.....short term traders....market.

 

At least the markets this year do not involve dealing with any new issues. Here is what is going on today.

S&P 500 falls on Monday as it struggles to rebound from a 6-week slide

https://www.cnbc.com/2022/05/15/stock-market-futures-open-to-close-news.html

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

"Stocks fell Monday as the market struggled to rebound from a relentless sell-off that’s punished tech stocks and pushed the S&P 500 to the brink of a bear market.

The Dow Jones Industrial Average dropped 141 points, or 0.4%. The S&P 500 fell 0.6% after the benchmark nearly fell into a bear market last week before a Friday rebound. The Nasdaq Composite was down 1%.

“We continue to be transitioning through this interest rate driven repricing,” said Bill Northey, senior investment director at U.S. Bank Wealth Management. “So as the U.S. Treasury yield curve has continued to move higher in anticipation of both higher realized inflation and Federal Reserve policy adjustment, we’ve seen a consistent and broad adjustment to asset valuations that has occurred consistent with those rising inflation concerns.”

After a long spate of selling, markets rebounded on Friday, with the Dow rising 466.36 points and the S&P 500 climbing 2.39%. The Nasdaq Composite jumped 3.82% and posted its strongest one-day gain since November 2020.

But major averages still posted steep losses for the week and are undergoing an intense sell-off as the Federal Reserve attempts to tamp down inflation with aggressive rate hikes. The Dow’s seven-week losing streak is its worst since 2001. The S&P 500 just posted its first six-week losing streak since June 2011.

The S&P 500 sits 16% off its record high, while the Nasdaq Composite is down more than 27%.

Those losses continued on Monday as major tech names declined. Shares of Apple, which fell into a bear market at one point last week, fell 0.8%. Microsoft’s stock price dropped 1%. Shares of Google-parent Alphabet declined 1%.

Some analysts believe those declines may soon point to an attractive entry point for the broader market index, based on a long-term perspective.

“The S&P 500 is quickly approaching a level that, historically, has indicated that future growth concerns are priced in,” Citi analyst Scott Chronert wrote in a note.

Some notable outperformers on Monday included healthcare. Shares of Eli Lilly surged 5% after Moujaro was approved by the Food and Drug Administration to treat Type 2 diabetes. The drug is also being investigated for potential use in the treatment of obesity and overweight. Pfizer’s stock price jumped 1.2%, AbbVie’s stock price was up 1.2%.

Energy stocks also made gains, climbing higher on the back of rising oil prices. Exxon Mobil’s stock price climbed 1.8%, Chevron’s surged 2% and ConocoPhillips’ rose 1.3%.

Elsewhere, shares of Spirit Airlines jumped 10% after JetBlue announced a tender offer to acquire the airline for $30 a share. Carvana’s stock price rose 8% after the used car company issued expectations of significant core earnings in 2023, and outlined a plan to cut costs.

Despite the relentless selling, some investors say there are good buying opportunities at current levels.

“I’m not calling the bottom here, but there’s some opportunity here to dollar cost average,” said Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs, told CNBC. “If you’re sitting on a bunch of cash, you’re locking in losses because of inflation. Investing in equities or asset classes that you believe in... it is the lesser evil. The selling fatigue will wane, the market will reset. It’s unlikely the Dow and the S&P are going to be in correction territory six months to a year from now.”

Retail earnings season kicks off this week with several big-box retailers set to report results for the first quarter, including Walmart, Target and Home Depot. Elsewhere, Deere is also on deck, along with a handful of technology companies.

Investors will also have their eye on retail sales data this week, which could give them insight into how retailers are managing inflation, which remains near 40-year highs."

MY COMMENT

NOTHING new here.....same old same old. Nothing to see here.......move on. I am normally not a fan of dollar cost averaging. I prefer to invest according the the research that shows that all in all at once is the best strategy regardless of market conditions. AND.....if I had cash right now I would still do my usual thing......and put it all in all at once.

BUT......for others.....if you have cash the next 4-6 months might be a good time to dollar cost average into the markets. You would be taking the risk of a sudden turn around rally causing you to leave some of the early explosive gains on the table. BUT......if you need peace of mind......I think a dollar cost averaging plan over the next 4-6 months would capture most of the historic low prices we are seeing at the moment PLUS the additional drops that are likely to happen over the next 4 months or so. Anyone with cash.....this is a good opportunity to get it to work in the markets......for the long term......at a 2-3 year discount.