The Long Term Investor

HERE we go again. Is this REALLY a big surprise?

Stock market news live updates: Futures reverse gains after Fed headlines

https://finance.yahoo.com/news/stock-market-news-live-updates-september-7-2022-110727390.html

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

"U.S. stock futures reversed modest gains early Wednesday after headlines from the Wall Street Journal suggested another 0.75% interest rate increase from the Federal Reserve is likely later this month.

Near 8:00 a.m. ET, S&P 500 and Nasdaq futures were down about 0.1%, while Dow futures were off 0.03%.

Earlier in the morning futures for all three indexes had been higher.

The reversal in futures followed the latest report from Nick Timiraos at the Wall Street Journal, who wrote early Wednesday, "...Powell’s public pledge to reduce inflation even if it increases unemployment appears to have put the central bank on a path to raise interest rates by 0.75 percentage point rather than 0.50 point this month."

“The difficult 2022 for stocks may not get much easier because as we now wait for better news on the inflation front, we have to contend with a seasonally weak month of September,” strategists at LPL Financial Research said in a recent note.

Since 1950, the S&P 500 has registered an average decline of 0.54% in September, the worst historical performance of all 12 months of the year. Moreover, September has been the only month over the past decade when the benchmark index averaged a loss.

In commodities, oil prices pushed higher Wednesday amid reports President Vladimir Putin threatened to cut off energy supply if price limits are imposed on Russian oil and gas exports by the West over the country’s war in Ukraine. West Texas Intermediate crude oil rose 0.4% to $87.23 per barrel while Brent futures edged up by about the same margin to $93.21 per barrel."

MY COMMENT

Here is a perfect example of market INSANITY. There can not be anyone left in the entire world that was not aware of the rate increase in September being 0.75%. AND....just for fun add in the age old SEPTEMBER fear mongering.

We are in a traders market. I have no doubt that all the AI trading programs acting in concert.....since they were all designed by people that think and act the same.......are creating what we are seeing. These AI programs trading thousands of times a day are the equivalent of the REDDIT guys acting in concert. It may not be illegal.....but....it is market manipulation.

 

Very nice market gains so far today. I see that my. Costco is up over 5%. I am seeing 1%+ gains in every holding. I am out and about , actually siting here looking across at the new Tesla plant. Glad to see some money being made so far today. With no help from me.

I will back off now so I don’t spook the markets.

 

I think I am seeing a pattern here. Every time we have a nice UP day.....out comes one of these FED tools....with their negative comments about interest rates. It happens so often ovr the past 4-6 months.....it is starting to seem INTENTIONAL. This was TODAY......this morning.

Fed’s Brainard sees further rate hikes, restrictive policy for 'some time'

https://finance.yahoo.com/news/feds-brainard-further-rate-hikes-restrictive-policy-165044460.html

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

"Federal Reserve Vice Chair Lael Brainard said Wednesday that while a small drop in inflation is welcome, the Fed will still need to raise interest rates further and for as long as it takes to bring down inflation.

“While the moderation in monthly inflation is welcome, it will be necessary to see several months of low monthly inflation readings to be confident that inflation is moving back down to 2 percent,” Brainard said in a speech in New York.

“Monetary policy will need to be restrictive for some time to provide confidence that inflation is moving down to target,” she said, adding: “We are in this for as long as it takes to get inflation down.”

"How long it takes to move inflation back down to 2 percent will depend on a combination of continued easing in supply constraints, slower demand growth, and lower markups, against the backdrop of anchored expectations," Brainard said.

The Fed vice chair noted the rate at which the Fed will shrink its bond holdings will double this month, and that this action together with rate hikes should help tamp down inflation. Though Brainard noted it may take some time for the full effect of tighter financial conditions to work their way through the economy given monetary policy tends to operate with a lag.

Brainard also warned of the risks of pulling back on rate hikes too soon.

"Following a lengthy sequence of adverse supply shocks to goods, labor, and commodities that, in combination with strong demand, drove inflation to multi-decade highs, we must maintain a risk management posture to defend the inflation expectations anchor," she said.

Brainard’s comments come ahead of the Fed’s September policy meeting at which the central bank is expected to raise its benchmark interest rate by three-quarters of a percent for the third-straight meeting.

The federal funds rate currently stands at 2.25%-2.50%. A 75 basis point rate hike would bring the interest rate back above 3% for the first time since 2008.

On Wednesday morning, market pricing showed traders pricing in a greater likelihood of a 0.75% rate hike this month following a report from Nick Timiraos in the Wall Street Journal, which cited, in part, Fed Chair Jay Powell's "public pledge to reduce inflation." According to data from the CME Group, there is now an 80% chance the Fed raises rates by 75 basis points in its September 21 policy announcement.

Inflation measured by the consumer price index fell to 8.5% in July from to 9.1% in June. Brainard said Wednesday the economic environment remains is “highly uncertain” and rate hikes will depend on economic data.

Anecdotally, in signs Brainard sees inflation has further to drop, she says retail profit margins have further room to shrink and noted reports of large retailers planning markdowns due to excess inventories."

MY COMMENT

Thank God that we have these ELITES to guide us and business, daily. Us little people sure need their expert help and guidance. Business too......without the FED our businesses would be helpless.

AND.......yes I have no doubt that what we are seeing every time the markets try to make a come-back is a coordinated campaign. It happens too often to not be.

Unfortunately the only people that are being hurt are all the productive people with a 401K account or a brokerage account. The big banks dont care......this stuff drives their micro-day-trading and benefits them.

 

That is for sure....Smokie.

I ended the day with every stock strongly green. A nice change and a nice way to get back a couple of days of losses. I also beat the SP500 by 0.32% today. I still have a nice cushion before I am back at the prior low.

At this moment my LOSS for the year has gone back to......(-21.9%)......so back into correction for me. Due to the nature of my ten stock portfolio any market action......up or down....is magnified for me. Something that I accept as an INTENTIONAL result of what I own,

 

I simply IGNORED the markets for the day today. So to fill mywelf in on how the day went......here it is.

Stock market news live updates: Tech leads afternoon rally, oil plunges to seven-month low

https://finance.yahoo.com/news/stock-market-news-live-updates-september-7-2022-110727390.html

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

"U.S. stocks charged forward Wednesday as Wall Street clawed back from a three-week long sell-off across equity markets.

The S&P 500 rallied 1.8%, while the Dow Jones Industrial Average added 436 points, or about 1.4%. The Nasdaq Composite led gains, surging 2.1% to notch its biggest jump in four weeks and snap a seven-day streak of declines.

In commodity markets, oil slid to a fresh seven-month low. West Texas Intermediate crude oil tumbled 5.7% to settle at $82.32 per barrel, the lowest level since Jan. 13. Brent futures dropped 5.4% to settle at $87.62 per barrel. Declines came on the heels of a report Russian President Vladimir Putin threatened to cut off energy supply if price limits are imposed by the West on Russia's oil and gas exports.

Apple (AAPL) debuted its iPhone 14 and iPhone 14 Pro Wednesday afternoon at its annual product launch in Cupertino, California along with a lineup of other products. Shares closed up 0.9% after hitting a session high of as much as 1.1% during the event.

The Federal Reserve's "Beige Book," which offers a periodic gauge of the U.S. economy, suggested growth is expected to slow while inflation cools.

Separately at a speech in New York, Federal Reserve Vice Chair Lael Brainard said Wednesday that U.S. central bank will need to raise interest rates further and for as long as it takes to restore price stability, even as signs emerge that inflation is slowing.

“While the moderation in monthly inflation is welcome, it will be necessary to see several months of low monthly inflation readings to be confident that inflation is moving back down to 2 percent,” Brainard said in remarks.

Earlier in the session, a report from the Wall Street Journal suggested the Fed is likely to deliver another 75 basis-point interest rate hike at its policy meeting later this month.

"Powell’s public pledge to reduce inflation, even if it increases unemployment, appears to have put the central bank on a path to raise interest rates by 0.75 percentage point rather than 0.50 point this month," Timiraos wrote.

On the currencies front, the U.S. dollar index soared to $110.24 after touching a 20-year high earlier in the day.

In the crypto world, Bitcoin (BTC-USD) tumbled below $19,000, testing a new low for the year.

Elsewhere in markets, airline stocks rallied Wednesday after United Airlines Holdings, Inc. (UAL) raised its sales outlook for the third quarter, with UAL itself climbing 5.5%.

Twitter (TWTR) shares jumped 6.6% after s Delaware court denied Tesla CEO Elon Musk's request to postpone the trial with the social media giant over their $44 billion deal.

Shares of Sharpie marker-, Elmer’s glue-, and Yankee Candle-maker Newell Brands (NWL) closed higher after paring a 5% slide. The company was in focus during the session after slashing its full-year forecast late Tuesday. Chief Executive Officer Ravi Saligram said Newell experienced a “significantly greater-than-expected pullback” in retail orders as inflation pressures consumer spending.

Investors awaited second-quarter earnings from GameStop (GME) after market close. Shares were down around 4%.

Across the months of July and August, analysts trimmed their third-quarter earnings per share estimates by a larger margin than average, according to FactSet Research. The Q3 bottom-up EPS estimate – an aggregation of the median EPS estimates for Q3 for all the companies in the S&P 500 – decreased by 5.4% from June 30 to August 31.

Typically, analysts reduce earnings estimates during the first two months of a quarter. Over the past two decades, the average decline in the bottom-up EPS estimate during the first two months of a quarter has been 2.9%.

Morgan Stanley’s Michael J. Wilson, one of Wall Street’s most bearish strategists, cut his expectations for earnings-per-share growth for the year in a note Tuesday, citing the growing threat posted by a slowing economy – more than inflation or monetary tightening by the Federal Reserve. Wilson expects earnings to fall 3%, even if the U.S. economy does not enter a recession.

Since 1950, the S&P 500 has registered an average decline of 0.54% in September, the worst historical performance of all 12 months of the year, according to data from LPL Financial. Moreover, September has been the only month over the past decade when the benchmark index averaged a loss.

“The difficult 2022 for stocks may not get much easier because as we now wait for better news on the inflation front, we have to contend with a seasonally weak month of September,” LPL strategists said in a recent note."

MY COMMENT

We live to fight another day. That is the life of a long term investor. You take the punches from the markets......but.....over the longer term the market direction is overwhelmingly positive......about 70% of the time. NOW we need to string together a couple more days to end the week with a gain and STOP the string of weekly losses that we have been experiencing lately.

 

I am NOT liking what I have seen from the new AMAZON leadership over the past year or so. Needless to say......I dont like this decision.....or should I say......lack of a decision.

Amazon CEO Andy Jassy says he has no plan to force workers to return to the office

https://www.cnbc.com/2022/09/07/and...e-amazon-workers-to-return-to-the-office.html

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

"Key Points

• Amazon CEO Andy Jassy said the company doesn’t plan to call its employees back to the office.
• The company has embraced remote and hybrid work.
• Last year, Amazon said it would leave it up to individual managers to decide how often employees would be required to work at physical offices.

Amazon CEO Andy Jassy said the company doesn’t plan to order corporate employees to return to the office.

“We don’t have a plan to require people to come back,” Jassy said on stage Wednesday at the Code Conference in Los Angeles. “We don’t right now. But we’re going to proceed adaptively as we learn.”

Amazon tech workers were told to work from home in early 2020 as the coronavirus spread rapidly. Last October, Jassy said Amazon would leave it up to individual managers to decide how often workers would be required to come into the office, which marked a sharp reversal from its earlier goal of returning to an “office-centric culture.”

Jassy said Wednesday most employees have returned to physical offices, and are spending some days working from home. Certain teams tend to be at the office more often, such as hardware or creative units, while others, such as engineers, continue to work largely remotely, he added.

“I do think there are some things that are harder to do remotely,” Jassy said. “I think it’s a little harder to invent remotely.”

Jassy has previously said the Covid-19 pandemic could leave a lasting impact on how offices are used, noting that it has already affected how Amazon hires employees. For example, Amazon is now more open to remote work, and will recruit employees from any location, rather than just focusing on areas where it has “critical mass,” he said.

Amazon’s position on remote work differs from some of its tech peers. Google began requiring most employees to return to physical offices at least three days a week in April, which has generated some pushback among workers who oppose the mandate. Apple also told some of its employees to come into the office three days a week starting this month."

MY COMMENT

This is simply WEAK leadership in action. I am not happy to see this company cave in and not be decisive on this issue. Leaving it up to various managers is a recipe for disaster. You need a company wide policy.

As this sort of thing continues.....management will be more and more removed from their company and workers.

As to recruiting from any location.......wake up people......this means outside the USA. Those that love working from home will also love.....not having a job as more and more jobs are outsourced remotely to other countries.

We now know how well this remote stuff worked for school kids.....I suspect we will see very similar results with older humans.

BOTTOM LINE.....this is NOT leadership. I HATE management changes in ICONIC companies when the founder leaves, is driven out, or loses interest.

As the article notes......this policy....."marked a sharp reversal from its earlier goal of returning to an “office-centric culture"

In other words in order to be Mr Nice Guy......he caved to the employees that want to sit at home and pretend to work......as Elon Musk would say.

 

Once again I was out and out of touch today....except for seeing on my phone that my stocks and the markets were UP earlier in the day. Looks like there was some slippage later in the day......since I went from all ten stocks in the green to only six in the green at the close. My RED stocks today were AAPL, COST, HON, and GOOGL.

I still managed to get in a nice but small gain today. I was beat by the SP500 by .60%.

Last day of the week tomorrow......hoping for a positive end to the week. Lets set a new tone to the markets.

 

I like this little article....as I try to catch up on my reading today.

How ‘Sell the Losers’ Can Be Very Counterproductive
Whether to sell should always be a forward-looking decision.

https://www.fisherinvestments.com/e...sell-the-losers-can-be-very-counterproductive

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

"With stocks tumbling again, we have seen a notable shift in financial commentary: an abundance of chatter about winners and losers, both in this current bear market and in recessions historically. The implication? Shifting into what has done well—and what usually holds up better during recessions—will help limit portfolio downside from here. This prospect, coupled with the emotional relief some investors feel when “selling the losers,” seems enticing to many. Yet we think it is one of the least beneficial things anyone seeking long-term growth could do right now.

Selling stocks that have suffered this year may seem appealing from a stop the bleeding standpoint. But in investing, emotional appeal and wisdom rarely intersect. So it is with selling stocks that are down right now, in our view. For one, it amounts to selling a company because of what it has done, not what it will do. Two, overall and on average, the categories that get pounded the hardest during a bear market (generally a prolonged decline of -20% or worse with a fundamental cause) typically have the biggest, fastest bounce off the bottom. So if the bounce is close by, you likely limit your potential to capitalize on it if you sell the stocks most likely to drive it.

Then too, selling losers risks impeding diversification. The popular view of this bear market holds that Tech and Tech-like stocks in Consumer Discretionary and Interactive Media & Services (within the Communication Services sector) are primarily responsible for stocks’ trip below -20%. And to an extent, that is true, considering these categories have been hit the hardest. Yet the vast majority of stocks are down this year (Exhibit 1), and nearly half of MSCI World Index constituents are currently in bear market territory (Exhibit 2). If you were to sell all the down stocks, you would be selling over 80% of the global market’s constituents. Selling only those that are down big would take 749 of 1,510 MSCI World Constituents off the table. Ditching all of those and piling into what has held up well basically means taking concentrated positions in Energy, Utilities and Consumer Staples.

Exhibit 1: This Year’s Declines Are Broad-Based



Source: FactSet, as of 9/2/2022. MSCI World Index constituent price returns, 12/31/2021 – 9/1/2022.

Exhibit 2: So Are This Year’s Deep Declines



Source: FactSet, as of 9/2/2022. MSCI World Index constituent price returns, 12/31/2021 – 9/1/2022.

Another problem: The sectors that have held up ok are holding up ok for some pretty clear and specific reasons. Energy stocks benefit from high oil prices, as oil jumped when Russia invaded Ukraine and supply shortage fears reigned supreme. Those fears have eased some as it becomes ever-more apparent that sanctions aren’t keeping Russian oil off the market and other nations are ramping up output. We would expect that easing to irregularly continue. That limits the likelihood that oil prices soar from here, which means the eye-popping earnings growth rates that Energy stocks enjoyed earlier this year are unlikely to repeat perpetually, likely teeing up some disappointment for the sector. Meanwhile, Utilities, Consumer Staples and parts of the Health Care sector are traditionally defensive, so they are benefiting from all this year’s recession dread. Their relative resilience is part of stocks’ pricing in recession talk this year, making the core thesis to own them largely priced in at this juncture.

Stocks look forward, not backward. Companies that investors have punished for global growth fears will logically stand to bounce disproportionately as those fears prove false. That same phenomenon will probably work against those that have held up well—the reason to own them will likely vanish. In short, selling the biggest losers and piling into this year’s winners basically means crystalizing big losses and loading up on things with the least bounce potential in a recovery, potentially robbing you of returns that would otherwise compound throughout the next bull market. In our view, that is likely to work against the vast majority of stock investors’ long-term goals.

Of course, all of this is predicated on the bear market’s end being close by. We think it is, as we have shown in other recent commentaries. All of today’s negatives are widely known. Pundits have extrapolated them into increasingly dour forecasts for months. At this point, it would take something much worse than what stocks have already priced in to make the market drop another -20%, -30% or more from here. That is possible, but it doesn’t seem probable to us. Meanwhile, sentiment has morphed into what we call the “pessimism of disbelief,” where bad news gets top billing and good news goes ignored or gets buried in “yah, but” objections. This is the typical backdrop for a recovery.

We know this year, like most bear markets, has been frustrating and difficult. But taking rash action this far into it seems likely to be a decision many would go on to regret."

MY COMMENT

AGREE with this article. I have no plans to sell or drop anything just because of the losses this year. I STILL consider the companies that I own the CREAM OF THE CROP of the business world and the world economy.

That said......I consider Amazon a two year hold. I want to see how their new management does going forward. But I am not close to selling out that stock.

In addition......I have been generally happy with the earnings of the stocks that I own. I consider most of them as OVERSOLD at this point. That......however......does not mean they can not go down some from here. I continue to think that we hit a soft bottom in June.....but there is potential for perhaps another 10% down into the mud of that soft bottom.