NOW.....contrary to what you see in the media this week.....at least in my little world.....gas prices have gone up this week here in Central Texas. I also heard this last weekend that the housing market......in my very local city area....... is more stable with 2.5 months of inventory...still a mild sellers market. Prices of homes are UP by 14% year over year and the median price for a home here in my general area is UP by 8% since July. In my daily lunch excursions to support the local restaurants every day......I notice that they ALL seem to be operating on a skeleton staff.......the number of customers seems down......and prices are way UP. Looks like we are definitely seeing DEMAND DESTRUCTION here in the local restaurants....due to the high prices.
Agree. We have been dealing with this for awhile. Every trip to the grocery store, every utility bill paid, every dinner at a restaurant, on vacation and etc. Most Americans do not need a monthly report and over analyzing buffoons to tell us any of this. And as as you pointed out above...the numbers game and how it is sensationalized is just way over done. Nothing has changed, we have continued high inflation. I guess they do not realize how difficult it is to dislodge inflation once it becomes entrenched in the economy. While most Americans operate off of a true budget, the government continually blows theirs with no consequences.
I would say that we are ONLY in about the middle of grocery price increases......it WILL get worse over the near future as we continue to demonize farmers, the use of fertilizer, etc, etc,.....combined with.....inflation that is working its way through the entire supply chain. Inflation: Grocery prices in August rise 13.5%, the highest increase since March 1979 https://finance.yahoo.com/news/infl...e-135-highest-since-march-1979-135420560.html HERE are the basics of this little article.....read it for more if you DARE. "According to the Bureau of Labor Statistics' August Consumer Price Index (CPI), the overall cost of food rose 11.4%, with the food-at-home category, groceries, up 13.5% year-over-year. For the overall food category, that's the highest increase since May of 1979, but for the food-at-home category, that's the largest increase since March of 1979, according to Steve Reed, an economist at the U.S. Bureau of Labor Statistics (BLS). From July to August, the cost of groceries increased 0.7% month-over-month, lower than recent months, but still not near where it was back in December of 2021, only up 0.4%"
Well said Smokie. Some of us that were alive and adults during the last time of massive inflation.....way worse than today.....remember all the steps that were taken by the Regan Admin and the FED to kill it.......and....kick off a 20 year ECONOMIC BOOM. NO......I am not going to list what was done and why it worked......no one cares anyway.....in the world we live in today. Plus....it would just be seen as political.
I like this little article.....contrary to what is happening today. If You Think Inflation Has Crested, Position Yourself For a Rally Now https://www.realclearmarkets.com/ar...position_yourself_for_a_rally_now_853099.html (BOLD is my opinion OR what I consider important content) "Fastest in 40 years! Stagflation! A 1970s redux! Inflation has dominated headlines all year, majorly contributing to 2022’s unusual, sentiment-driven bear market. The fear is understandable. Fast-rising prices pressure people’s budgets and cause disruption. Rightly or wrongly, inflation stokes FED hikes fears and weighs on economic expectations. Theories abound on its causes, ranging from COVID lockdown-related disruptions, big government spending, vast money supply increases, war, tight labor markets and more. But, no matter which theories you champion, signs are emerging inflation may have crested. If so, that would be a major relief—a fillip for stocks’ recovery. Here I offer you a comprehensive look. Then draw your own conclusions where prices are heading. Before continuing, two things: One, set politics aside. Inflation is politicized, but my aim is solely market-oriented. Two, to be clear, this year’s inflation has lasted longer than I anticipated. That makes it increasingly likely some of my views are wrong. It is a multifaceted issue in a world desperately seeking simple answers. Regardless, signs of easing price pressures are evident on many fronts. Take energy, a chief inflation driver earlier: Now cooling energy prices are showing in US inflation data. They underpinned the July US Consumer Price Index’s slowing to 8.5% y/y from June’s 9.1%. How? Oil is down -34.1% from March 8’s high. The national average regular gasoline price is off -45.7% since early June. It likely doesn’t show in CPI data yet, but US natural gas prices are down -20% from August 22’s year-to-date high. Food? Putin’s vile invasion of Ukraine drove up wheat and grain prices, fueling broad fears of worse to come—even famine. But wheat peaked May 17, tumbling -34.3% since. Corn prices, plagued by droughts, are still down -14.2% since mid-May’s highs. Meat eater? Beef and hogs are down -8.7% and -15.5% since highs on March 31 and August 10, respectively. On the dairy products side, eggs and milk are down -35.9% and -19.5% since their respective 2022 highs. To sum it all up globally: The UN’s Index of World Food Prices has fallen in five straight months, currently sitting -13.6% below March’s high. Housing is another area many blame for inflation. Here shifts are more nascent, but the Case-Shiller National Home Price Index’s gains slowed from April’s 20.6% y/y to 18.0% in June. Looking ahead, the National Association of Home Builders’ August survey showed builders are starting to cut new home prices. Fannie Mae’s August survey shows would-be buyers and renters expect to pay less soon. For businesses, the Institute for Supply Management’s manufacturing and services purchasing managers indexes both show easing price pressures. In August, 52.5% of respondents reported rising prices—down -7.5 points from July and -34.6 from March’s 2022 high. On services prices, which have followed goods at a lag tied to recurrent lockdowns and restrictions, 71.5% of respondents reported increased pressures—high, but down -13.1 points from April. Transport costs are off, too: The Baltic Dry Index, a gauge of maritime freight rates, is down -66% from this May’s high. Shanghai Freight rates are down -44% since January. This index, when down, is often feared by many as a recession warning. Maybe. But maybe part of it is all of the above, also. Fret big deficit spending fueling fast price rises? Consider: Little noted, year-to-date through July, the cumulative US federal budget deficit was down -82.3% versus 2021’s first seven months. Key to this is an also little noted -24.1% reduction in year-to-date spending, as one-time COVID bursts fade. Other legislation, like the infrastructure plan and the recently passed climate bill, doles funds out over many, many years—too slow impact prices now, for better or worse. Those thinking money supply stoked higher prices should also find solace in data. M2, a measure of currency in circulation, deposit accounts and money funds, peaked at 27.5% y/y the week of February 22, 2021. It was just 4.8% in early August, the latest figure available. The Center for Financial Stability’s broader M4 gauge hit 2.3% y/y in July, down from June 2020’s astronomical 30.7%. Pessimists claim the tight labor market still augers higher wages sending prices spiraling. They missed the fact Nobel laureate Milton Friedman proved 60 years ago wages follow prices—they don’t lead them. Regardless, hiring slowed in the last six months while August’s labor force spike suggests more slack remains than many think. All this is happening regardless of Fed actions. Monetary decisions always hit the economy at a long lag, through their influence on lending. Besides, the Fed’s fiddling with the interest rates affecting banks’ overnight borrowing costs won’t do much when banks are flush with cash and don’t need to borrow. It historically used reserve requirements to restrain credit in such scenarios. But they ditched those in 2020—complicating their “inflation fight” now. As long time readers know, I’ve always been a FED skeptic and consider it likely about the last observer to fathom what is actually happening. Of course, that’s just my bias. Then too, inflation’s peak will only be crystal clear to all in hindsight. Maybe some spike ahead i can’t see means it hasn’t come yet. But many of these figures I’ve cited are forward indicators yet to show in stores—and inflation data. So no matter your inflation narrative, if you think these data suggest inflation is peaking, you had better position for a rally now. Fear and loathing of fast-rising prices played a big role in dragging sentiment—and stocks—down. Ebbing inflation would be a major relief for both stocks and bonds, rocket fuel for the nearby rally." MY COMMENT Where we are now is probably the PEAK. I WILL NOT be exiting stocks and when I have available money....I WILL be buying.
Take HEART....enjoy the day.....unless you are a one day investor. Weekly Market Pulse: No News Is https://alhambrapartners.com/2022/09/11/weekly-market-pulse-no-news-is/ (BOLD is my opinion OR what I consider important content) "Nothing happened last week. Stocks and bonds and commodities continued to trade and move around in price but there was no news to which those movements could be attributed. The economic news was a trifle and what there was told us exactly nothing new about the economy. A report that wholesale inventories rose 0.6% cannot be turned into market moving news no matter how hard the newsletter sellers try. Jobless claims fell 8,000? Yawn. Exports rose $500 million? In a $24 trillion economy? Give me a break. There was the kerfuffle of the S&P US Services PMI versus the ISM Services PMI. The former fell all the way to 43.7 (50 is the dividing line between expansion and contraction) while the latter, supposedly measuring the same thing, rose to 56.9. Which one is right? The major difference between the two is that S&P surveys more small businesses, so maybe there’s a divide in the outlook between large and small companies. Or maybe, like the NFIB and U of Michigan sentiment surveys the S&P report has been tainted by politics somehow. All I can say is that the S&P data isn’t confirmed by any other metric. The two reports were nothing more than a gift to the permas; bulls flogged the ISM report and the bears reveled in the S&P report. No one else cared. A couple of weeks ago when Jerome Powell spoke at the Jackson Hole retreat, his speech was taken as a forceful warning to markets that he and his merry band of rate-setters were going to keep hiking until, well, you just wait and see. Last week he said basically the same thing at the Cato monetary conference and stocks went up just to confuse everyone. Bonds were down as interest rates rose – as they have been doing all year or to be more accurate, as they’ve been doing for 2 1/2 years. The ECB did raise rates by 75 basis points last week despite everyone on the planet knowing that Europe is on the verge of recession and likely to, at a minimum, freeze their buns off this winter because Vlad won’t turn the gas back on. So European stocks rose more than US stocks and the Euro moved back above parity with the dollar because, well…maybe because Vlad’s army was about to get its butt kicked over the weekend? Hey, I’m all on board with markets discounting the future but that’s a little farfetched…maybe. We will be getting some new inflation information this week that seems likely to be positive. The BLS will report CPI on Tuesday and PPI on Wednesday both of which are expected to be down 0.1%. There were some obvious price declines in August from gasoline to used cars to clothing so everyone knows that everyone knows that inflation has moderated. Could the report show an even steeper drop than expected? Maybe but the Fed speakers last week made it pretty clear they intend to hike 75 basis points in September and with it already priced into the market they’ll probably go ahead. Most of what passes for news, the things people credit with moving markets on a day-to-day or week-to-week basis, is nothing more than noise. And sometimes we don’t even get any noise. Environment The trend for the 10-year Treasury note yield and the dollar is still up. The dollar did pull back ever so slightly last week but it doesn’t mean a thing yet. Could positive developments in Ukraine change that? Sure, but only if Putin gets replaced by someone sane. I certainly want to see Putin ousted but I am also cognizant of the old saying to be careful what you wish for. A win for Ukraine should be a win for Europe and the world but victory and positive results are far from assured. The rise in rates has not been confined to nominal rates. 10-year TIPS yields hit 0.91% last week, the highest since 2018. Fear of inflation in the market peaked late last year when this yield fell to -1.15%. Except for a brief fall in TIPS yields in the immediate aftermath of the Ukraine invasion, investors have been selling inflation protection persistently since then. A suggestion that the Fed will be successful in their inflation fight? Maybe. Markets aren’t always right but they are better at predicting the future than the Fed or any other forecaster, so I’ll go with markets. The Fed may well be behind the curve, just not in the way most of the pundits think. Long-term real rates have been called the single most important price in an economy and for good reason. Real rates are a critical factor in almost every decision made by households, businesses, and governments about whether to spend now or spend later. What’s amazing is that these decisions get made with the vast majority of people having no idea what the real rate is or how it is calculated. In simple terms, when real rates are negative, fear of inflation is high and investors act to protect their purchasing power; they concentrate on capital preservation, inflation protection. They might buy gold – which is inversely correlated with real rates – or other commodities or TIPS. What they aren’t doing is making productive investments; the desire to protect the value of savings is greater than the desire to grow it. So, rising real rates, such as we have today, is a positive sign that people are more interested in investing for the future than protecting the gains of the past. That’s good news and we should hope it continues. Markets Stocks, commodities, and real estate were all up last week while bonds sold off again. There wasn’t, to my knowledge, any catalyst for the buying. The economic data was mostly benign and the Fed was out again talking tough about inflation. It is interesting that when Powell spoke at Jackson Hole a couple of weeks ago the Dow fell 1000 points but when he said almost exactly the same thing last week, the market went up. Growth stocks took the lead last week and there is some indication that a trend toward growth is developing. That is more than a little dismaying since we don’t think they are very cheap just yet. Quite the contrary actually. Mid and small-cap growth stocks are reasonably priced but large cap is still on the expensive side for us. We’ll see how things progress but we are watching the growth vs value battle very closely. It may well depend on the course of the dollar. A lower dollar tends to favor value while a rising dollar tends to favor growth. Obviously, that hasn’t been the case this year but it is a tendency, not a sure thing. Economically sensitive sectors outperformed last week with cyclicals, financials, and materials leading. Defensive stocks were up but less than the market. Credit spreads rose to almost 6% back in July but eased back to 4.25% in mid-August. They had been creeping back up but peaked just over 5% about 10 days ago. Spreads will widen at some point when the economy is closer to recession but current levels don’t indicate any big stress. As I said above, there really wasn’t any news of note for the markets last week. Is it significant that, in the absence of news, stocks were bid higher? Maybe. Sentiment, as I’ve noted repeatedly over the last few months, is very negative. I am frankly dismayed at the defeatism, the feeling that things are bad and can only get worse that pervades the national mood. That isn’t the America I grew up in and it isn’t the one I want to leave to my daughter. But maybe some of that gloom is starting to lift. Maybe the fact that in a vacuum, people want to take risk, to invest for the future, is a sign of better things to come. I certainly hope so." MY COMMENT NOTHING new today....NOTHING new last week.....NOTHING new over the past 3-6 months. So as an investor.....I will do NOTHING new.
I dont think there are many that read this thread that are selling stocks and going to cash. Most are either siting or buying into the dips. Since I....choose.....to not talk about investing or money outside of family in daily life.....I have no clue what the average baby boomer is doing at the moment as they near retirement. I sure hope that most people did not get themselves way out over their skis before this little drop in the markets. It is important to ACTUALLY PLAN your financial life 3-10 years out into the future. UNFORTUNATELY.....I know that it is the NORM for people to get way over-invested ins risky stocks and funds and to totally under-perform the markets over the long term.....due to their BEHAVIOR.
This headline sums up what I was saying earlier: Inflation rose 0.1% in August even with sharp drop in gas prices https://www.cnbc.com/2022/09/13/inf...ugust-even-with-sharp-drop-in-gas-prices.html MY COMMENT Oh my God.......a 0.1% increase in inflation.......we are DOOMED. I hear the drums pounding out.......DOOM, DOOM, DOOM.
Since everything seems FUNNY to me today.....I raise the question.....why do we allow the FED, GOVERNMENT, various BOARDS, etc, etc.....to be run by ECONOMISTS. We put out all these expectations for what the BUSINESS data is going to be from.....ECONOMISTS. Who in the world thinks a bunch of ivory tower, pseudo-science, witch doctors, called economists have any clue what is going to happen? Today is the perfect example.....these people have no clue. In fact if you interact with them....they seem to uniformly be.....dumb as a post.....in terms of common sense. It is ALL simply THEORETICAL NONSENSE that is meaningless. For those that might think otherwise.....I pose a question to you. Well a few questions.......why do they all seem to work in academics or government? Why are there little to no BUSINESS CEO's that are economists? The way we rely on their PHONY expertise.....you would expect that every successful corporation would be run by a CEO economist. I have run into a lot of these people over my lifetime at various levels of government and academia......very polite and nice, well meaning, people.....but for the most part totally dysfunctional. That is why this sort of stuff is simply DRIVEL for real investors. It has NOTHING to do with business, running a business, or success in business.
I just looked at my account.....not that bad. I have given up a few days of gains so far today. What my GREEDY MIND is focusing on today is the fact that I am going to soon see my income from Social Security and my annuities jump up to about $185,000 annually....... with the nice increase I am going to see in Social Security starting next year. I dont count my "SHOW" income in my annual income since it could end at any time. It is interesting to look back and see how my Social Security has compounded since I started at full retirement age......in spite of the small raises that I got in many of those years. Even the small 1% to 2% SS raises are pushing me ever higher in my annual income. Those SS increases are more significant for me since I recently hit the time in my life that my efforts to MINIMIZE my taxable income have paid off. I should now be paying the MINIMUM medicare and drug premiums.....deducted from my SS.....from here on. Of course....it helps that in retirement we have ZERO mortgage payment and ZERO debt.......another bit of long term planing that continues to pay off big time.
They are detached from reality. The real world out there for a business owner and just the average consumer in general is a tangible, real life economy that everyone is very attuned to on a day to day basis. The day to day operations of businesses feel it, the American family budgets feel it, and any slight disruption or change in it is noticeable. Here is a snippet on why they get it wrong in addition to the above. Why do economists have an abysmally poor prediction record? (Article by Peter Sainsbury/Materials Risk) So why are they so abysmal? Well, first the economy is a complex system full of positive and negative feedback loops. And so it doesn’t necessarily follow that a change in one part of the economy (say a cut in interest rates by X) would automatically lead to an improvement of Y elsewhere. Its non-linear. “Nobody has a clue,” Jan Hatzius, Goldman Sachs’ chief economist, said to Nate Silver in the book “The Signal and the Noise”. “It’s hugely difficult to forecast the business cycle. Understanding an organism as complex as the economy is very hard.” According to Hatzius, forecasters face three fundamental challenges: first, it is very hard to determine cause and effect; second, that the economy is always changing and, third, that the data that they have to work with is pretty bad. Second, economic forecasters of all stripes are prone to the same biases. They are prone to recency bias (thinking the current trend will continue), availability bias (only considering salient data and insights) and confirmation bias only seeking out information that confirms their worldview). Finally, they are all subject to different incentives. And the main one is whether to herd, or not to herd. If a forecaster strays too far from the consensus forecast and turns out to be wrong they may lose their job or be passed over for promotion. As the great investor Warren Buffet said, “Forecasts usually tell us more of the forecaster than the future.” Forecasters are too busy looking in the rear view mirror and looking across at their competitors to provide an unbiased forecast of the future.
And for WXYZ and his GREEDY mind.... a little clip from an article listed on Barron's Social Security recipients are up for a big raise next year: benefits are projected to climb 8.7% in 2023, the biggest increase in more than 40 years.
You cant fight DUMB. So...I dont even try. I stick to the long term and take my lumps when necessary to stay long term and fully invested all the time. I think I lost the past 3 or 4 days of gains today. As to the rest of the week in the markets.....probably SUNK. Next week we get the FED meeting......and.....everyone will get to see the 0.75% increase that is TOTALLY BAKED IN. I was RED today. Every stock down of course. I got beat by the SP500 by 1.36% today. We move FORWARD from here......as usual.
You might like.....or not like.....this little article if you own NIKE like I do. Nike challenged by 'unprecedented macro headwinds' ahead of earnings, analyst says https://finance.yahoo.com/news/nike-macro-headwinds-earnings-analyst-184139440.html MY COMMENT Not going to post it since it is the opinion of a single analyst. Here is the good news at the end of the article: "Despite the inflationary environment, Kernan still maintains an Outperform rating on the stock, stating that many of the headwinds are near-term concerns and not emblematic of Nike’s larger trajectory. "The long-term Nike story, the long-term margin expansion, the shift to DTC, the shift to e-commerce creates a tremendous amount of earnings growth long term," Kernan said."
Are we having fun yet? Inflation isn’t just about fuel costs anymore, as price increases broaden across the economy https://www.cnbc.com/2022/09/13/inf...ice-increases-broaden-across-the-economy.html (BOLD is my opinion OR what I consider important content) "Key Points Rather than fuel, it was food, shelter and medical services that drove costs higher in August, slapping a costly tax on those least able to afford it. The food at home index, a good proxy for grocery prices, has increased 13.5% over the past year, the largest such rise since March 1979. For medical care services, the monthly increase of 0.8% was the fastest monthly gain since October 2019. Veterinary care was up 10% from a year ago. For the better part of a year, the inflation narrative among many economists and policymakers was that it was essentially a food and fuel problem. Once supply chains eased and gas prices abated, the thinking went, that would help lower food costs and in turn ease price pressures across the economy. August’s consumer price index numbers, however, tested that narrative severely, with broadening increases indicating now that inflation could be more persistent and entrenched than previously thought. CPI excluding food and energy prices — so-called core inflation — rose 0.6% for the month, double the Dow Jones estimate, bringing year-over-year cost-of-living increases up 6.3%. Including food and energy, the index rose 0.1% monthly and a robust 8.3% on a 12-month basis. At least as important, the source of the increase wasn’t gasoline, which tumbled 10.6% for the month. While the summertime decline in energy prices has helped temper headline inflation numbers, it hasn’t been able to squelch fears that inflation will remain a problem for some time. The broadening of inflation Rather than fuel, it was food, shelter and medical services that drove costs higher in August, slapping a costly tax on those least able to afford it and raising important questions about where inflation goes from here. “The core inflation numbers were hot across the board. The breadth of the strong price increases, from new vehicles to medical care services to rent growth, everything was up strongly,” said Mark Zandi, chief economist at Moody’s Analytics. “That was the most disconcerting aspect of the report.” Indeed, new vehicle prices and medical care services both increased 0.8% for the month. Shelter costs, which include rents and various other housing-related expenses, make up nearly a third of the CPI weighting and climbed 0.7% for the month. Food costs also have been nettlesome. The food at home index, a good proxy for grocery prices, has increased 13.5% over the past year, the largest such rise since March 1979. Prices continued their meteoric climb for items such as eggs and bread, further straining household budgets. For medical care services, the monthly increase of 0.8% is the fastest monthly gain since October 2019. Veterinary costs rose 0.9% on the month and were up 10% over the past year. “Even things like apparel prices, which often decline, were up a little bit [0.2%]. My view is that with these lower oil prices, they stick and assuming they don’t go back up, that will see a broad moderation of inflation,” Zandi said. “I have not changed my forecast for inflation to get back to [the Federal Reserve’s 2% target] by early 2024, but I’d say I hold that forecast with less conviction.” On the positive side, prices came down again for things such as airline tickets, coffee and fruit. A survey released earlier this week by the New York Fed showed consumers are growing less fearful about inflation, though they still expect the rate to be 5.7% a year from now. There also are signs that supply chain pressures are easing, which should be at least disinflationary. Higher oil possible But about three-quarters of the CPI remained above 4% in year-over-year inflation, reflecting a longer-term trend that has refuted the idea of “transitory” inflation that the White House and the Fed had been pushing. And energy prices staying low is no given. The U.S. and other G-7 nations say they intend to slap price controls on Russian oil exports starting Dec. 5, possibly inviting retaliation that could see late-year price increases. “Should Moscow cut off all natural gas and oil exports to the European Union, United States and United Kingdom, then it is highly probable that oil prices will retest the highs set in June and cause the average price of regular gas to move well back above the current $3.70 per gallon,” said Joseph Brusuelas, chief economist at RSM. Brusuelas added that even with housing in a slump and possible recession, he thinks price drops there probably won’t feed through, as housing has “a good year or so to go before the data in that critical ecosystem improves.” With so much inflation still in the pipeline, the big economic question is how far the Fed will go with interest rate increases. Markets are betting the central bank raises benchmark rates by at least 0.75 percentage point next week, which would take the fed funds rate to its highest level since early 2007. “Two percent represents price stability. It’s their goal. But how do they get there without breaking something,” said Quincy Krosby, chief equity strategist at LPL Financial. “The Fed isn’t finished. The path to 2% is going to be difficult. Overall, we should start to see inflation continue to inch lower. But at what point do they stop?”" MY COMMENT I heard someone talking about the growth rate of 3-4% that we used to celebrate in the 1980's and 1990's. For some reason we have to be content with a miserly 2% now. As usual.....the FED target is significantly too low for a good growing economy. We have now been stuck in a BEAR MARKET for nine months now and a RECESSION for at least 3-4 months now.
A nasty end to the day. It has been a challenging year to say the least. The bear appears to want to hang around and overstay his welcome. Although, bear markets are a normal and recurring part of our economic cycle. The bear has visited us in previous investing years and he will again sometime down the road after this. The positive side of it....we are going to have one hell of a run when he does leave. I plan on being here for it. Hang in there, believe in your goals and stick to your long term plan.
YEP....you are right. PLUS.....most bear markets probably stick around for a year to two years. We still probably have a good ways to go with the current one since it has only been 9 months so far. . Although I still believe that we already hit a soft bottom that we will not revisit.
