The Long Term Investor

WOW......as I was typing the above I now see that ALL the averages have gone strongly into the RED. That is a very sudden move.

 

I thought Powell was going to talk later today....but I now see....that he is talking right now. I was sure that was the case when I saw ALL the averages go from green to medium red instantly.

So I looked it up....he started talking at 11:00 EST.

Powell is part of a panel discussion that started at 11:00 EST and is supposed to end at 11:45 EST. So I guess it just ended if it is on schedule.

 

Here is another MONKEY WRENCH thrown out there just a short time ago.

Debt limit talks come to a standstill

https://finance.yahoo.com/news/top-house-negotiator-debt-limit-153130663.html

MY COMMENT

Just typical political posturing. BUT....the markets hate this sort of stuff......even if it is just CRAP.

 

WELL.....at least my losses moderated by the close compared to this morning. I ended up with a moderate loss for the day....compliments of the Debt talks going into the toilet.

I had a couple of stocks in the green today.....AAPL and TSLA. I also got beat by the SP500 by 0.66%.

Still it was a great week for investors in general....especially.....those that are in the TECH space.

MOVING ON....to next week....as we head toward June.

I notice that I am NOT hearing much about....."sell in May and go away"......it has been a bust this year. I dont invest by superstition and I believe the data does not support this old rhyme.

 

ANOTHER big week for many investors.

DOW year to date +0.84%
DOW for the week +0.38%

SP500 year to date +9.18%
SP500 for the week +1.65%

NASDAQ 100 year to date +26.36%
NASDAQ 100 for the week +3.53%

NASDAQ year to date +20.94%
NASDAQ for the week +3.04%

RUSSELL year to date +0.71%
RUSSELL for the week +1.89%

NOW......as to my entire account, stocks and funds.....I was UP by +19.32% year to date, as of the end of last week, May 12, 2023. This week my entire account, stocks and funds....is UP by +22.21% year to date, as of today May 19, 2023. A VERY NICE weekly gain for my account.

 

We are now entering the final game of political chicken over the debt ceiling negotiations. I have ZERO doubt a deal will be made. After that every member of congress will attach every GOODIE in the world to the final bill. It will be a GIANT Christmas tree. What a bunch of ASSES.

 

Have a great weekend everyone.....we come back strong on Monday.

 

Here is some info if you want to get into the BIG RETAIL earnings a bit.

Five takeaways about the consumer from Walmart, other retailers after a big week of earnings

https://www.cnbc.com/2023/05/19/us-economy-consumer-takeaways-from-wmt-tgt-hd-retail-earnings.html

MY COMMENT

Next week Best Buy, Lowes, and Costco.........not a big retail company but also......NVIDIA.

The article discusses:

Sales trends have weakened
Inflation is still a key factor
Consumers are spending on needs, not wants
Weather dampened demand (literally)
Shoppers have become more last-minute

 

Here is what Powell talked about today......if you care.

Fed’s Powell: Rate decisions made 'meeting by meeting' after aggressive hikes

https://finance.yahoo.com/news/feds...meeting-after-aggressive-hikes-170449574.html

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

"Federal Reserve Chair Jay Powell said Friday future decisions on interest rate moves will be made on a "meeting by meeting" basis after an aggressive campaign that has pushed rates to the highest level in 16 years.

Powell also said interest rates may not need to rise as high as previously expected with the bank crisis tightening credit conditions, even with inflation well above the Fed's 2% target.

"We've come a long way in policy tightening and the stance of policy is restrictive," Powell said at a conference alongside former Fed Chair Ben Bernanke at the Federal Reserve in Washington Friday.

The Fed's 0.25% interest rate increase on May 3 marked the 10th-straight meeting the central bank raised rates.

"We'll be monitoring as we assess the extent to which additional policy firming may be appropriate to return inflation to 2% over time," Powell said. "That assessment will be an ongoing one. As we move ahead meeting by meeting having come this far, we can afford to look at the data and the evolving outlook and make careful assessments."

Reading at times from prepared notes, Powell said interest rates — which currently stand in a range of 5%-5.25% — are now "restrictive," meaning they are above the level at which economic growth would neither be encouraged nor discouraged in the view of policymakers.

"[Banking sector developments] are contributing to tighter credit conditions and are likely to weigh on economic growth, hiring and inflation," Powell said.

"So as a result, our policy rate may not need to rise as much as it would have otherwise to achieve our goals. Of course, the extent of that is highly uncertain."

These comments largely echoed those made by the Fed chair during a press conference earlier this month.

Stocks were little-changed as Powell spoke, instead reacting negatively to headlines out of the debt ceiling negotiations which crossed the wires at roughly the same time.

Elsewhere on Friday, Powell said he thinks slack in the job market slack is likely to be an important factor in inflation going forward. Powell also noted that inflation in non-housing services has shown signs of being "persistent.

The latest Consumer Price Index released on May 10 showed headline prices rose 5% over the prior year on a headline basis and 5.5% on a "core" basis, which strips out the cost of food and gas. An 8.1% increase in the cost of shelter accounted for 60% of the total increase in core inflation last month.

Core PCE, the Fed’s preferred measure of inflation, rose 4.6% over last year in March. The latest PCE data will be released next week.

After raising rates earlier this month, the Fed's benchmark interest rate stands at the top of what officials' forecasts in March suggests would be the peak for rates during this cycle.

On Thursday, at least two Fed officials suggested that rates may need to rise further to push inflation lower.

Powell left the door open to those moves on Friday. The Fed will release a new set of economic forecasts, including interest rate projections, at the conclusion of its next meeting on June 14.

Powell noted Friday, however, investors should not take these forecasts as a "plan" for the central bank."

MY COMMENT

Pretty neutral stuff above......actually this should be encouraging for investors. BUT......I am still seeing the chance for a final rate hike in June as 50/50.

I am sure the FED knows that their ability to grab attention and move the markets...not to mention the economy......is now pretty much set in stone. There is obviously NOT going to be many....if any....more rate hikes. As time goes on there will be less and less attention paid to the FED.

Of course....any time there is a hint of inflation going up or returning.....there will be a frenzy for a day or two. If the FED is smart they will be happy with inflation in the 3-4% range.....this is actually NORMAL on a historical basis and is about right for the worlds greatest economy.......the USA.

 

Here is an extremely interesting story....it covers the solar and green industry, politicians, banking, Warren Buffett/Geico, bankers, attorneys, the wealthy and more than anything else......"THE EXPERTS". A very classic and sad story about.......business and the inside workings and failures of so called "professionals" on all levels. YES.....many of these people really are....MORONS.

It will also make you wonder if all of.......US......regular people, living our normal lives, are just SUCKERS and OBLIVIOUS FOOLS with no idea what is going on all around us at all levels.

The Billion-Dollar Ponzi Scheme That Hooked Warren Buffett and the U.S. Treasury
How a small-town auto mechanic peddling a green-energy breakthrough pulled off a massive scam

https://www.theatlantic.com/magazine/archive/2023/06/dc-solar-power-ponzi-scheme-scandal/673782/

MY COMMENT

A real eye opener on the STUPIDITY and FAILURES of........"experts". As an investor this story is CHILLING. It is a real eyeopener as to BUSINESS INCOMPETENCE. This will give any investor nightmares.

 

Well.....I have a couple of companies reporting this coming week.....NVDA and COST. These are my final two companies to report this month. I believe that NVDA is on Wednesday and COST is on Thursday.

I also have NKE reporting on about June 26.......that will be my final report till after the end of the second quarter.

 

This is the little.....that we face this next week. It will be another week with little to nothing going on. Each day.....especially the open..... will probably be a repeat of the typical day we have been seeing lately.

Debt ceiling drama, retail earnings, Fed Minutes:

https://finance.yahoo.com/news/debt...minutes-what-to-know-this-week-130041592.html

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

"Debt ceiling deliberations, more retail earnings, and the minutes from the Federal Reserve's latest meeting await investors as highlights in the week ahead.

House Speaker Kevin McCarthy (R-Calif.) said Saturday discussions over the debt ceiling wouldn't resume until President Biden returns from his trip to Japan for a G-7 meeting. On Sunday before departing the G-7, Biden called the GOP's debt-ceiling stance "unacceptable," adding it was "time for the other side to move from their extreme positions." This as Treasury Secretary Janet Yellen's June 1 "X-date" looms.

On Friday, the two parties put talks on pause, raising doubts about the near-term potential for a deal and sending markets lower.

All three major indexes still finished the week with gains, however, notably the Nasdaq, which rose more than 3%.

The Nasdaq and S&P 500 had their best week since March and their highest weekly close since August 2022. Year to date, the Nasdaq is up more than 20%, while the S&P 500 has risen more than 9%; the Dow Jones Industrial Average is just barely clinging to gains for the year.

Stocks were encouraged last week after earnings from the retail sector struck a cautious tone on consumer spending for the year, but didn't sound alarms on a full-on recession quite yet.

In the week ahead, results from Dollar General (DG), Costco (COST), and BJ's (BJ) will offer further insights on the health of the consumer. Walmart's results (WMT) hinted at the benefits to some retailers from wealthier consumers trading down to save money as inflation pressures household budgets.

"We've seen transactions at Walmart, at Target, at TJX, at Ross positive year over year, which suggests that there is some trade down coming into the value side of the equation as some of those mainstream consumers make different choices," Bernstein retail analyst Aneesha Sherman told Yahoo Finance Live on Friday. "And that's what some of the new data is showing that wasn't the case last year. So for value retail, I think it's a positive."

On the tech front, Nvidia (NVDA), which has seen its stock more than 100% this year, is expected to report earnings on Wednesday.

On the economic data front, investors will look for further hints on the Fed's path forward as investors prep for the end of the central bank's most aggressive rate hiking campaign since the early '80s.

On Thursday, the second estimate of first quarter GDP will offer a look at growth in the first quarter and another check on the central bank's preferred inflation gauge, the Personal Consumption Expenditures (PCE) price index, for Q1.

Economists expect "core" PCE — which strips out the more volatile costs of food and energy — rose 4.9% on an annual basis in the first quarter, unchanged from the first reading; "core" PCE is expected to have risen 0.3% in April, a monthly increase unchanged from March.

But the debt ceiling will remain the biggest factor for investors until a resolution on the current negotiations can be reached.

Traditionally, markets have been more volatile as the "X-date" — or the date at which the US would default on its obligations — nears, with the possibility of default weighing on markets most in the two weeks before this date.

"If the X-date is crossed without a formal default, we see the drop in Q2 deepening a further 5% to 3750, but proving temporary," UBS's global economics and strategy team wrote in a note to clients on Friday.

"A 1-week period of no coupon payment and default would trigger up to a 20% drop in stocks towards 3,400, and keep them suppressed at those low levels through Q3 before making a partial recovery towards 3.800 by year end. The very unlikely scenario of a month long non payment of coupon would not only cause an immediate drop of up to 30% in stocks, it would also see a very weak recovery."

The S&P 500 closed at 4,191 on Friday.

Debt ceiling discussions will also take a bigger place in the investor conversation going forward as this week wraps up earnings season.

Entering Friday, 94% of the S&P 500 had reported earnings. On average, companies have been beating estimates by 6.5%, per Evercore ISI, while reporting an earnings decline for the second straight quarter.

Still, stocks are up since the start of the first quarter earning season and the much discussed looming recession hasn't impacted markets yet.

“In thinking about the timing of a Recession, the Consumer remains key,” Julian Emmanuel, who leads Evercore ISI's equity and portfolio strategy, wrote in a note to clients on Friday.

"A resilient Consumer was largely the theme in 1Q results, though Banks and Retailers bookending Earnings Season did note some deceleration later in the quarter. Waning momentum could put renewed pressure on estimates in line with historical revision trends."

MY COMMENT

I am looking for a similar week to last week. Of course with many people being focused on the PHONY Debt Ceiling stuff.....there is potential for the markets to react up or down depending on the day to day rumors and media BS. But......a totally meaningless issue......political games.

I think we have a good shot.....a probability.....at yet another UP week by the time we reach Friday afternoon.

This week will be the end of earnings.....they have KICKED all the experts that predicted a disaster for earnings.....in the butt.