The Long Term Investor

One quick post before I have to head out to the studio today.

Hitting 'reset' on the US recession countdown: Morning Brief

https://finance.yahoo.com/news/hitt...ession-countdown-morning-brief-102042203.html

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

"The first half of 2023 will come to a close on Friday.

And when it does, one of Wall Street's big predictions for 2023 will officially be a bust — the stock market did not fall and the US economy did not enter recession.

When the year began, we flagged a "surprising consensus" among Wall Street strategists, many of whom expected a dip in the stock market in early '23 as the economy fell into a downturn before a rebound over the second half of the year.

Instead, investors have been treated to a stock market rally accentuated by AI hype, a pause in the Fed's rate hikes, a cooldown in inflation, and growing optimism that a seemingly inevitable recession may be forestalled.

And writing in a note to clients on Monday, Neil Dutta at Renaissance Macro pulled no punches when taking to task his peers on the Street who have called for an impending recession for a year.

"Wall Street has had recession on the brain since at least mid-2022," Dutta wrote. "Analysts have a tendency of falling in love with their forecast, and it is clear some are having trouble letting go even as evidence piles up to the contrary. Strong jobs growth? Late cycle! Rally in US equity markets? We had a big rally in mid-2008 too! None of these arguments stand up to scrutiny."

Dutta added: "There is only so long one can keep claiming that the recession is just six months away. The statute of limitations has now kicked in. There are several reasons to be upbeat on the US economy. The recession clock has been reset."

In Dutta's view, the housing market, easier financial conditions, and falling inflation boosting spending power are among some of the reasons to be upbeat on the US economy.

And in looking at the housing and auto markets specifically, we see the crux of the argument, with Dutta writing, "the Fed has been tightening for 18 months already, and it is the cyclical-credit sensitive areas of the economy that have shown improvement of late — housing and autos!"

Yes, people are always spending money on their cars and homes.

But because these are large purchases, most consumers are financing (read: borrowing money) these expenses. When the economy is slowing down, or on the verge of doing so, we'd expect these categories — what Dutta calls the "cyclical-credit sensitive areas" — to be slowing.

Instead, we see the opposite today.

Confidence among US homebuilders is on the rise as demand for new homes improves.

Auto sales in May rose nearly 20% over the prior year, the most in two years.

Neither the housing nor auto market, of course, is a story as simple as the two stats cited above.

But calls for a near-term recession, in Dutta's view, have a hard time overcoming the reality that the US economic story is transitioning from "resilience" to outright growth again.

"There is cyclical momentum under the economy that is making near-term recession risks fade rapidly," Dutta wrote.

"You cannot talk about late cycle dynamics with housing turning up and inventories likely to follow. There will be no recession in the next six months, and it is increasingly likely that we’re not seeing one in the next year either.""

MY COMMENT

YEP......the MORONS.....the so called experts.....WRONG AGAIN. This is a HUGE miss for all the professional market callers.

YES......there is no recession.

This statement above says it all:

"Analysts have a tendency of falling in love with their forecast, and it is clear some are having trouble letting go even as evidence piles up to the contrary. Strong jobs growth? Late cycle! Rally in US equity markets? We had a big rally in mid-2008 too! None of these arguments stand up to scrutiny."Dutta added: "There is only so long one can keep claiming that the recession is just six months away"

Of course.....you have been hearing the "correct" view on this thread for about 6-9 months now.

 

NO......this is NOT the role or the job of the FED. This sort of thinking is DELUSIONAL.

Federal Reserve's message to the bullish stock market: We will break you

https://finance.yahoo.com/news/fede...stock-market-we-will-break-you-130024015.html

"Not watching stocks tick by tick sometimes has its benefits.

That's where I am at right now after spending a week in sunny Cannes, France, with my Yahoo colleagues covering the Cannes Lions.

We laughed, we didn't cry, we talked to big names such as Kevin Hart and Pinterest CEO Bill Ready about business matters and we ate incredibly fresh food that oddly didn't seem too inflationary. I even tried to dance at a late-night party (it was for business, people).

One thing we didn't do was pay attention to stocks every waking second. It felt as refreshing as the ocean water I let touch my calves during a 15-minute break after we wrapped taping on Thursday. At least for me, that market detox has proven incredibly helpful as I get back to reality in increasingly warm New York City.

My blunt view on markets: The Fed is trying to club the bulls over the head to remind them who is boss. It may be wise for those bulls that have made bank on AI stocks, tech names like Microsoft, and of course Tesla, to respect the mighty club of the Fed and pull in their horns for a bit.

Sentiment has shifted on Wall Street to begin the summer, thanks in large part to new information from the Fed. The Fed's pause on raising interest rates a few weeks ago has spooked investors as it's clear a pause doesn't mean no more rate increases. Powell's testimony last week added further fuel to the view that two more rate hikes are coming this year to wrangle inflation, perhaps much to the detriment of the economy.

I expect a similar hawkish tone to emerge from Powell's two speeches later this week.

"One of the big stories this year is that central banks continue to surprise the markets with either more rate hikes or hints of more to come," proclaimed Bank of America economist Ethan Harris.

Harris is on the mark with that observation and is right in questioning the markets' resilience amid those negative surprises.

"Markets have also proved remarkably resilient with only a mild tightening of financial conditions. Despite the rapid game of catch-up by central banks in the past year, there have been very few financial 'accidents.' The one potentially serious shock — the stress in US regional banks — seems to have been ring-fenced with very aggressive actions from regulators. It is striking how strong global equity markets are relative to their pre-COVID levels," Harris added.

Widely respected Goldman Sachs strategist David Kostin has also laid the groundwork for more near-term pressure on markets as investors stew on Fed confusion.

"While our baseline view remains that the S&P 500 will rise by 3% to 4500 by year-end, the narrow market rally, elevated valuations, and stretched investor positioning represent downside risks," Kostin wrote in a weekend note.

Continued Kostin, "If corralling inflation requires the Fed to implement additional hikes to the policy rate, stocks with 'quality' attributes like strong balance sheets, low volatility, and high returns on capital should outperform."

That's a counter vibe to the risk-taking bullishness that sent markets to records just a few weeks back and the likes of Nvidia to a $1 trillion market cap.

Fight the Fed at your own risk...but let it be known I didn't fight the currents on the beach in France. I went back to my towel to soak in some sun — which was the correct move."

MY COMMENT

Unfortunately the current FED seems to have the view that TRASHING the stock markets is somehow fighting inflation. In reality that is a TOTAL WASTE OF TIME. It will not impact inflation in the slightest.

It does allow the FED to claim they are doing something. The stock markets are NOT the economy and the economy is NOT the stock markets. They need to leave investors and markets alone. It is NOT their mandate to fight and trash the markets. In fact it is is simply RIDICULOUS that the FED has any mandates at all. We don't need a bunch of political, ivory tower, economist MORONS, trying to control and guide the USA economy. IT never worked out well in RUSSIA and it will not work here.

 

You guys did a MASSIVE job on the markets today. Thanks for the gains. I had one of my largest gains in a while today. ALL my stocks were UP nicely except for GOOGL. I also got in a good beat on the SP500 by 0.58%.

Keep up the good work tomorrow.

 

I will be tied up in the studio again tomorrow for 12 hours.....8:00 to 8:00. We will wrap it up tomorrow with six songs done.....if we can stay on track tomorrow. After that over the rest of the year we will add four more songs as time allows and do all the mixing and mastering, etc, etc. Release will be some time early in 2024.

 

I guess this was the day today.....I missed it all.

US STOCKS-Wall Street closes higher as upbeat economic data allays slowdown fears

https://finance.yahoo.com/news/us-stocks-wall-street-closes-205647690.html

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

"June 27 (Reuters) - U.S. stock indexes rebounded on Tuesday from a recent losing streak as upbeat economic data soothed investor worries about an imminent recession triggered by the Federal Reserve's aggressive interest rate hikes.

Separate reports showed new orders for key U.S.-manufactured capital goods unexpectedly rose in May, and sales of new single-family homes surged in the same month, while U.S. consumer confidence increased to a near 1-1/2 year high in June.

The data gave investors a reason to buy back into stocks after a "pretty vicious correction" in the last several sessions, said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

"What we have today is this series of economic releases that on balance fit this setting of an economy that continues to be in an expansionary mode, without at the same time suggesting there's any condition that's running too hot."

And just days before the second quarter ends, Luschini said it was notable that some the top sector performers on Tuesday, such as consumer discretionary and technology , were also the market's biggest gainers on a year-to-date basis.

While the economic data was encouraging, Rhys Williams, chief strategist at Spouting Rock Asset Management, said the market was likely helped by so-called window-dressing, when fund managers add outperforming assets to their portfolio for their quarter-end statements.

"You'd a bad week in the stock market last week and a bad day on Monday. It's just a bit of recovery," said Williams. "There could be some quarter-end window-dressing too as we get close to the end of the quarter."

The blue-chip Dow Jones Industrial Average snapped a six-day losing streak on Tuesday while the tech-heavy Nasdaq Composite was eyeing its best first-half performance in 40 years and the S&P 500 advanced after falling in five of the last six sessions.

The Dow Jones Industrial Average rose 212.03 points, or 0.63%, to 33,926.74; the S&P 500 gained 49.59 points, or 1.15%, at 4,378.41; and the Nasdaq Composite added 219.90 points, or 1.65%, at 13,555.67.

The signs of U.S. economic resilience also boosted the Dow Transports index, which closed up 2.7% and the small-cap Russell 2000 index, which advanced 1.5%.

And the PHLX Housing index closed up 2.99% after hitting an all-time high on Tuesday.

Traders were pricing in a roughly 77% chance the Fed will raise interest rates by 25 bps to the 5.25%-5.50% range in its July meeting, according to CME Group's Fedwatch tool, up from 74.4% a day earlier.

More economic data is expected this week, including a key inflation measure, as well as Fed Chair Jerome Powell's speech at the European Central Bank Forum in Sintra, Portugal, which could provide cues on the path of interest rates.

Powell's hawkish comments last week stalled a U.S. stock rally that had pushed the S&P 500 and Nasdaq to an over one-year high and the Dow to a six-month peak.

Despite recent market weakness, a growth stocks rally, an upbeat earnings season and hopes of the Fed ending its monetary tightening soon have set the main indexes on course for quarterly gains.

Market heavyweights Microsoft Corp and Apple Inc were among the biggest boosts to the S&P 500 during the session, along with Amazon.com Inc, Tesla Inc and Nvidia Corp.

Meta Platforms Inc shares rose 3% after Citigroup raised its price target on the stock.

Snowflake climbed 4.2% after the cloud data analytics company announced a partnership with Nvidia to allow customers to build artificial intelligence models using their own data.

Walgreens Boots Alliance shares sank 9.3% as the pharmacy chain cut its annual profit forecast on lower demand for COVID-19 tests and vaccines.

Other drugstore chains, including CVS Health Corp and Rite Aid Corp, also fell.

Lordstown Motors Corp shares slumped 17.2% after the U.S. electric truck manufacturer filed for bankruptcy protection and put itself up for sale.

Advancing issues outnumbered decliners on the NYSE by a 2.55-to-1 ratio; on Nasdaq, a 1.54-to-1 ratio favored advancers.

The S&P 500 posted 46 new 52-week highs and one new low; the Nasdaq Composite recorded 64 new highs and 150 new lows.

On U.S. exchanges 10.16 billion shares changed hands compared with the 11.63 billion average for the last 20 sessions. "

MY COMMENT

I even see some commentary calling the past week and a half a CORRECTION. This time span is NOWHERE near being a correction. That is BS.

We are seeing good results spreading through the economy and business. In a few days we start the third quarter and the second half of the year. It should be good.....with the usual UP and DOWN time periods. In other words.....NORMAL.

 

Looks like the little BLACK SWAN that tried to rise up in RUSSIA has FIZZLED. We are free and clear of that event and the markets did not care at all. We move on from here........ONWARD AND UPWARD.