The Long Term Investor

A bit of a sell off at the open today. ALL the big averages in the red with no sign of a turn-around....yet.

Not much going on today as usual as we are now in a "normal" short term market environment. I am sure the Ten Year Yield is weighing on the markets today and lately. It will take another rate cut or two to hammer the rates lower.

10-year Treasury yield climbs to highest level since late July

https://www.cnbc.com/2024/10/23/us-treasurys-yields-closely-watched-putting-pressure-on-stocks-.html

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

"The U.S. 10-year Treasury yield rose again on Wednesday as traders digested the latest comments from Federal Reserve officials on the trajectory of interest rate cuts.

The yield on the 10-year Treasury rose more than two basis point to 4.2%, reaching levels not seen since late July. At its session high, the benchmark rate traded at 4.24%. That move comes after the 10-year soared 12 basis points on Monday and broke above 4.2% on Tuesday.

Meanwhile, the yield on the 2-year Treasury stood at 4.05%, up more than one basis point. It hit a high of 4.065% earlier in the day, a level not seen since Oct. 10.

Yields and prices move in opposite directions. One basis point equals 0.01%.

Higher Treasury yields are putting pressure on equities, with U.S. stock futures falling, the declines coming after the S&P 500 posted its first back-to-back loss since early September.

Robust economic data and deficit worries are among the factors behind the rise in the 10-year Treasury yield — despite a half-point rate cut from the Fed in September. Traders have become concerned that the central bank may be less inclined to reduce rates, even as the Fed had forecast another half-point worth of cuts before the year ends.

It’s been a busy week for Fed commentary, with an array of policymakers delivering speeches earlier this week.

Investors will be keeping an eye on the latest comments from Fed officials on Wednesday as Fed Governor Michelle Bowman speaks at the 8th Annual Fintech Conference in Philadelphia while Richmond Fed President Thomas Barkin will address the Virginia Education and Workforce Conference.

The Fed’s Beige Book, a review of economic conditions across its 12 districts, is also set to be published Wednesday.

MY COMMENT

This is simply an ABERRATION.....a short term event. BUT....it is going to stick for a while....as traders drive this short term market action.

 

The above is about it for the short term events impacting the markets today. Earnings continue and are the big story.....for real investors....whether mentioned or not.

BASICALLY.....a dull and boring day as the markets takes a little rest.

We are now within about a week of closing out the month of October.....with EPIC YTD gains still in place. A perfect set-up for the end of the year.

 

Another little....black-eye....for BOEING.

Satellite made by Boeing a 'total loss' after space 'anomaly'
Intelsat's IS-33e manufactured by Boeing considered 'total loss' this week

https://www.foxbusiness.com/technology/satellite-made-boeing-total-loss-after-space-anomaly

 

Well yes....TomB16...you are in retirement mode...you made it and now you get to enjoy what you did. Good for you.

 

I ended the day today driven into the RED by the Ten Year Yield. Only a single stock in the green....COST. I also got beat by the SP500 by 0.92%.

A wasted day for me......but it is a new day tomorrow.

 

A BIG-MEDIA- NOTHING-BURGER........roadtonowhere08. In the end it was exactly what I expected.....NOTHING.

 

AND....speaking about a HUGE knife hurtling toward the earth.........yes poor BA. I am certainly never going to try to catch this knife.

Boeing machinists reject new labor contract extending more than 5-week strike

https://www.cnbc.com/2024/10/24/boeing-machinists-new-labor-contract-strike.html

I see this as the rank and file and old company engineers and employees giving the ABSENTEE management team the finger.

Anyone working at that company over the past 15-20 years has watched the deterioration of what was once an ICONIC world wide company. AND....it was ALL self-inflicted by arrogant, absentee, MANAGEMENT.

 

This is a nice little article....after the market drop today.

Tech Stocks Up in Late Trading as Tesla Surges 9%

https://finance.yahoo.com/news/treasuries-hold-losses-following-global-222948794.html

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

"(Bloomberg) -- Big tech climbed in late hours as Tesla Inc. kicked off the “Magnificent Seven” earnings season with solid results. Bond yields rose on bets the Federal Reserve will take a measured approach on rate cuts.

Following a stock-market selloff on Wednesday, Wall Street pointed to a rebound led by its most-influential group. A $300 billion exchange-traded fund tracking the tech-heavy Nasdaq 100 (QQQ) gained after the close of regular trading. Tesla jumped 9% as Elon Musk’s electric-vehicle giant also indicated it expects another strong quarter of deliveries, saying it anticipates higher volumes for the full year.

“Earnings season is heating up. We believe there is continued upside ahead for stocks, especially now that we are entering a seasonally strong period of the year for markets,” said David Laut at Abound Financial.

After last week’s rally to fresh all-time highs, equities have taken a breather, with investors fretting over a number of near-term risks. The next three weeks capture big tech earnings, October’s payrolls report, and the US election, followed by the Fed meeting.

“Despite the possibility of more volatility as we get deeper into earnings season and close in on the November election, the market’s longer-term outlook remains solid,” said Daniel Skelly at Morgan Stanley’s Wealth Management. “And even though this week’s move is a reminder that even the strongest trends have setbacks, so far, this has been a run-of-the-mill pullback for the major indexes.”

The S&P 500 fell 0.9%. The Nasdaq 100 dropped 1.6%. The Dow Jones Industrial Average slipped 1%. International Business Machines Corp. declined as its revenue underwhelmed. T-Mobile US Inc. raised its forecast for subscribers after a strong quarter.

Treasury 10-year yields rose three basis points to 4.23%. The dollar rose. The yen hit the lowest in almost three months, reviving concern that Japan may intervene. The loonie slid after the Bank of Canada stepped up the pace of easing.

To Jonathan Krinsky at BTIG, equities are finally noticing the moves in bonds and the dollar. That’s a stark contrast to the action in the last couple of weeks, with the bullish narrative being that bonds were re-pricing to where they should be based on the stronger-than-anticipated economy, he noted.

“While that might be fair in the big picture, markets are always concerned with the velocity of the move rather than the overall level, and the fact that stocks didn’t flinch in the face of those moves suggested complacency,” Krinsky said. “Whether this is the start of the pre-election jitters or not, we continue to see downside risk for equities broadly over the coming weeks, with an SPX pullback into the 5,500-5,650 zone a decent probability.”

The price of options that protect against an extended slump in Treasuries has soared to the highest this year amid concerns that losses may deepen.

Meantime, swap prices reflect less than a 100% certainty that the central bank reduces rates at each of its two remaining policy meetings this year. The bond market is also trimming bets on the degree of Fed rate reductions over the next year.

“The price of options to hedge against Treasury losses is soaring,” said Andrew Brenner at NatAlliance Securities. “In the US, it is about the election and potential sweep. That is what is being built into the rate structure, which is giving the vigilantes the green light. It will reverse, but it might take a severe employment number or a surprise in the election.”

“We would caution investors from reading too much into the recent rise in bond yields,” said Tiffany Wilding at Pacific Investment Management Co. “Over the past six major Fed rate-cutting cycles, the change in the 10-year Treasury yield a month after the first cut has not provided a consistent signal about the magnitude of further cuts or whether the Us economy falls into recession.”

In fact, yields rose in the month after the first cut more often than not, she noted.

“Equity market performance in the first month after the Fed starts cutting has been a similarly bad predictor of future economic performance (and market returns),” Wilding said. “Equities, more often than not, have tended to rise in the month after a cutting cycle begins, despite more significant divergence as time goes on.”

Looking at the same starkly different cycles of 1995 and 2007, equity returns (proxied by the rate-sensitive Russell 2000 of small caps) in the month after the first cut were positive in both cycles (at 4.6% and 6.9%, respectively), Wilding said. However, equity market performance was down 4.4% in the year after the 2007 cut, while it was up 21% in the year following the 1995 adjustment.

“Even with the recent move in 10-year Treasury yields, we remain bullish on US large caps,” said Nicholas Colas at DataTrek Research. “History says to discount the idea that rates will blow out because of deficit worries, at least over the near term. Instead, we see higher yields as a sign that economic growth remains robust and corporate earnings growth should continue over the coming quarters.”

“All else equal, the more rate cuts that are removed for next year the less of an outlier reading it becomes for the market to achieve 15% earnings growth,” said Ryan Grabinski at Strategas. “However, additional rates cuts do not change the challenges the S&P faces with achieving that growth rate.”

Sales growth continues to show signs of slowing, and if analysts were suggesting rate cuts would reduce interest expense, that argument is beginning to recede, Grabinski said.

“Nearly 14% EPS margins continue to look more and more difficult to achieve,” he added. “The question is when does something give.”

To Jose Torres at Interactive Brokers, the equity market is extremely fragile considering the headwinds that are lurking right around the corner.

“Earnings expectations are buoyant for next year, which increases the importance of forward guidance rather than past results,” he said. “When considering that valuations are around 22 times next year’s profits, any disappointment in the outlook for the bottom line can significantly impact stock market performance.”"

MY COMMENT

To be talking about a market PULLBACK when we are just seeing a day or two of market losses......is simply STUPID.

AND....election jitters.....I am not seeing or hearing anything out here in the real world. Everyone I know or have any day to day contact with is studiously ignoring and not talking about the election.

But...I do agree with much of what I put in BOLD above.

 

Well said guys.......imagine a world where no one pays attention to the media anymore. Kind of like....if a tree falls in the woods and no one....etc, etc, etc. We are pretty much at that point now. I look at what the media headlines are and most of the time simply SKIP the BS. In my view....there simply is little to no media left. It is ALL opinion, opinion, opinion....all the time by writers that are usually IDIOTS...with ZERO ability to see or analyse an issue or event.

AND.....the election....Yes....it is extremely important. I would actually say it is probably one of the most significant elections in the history of the USA when it comes to the future of the country. BUT the markets are strongly under the influence of a positive BIAS and a bull market right now. So.....I believe stocks will go up regardless the outcome.

BUT.....that does not mean the ECONOMY will be fine. The ECONOMY is very different than the markets.

In the end it will simply all be defined as.......YOU GET WHAT YOU VOTE FOR. Unfortunately for the other 50% of the country....you will "GET IT" too.

 

We have a nice little mixed market today. Much of the positivity is driven by the TSLA earnings.

Tesla stock soars after investors cheer Q3 earnings details

https://finance.yahoo.com/news/tesl...tors-cheer-q3-earnings-details-223811444.html

Now as raised by TireSmoke......will we see companies rewarded for good or great earnings this time around?

I doubt it. We have seen good and even great earnings disrespected for years now. It is ALL about forward guidance and nit picking some little earnings data point.

This trend is probably driven by the short term media environment and the trading mentality. It is very rare to see much long term thinking in any media piece that is put out there as daily content. In addition MOST if not all of the financial content has now been corrupted by politics or social concepts that are pushed daily.

Too bad....but that is just the world we live in.

 

I will put it up in case anyone on here cares......I dont. You have got to be kidding......."WEEKLY"......economic data? Talk about totally meaningless data. TOTALLY irrelevant and worthless for any investor.

Jobless claims fall to lowest level in nearly a month

https://finance.yahoo.com/news/jobless-claims-fall-to-lowest-level-in-nearly-a-month-132711944.html

 

The market today.

Stocks Rise as Earnings Roll In With Tesla Up 17%

https://finance.yahoo.com/news/asian-stocks-fall-yen-steadies-222926704.html

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

"(Bloomberg) -- Stocks rose for the first time this week, with traders parsing a slew of corporate results for clues on the health of the world’s largest economy. Treasuries were little changed after days of losses.

Big tech led gains in equities as Tesla Inc. surged 17% after the carmaker reported surprisingly strong earnings and forecast as much as 30% growth in vehicle sales next year. United Parcel Service Inc. — a barometer of economic activity — jumped 7% after returning to sales and profit growth for the first time in nearly two years. Boeing Co. dropped 2% as factory workers rejected the latest offer aimed at ending a strike.

Markets barely budged after data showed initial jobless claims declines for a second week. Hurricanes that hit large swaths of the South have left many out of a job — but also likely unable to file for benefits right away — causing weekly data to fluctuate. US business activity expanded at a solid pace through most of October on resilient services demand.

“Goldilocks data that’s in-line with expectations (so not too good or too bad) is the best outcome for a continued rebound in stocks and bonds today,” said Tom Essaye at The Sevens Report.

The S&P 500 rose 0.2%. The Nasdaq 100 climbed 0.5%. The Dow Jones Industrial Average fell 0.3%. Treasury 10-year yields declined one basis points to 4.23%.

This week’s equity slide did little to dent the wall of bullish technical signals built up around the S&P 500 Index. The US stock benchmark continues to trade comfortably above its 200-day moving average, clocking 245 straight days above the closely watched long-term line on Wednesday.

In the prior 13 instances when the S&P 500 closed above its 200-day average for at least 242 consecutive days, with the index less than 3% below a record, the gauge proceeded to post a median gain of 7.2% in the next six months, advancing in all but two cases, SentimenTrader’s analysis found.

“Near term, pullbacks/profit-taking should be expected given the uncertainties around the upcoming US presidential election, geopolitical uncertainty, and the earnings parade,” said Craig Johnson at Piper Sandler. “No change to our 2024 year end S&P 500 price objective of 6,100.”"

MY COMMENT

I am too lazy to go back and look.....but....I believe I was positive for the first two days this week. AND....now.....I plan to be positive today and tomorrow. Not that I have any actual control over it.

In fact I plan to be positive in the markets EVERY DAY. I also plan to be negative in the markets EVERY DAY.

Like everything when I was a business owner......I would plan for the best and worst case situation......with BRUTAL CLINICAL HONESTY. I wanted to be prepared for any possible future or outcome.

 

I am glad this writer speaks for......"WALL STREET".

Palantir’s AI-Driven Rally Has Gone Much Too Far for Wall Street

https://finance.yahoo.com/news/palantir-ai-driven-rally-gone-121504900.html

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

"(Bloomberg) -- After a 150% rally that’s added about $60 billion in market value, Wall Street thinks Palantir Technologies Inc. has gotten way ahead of itself.

Shares in the company, which makes data analysis tools for companies and governments, have soared this year, helped by its inclusion in the S&P 500 Index in September and its success in leveraging artificial intelligence. But analysts don’t expect the winning streak to continue, with the average target implying a decline of more than 30% in the next 12 months — the most downside seen for any stock in the US benchmark, according to data compiled by Bloomberg.

Their caution mainly stems from Palantir’s lofty valuation. The shares trade at more than 100 times future earnings, a hefty premium over other AI names, some of which are also considered too pricey by investors. Nvidia Corp. has a multiple of about 37 times forward earnings, while software firm Oracle Corp., which has also been riding AI-related tailwinds, trades at just 26 times.

Palantir shares “need to consolidate stellar gains over the last couple of years and grow into its rich valuation,” Raymond James analysts led by Brian Gesuale wrote in a recent note, downgrading the stock. The rally mean Palantir has “no room for error” when it reports earnings next month, he added.

Palantir shares rose as much as 2.2% in early trading Thursday.

While Palantir is now the third-best performer on the S&P 500 this year, behind Vistra Corp. and Nvidia, analysts are unusually negative for an AI-exposed name. Among 21 firms tracked by Bloomberg, only four recommend buying the stock, while ten have hold ratings and seven rate it a sell. The company’s co-founder and chief executive officer, Alex Karp, has a love-hate relationship with Wall Street, and has said that analysts don’t understand the company.

Still, shares have kept on soaring, helped by the success of Palantir’s AI tools, which have pulled in new customers including CBS Broadcasting, General Mills Inc. and Aramark Services Inc. this year. The company has also continued to win big contracts with government agencies in the US and allied countries, with government revenue making up the majority of overall sales.

Some Palantir investors agree that the stock may see volatility after the huge rally.

“It’s come so fast, there’s going to be bumps along the way,” said Joe Tigay, portfolio manager at Equity Armor Investments LLC. “With such an extremely high valuation, it can fall on bad news,” he said, adding that Palantir potentially has significantly more room to run.

The next test of the stock will come when Palantir reports results in November. Analysts estimate third-quarter revenue of $702 million, up 26% from last year, with earnings growth of 28%. Investors will also be looking for updates on new customers.

“I’m more concerned about their total clients,” said Tigay, adding that growing the client list is more important for Palantir in the short term than the bottom line.

Jim Worden, chief investment officer of Wealth Consulting Group, said that while the stock may be volatile into earnings, that doesn’t have to be bad, and could mean more upside. At the same time, Palantir’s business with government agencies provides an anchor.

Palantir has “this first mover advantage — the government contracts are sticky and there’s a high cost to switch,” said Worden, who also owns the stock. The company has won a range of recent government contracts, including for building out an AI platform for the military.

Still, the big driver for further growth will be winning more corporate customers for its AI platform, released in 2023. Palantir has been trying to bring in more customers by hosting boot camps, which bring together the company’s engineers with potential and current customers to test out its software.

“They’ll have to show tangible incremental progress with their AI boot camps,” said Hilary Frisch, director and senior research analyst at ClearBridge Investments LLC, who also holds the stock. “If they show incremental progress at the margins that would be positive.”

Frisch said that recent gains for Palantir have probably been driven by retail investors, not institutional ones, while its recent addition to the S&P 500 may have caused some volatility. The inclusion means the company will be added to index-tracking funds held by major investors.

After the boost from being added to a major index, companies often have to spend some time growing into their valuation, Frisch said."

MY COMMENT

What a HUGE job....to be the spokesperson for the entire stock market. I dont know how this writer shoulders this HUGE burden.

TODAY....the stock is up by 2.21%.....so far.

I do agree that this is a very young company and will go through the typical growing pains and will be a volatile ride. BUT as a long term investor....NO....I dont care what the short term analysis is focused on or predicting. I will own the stock for as long as I believe there is good long term potential.

I like their management and how they REFUSE to be corporate clones. They follow their own path.....and dont care what others think about that path.

In addition I have come to LOVE all the government contracts and work that this company does. it is a HUGE ANCHOR for their fundamentals. The...."sure thing"....government money gives this company a huge head start every single quarter on their financial fundamentals. It is MONEY IN THE BANK.

I also LOVE how they have been able to pursue and grow their civilian business so far.

I have not owned this company a long time....but it is looking nicely promising. I am slowly adding more shares in all the portfolios that I manage and have some of those accounts are nearly up to a normal size position. (not my personal account)

As usual...thank you Zukodany....for giving me awareness of this company. It is looking good to be a long term holding for me....but is STILL in the "wait and see" phase for me.

 

My other......"wait and see".....stock is CMG. They are also UP today.....0.75%.

It has had a tougher path forward since I started adding shares of this company. BUT.....the various shares that I own with different purchase dates are slowly and steadily SLOGGING forward. Many are still RED and some are now GREEN.

Initially.......soon after I purchased......the stock was punished by a social media campaign against the company based on portion size. The response by management was confused and not effective initially.

Months later they finally made the right response and the issue have now faded. Next they lost their CEO to Starbucks.....another short term hit to the stock. BUT.....the management team at this company is extremely deep and experienced. i see ZERO impact on the business from the loss of the CEO.

As far as I can see the company is still operating under......"Interim CEO".....Scott Boatman. I am expecting and pulling for Boatman to get the position......for real. I have seen nothing to indicate any sort of issue in the company due to the CEO change.

SO....even though I still have some shares that are in the RED with this "training-wheels" holding.....I am very happy with how the stock has slowly but surely moved to the positive.

The stock is NOW......POSITIVE....for:

1 day
5 days
1 month
6 months
YTD
1 year
3 years
5 years.

I am very much looking forward to the upcoming earnings. They will cover much of the time period since the "old" CEO left.

NOTE: I do notice that the "old" CEO is not having much immediate impact at SBUX. That company is going to be a very difficult turn-around candidate. Unfortunately it is a perfect example of a company getting too caught up in social and cultural issues and pissing off half their potential customer base.

i also note that regarding SBUX...there is really nothing to differentiate them from all the competition in the COFFEE business. In fact my PERSONAL VIEW is that their drinks are not as good as many of their competitors.....are expensive..... and their parties and food items generally....SUCK.

I was an early shareholder of SBUX for the first 5-10 years. I lived in the Seattle area and had good awareness of the company and the ESPRESSO BUSINESS for many years before SBUX came into being. I remember very well the downtown Nordstroms store "Christmas Espresso Stand" on the sidewalk outside their flagship store for many, many years before SBUX came into being.

I used to marvel at the business that little stand did and my calculation of how much money it was grossing in a single day and per month.

If Nordstroms had taken hold of the espresso concept and run with it....they would be the ESPRESSO KING today and SBUX would probably not exist. BUT.......that is how the cookie crumbles.....in the business world......what could have been....what should have been....versus.....what is.

 

I have mentioned in the past.....It is AMAZING how many companies came out of the SEATTLE area back in the 1990's era. it was a GOLD MINE for me to be living in that area and driving a long drive to and from my business each day. I had plenty of time to listen to local business radio in the car every day and had good awareness of all the young NW companies.

I took advantage of being an early shareholder in many of them....not just for the short term but for the long term.

BA
NKE
COST
SBUX
AMZN
MSFT
HD (indirectly through Eagle Hardware, an early Seattle big box store)
REI

Other ICONIC NW companies:

Holland America
Paccar
UPS
Weyerhaeuser
Alaska Air
Eddie Bauer
Nordstrom
Zillow
Ben Bridge
Darigold


Obviously every state and region has companies that have grown to become national names. It PAYS OFF for any investor to be aware of what is going on around them in the business world in the area where they live.

Of the companies above......those that I owned for many years in their early days and beyond:

MSFT
COST
SBUX
AMZN
NKE