The Long Term Investor

WELL.....stick around for a while and let us know about any changes to your investments.

 

HERE is yet another company to join....SBUX, BA, and NKE. Dismal management that is totally out of touch with the customers and culture of the company. This is what happens when you bring in a foreign manager that has NO CLUE. ADD in policies that pissed off a big portion of current and past customers. Etc, etc, etc.

Harley-Davidson cuts revenue forecast on inflation, DEI backlash
Harley-Davidson has faced headwinds with consumers amid inflation, high interest rates and a DEI controversy

https://www.foxbusiness.com/markets/harley-davidson-cuts-revenue-forecast-inflation-dei-backlash

Just...SHUT UP.....and sell motorcycles.

AND....yes fire your current management.

 

I know.......roadtonowhere08. Who could have known?

 

It will be an EPIC EARNINGS WEEK......one for the ages. I cant remember one where we had this number of BIG CAP monster stocks all reporting in a single week. At least we can get them all out of the way at once and move on.

Inflation, Big Tech earnings, and a crucial jobs report: What to know this week

https://finance.yahoo.com/news/infl...-report-what-to-know-this-week-114150725.html

 

And....regarding earnings and the above.....I note that is is becoming rare to see articles with "experts" talking about upcoming earnings......the media seems to have blacked them out....probably because they are virtually always LAUGHABLY WRONG.

HERE is the TRUTH.

MY SUMMARY:

Key Data

For Q3 2024 (37% of S&P 500 companies), 75% of S&P 500 have reported a positive EPS surprise.......59% have reported a positive revenue surprise.

• For Q3 2024, year-over-year earnings growth is 3.6%. This puts us on track to mark the 5th straight quarter of year-over-year earnings growth for the SP500.

• Earnings Guidance........20 S&P 500 companies released negative EPS guidance and 11 S&P 500
companies released positive EPS guidance.

• Forward 12-month P/E ratio for the S&P 500 is 21.7. Above the 5-year average
(19.6) and 10-year average (18.1).


https://advantage.factset.com/hubfs...k/Earnings Insight/EarningsInsight_102524.pdf


This actual article is 39 pages long if you really want to DIG DEEP.

 

OK.....I am now about 1.2 hours into the new week and I have a clean sweep in my nine stocks. ALL GREEN. A good way tos tart the day and the week.

Of course the BIG STORY this week is the FIVE members of the Magnificat Seven that will report earnings this week. In addition for me I will get my earnings for CMG.

EXCITING.....short term action.....for a long term investor. BUT up or down, win or lose, green or red......I will simply enjoy the moment BUT......do nothing.

 

The potential impact on the markets by events in the Middle East did not happen. Fortunately Israel completed their mission with little to no negative consequence to the markets.

 

I agree with this little article. Depending on the commentary and forward guidance from the five BIG CAP TECH companies that report this week.....it could be an EPIC week for the one that DOES NOT report....NVDA. Good or bad forward guidance from the five reporting companies is probably second only to the actual NVDA earnings......as to the short term and medium term for NVDA.

Nvidia Has Lots Riding on This Week Even as Earnings a Month Out

https://finance.yahoo.com/news/nvidia-lots-riding-week-even-094451841.html

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

"(Bloomberg) -- Nvidia Corp. isn’t expected to announce earnings for another month, but results this week from the chipmaker’s biggest customers are about to set the tone for its shares, which are trading near an all-time high on optimism around the AI boom.

Microsoft Corp., Alphabet Inc., Amazon.com Inc. and Meta Platforms Inc. all announce earnings in the coming days. Traders will be paying close attention to their capital spending to gauge demand for Nvidia’s chips, which are prized for artificial intelligence computing. The group accounted for more than 40% of Nvidia’s sales in the second quarter, data compiled by Bloomberg show.

Wall Street expects the four tech giants to unveil a record amount of capital expenditures, but any disappointment around the pace of outlays stands to rattle Nvidia shares, which have almost tripled this year, adding more than $2 trillion in market value. It’s likely to be a pivotal stretch for the entire stock market. Nvidia has been the biggest contributor to the S&P 500 Index’s gains this year, accounting for about a quarter of its 22% advance.

“If these companies come out and broadly say that capex is increasing even at a modest rate, that’s what Nvidia really needs to keep this momentum going,” said Dave Mazza, chief executive officer at Roundhill Investments. “If anything is poor you could see a lot come out of the stock.”

The four tech behemoths are projected to have pumped a combined record $56 billion into capital expenditures in the third quarter, according to the average of analyst estimates compiled by Bloomberg. Much of that spending is going to Nvidia and other makers of AI-related gear, and it’s projected to rise further in the coming quarters.

All signs point to continued strength in AI-related spending. From chip equipment maker ASML Holding NV to Taiwan Semiconductor Manufacturing Co., AI has been a bright spot this earnings season.

That backdrop has helped propel Nvidia shares, along with reassurances from CEO Jensen Huang that production of its new Blackwell chips is on track and in high demand. Nvidia has been the biggest beneficiary of the heavy spending on AI computing equipment. The stock hit a record high last week and its market capitalization is now roughly $3.5 trillion, just shy of Apple Inc., which is still the world’s most valuable company.

To be sure, there has been some concern around all the spending on AI by the Big Tech companies, given investors’ perception that the billions of dollars the firms have invested has generated relatively little in revenue. So that will be another focus as the cohort announces earnings this week.

“You’ve got to walk that fine line of investment,” said Paul Marino, chief revenue officer at Themes ETFs, so that investors see you’re “not getting too far ahead of yourself.”

Nvidia’s revenue is projected to more than double this year to $125.6 billion, according to the average of analyst estimates compiled by Bloomberg. Next year, sales are estimated to increase 44% to $181 billion, in the chipmaker’s fiscal 2026.

Of course, there are other beneficiaries of high AI spending for which this week will be important to watch, including Broadcom Inc., Super Micro Computer Inc. and Dell Technologies Inc."

MY COMMENT

I expect good numbers from the reporting companies for themselves and for NVDA. I dont see how any of these companies can let up on the AI gas pedal. They are all in a HUGE race for AI supremacy. They are also in a HUGE AI race just to keep up with each other.

I believe the earnings this week have the potential to be greater for NVDA than the actual NVDA earnings.

 

There WILL be a pretty good amount of economic data this week in addition to the earnings. I suspect it will mostly be in line with expectations and will mostly be ignored......since the SEXY story of the week will be the BIG CAP earnings.

Cut or pause? 2 critical reports will determine what Fed does in November.

https://finance.yahoo.com/news/cut-...mine-what-fed-does-in-november-090014786.html

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

"The coming week will seal what the Federal Reserve does in November.

Cut rates again or pause? Those appear to be the two options on the table for central bank policymakers at their next meeting on Nov. 6-7, and two reports this week on inflation and the labor market could swing the final calculus.

If inflation numbers released Thursday look firmer than expected and the jobs picture in a Labor Department report on Friday is hotter than expected, "I think they could debate pausing since they cut by 50 basis points before," said Wil Stith, bond portfolio manager for Wilmington Trust.

Strong job gains "could convince the Fed to pause in November," added Jeffrey Roach, chief economist for LPL Financial.

But other Fed watchers said it’s not likely the data due out Thursday and Friday will change the Fed’s path downward.

"The Fed is already on the glide slope of a 25 basis rate cut in November and is unlikely to alter that trajectory, no matter what the data say," said Jamie Cox, managing partner for the Harris Financial Group.

Barring a major surprise in the jobs report, "there’s no reason to think the Fed won’t cut rates another quarter point on Nov. 7," said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.

As of now, many traders agree with that assessment. Investors, as of last Friday, were pricing in a greater than 90% chance of a 25 basis point rate cut when Fed officials meet on Nov. 6-7.

'It won't be easy'

What is a sure bet is that all Fed policymakers are going to be paying close attention to the reports due out this week.

First up is a new reading Thursday from the Fed’s preferred inflation gauge — the Personal Consumption Expenditures (PCE) index.

It is supposed to show that so-called core inflation, which excludes volatile food and energy prices, cooled a tenth of a percent to 2.6% during the month of September from 2.7% in August. The Fed’s goal is to get this measure all the way down to 2% over time.

A separate reading on inflation, known as the Consumer Price Index, was warmer than expected during the month of September. That offered new ammunition for those on the Fed arguing for a gradual pace of rate cuts following the jumbo reduction in September.

The second critical report this week will be a reading on the labor market due out Friday.

That report may not offer officials a clear assessment because it could be buffeted by two major hurricanes that temporarily caused people in the regions affected by the natural disasters to be out of work, as well as an ongoing labor strike at jet maker Boeing (BA).

Economists expect 125,000 jobs will be added for the month of October, which would mark a drop from the stronger-than-expected 254,000 payrolls added in September. The unemployment rate is expected to hold steady at 4.1%.

"Unfortunately, it won’t be easy to interpret the October jobs report," said Fed governor Christopher Waller on Oct. 14.

"This report will most likely show a significant but temporary loss of jobs from the two recent hurricanes and the strike at Boeing," added Waller, who expects the storms could reduce employment growth by more than 100,000.

Anecdotal evidence collected across the Fed’s 12 regional bank districts in October showed a gently cooling but stable job market, according to the latest release of the Fed’s Beige Book.

Layoffs were limited and employment increased slightly, with more than half of the Fed districts reporting slight or modest growth, but that hiring was focused on replacing jobs rather than creating new ones. The pace of wage increases also slowed.

'Gradual' and 'modest'

Waller is among a group of Fed officials who have used speeches in recent weeks to argue for a "gradual" approach to cutting rates as they absorb some new evidence that inflation and the job market remain warm.

Minneapolis Fed president Neel Kashkari has said he is looking at "modest" interest rate reductions in the "coming quarters," while Kansas City Fed president Jeff Schmid noted his preference “would be to avoid outsized moves."

And Dallas Fed president Lorie Logan has said that rates will come down "gradually," citing an increased risk that the job market could worsen and a danger that inflation could still heat up again.

The median estimate of all Fed policymakers in September was for two more 25 basis point rate cuts for the remaining two meetings of the year.

Atlanta Fed president Raphael Bostic is one who has said he is entertaining the idea of holding rates steady at the next meeting.

He told the Wall Street Journal he was "totally comfortable" with holding steady at the Fed's Nov. 6-7 meeting and that he had already penciled in an estimate of just one more rate cut this year.

Despite hints of a pause from hawkish members of the Fed, EY chief economist Gregory Daco cited the guidance of Fed Chair Jay Powell as a reason why he believes the Fed will stick with two more 25 basis point cuts at the remaining two policy meetings this year.

"Fed Chair Powell has stressed that policy gradualism will prevail through year end," Daco said in a note."

MY COMMENT

I completely agree that we are....."probably".....looking at two more rate cuts this week. I would be very surprised to see anything else happen. Not that the FED really matters much anymore since the rate hikes are OVER.

 

I believe that it is .....ABSOLUTELY WRONG.....to allow investment brokerages to become GAMBLING sites. This is taking the TRADING MENTALITY to a new low and to the extreme.

To me......IN MY PERSONAL OPINION..... it shows that the companies that are allowing this "stuff" are not serious and legitimate financial businesses that exist to support and help investors. IN MY PERSONAL OPINION......companies that allow and sell these products are simply speculators that will jump on any bandwagon for any product.....to make money.....whether it is good for their customers or not.

GAMBLING is not and should not be the business model of financial and investment BROKERAGES. If you want to be an online GAMBLING company....ok. BUT if you are an investment brokerage site.....stay away from selling GAMBLING products.

Of course this is all a logical extension of all the other GAMBLING products that are now sold at financial and investment brokerage companies. All the various futures and leveraged products and derivatives, etc, etc, etc, that are now allowed are RIDICULOUS. We have now STRETCHED the definition of a "future" or "commodity" or proper "derivative product" to the extreme.

HERE is what I mean:

"We believe event contracts give people a tool to engage in real-time decision-making, unlocking a new asset class....."

So.....we have now reached the point in the investment world where Robinhood and other companies......(yes legally)...... are selling these sorts of "prediction contracts"........as an......"ASSET CLASS".

Robinhood jumps into election trading, giving users chance to buy Harris or Trump contracts

https://www.cnbc.com/2024/10/28/rob...-chance-to-buy-harris-or-trump-contracts.html

 

This company continues to sink. POOR BA. They are very lucky that they are in a business where there are only two companies in the world....or they would be gone.

Boeing to raise up to $22 billion to shore up finances, stave off downgrade

https://www.cnbc.com/2024/10/28/boe...roughly-19-billion-to-shore-up-finances-.html

What a shame that the BOARD of this company allowed this to happen.....through years of incompetent and self absorbed management. It makes me CRINGE to even use the word "management" in the last sentence.

 

OK....looks like the early gains are still hanging on. We are about to hit the mid morning or early lunch time in the markets when there is often a little dip or softness. So lets see how it all goes and if the markets can power through it all to the close hours from now.

I can see some chance of a late day FADE today and tomorrow as short term investors leave the markets heading into the BIG CAP earnings.

 

With NVDA, COST and MSFT being RED today I ended the day with a small loss. I also got beat by the SP500 by 0.37%.

On to earnings day tomorrow.

 

Here is a fun and interesting story about a big ART theft from a museum by the USUAL MORONS.....that have no idea you can not sell well known stolen art. In end they are....of course caught....but the paintings are burned to destroy the evidence. This is why GREAT and VALUABLE art is rare and goes up in value......over time it gets scarcer and scarcer due to disaster, fire, theft, and other forms of destruction.

Many of the paintings that we own are at least 100 to 125 years old. For any of them it is just DUMB LUCK that they made it to that age without being somehow destroyed, thrown in the trash, burned up in a fire, etc, etc, etc.

A long but interesting article and story.

The art of stealing
The tragic fate of the masterpieces stolen from Rotterdam

https://www.nrc.nl/kunsthal-en/

"Picasso, Gauguin, Matisse, Monet, Meijer de Haan and Freud. On television they are talking about a loot worth hundreds of millions of euros. The amount is not important to her. The pictures are evidence against her son and destroying the evidence seems like the only way she can help him.

The artworks go up like tindersticks."

 

I like this little article. AND yes......the economy is NOT the stock markets.

Rose Colored Glasses?

https://alhambrapartners.com/weekly-market-pulse-rose-colored-glasses/?src=news

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

"Are investors too optimistic? It seems strange to ask that question at a time when so many Americans believe the economy is performing poorly and consumer sentiment is at levels that, in the past, were reserved for much worse conditions than we have today. But stocks are at all-time highs – and near all-time high valuations – for a reason and it isn’t because things are awful. The year-over-year change in real GDP over the last four quarters has averaged 3.1% and since the 3rd quarter of 2021, it has averaged 3.2%. Yes, some portion of that was coming off the low base of COVID but it is four years of solid growth, well above the 2.4% we averaged during the 2010-2020 period. Has that high growth positively skewed investors’ perception of the future? The valuation of the S&P 500, currently near dot com era levels, certainly points in that direction.

The pessimism we see in the consumer sentiment polls is not driven by growth but rather inflation. Over the last four quarters, while GDP was growing at a 3.1% pace, prices were rising at 3.2% which isn’t great on the inflation side, but with unemployment low and real wages rising, it’s pretty good overall. But during the longer period since the third quarter of 2021, while GDP grew at a 3.2% pace, inflation averaged 5.4% per year. The good growth over the entire period is overshadowed, in many people’s minds, by the bad inflation of 2021 and 2022. The misery index (the inflation rate over the last year + the unemployment rate) has been improving steadily since peaking in the summer of 2022 at 12.6. Today it is at 6.5 and falling. Over the last four quarters it has averaged 7.1, which is better than the average of every decade since 1970. If that continues, the GDP growth is likely to continue as well and consumer sentiment should improve.

Misery Index

Click Here for a FREE Portfolio Review →
1960s 7.1
1970s 13.3
1980s 12.8
1990s 8.8
2000s 8.1
2010s 8.0
2020s 9.3
Last 4 Quarters 7.1


Today’s optimism, reflected in high stock market valuations, is not driven by past growth or concerns about inflation but rather by expectations that AI will dramatically improve productivity. The market – investors – believe that the current productivity growth rate (2.4% over the last 5 quarters vs 1.3% during the 2010s) will be maintained and so, therefore, will the recent GDP growth rate. The most optimistic out there suggest that AI could drive productivity gains well beyond what we’ve seen so far. In their view, today’s GDP growth rate is a floor, not a ceiling.



There have been several innovative periods of high productivity growth in the past that drove economic growth higher. The 2000s are remembered as a time of weak GDP growth (1.8% average over the decade) but the average growth rate for the decade was brought down by the 2008 crisis. The real surge in productivity from the dot com boom came from 1998 – 2005 (and maybe a little earlier) when growth averaged 3.2% and productivity rose at a 3.1% rate. We also have the period in the 1960s from about 1961 to 1968 – another period of rapid technological development – when productivity grew 3.4%/year and real GDP growth surged 5.2%/year. If the widespread adoption of AI has a similar impact, today’s stock market optimism may well be justified.

AI has likely played some role in the recent growth spurt because of the investments being made today in things like data centers and electricity generation to accommodate the future needs of an AI-driven economy. Of course, that future AI economy hasn’t arrived yet and that’s why so many people, myself included, look at today’s valuations and think AI better prove out or the downside in stocks is going to be large. I also look at continuing budget deficits running at over 6% of GDP and wonder how much of this growth is sustainable if the deficits aren’t. Those deficits have, no doubt, raised today’s growth rate and corporate earnings. The question that is yet to be answered is whether the deficits have produced investments that will pay off in higher growth or whether today’s growth has just been borrowed – pun very much intended – from tomorrow. I am always skeptical of government-led investment so I have my doubts, but I also don’t doubt that the next President, whoever it is, will keep spending until the bond market says no mas. Large deficits are sustainable until they aren’t and I have no idea when that day will arrive.

Stocks – particularly large cap stocks – are expensive compared to almost all of the known history. But are they too expensive? We’re going to start seeing firms update their capital market assumptions for 2025 and beyond soon and you should expect everyone to project low returns for the S&P 500 over the next 10 years. As JP Morgan put it in their recent report:

Starting at a higher (valuation) level lowers return expectations, all else equal.

I would suggest that the most important part of that sentence is at the end, “all else equal”. High valuations today do not assure that future returns will be sub-par. It merely means that investors today are optimistic about the future (which, given the current election rhetoric, may be the biggest instance of cognitive dissonance in all of history). If investors are too optimistic, future returns will likely be low compared to long-term averages. If not, then all else isn’t equal. Is today’s optimism unwarranted? Maybe. Maybe not. But when you see those projections of below average future returns, that is the implied assumption. While it is hard to imagine, it could be that today’s optimism is not only warranted but understated. In 2016, almost all the 10-year outlooks called for S&P 500 returns of 6-7%. JP Morgan, for instance, pegged future returns at 6.5%. There were plenty of very smart people projecting even lower returns. All of those expectations were wrong and not by a little. The actual return since then has been 14.6% per year. As William Goldman, Oscar winning screenwriter of All The President’s Men and Butch Cassidy and the Sundance Kid, once said, “nobody knows nothin”.

JP Morgan today pegs equity returns at 6.7%/year over the next 10 to 15 years, a number remarkably similar to their projection in 2015. If you wonder why that is, consider that the long-term growth rate of earnings is, you guessed it, 6.5%. JP Morgan rarely ventures very far out on the arboreal appendage. Goldman Sachs also released their projection for the next 10 years and they are even more pessimistic, looking for a nominal return of 3%/year. While both firms mention AI as providing a boost to growth over the next decade, neither thinks it is a large change with JP Morgan expecting AI to raise growth by just 0.2%/year. If that turns out to be true, the amounts being spent on AI today will look pretty foolish.

I don’t know what the ultimate impact of AI will be and neither does anyone else. It could be a paradigm shift for the ages or, as JP Morgan reckons, a modest boost to growth. How should we invest in a situation with such a wide range of potential outcomes? We diversify, we spread our bets across multiple asset classes and wait for trends to emerge. Right now, with interest rates and the dollar stable and providing little tactical guidance, investors should stick close to their long-term strategic allocation. Don’t get caught up in the AI hype and don’t succumb to the negativity of the political campaigns. Both are likely exaggerated."

MY COMMENT

NO.....smart people dont make dumb predictions or say dumb things. The REALITY....many or even most of the so called experts are simply DUMB. It is ALL guess work.....they dont know anything about the future and neither does anyone else.

The best way to play the future is to do what has worked for you in the past over the LONG TERM. Stick with RATIONAL and REALISTIC proven stocks and funds.

 

The Ten Year Treasury yield is on a tear today. BUT I say.....WHO CARES. This is simply the usual bond vigilantes and short term trading driving the yields higher. I blame this for the RED open today.

I say....there is NO WAY these higher yields can last long. As the FED cuts rates the yields will not be able to hold on against the pressure of FED cuts.

In hindsight all this bond yield "stuff" will be shown to be nothing more than SHORT TERM NOISE. IGNORE IT ALL....that is my plan. It is an irritant to long term investors in the short term....especially the media coverage....but,....I will IGNORE IT ALL.

 

The RED open is now gone and all the big averages are now green. The red open simply could not withstand the UPWARD BIAS that is currently inherent in the markets.

AND....have no fear....we are heading to a year and a half of RATE CUTS.

 

Here is one of the big economic reports that was being semi-fear-mongered for this week.

Job openings fall to lowest level since January 2021

https://finance.yahoo.com/news/job-openings-fall-to-lowest-level-since-january-2021-141507569.html

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

"Job openings fell more than expected in September. The data comes as investors closely watch for signs of further cooling in the labor market ahead of the Federal Reserve's next interest rate decision on Nov. 7.

New data from the Bureau of Labor Statistics released Wednesday showed there were 7.44 million jobs open at the end of September, a decrease from the 7.86 million seen in August and the lowest level of job openings since January 2021.

August's figure was revised lower from the 8.04 million open jobs initially reported. Economists surveyed by Bloomberg had expected the report to show 8 million openings in September.

Also in Tuesday's data, the quits rate, a sign of confidence among workers, fell to 1.9% in September down from the revised 2% seen in August.

Meanwhile, the Job Openings and Labor Turnover Survey (JOLTS) showed 5.55 million hires were made during the month, up from 5..43 million seen in August. The hiring rate hit rose slightly to 3.5% in September, up from 3.4% in August.

The data kicked off a busy week of labor market data ahead of the Fed's November meeting. On Friday the October jobs report is slated for release. Wall Street estimates the US economy added 110,000 jobs in October, down significantly from the 243,00 seen in September, per Bloomberg data. Economists expect recent weather disruptions and a strike from Boeing (BA) workers to limit overall payroll gains seen in the month.

As of Tuesday, markets were pricing in a 96% chance the Federal Reserve cuts interest rates by 25 basis points on Nov. 7, per the CME FedWatch Tool."

MY COMMENT

AS usual we see the constant REVISION of this data.....it is corrupt and not dependable. BUT....nothing above will slow or stop the coming RATE CUTS.