I do believe that....baring....some sudden deflation.....we are at the end of rate cuts for at least 6-12 months. Which is simply....fine with me.
Ok....not as big of a loss as I expected for me today...but still a good loss. I also lost out to the SP500 by a little bit.....0.15% today. I ended the day with two stocks in the GREEN.....HD and COST. Better than a poke in the eye with a sharp stick. ONWARD AND UPWARD
Here are the numbers. DOW year to date (-1.69%) DOW five days (-1.31%) SP500 year to date (-1.29%) SP500 five days (-1.09%) NASDAQ 100 year to date (-1.32%) NASDAQ 100 five days (-1.19%) NASDAQ year to date (-1.25%) NASDAQ five days (-1.21%) RUSSELL year to date (-2.35%) RUSSELL five days (-2.31%) As for me my YTD at the close today for my entire account is......(-0.50%). Last week I was at.......+2.77%. BUMMER
As we thought back in the last few months of 2024. The holiday shopping season set another record. U.S. consumers spent a lot of time and money shopping online this holiday season, ringing up a record $241.4 billion from Nov. 1 to Dec. 31, 8.7% more than last year, according to Adobe data. Half of that online spending came in three categories: electronics, apparel, and furniture and home goods.
Good news Smokie. the economy is very STRONG. Another indicator that the market action we saw today is just.....SILLY.
A little talk about earnings that will start.......next week.......with the usual big banks. An important tell is coming with fourth quarter earnings reports https://www.briefing.com/the-big-picture (BOLD is my opinion OR what I consider important content) "The fourth quarter reporting period is the reporting period that feels like it never ends. That is because year-end accounting is enmeshed with the quarterly reports. Things will get rolling in the coming week when the big banks start to report their results, but we won't be putting a lid on this particular reporting period until early March. It will be a long, cold stretch between now and then for a crew based in Chicago, yet the stock market has a chance to heat up if the results and, importantly, the guidance impress. If they don't, then it may be a long, cold stretch for a stock market that is also wrestling with rising interest rates. Full, Rich, and Fiery It isn't breaking new ground to suggest the earnings multiple for the market cap-weighted S&P 500 is high on a historical basis. Currently, it sits at 21.6x forward 12-month earnings, down from 22.5 seen in early December but still high relative to the 10-yr average of 18.1, according to FactSet. We have discussed before, however, that the earnings multiple for the equal-weighted S&P 500 is less demanding on an absolute and relative basis. It sits at 16.4x forward twelve-month earnings versus a 10-yr average of 16.5x. On this basis, the market is not overvalued. Sill, someone like Warren Buffett might contend that "the stock market" is overvalued in a big way when looking at the ratio of the Wilshire 5000 market capitalization to nominal GDP. That happens to be known as the "Buffett Indicator" after he observed in a 2001 Forbes Magazine interview that, "If the percentage relationship falls to the 70% or 80% area, buying stocks is likely to work very well for you. If the ratio approaches 200%–as it did in 1999 and a part of 2000–you are playing with fire." Today, it sits at 202%. One's view of the stock market's valuation, then, may just boil down to one's risk tolerance, yet we will say this: the stock market's valuation ranges from full to rich to fiery, partly because a lot of good earnings news has been priced into it -- not just past earnings news but future earnings news that is expected to be even better. That is why there is a lot riding on the fourth quarter reports to start the new year. Companies will be providing a lot of qualitative and quantitative guidance for the first quarter and year ahead that will validate, or invalidate, the market's optimistic outlook. Riding High According to FactSet, the fourth quarter blended earnings growth rate is 11.7%. That is down from 14.5% on September 30, yet it would still mark the highest year-over-year growth rate since the fourth quarter of 2021. But wait, it gets better. The first quarter earnings growth rate is projected to be 11.8% and for calendar year 2025 it is projected to be 14.8%. So, one can see expectations are riding high into 2025. For the fourth quarter, the financial sector is expected to deliver the strongest growth (39.5%) followed by the communication services (20.8%), information technology (13.9%), consumer discretionary (12.8%), and utilities (12.5%) sectors. The remaining sectors are projected to trail the S&P 500 growth rate. Four sectors are expected to have negative year-over-year earnings growth: consumer staples (-1.6%), industrials (-3.7%), materials (-4.6%), and energy (-26.4%). The overall growth rate will be in a state of flux as the results roll in. BlackRock (BLK), BNY Mellon (BK), Citigroup (C), Goldman Sachs (GS), JPMorgan Chase (JPM), and Wells Fargo (WFC) will get that ball rolling on January 15. With a new administration pushing deregulation and more market-friendly tax policy, the qualitative guidance out of the big banks should sound pretty encouraging, although they will have to work to temper concerns about the impact of rising interest rates on loan demand and debt issuance/refinancing. Meanwhile, multinational companies are going to have to temper concerns about the impact of the strengthening dollar while companies in general are going to have to temper concerns about the impact of potential tariffs. The latter won't be easy to do since new tariffs haven't been enacted, and there is no telling how penal they will be or the countries/products at which they will be aimed, although it is fair to say that China is tops on the new administration's tariff list. CY25 earnings estimate have been reined in since September, roughly coinciding with the dollar's ascendance. What It All Means There will be a lot of time to get a fix on the calendar year 2025 earnings line given the extended nature of the fourth quarter earnings reporting period. The cast of that line will happen as companies report their year-end results and analysts fish for information that moves their earnings models. Clearly for a market trading at best with a full valuation, it won't want the earnings growth line reeled in. It would presumably be content to see that line remain fixed and even happier if it is let out some more to catch additional earnings growth. That isn't getting easier with the dollar strengthening and interest rates rising. The upcoming, and extended, fourth quarter reporting period will be an important tell for a stock market that has been priced for nothing but good earnings news." MY COMMENT At least for the companies that I own there has been a number of quarters recently that were either....IGNORED......or.....disrespected. In other quarters......earnings from many if not all of my companies......have been wiped out by other news events. Although some of these company stocks look expensive on paper....there should be pent up room to run. BUT......I see nothing that is going to change the usual earnings result we have been stuck with for years now. That being....good to great earnings reports that are simply ignored or worse punished. This usually happens based on the financial media and the speculators and traders ignoring actual earnings and focusing on forward guidance. Unfortunately I doubt that this pattern that we have been seeing for years now is suddenly going to change. So in the end.....at least for the short term and medium term.....if the markets choose to ignore and punish good to great earnings........do earnings mean much.....at least when positive?
Speaking of the earnings that will start next week. If the markets refuse to reward good to great earnings......or worse.....punish good to great earnings....my view is that will be a very negative sign for year 2025. In my view......if the above happens it will mean we are likely heading to a market wide....broad.....correction. If this happens I would not be surprised to see such a correction last for the first 3-6 months of the year. If this trend of ignoring and punishing good to great earnings continues.....I believe it will have the potential to be a catalyst for a negative market in 2025. So....yes.....this earnings season for the forth quarter and the next round for the first quarter will be very important for investors.
I am not saying that the above is sure to happen....but....considering how the markets have ignored and punished good/great earnings for the past 2-4 years......I would put the odds at 50/50 for such a correction. In other words....borderline probability. Yes....it is entirely possible to have an extended correction in the middle of a bull market. And if the FED freaks out and throttles the economy.....we could end up with a mild and lingering bear market in spite of all the good things that will be happening with government policy and the economy. If I had to put odds on this happening I would say......30-40%. A significant "chance". I say this from a very CLINICAL view of how the markets seem to be working recently. I am not being negative...but....realistic. I still say the "probability" is for a continuation of the bull market. Of course as a long term investor....I am not going to do anything regardless of how things evolve in 2025. BUT...it is important to not get too caught up in all the rainbows and unicorns....the big gains last year. Being a little forewarned for what....."might happen"......will give me the foresight and fortitude to just ignore it all and carry on for the long term as a fully invested all the time investor.
For further information on the above topic. US Stock Market Faces Reality Check in High-Bar Earning Season https://finance.yahoo.com/news/us-stock-market-faces-reality-120000533.html
As a harbinger for big tech earnings....and if the markets will just blow them off.....lets see how the markets react to this earnings report next week. (this is just a partial report, full earnings will come next week) TSMC's fourth-quarter revenue handily beats market forecast on AI demand https://finance.yahoo.com/news/tsmcs-fourth-quarter-revenue-handily-053918754.html
Some good posts and thoughts above. I don’t know. We have benefitted from good earnings for a while now. Even back sometime ago during the Covid era. Yes, the market dropped, but many companies did far better than expected coming out of that, which kept it from being worse and made for a relatively quick recovery. We have been sailing since then. I also think with some of the companies there has been a lot of forward earnings potential priced in. Especially when you look at some of their returns the past couple of years. The AI boom is one of those areas. Stocks in and associated with it were giving guidance based on what they expected to produce and investors began buying in and paying to be part of what was to come. Now we are getting into the time frame where maybe those prices must be justified in going further with paying a premium for results and still some future results as well.
To add a bit more to the above mentioned by WXYZ….I would agree that we probably will not get through this year without a correction. Simply because those events are normal in any year. We skated through last year without it. Of course, I admit I am no expert and anything can happen. And as has been the case in my long term investing life, I don’t need to be an expert to make it either. A good financial plan should take into account the good times and the rough ones. This way, you can ride out and stick with it over many years.
I've been buried in snow and trying out the snow shovel. Made me think about our friend emmett. If I remember correctly, he was from CA. I hope he and his family are well regarding the fires out there.
Emmett problem would be fire….not snow. I’ve got the snow….wait a minute, you took a shot at me then….
I forgot Emmett is in CA. He's a big fan of barbecue so maybe the current situation is ideal for him.
Well, hopefully he is not directly affected. There has been a huge amount of property loss and loss of life in that event.
Though I am thankfully not affected by the fires here in So Cal, it is hard to overstate the damage both fires did. Countless blocks burned to the ground. I would not be surprised if it tops 60-100 billion in damages. The last 10 years or so have been horrific both here and up in Northern California. This state desperately needs to get serious about prescribed burns, foliage gap perimeters, updating power lines in the wind prone areas, making existing homes more fire resistant, and ending further development into rugged terrain. Climate change or not, Mediterranean climates are meant to burn. No way around that.
