The Long Term Investor

A big fat.....tempest in a teapot....yesterday in the markets. or if you prefer....a good old fashioned PANIC.....mostly as usual....on the part of the so called "professionals" with the media egging it on.

Weekly Market Pulse: Whiplash

https://alhambrapartners.com/weekly-market-pulse-whiplash/?src=news

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

"What a difference a day makes! After a two-week correction of nearly 5%, the S&P 500 spent the first part of last week rallying in anticipation of a friendly Fed meeting. That Fed meeting Wednesday produced the expected, namely that a rate cut in September was likely. That pushed the S&P 500 up over 2% from the Fed meeting to the high the following day. Small and midcap stocks moved in the same general direction as the large caps but with wider swings. Then…everything went down in a straight line. The S&P 500 fell 4% from Thursday’s high to the close on Friday; the Russell 2000 index of small stocks fell 8.6%. The totals weren’t that bad for the full week with the S&P down 2.1% and the Russell down 6.8%. Bonds also had a wild week with the 10-year Treasury yield down 41 basis points and the 2-year Treasury down 50 basis points on the week. Credit spreads also widened but only about 25 basis points and are still below the highs of the year and way below the levels of last year.

So, what changed between Thursday morning and Friday afternoon? The explanation offered by most commentators is that all of this was due to fears of recession, produced by three economic reports released after the FOMC meeting:

1. Initial jobless claims – Claims rose 14,000 to 249,000 from last week’s 235,000.
2. ISM Manufacturing PMI – The index fell to 46.8 from last month’s 48.5. Employment and new orders also fell while prices rose slightly.
3. The employment report – The economy added just 114,000 jobs last month, down from 216k in May and 179k last month.

Seen in isolation, it is obvious that these reports all seem to point to a slowing economy, but in context they don’t look all that special.

1. Jobless claims were 245,000 just two weeks ago and didn’t induce any kind of reaction in the market. Claims were also higher last summer: 261k in June of ’23 and 258k in August. They have been rising all year, starting the year just under 200k, but other than the COVID recession, we haven’t had a recession start with claims under 300k since 1973 when the civilian labor force totaled around 90 million vs over 168 million today.
2. The ISM manufacturing PMI has been below 50 (denoting contraction) for 20 of the last 21 months. The manufacturing sector is still trying to recover from the COVID supply chain issues. Wholesalers and retailers both overstocked during COVID and they have been working down inventories for the last two years (which is why this indicator has been negative for 20 of the last 21 months). Inventory to sales ratios have come down but apparently not enough to set off a restocking cycle just yet. I would also point out that this indicator, like the part of the economy it covers, is very volatile. It often prints below 50 during an economic cycle without a recession.
3. The number of jobs added on a monthly basis is basically just a guess and I don’t know why so many investors take it so seriously. The numbers will be revised several times before the final reading that will come with the annual benchmark revisions in January next year. The monthly number is only accurate to + or – 100,000 jobs. So the actual number could ultimately be over 200,000 or near zero. Furthermore, this wasn’t even the worst month of the year. That was April’s 108k although to be fair that was initially reported as +175k. See how those revisions work? The unemployment rate did rise to 4.3%, up from the cycle low of 3.5% last July. However, the unemployment rate rose primarily because, according to the Household Survey, the work force grew by 420,000 last month and the number of employed only rose 67,000. But that 420k number is way above the average since 2022 of 194k/month. Longer term, the average is even lower, about 100k per month dating back to the 1990s. So the unemployment rate may be rising but it’s probably being overstated.

So if it wasn’t the economic reports, what was it? I don’t really know but large moves in such a short period of time are often associated with unwinding of leveraged positions. One potential culprit in last week’s selloff – and maybe the selloff in the large caps and tech stocks since July 10th – is the Yen carry trade. Hedge funds and other leveraged players have been borrowing in a low yielding, depreciating Yen and buying other, higher yielding assets. That includes places like Mexico and Brazil but it also includes trades in the US stock and bond markets. Expectations for a rate hike from the Bank of Japan have been rising and were vindicated when they did exactly that on Wednesday last week. It wasn’t much of a move – about 0.15% – but it is the direction that matters. With the Fed raising hopes for a cut in September, the spread between the two yields is narrowing. The biggest impact has been in the forex markets where the Yen is up over 10% since July 10th with nearly half of that coming from Wednesday to Friday last week.

A leveraged fund that has been short Yen and long EM currencies started to get hurt in late May when the Mexican Peso plunged after the election there. The Brazilian Real has been falling since the beginning of the year but accelerated to near the 2021 low in July. Now with the BOJ in a rate hiking cycle and the Fed about to embark on a rate cutting cycle, the Yen is rising rapidly, hurting the other side of the trade. This may have just been the culmination of several bad months for these funds.

Market sentiment has turned negative very quickly with the VIX (volatility index) rising to near 30 Friday before closing at 23 and change. A VIX over 30 has been a reliable buy signal in the past, although higher readings are sometimes needed for full blown bear markets. But getting there so quickly in such a mild correction would seem to indicate some extreme nervousness on the part of investors. Put/Call ratios also rose last week indicating an urge to hedge portfolios and the high VIX showing a willingness to pay up for it.

I don’t think the economic outlook changed all that much last week although I will admit that I’m more nervous about the economy now than I have been during this entire COVID recovery. I am not a big believer in the power of the Fed but I think they should have started cutting rates two meetings ago. That’s when the Taylor rule indicated the need for a cut and it hasn’t changed. But the market is providing what the Fed hasn’t; with the 10-year rate coming down so have mortgage rates with the average 30-year hitting 6.375% last week and the 15-year falling to 5.89%. Those are the lowest rates since the spring of last year and well down from the 7.5% the 30-year hit last fall. Mortgage rates are still elevated relative to the 10-year Treasury as well so they could continue to fall. I can’t imagine that won’t have a positive impact on housing market activity.

The biggest impact in the economy from the Fed’s rate hikes has been on housing and associated sectors. One of the reasons durable goods sales and orders have been stagnant is because of the stasis in the housing market. Homeowners with low mortgage rates were unwilling to sell and buyers were unwilling to buy with rates this high. But that was starting to ease even before rates started falling in earnest. Existing home inventory has been rising and new home inventory is at a 14-year high. The probability of moving is also rising and nearly back to the pre-COVID level. Regardless of mortgage rates, people’s lives change and sometimes that involves moving (change of job, retirement, etc.).

From the New York Fed’s Survey of consumer expectations:


If the economy has been slowing because of higher rates, then lower rates ought to cure it. Economies are, to some degree, self-healing and while the Fed may not be ready to cut rates, the market has already taken care of that to a large degree. As I’ve said many times, the Fed is a follower of the market, not a leader. Can the housing market – and commercial real estate – turn around fast enough to keep the economy out of recession? I don’t know but with current existing home sales annualizing under 4 million and the average since 2000 at 5.3 million there is a lot of room for improvement."

MY COMMENT

In spite of the last few weeks and yesterday. There is really little going on. Mostly we have some extremely suspect economic data....that is about as expected. We have the collapse of the CARRY-TRADE......involving the usual suspects.....the Hedge funds. And.....we have the FED waiting a month and a half to do a rate cut. AND....yes.....we have the PANIC on the part of the "professionals as usual along with the MEDIA pushing the ridiculous idea that we are heading to a recession.

A perfect storm of.....IDIOCY....pushing the markets down.

 

Another little article that I like.

Breathe … and Put Recent Swings in Proper Perspective
Bear markets start with a whimper, not a bang.

https://www.fisherinvestments.com/e...e-and-put-recent-swings-in-proper-perspective

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

"Shuddering sentiment sent stocks reeling again on Monday, bringing the drop since July 16’s high to nearly -8% on the S&P 500 as we type—a bit less of a decline for world stocks. Both are within striking distance of the -10% mark that would officially make this move a “correction.”

However, that is a distinction without much meaning, in our view. The key is the same: Stay calm. Reacting to volatility, especially such sharp swings, is usually a mistake—a potentially costly one at that. We see little here to suggest this is a bear market in the offing, and corrections come and go so swiftly that timing them is a folly.

We often counsel readers that volatility erupts without warning—often cutting both ways—because sentiment can shift on a dime. Markets are living this now, with moods on the US economy and central bank moves shifting wildly as stocks flipped late last week from a big up day Wednesday to sizable drops Thursday, Friday and Monday. Such swings are uncomfortable, maybe even unsettling. But when they strike, it is vital to step back, take a deep breath, and survey whether anything really, fundamentally changed.

We are always wary of ascribing daily moves to any one cause. Sometimes there is an obvious culprit. And sometimes headlines just find a post-hoc reason to justify whatever shook out from the millions of trades moving markets daily. But in general, headlines pinned the sharp slide first on the Bank of Japan’s (BoJ’s) rate hike, then on Friday’s US jobs report and the Fed’s decision not to cut rates Wednesday. Oddly, headlines Wednesday called the Fed’s decision a big positive, cheering head Jerome Powell’s strong hints of a September rate cut. Many credited it for stocks’ nice Wednesday, even though the S&P 500’s rise that day preceded his comments. But with hiring slowing and the unemployment rate up—and Thursday’s manufacturing purchasing managers’ indexes negative again—US economic sentiment shifted rapidly to worries the Fed is behind the eight ball.

Sentiment toward Japan’s move shifted similarly fast. On Wednesday, the day of the rate hike, headlines were pretty sanguine about it, noting Japanese stocks’ big rise that day and theorizing that the strengthening yen would help ease Japan’s economic headwinds. But Japanese stocks have tumbled, falling more than -10% on Monday alone and breaching -20% (in yen) cumulatively since the MSCI Japan’s July 11 peak.[ii]

Headlines pinned it on markets rapidly adjusting to a stronger currency, arguing this is a big headwind for exporters, tourism-reliant companies and property firms. When stocks outside Japan fell, too, analysts also blamed the yen. Japanese investors were yanking overseas investments, they claimed, to reduce their currency risk. And international investors were allegedly unwinding the carry trade—where they borrow in yen to invest outside Japan, profiting off currency movement as well as market returns—sparking a vicious cycle of forced selling as currency moves and market volatility fueled each other.

This is probably happening, to a degree. But we wouldn’t overstate the long-term effect. For one, while the yen has strengthened this week, it still trades at levels seen in January—which everyone bemoaned as 40-year lows. Little has actually shifted, if you zoom out more than myopic headlines do. Carry trades and overseas investments placed two weeks ago might be out of the money and sparking panic, but longer-term ones aren’t in anywhere near as much jeopardy, so we question how much forced selling is really in the offing. Then, too, money flows to the highest-yielding asset. Even with the rate moves, that isn’t Japan—its short- and long-term interest rates remain well behind the US, UK and eurozone nations. So to us, this looks primarily like a sharp sentiment reset.

As for claims US stocks are rapidly pricing in a mounting risk of recession as the labor market deteriorates and the Fed delays, we are sensing a bit of a chicken/egg thing. That is: Would headlines be in this much of a panic over one jobs report if stocks weren’t already taking a hit? We can see a strong case for the volatility coloring everyone’s view, especially when we dig into the report.

See for yourself: Nonfarm payrolls rose by 114,000 in July, slowing from June’s 179,000 and missing expectations for 175,000.[iii] More troubling, according to most commentary, was the unemployment rate’s uptick from 4.1% to 4.3%.[iv] With more people out of work, the story went, it is clear higher interest rates are taking a toll and the Fed is moving too slowly. Given monetary policy moves hit the real economy at a lag, some coverage claimed it may already be too late and recession inevitable.

But the unemployment rate is open to interpretation. It can rise for bad reasons, yes, if it is up because more people are out of work. But that isn’t what happened in July. The Household Survey, whose data underpin the unemployment rate, showed a 67,000-person increase in total employment.[v] The unemployment rate rose because the civilian labor force rose even more, by 420,000 people.[vi] That outstripped the 206,000-person growth in the general civilian population, inching the labor force participation rate back up to 62.7% from June’s 62.6%.[vii] So it looks to us like a strong economy continued attracting more workers.

At the same time, while the Fed focuses on the labor market as part of its dual mandate, jobs data aren’t predictive. Businesses’ hiring (and firing) decisions result from the economic trends in the months preceding them. They hire when they have reached the limit of boosting output with their current headcount and have to add in order to keep up with demand. They shed workers, usually very reluctantly, when trouble is deep enough and entrenched enough that they have to reduce overhead. Hence, labor market moves are a late-lagging economic indicator. They confirm the trends other data (e.g., GDP, retail sales, industrial production, etc.) showed in the months preceding them. Stocks, meanwhile, pre-price expected events 3 – 30 months out, including economic developments. So whatever July’s jobs report shows, stocks already lived through and priced it.

Therefore, setting aside the jobs report: Have economic drivers changed meaningfully in recent weeks? We don’t think so. As we covered at the time, GDP accelerated in Q2. While base effects flattered consumer spending, business investment’s acceleration shows a more offensive Corporate America—not companies withering in the face of high rates. Durable goods’ orders’ -6.7% m/m drop in June doesn’t contradict this, as it stems primarily from the always-volatile commercial aircraft industry. The more meaningful metric, nondefense capital goods orders excluding aircraft, rose 0.9%.[viii] The contractionary manufacturing PMIs aren’t great but also aren’t new. The Institute for Supply Management’s has been in contraction since April … and for much of the past two and a half years. If that didn’t cause a recession before, we aren’t sure why it would suddenly do so now. Especially when services, S&P Global’s and ISM’s July PMIs, are growing at a very nice clip. Manufacturing may get the headlines and be more relatable, but services is nearly three-fourths of GDP.[ix]

We aren’t dismissing the risk of the Fed being too slow on the uptake. Historically, that is typical. Rate cut cycles are usually a delayed response to a deteriorating economy. So from our standpoint, rate cut hopes were always a matter of be careful what you wish for. But for now at least, we don’t see credible evidence this is the case.

To us, this all just looks like a big sentiment shakeout: sharp, short-term and stunning, classic correction traits. It is resetting folks’ expectations lower in a hurry. This is the opposite of how bear markets usually begin. Bull markets die with a whimper, not a bang. Bear markets lull investors to sleep with long, rolling tops, packing big volatility into the late stages. We are talking about an -8% slide from a high in 14 trading days.[x] That is a bang out of the gate. It isn’t escaping many folks’ notice, based on professional reaction and newsflow. Such moves usually reverse fast.

In the moment, it is jarring. But there is a silver lining: Sudden negativity helps reset sentiment and expectations, rebuilding some of the bull market’s wall of worry. It is a normal, even healthy development in a bull market.

Trying to time the start and end of such swift sentiment swings is a folly. Before you react to the swings you see, take a breath. Step away. Take the time to remember investing decisions should always be forward-looking, planful, business decisions. In other words, remember what you already know: Selling on fear is not a strategy."

MY COMMENT

EXACTLY. Not much has changed and there is really nothing DRAMATIC happening right now. We are seeing a huge overreaction to minimal data and "stuff".

BUT that does not mean the markets will simply head right back UP. NO.....with the Hedge funds and other speed traders in panic mode....we are going to see big volatility for some time to come.

 

Well we open in the GREEN today as most would expect after a sell-off like yesterday. I am sure there was much buying pressure at the open. BUT....I would not be surprised to see the markets struggle to maintain the gains today once the initial buying ends.

 

I have ZERO interest in the manipulations and short term thinking of the Hedge Funds. If you are interested here you go.

Inside the unwind of Japan's 'carry trade'

https://finance.yahoo.com/news/inside-unwind-japans-carry-trade-133622247.html

Unwind of $500 billion yen-funded carry trade only 50% done, UBS says

https://finance.yahoo.com/news/unwind-500-billion-yen-funded-133940818.html

MY COMMENT

I put ALL the blame for yesterday of the "professionals"....the Hedge Funds......and....the AI speed traders. The MEDIA was just incidentally piling on for clicks.

Yes there was a mini-panic....but it was not on the part of the little retail investors or the 401K holders. As usual all of us get jerked around by the people that are supposed to be the most experienced and the most clinical and educated about the markets. BS.....these people are simply short term speculators....NOT...."professionals. In the end they are usually shown to be nothing more than......empty suits. It is ALWAYS them running around with their hair on fire when one of their trading schemes ( the carry-trade) collapses.

 

Not much more for me to say today. We are currently in a short term market that is totally disconnected from FUNDAMENTALS and BUSINESS FACTORS. I will continue to skim for content that I think is important.....but....as to the short term....the next 2-4 weeks.....all anyone can do is just ride along and watch the CIRCUS.

 

Well right now I have seven of nine stocks in the GREEN. COST is doing very nicely today. CMG is having a big cay...up by 4.3%....I think they have FINALLY properly responded to the social media portion size campaign and have broken free of that little anchor dragging on the stock. PLTR is riding a HUGE EARNINGS BEAT and is up by about 10% right now.

My three stocks that are RED.....GOOGL, and AAPL.

 

AMAZING.....I will say it again....AMAZING.

Just about ALL the headlines and articles about the impending recession have now disappeared.

I just went through CNBC and YAHOO FINANCE....and not a single headline story on this issue. In fact on CNBC...not a single article at all.

I also scrolled way down through at least 50-100 headlines on Yahoo finance....and....NOT A SINGLE article on "recession". That story-line yesterday was simply.....BS.

A one day......panic driving story....... that was put out there in the media with NO BASIS in fact. Pure fear mongering.

In fact......just about everything I am seeing today is pointing strongly to the CARRY-TRADE......compliments of our heroic Hedge Funds........as the cause for yesterday.

 

STRONG markets today. We will see if this can hold through the final hour later in the day.

At this point I have improved to nine of nine stock in the GREEN.

I note that GOOGL is bouncing back and forth between green and red.....but at this moment.....is green.

 

AMAZING......ALL...of the doom and gloom stories that dominated the news yesterday are nowhere to be found today. They have simply disappeared as through they never existed.

The FED must do an emergency rate cut......NEVER MIND.

We are in a recession......NEVER MIND.

It is a correction.......NEVER MIND.

Markets are in panic.....NEVER MIND.

THIS is a huge problem with the Financial MEDIA.

As investors we are entitled to somewhat of a rational and clinical media.....ESPECIALLY....the FINANCIAL MEDIA. I dont have high expectations for journalism these days.....but....we should expect......and receive...... more from the financial media.

There should be some basic level of professionalism from this branch of the media that is......supposed.....to have a level of expertise in business, investing, finance, and money. Screw the general media....if they want to be sensationalist.....so what. No one trusts or cares about them anymore, anyway.

BUT.....the FINANCIAL MEDIA....."should" operate with some level of professionalism considering the responsibility inherent in what they are doing....providing information that is critical to investors and the public at large. They should not be SCREWING with peoples retirement and financial wealth........by sensationalizing stories and trolling for clicks.

YES....I know it is not going to happen....but I can dream.

 

BIG....DUH.

Wall Street economists say investor fears about recession are overblown

https://finance.yahoo.com/news/wall...-about-recession-are-overblown-190225299.html

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

"The market's response to the weak July jobs report has fueled concerns the Federal Reserve made a mistake holding rates at a 23-year high at their most recent meeting.

And now, talk in some corners of the investment world has shifted from the timing of rate cuts to the timing of a recession hitting the US economy.

But several economists and equity strategists believe that while the risks of recession have risen amid weakening economic data, the last few days of market action have been an overreaction.

In an interview on Tuesday, Apollo Global Management chief economist Torsten Sløk told Yahoo Finance the market is "pricing in too many cuts." (Disclosure: Yahoo Finance is owned by Apollo Global Management.)

Investors quickly moved to price in more than four interest rate cuts in 2024 after Friday's jobs report, up from the three seen after the Fed's meeting on July 31. Some market commentators have even suggested the Fed should cut before its September meeting.


Sløk added that, given the volatile swings seen in market bets on Fed cuts over the past several trading sessions, investors should be taking what the market is projecting with a "grain of salt."

Sløk pointed to data showing consumers still spending on activities like flights, dining out, and hotel stays to make the case that the consumer is showing few signs of pulling back at this point.

"Across the board, there is just not much evidence of the economy either being in a recession or being on its road to entering a recession," Sløk said.

A different composition

The most troubling part of July's jobs report was a rise in the unemployment rate to 4.3%, which triggered a closely followed recession indicator. The report also showed monthly job gains slowed to their second-lowest level since 2020.

But to Deutsche Bank senior US economist Brett Ryan, the report still tells the same story of a labor market "being propped up by lack of layoffs as opposed to strong hiring."

"The composition of the rise in unemployment is sort of different than what you would normally see at the beginning of recession," Ryan said.

The unemployment rate has largely risen due to an increase in the labor supply — people either entering the labor force for the first time or just coming back to work — rather than a rise in permanent layoffs, Ryan argued.

"You don't want to overreact to one data point," Ryan said. "So without question, the risks have risen, leaning toward the Fed starting off with a more aggressive pace of rate cuts, but we're not there yet."

For instance, weekly jobless claims recently hit their highest weekly mark in nearly a year. But Ryan points out that if you remove Texas, where flooding from Hurricane Beryl displaced workers, the four-week average of initial jobless claims is actually dropping.

Bank of America US economist Michael Gapen took a similar stance, writing in a client note that without widespread layoffs, the case for a large emergency rate cut due to labor market dynamics is weaker than the market is pricing.

"A rate cut in September is now a virtual lock, but we do not think the economy needs aggressive, recession-sized cuts," Gapen wrote in a note to clients on Monday.


'Risk assets can recover'

Some strategists also see the market's sharp reaction to this data as an opportunity to get more aggressive in the stock market.

The BlackRock Investment Institute, led by Jean Boivin, wrote in a note to clients on Monday it thinks recession fears are "overblown."

"We think risk assets can recover as recession fears ease and the rapid unwinding of carry trades stabilizes," BlackRock's team wrote. "We keep our overweight to US equities, driven by the AI mega force, and see the selloff presenting buying opportunities."

Seema Shah, chief global strategist at Principal Asset Management, agrees.

Shah pointed to Tuesday's market rebound in telling Yahoo Finance, "What you're seeing now is a little bit of a reality check that maybe the economy concerns are not as bad as had been expected."

Shah added that the key for investors in this market moment remains whether the macro story has fully changed. For now, she thinks it's more of the same.

"We are expecting the US economy to slow, but we're not expecting recession," Shah said.

"We're expecting the Fed to cut rates, but again, not to have to cut rates aggressively. So, from that perspective actually, the backdrop hasn't really changed for us.""

MY COMMENT

I am seeing and "feeling".....nothing....in terms of a recession. If we get one in the next six months I will consider it HIGHLY unusual.

AND.....I dont care what the FED does....they are simply a bad joke on all of us.

 

WELL....we managed to close nicely in the GREEN today. The markets did back off....especially...the NASDAQ in the final 15-20 minutes as I expected. We now have one GREEN day in the can after the...INSANITY....yesterday. Now the question is.....can we continue to make progress tomorrow and over the rest of the week. I am sure there will be some selling or profit taking tomorrow.....as people....especially the so called "professionals" will still be looking to bail.

As for ME.....I ended the day with seven of nine stocks GREEN. My two red stocks were the same as earlier in the day....AAPL and GOOGL. I managed to beat the SP500 today by 0.92%.

 

Again.....DUH:

New Goldman Sachs index shows financial stress relatively normal

https://finance.yahoo.com/news/goldman-sachs-index-shows-financial-200959624.html

and

Wall Street sees 'buying opportunity' amid AI pullback

https://finance.yahoo.com/news/wall-street-sees-buying-opportunity-amid-ai-pullback-143651303.html

and

Now is the time to ‘buy things on sale’ in the stock market, advisor says. Here’s what to know

https://www.cnbc.com/2024/08/06/now...on-sale-in-the-stock-market-advisor-says.html

 

With this happening...I am looking for a good green day tomorrow and a good close to the week.

Stocks Advance After BOJ Eases Worries Over Rates: Markets Wrap

https://finance.yahoo.com/news/asian-stocks-resume-drop-rollercoaster-223807230.html


"Shares rallied after the Bank of Japan’s deputy governor said it won’t raise interest rates if markets are unstable, comforting investors unnerved by a recent surge in the yen."....

"Uchida’s comments offered much-needed reassurance to markets at a time when investors remained concerned whether the recent unwinding of the yen carry trade has run its course. The BOJ’s softening stance also served to remove one major uncertainty as traders continued to assess if the recent global selloff was an overreaction to weak US economic data."

MY COMMENT

CLICK on the article for more detail. This should be a big help tomorrow. I note that the futures are looking very positive right now......they were down pretty good earlier.

 

We are about to open today with some really good green numbers in the big averages.....if the futures are accurate. WHY?

Because of the simple statement by Japanese officials and their government above. That is all it took to calm the markets.

Contrast this with how our FED works and acts. Contrast this with our MUTE and incompetent government. They are both AWOL when market events are causing fear and panic. All it would often take is for them to make a simple statement once in a while. Instead they continue to basically trash the markets with their statements.....or....their silence.

As a result there is ZERO confidence in our officials and our economic people. They NEVER recognize or understand the POWER of a simple statement in support of the markets at the right time.

In addition.....we are constantly trashing our big companies through antitrust lawsuits and threats.....often politically motivated. Imagine a world where our government and politicians on both sides.....without politics....actually supported our big companies. AND.....by doing so......indirectly....supported the American people that depend on the markets for their retirement and financial well being.

 

Speaking of AWOL....I have a lot of running around I have to do today so my posting will be minimal. But we are looking good for the open. You guys keep the markets going today.

MAKE ME SOME MONEY.

 

I have no clue what went on today.....other than seeing on my phone that about 1:00 the markets flipped from green to red. I assume the morning gains triggered AI selling and profit taking.

As for me....yes....I was in the red today with six of nine stocks down. My winners....AAPL, AMZN, and GOOGL. I los tout to the SP500 today by 1.46%.

I am happy to be another day closer to the end of the week as we move toward mid August.

 

AMEN.......and....best for long term investors to just ignore the whole MESS.

It’s a Macbeth market: full of sound and fury, signifying nothing
Volatility markets and credit markets are at odds. And the stock market disagrees with itself.

https://sherwood.news/markets/its-a-macbeth-market-full-of-sound-and-fury-signifying-nothing/

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

"The good news: the wounds inflicted on global markets this week look a lot more technical than fundamental. The bad news: the wounds inflicted on global markets this week look a lot more technical than fundamental – so far.

Volatility markets and credit markets – which typically behave the same way in times of financial stress – are completely at odds. And in the equity market, investors can’t make up their minds whether to focus on rotating out of megacap tech into more cyclical parts of the market, or seeking safety in defensive sectors as recession fears creep higher.

If the dust from recent mechanical, panic-induced selling dissipates, the backdrop could look fairly benign before long. The S&P 500’s earnings expectations are still improving, profit results are largely beating expectations, and investors may grow more confident that easing from the Federal Reserve will stabilize the labor market and the economy before long.

But it’s also easy to take off the rose-colored glasses and see a more perverse future. If the outlook for the US economy continues to soften, cyclical parts of the market might have a lot more downside – just as investors are beginning to question the ROI on AI spending.

The challenge for investors in the coming days and weeks will be the search for cohesion in a Macbeth market, where the price action has been full of sound and fury, signifying nothing.

With the S&P 500’s fear gauge hitting levels only seen during the 2008 financial crisis and the 2020 pandemic, the signal from volatility markets is that the world is on fire. But the credit market continues to say it’s fine. The surge in the VIX Index on Monday was accompanied by a relatively tepid widening in credit spreads.

More important than the one-day moves are the absolute levels these metrics finished at during Monday’s rout. The VIX ended the session at its 96th percentile relative to history (i.e., it’s only been higher on 4% of sessions going back to August 2000). High-yield credit spreads are in their 33rd percentile – in other words, investors are usually much more worried about the potential for a wave of corporate defaults than they are now.

For better or for worse, the US stock market remains tethered to Japanese assets right now. When US stocks have a stronger connection with Japanese assets than with US credit markets, your eyebrows should go up: this is definitely not normal.

Speaking of abnormal, we have the completely muddled internals of the US equity market.

On the one hand, the Financial Select Sector, Industrial Select Sector, and SPDR S&P Regional Banking ETFs are all closer to their 52-week highs than the Nasdaq 100. This is a market that still bears a lot of the hallmarks of the “rotation” narrative that was in full swing in early to mid July, when a narrow, AI-dominated market shifted into one with more breadth, with small caps and more cyclical stocks performing well.

This isn’t what markets trade like when recession worries are ascending.

“If company fundamentals are in decent shape, this begets the question as to whether valuations have to now re-rate lower because a recession is more obviously on the horizon today than it was in April,” writes Michael Purves, founder of Tallbacken Capital Advisors. “Our view is this question will haunt cyclicals and the ‘rotation equities’ much more so than it will haunt the big tech indices.”

That being said, tech companies are the most expensive part of a richly valued market, and the bar for them to attract more love from investors seems to be high. With six of the so-called Magnificent Seven having reported results so far this season (all save Nvidia), the average member has fallen 3.6% the session after releasing their quarterly update.

On the other hand, defensive, rate-sensitive sectors are trouncing the US stock market as a whole, something that is generally seen when risk aversion and fears about the economic outlook are high.

Utilities, for instance, have outperformed the S&P 500 by more than 9% over the past two weeks. That’s 99th percentile outperformance. The only times we’ve seen this defensive sector do even better than the benchmark US stock gauge has been during bear markets (March 2022 and the 2008 financial crisis) or relatively deep equity market drawdowns (2018, early 2016).

And investors seem to doubt that consumer-centric parts of the equity market will be able to maintain their recent operating performance – in large part because these companies sound circumspect, if not gloomy, about the road ahead.

“Many clients have fixated on downbeat commentary about the US consumer from select corporates,” writes Goldman Sachs chief US equity strategist David Kostin.

Kostin flagged how consumer discretionary that have exceeded expectations on quarterly profits outperformed the S&P 500 by a paltry 0.2% the following session. Normally, stocks that beat earnings estimates go on to best the benchmark US stock gauge by 1%.

It’s going to take time to wrestle through these competing narratives and mixed messages.

“Our sense is the market will stay violently flat – little direction at the index level, but lots of internal realized vol – until the breadth of data can allay recession fears,” writes Dennis DeBusschere, chief market strategist and founder of 22V Research. “We’d be surprised if the market melted down because of the one payroll reading.”

Stepping back, it’s a complete mess out there. And a market that doesn’t make too much sense is probably a market you shouldn’t try to make too much sense of."

MY COMMENT

At the moment the markets are completely.....ILLOGICAL. Good earnings are ignored. Companies are punished for no reason. Random and unreliable government data is used to push RECESSION talk.

Companies that are simply.....MINTING MONEY.....are thrown overboard with the trash.....etc, etc, etc.

It is RANDOM and MEANINGLESS in the markets right now. If they should go up....they go down. If they should go down....they go up.

The FED is doing nothing to quell the fear and turmoil and neither is the government....with a President that is on permanent vacation for the rest of their term.

it is basically.....DISGUSTING to watch and to invest in. BUT....as a long term investor there is no choice but to simply wait it out and move on.

 

Poor NVDA. They are now way beyond "correction".

Their recent results:

One day (-5.08%)

Five day (-15.08%)

One month (-22.82%)

AND......since the last high of approximately $135 on July 10, 2024.........(-26.70%)

I will be very interested to see the earnings report on August 28, 2024......fourteen market days from now. I dont think I can ever remember over my 55+ years of investing....a company EVER being totally DISRESPECTED like this.....when it is putting up the kind of numbers that NVDA has been doing lately.