The Long Term Investor

YES.....there is no inflation. In fact I would call it a GOLDY-LOCKS economy right now. Here is the latest economic data that is a positive for the economy and investors:

Retail sales top Wall Street estimates in August

https://finance.yahoo.com/news/retail-sales-top-wall-street-estimates-in-august-123219523.html

 

In spite of all the FED drama and turmoil and attempts to gain readers with dramatic headlines.....there is REALLY NOTHING happening this week. We know exactly what is going to happen.....the FED will cut rates. SO WHAT.

In the REAL WORLD.....I dont hear anyone talking about the FED and rate cuts or the markets. it is a topic with ZERO daily interest among normal people. No one will be rushing out and buying or selling anything based on this event. AND....that is a good thing.

Most people that are NORMAL are simply living their lives, and doing NOTHING in terms of changing or moving their money....most of which is siting in a 401K account.

 

HERE is the amazing markets today.

S&P 500 rises after retail sales increase, benchmark nears record before Fed decision

https://www.cnbc.com/2024/09/16/stock-market-today-live-updates.html

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

"Stocks rose Tuesday following better-than-expected retail sales data ahead of the start of the Federal Reserve’s September policy meeting.

The S&P 500 climbed 0.3%, putting it less than 0.6% below a record high. The Nasdaq Composite gained 0.7%, and the Dow Jones Industrial Average advanced 44 points, or 0.1%. The 30-stock Dow hit a fresh all-time high.

Microsoft rose more than 1% after the tech giant hiked its quarterly dividend by 10.7% to 83 cents per share. The company also approved a $60 billion buyback program.

Intel shares jumped 2.3% after the company said it plans to make its foundry business a subsidiary. The Biden administration also awarded the company up to $3 billion in funding through the Chips Act.

The latest retail sales data indicated solid consumer health ahead of the Federal Reserve’s policy meeting set to begin on Tuesday. Retail sales rose 0.1% in August versus economists’ estimates for a 0.2% decline, according to Dow Jones. Excluding autos, the number also came in at a 0.1% increase, which slightly missed the 0.2% consensus forecast.

Wall Street is on standby for the Fed’s long-anticipated rate cut, a move that could help boost earnings growth for companies following a backdrop of steep borrowing costs and high inflation. The Fed first embarked on its aggressive hiking campaign in March 2022.

While investors expect a cut Wednesday, the market is divided on the size of the potential reduction. Traders are currently pricing in a 61% chance that the central bank eases rates by 50 basis points, according to CME Group’s Fed Watch tool. That’s up from a roughly 47% chance Friday. One basis point equals 0.01%.

“The decision is complicated by conflicting signals of solid economic activity but a weakening labor market,” said Principal Asset Management’s Seema Shah. “Rarely have market expectations been so torn, so close to a [Federal Open Market Committee] meeting.”

While a 50 basis point cut isn’t out of the question, the chief global strategist thinks that the Fed should take a more cautious approach to cutting and ease rates by 25 basis points. She is forecasting additional 25 basis point cuts in November and December.

Wall Street is coming off a mixed trading session. The 30-stock Dow rose more than 228 points to close at a record while the S&P 500 added 0.13%. The Nasdaq posted a loss. The moves come on the back of the market’s best trading week of 2024 in the previous week as stocks climbed higher in anticipation of forthcoming rate cuts."

MY COMMENT

WELL.....surprise, surprise,.......the economists were WRONG AGAIN. They totally blew the retails sales. It is amazing how often and how regularly they are WRONG. Although there is no mystery here....economics is NOT a science. It is just good old fashioned fortune telling.

I will NEVER make any investment decision based on economics.....it is meaningless.

Talking about meaningless.......lets talk about the recent market superstition based media reporting. The DREADED AUGUST and SEPTEMBER time span. Yes...it was supposed to be a disaster for investors. Well, now with all the averages hitting or pushing toward ALL TIME HIGHS......not so much.

BASICALLY it is impossible to predict the short term markets. There is no way to anticipate the EXPLOSIVE market gains that propel the markets higher in spurts. This is why I simply stay fully invested all the time. This is the only way to keep probability on my side as an investor. Focus on the long term is critical.

 

One hour in and the rally continues.

MAKING MONEY IS SO MUCH FUN. TO INFINITY AND BEYOND. SHOW ME THE MONEY.

 

At this moment I have seven of nine stocks in the GREEN. Only PLTR and COST are in the red.

PLTR has had an epic run up lately and I believe it will continue. As to COST...I thing the Retail Sales data is good news for them. they have also had a really nice BIG run up over the last 6 months......+24%. So.....all is good.

CMG......is continuing to push higher. The stock has made a good come-back after the Social Media hit-job over portion size was properly dealt with by the company.

 

It was my.....destiny....to be in the RED today. BOTH of my two largest holdings....COST and NVDA....were red today. The rest of my stocks were GREEN. I also got beat by the SP5000 today by 0.30%.

 

OK....here we go.....it is FED RATE CUT EVE.

"All the investors are nestled all snug in their beds with visions of capital gains dancing in their head."

This is the day we have been waiting for over four years now. We are now oficially done with the pandemic. The economy is strong. We are in the middle of a ROARING BULL MARKET........and.....the FED is going to go on a rate cut binge for the next 1.5 years.

Sure thare will be some bumps along the way and......no doubt....much fear-mongering. But.....we are now finally at a good place as investors as we enter as NORMAL of a time as is possible in the modern markets.

PARTY TIME.

 

Sounds like a BIG project Zukodany.

 

OK FED day......and.....in honor of FED day the national mortgage average hit a new lower number.....6.15%.

US 30-year mortgage rate falls to two-year low of 6.15%

https://finance.yahoo.com/news/us-30-mortgage-rate-falls-110417672.html

 

No need to say much......everyone knows this already.

US stocks in holding pattern in wait for Fed decision

https://finance.yahoo.com/news/live...ttern-in-wait-for-fed-decision-103233947.html

MY COMMENT

We will find our our......FATE.....at 2:00 today. Till than the markets will simply drift.....unless some "special people" get advance and illegal notice of what is going to happen and the comments that Powell will make. If the markets make a sudden burst up or down before 2:00......you know that this "possibly" happened.

 

I have only two stocks in the green right now.....GOOGL and AAPL. But at least tthe big averages.....SP500 and NASDAQ are mildly green. Whoops.....make that only the NASDAQ.....as we drift, drift, drift.

 

The end of a BABY BOOMER ICON. We all grew up with Tupperware parties and their products. This made me think of the FULLER BRUSH COMPANY....which early baby boomers might remember.

These used to be big name companies.....but they have just faded way into irrelevance. No big dramatic collapse....just business irrelevance. This is the sorting process of business and the markets at work.

Tupperware files for bankruptcy as its colorful containers lose relevance

https://www.cnbc.com/2024/09/18/tup...-its-colorful-containers-lose-relevance-.html

 

Today.....basically a NON-EVENT. It is NOT a huge media story. Everyone knows what the FED is going to do....cut rates.

If you look back we have been relentlessly told by the media over the past four years that.......the big cap tech stocks are interest rate sensitive. Every time there was a rate hike....right on cue....those stocks would be punished with the media commenting that it was because they are so sensitive to rates.

Today and tomorrow we will finally see this put to rest. It will all turn out to simply be BS.

Now......that does not mean that the markets will ignore the rate cuts. i suspect that the initial reaction might even be negative. But over the rest of the year they should give the markets a nice psychological boost. Of course what will really matter is the earnings that will start to come in about 3-6 week from now.

AMAZINGLY......I just heard on Varney that Fox Business will have "special coverage" of Fed day on the Cavuto show......and.....between will have "commercial free coverage".....from 1PM to 4PM on Fed decision day.

How crazy is this? Way over the top. FLUFF over substance.......the media HYPE machine is on steroids today.

 

Regarding the above....it is simply a waste of time to read or watch anything about business or investing today. So.....I am out of here. See you after 2PM.

 

Way to go FED....you went BIG. Not that a cut of 0.50% is particularly big or shocking.

Fed slashes interest rates by a half point, an aggressive start to its first easing campaign in four years

https://www.cnbc.com/2024/09/18/fed-cuts-rates-september-2024-.html

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

"Key Points

• The Federal Open Market Committee chose to lower its key overnight borrowing rate by a half percentage point, or 50 basis points, amid signs that inflation was moderating and the labor market was weakening.
• It was the first interest rate cut since the early days of the Covid pandemic.
• “The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” the Federal Reserve statement said."

"WASHINGTON – The Federal Reserve on Wednesday enacted its first interest rate cut since the early days of the Covid pandemic, slicing half a percentage point off benchmark rates in an effort to head off a slowdown in the labor market.

With both the jobs picture and inflation softening, the central bank’s Federal Open Market Committee chose to lower its key overnight borrowing rate by a half percentage point, or 50 basis points, affirming market expectations that had recently shifted from an outlook for a cut half that size.

Outside of the emergency rate reductions during Covid, the last time the FOMC cut by half a point was in 2008 during the global financial crisis.

The decision lowers the federal funds rate to a range between 4.75%-5%. While the rate sets short-term borrowing costs for banks, it spills over into multiple consumer products such as mortgages, auto loans and credit cards.

In addition to this reduction, the committee indicated through its “dot plot” the equivalent of 50 more basis points of cuts by the end of the year, close to market pricing. The matrix of individual officials’ expectations pointed to another full percentage point in cuts by the end of 2025 and a half point in 2026. In all, the dot plot shows the benchmark rate coming down about 2 percentage points beyond Wednesday’s move.

“The Committee has gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance,” the post-meeting statement said.

The decision to ease came “in light of progress on inflation and the balance of risks.” Notably, the FOMC vote was 11-1, with Governor Michelle Bowman preferring a quarter-point move.

“We’re trying to achieve a situation where we restore price stability without the kind of painful increase in unemployment that has come sometimes with this inflation. That’s what we’re trying to do, and I think you could take today’s action as a sign of our strong commitment to achieve that goal,” Chair Jerome Powell said at a news conference following the decision.

Trading was volatile after the decision with the Dow Jones Industrial Average jumping as much as 375 points after it was released, before easing somewhat as investors digested the news and considered what it suggests about the state of the economy.

The committee noted that “job gains have slowed and the unemployment rate has moved up but remains low.” FOMC officials raised their expected unemployment rate this year to 4.4%, from the 4% projection at the last update in June, and lowered the inflation outlook to 2.3% from 2.6% previous. On core inflation, the committee took down its projection to 2.6%, a 0.2 percentage point reduction from June.

The committee expects the long-run neutral rate to be around 2.9%, a level that has drifted higher as the Fed has struggled to get inflation down to 2%.

The decision comes despite most economic indicators looking fairly solid.

Gross domestic product has been rising steadily, and the Atlanta Fed is tracking 3% growth in the third quarter based on continuing strength in consumer spending. Moreover, the Fed chose to cut even though most gauges indicate inflation well ahead of the central bank’s 2% target. The Fed’s preferred measure shows inflation running around 2.5%, well below its peak but still higher than policymakers would like.

However, Powell and other policymakers in recent days have expressed concern about the labor market. While layoffs have shown little sign of rebounding, hiring has slowed significantly. In fact, the last time the monthly hiring rate was this low – 3.5% as a share of the labor force – the unemployment rate was above 6%.

At his news conference following the July meeting, Powell remarked that a 50 basis point cut was “not something we’re thinking about right now.”

For the moment, at least, the move helps settle a contentious debate over how forceful the Fed should have been with the initial move.

However, it sets the stage for future questions over how far the central bank should go before it stops cutting. There was a wide dispersion among members for where they see rates heading in future years.

Investors’ conviction on the move vacillated in the days leading up to the meeting. Over the past week, the odds had shifted to a half-point cut, with the probability for 50 basis points at 63% just before the decision coming down, according to the CME Group’s FedWatch gauge.

The Fed last reduced rates on March 16, 2020, part of an emergency response to an economic shutdown brought about by the spread of Covid-19. It began hiking in March 2022 as inflation was climbing to its highest level in more than 40 years, and last raised rates in July 2023. During the tightening campaign, the Fed raised rates 75 basis points four consecutive times.

The current jobless level is 4.2%, drifting higher over the past year though still at a level that would be considered full employment.

With the Fed at the center of the global financial universe, Wednesday’s decision likely will reverberate among other central banks, several of whom already have started cutting. The factors that drove global inflation higher were related mainly to the pandemic – crippled international supply chains, outsized demand for goods over services, and an unprecedented influx of monetary and fiscal stimulus.

The Bank of England, European Central Bank and Canada’s central bank all have cut rates recently, though others awaited the Fed’s cue.

While the Fed approved the rate cut, it left in place a program in which it is slowly reducing the size of its bond holdings. The process, nicknamed “quantitative tightening,” has brought the Fed’s balance sheet down to $7.2 trillion, a reduction of about $1.7 trillion from its peak. The Fed is allowing up to $50 billion a month in maturing Treasurys and mortgage-backed securities to roll off each month, down from the initial $95 billion when QT started."

MY COMMENT

A good....very logical start to the process of reducing rates. This whole process will be a BIG net positiv for stocks and investors. There is going to be a HUGE amount of money looking for a home over the next 1.5 years and much of it will have no option but to go into stocks and funds.

We are now in a true GOLDY-LOCKS economy. The only potential issue.....the election.

 

AND....the 1-2 year future is looking very BRIGHT.......it is going to be so BRIGHT that we are all going to have to start wearing designer sunglasses.

The Fed forecasts lowering rates by another half point before the year is out

https://www.cnbc.com/2024/09/18/the...nother-half-point-before-the-year-is-out.html

 

I do agree with one headline that I saw that this does not mean that.....higher for longer.....is over. They will have the ability to slow walk this whole rate cut thing is needed and it would not surprise me to see than really drag it out.

 

AND....I notice that I am not seeing any of the SCARY headlines about the cut being a negative or freaking out the markets. As usual....they were more.......media BS.

 

Looks like many market people.....LOVE IT.

Wall Street Reacts to ‘Dovish’ First Fed Rate Cut in 4 Years

https://finance.yahoo.com/news/wall-street-reacts-dovish-first-185015315.html