I cant see this whole article but the headline says it all. China is in the news today as....supposedly....pushing new and higher stimulus measures. BUT....who know what is true......as this is the worlds most opaque, fraud-ridden, brutal communist dictatorship. Hong Kong stocks lead global surge on reports of more China stimulus measures Hang Seng hits a new one-year high on report of possible capital injection to banks https://www.marketwatch.com/story/h...orts-of-more-china-stimulus-measures-98112197 MY COMMENT I dont care about China. AND....I dont really trust these reports. I do notice that much of the financial media is IGNORING this story at the moment......so there may be issues with it.
I am very happy to see this story........our companies need to get the HELL out of China. India wants to become a semiconductor powerhouse, but it can’t do it on its own https://www.cnbc.com/2024/09/26/ind...-powerhouse-but-it-cant-do-it-on-its-own.html (BOLD is my opinion OR what I consider important content) "Key Points India’s semiconductor manufacturing industry is still at a very nascent stage, but it aspires to become a chip powerhouse. As it develops the sector, the South Asian nation will need to continue to rely on Taiwan, China and the U.S. “India is far behind China in semiconductor manufacturing. Although India may be able to run fast and catch up, China will be running faster,” said Rishi Bhatnagar, chair of the Institution of Engineering and Technology’s future tech panel. India has big ambitions to become a semiconductor powerhouse as the world’s fifth-largest economy pushes for self-reliance in manufacturing. Indian Prime Minister Narendra Modi has set numerous goals to propel the country’s semiconductor sector forward, with the latest and biggest target being to grow the country’s electronics sector from $155 billion today to $500 billion by 2030. The announcement turned heads and raised eyebrows, and industry experts that spoke to CNBC have opposing views on whether the target is realistic. However, they all agree on one thing: India cannot achieve this goal on its own. “While the speed of development seems to be fast and the momentum is there, India has just started to embark on the semiconductor industry development from scratch,” said Eri Ikeda, assistant professor at the Department of Management Studies at the Indian Institute of Technology Delhi. Taiwan is currently the world’s largest chipmaker, holding approximately 44% of global market share, followed by China (28%), South Korea (12%), the U.S. (6%) and Japan (2%), data from Taiwanese consultancy Trendforce showed. Bhatnagar pointed to how Taiwan’s Powerchip Semiconductor Manufacturing Corporation will help India’s Tata Electronics to build the country’s first 12-inch wafer fab in Gujarat. He also noted American chipmaker Micron Technology is set to roll the first India-made semiconductor chip in 2025. Last week, U.S. chipmaker Analog Devices and Tata Group signed an agreement to explore building semiconductor products in India. These examples, he explained, show collaboration is necessary. Lessons from China India is increasingly viewed as a viable alternative to China for companies looking to diversify their supply chains amid geopolitical risks. However, analysts said India first needs to learn the ropes before it can compete with the East Asian giant, especially since its semiconductor manufacturing industry is still at a very nascent stage. China reclaimed its position as India’s top trading partner in financial year 2024, with bilateral trade between the two countries reaching $118.4 billion. India’s imports of telecom and smartphone parts from China amounted to $4.2 billion, data from the Ministry of External Affairs showed. “India is far behind China in semiconductor manufacturing. Although India may be able to run fast and catch up, China will be running faster,” said Rishi Bhatnagar, chair of the Institution of Engineering and Technology’s future tech panel. He added that collaboration rather than competition between the two countries is paramount. “Even China is catching up with the technological advancements of TSMC and others, and building and scaling up its semiconductor industry by importing large amounts of equipment from the U.S. and Japan,” Ikeda told CNBC in an interview. Cozying up to the U.S. Although India will still have to rely heavily on top chipmaker Taiwan and China, the South Asian nation plans to keep working with the U.S. to counter China, industry experts told CNBC. Earlier in September, the U.S. Department of State announced it will partner with the India Semiconductor Mission and India’s electronics and IT government body to improve the global semiconductor value chain. This came just three days before the Biden administration rolled out new export controls on critical technologies, including quantum computing and semiconductor goods, a move that is likely to restrict Beijing’s advancements in AI and computing. For the U.S., India could help it diversify its chip sources and lessen its reliance on Taiwan, said Bhatnagar. “They’re investing in a democratically elected country with a legal framework and a growing number of English speakers. So when two democracies are talking, that’s a very different kind of discussion. And we need to accept and agree this is needed when global scenarios are changing,” Bhatnagar said. Earlier this week, Modi met Nvidia’s Jensen Huang and Google’s Sundar Pichai, among other tech CEOs at a roundtable in New York after attending the annual Quad meeting. Huang said that “this is India’s moment” and made a promise to partner with the country, Hindustan Times reported. CEOs of other semiconductor companies such as GlobalFoundries’ Thomas Caulfield and AMD ’s Lisa Su were in attendance as well. Other analysts said India’s semiconductor focus can help boost U.S.′ standing in its ongoing “chip war” with China, and ultimately help the country. “India is willing to utilize the U.S. and even Chinese investments for its development of industry, which might end up competing with them if it is successful,” said Ikeda. “Apple is already exporting more items from India than they are selling in India.”Tarun PathakResearch Director at Counterpoint Research. Still, she added there are many hurdles before India could truly compete with China on chips, particularly when it comes to infrastructure and investment. “We are encouraging [the] semiconductor industry in a big way. We started building up the ecosystem, which is essential before we can see more and more foundries coming into the country to the actual chip making,” Piyush Goyal, India’s minister of commerce and industry told CNBC’s Tanvir Gill in an interview. India’s upper hand Although India still has ways to go before it becomes a semiconductor powerhouse, it has a number of advantages working in its favor. India’s low labor cost, for example, has made the country an attractive destination for companies looking to diversify parts of their supply chains away from China. The monthly minimum wage in New Delhi for skilled workers is 21,215 Indian rupees ($253.85), while workers in Beijing earn 2,420 yuan ($344.30) during the same period. The minimum wage in each country differs across states and provinces. “If India can become more technologically advanced and cater to the global demand with cheaper and fair quality products, it will have a competitive advantage over China,” Ikeda said. The world’s most populous country, which Goldman Sachs says is set to be the world’s second-largest economy by 2075, has already attracted investors like tech giants Apple and Google. Analysts predict these companies are set to further increase production in India. “Apple is already exporting more items from India than they are selling in India. It’s huge domestic market and young nation that gives India an edge,” Tarun Pathak, research director at Counterpoint Research said. That optimism is expected to be supported in the next decade as the country continues to make significant strides in connecting and modernizing its highways, railways and airports. In the interim budget in February, Finance Minister Nirmala Sitharaman estimated capital expenditure will rise by 11.1% to 11.11 trillion Indian rupees ($133.9 billion) in the fiscal year 2025, largely focused on constructing railways and airports. “The semiconductor industry doesn’t need that many large ships and cargos. Chips are small items that can be transported by planes in large quantities,” Bhatnagar said. With the need for chips only set to increase from here, India could be a solution for many companies looking to lower costs and meet demand. “I would not bet against India. When you look around the world, there are very few places where you can see the right kind of infrastructure, economics, stability and workforce to actually achieve this goal,” Samir Kapadia, CEO of India Index and managing principal at Vogel Group said." MY COMMENT This will take time and it is only the start of a long process right now. BUT....it is very important to move as much of the tech business to India and other countries outside China as possible. All of the resources are there in India....it will be important for teh BIG CAP TECH companies to support the growth in that country. It will also be important for the government of India to push there initiatives and remove barriers to global business.
WELL....we have been hit by a mid-morning SLUMP in the markets. The NASDAQ is now red and most of the big gains of the open have been lost in the markets. Profit taking and short term trading. SO.....we start fresh from here....for the day.
Well that did not take long....within minutes...the NASDAQ was back in the green. With where the big averages are right now....we are in a very similar position to where we were yesterday and the day before at this time in the morning. WHATEVER.
SMCI......this has got to be one of the most EPIC stock drops in a while. I owned this stock as a.....small, training-wheels position......for a short time. I ended up selling quickly as the stock did not hold up to my expectations and more importantly i needed to get some funds to buy more NVDA at what I considered a bargain price. Thankfully...... I do not buy any stock as a new holding....especially a small company.....as a full position. I buy a small position....to get a feel for the stock and judge its performance....before either dumping it or moving it to a more normal size position. NOW SMCI is trading at $386....down by $72 today. On March 13 the stock was trading at $1188. A loss of 63% over six months.....32% over one month.....and now.....12% over five days. Here is the reason for the drop today. US Justice Department probes Super Micro Computer, WSJ reports https://finance.yahoo.com/news/us-justice-department-probes-super-150035464.html MY COMMENT Keep in mind that these are just.....allegations....until proven to be true. BUT......based on the last 5.5 months of what I have seen with this company.....THERE IS NO WAY I WOULD EVER BUY THIS STOCK. BEWARE.
OK....so much for my 2025 Social Security Cost Of Living raise. I will get a little over $100 per month raise next year. BUT....medicare will take $10 more each for my wife and I each month. AND.....I just got in the mail today my new Medicare Drug Coverage premium for next year. My government required policy from Aetna will go from $10 per person for my wife and I to $45 each per month. So these increases will eat up $110 of my slightly higher raise. After it all sorts out we will net less than $10 per month as our raise. God help us all. As we used to say about government in Washington State when I was somewhat involved with the state legislature for my business association group....."No man's life, liberty or property are safe while the Legislature is in session."
OK....here is a simple question. The Fed slashed interest rates last week, but Treasury yields are rising. What’s going on? https://www.cnbc.com/2024/09/26/the...easury-yields-are-rising-whats-going-on-.html (BOLD is my opinion OR what I consider important content) "Key Points Despite the Fed approving a half percentage point reduction in its baseline short-term borrowing rate, Treasury yields have been moving higher, particularly at the long end of the curve. For now, bond market professionals are writing off a good portion of the move as a simple makeup for markets pricing in too much easing before the Fed meeting. However, some experts interpreted the Fed’s focus on supporting the softening labor market as an admission that they’re willing to tolerate a little higher inflation than normal. With its larger-than-normal cut last week, the Federal Reserve sent a clear message that interest rates are heading considerably lower in the future. The Treasury market, though, hasn’t been paying attention. Despite the Fed approving a half percentage point reduction in its baseline short-term borrowing rate, Treasury yields instead have been moving higher, particularly at the long end of the curve. The 10-year note yield, considered the benchmark for government bond yields, has leaped about 17 basis points since the Federal Open Market Committee meeting of Sept. 17-18 — reversing what had been a sharp decline throughout September. (One basis point equals 0.01%.) For now, bond market professionals are writing off a good portion of the move as a simple makeup for markets pricing in too much easing before the Fed meeting. But the trend bears watching, as it could signal something more ominous ahead. Other reasons cited for the move include the Fed’s willingness to tolerate higher inflation, as well as concerns over the precarious U.S. fiscal situation and the potential that an onerous debt and deficit burden could raise long-term borrowing costs no matter what the Fed does. “To a certain extent, there was just an element of people buying the rumor and selling the fact as it relates to the actual FOMC decision last week,” said Jonathan Duensing, head of U.S. fixed income at Amundi US. “The market already had discounted a very aggressive easing cycle.” Indeed, the market had been pricing in larger rate cuts than what Fed officials had indicated at the meeting, even with the 50 basis point move. Officials penciled in another 50 basis points in reductions by the end of the year and another 100 by the end of 2025. By contrast, markets expect another 200 basis points of cuts in the same period, according to fed funds futures pricing as gauged by the CME Group’s FedWatch tracker. But while longer-duration notes like the 10-year have seen yields surge, those on the shorter end of the curve — including the closely followed 2-year note haven’t moved much at all. This is where it gets tricky. Watching the curve The difference between the 10- and 2-year notes has widened significantly, increasing by about 12 basis points since the Fed meeting. That move, particularly when longer-dated yields are rising faster, is called a “bear steepener” in market parlance. That’s because it generally coincides with the bond market anticipating higher inflation ahead. That’s no coincidence: Some bond market experts interpreted Fed officials’ commentary that they are focusing more now on supporting the softening labor market as an admission that they’re willing to tolerate a little higher inflation than normal. That sentiment is evident in the “breakeven” inflation rate, or the difference between standard Treasury and Treasury Inflation Protected Securities yields. The 5-year breakeven rate, for instance, has risen 8 basis points since the Fed meeting and is up 20 basis points since Sept. 11. “The Fed has justifiably shifted because they’re confident inflation is under control but they’re seeing a rise in unemployment and a rate of job creation that clearly appears to be insufficient,” said Robert Tipp, chief investment strategist at PGIM Fixed Income. The rise in long-duration yields “is definitely an indication that the market sees risks that inflation can be higher and [the Fed] will not care.” Fed officials aim for a 2% inflation rate, and none of the principal gauges are there yet. The closest is the Fed’s favorite personal consumption expenditures price index, which was at 2.5% in July and is expected to show a 2.2% rate in August. Policymakers insist that they’re equally focused on making sure inflation doesn’t turn around and start moving higher, as has happened in the past when the Fed eased too quickly. But markets see the Fed with a closer focus on the labor market and on not pushing the broader economy into an unnecessary slowdown or recession brought on by too much tightening. Possibility for big cuts ahead “We’re taking collectively the Fed and Chair [Jerome] Powell at its word that they’re going to be very data dependent,” Duensing said. “As it relates to the softening in the labor market, they are very willing and interested to cut another 50 basis points here as we get into the post-election meetings coming up. They stand ready to approve and accommodation they need to at this point.” Then there’s the debt and deficit issues. Higher borrowing costs have pushed financing costs for the budget deficit this year over the $1 trillion mark for the first time. While lower rates would help lessen that burden, longer-duration Treasury buyers could be scared into investing into a fiscal situation where the deficit is approaching 7% of gross domestic product, virtually unheard of during U.S. economic expansions. Taken together, the various dynamics in the Treasury market are making it a difficult time for investors. All of the fixed income investors interviewed for this article said they are lightening up on Treasury allocations as conditions remain volatile. They also think the Fed might not be done with big rate cuts. “If we start to see that [yield] curve steepen, then we probably start to set the alarm bells off on recession risks,” said Tom Garretson, senior portfolio strategist for fixed income at RBC Wealth Management. “They’d still probably like to follow through with at least one more 50 basis point move this year. There’s still an ongoing, lingering fear here that they’re a bit late to the game.” MY COMMENT I am not a bond trader.....but....my view is that there is ZERO chance of another 0.50% cut this year. The Treasury markets and traders will get this stuff sorted out and back onto a logical track. It might take a week or two but it will happen and rates on the Ten Year will come back down.
WELL...I ended in the green today for my nine stocks.......even though I only had three of nine stocks UP at the close. the magnificent three.....GOOGL, AAPL, and NVDA. BUT.....woe is me.....I lost our to the SP500 today by 0.32%. I am just happy to get a gain today considering the very volatile day we had.
If you did not live the markets today. Dow jumps more than 250 points, S&P 500 closes higher to post fresh record https://www.cnbc.com/2024/09/25/stock-market-today-live-updates.html MY COMMENT The headline makes it sound better than it was....at least for me. BUT...I will take it as we continue to move forward in a little STEALTH RALLY.
The COST earnings today. Costco: Fiscal Q4 Earnings Snapshot https://www.ctpost.com/business/article/costco-fiscal-q4-earnings-snapshot-19795821.php (BOLD is my opinion OR what I consider important content) "ISSAQUAH, Wash. (AP) — ISSAQUAH, Wash. (AP) — Costco Wholesale Corp. (COST) on Thursday reported fiscal fourth-quarter profit of $2.35 billion. The Issaquah, Washington-based company said it had net income of $5.29 per share. Earnings, adjusted for pretax gains, came to $5.15 per share. The results surpassed Wall Street expectations. The average estimate of 14 analysts surveyed by Zacks Investment Research was for earnings of $5.05 per share. The warehouse club operator posted revenue of $79.7 billion in the period, missing Street forecasts. Twelve analysts surveyed by Zacks expected $79.75 billion. For the year, the company reported profit of $7.37 billion, or $16.56 per share. Revenue was reported as $254.45 billion." MY COMMENT I like this little....right to the point....short and sweet little article. MOSTLY a BEAT other than a slight miss on revenue. It looks like this was an AI generated article. i like it....it is nice to not have all the snarky and gratuitous opinion that we usually see in articles on earnings. Here is what it said at the end of the article....."This story was generated by Automated Insights".
Here is.....I suppose....the human view. Costco Q4 earnings beat estimates, revenue lighter than expected https://finance.yahoo.com/news/cost...-revenue-lighter-than-expected-130009068.html (BOLD is my opinion OR what I consider important content) "Costco (COST) reported mixed fiscal fourth quarter results on Thursday after the market close. Earnings per share for the wholesale giant beat estimates, coming in at $5.29, compared to Bloomberg consensus estimates of $5.07. But the company posted a slight miss on revenue, with $79.7 billion, compared to expectations of $79.96 billion. "In the recent mixed discretionary backdrop, we believe Costco's merchandising efforts, including an attractive assortment of discounted gift cards, have contributed to a meaningful improvement in non-foods category trends lately," Oppenheimer analyst Rupesh Parikh wrote in a note to clients prior to the release. Costco's same-store sales came in higher than expected at 6.9%, compared to expectations of a 6.4% increase, while e-commerce sales jumped 19.5%, slightly lower than the 19.63% increase Wall Street was hoping for. There was a lot of optimism heading into this report with 26 Buy ratings on the Street, 18 Holds, and one Sell. Prior to the release, UBS analyst Michael Lasser wrote that the company is "clearly gaining market share" with consistent traffic growth and a "faster recovery in general merchandise" sales than its competition. In August, Costco's foot traffic jumped 10.5%, per data analytics firm Placer.ai. The superstores and wholesale club sector saw a 4.9% increase in foot traffic. Another tailwind for Costco was its first membership fee increase since June 2017. Effective Sept. 1, Costco hiked the price of its Gold Star membership by $5 to $65 while it increased the Executive membership by $10 to $130. The change was expected to impact around 52 million memberships, a little over half of which are Executive memberships. Membership fee income for the quarter came in slightly below Wall Street's expectations at $1.51 billion, compared to the $1.54 billion that the Street expected. The fee hike was expected to grow membership income by high single to low double digits. To end the quarter, there are currently 78,185 total Costco locations, compared to the Street's estimates for 78,589. The earnings rundown: Here's what Costco reported for its Q4 earnings report, which ended Sept. 1, 2024, versus Bloomberg consensus estimates. Revenue: $79.70 billion versus $79.96 billion Adjusted earnings per share: $5.29 versus $5.07 Total company comparable sales growth, excluding fuel: 6.9% versus 6.40% US same-store sales growth: 6.30% versus 5.96% Canada same-store sales growth: 7.90% versus 7.35% Other international sales growth: 9.30% versus 8.62% E-commerce growth: 19.5% versus 19.63% Membership fee revenue: $1.51 billion versus $1.54 billion" MY COMMENT EVERY single category above is a BEAT.....except for a small E-commerce growth and revenue miss. I find it interesting that the first article above cites revenue expectations as......$79.75BILLION.......while....this article using different expectations puts the expectation at.....$79.96BILLION. Let the punishment begin.
I like this little article. The New Record High for Markets Is Not a “Sugar High” https://www.carsongroup.com/insights/blog/the-new-record-high-for-markets-is-not-a-sugar-high/ (BOLD is my opinion OR what I consider important content) "Last week was all about the Federal Reserve (Fed) jump-starting the rate cut cycle with a 0.5%-point cut. But amidst all the commentary around that, it’s easy to forget about what ultimately drives equities: profits. Note that what the Fed did was important even from this perspective. A Fed that is looking to cap the unemployment rate at around 4.4% is also trying to put a floor on the economy. And the economy is where profits come from. After all, one person’s spending is another person’s income or business’s revenue and profits. And spending is driven by incomes, which is why the labor market is the ballgame. The good news is that profit expectations continue to rise. Expected earnings per share for the S&P 500 over the next 12 months is now at $266, about 10% higher than it was at the end of last year. I’ve pointed out in past blogs that we can break apart the price return of a stock (or index) into two components: earnings growth and valuation multiple growth (forward P/E). Note: I use forward expectations here because markets look ahead. As of September 23, the S&P 500 price index was up 19.9% year to date, of which Earnings growth contributed +10.3%-points Multiple growth contributed +9.6%-points As you can see in the chart below, the volatility in the S&P 500 has come from multiples swinging wildly back and forth. Meanwhile, earnings expectations have moved steadily higher. Right now, profit growth makes up just over half the S&P 500’s year-to-date return. Contrast to two months ago, when valuations contributed the majority of the return. A More Important Story: Margin Expansion “Operating leverage” allows firms to expand margins as sales grow (even modestly). And corporate America now has a lot more operating leverage thanks to a lot of cost cutting in 2022, especially variable costs. 2022 was a year of low productivity, as firms felt the blowback of over-hiring and over-spending in 2020-2021. Sales grew but margins fell. So corporate America pulled back. However, getting more conservative bore fruit in 2023. Sales grew amid strong nominal GDP growth, and margins expanded. That’s a result of more operating leverage. This also showed up in rising economy-wide productivity, which has continued into 2024 and is positive for earnings/margins going forward as the economy continues to grow. S&P 500 margins are now at a new high of 13.4%. Diving back into attribution of S&P 500 returns, we can separate earnings growth into sales growth and margin expansion. I’m going to include dividends as well, to get to “total return.” Looking back at the prior record high for the S&P 500 on July 16, it was up 19.7% year to date back then, of which the contributions broke down as Sales growth: +3.8 %-points (pp) Margin expansion: +4.2 pp Multiple growth: +10.8 pp Dividends: +0.9 pp Fast forward to this week, and the S&P 500 was up 21.1% year to date as of September 23. Here’s how the components added to that total return: Sales growth: + 4.8 pp Margin expansion: +5.5 pp Multiple growth: +9.6 pp Dividends: +1.2 pp My colleague, Carson’s Chief Market Strategist Ryan Detrick, was on CNBC last week talking about how the Fed going with a big cut was actually positive for markets (so far that’s borne out). However, the anchor wondered if these were “sugar highs.” I’m not sure you can call these new record highs sugar highs, especially since they’ve come on the back of sales growth and even more so, margin expansion. In other words, strong fundamentals in the corporate sector are driving returns more than just positive sentiment. (They’re obviously correlated, but sentiment can swing wildly as we saw last month.) Even the Last 5 Years Haven’t Been a “Bubble” New record highs for equity indices always raises concerns, and we typically see questions or comments in the form “Is this it?”, or “Should we reduce exposure?”, or “Things look stretched!”. Ryan’s done some great work showing that new highs lead to more new highs, as momentum begets momentum. But let’s broaden out the horizon. From the end of 2019 through September 23, 2024 (a quarter shy of 5 years), the S&P 500 is up 90%. Here’s how the various components contributed to that massive total return: Sales growth: +41 pp Margin expansion: +16 pp Multiple growth: +19 pp Dividends: +14 pp The big takeaway is that 71%-points of the total return came from “fundamentals,” i.e. profit growth (sales + margin expansion) and dividends. Another lesson is that you shouldn’t ignore dividends — its contribution is almost as strong as multiple growth. Now, as you can see in the chart below, in individual years we can see wild swings, especially if valuations pull far ahead (like 2020) or revert back (2022). But ultimately over the long run, it’s usually earnings growth that drives returns (and dividends). As our friend Sam Ro (who writes the Tker substack), says, earnings are the most important driver of stock prices. And earnings for US companies have been going up for a very long time, which explains why stocks have gone up. The main pullbacks in profits have occurred during recessions." The good news is that we’re not in the middle of a recession now, nor is one imminent. And it looks like the Fed has cut the risk of one occurring over the next 6-12 months as well by signaling its intention to backstop the labor market. That’s a tailwind for profit growth, and markets. MY COMMENT There are many charts in this article that are nice.....use the link to see them. YES....it is all about earnings. AND...I believe that we have been disrespecting good and great earnings for many quarters now. There is a lot of pent up earnings POWER behind the current BULL MARKET....much of it from the past. We continue to see good earnings and probably will moving forward. AND...that means a continuation of the rally and growth in stocks.
And to continue. Ancient GDP History and the Return to Normalcy A multiyear GDP revision reminds us the economy’s path was weird for a while. https://www.fisherinvestments.com/e...ncient-gdp-history-and-the-return-to-normalcy (BOLD is my opinion OR what I consider important content) "US GDP figures for the past several years got a revision Thursday morning, showing output rebounded from COVID lockdowns faster than previously estimated. Early 2022’s contraction also turned out to be not so bad, with a smaller-than-estimated decline in Q1 and now growth in Q2. Several first-quarter results also got a lift, suggesting statisticians are still wrangling with their infamous seasonal adjustment difficulties. Our main takeaway, though? Economic activity lately looks pretty darned normal, something we can see even better when we look under the hood. None of this is new for stocks, but it helps show the lingering gap between reality and sentiment. These revised data remind us that something very strange, truly unprecedented, happened in 2020: Governments forced people to stay home and, for the most part, out of the office or even off the job. This disrupted everyday patterns in ways both obvious and less obvious. The obvious: GDP tanked during lockdowns, then rebounded sharply once they ended. But the rebound didn’t mean business as usual. Even though people were allowed out and stores were open, a lot of services weren’t, and people were still spending a lot of time at home. So when spending rebounded, a lot of it went to physical goods and much of that to durable goods. People bought barbeque equipment and other culinary tools to make up for not going out. Sporting equipment to fill the long afternoons. Office accoutrements to make working from home more comfortable. Hair and beauty gadgets to fill the void before salons opened. Outdoor furniture. Camping equipment. Anything they thought would help give the home a nice zzhizzh. As a country, we filled the services void with stuff. Meanwhile, when services restrictions eased, society made up for lost time at all their favorite restaurants, bars and sporting events. By mid 2021, this goods boom was fading. The high of reopening gave way to more normal services consumption habits. Goods consumption also flattened. Stores erred in thinking pandemic-era buying was the new normal and over-ordered everything Americans gorged on during lockdowns, leaving them with gluts to work through and driving huge swings in inventories, which added to volatility in GDP during 2021 and 2022. Factories were slow to make the things we all did want, like cars, because it turned out to be much harder to rev production back up than shut it off. But the earlier boom also pulled forward demand for many other items. Because more economic data—and especially the series media touts most—feature manufacturing despite its small share of GDP, it helped fuel 2022’s great recession freakout and the sour sentiment that fueled stocks’ shallow bear market, keeping a lid on consumption. When animal spirits started reviving in 2023, most of the resurgent demand went to services, not goods. Travel and tourism were returning. Taylor Swift embarked on a huge tour. Goods spending mounted a tepid recovery, but services won the day as society continued working off the hangover from 2021’s binge on stuff. Exhibit 1: The Great Goods and Services Divide Source: US BEA, as of 9/26/2024. Real personal consumption expenditures on goods and services, Q4 2019 – Q2 2024. This divide filtered through other data, including purchasing managers’ indexes, which have shown growing services and weak manufacturing for a couple of years now. Industrial production, too, has been meh since 2022. Ditto durable and core capital goods orders, a leading indicator of investment in equipment. Headlines continued to cast this industrial weakness as a recession warning sign, forgetting what we had just lived through and the disruptions it caused. But to us, it was all just part of the long slog back to normal. Which seems to be close to where we are now, with services and goods growing. The last leg in this return is the one people continue misinterpreting: Employment. Alleged labor market “weakness”—which is really just new entrants and returnees joining the labor force a smidge faster than businesses can absorb them—is a sign of a teetering economy in need of more rate cuts, we are told. Even the Fed plays into this, saying they cut last week to prevent the jobs market from weakening further. But when you remember that labor markets are a late-lagging indicator, then it becomes easier to see these wobbles as a trailing indicator of the bust, boom and volatile, uneven return to more normal trends that marked the past four and a half years. Recency bias being what it is, people look at monthly payroll gains in the 100,000s, compare them to the 200,000 and 300,000 figures that marked the initial lockdown recovery, and call hiring slow. But this year’s average monthly private payroll growth is 151,500 jobs. The average during the previous economic expansion? Not far off, at 163,800.[ii] Seems to us everyone is mistaking normal for weak. For stocks, this is all backward-looking. But it does suggest economic conditions aren’t actually weak. They are normal, while sentiment isn’t. And sentiment seems stuck to the downside, indicating some wall of worry persists on the economic front. Economics are just one market driver, and this is not a 2025 forecast. But it does show that as we wend toward the holidays, things look—perhaps surprisingly, to many—fine." MY COMMENT We are finally overcoming the lingering PTSD of the whole pandemic/economic disaster that we STUPIDLY imposed on ourselves and our economy in 2020. It has taken this long but we are finally moving into a normal economy. In my view the markets front-ran this move back to normal and are now chugging along in the middle of a......so far.....1.5 year BULL MARKET. Of course GOVERNMENT escalated the pain by driving inflation with CRAZY out of control spending over the last 3.5 years. Nicely even that drag on people, business, and the economy is now close to being back to normal. At the same time, inflation is going to linger in the minds and pocketbooks of everyday people as the price hikes of the last 3 years are going to stick....at least for a while.
Oh yes.....the markets. I have been ignoring them so far to let the averages settle in a bit. At the moment all the big averages are in the green....especially the DOW.
Here is the economic news of the day. Fed's preferred inflation gauge shows prices increased less than Wall Street expected in August https://finance.yahoo.com/news/feds...wall-street-expected-in-august-123312217.html (BOLD is my opinion OR what I consider important content) "The latest reading of the Fed's preferred inflation gauge showed that prices increased at a slower pace than expected on a monthly basis in August. The core Personal Consumption Expenditures (PCE) index, which strips out the cost of food and energy and is closely watched by the Federal Reserve, rose 0.1% from the prior month during August, below Wall Street's expectations for 0.2% and the 0.2% reading seen in July. Over the prior year, prices rose 2.7% in August, matching Wall Street's expectations and coming in higher than the 2.6% seen in July. On a yearly basis, overall PCE increased 2.2%, its lowest annual increase since February 2021. "We've come on a string of pretty good inflation readings over the last several months, and that was coming after an acceleration in inflation in the first quarter," PIMCO economist Tiffany Wilding told Yahoo Finance. "So I think Fed officials are pretty feeling pretty good about where inflation is sitting." The report is the first look at inflation since the Federal Reserve cut interest rates by half a percentage point on Sept. 18. In a press conference after the decision, Powell noted the Fed now has "greater confidence" in inflation's path down the central bank's 2% target. Powell argued that further cooling in the labor market is now as big of a concern for the Fed as inflation. "The upside risks to inflation have really come down, the downside risks to employment have increased," Powell said. "And because we have been patient and held our fire on cutting — while inflation has come down, I think we're now in a very good position to manage the risks to both of our goals." Friday's data now comes as investors debate whether the Fed will cut interest rates by 25 or 50 basis points at its November meeting. Following Friday's release, investors were pricing in a 54% chance of a 50 basis point interest rate cut, above the 50% chance seen a week ago, per the CME FedWatch Tool. MY COMMENT More good news for the economy and continued FED cuts going all the way through 2025. AND....more good news for business and stocks. PLUS.......yes, there is NO recession. At least this should shut up the fear-mongers for a day or two.
I love this as a COST shareholder. Costco still selling gold bars like hot cakes as prices surge https://finance.yahoo.com/news/cost...like-hot-cakes-as-prices-surge-121843061.html "Wells Fargo analysts have estimated Costco is selling $100 million to $200 million in gold bars each month."
NO SURPRISE in this result. Crystal Ball’ Breaks as Traders Fail to Get Rich in New Study https://finance.yahoo.com/news/crystal-ball-breaks-traders-fail-114603440.html (BOLD is my opinion OR what I consider important content) "(Bloomberg) -- If investors had known in advance the size of the Federal Reserve’s latest interest-rate cut, would they have made big money on stocks and bonds trading on this market-moving intel? Surprisingly, the answer appears to be a resounding no, at least when it comes to amateur traders and their ilk, according to a recent study from Elm Partners Management’s Victor Haghani and James White. The researchers placed participants in a dream position of knowing the future in an experiment called “The Crystal Ball Challenge.” Players got an early read of major economic news and Fed policy decisions — without knowing the precise market moves of the day in advance — before placing their bets. Three groups with varied financial knowledge and trading experience played the game. Wall Street’s seasoned macro traders performed the best. Yet when it came to predicting market directions, the score was far from stellar, with their bets ending up correct only 63% of the time. For amateurs, their returns took a hit as levered-up stock wagers went awry. The results will resonate with many on Wall Street, where monetary and economic trends in the post-pandemic era have bedeviled the smartest minds. This year, the record-setting equity rally is crushing even the most optimistic strategist forecasts while traders have have been misfiring on their interest-rate wagers. The paper, titled When a Crystal Ball Isn’t Enough to Make You Rich, suggests that even if one has advance knowledge of near-term macroeconomic catalysts, translating that into successful investment decisions is a task few could pull off. The research project was inspired by a 2016 posting on X from Nassim Nicholas Taleb, author of the best-selling book The Black Swan: The Impact of the Highly Improbable. In that post, he surmised the market was so unpredictable that even investors with immaculate prescience of the next day’s news “would go bust in less than a year.” “It’s very humbling,” said Haghani, who was a founding partner of Long-Term Capital Management. “Even if you have the news in advance, it’s still really hard to do asset allocation or whatever with a high chance of being right, let alone not knowing what’s going to happen.” That aggravation was on display when the Fed announced its first rate cut in four years. While the half-point reduction was larger than most economists forecast, stocks fell and Treasury yields rose in the immediate aftermath, confounding those who had expected aggressive monetary easing to unleash a wave of buying. While counter-intuitive at first blush, the market had priced in a dovish Fed ahead of the policy shift, according to Haghani. He views this dynamic, along with the “crystal ball” study, as evidence that the investment landscape remains largely efficient, despite recent doubts aired by the likes of AQR Capital Management’s co-founder Cliff Asness. “If we think about the question of market efficiency in terms of how hard it is to beat the market, this really shows us that it’s hard to beat the market even with this advanced information,” Haghani said. “Hence the markets are pretty efficient.” In the game, players trade futures on the S&P 500 and 30-year Treasuries with the news from the front page of the Wall Street Journal one day in advance — and of course with market data blacked out. The stories were originally published between 2008 and 2022. They chose 15 different days, one for each year in that 15-year stretch. Each day, players are allowed to place only one bet each for stocks and bonds, long or short with leverage up to 50 times. Among the three groups, the band of five veteran macro traders stood out, raking in an average profit of 130%. The pool of 118 graduate students, mostly majoring in finance or business, managed to break even. A separate batch of 1,500 volunteer players fared the worst, losing 10% of their money. Contributing to the inexperienced traders’ dispiriting returns was their relatively lower accuracy in guessing market moves. College participants, for instance, correctly foresaw stocks and bonds only 51.5% of the time, about 10 percentage points behind the pros. A lack of proper alignment on trade size and leverage also played a role. College traders got their bond calls right more often than stocks. Yet their performance didn’t benefit because they placed more trades in equities and did it with higher leverage. By contrast, the experienced traders appeared more conscious about the risk of getting things wrong. They refrained from betting at all on roughly one third of the trading opportunities. And when they presumably felt confident, they doubled down. “We like to talk about how investing involves two decisions — the what and the how much. What to buy or sell, and then how much of it to buy or sell,” said Haghani. “Even if you get the selection decision right, but you get the sizing decision wrong, you can be wiped out.”" MY COMMENT If you wish to trade that is your choice. It is your money. BUT.....if you want to go with PROBABILITY it is all about steady long term investing. I have NEVER in my entire investing life known or seen a trader that could beat the SP500 long term. And the vast majority simply lose money until they get fed up and quit the markets.
I dont even have to look to know that I am in the red today. NVDA, MSFT and AMZN are all in the red.....as is COST. BUMMER for me......woe is me.....Waaaaaaa.....Waaaaaa.....Waaaaa.
Regarding the COSTCO gold article above....this is funny. "Veteran Evercore ISI analyst Greg Melich asked executives, "Given the nonfood, the success there, ... I'm just curious, are there any plans to maybe bring Kirkland Signature into the gold bullion market?" Kirkland Signature is Costco's large private-label business. "No plans at this time," Costco CEO Ron Vachris said."
I will patiently wait....what choice do I have.....for my gains to come today. If we get a strengthening market I might see some by the close.....key word being....."might".
