The Long Term Investor

WELL.....as the article a few posts above says....more of the "professionals" are......gracing us......with their positive opinions for the coming months to the rest of the year. I say.....welcome to the club....what took you so long?

Strategists see more stock market gains through the end of the year

https://finance.yahoo.com/news/stra...ns-through-the-end-of-the-year-164055396.html

(BOLD is my opinion OR what I consider important content)
"The first month of the new year has not even ended yet, and Wall Street firms are already building a case for stocks to rise even further this year.

With the composition of the government now confirmed and Democratic lawmakers in control of both the U.S. House of Representatives and Senate, strategists are preparing to see more fiscal stimulus boost consumer spending, the economy and corporate profits in the coming months. This is set to lay the groundwork for a strong recovery once the vaccine rollout reaches much of the population, many have said.

Still, these risk-on catalysts will likely come alongside some opposing forces, including rising interest rates and the specter of a less accommodative Federal Reserve and higher corporate taxes as the economy emerges from the pandemic.

But on net, with all these factors in mind, a number of strategists suggested stocks will rise even more strongly this year than they believed at the end of 2020.

Here’s what some Wall Street strategists are now expecting for the U.S. stock market this year.

Deustche Bank (Target: 4,100; EPS: $202): Equities likely to rise, pull back briefly, then rally to new highs by year-end
Deutsche Bank equity strategist Binky Chadha now sees even more upside for equities, with additional fiscal stimulus set to boost an economy already in the early innings of a post-pandemic rebound.

"Near term, we expect equities to continue to move up, supported by an acceleration in macro growth and earnings upgrades, which are already prompting rising positioning and large inflows as is typical, and likely to be further boosted by direct and indirect flows from stimulus payments," he wrote in a note on March 12.

"We then expect a pullback as growth peaks in Q2 at a high level," he added. "The more front-loaded the impact of the stimulus, the sharper the peak in growth, and the closer this peak in macro growth is to warmer weather (giving retail investors something else to do); and to an increased return to work at the office, the larger we expect the pullback to be."

However, he added that he then sees equities rallying back following the potential pullback and reaching 4,100 by year-end. That marks an increase from the firm's previous price target of 3,950 on the S&P 500, and implies additional upside of 3.3% from the S&P 500's record closing high on March 15. The firm also now sees aggregate S&P 500 earnings rising 43% to $202 this year, up from its previous $194 forecast.

By sector, Deutsche Bank said its top picks remain energy — as it forecasts West Texas intermediate crude oil will approach $80 per barrel by year-end — and financials, with the 10-year Treasury yield forecast to end the year between 2% and 2.25%.

"We move other cyclical sectors (industrials, consumer) from overweight to neutral; stay neutral the secular growth group and underweight the defensives," Chadha said. "Across regions we are overweight the more cyclical EM [emerging markets], Europe and Japan versus the U.S, on a baseline of a global cyclical rebound."

S&P 500 price target updated on March 12, 2021 following a price target initiation December 3, 2020

Credit Suisse (Target: 4,300; EPS: $185): 'Accelerating GDP should result in higher revenues ... and an even greater gain in EPS'
Credit Suisse strategist Jonathan Golub upwardly revised his S&P 500 price target for the second time in two months on February 23. This time, he noted that stronger-than-expected corporate profits and upbeat reopening prospects warranted a more optimistic outlook on equities.

Credit Suisse's new year-end S&P 500 price target of 4,300 suggests upside of 10.9% from current levels. In January, Credit Suisse saw the S&P 500 ending 2021 at 4,200, and last year expected the index to rise to 4,050.

Golub now expects aggregate S&P 500 earnings per share to grow to $185 and 2021 and $210 in 2022, up from the $175 and $200, respectively, he estimated previously. Companies already entered 2021 with more profit-making momentum than expected, with fourth-quarter EPS topping estimates by 17% and unexpectedly growing on a year-over-year basis, Golub said.

And as vaccines enable the economy to open further, companies should be able to grow results even more, offering further catalysts for their stock prices. Major Wall Street banks expect, on median, that GDP will grow by 6.1% in 2021, Golub added. This would mark a sharp rebound from 2020's COVID-induced 3.5% contraction — the worst since 1946.

"Accelerating GDP should result in higher revenues (every 1% in GDP is a 2.5-3% change in sales), and an even greater gain in EPS given operating leverage," Golub added. "Additionally, rising rates — a benefit to Financials — and copper and oil prices — a boon for Industrials, Energy, and Materials — further augment this favorable backdrop."

S&P 500 price target updated on Feb. 23, 2021, following a prior update on Jan. 7, 2021

Goldman Sachs (Target: 4,300; EPS: $181): ‘Fiscal stimulus should support consumer-facing cyclicals'
Goldman Sachs raised its S&P 500 earnings outlook this month, citing an unexpected bump higher in corporate earnings results as companies rebounded faster than expected from pandemic-related disruptions.

"Analysts expected 4Q S&P 500 EPS would fall by 11%, but results showed +2% year/year growth," the strategists led by David Kostin said in a note published Feb. 12. "We raise our S&P 500 2021 EPS estimate 2% to $181 (from $178), reflecting higher sales and profit margins that should overcome input cost pressure due to high operating leverage."

Despite the improved earnings outlook for this year, Goldman Sachs left its S&P 500 price target at 4,300, implying 9.3% upside from the index's record close on Feb. 12.

Fiscal stimulus will likely comprise the next catalyst for U.S. equities, Kostin added, as lawmakers in Washington work toward another robust round of virus relief measures that would stoke consumer spending and further boost corporate profits.

"Many investors believe the spending boost will lead to higher inflation and interest rates, which would reduce the value of equity duration and increase the importance of near-term growth," Kostin said. "Fiscal stimulus should support consumer-facing cyclicals and our High Operating Leverage and Low Labor Cost baskets."

The firm highlighted a number of cyclical stocks that appeared appealing due to correlations with consumer spending and strong earnings growth over the past year, including Whirlpool, Charles Schwab, 3M and Facebook.

Updated EPS target as of Feb. 12, 2021, following a prior update on Jan. 8, 2021

RBC Capital Markets (Target: 4,100; EPS: $168): ‘While we expect 2021 will be a solid year, it comes with risk’
RBC Capital Markets released its initial year-end outlook for U.S. equities on Jan. 20. In this, RBC said it expected the S&P 500 would ultimately end the year at 4,100, implying upside of 9% from closing prices on Jan. 19. One of the key drivers of the rise will come amid the expected economic reopening, with RBC estimating real gross domestic product will grow 5% in 2021.

Before ending the year higher, however, stocks are likely to endure a pullback as traders take a pause after 2020’s 16% rally and extended gains so far this year.

“While we expect 2021 will be a solid year, it comes with risk. We anticipate a period of consolidation, most likely in the first half,” the strategists led by Lori Calvasina said in a note.

The drop could come as a mid-single digit decline from the index’s recent record highs, taking the S&P 500 down to about 3,600, the firm said. But it could also be an as much as mid-teens correction that pulls the index back down to approximately 3,200, it added.

“Our positioning/sentiment analysis suggests a pullback could start any time, but could also take a few more weeks/months to materialize,” Calvasina said. “Ultimately, 2021 price action will reflect 2022’s fundamentals. Longer-term risks to the market and our bullish full-year view include higher corporate taxes, Tech/Internet regulation, a less accommodative Fed, and the virus/vaccine backdrop.”

S&P 500 price target initiated Jan. 20, 2021"

MY COMMENT

The opening paragraphs of this little article are from a earlier article. BUT.......the information that I have in BOLD are current data. Reading this makes you wonder what in the world is WRONG with these analysts? What planet were they living on? It is about as simple and OBVIOUS.......that the economy was and is going to BOOM. Just......yet again.....another example of the caution and herd behavior of the financial industry. They WAIT and than......tell you the OBVIOUS.......and later claim credit for their prescient predictions of the future. What a JOKE.

 

I have noticed that over the past years the financial and investment industry has taken on a........VERY DISTINCT.......push toward ..........TRADING.......as the model for EVERYONE. UNFORTUNATELY for them.....I believe that most people REJECT this in their retirement accounts. They HAVE made nice inroads into the younger people.....especially the MALES.....with this BALONEY.

I find it interesting that they are now BASICALLY....convincing people to......CHURN....their own accounts. Of course....this benefits the brokerages and big banks. They have ALSO....convinced many people to invest in stocks that are........CLEARLY NOT SUITABLE....for the investor. Many of the stocks that people are buying for themselves.......if a broker was putting you into them......would be a securities violation of the ......SUITABILITY RULE.

BUT.....its your money.......so.......whatever.

 

NOTHING to see here.....but for any that are interested,,,,here is the RETAIL SALES data.

Harsh weather temporarily weighs on U.S. retail sales in February

https://www.cnbc.com/2021/03/16/retail-sales-february-2021-.html

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

"Key Points

• U.S. retail sales fell more than expected moderately in February amid bitterly cold weather across the country.
• A rebound is likely, however, as the government disburses another round of pandemic relief money to mostly lower- and middle-income households.
• Retail sales dropped by a seasonally adjusted 3.0% last month, the Commerce Department said.

U.S. retail sales fell more than expected moderately in February amid bitterly cold weather across the country, but a rebound is likely as the government disburses another round of pandemic relief money to mostly lower- and middle-income households.

Retail sales dropped by a seasonally adjusted 3.0% last month, the Commerce Department said on Tuesday. Data for January was revised up to show sales rebounding 7.6% instead of 5.3% as previously reported. Economists polled by Reuters had forecast retail dropping 0.5% in February.

Unseasonably cold weather gripped the country in February, with deadly snowstorms lashing Texas and other parts of the South region. The decline in sales last month also reflected the fading boost from one-time $600 checks to households, which were part of nearly $900 billion in additional fiscal stimulus approved in late December, as well as delayed tax refunds.

Excluding automobiles, gasoline, building materials and food services, retail sales decreased 3.5% last month after surging by an upwardly revised 8.7% in January. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously estimated to have shot up 6.0% in January.

Still, last month’s drop in core retail sales left the bulk of January’s gain intact, and the decline was probably temporary. President Joe Biden last week signed his $1.9 trillion rescue package into law, which will send additional $1,400 checks to households as well as extend a government-funded $300 weekly unemployment supplement through Sept. 6.

The anticipated rebound in retail sales will also be driven by an acceleration in the pace of vaccinations, which should allow for broader economic re-engagement, even as the rate of decline in new COVID-19 cases has leveled off. Households have also accumulated $1.8 trillion in excess savings.

“With many households set to get another round of direct checks that are more than double what they received in January, we expect spending to receive another jolt in just a few months’ time,” said Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina.

“After that, the record amount of ‘excess’ savings should provide ample support to fund consumption as the public health situation improves and restrictions on activities are eased.”

Economists at Goldman Sachs on Saturday boosted their first-quarter GDP growth estimate to a 6% annualized rate from a 5.5% pace, citing the latest stimulus from the Biden administration. The economy grew at a 4.1% rate in the fourth quarter.

Goldman Sachs forecast 7.0% growth this year. That would be the fastest growth since 1984 and would follow a 3.5% contraction last year, the worst performance in 74 years."

MY COMMENT

NO surprise here. We should see some good numbers for March....with the stimulus money now being distributed.

 

Allright......another OK day.....green is always good. PLUS a beat of the SP500 by .39%. So no complaints.

 

YES......more yield "stuff".

People Are Buying US Treasurys
This week’s successful bond auctions suggest rumors of Treasury demand’s demise are greatly exaggerated.

https://www.fisherinvestments.com/en-us/marketminder/people-are-buying-us-treasurys

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

"In a telling sign of just how hyper-focused people are on bond markets right now, one of this week’s most-watched events was … Treasury bond auctions. Usually, the Treasury’s debt sales to its regular customer base of banks and institutional investors don’t garner much attention. Success is usually a foregone conclusion, making them more dog bites man than man bites dog for news editors. But two weeks ago, a sale of 7-year Treasurys attracted the lowest demand since 2009. (Never mind that bids totaled just over twice the amount on offer.) That supposedly bad auction triggered some fear, contributing to yields’ recent uptick, and making this week’s three auctions much-watched events. The last one happened today and—spoiler alert—it went great, which we think offers a couple of lessons for investors.

The first of this week’s festivities was an auction of 3-year notes on Tuesday, which attracted demand of 2.69 times the amount on offer at a median yield of 0.32%. Wednesday’s offer was a 10-year note, which was similarly oversubscribed with a bid-to-cover ratio of 2.38 at a median yield of 1.47%.[ii] Rounding out the pack was Thursday’s sale of less-plentiful 30-year bonds, which attracted bids for 2.28 times the amount on offer an a median yield of 2.23%.[iii] All were nicely above the 2.04 bid-to-cover ratio at that supposedly disastrous 7-year auction two weeks ago.[iv] They were also right in line with their trends over the past eight months since yields bottomed last August. That suggests to us that the panic-inducing auction was an aberration and investors are very, very happy to buy US bonds.

The surface-level takeaway here is that Congress’s multiple debt-financed COVID relief bills aren’t denting demand or visibly inducing concerns about Uncle Sam’s creditworthiness. Even with the recent uptick, yields remain near generational lows, keeping that new debt affordable. Think through that 30-year auction—the Treasury will be paying 2.23% on that tranche of debt until 2051. That is a wonderfully long time to lock in low funding costs.

The potentially more interesting aspect to all of this is the timing. The other big interest rate-related item preoccupying investors these days is the pending implementation of a bank capital rule called the Supplementary Leverage Ratio (SLR). (Yes, we know bank regulations are boring, but stay with us.) That rule mandates that banks hold a given amount of capital relative to their entire book of assets, without any consideration for how risky those assets are. So a stake in Bitcoin would require as much backing capital as an equivalent US Treasury holding. This was supposed to take effect last March 31, but when markets were going haywire during the pandemic panic, the Fed gave banks a one-year grace period. Now the new deadline is looming. Some argue this will trigger a rush of bond sales as banks race to get their books in compliance—and reduce demand for Treasurys overall.

This week’s auctions imply that isn’t the case. It seems fair to assume that banks didn’t load up on shiny new Treasurys today only to sell them next week. That just isn’t how these things work. So either banks bought bonds because they are in good SLR shape, or demand is a lot more broad than that—or, more likely, both. Either way, considering research we have seen suggests only two large-ish US banks aren’t already in compliance with SLR rules, we think this issue is rather overstated.

We will end with a broad conceptual point: These auctions show markets are working largely as they are supposed to. The thesis that higher rates would deter buyers and become a self-fulfilling prophecy has long run hollow with us, because prices are a signal. When yields tick up, it gives investors a chance to buy one of the world’s most sought-after assets at a small discount and get a modestly higher return. That is an incentive! Better prices attract buyers to the marketplace. As this happens, it wouldn’t surprise us if investors bid prices back up over the period ahead, putting a lid on yields. As we wrote earlier this week, that is an outcome few seem to expect right now, judging by the record amount of short interest in Treasury bonds. When a trade is this crowded, markets usually do something different than most expect, and it wouldn’t shock us at all if these over-watched auctions that went way better-than-feared were a sign of that starting to happen.

MY COMMENT

In my opinion......much of the "stuff" we are seeing in the bond markets and yields is simply MANIPULATION by the BIG BOYS. They have a massive short going on the Ten Year Treasury. For regular investors.........not going to matter in the least over the long term.

 

HANG on to your money the.......TAX MAN.....is getting all fired up. NO....not politics.....this sort of STUFf has massive business and investing implications.

Taxing rich Americans gains steam as states and Biden administration float plans

https://finance.yahoo.com/news/tax-rich-biden-states-154519883.html

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

"Several states are unveiling new tax proposals, adding to an effort by the Biden administration and Senate Democrats to tax ultra-rich Americans and corporations.

Lawmakers in California are considering a tax on extreme wealth that would impose an annual excise tax of 1% on those who have wealth exceeding $50 million per taxpayer and a 1.5% tax on those with wealth above $1 billion. The tax would raise an estimated $22.3 billion starting in 2023. New York and Washington are also looking at new taxation targeting ultra-wealthy individuals.

“This is the way that we get back to a California where everybody has an opportunity, and I don’t know a single business leader or moderate who doesn’t believe in that,” Assembly Member Lorena Gonzalez (D-San Diego) said during a press conference on Tuesday. “It’s time to do something about it and quit b***ing, quite honestly.”

On a national level, the Biden administration and Democratic lawmakers are floating several different tax measures related to higher taxes for wealthy Americans and corporations. Sen. Elizabeth Warren (D-MA) recently reintroduced her proposal on taxing the ultra-rich.

“I know Senator Warren has put forward a wealth tax, and the president shares her view that middle-class families are paying more than their fair share and those at the top are not doing their part,” White House Press Secretary Jen Psaki said at a press conference on Monday. “Certainly he has that shared objective.”

'Something we've never done in the United States'
The proposed wealth taxes in California and Washington state are similar to Warren’s plan and would impose an annual tax rate on income above certain thresholds.

“Since the start of the pandemic, billionaires have accumulated an additional $1.1 trillion in wealth,” Assembly Member Alex Lee (D-San Jose) said. “In order for California to really come back roaring, we need sizable investments in our communities… we’re proposing a modest 1% tax on households with net worths of over $15 million, and 1.5% on wealth over $1 billion.”

Critics of the wealth tax say it may be difficult to calculate and be enforced. The revenue generated might not be as much as expected while the costs of administering the tax could be higher than calculated.

“Taxing wealth is something we've never done in the United States and that most countries have not done,” Jared Walczak, the Tax Foundation's vice president of state projects, told Yahoo Money. “They're complex and they create a lot of economic harm because they're paid on your assets — which often have to be liquidated to pay them.”

While wealth taxes reached their peak in OECD countries in the 1990s, the number of OECD countries that currently have a wealth tax dropped to five from 12 by 2019 because of the challenges those taxes create.

The proposed plan in New York — which includes raising income taxes, imposing new capital gains taxes, and increasing the estate tax among other measures — is similar to President Joe Biden's campaign plan to raise the corporate tax rate to 28%, require a true minimum tax of 21% on all foreign earnings on U.S. companies, raise the top individual income tax rate to 39.6% (the current maximum is 37%), and require those who make more than $1 million annually to pay the same rate on investment income as they do on their wages.


The top 5% would bring in most of the tax revenue. (Graphic: David Foster/Yahoo Finance)
'We create more billionaires than anywhere in the world'
This isn’t the first time California has proposed a wealth tax on its richest residents: Last year, a similar bill to levy a 0.4% tax on the wealthiest who have a net worth of more than $30 million did not garner enough support.

The new proposal, instead, raises that to a 1% tax on individuals who earn more than $50 million per year.

“California has 12% of the U.S. population, but 25% of all billionaires,” economist Emmanuel Saez, who worked with Warren on her wealth tax proposal, said at the Tuesday press conference. “Their total wealth is now about $1 trillion… about half of the $22 billion wealth tax would be paid by 170 California billionaires.”

Gonzalez noted that “in California, we create more billionaires than anywhere in the world, yet we still have people living on the streets, we still have schools that are underfunded."

Miguel Santiago, a Democrat who represents Los Angeles, added: “When we talk about a wealth tax, we talk about striking at the heart of income inequality… a lot of people in our communities have fallen back… [while] those who are ultra-wealthy could afford a quarantine in their multi-million dollar homes or their yachts… it’s not a radical idea to uplift people out of poverty.”

Entrepreneur Joe Sanberg, a progressive activist who has also pushed for a $15 federal minimum wage, also joined the call and stressed that he was passionate about this initiative as he sees it boosting economic growth in the state.

Washington's wealth tax would only target intangible financial instruments, meaning that investments and ownership in publicly traded companies would be taxed but not houses or business ownership. Walczak noted that the Washington state wealth tax would only affect 12 billionaires.

“If any one of them were to leave the state, or make another state their state of residence, the tax revenue would plummet on this,” he said. “Not just the revenue from this new wealth tax, but also potentially all of the other taxes.”"

MY COMMENT

WATCH OUT.......these sorts of "new" taxes that ONLY target the 1%....have a historical way of ending up applying to EVERYONE. Ever hear of the income tax? It started the same way....only on the top 1%.

Increased capital gains taxes.....will severely impact job creation and will severely impact investors behavior. The higher the capital gains tax.....the less incentive for people/investors to gamble their personal assets buying shares of a business.

The increase in the corporate tax rate. Well we saw how this worked just four years ago. The TOTAL incentive was for companies to FLEE the USA and establish themselves as foreign companies. In addition much incentive to move plants and manufacturing overseas. Yes....more job losses.

Estate taxes......a total negative toward small business. The tax plan ALSO includes proposals that will severely impact small business over and above estate taxes.

There has never been a country that has TAXED itself to success. This STUFF......will truly be a total negative for the economy.....for business.....for investors......for jobs.......and for the country.

As a small business owner.......that retired and got out of business at age 49......the key consideration was the ever increasing taxes, fees, and regulations that drove up the cost of business and put the hand of the government in my pocket to the tune of over 50% of my business earnings. Companies, business owners....do have a choice.....when this STUFF gets too extreme.....it is an easy choice to.........choose to put personal assets elsewhere. Of course....that means loss of jobs for employees, loss of benefits for employees, loss of taxes and fees to government, loss of payments to suppliers and all the other support services that live off the business.....etc, etc, etc.

It shows where we are when investors worry about a small blip in a Ten Year Treasury......yet the government is going to......yes I said going to since I believe much of this stuff is INEVITABLE.........impose HUGE costs on the business community and the people that furnish the capital to keep business moving forward.

 

They have not released the date yet Dax. All they are saying is later in the month of March 2021.

 

I.........FEEL YOU.......oldmanram. I made the exit when I was 49. I thought the tax burden was bad than. BUT.......with the sort of thinking that is going around right now.....it might end up being worse.....or even way worse. BUT.....hey....50K as a couple.......that IS rich right?

 

Been skimming some articles. I LOVE how the media is trying to....fear monger.....the FED meeting and their announcement and language tomorrow. HERE are some......I could post ten times this many. Powell has said.......about 500 times......over the past 1-7 days....that there is NOT going to be any change....yet they just can not help themselves. The people writing this stuff are.......SHAMELESS.

How the Federal Reserve Might Try to Calm Inflation Fears This Week

US STOCKS-Wall Street dips as Fed meeting kicks off

Dow snaps record-setting streak as Fed starts two-day meeting

S&P 500 ends lower as investors eye Fed meeting

S&P 500 Eases From Record High as Tech Fights to Hold Gains Ahead of Fed

Treasury yields tick up despite good debt auction, with Fed meeting ahead

 

SORRY......oldmanram. This is all speculation at this point.....but....I heard a person on the radio theother day on a financial show saying that one of the things they want to get rid of is TAX DEFERRED EXCHANGES.