The Long Term Investor

As the media and other short term thinkers continue to hammer on the virus, inflation, the FED, negativity, etc, etc.....apparently investors are NOT paying attention....at all.

U.S. Stocks See Large Inflows as ‘Everyone Believes in TINA’

https://finance.yahoo.com/news/u-stock-funds-attract-biggest-100046539.html

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

(Bloomberg) -- U.S. stock funds enjoyed their largest inflows in nine weeks, according to Bank of America strategists, as strong central bank support means there’s no alternative to equities to generate returns.

U.S. equity funds attracted $12.8 billion in the seven days ending Aug. 18, Bofa said in a note, citing EPFR Global data. Worldwide, investors poured $23.9 billion into equities in the period, and pulled $4.5 billion from cash funds, the first outflow in five weeks.

The BofA data, which was collected before the Federal Reserve indicated it could potentially start to taper stimulus this year, indicate investors still have enough confidence in policy support to buy the dips, according to the strategists.

“Investors have zero fear of central banks,” they wrote. “Global central banks have spent $834 million every hour buying bonds since Covid, U.S. government spending $875 million every hour in 2021. Little wonder everyone believes in TINA (there is no alternative) & BTD (buy the dip).”

While risks to the global economic recovery are mounting, money managers in search of returns are sticking to equities. As stocks come off record highs, some markets are faring better than others. Those in China are taking the biggest hit as Beijing widens its regulatory crackdown, with the impact spreading to European luxury shares this week.

U.S. large caps were in vogue, receiving $14 billion of inflows in the week, while investors pulled money out of U.S. small-caps and growth stocks.

Bond funds were also in favor, receiving $12.6 billion. Of those, investment-grade bond funds netted the largest amount, $7.8 billion. High-yield and emerging-market debt also had inflows."

MY COMMENT

YES.....the money POURING into the stock funds is a REAL indicator of the thinking of the GUTS of the investing world....the SILENT MAJORITY....the little retail investors. As to the professionals....who cares.

NOW....on the other hand....those buying bond funds and high yield and emerging market debt.....I have NO CLUE what those people are thinking with the 100 year low interest rates and half the world being at NEGATIVE returns. The risk to their principle is MASSIVE.

We are living through strange and interesting times.

 

Hey G. I went through your remodel finances and list. Looks like you got AMAZING value for your money. I bet the results are spectacular. Good to have you back doing investing talk.

 

I like this little article.

The purpose of a corporation is to seek profits, not popularity

https://thehill.com/opinion/finance...corporation-is-to-seek-profits-not-popularity

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

"The purpose of a corporation is to seek profits, not popularity. But corporate managers are increasingly under immense socio-political pressure to take stances on controversial issues or commit corporate resources for symbolic effect. For example, so-called “investments” in ESG categories (an acronym standing for environmental, social justice or sustainability and governance issues), put a shine on corporate activity but often have little benefit to shareholders. And they often do not even help much the causes to which those diversions of firm capital are directed.

Under traditional corporate governance rules, little of this is authorized. Such socially conscious, popularity-driven management decisions violate a corporate managers’ duty to focus exclusively on maximizing shareholder value.

Yet, in a strange move two years ago this week, the Business Roundtable gave cover to corporate managers who desire to shirk this duty and succumb to socio-political pressure to appear socially virtuous. The Business Roundtable’s Aug. 19, 2019 “new Statement on the Purpose of a Corporation” embraced a “stakeholder” (rather than stockholder) paradigm for what it admitted “redefines the purpose of the corporation.” Over 180 CEOs made a commitment to “lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders.” And they made this shift illegitimately because nothing about it came with shareholder command or even consent.

This vague and multi-metric standard for defining corporate duties is riddled with problems. First, investments of corporate resources are usually zero-sum. If funds are directed toward funding social causes, those funds are not being returned to the shareholders or invested back into a firm to increase its value.

One of the qualities of a good corporate officer is her ability to focus on duties and hold at bay pressures to deviate from the focus on shareholders. Heads of charities have the luxury to think creatively about doing social good. But corporations are not charities.

Indeed, asking corporations to act like charities is counterproductive. Focusing on shareholder value is the highest social cause because it leads to the greatest amount of wealth creation. As corporations and their shareholders maximize wealth, resources flow into the economy in ways that necessarily increase overall social welfare. This is why the title of Milton Friedman’s 1970 New York Times essay, “The Social Responsibility Of Business Is to Increase Its Profits,” so concisely and effectively summarized these duties.

It is important to consider why Friedman stressed that “The view that . . . corporate officials and labor leaders have a ‘social responsibility’ that goes beyond serving the interests of their stockholders or their members . . . shows a fundamental misconception of the character and nature of a free economy.” Corporations operate under a separation of ownership and control. Shareholders own, while managers control decision making, and seldom the twain shall meet.

Furthermore, shareholders generally have highly diversified portfolios, meaning they exercise oversight as the principals in the relationship over their agent managers through contractual provisions and corresponding legal regimes that impose clearly defined duties for corporate managers.

The risk that managers will pursue interests misaligned with the interests of their principals (the shareholders, who are there to get a financial return on their investment) creates what are known as “agency costs.” To decrease these agency costs and eliminate the need to micro-monitor, something which would defeat the idea of separation of ownership and control and make investment more costly than it is worth, corporate managers are subject to a duty to maximize shareholder wealth. From that focused metric, an effective and low-cost system for evaluating a manager’s performance and for controlling agency costs emerges.

Because shareholders have diverse portfolios, they remain rationally ignorant of day-to-day corporate decisionmaking and have no desire to micromanage the control operations of the managers. Consequently, shareholders rely on the contractual duties and the single metric of share value profit maximization reflected in share price as their guide for determining whether or not corporate managers are doing a good job or need to be replaced. Outsiders too use the low profitability of the corporation or low share price to identify poorly managed firms that are prime targets in the market for corporate control for takeovers and the concomitant benefits for shareholders that follow from replacing underperforming management.

Whether a corporate manager is doing well at achieving ESG goals, for example, is impossible to measure, setting aside that achieving those goals was not why the shareholders invested. Consequently, none of the functions served by the traditional corporate purpose model work under the regime advocated for by the Business Roundtable. Once a variety of vague metrics are introduced to judge allowable, appropriate, or even desirable managerial behavior, with ill-defined modes of measurement to determine whether the manager is doing a good or a bad job, the shareholders’ ability to conduct oversight collapses and managers are left unaccountable.

That is the kind of world that the Business Roundtable’s statement two years ago inevitably welcomes and that would make Milton Friedman cringe. This is not an anniversary to celebrate. Instead, it is one that every year requires ringing a warning bell lest we fall prey to its siren song."

MY COMMENT

Others are free to disagree and invest as they wish....of course. BUT....my view of investing is focused on ONE thing....making money. If I am interested in political or social causes I am content to exercise my right to do so through other means than my investments. My preference is to see the companies that I invest in TOTALLY focused on business.

 

This sounds like a good program to me....although all I know is what is in this little article. Financial education.....always a good thing for the next generation.

'Stocks over sneakers': Nonprofit teaches high school students how to invest real money

https://finance.yahoo.com/news/stoc...dents-how-to-invest-real-money-114526770.html

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

"“Stocks over sneakers,” says the T-shirt, neatly capturing the premise behind First Generation Investors (FGI). Three college students launched the nonprofit, which uses real money to introduce high school kids from economically disadvantaged backgrounds to investing in the stock market, in 2018.

FGI was founded by Dylan Ingerman along with his brother Alex, and their friend Cole Mattox while attending the University of Pennsylvania. From a single location in Philadelphia and three kids, FGI now has chapters in 25 schools with 30 more planned to open this fall. In addition to Penn, these include Harvard, Vanderbilt, Middlebury, Tulane, and Duke, as well as historically black colleges and universities like Morehouse and Spelman in Atlanta. Nearly 500 students are enrolled in or have completed the program.

“The reason it’s called First Generation Investors is because none of these kids’ parents have had the chance to learn what they’re learning,” says Niso Nahmiyas, who helped found an FGI chapter at Duke University in Durham, N.C. The goal, he says, is to “stop the cycle of some people working hard and investing and others working just as hard but never having the opportunity to accumulate wealth.”

Last year, there were 27 official “graduates” – students who finished the program and also completed high school – at which point they come into control of the investment account set up for them by FGI. That number jumped to 109 this year and should grow as the program expands. Based on this year’s FGI survey, the demographic breakdown of participants is about 57% female, 42% male, 55% Black, 22% Hispanic, 11% white, and 10% Asian/South Asian. The majority of these students are hoping to attend college, including three who have been admitted to Harvard and wrote about FGI on their college applications.

Meme stocks, bitcoin, and Peter Lynch
Perhaps there’s never a “normal” time in the stock market, but the last three years have been particularly eventful. There was the 2020 Covid crash, a quick and massive economic contraction, and in the wake of that, the rise of meme stocks and digital currencies.

But the high school students in the FGI program don’t seem to get distracted by the occasional drama on Wall Street. The FGI curriculum includes a showing of what to this demographic must appear to be an ancient video featuring Fidelity’s Peter Lynch discussing market cycles and extolling the benefits of having, and sticking to, a long-term strategy. They discuss idiosyncratic versus systemic risk, with idiosyncratic risk illustrated using the example of a 2018 Kylie Jenner tweet that knocked $1.6 billion off the market cap of messaging app Snap.

They provide a grounding in the basics of equity investing and the dynamics of the stock market. But what really seems to grab students’ attention is another concept at the core of the program: the idea of compounding – making money on money over time. And why not? After all, these are 16- to 18-year-olds and they have a long run ahead of them.

Mortgages are boring
Cole and Dylan met during their freshman year at Penn. Both grew up in New Jersey, within commuting distance of New York City, and had been interested in markets since a young age. Both understood they had economic and social advantages not available to most people – parents who went to business school, family members working on Wall Street. They thought there might be a way to use the markets to help address the challenges of income inequality and multi-generational wealth.

That led them first to the issue of financial literacy. After a visit to the Wharton Social Impact Center to review the literature there on financial literacy programs, it became apparent that a lot of this didn’t work as well as it could, says Cole. But what did seem to work was using real money to teach kids about investing. “We thought this [investing in the markets] would have a more immediate and tangible impact than trying to teach someone about mortgages when they’re 16 years old,” says Dylan.

To that end, FGI provides students with $100 in $20 increments over the last five weeks of the program. The money is held by FGI in a custodial account and the kids are given a menu of mutual funds and ETFs in which to invest. Once they complete the course and graduate high school, they assume ownership of the account.

That the sums involved were dwarfed by the money changing hands around AMC or GameStop didn’t seem to matter that much. “I worried that given the small amount of money they might lose interest, but they were mostly happy to just have a stake in the game,” says Duke’s Niso. “Just asking the kids to think about this stuff sends them off in a new direction.”

Working initially with the three kids from Philadelphia’s Boys Latin Charter, Dylan, Cole and Alex began to sense they’d hit on something. “We saw that the program we had crafted was really ‘sticky’ – they all wanted to come back to learn more and ask questions. That was the lightbulb moment,” says Cole.

From there, they went on to develop a formal curriculum and adopted a “franchise” model for the program which would provide a higher level of autonomy to the chapters and make it easier to grow. They did an initial capital raise through GoFundMe, bringing in $10,000 in just two days in November 2020. “Every decision we made from early on was about scale,” says Dylan.

Within a few months they added Fordham and Harvard. From there, the interest has continued to snowball.

‘Squawk Box’ in the school hall
Brett Oslon teaches AP History and financial literacy at Motivation, a Title One high school in West Philadelphia. (He also serves as a senior academic advisor to FGI.) He estimates that about a third of the student body there is made up of “first generation students,” including a large contingent from African countries like Ethiopia and Liberia. He learned about FGI by chance one September Friday in 2019. He was alone in the school at the end of the day when the phone rang. On the other end was Blake Kiernan, a cold-calling student from Penn working with FGI, asking to speak to the financial literacy teacher.

“Having taught in Philadelphia for 21 years I thought I’d heard everything, but this was the first time I’d heard this pitch,” says Oslon. “High school kids from impoverished areas are going to spend time with college kids talking about the stock market. And by the way, they’re going to give your students $100 to invest. It sounded too good to be true.”

Intrigued, Oslon asked around to see who, if anyone, might be interested. The following Saturday, he delivered 25 students for the school’s first class. In those pre-Covid days, the meetings took place in person on the Penn campus, a few miles but a world away from Motivation. Oslon says at first his kids were a little intimidated. “There were some socio-economic differences. Some of our students had a preconceived notion about what a University of Pennsylvania kid looked like.” But ultimately, it became a place for a “great exchange of ideas.”

“A lot of adults make the mistake of correlating poverty and intelligence,” says Oslon. “We have very intelligent kids who, given the opportunity, will do well. Opportunity is the biggest piece of the puzzle for our students.”

Good grades were not a prerequisite for the class. We were looking for kids with a “spark,” says Oslon. This is consistent with the program’s overall philosophy. “We don’t look at grades because we realize that the motivation for something like this isn’t tied to how they do in school,” says Cole.

Oslon likes to tell the story of two students who were late to class one day, talking in the hall. “Our principal was upset that they were late but when I spoke with them, I found out they were having a Squawk Box-like conversation about the value of compounding,” Oslon says. “One of them said something like ‘this compounding is insane.’ Both kids are in college now.

Of course, students this age aren’t necessarily known for long-term planning. Professor Roberto Quercia, who teaches a popular personal finance course at University of North Carolina at Chapel Hill, suggests incorporating a “holistic approach” would be useful if the goal of building intergenerational wealth is to be achieved. “Investing is an important part of this, but not the only part,” he says. Values – why you want money, what you plan to do with it – matter, too, he says.

Harvard professor John Campbell, who also teaches a financial literacy course, takes a similar view. Using “real money is good,” he says, but should be part of a broader financial literacy program. “The concern with financial knowledge is right on point, but there are many other financial decisions that people have to make that have nothing to do with the stock market but also contribute to wealth inequality.”

A big leap
This fall FGI is taking a big leap, more than doubling in size. Of the founders, Alex Ingerman has graduated; Dylan and Cole are both rising seniors, busy laying the groundwork to support FGI once they're out of school. On Aug. 11, they announced a plan to raise an additional $500,000 to support all this growth. By Aug. 17 they already had pledges for $100,000. The money will be used to fund more portfolios and to bring on full and part-time staff.

Wall Street is starting to buy in. Global Endowment Management, an asset management firm based in Charlotte, N.C., recently stepped forward to fund the student portfolios for eight chapters for schools including Vanderbilt, Notre Dame, Wake Forest, and North Carolina A&T.

Professor Quercia notes that successfully managing personal finances is “20% knowledge, 80% habit.” To that end, FGI is working to establish the saving and investment habit in students early on. The hope is these habits will persist even when the markets go south, as they inevitably will. They understand that this is unlikely to solve wealth inequality on its own, but believe every little bit helps. Here again, the program founders are taking the long view, defining success as “the accumulation of household wealth over time.”

It’s an ambitious goal. As Cole says, “This is way bigger than a college project.”"

MY COMMENT

A GREAT program for students. I am SURE the lessons learned in this one SIMPLE COURSE will translate to more students going on to graduate and go on to college and success in life. The KEY will be to keep the program focused on INVESTING......and.......not let it get HIJACKED by advisors and other adults........with other agendas and causes they want to push.

 

I was looking at my primary account today. With the recent discussion of Amazon....I was curious how it stacked up in "total dollar value" and "total dollar gain"....over the life of the holding compared to the other stocks in the account. Here is the info.

Holdings with the highest "total dollar value":

1. Amazon
2. Apple
3. Nike
4. Microsoft
5. Costco

Holdings with the highest "total dollar gain":

1. Microsoft
2. Google
3. Nike
4. Amazon
5. Apple
6. Costco

These are the numbers.....but....you can not draw much conclusion from this since various holdings were purchased at different times and added to at different times. In addition there have been some sales over the many years.

The other holdings that are not mentioned....Nvidia, Honeywell, Home Depot, and Proctor & Gamble.....are not in the same league as the above in terms of "total dollar value" or "total dollar gain"......but.....are in the same general ballpark.......they are ALL doing nicely and are important to me as part of the WHOLE. I consider the "WHOLE" of the portfolio as more important and significant than the individual parts.

If I look at the gain as a...."percentage"...the list is:

1. Google
2. Microsoft
3. Nike
4. Amazon
5. Apple
6. Costco

Basically MEANINGLESS stuff.....but......whatever. ALL in all the 10 holdings are doing extremely well as a whole and producing outsized gains over the long term compared to the SP500.

HERE is the data that REALLY matters....ENTIRE......including my two funds the SP500 Index and Fidelity Contra...... portfolio performance versus the SP500:

Portfolio.....versus the.....SP500:

Since 1-1-09 +17.68% versus 15.78%

Five years +16.14% versus +17.45%

Three years +18.41% versus +17.96%

One year +34.43% versus 33.20%

Year to date +19.69% versus 19.36%

Three months +11.88% versus +7.17%

Again totally meaningless data.....for anyone looking at this snapshot. What is amazing to me is the fact that nothing in the account is RUNNING AWAY from the other holdings...all are doing consistently well over the longer term.

 

Sounds GREAT G.....good job on the remodel.....and....your life plan with the home sounds very well thought out. It is nice when you get that close to having no mortgage.

 

I like this article. Is it "LIKELY" to happen.....I dont believe so....but it is definitely possible and something to consider.

A ‘Flash Recession’ Might Be Looming. Here’s What That Means.

https://www.barrons.com/articles/flash-recession-might-be-looming-51629483005?siteid=yhoof2

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

"Recently, data on economic growth have been missing estimates as the Delta variant of the virus that causes Covid-19 hampers global supply chains and demand. Bank of America strategists warned in a note published Friday morning that the near future is bleak for the economy, saying a flash recession could come this year. That’s a brief and sudden decline in economic output, while a standard recession is when economic activity declines for at least two consecutive quarters.

The bank flagged three reasons investors appear to be concerned about economic growth. First, the yield curve, or the difference between long-dated and short-term bond yields, has declined. Since the first quarter’s conclusion, the yield differential between the 10-year and 2-year Treasury bonds has fallen from 1.59 percentage points to 1.02. That signifies investors see weakening economic demand in the future, even while inflation runs hot.

Second, commodity prices, which respond to economic demand, have been falling, with crude oil and copper off 16% and 13%, respectively, from their 2021 highs.


Third, small-caps, whose earnings are more sensitive to changes in economic demand, have suffered. The Russell 2000 index is down nearly 8% from its all-time high, hit in mid-March.

If economic demand does weaken from here, the strategists believe manufacturing could suffer in particular. Manufacturing activity, measured by The Institute of Supply Chain Management Purchasing Manager’s Index, grew almost 50% year over year earlier this year, its highest growth rate since before 2011. The growth has since slowed to roughly 10% and is likely to turn negative by October, Michael Hartnett, chief investment strategist at Bank of America wrote. Such a decline would likely be consistent with a decline in overall economic output, or negative growth.

Any decline in manufacturing activity would be negative for the stock market, Bank of America’s data shows. There’s a tight correlation between the year-over-year movements of the ISM PMI and those of the S&P 500. If manufacturing activity contracts, the S&P 500 would fall hard, according to the strategists. Hartnett wrote that the bank’s view is that stocks will have negative returns in the second half of the year.

Investors are chiefly concerned by the threat of stagflation, or weak economic growth with high inflation. This year, inflation has run hot as trillions of dollars of fiscal stimulus have shored up demand as states and countries have reopened. Now, supply-chain constraints are worsening as the Delta variant forces global ports and factories to close, making supplies scarce and, in turn, increasing costs. “Inflation [is] now inducing stagflation,” Hartnett noted.

Just keep watching the path of the Delta variant."

MY COMMENT

It is all about PROBABILITY......and that means that I dont think we will have a recession. We might have a nasty correction for a few months perhaps even 3-4 months. BUT....the above is a consideration since we are in UNKNOWN economic times.....never experienced before.

 

Here is what we are facing this week......futures as I type this are up VERY NICELY.

Fed's Jackson Hole Symposium, personal income and spending: What to know this week

https://finance.yahoo.com/news/fed-...pending-what-to-know-this-week-150228513.html

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

"Traders this week are poised to focus closely on Federal Reserve policymakers' virtual appearance at the bank's annual Jackson Hole Economic Policy Symposium.

The event, which takes place from Thursday to Saturday this week, is set to serve as a forum for more discussions around Fed policymakers' plans to announce and implement a shift in the central bank's monetary policy stance. Namely, investors have been closely watching for months to hear when officials will begin tapering their purchases of Treasury and mortgage securities, which have been taking place at a pace of $120 billion per month for more than a year during the pandemic.

This asset purchase program had been a major policy underpinning U.S. equity markets this year, providing liquidity throughout the economic crisis induced by the virus. But as the economy makes headway in recovering, Fed officials' talk around pulling in the reins on this program has started to increase.

Last week, Federal Reserve officials signaled the announcement of the start of tapering was edging closer. According to the meeting minutes from the Federal Reserve's July meeting, most monetary policymakers believed the economy will have made enough progress toward recovering to warrant tapering.

"Most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year because they saw the Committee’s 'substantial further progress' criterion as satisfied with respect to the price-stability goal and as close to being satisfied with respect to the maximum employment goal," according to the FOMC minutes.

But as many pundits have noted, the central bank still has a host of meetings left in 2021 to serve as a platform for further discussing or announcing tapering. As a result, Jackson Hole this week may cause few ripples, with policymakers like Federal Reserve Chair Jerome Powell sticking to their previously telegraphed language about waiting to see further improvements in the labor market before escalating talk of tapering further.

"Jackson Hole next week is certainly a target for when we might hear some actual firm language around taper. I'm not really expecting much out of Jackson Hole," Garrett Melson, Natixis Investment Managers Solutions portfolio strategist, told Yahoo Finance last week. "We're more in the camp that we probably start to hear something around the November meeting. Perhaps they're as quick as December to start actually implementing the taper. But I'm still more in the camp that January is probably when we begin to see a slow taper, probably in the ballpark of $15 billion per month."

"They're still very, very dovish. They're slightly less dovish," he added. "But that's a little semantics at this point. Taper is very well documented and well known. We know it's coming. It's just a matter of timing and really shouldn't surprise many investors out there."

As for the ultimate market impact of tapering, if the outcome is anything like the response from the last announcement of tapering in 2023, investors might brace for a momentary bout of volatility and some sector rotation beneath the surface.

"In 2013, Fed Chair Bernanke's comments about tapering catalyzed a five-day, 40 bp backup in 10-year yields and a 5% drop in the S&P 500," said David Kostin, Goldman Sachs' chief U.S. equity strategist, in a note last week. "The initial signal from the taper tantrum ultimately proved fleeting during a year with extremely strong returns for equities."

"The S&P 500 rebounded 5% in the roughly two months following the tantrum, led higher by the materials, consumer discretionary, and health care sectors," he added. "By December, the S&P 500 had posted a full-year return of 32%. As the Fed reiterated its commitment to accommodative policy, growth outperformed value and cyclical stocks outperformed defensives."

Personal spending, income
New economic data on consumer spending and income will also be in focus later this week, with reports on both metrics due for release on Friday.

Consensus economists expect to see personal spending slow to just a 0.4% monthly clip in July, decelerating from June's 1.0% increase.

Just last week, the Commerce Department's data showed retail sales fell more than expected in July, dipping by 1.1%. The print pointed to more moderation in spending as the impact of stimulus checks earlier this year waned further, and lowered the bar for the Bureau of Economic Analysis' monthly personal spending data.

Other data has also underscored the slowdown in consumer spending, especially given the recent spread of the Delta variant starting in the middle of summer.

"Although services spending started strong in July boosted by the holiday, our aggregated BAC credit and debit card data suggest services spending, particularly for travel and leisure, slowed down noticeably in the second half of the month, potentially due to rising Delta concerns," Bank of America economist Michelle Meyer wrote in a note Friday.

Friday's consumer spending report will also come with data on personal income, which is also expected to have ticked up only slightly on a monthly basis. Economists look for a 0.1% increase in July, which would match the pace from the prior month.

Even with the deceleration in income, however, the personal savings rate may have increased as an early round of child tax credit payments helped offset a slowing pace of income growth, some economists noted.

"The advance child tax credit payments delivered this month translated into a lower tax burden and therefore a 1% month-over-month boost to disposable income, consequently leading to a rise in the savings rate to 10.0% from 9.4% in June," Meyer predicted."

"Economic calendar

• Monday: Chicago Fed National Activity Index, July (0.09 in June); Markit U.S. Manufacturing PMI, August preliminary (62.8 expected, 63.4 in July); Markit U.S. Services PMI, August preliminary (59.0 expected, 59.9 in July); Markit U.S. Composite PMI, August preliminary (59.9 in July); Existing home sales, month-on-month, July (-0.3% expected, 1.4% in June)
  
  
• Tuesday: Richmond Fed Manufacturing Index, August (25 expected, 27 in July); New home sales, month-on-month, July (3.6% expected, -6.6% in June)
  
  
• Wednesday: MBA Mortgage Applications, week ended August 20 (-3.9% during prior week); Durable goods orders, July preliminary (-0.2% expected, 0.9% in June); Non-defense capital goods orders excluding aircraft, July preliminary (0.5% expected, 0.7% in June); Non-defense capital goods shipments excluding aircraft, July preliminary (0.6% in June)
  
  
• Thursday: Initial jobless claims, week ended August 21 (352,000 expected, 348,000 during prior week); Continuing claims, week ended August 14 (2.780 million expected, 2.820 million during prior week); GDP annualized quarter-over-quarter, Q2 second estimate (6.6% expected, 6.5% in prior print); Personal consumption, Q2 second estimate (12.3% expected, 11.8% in prior print); Core PCE quarter-over-quarter Q2 second estimate (6.1% expected, 6.1% in prior print); Kansas City Fed Manufacturing Activity Index, August (30 in prior print)
  
  
• Friday: Advanced goods trade balance, July (-$90.9 billion expected, -$91.2 billion in June); Wholesale inventories, month-over-month, July preliminary (1.0% expected, 1.1% in June); Personal income, July (0.2% expected, 0.1% in June); Personal spending, July (0.4% expected, 1.0% in June); PCE core deflator, month-on-month, July (0.3% expected, 0.4% in June); PCE core deflator, year-on-year, July (3.6% expected, 3.5% in June); University of Michigan Sentiment, August final (71.0 expected, 70.2 in prior print)"
  

"Earnings calendar

• Monday: No notable reports scheduled for release
  
  
• Tuesday: Advance Auto Parts (AAP) before market open; Intuit (INTU) after market close
  
  
• Wednesday: Best Buy (BBY) before market open; Salesforce (CRM), Autodesk (ADSK), Ulta Beauty (ULTA) after market close
  
  
• Thursday: The JM Smucker Co. (SJM), Dollar General (DG), Dollar Tree (DLTR) before market open; The Gap (GPS), HP Inc. (HPQ) after market close
  
  
• Friday: No notable reports scheduled for release"
  

MY COMMENT

I dont expect anything on tapering this month.......and.....I would still be surprised to see it start this year. Early next year....probably. AND....it will continue for many many months perhaps all year in 2022. As to any impact on investors......NONE. Will anyone care after the first few weeks of tapering.....NO.

This will be our last full market week to end the month of AUGUST.....lets make it a good one.

 

VERY succinct and to the point Zukodany.

Here is a nice little article to start the new investing week.

Don’t Let Summertime Blues Influence Your Investing Decisions
Sentiment surveys don’t tell you much about stocks’ future direction.

https://www.fisherinvestments.com/e...time-blues-influence-your-investing-decisions

"From the tragic circumstances in Afghanistan and Haiti to COVID’s persistence, headlines have no shortage of bad news these days. The Delta variant in particular has dominated coverage, and it is weighing on the collective mood if the latest sentiment surveys are any indication. US consumers are feeling their bluest in nearly a decade, and the atmosphere seems similarly dour on the Continent. But for investors, sentiment surveys are at best a snapshot of feelings in the present—a coincident indicator. They won’t tell you where the economy or markets are headed next.

Several widely watched surveys highlighted the world’s case of the summertime blues. The University of Michigan’s US Consumer Sentiment Index (CSI) fell -13.5% m/m to 70.2 in August, well below expectations of 81.0. That was the third-largest monthly decline on record—behind only April 2020 and October 2008. The ZEW – Leibniz Centre for European Economic Research’s Indicator of Economic Sentiment for Germany fell 22.9 points to 40.4—a third-straight monthly contraction after May’s 20-year high.[ii] A Wall Street Journal/Vistage small-business confidence survey reported only 39% of small-business owners expect US economic conditions to improve in the next 12 months—nearly 30 percentage points below March’s 67%.[iii] The overwhelming (and unsurprising) factor weighing on sentiment: the Delta variant. As an economist summarized in U-Michigan’s press release, “Consumers have correctly reasoned that the economy’s performance will be diminished over the next several months, but the extraordinary surge in negative economic assessments also reflects an emotional response, mainly from dashed hopes that the pandemic would soon end.”[iv]

We can certainly empathize. Yet it is also important to keep perspective, as sentiment surveys don’t predict future market returns. Take the U-Michigan survey, which last plumbed similar lows in December 2011 and spent much of that year below today’s level. That year coincidentally[v] illustrates how sentiment surveys are, at best, coincident indicators—and can be influenced heavily by recent stock market movements and fearful headlines. Several big stories weighed on sentiment in 2011. In the US, a debt ceiling fight—and potential credit rating downgrade (which eventually happened)—led coverage. Across the Atlantic, the eurozone’s debt crisis stirred concerns about a potential euro collapse. Global stocks suffered twin corrections (sharp, sentiment-fueled drops of -10% to -20%) that year, further shattering investors’ nerves. However, as Exhibit 1 shows, Americans’ mood didn’t predict lasting market malaise. Nor did it do a good job predicting volatility—mostly, it just mirrored market wobbles.

Exhibit 1: Sentiment Doesn’t Lead Stocks


Source: FactSet, as of 8/18/2021. S&P 500 daily Total Return Index, 12/31/2010 – 12/31/2013, and University of Michigan Consumer Sentiment Index, monthly, January 2011 – December 2013.

The CSI’s 2011 high was in February—not exactly a precursor of the bumpy stock market ride to come. Its 2011 low came in August, when stocks were in the midst of the year’s first correction and hyperbolic headlines were escalating. The US debt ceiling fight culminated with Standard & Poor’s downgrade of America’s credit rating on August 5, while protests and bailout talks for Greece dominated discussions throughout the summer.

Yet poor moods don’t equal a poor reality. Dour headlines can weigh on people’s emotions, especially when coverage speculates the worst is yet to come. In 2011, headlines claimed America’s credit downgrade was a step toward default and Greece’s problems made eurozone collapse imminent. These were all false fears, not serious threats to the US or global economy. Moreover, stocks move most on the gap between expectations and reality. When those dismal projections didn’t pan out, the relief boosted stocks up the proverbial wall of worry. A rocky 2011 gave way to a nice 2012 and gangbusters 2013—and the bull market kept marching until lockdowns truncated it last year.

We think those past lessons can serve investors well today. Sentiment surveys have roughly tracked COVID progress this year. Moods perked up this spring as vaccines rolled out and a summer of fun seemed on the horizon, but they have since cooled alongside rising case counts. However, surprises move markets most—and little with COVID is surprising at this point, and the primary economic risk has always been the associated lockdowns rather than the virus itself. Granted, restrictions and lockdowns are human decisions, which defy prediction. But outside so-called “Zero Covid” areas like Australia and New Zealand, draconian rules largely aren’t reappearing. Instead, continuing to adapt while staying open appears to be the choice for most governments in the US and Europe. To roil markets anew, we think reality would likely have to turn out much worse than feared.

The latest sentiment surveys suggest many expect a pretty bleak foreseeable future. With expectations so dour, reality has a low bar to clear—reason to remain bullish, based on what we see now. That perhaps sounds counterintuitive, but we think it is critical to remember stocks are forward looking and rather callous. In our view, they have likely already moved on from today’s Delta-related setbacks and are looking further ahead, to a world that has continued to adapt to living with COVID."

MY COMMENT

Stocks are rather CALLOUS......I love that phrase. So true. The markets dont care in the slightest about the short term drama and fear......at least over the longer term. It is all about......show me the money, the reality, and the fundamentals.

 

SOLID....open today. Perhaps I should call the day and we can all go home early. NAH.....not going to do that yet. I think I will wait till about five minutes to the close to be able to call the day.....one way or the other.

 

This is a nice little article and ILLUSTRATES.....nicely......the difference between emotion and drama and REALITY.

Retail powers through a Delta slowdown: Morning Brief

https://finance.yahoo.com/news/stock-power-through-a-delta-slowdown-morning-brief-090842244.html

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

Delta might be hitting economic growth. Retailers aren't feeling the pinch.
Last week, two main stories featured prominently for markets and the economy: data showing the economic recovery slowing down and retailers reporting blowout second quarter results.

In the Morning Brief last week, we covered a slowing housing market, economists cutting their forecasts for GDP growth, and more commentary about the idea of "peak growth" in this recovery cycle. All of which followed an August 13 report on consumer sentiment that revealed a shocking drop in confidence in the early part of this month amid the spread of the Delta variant, and a pickup in inflation.

In the background of these developments, the stock market wavered. But a rally on Friday left the S&P 500 (^GSPC) roughly unchanged on the week, and within shouting distance of record highs. And a quick glance at my colleague Brian Sozzi's reporting gives us a window into the kinds of results retailers churned out that helped buoy investor confidence.

The week began with Walmart's (WMT) earnings beating expectations, as executives told the Street the Delta variant wasn't changing consumer behavior. Target (TGT) followed with a blowout quarter, and commentary that traffic to its stores hadn't been slowing down in recent weeks.

But even as last week's earnings rush moved away from bellwethers like Walmart and Target, the news remained upbeat.

TJX Companies (TJX), which owns TJ Maxx, Marshalls, and HomeGoods, reported second quarter sales that beat estimates, and said sales have been "very strong" in the early part of the third quarter. Results from Foot Locker (FL) also topped expectations, with the company reporting same-store sales that rose nearly 7%, against Street estimates for a more than 1% drop in the second quarter.

Even Macy's (M), which has been a laggard in the retail space for years, reported a blowout quarter while raising its full-year guidance. It also reinstated its dividend after having cut that payout to preserve cash during the early days of the pandemic.

"Through [Thursday], sales are still great," retail expert Jan Rogers Kniffen told Yahoo Finance Live on Friday. "Nobody's talked about sales slowing down in August. People that did say anything about it said August was good."

Kniffen added: "There is nothing wrong with the consumer from the point of view of the ability to spend or the willingness to spend. And so far, they haven't stepped away from my kind of retail. [Consumers] may have stepped away a little bit from restaurants, but they're showing no inclination to stop spending on discretionary retail, apparel, clothes, shoes. All that stuff is going really, really well."

And so just as we've seen financial markets rotate through leadership groups over the last year, we see consumer spending — the driving force of economic growth — rotating from staying at home, to traveling and dining out, and now towards stocking up ahead of the school year.

A trend that seems to be enough for investors to rally behind."

MY COMMENT

I have NEVER before seen the gap between financial reporting and news and REALITY as large as it is now. The stock markets are STILL doing the......old normal. The ......new normal....is the delusional material that is being put out as FACT by the financial media.

The problem....virtually everything reported as FACT is nothing more than the personal opinion of the writer.....or.....a reflection of "FEELINGS". I can understand this in the normal news media...they have become totally.....supermarket tabloid sources. BUT....the financial media....you would think they would be better than this. NOPE....this trend has INFECTED every media source of any stripe.

I dont use "media" to invest by anyway.......but many people do and they will pay the price. This is the ultimate BACKWARD LOOKING source. By the time you see anything in the media it is......old news to the markets.

 

As to the Jackson Hole Symposium.......totally irrelevant performance art. Financial theater. There is NOTHING that can or will happen there that is not already known to ANYONE with any sort of connections. Simply another gathering of the ELITES. BUMMER for them....they have to do it by ZOOM this year.....so no big parties for them this year.