The Long Term Investor

You are so right....Emmett. This is going to be the mother of all years......for shopping VERY EARLY for the holidays......if you want to score what you are looking for. I believe it is going to be a BOOMING Christmas season and "stuff" is going to disappear very quickly and very early.

 

Consider ALL the negativity out there right now in the financial media.....and than.....weigh what is in this little article.

Stocks Get ‘Monster’ Inflows as Traders Exit Cash on Fed Relief

https://finance.yahoo.com/news/stocks-monster-inflows-traders-exit-103522257.html

(BOLD is my opinion OR what I consider important content)
"(Bloomberg) -- Market participants spurned cash this week in the biggest exit in more than a year and piled into equities on bets that the Federal Reserve will remain investor-friendly, according to Bank of America Corp.

Money-market funds saw an outflow of about $62 billion in the week through Wednesday, the most since July 2020, BofA said in a note, citing EPFR Global data. Investors put $51 billion into stocks, the largest addition since March, and $16 billion into bonds.

“Monster reallocation cash-to-stocks as tax redistribution threat recedes and Fed expected to remain Wall Street-friendly,” said BofA strategists led by Michael Hartnett.

The Fed will probably hint at its meeting next week that it’s moving toward scaling back monthly asset purchases and make a formal announcement in November, but would hold interest rates near zero through 2022, according to a Bloomberg survey of economists. Investors have also been keeping track of President Joe Biden’s plans to raise taxes, as moderate Democrats have balked at recent efforts to target the assets of the wealthiest.

The seven-month rally in stocks has stumbled in September over concerns about the rollback of monetary stimulus, inflation risks and China’s regulatory crackdown. But major fund managers remain invested and bullish on equities, citing a lack of investment alternatives.

Equity inflows were led by U.S. stock funds with an addition of about $46 billion, according to BofA. U.S. large caps saw their biggest inflows on record and technology shares were investor favorites among sectors. Gold funds attracted $37 million, the largest amount in six weeks."

MY COMMENT

IGNORE everything else....follow the money. I mean come on man........where is anyone going to put money now or into the future? The stock markets are the ONLY game in town......short term and long term.

 

And speaking of the short term.......YES......I post a lot about the short term "stuff"......primarily out of day to day interest and having an interest in business and economics and capitalism.

BUT.....be aware......I dont post the short term "stuff" because it is important. ACTUALLY it is RARELY important to any real long term investor. This thread would be pretty boring if it was 300+ pages of......"well I did nothing since I am a long term investor".

I LIKE to talk business and investing and economics and capitalism.....BUT....that does NOT mean that I am considering any of this day to day stuff as an investor. My entire focus as an investor is SUPREMELY LONG TERM.......and....has been for 0ver 45+ years. That is where the REAL money is made.

I continue to be fully invested for the long term as usual.

 

I BELIEVE that the greatest negative impact on the markets right now is government and taxes. There are so many CRAZY trial balloons on tax increases in the sky right now that you can not even see the sun. All you see is a mass of brightly colored balloons.

Much of the tax stuff that is in the daily media is INSANITY and CRAZY. Most of it has ZERO chance of passing......but.....it is impacting people and making the markets very erratic. People are EXHAUSTED by all that is going on in DC. EVERYONE is waiting for the next shoe to drop.

IGNORE....IGNORE.....IGNORE.

 

For Emmett.....

Why a record number of container ships are chilling off the California coast

https://finance.yahoo.com/m/dd5a564e-7701-33ba-8145-4d6b3b7c31b6/why-a-record-number-of.html

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

"As retailers gear up for the holiday season, a record number of container ships trying to bring imported goods into the US are stuck off the coast of California, another casualty of ongoing disruptions to the global supply chain.

Sixty-five vessels were waiting to dock at the ports of Los Angeles and Long Beach in the San Pedro Bay Sept. 16, according to the Marine Exchange of Southern California, a record high. Captain Kip Louttit of the Marine Exchange told Quartz that an unprecedented 23 of these ships are in a drift area—meaning there is no room for them to anchor in the water.

The queue of container ships waiting in the bay has been rising steadily throughout the week, reaching new highs each day. AS SERAFINA, which arrived in Long Beach on Aug. 25, has been there the longest, according to Louttit. The ship, which arrived from Shanghai, appears to be delivering goods to companies including Samsung C&T America, according to the website Marine Traffic.

How is the shipping industry handling the end of lockdowns?
Shipping companies have been dealing with the impact of supply chain disruptions since March of last year, when consumer demand slowed due to pandemic lockdowns and ocean liners were taken offline as manufacturers shut down. The shipping industry still hasn’t caught up with the surge in demand from reopened economies.

With the holiday season approaching US imports are on the rise, creating logjams at major ports around the country. A recent Bloomberg analysis found that the number of container vessels waiting to enter the top three US ports has been steadily rising since July.

What’s more, warehouses are increasingly full, with the volume of cargo piling up due to supply chain bottlenecks. While there is about 2 billion square feet of warehouse space in Southern California, Gene Seroka, executive director at the Port of Los Angeles, told Bloomberg on June 30 that these warehouses were “overflowing.” There often isn’t enough space for container ships to unload deliveries even when they do finally dock.

“All parts of the supply chain have been kind of stacked up,” he added.

What does this container ship pileup mean for you? In a Sept. 16 CNBC interview, Seroka echoed the message that many retailers have been sending to customers over the past few weeks: get your holiday shopping done early, and plan for delays."

MY COMMENT

I have been through that Huntington Beach, Newport Beach, Santa Monica, Hermosa Beach, Long Beach, etc, etc, area many times while touring.

Listen to Emmett.....he is right on the Christmas shopping mess that is quickly coming.

 

Nice RED day today. And...I lost ground to the SP500 by 0.23%. Nothing good to say about the markets today.....I had 1 holding in the green....slightly......good old PG.

 

This week was one of those weeks that seems DISMAL and NEGATIVE......but all in all the losses in the big averages were NOT significant. If we are at the start of a correction.....at this rate.....it will take a long, long, time to get to where we are down by 10%.

DOW year to date +13.00%
DOW for the week (-0.07%)

SP500 year to date +18.02%
SP500 for the week (-0.57%)

NASDAQ 100 year to date +18.97%
NASDAQ 100 for the week (-0.69%)

NASDAQ year to date +16.73%
NASDAQ for the week (-0.47%)

RUSSELL year to date +13.27%
RUSSELL for the week +0.42%

Hardly a bump in the road this week for the averages. Good to move on to a new week in a few days.

 

HERE is an example of one of those many, many TRIAL BALLOONS that I talked about above.

Democratic plan would close tax break on exchange-traded funds

https://www.cnbc.com/2021/09/16/democratic-plan-would-close-tax-break-on-exchange-traded-funds.html

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

"Key Points

• Senate Finance Committee Chairman Ron Wyden, D-Ore., has floated a new levy on exchange-traded funds to help pay for the Democrats’ $3.5 trillion budget package.
• The measure, which targets tax-free “in-kind” transactions, aims to stop wealthy investors and companies from skirting capital gains taxes.
• However, opponents say the proposal may negatively affect all investors.

Senate Finance Committee Chairman Ron Wyden, D-Ore., has floated a new levy on exchange-traded funds to help pay for the Democrats’ $3.5 trillion budget package.

Exchange-traded funds, or ETFs, are baskets of assets — such as stocks or bonds — and can be bought or sold throughout the day like stock. While everyday investors don’t directly own the shares, a fund manager may buy or sell the underlying assets to financial institutions.

Regular investors typically avoid taxes while owning the fund because financial institutions can swap the underlying assets for others, known as an “in-kind” trade, which doesn’t trigger capital gains.

Wyden has called for ending the tax break for these in-kind transactions, according to the proposal, which may affect all investors across the $6.8 trillion U.S. exchange-traded fund industry.

The plan aims to crack down on the financial institutions that bypass capital gains taxes.

“We’re only talking about the taxable accounts of the wealthiest investors,” said Wyden in a statement, as the plan exempts ETFs in tax-deferred retirement plans, such as 401(k) plans or individual retirement accounts.

“This particular proposal simply applies the same rules already in place for corporations to regulated investment companies, so wealthy investors can no longer avoid all tax on their gains,” he said.

Fund managers use the in-kind trading strategy to get rid of appreciated assets without creating a taxable transaction.

For example, a fund manager may tell a financial institution to deposit stocks, and the financial institution redeems the assets the fund manager wanted to sell two days later, known as a “heartbeat trade.”

“Everyone uses [heartbeat trades] when there’s going to be a rebalancing,” said Fordham University law professor Jeffrey Colon, who has researched the topic.

Wyden’s plan to tax in-kind trading has already received pushback from the ETF industry, saying the plan may hurt smaller investors as they could be liable for taxes as well.

“The Investment Company Institute strongly opposes the provision in Chairman Wyden’s draft legislation to change the tax treatment of the use of in-kind redemptions by ETFs and mutual funds,” said Investment Company Institute President and CEO Eric Pan.

“This provision will penalize Main Street investors striving to build financial security, especially those using ETFs, which make greater use of in-kind redemptions,” he said.

Wyden’s proposal may raise $200 billion over the next decade, according to preliminary estimates from the nonpartisan Joint Committee on Taxation. However, lawmakers are still debating ways to fund the $3.5 trillion budget.

“As the Senate Democratic caucus continues to look at the menu of tax policy I’ve put forward, this package of loophole closers will be an important part of our conversation,” Wyden said."

MY COMMENT

Yes...at the moment ETF's have an inherent advantage over mutual funds because of this strategy which saves shareholders being subject to capital gains taxes.....they are tax efficient. If this happens to get included in any tax package that......actually....passes it will subject ALL ETF holders to more capital gain taxes....REGARDLESS of income level.

 

Glad to be in the weekend now. We will get another shot at some gains next week with a NEW BEGINNING.

Stock market news live updates: Stocks close lower; S&P 500 posts back-to-back weekly losses as September selling pressure lingers

https://finance.yahoo.com/news/stock-market-news-live-updates-september-17-2021-221426215.html

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

"Stocks fell on Friday as traders continued to digest a slew of mixed economic data and its implications for monetary policy.

The S&P 500 dropped more than 0.9%, adding to recent losses after a new report showed consumer sentiment missed estimates in early September and held near a decade-low as concerns over inflation lingered. The blue-chip index also posted its second straight weekly loss. And both the Dow and Nasdaq also ended lower by the end of Friday's session.

Friday's session also coincided with the quarterly "quadruple witching" event on Wall Street, wherein individual stock options and futures, and index options and futures, all expire on the same day. The occasion has typically brought additional volume — and often some volatility — especially in the days leading up to it and in the run-up to market close."

MY COMMENT

The rest of this little article is just a re-hash of what I posted earlier. Really nothing going on this week....it was just a MILD down week. So what.....it happens.

There was really No significant negative news this week and nothing to cause the down week.....other than trader and big bank negativity. I suspect that much for the negativity is the result of the government TAX AND SPEND bills pending and no one knowing how they will end up. Now that they are actually on the table, suddenly everyone is starting to pay attention. Not that any of this is a surprise.....it has been known since before the election that this STUFF would all be on the table if we had a change in government.

 

HERE is a little article with some Buffett quotes and commentary.....always a good review exercise for any investor.

7 timely Warren Buffett quotes to help guide you in this risky market

https://finance.yahoo.com/news/7-warren-buffett-quotes-know-200000130.html

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

"Warren Buffett is a remarkable investor. He’s grown his business, Berkshire Hathaway, from a failing textile company into a multinational conglomerate with stakes in Geico, Apple and Coca-Cola.

Buffett has dropped countless gems of wisdom over the years, but the following seven quotes offer investors particularly timely advice on how to invest in stocks today — maybe even with your spare change.

1. Beware of inflation (it’s heating up)

“Inflation acts as a gigantic corporate tapeworm. That tapeworm preemptively consumes its requisite daily diet of investment dollars regardless of the health of the host organism. Regardless of a company's profits, it has to spend more on receivables, inventory, and fixed assets to simply equal the unit volume of the previous year.”

Buffett offered this colorful image back in his 1981 annual letter to shareholders. The billionaire investor described high inflation as a “tax on capital” that dissuades corporate investment.

With inflation steadily on the rise, hitting highs not seen in close to a decade-and-a-half, investors might want to think about assets that are immune (or at least not as vulnerable) to the ravages of rising costs.

One example other billionaires like Bill Gates have taken to recently is investing in farmland. Agriculture offers steady, reliable returns — whatever the state of the economy, people still need to eat.

Other assets that have historically done well during periods of high inflation include gold and real estate.

2. Don’t follow the herd

“Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can't buy what is popular and do well.”

According to a Bank of America report in April, a whopping $576 billion went into stock-based funds from November 2020 to March 2021 — trouncing the combined $452 billion inflows seen in the 12 years prior.

Whether you’re new to investing or you’ve been at it for ages, going against the grain is often the prudent thing to do.

As we’ve seen with the meme stock fiascos of late, blindly following the crowd often leads to disastrous results. Instead of focusing on what’s popular, try to prioritize safety and stability.

For example, three solid blue-chip stocks that have performed sluggishly in recent months include The Walt Disney Company, Caterpillar, and Intel. If you're a bargain hunter, they can even be purchased using your digital nickels and dimes.

3. Prepare your portfolio for anything

“[T]he biggest thing you learn is that the pandemic was bound to occur, and this isn’t the worst one that’s imaginable at all. Society has a terrible time preparing for things that are remote but are possible and will occur sooner or later.”

In an interview earlier this summer with CNBC, Buffett reflected on his biggest takeaway from the pandemic: how ill-prepared society is to handle emergencies that it knows will happen sooner or later.

COVID, he points out, had an “extremely uneven” impact on different members of society. While we will certainly be faced with another crisis in the future, it’s difficult to know exactly what that challenge will be.

As an investor, the simplest way to prepare for anything is through proper diversification. Spread your bets out as widely as possible.

Buffett is famously a fan of index funds and has previously said the best thing most investors can do is put their money in an S&P 500 index fund. Many investing apps even let you invest in index funds using only your spare change.

4. Volatility is part of the game

“The true investor welcomes volatility… a wildly fluctuating market means that irrationally low prices will periodically be attached to solid businesses.”

Investing is a roller-coaster ride.

Ups and downs are built into the experience. And no one knows with 100% certainty when, and for how long, those moves will come.

Invest long enough and you’ll find that there will be weeks, months, or even years that your portfolio produces nothing but losses.

But as Buffett explains in the above quote, those periods of decline offer tremendous opportunities to buy high-quality stocks at cheap prices. Investors who purchased stocks during the height of the COVID pandemic have profited handsomely. And, unfortunately, those who sold out to move their money to the sidelines are likely regretting their decision.

If you understand that volatility is the rule (and not the exception), prolonged dips and swings can actually work to your advantage.

5. If you want to buy Bitcoin, proceed with caution

“If you don’t understand it, you get much more excited than if you understand it. You can have anything you want to imagine if you just look at something and say, ‘that’s magic.’”

Buffett has never been shy about his disdain for cryptocurrency. Not only does he openly avoid investing in anything he doesn’t understand, but he’s also wary of a currency that his business partner Charlie Munger criticized as being “so useful to kidnappers and extortionists.”

While he said he would never buy Bitcoin, he famously refused to invest in Apple once upon a time — and now it’s one of Berkshire Hathaway's largest stock holdings.

If you’re set on buying into Bitcoin, be sure to invest only what you can afford to lose. And, as Buffett told CNBC in 2018, remember that it’s not magic — so temper your expectations for returns.

6. Focus on quality and value

“Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down.”

Sure, frugality runs in Buffett’s blood. With a net worth of $100 billion, one of his favorite restaurants is still McDonald’s and has a card that grants him free breakfast at the fast-food chain — something he reportedly cashes in on often.

And who doesn’t love a good deal?

When it comes to stocks, Buffett is just as adamant about finding good bargains — especially of high-quality companies.

Even with a $140 billion war chest of cash, Buffett is never in a hurry to invest Berkshire Hathaway's capital. Instead, he remains patient and only invests in good companies when they're available on the cheap. A couple of Buffett's famous investments include buying Bank of America during the height of 2008 mortgage crisis and Coca-Cola back in 1988 at a time of struggle.

Create a watchlist of stable companies with reputable brands that you'd love invest in, and then wait for the chance to snap them up at discounted prices.

7. Think long-term — even if you have very little to invest

“No matter how great the talent or efforts, some things just take time. You can't produce a baby in one month by getting nine women pregnant.”

No one spits out a fun turn of phrase like the Nebraska native.

But underneath the quip, Buffett has an important message to share: In investing, there’s no tool as powerful as time.

Studies have shown that investors are becoming increasingly impatient, zigzagging in and out of stocks in order to predict what the market will do next.

But instead of worrying about short-term gains, think long-term.

Where to go from here
You don’t have to have to be a billionaire like Buffett to make these investment lessons work for you. And you don't have to limit yourself to the stock market.

For instance, some investing services make it possible to lock in a steady and consistent rental income stream by investing in premium real estate properties — from commercial developments in LA to residential buildings in NYC.

You’ll gain exposure to high-end properties that big-time real estate moguls usually have access to, and you’ll receive regular payouts in the form of quarterly dividend distributions.

With enough time and commitment to the principles that Buffett teaches, investment success is well within anyone's reach."

MY COMMENT

Like EVERYTHING in investing and in business......SIMPLICITY......is critical to success......although.....is is extremely difficult to pull off. It really is as SIMPLE as the above. BUT......as humans.....we are genetically and behaviorally wired to make things more and more difficult and complex. In my view the single most important trait for investing success is the ability to do the same SIMPLE thing over and over and over. When you boil it all down it really is just a function of.....COMMON SENSE.

 

Tax law is now about 90% social engineering and about 10% funding government.

Yes, the U.S. Tax Code Is Progressive

https://taxfoundation.org/us-tax-system-progressive/

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

"As Congress considers several tax proposals designed to raise taxes on high-income earners, it’s worth considering the distribution of the existing tax code. While the image that rich Americans pay little taxes is popular, it’s a misconception: high-income individuals already pay a large share of taxes, even when compared to their share of national income.

Data and analysis from the preeminent nonpartisan governmental research organizations confirms this pattern.

This August, the Congressional Budget Office (CBO) released its annual Distribution of Household Income report, this year relying on data from 2018. The report examines the distribution of household income (as one might guess), as well as taxes and transfer payments. The data shows that top-earning households pay substantial federal taxes. Notably, while the top 1 percent of earners took home 18.3 percent of market income in 2018, they paid 25.9 percent of all federal taxes; by the same token, the top 20 percent of earners received 59.1 percent of market income yet paid 68.9 percent of federal taxes.



The Treasury Department has also released data confirming the above pattern. In a report released this April, they estimated the distribution of federal tax burden across the income spectrum in 2022. According to these estimates, the top 1 percent under current law will pay the highest average effective tax rate, when considering all federal taxes. This difference is largely due to the significant progressivity of the individual income tax: the bottom 40 percent of taxpayers on average pay negative effective personal income tax.



The Joint Committee on Taxation (JCT) published an analysis reaching a similar conclusion about the distribution of the tax code in 2018. My colleague Garrett Watson discussed the data this May. The original report found that the burden of federal taxes was much higher on high-earning households. They paid a much higher effective rate in total, similarly thanks to the progressivity of the personal income tax.



It’s also worth noting that these analyses predominantly focus on pre-pandemic data. The fiscal response to COVID-19 relied heavily on refundable tax credits, lowering the effective personal income tax rate for a majority of taxpayers to below or nearly zero. The Tax Policy Center recently estimated that 60.6 percent of households paid no individual income tax in 2020. In light of these estimates, distribution of the U.S. tax burden was likely even more skewed towards wealthy taxpayers.

Of course, some people will argue that even if the tax code is currently progressive, it should be even more progressive. But they should not dispute the fact that the wealthy pay a larger share of federal taxes than they earn of national income.

MY COMMENT

I have lived this debate and tax situation in my personal life. Raising taxes is NOT a money producer for the government. There are consequences. My personal experience......I was a small business owner for over 20 years. As taxes and fees got higher and higher I reached a point in 1999 where they......(all my personal and business taxes and fees)..... were going to TAKE over 50% of my GROSS BUSINESS INCOME. Yet......at the same time.....the government was NOT stepping up to help fund my business.....that was all my personal responsibility. So....I made the decision to close my business and CUT my NON-CONTRIBUTING partner.....government.......lose. There is a point for any business where the personal sacrifice and putting personal money at risk year after year.....IS NOT WORTH IT. I had the ability to close up and retire at age 49......SO I DID.

At my peak......my business had 12-15 workers. So when I closed my state LOST those jobs......all the business taxes and fees that I was paying were also lost. I planed out my closure for about a year and made sure that ALL my long term workers had.....new..... jobs to go to (through my community and business contacts) and a ONE YEAR severance salary payment. I did things the right way to take care of he people that were loyal productive workers for me.

Over my lifetime......speaking in general.....I have seen a number of times when taxes were RAISED and a number of times when taxes were LOWERED. INVARIABLY.....when taxes are raised.....the amount actually collected goes down and the predictions of the amount of money that the increased taxes are going to raise is NEVER realized. When taxes are lowered the amount of tax receipts invariable goes up. On one hand you are punishing and restricting business.....on the other hand.....you are freeing business to achieve success and growth.

I could go on and on and on about the impact of rising taxes on people and business......but....it is a waste of time since as I started this post......it has NOTHING to do with government revenue or funding government....it is now.......and has been for a long time....... all about driving social policy and creating winners and losers through the tax code. BUT.....BEWARE.....business owners and people have choices and all the projections and predictions of how some tax increase is going to work....in theory.....NEVER works out in REALITY.

 

We ARE going to see a start to TAPERING some time in the next 2-4 months and rising rates some time in about 12-16 months. In spite of the.......GNASHING OF TEETH......in the media.....the ACTUAL impact on investors will be NOTHING. In FACT it will probably be a POSITIVE to get rates and the economy back to normal.

Payback Time With a Potential Payoff

https://www.schwab.com/resource-cen...payback-time-with-potential-payoff?cmp=em-QYC

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

"The European Central Bank (ECB) headed off the U.S. Federal Reserve (Fed) with their announcement to taper their emergency bond purchases enacted in the aftermath of the global pandemic. The Fed is probably not far behind; we anticipate a similar announcement likely to come later this year. But they aren’t the first central bank to consider reining in stimulus—interest rate hikes are underway in an increasing number of countries. It’s payback time as central banks around the world begin to reverse the measures enacted in response to the pandemic. For investors, the payback may lead to a payoff.

Taper-lite
Last Thursday’s ECB policy statement upgraded the growth and inflation outlook for Europe. Responding to this positive news, it also announced a slow reduction in the pace of its asset purchases (QE) compared to its average since March of this year. This move qualifies as “taper-lite” (instead of a full taper) given that:

• Currently, there is no planned end to the Pandemic Emergency Purchase Program (PEPP)—those discussions are anticipated to take place in December. The total asset purchases for PEPP will probably continue at an average monthly rate of around 60-70 billion euros per month in the coming quarter (compared with 80-90 billion in recent months). Further reductions in purchases may be coming early next year, but there is no timeline to winding up the program, yet.
• The ECB still plans to continue its pre-pandemic Asset Purchase Program (APP) until shortly before it raises interest rates—meaning that even if they eventually phase out the PEPP program purchases of 65-70 billion euros per month sometime next year, the 20 billion euros per month under APP will go on (or potentially increase as needed).

The change in asset purchases is likely to make a negligible difference to overall financial conditions or equity markets. We expect more announcements at meetings in the coming quarters, as this was a very gradual start to the removal of stimulus which delivered the easiest financial conditions since the 2008-09 Great Financial Crisis.

Financial conditions easiest since pre-Great Financial Crisis


A positive value indicates accommodative financial conditions, while a negative value indicates tighter financial conditions relative to pre-crisis norms.
Source: Charles Schwab, Bloomberg data as of 9/8/2021.



Although stock markets seem to hang on the words and actions of central bankers, past periods of tapering in Europe have not seen Eurozone stocks weaken. Indeed, just the opposite. The major stock market declines typically came along with the ECB growing its balance sheet to address a weakening economic outlook.

Eurozone stocks and ECB balance sheet tapering/trimming


Source: Charles Schwab, Bloomberg data as of 9/8/2021.



Rate hikes rising
The ECB is not unique in its beginning to rein in stimulus. The Bank of Canada has already tapered asset purchases and looks set to hike rates a year from now. The United Kingdom is now widely expected to raise rates in the first half of next year. The central banks of Norway and New Zealand may both hike rates this year. In fact, an increasing number of the world’s central banks are raising rates, as you can see in the chart below.

Return to rate hikes


* Based on study of 76 central banks
Source: Charles Schwab, Bloomberg data as of 9/8/2021.



As a result, the average central bank policy interest rate for the Group of 20 nations has already started to rise, although remaining very low on a historical basis, as you can see in the chart below. Overlaying the MSCI World Index of stocks onto the Group of 20 nations average policy rate, it seems that the rise in rates has not been an impediment to stock market gains.

Lift off: G20 central bank rates


Source: Charles Schwab, Bloomberg data as of 9/8/2021.



Historically, this observation has also held true looking back further, as seen in the table below. When central banks rates were rising from a low level (below average), stocks in the MSCI World Index performed best (+10.3%). When they were being cut from a high level (above average), stocks in the index performed the worst (-17.8%). This makes sense since it is the economic and earnings environment that is the primary driver of the stock market performance and central bank behavior. When the economy is strengthening after a downturn central banks often lift rates from low levels seeking to normalize policy. When the economy is weakening, central banks are often cutting rates to support economic activity. In the next year, global economic growth is expected to remain above average, and the rise in policy rates is likely to come amid a favorable backdrop for stocks.

Annual performance of global stocks under different policy rate environments


Annual performance of MSCI World Index for all years since 1997.
Source: Charles Schwab, Bloomberg data as of 9/10/2021.



Reining in monetary stimulus of the past year and a half seems to be underway around the world, with the U.S. likely to follow. Contrary to the fear that the payback for a gradual slowing of stimulus is a major drop for the world’s stock markets, the evidence suggests potential for a positive outcome. This would be consistent with the top right quadrant in this table. The payback may lead to a payoff for investors.

MY COMMENT

TAPERING.....who cares. When it happens it will be a financial media topic for about 2 weeks and after that no one will care. When rates start to rise in a year or so.......each announced increase will be a financial media topic and have potential to impact the markets for about a few days to a week.....after that people and the markets will quickly adjust and move on.

Having lived and invested through many, many, times of rising interest rates in the past 45+ years......it is NOTHING to worry about for stock investors. The end result will be simply......NORMALIZING......interest rates.

 

You know what I think about the CHINA stocks......or I should say Caribbean shell companies with no assets that are stand-ins for the actual Chinese companies that DO NOT allow foreign ownership. BUYER.......and.......INVESTOR BEWARE.

China: 'We really are not even in the beginning stages' of the tech crackdown, short-seller says

https://finance.yahoo.com/news/china-tech-crackdown-short-seller-says-133759268.html

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

"Beijing’s latest moves to crackdown on various sectors in the Chinese economy is spooking some investors, and one short seller believes that this is simply the start.

"I know the bulls wanted to say: 'It's just going to be the education stocks,' and then it was the crackdown on gaming," short seller Dan David told Yahoo Finance Live (video above).

In the last few months, the Chinese government under President Xi Jinping has started tightening regulations across various sectors such as gaming — both in terms of casinos and kids playing video games — in addition to Big Tech in the country and even celebrity culture.

“We really are not even in the beginning stages of the crackdown,” the Wolfpack Research Founder and CIO added. “China is going back to a policy of total control.”

Part of Xi’s focus is addressing the wealth inequality in China: There are 626 billionaires in China as of last year, as compared 724 to the U.S., according to Forbes. In contrast, Chinese Primer Li Keqiang said that there were 600 million people in China earning a monthly income of barely 1,000 yuan — roughly around $155 — during a 2020 press conference.

State messaging indicates that the Chinese Communist Party (CCP) is pursuing the concept of “common prosperity” to address the wealth gap.

"We will adhere to the mainstay status of the people and the direction of common prosperity, and always practice development for the people, development by the people, and sharing the fruits of development by the people," the CCP's most recent five-year plan stated. "We will protect the people's fundamental interests, inspire the enthusiasm, initiative, and creativity of all the people, promote the well-being of the people, and continuously realize people's aspirations for the good life (美好生活)."

From a foreign investor’s perspective, according to David, these developments made it “very dangerous” for U.S. investors to hold Chinese stocks. He also stressed that with big mutual funds like BlackRock, Vanguard, Fidelity still exposed to Chinese companies, that would put investors “at great risk.”

'They’ve missed out on what’s going on in China'
Some experts and investors still remain optimistic regarding the outlook for foreign companies in China — at least for the time being.

Cowen Research’s Oliver Chen told Yahoo Finance Live that he was “bullish on luxury goods” in the U.S. as well as China.

“Consumption has changed in China, where it’s more inside China, versus traveling,” said Chen. “The luxury market is very robust, as wealthy people have benefitted from stock market appreciation, real estate appreciation.” Chen added that he saw a lot of momentum for companies that are targeted to the middle-class, such as Coach and Tapestry.

Chen also acknowledged possible headwinds for foreign companies in China, especially for the brands catering to the ultra-rich. For instance, even though Louis Vuitton has an “outstanding presence” in China, Xi’s desire to achieve a “common prosperity” and the “egalitarian nature in China" could present a big risk to the luxury sector, said Chen.

Bridgewater co-chief investment officer Ray Dalio also argued for investing in China despite the crackdowns.

"I have found that most Western observers... interpret moves like these two recent ones as the Communist Party leaders showing their true anti-capitalist stripes even though the trend over the last 40 years has clearly been so strongly toward developing a market economy with capital markets, with entrepreneurs and capitalists becoming rich," Dalio wrote in a LinkedIn post on July 30, referring to the crackdown in the ride-hailing and education sectors.

"As a result, they’ve missed out on what’s going on in China and probably will continue to miss out," the billionaire hedge fund manager added. "I urge you to not misinterpret these sorts of moves as reversals of the trends that have existed for the last several decades and let that scare you away."

At the same time, no one outside of the CCP really know what comes next.

“While US regulators are primarily focused on just four Big Tech companies, the Chinese government is targeting dozens and has the centralized power to act quicker and more aggressively than the US,” DataTrek’s Jessica Rabe wrote in a recent note. “This nuance makes it trickier for investors to navigate the current environment, especially as Chinese regulators remain tightlipped about everything they have planned."

MY COMMENT

The CHINA BULLS are fooling themselves. This move in china by the.........ABSOLUTE DICTATOR........is a POWER move......a consolidation of power. It is a message that we will do whatever we want whenever we want......we own and control everything.

I have believed for many years that all the AMERICAN companies choosing to do business in China at the expense of their technology and business practices being STOLEN.....is pure and simple MANAGEMENT MALPRACTICE and they should be sued by shareholders.

The people that STILL condone and recommend doing busines and investing in China are simply.....FOOLS. Sooner or later the government will come for them and their investments. OR.....in order to do business and invest in China.....they will KOW-TOW to the Chinese dictatorship. Either way it will not end well. You can NOT placate a dictator.....you will only delay the inevitable....which will come when they no longer need you or your money........or.......there is a greater need that takes priority to the outside investor.....so they get thrown under the bus.

BUT....everyone is free to invest as they choose.....it is their money. As for my money....I will NEVER invest in any Chinese company......it is BAD ENOUGH that some of my holdings like APPLE choose to invest and build in China as a routine practice.

 

Typical drop today.....the USUAL reasons......government action with budget, taxes, and spending and other policy or lack of policy. The BIG one is the Chinese EVERGRANDE collapse......that everyone assured us had no chance of CONTAGION last week. Suddenly this week......the reality is different in their thinking. I love that word CONTAGION in conjunction with China.

Add in the media and financial insider OBSESSION with the FED this week....and....you have today.

Fortunately what is going to happen.....or not happen today.....has absolutely NOTHING to do with fundamentals. So....beyond the short term....meaningless. This is one of those days that I look at the reactions of the markets and just SMILE.......it is so SILLY. As usual lots of entertainment value watching human behavior.

 

Well my view is that what we are seeing it s TYPICAL media and news driven event that will be irrelevant and nothing when viewed from long term hindsight. It does not concern me at all. We are STILL not anywhere near correction territory and when or if a correction happens....who cares.....they happen all the time for various reasons that NEVER matter long term.

I just can not get excited in the least about the markets today. A CONFLUENCE of news events and happenings that are NOT based on the fundamentals of AMERICAN companies in the slightest.

I was thinking yesterday as I was driving to a show about how people have moved the goalposts on the definition of long term investing over the years. As we have been seeing for many decades the definition of "long term" continues to shrink. For most of my life I considered long term to be a MINIMUM of about 7 years and perhaps even 10 years. In fact.......I still consider a long term investor as someone with at least a 7-10 year horizan. Worst case....you have to be prepared for BEAR MARKETS that can last for 1-3 years......when defining long term investing.........although they dont happen very often. NOW.....I dont even have a clear idea of what people consider long term....probably a year or two or three.

I just cant get excited over a drop of 3-4% over a 3 week time span. AND.....I try to not get excited over any correction or even a BEAR MARKET......time is on my side. I have DIVORCED all my investing money from my income needs.......so......I have no concern what happens over the short term.......0-2 years. So it really does not matter what I assume or think is happening right now......it does not matter if I am right or wrong in my speculation about the short term markets. NOTHING will change in terms of my portfolio model or the FACT that I am a fully invested......all the time......investor.

 

CHINA, CHINA, CHINA.

Xi Jinping Doesn't Care About Your Portfolio

https://americanconsequences.com/kim-iskyan-chinas-president-doesnt-care-about-your-portfolio/

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

In mid-August, the world’s largest money manager, BlackRock, recommended that investors increase their exposures to China – that is, the percentage of their portfolios – by two to three times, as reported by the Financial Times.

In the world of asset management, tweaking a portfolio by a few basis points (that is, hundredths of a percentage point) is a this-is-the-hill-I’m-dying-on position. In that context, BlackRock’s suggestion is as grounded as the manager of the New York Yankees baseball team bringing in the Kool-Aid Man to play shortstop and the ghost of Abraham Lincoln to pitch.

It’s saying: Buy China up to your gills… fill your boots… and just buy, buy, buy. During normal times, that kind of hyper-ultra-bullishness on China would be head-turning.

But in light of the recent measures taken by the government of Chinese President Xi Jinping (most of which had been announced before BlackRock planted its flag in August), it’s downright outlandish… idiotic… and terrifying.

And, most importantly, not all are 401(k)- or brokerage-balance friendly… no matter what your contrarian Spidey-Sense might be telling you.

Welcome to the Investor Smackdown, Chinese-Style
It’s a long list:

Tech crackdown: A nearly year-long, wide-ranging crackdown on dozens of publicly traded Chinese tech companies by antitrust regulators, as well as over concern about the handling of critical information by publicly traded companies (see more here.) Shareholder value destruction: Upward of $1 trillion and counting.

Education-technology company wipeout: Tutoring companies are no longer allowed to earn a profit… list their shares abroad… or have foreign investors. Around $90 billion in shareholder value in the largest Chinese ed-tech companies has been vaporized.

Wide-ranging cybersecurity focus: All Chinese companies in the (take a deep breath) energy, telecoms, transport, finance, and defense sectors are put under the cybersecurity microscope to protect “critical information infrastructure.” The risk to shareholders of this kind of scrutiny is clear and present.

Gambling clobbered: Earlier this week, an index of the shares of casino companies operating in Macau – the world’s largest casino center, around seven times larger than Las Vegas – dropped by the most ever in one day to all-time lows (erasing $20 billion in shareholder value), amidst hints that the sector will be subject to increased regulatory oversight.

Video games capped: In late August, The Chinese government limited children in China to three hours of online gaming per week, and a state newspaper labeled video games “spiritual opium.” Shares of former market darling Tencent are down more than 40%. (Tencent’s all-time high market capitalization in February was nearly $1 trillion.)

Real estate under pressure: Regulators are warning Evergrande – one of China’s largest real estate groups (share price down 90% over the past year) – to address its debt issues… Meanwhile, earlier this week, U.S. private equity heavyweight Blackstone ended its effort to acquire property developer Soho China for $3.3 billion when regulators didn’t approve the deal within a specified timeframe.

We’ll take a piece of that: The Chinese government took a small stake (and a seat on the board) in the company that owns TikTok, as well as in Weibo – a Chinese platform similar to Twitter. Part of the government’s interest is in the algorithms of technology companies, which is arguably the most important asset of TikTok (approximate valuation range: $200 billion to 400 billion).

A Communist Nanny State
Then there are the nanny-state measures, which reflect a sharp shift in underlying attitude…

Don’t drink alcohol: Central Commission for Discipline Inspection – the Chinese Communist Party’s (“CCP”) anti-corruption arm – warned that pressure to drink alcohol should be replaced by “correct values,” as part of an effort to crack down on after-work drinking.

Beware dangerous karaoke song lyrics: China’s culture ministry said it would ban karaoke songs with lyrics that might “inspire listeners into drug taking, gambling, and religion,” according to the Financial Times (as well as content that might be seen to “endanger Chinese sovereignty”).

Entertainers in the crosshairs: Chinese regulators aim to “resolve the problem of chaos” in online celebrity culture by banning popularity rankings and regulating companies in the sector. Several high-profile entertainers have recently been accused of rape, tax evasion, and other crimes.

All of these measures are packaged under an evolving policy rubric called the “New Development Concept” – which sounds boring but (especially if your IRA is at risk) most definitely isn’t.

As part of it, Xi aims to reduce China’s reliance on exports, and to make domestic-consumer demand the most important driver of economic growth. A piece of this process is to expand the reach of industrial policy, in which the state – rather than private enterprise – takes a leading role in how companies invest and grow, particularly in the technology sector.

And last, and maybe most worryingly, is the New Development Concept of “common prosperity.” It’s about focusing on redistributing income and wealth from the rich to the middle class and poor – which is about the most unfriendly investor philosophy imaginable.

It sounds downright… communist. Wait, what’s the name of the political party that runs China?

Mr. Foreigner, China Doesn’t Need Your Stinking Money
But wait… Doesn’t China need the cash of outsiders – foreign investors – to support its economy?


Actually… no, not at all. In fact, it’s just the opposite.

China’s nosebleed national savings rate of around 45% (which is the share of disposable income that’s saved rather than spent on consumption) means that the country’s economy has plenty of domestic capital to draw from to invest and fuel economic growth.

Comparatively consumerist Americans, with a savings rate of 19% (also from 2019, and according to the World Bank), puts the American economy in a very different position – and in constant, dire need of foreign capital (including Chinese) to buy its government bonds.

What’s more, too much foreign capital inflows – for example, if foreigners buy more Chinese stocks – creates problems that the country’s government just doesn’t need. Over time, that increase in foreign money could drive up the value of the renminbi, China’s currency… and in so doing, make Chinese exports less competitive (which would also hurt economic growth).

Of course, the Chinese central bank could buy dollars – as they flow into Chinese assets – to try to limit the appreciation of the renminbi. But eventually – to fast forward through a few chapters of your old Macroeconomics 101 textbook at once – this would trigger a boom in domestic credit and an asset bubble… two market challenges that China is already facing, and which the government doesn’t want to get worse.

Alternately, to try to balance investment inflows, China could encourage its citizens to invest abroad. But that opens a Pandora’s box of other issues, most notably one of control: As soon as the money goes elsewhere, so does the Chinese government’s ability to track it.

And what Xi Jinping has in common with politicians everywhere – particularly those of an authoritarian bent (think: Russia and Turkey, for starters) – is an all-encompassing, spread-eagle, full-bodied, opioid-laced-with-crack lust for control… and its kissing cousin, power.

And the shorthand here is this: Too much foreign capital equals less control and power. In other words, your shareholding in that China ETF, or that hot China ADR, would be sacrificed early and often.

BlackRock Wouldn’t Be Talking Its Book… Would It?
Back to BlackRock, which in its 2021 mid-year market review warned (seemingly without irony) that “China is pushing through reforms that could weigh on the quantity of growth in the near term but potentially improve the quality in the long run.”

And BlackRock’s more recently upbeat perspective on China seems to deny… well, everything that’s going on in China, which suggests the question, why?

As it happens, it was just in June that BlackRock became the first global-asset manager to win regulatory approval to launch a wholly owned (that is, with no local partner) domestic Chinese mutual fund business. While that’s not exactly an invitation to mint money, in the world of asset management, it comes close.

And – yet another strange coincidence! – the month before, BlackRock got the nod to launch a wealth-management business, which it will majority own, in part with a big local partner. It was also a big coup.

Surely those sorts of business considerations – like, say, staying on the good side of the Chinese government by promoting China as an investment destination, despite overwhelming evidence to the contrary – wouldn’t cloud the perspective of an asset manager’s insight and research, and advice to customers, would it?

Would You Marry This Market?
BlackRock is talking its book… that is, it’s aiming to support its own business interests in China, whatever the cost (the cost, that is, to anyone who listens to its advice about China).

“Pouring billions of dollars into China now is a tragic mistake. It is likely to lose money for BlackRock’s clients,” wrote investment guru and philanthropist George Soros in the Wall Street Journal, in an opinion piece titled “BlackRock’s China Blunder.”

That’s because right now China is uninvestable. It’s the ultimate investment insult, or declaration of futility or worthlessness. It’s like “unmarriageable” in Victorian England, or a car with no engine, or a thousand-piece puzzle that’s missing a single piece… that is, useless and pointless, and why are we even talking about it?

Earlier this month, a Financial Times columnist, in addressing the investability – or lack thereof – asked…

Does the CCP [Chinese Communist Party] care about what happens if foreign investors take flight? Do outcomes for foreign investors figure in the party’s political calculus?


The conclusion… No, not at all. And, the piece concluded, “China may not be uninvestable.”

That’s like saying someone is marriageable when there’s no other living soul left on Earth… or claiming to make that engineless car drivable by doing it Flintstones-style… or, here’s a sheet of paper, markers, and some scissors to make that missing puzzle piece.

And investors are voting with their feet. Chinese tech stocks are among the biggest “underweight” (that is, less than the benchmark index suggests) positions of actively managed portfolios.

According to Copley Fund Research, the global stock fund’s average exposure to China and Hong Kong – that is, the percentage of total assets that is invested in those markets – is the lowest it’s been since 2016. And the average “underweight” relative to the global investment benchmark index is the highest it’s ever been.

In other words… no one likes China.

(A more extreme version of “uninvestable”… In August 1998, the Russian government defaulted on $160 billion in domestic debt. Investors were so upset that – as the head of the Moscow office of an international brokerage told a reporter – “After this, Western investors would rather eat nuclear waste than buy Russian debt.” While Chinese shares aren’t in vogue, it’s not like snacking on used uranium… yet, at least.)

If It’s So Bad, Shouldn’t I Buy?
It’s the siren call of contrarian investing: If sentiment is so bad… doesn’t that mean it’s a good time to buy? After all (cue the Warren Buffett quotes, the Jim Rogers quotes, the “buy hated assets” quotes), that’s how the real money is made – right?

We celebrate investors who go against the grain and win big. There are times when emotions rule, and market logic goes out the window, creating enormous opportunities for steel-stomached investors.

But it’s easy to forget that most of the time, “they” are right… That is, the collective and conventional wisdom, experience, and insight of smart people, the mainstream, the financial-industrial complex, the annoying people who do the research and take the time – more often than not, those folks are correct.

Just now, they’re saying that investing in China is a lousy idea, and just because they are saying it doesn’t mean it’s wrong.

And just now, investing in China isn’t as contrarian as you might imagine, dire headlines notwithstanding…

The best way to gauge the out-of-favor-ness of a market is to look at valuations (like, say, the price-to-earnings ratio) of stocks and stock markets relative to their historical levels. After all, just because a share price falls by, say 50%, doesn’t mean it’s cheap – it only means (all else equal) that it’s cheap-er than it was 50% ago. But it might still be a whole lot more expensive than it was just a year or two ago.

And just now, Chinese shares – the CSI 300 Index (mainland China shares), the Hang Seng Index (Hong Kong), and China ADRs (listed abroad) – are trading at valuation levels at or above their 10-year averages. That’s partly because a lot of Chinese stocks had a big rally… and are still deflating from the resultant valuation premiums.

They have a long way to go before they’re cheap… and truly contrarian.

We Were Warned
It shouldn’t be a surprise that the Chinese government doesn’t care about the share price of Chinese shares, or how much you’re down on your Tencent position. And it’s no shock that the world’s biggest asset manager is offering up advice that you’d only offer your worst enemy…


What’s happening today in China is a structural shift… This time it is different – for contrarians, and for everyone else, too.

MY COMMENT

NO surprise here......after all you are investing with your partner......the worlds most brutal communist dictatorship......when you buy into ANYTHING in China.

As to EVERGRANDE.......I would not hold my breath for the Chinese to bail out all the foreign banks and investors that have put money into this company. They are just going to say.....SCREW YOU......we got the money and now if you dont like losing it.....well you can try to get something back under the Chinese court and bankruptcy system.....if they even have a bankruptcy system. Of course ALL those systems and ALL the judges are under the direct control of the Chinese DICTATOR.

I have ZERO sympathy for any foreign bank or investment firm that is going to lose their money in Evergrande. YOU....played the game.....you gambled......and if you lose......too bad for you. Unfortunately....none of them will elarn a lesson....they will all be right back in the near future investing in China with their Chinese FRIENDS.

 

AND......to continue as to the markets today and the cause of this LITTLE short term drop.

Stock market news live updates: Wall St. sinks amid China's Evergrande contagion fears, US debt politics

https://finance.yahoo.com/news/stock-market-news-live-updates-september-20-2021-105919123.html

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

"Stocks plunged on Monday, with major indices tumbling by over 1% at the opening bell, as investors nervously eyed the potential ripple effects of the default of a major Chinese real estate company, as well as ongoing debates over the debt limit in Washington.

After defying gravity for most of the summer, September is shaping up to be a tough month for markets, with major benchmarks in retreat for three consecutive weeks. At Wall Street's opening bell, the Dow sank by more than 500 points, while the S&P 500 also dropped by nearly 70 points, adding to losses from last week. The CBOE Volatility Index, or Vix (^VIX), jumped by more than 15% to its highest since August, as a confluence of risks roiled markets.

Shares of China Evergrande Group (3333.HK) plunged by more than 10% on the Hong Kong Stock Exchange as fears mounted that the Chinese real estate juggernaut would collapse under a major debt burden, impacting shareholders, bondholders and potentially triggering turmoil elsewhere across global markets. The specter of a broader crackdown by the Chinese government on Hong Kong's real estate sector further added to concerns.

"While the Evergrande situation is front and center, the reality is, stock market valuations are overstretched and the market has enjoyed too long of a break from volatility and Monday's stock market declines are not surprising," said David Bahnsen, chief investment officer at wealth management firm The Bahnsen Group, with over $3 billion in assets under management.

Meanwhile, heated debates in Washington over increasing the government's borrowing limit built on the risk-off tone in markets. U.S. Treasury Secretary Janet Yellen called for Congress to raise the U.S. debt ceiling again in a Wall Street Journal op-ed, and suggested that to do otherwise would risk leaving the government to default on payments and generate "widespread economic catastrophe."

The U.S. House is set to vote this week on the debt ceiling and a stopgap spending measure to keep the government operating past the end of the fiscal year at the end of September.

Even heading into Monday's session, the three major U.S. stock indexes had dipped so far in September amid escalating concerns over the Delta variant, pace of the economic recovery, inflation and path forward for monetary and fiscal policy. Retail sales data last week suggested the consumer was turning back towards goods rather than services spending amid the latest wave of the coronavirus, and still-weak consumer sentiment data suggested many individuals were becoming increasingly concerned about inflationary pressures.

And on the monetary policy front, the prospects of a near-term shift to present ultra-accommodative policy posturing from the Fed has also injected additional uncertainty into markets. The Federal Open Market Committee is slated to hold its two-day policy-setting meeting Tuesday and Wednesday, with the event culminating in a new monetary policy statement, update economic projections, and press conference from Federal Reserve Chair Jerome Powell.

One of the major focuses at this week's meeting will be about whether the Federal Reserve ramps up its signaling around when it will begin to taper its crisis-era asset purchase program. The central bank has suggested this quantitative easing — which currently comprises purchases of $120 billion monthly in Treasurys and mortgage-backed securities — would begin once the economy made "substantial further progress" toward the Fed's goals on inflation and employment.

"While we readily admit that the Committee could make changes to the September statement to signal that tapering is drawing closer, we believe the soft August hiring print and recent surge in COVID cases added enough uncertainty to the economic outlook that would refrain officials from making substantive changes to the wording," Sam Bullard, senior economist for Wells Fargo, wrote in a note on Sunday.

"If the economic data improves sufficiently over the coming weeks, then Fed officials could use public comments throughout October to signal that tapering will commence in November," he added.

For investors, the Fed's move on tapering will be closely watched given that the asset purchases were one major tool the central bank used to bolster liquidity and support the economic recovery during the pandemic, and had by extension helped underpin stocks' rise to record highs.

Though stocks have lost some of their momentum in September so far, some strategists believe the move may be temporary.

"You have to look at where the crowding is, and right now, there's so much negative sentiment with regard to the market. It's why we have been buying this dip this week and telling our clients that we think the market setup is perfect for a pretty big rally for the rest of September and possibly the beginning of October," Eddie Ghabour, Key Advisors managing partner, told Yahoo Finance on Friday. "The next big hurdle we have to get through is the Fed meeting on Wednesday. If the Fed doesn't disappoint, I think it's a risk-on rally ... right now everyone is so pessimistic about the market, and in our opinion markets don't crash when everyone is positioned for it." "

"10:00 a.m. ET: Homebuilder confidence rebounds
U.S. single-family homebuilders regained confidence in September, after three months of decline. The National Association of Home Builders/Wells Fargo Housing Market Index rose one point to 76, a reading of more than 50 indicates more builders view conditions are good instead of poor.

Homebuilder confidence reached an all-time high of 90 in November 2020, when the COVID-19 pandemic and low interest rates nudged people to buy homes, in some cases bigger homes due to work-from-home. But soaring lumber prices, labor shortages and supply chain issues have put a damper on homebuilder confidence this year.

“While building material challenges persist, the rate of cost growth has eased for some products, but the job openings rate in construction is trending higher," said NAHB Chief Economist Robert Dietz in a press statement."

MY COMMENT

There is a good reason why I ONLY invest in AMERICAN BIG CAP companies.....the cream of the crop.

We are in a nice little NEWS TORNADO right now.....and the majority of the issues impacting the markets are SELF INFLICTED. Most of the current news events fall into the category of......you get what you deserve. In other words......if you "choose" to invest in Chinese companies.....or if you "choose" to put money into a Chinese real estate company as a big bank of a financial company.......or.....if you "choose" to speculate or trade in risky investments.......or......if you "choose" a certain government with certain announced policies......etc, etc, etc....WELL......you get what you get. NONE of this stuff is a secret.....people just FOOL THEMSELVES.

NONE of this stuff is new.....the same behaviors happen in the markets over and over and over.......there is NEVER a NEW NORMAL. The same events and issues repeat. Invest long enough and....you will have seen it all....many times. HUMAN BEHAVIOR does NOT change.