The Long Term Investor

Discussion in 'Investing' started by WXYZ, Oct 2, 2018.

  1. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    4,912
    Likes Received:
    2,077
    As we wait for the FED news......I like this little article and what it predicts for the future of the BIG BULL MARKET.

    !!!!!!NEWS FLASH......POWELL will stay as the head of the FED!!!!!!

    The Shocking Truth About Today’s P/E Ratios
    P/Es don’t fit the narrative of a wildly overpriced stock market.

    https://www.fisherinvestments.com/en-us/marketminder/the-shocking-truth-about-todas-pe-ratios

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

    ""Have you heard the one about stocks being really expensive? We sure have, with most of the chatter centering on the S&P 500’s above-average price-to-earnings (P/E) ratio. Some pundits argue this sets up a weak 2022. The Fed got in on the action this week, warning in its semiannual Financial Stability Report that high valuations make stocks “vulnerable to significant declines should investor risk sentiment deteriorate, progress on containing the virus disappoint, or the economic recovery stall.” While the Fed’s analysis was measured, some pundits took the headline and ran, taking it on faith that surging valuations pose a risk. So it might interest you to know that valuations are, well, down over the past year-plus. Mind you, we don’t think valuations are predictive, but we think this is a shining example of pundits ignoring the denominator—earnings—and drawing off-base conclusions as a result.

    Exhibit 1 shows the S&P 500’s trailing P/E—that is, price divided by the past 12 months’ earnings—since the end of 2018. In our view, this metric is inherently backward-looking, as stocks move on expectations for profits and fundamentals over the next 3 – 30 months. Markets today are pricing in next year’s profitability, not last year’s. Yet trailing P/Es are oft cited as evidence of stocks’ being overvalued, so let us take a look.

    Exhibit 1: Checking In on Trailing P/Es

    [​IMG]
    Source: FactSet, as of 11/19/2021.

    Errr … some surge. Yes, P/Es exceed pre-pandemic levels, but they are down by over 10 percentage points since peaking on May 7—even though the S&P 500 is up 12.0% since then through yesterday’s (record-high) close.[ii] The reason for this is quite simple: The E improved relatively faster than the P over the past six months. Earnings tanked last year as lockdowns took their toll, which inflated valuations as stocks recovered—a natural byproduct of stocks moving ahead of earnings, which is normal. But they bounced high this year, as reopening fueled sky-high growth from a lockdown-depressed base. Look closely at the chart, and you will see three vertical drops in mid-May, mid-August and mid-November, all coinciding with earnings season coming in hot. So when it came to P/Es, as the denominator (earnings) grew faster than the numerator (price), the ratio dropped. Given all of this backward-looking pandemic skew, we think it is fruitless to draw any big conclusions—good or bad.

    Forward P/Es, which compare stocks’ prices to expected earnings over the next year, show a similar—if more muted—trend. As Exhibit 2 shows, the S&P 500’s forward P/E peaked on September 2, 2020. It is down from 23.4 then to 21.4 as of yesterday’s close, despite the S&P 500’s 33.8% total return over this span.[iii]

    Exhibit 2: Checking In on Forward P/Es

    [​IMG]
    Source: FactSet, as of 11/19/2021.

    You can thank earnings for falling forward P/Es, too. As it became clear that sentiment overshot to the downside late last summer, analysts started raising their earnings outlooks. That trend has continued this year as earnings have smashed expectations. So even as investors have bid stock prices higher, they are actually paying a bit less for expected future earnings growth than they were over a year ago.

    While we don’t think P/Es are predictive, we do think this is telling from a sentiment standpoint, as P/Es can indicate expectations getting out of hand. Not the level of P/Es, but the rate of change. A big spike could be one indication of euphoria and has often preceded bull market peaks. The past 14-plus months’ slow drift lower is, well, not a spike. So in our view, this is one indication sentiment has room to run and stocks have more wall of worry to climb.

    We also think this serves as a friendly reminder about how stocks and valuations work. Pundits often talk about “expensive” and “cheap” markets as if high P/Es predict weak gains and low P/Es predict big ones. But that focuses on price only, ignoring earnings. It also ignores that pricey stocks can get pricier and cheap markets can get cheaper. There are no magic thresholds or signals in P/Es. So take them for what they are: a loose sentiment gauge that doesn’t automatically tell you what will happen next week, next month or next year."

    MY COMMENT

    Just another example that if you look at the REAL data and REAL information that is out there the LINE that is PUSHED in the media does not usually match up with REALITY.

    With the reappointment of POWELL......the markets are set for a BIG year end rally. Things are lining up nicely for a 4-8%........BIG POP.....by year end. If this happens 2021 will end as an......EPIC....year for investors.
     
    #8521 WXYZ, Nov 22, 2021
    Last edited: Nov 22, 2021
  2. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    4,912
    Likes Received:
    2,077
    I like your STYLE.....TireSmoke. I mean this in a good way......you are the......Dr Jeckel....Mr Hyde....of investing. You are conservative and calm and easy going with your retirement money. At the same time you are a WILD AND CRAZY GUY and have established a BOOMING taxable portfolio that is growing like crazy based on a very RATIONAL bet on a couple of GREAT companies that have HUGE growth prospects. You have pulled off a nice investing COUP. WELL DONE.

    Of course.....I am not saying anyone else should follow this sort of path. BUT for you.....it was the right move......very calculated I am sure. You seem very rational in what you did and seem to have a very good understanding of your own risk tolerance. That is an AMAZING one year performance figure.....78% year to date. With the potential for a nice year end rally......you might get to 85-100% by year end.
     
    TireSmoke likes this.
  3. Dax Martinez

    Dax Martinez Member

    Joined:
    Jan 22, 2021
    Messages:
    53
    Likes Received:
    29
    Thank you, will do! And wow a decade. I can’t wait to see my portfolio ten years from now. Next month will be one year since I started investing.
     
  4. Dax Martinez

    Dax Martinez Member

    Joined:
    Jan 22, 2021
    Messages:
    53
    Likes Received:
    29
    This isn’t stock related just need some advice.

    currently looking for a new car. My car is about to hit 200k miles, gave me a good run. I bought it for 5k cash 5 years ago.

    I want a newer car now. I’m 28, I just want a reliable car tbh. Should I finance a car to build my credit? Or just save up about 10k and pay for it cash?
     
  5. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    4,912
    Likes Received:
    2,077
    I am STRONGLY CHEER-LEADING the markets into year end. I will have plenty of time to sit and sulk when the markets drop.....but for now.....I am seat belted in for the continuation of the ride. What is the use of being an investor if you can not have some fun and celebrate when it is all going well.

    I continue to be fully invested for the long term as usual. "USUAL" being the past 45+ years.
     
  6. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    4,912
    Likes Received:
    2,077
    CONGRATULATIONS on the one year investing anniversary coming up soon......DAX. You have a very good head for investing and money and have done very nicely. You should have some GREAT GAINS when you reach the ten year mark.
     
    #8526 WXYZ, Nov 22, 2021
    Last edited: Nov 22, 2021
  7. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    4,912
    Likes Received:
    2,077
    WELL.....my sale of PG and my....buy of TSLA....happened at the open. I put the orders in last night to happen "at the market".....at the open today. I got a bit over $147 for the PG and a bit over $1163 on the TSLA. SO.....I have a bit of a gain on the TSLA at the moment. If we can get a nice year end bump in the markets I might be able to build up a bit of a cushion in the TSLA for a little bit of protection when the inevitable pull back happens.

    PG was an OLD FRIEND. I have owned that company off and on for over 45 years. It is an amazing dividend KING. In my mind....it is the BEST of the old time consumer conglomerates that is still around today. They have held onto most of their long time products and have avoided the MANIA to sell off brands for.......shareholder value. A well managed company that has been able to do better than most as we entered the MILLENNIAL era. For a more conservative investor than me.....a company that is definately worth a long look.
     
    Lori Myers and rg7803 like this.
  8. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    4,912
    Likes Received:
    2,077
    HERE.....for what it is worth....is the home sales data that just came out today. NOT that it means much.....the housing market is so distorted right now with the low number of listings and OUTRAGEOUSLY LOW mortgage rates, etc, etc.

    Existing home sales slowed down in October

    https://finance.yahoo.com/news/existing-home-sales-october-2021-150010149.html

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

    "Existing home sales rose 0.8% to a seasonally adjusted 6.34 million units in October from a month earlier, according to the National Association of Realtors (NAR). The results were better than analysts' expectations of a 1.8% decline, according to Bloomberg consensus estimates.

    "The housing market remains strong, resilient," said Lawrence Yun, NAR chief economist, in a press conference announcing the results, attributing the strength in the market to "continued strong job additions, low interest rates in August, September."

    He added: "The stock market being at all time highs is also helping and investors are beginning to come in higher than normal, attracted by recent rent increases."

    In fact, investors represented 17% of transactions last month, while first-time homebuyers made up 29% of deals, down from 32% the same time a year ago.

    “Among some of the workforce, there is an ongoing trend of flexibility to work anywhere, and this has contributed to an increase in sales in some parts of the country,” said Yun.

    Regionally home sales were mixed. In the Northeast, sales fell 2.6%, in the Midwest (where homes are most affordable) sales increased 4.2% and in the South (where migration occurred) sales increased 0.4% in October.

    Year-to-date existing home sales are up 11% from the same time a year ago and up 13% from 2019 (pre-COVID-19), according to the NAR. Yun said based on the current sales pace, existing home sales transactions are on track to reach, if not surpass, 6 million units — the best performance in 15 years.

    The median existing-home price for all housing types in October was $353,900, up 13.1% from October 2020 ($313,000), as prices climbed in each region. This marks 116 straight months of year-over-year increases, the longest-running streak on record.

    Total housing inventory at the end of October hit 1.25 million units, down 0.8% from September and down 12.0% from one year ago (1.42 million). Unsold inventory sits at a 2.4-month supply at the current sales pace, equal to September’s supply, and down from 2.5 months in October 2020. Days that homes remain on the market "remain swift" at 18 days, but the pace is losing steam, according to Yun, noting that in September homes were on the market for 17 days."

    MY COMMENT

    The OUTRAGEOUS housing market continues....although....it has obviously slowed down some. Inventory is STILL low in most areas and the recent BIG price increases seem to be STICKING. I am sure just about anyone that owned a home through this current market has made significant money.....on paper.
     
    #8528 WXYZ, Nov 22, 2021
    Last edited: Nov 22, 2021
  9. TireSmoke

    TireSmoke Member

    Joined:
    Aug 29, 2021
    Messages:
    43
    Likes Received:
    39
    Thanks @WXYZ it has worked out nicely, I don't recommend the balance, which was never my intension but that's how it ended up with the huge run ups. My original plan was to do a 60% VGT and do 2 or 3 other stocks with the 40%. I am where I am and I'm riding it out. High demand, quality and innovative products, and EXCELLENT leadership.

    @Dax Martinez I'm a car guy as is @oldmanram so he may offer his perspective. I bought my first pickup for $3600 at 16 years old and drove it through high school and college (I actually still have it but not being used). I then bought a slightly larger truck for $4000 right after graduation from college so I could pull a car trailer for my muscle car hunting expeditions. After 2 painful years of one problem after the other I was driving home from a swap meet, pulled into the local Chevrolet dealer and ordered a 2012 Silverado 4x4. I still own it and it will be 10 years in January. I believe it was right around $30k out the door. At the time it was by far the most money I have ever spent on a car and had more expensive insurance and used more gas. 10 years and 140k miles later I don't regret it a single bit and would go back and do it again. To have a safe, reliable vehicle that meets my needs has been totally worth it. With that said there is nothing wrong with buying a used car and driving it into the ground but I will say in todays market I would not buy a car unless I REALLY needed one. Used car prices are so high it makes buying a new car look very attractive. I used to be a 'pay for everything in cash' guy (which I still am for 99% of things but with interest rates so low and the market performing so well a low interest car loan it's a bad thing. Also building credit for larger purchases such as a house is also a good thing. Everyone's situation is different. When I bought the Silverado I had just paid off my student loans and had 0 dept. If you have some credit card or other high interest dept I would tackle that first but if you're free and clear go for it. The word of wisdom I will say is NEVER stretch to buy a car. They are depreciating assets.
     
    SPP and WXYZ like this.
  10. Dax Martinez

    Dax Martinez Member

    Joined:
    Jan 22, 2021
    Messages:
    53
    Likes Received:
    29
    I’m a car guy too. I drive tractor trailer for living. I love driving. I would love to get a nice car but I’m still fairly young and know I can wait till my early 30s to get something I really want. For now I just need something reliable to take me to work and back but that is also on the newer side and drives smooth.

    I have 0 debt and my credit score is really good but I don’t have much payment history. I usually just pay bills with it and pay it off at the end of the month.

    I was thinking about saving up 10k and get a 10k car loan from my bank (federal credit union) so I could have 20k for a car purchase. I feel like I can tackle a 10k loan witching a year or 2 max. But ur right about the used car market being so high atm. I gave myself one year to make a decision because I believe my car will start giving me problems after winter time.

    but most importantly I don’t want a car note for several years. That takes money away from investing. As of right now I invest about 40% of my income. I’m very frugal.
     
  11. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    4,912
    Likes Received:
    2,077
    Short term market action is very opaque and meaningless......but......as a market cheerleader......it is nice to see 7 of my 10.......yes 10 holdings........UP by over 1% today so far. Some are WELL OVER 1%. Of course.....WTF is Amazon doing. They started the day just fine but than about 9:30 went straight down and are now down by about 1.7%.

    I looked for some news item on Amazon but could not find anything negative. I will look again.
     
  12. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    4,912
    Likes Received:
    2,077
    The final piece of my kitchen and laundry room countertop and backsplash job will happen today.......the stove will be installed. It has been siting in our living room for the past 3-4 weeks........the service tech will be here tomorrow to adjust and tune it. Natural gas of course. We are cutting it close to Thanksgiving....but these were the only appointments that I could get 4 weeks ago when I was doing scheduling for this job.

    We could get by with no oven since we also have a wall oven and a convection/microwave and a roaster oven. BUT......no burners would be a HUGE issue for Thanksgiving which......of course.....we are hosting here at our house. I guess I could go out and buy one or two double, countertop hot plates, if I had to.
     
  13. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    4,912
    Likes Received:
    2,077
    INTERESTING.....how the media does things. In my post above about the home sales data released a short time ago....here is the HEADLINE of the article that I posted:

    "Existing home sales slowed down in October"

    I really could not find anything negative in the little article.

    HERE is another headline from a different media source:

    "US Existing Home Sales Unexpectedly Rise in October"
     
  14. oldmanram

    oldmanram Active Member

    Joined:
    Feb 17, 2021
    Messages:
    349
    Likes Received:
    234
    Morning Guys,
    Dax, As far as the car goes , Tiresmoke pretty much said EXACTLY what I would have said,
    Well , I NEVER have bought a NEW car, yet,
    But in this economy , with used prices so close to new, that would be a possibility ,
    1st vehicle in 1976 , my dad's "hand-me-down" , 1970 GMC C10 pu , construction work truck , beige ! ugh, rolled of a dirt/gravel road, hurricane ridge.
    1979
    1st vehicle 1977 Toyota Pickup longbed 5sp , and yes, blue owned for 20 years and 300,000 miles
    19


    The only thoughts I might add to buying your vehicle:
    Buy the most DEPENDABLE vehicle , not the prettiest or coolest
    Don't buy the first year that they changed the model line-up - or generation ( they usually have problems)
    Change your fluids and filters, I don't care if they say it's a forever transmission fluid, forever in there minds is the warranty period.

    The past 6 vehicles I have purchased, I have done the 50% down , 50% financing , remember I have a wife and 3 daughters

    VGT vs QQQ
    this is a good writeup on the differences and similarities

    https://seekingalpha.com/article/4457938-vgt-qqq-etf-one-wins-by-a-hair

    Gotta go through a pail of money at a hole in the water
     
    Dax Martinez likes this.
  15. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    4,912
    Likes Received:
    2,077
    It is interesting that the day is turning....NEGATIVE. Amazon is well down at -2.53%. Nvidia is negative at -0.80%. Google is negative at -1.46%. Microsoft is negative at -0.43%. These big names are DRAGGING the NASDAQ down. I dont really see anything in the news as a reason.........just the short term market gods.....playing around.

    Perhaps it is the East Coast lunch hour CURSE.
     
  16. TireSmoke

    TireSmoke Member

    Joined:
    Aug 29, 2021
    Messages:
    43
    Likes Received:
    39
    Everything popped this morning and then dropped just as fast. I went from very nicely green to red. Maybe a sell the news on the Fed selection? Who knows, that's why we buy and hold for the long term and let the day to day squabbles iron themselves out.
     
  17. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    4,912
    Likes Received:
    2,077
    OK.......I see what is going on......as usual I will BLAME the government and the FED. After Biden put out Powells name......both Powell and Brainard had to......of course.....give nomination remarks. Here is what they both had to emphasize and of course spooked the markets.

    Powell, Brainard Nod to Inflation Threat in Nomination Remarks

    https://www.newsmax.com/headline/powell-brainerd/2021/11/22/id/1045712/

    "Federal Reserve Chair Jerome Powell and Fed Governor Lael Brainard on Monday both noted the corrosive impact high inflation is having on the U.S. economy and American families in what may be a signal that controlling the rapid pace of price increases is now the central bank's top priority."..........

    "each emphasized their awareness of how damaging inflation has become.".........

    "We know that high inflation takes a toll on families, especially those less able to meet the higher costs of essentials, like food, housing and transportation," Powell said"...........

    "We will use our tools both to support the economy - a strong labor market - and to prevent higher inflation from becoming entrenched."............

    "Brainard emphasized a goal of "getting inflation down at a time when people are focused on their jobs and how far their paychecks will go."..........

    MY COMMENT

    As usual the government and the FED......with their EXQUISITE TIMING.......tank the markets and put a damper on what should be an OUTSTANDING WEEK. This happens so often I dont think it is just chance or coincidence. Over and over and over they do this stuff while the markets are open. They could just wait till after the close......but.....NOOOOOOOOO.

    You know the economy and even INFLATION might be better if they could just SHUT UP and quit making people crazy. After a while it becomes a self-fulfilling prophesy.

    JUST like we saw with Jimmie Carter and Ronald Regan.........Carter was constantly morosely negative.....while Regan was optimistic and upbeat......it DOES make a difference.
     
  18. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    4,912
    Likes Received:
    2,077
    I dont do POLITICS on here......but think this is hilarious.......Elon Musk's mother blasting the politicians. Since I bought some TESLA today this is very relevant to me.

    Musk's Mom Disses Biden for Ignoring Tesla's Electric Feats

    https://www.newsmax.com/newsfront/elon-musk-mom-biden-electric-cars/2021/11/22/id/1045715/

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

    "Elon Musk's mother dissed President Joe Biden on social media after the chief executive failed to mention Tesla in recent remarks on the future of electric cars.

    Biden attended the grand opening of General Motor's new electric vehicle plant in Detroit last week, where he praised GM CEO Mary Barra's work toward an all-electric future, Business Insider reported.

    "You electrified the entire automobile industry," Biden said. "You led — and it matters — in drastically improving the climate by reducing hundreds of millions of barrels of oil that will not be used when we're all electric."

    Although it plans to have an all-electric vehicle lineup by 2035, GM's sales mostly derive from combustion-engine vehicles. Tesla, meanwhile, accounts for nearly 80% of the EV market in the US.

    "Biden's speech was written 20 years ago, just before GM killed the electric car," Maye Musk tweeted Thursday. "His speechwriter uploaded the wrong file."

    The Tesla CEO's mother was referring to 2003, when GM cancelled its electric car program after saying it could not turn a profit with the endeavor.

    Elon Musk responded to his mom’s tweet with "Sigh."


    Tesla, while only producing electric vehicles, has become the second-fastest company to hit a $1 trillion valuation.

    After Biden and Vice President Kamala Harris took to Twitter to praise GM's work, Tesla supporters posted comments defending Musk’s company.

    "Maybe they are NPCs [non-player characters] and Tesla just isn't in their dialogue tree," the world's richest person tweeted Monday. "Let's see if we can get them to say the word 'Tesla.'"

    Biden also appeared to snub Tesla earlier this year when representatives from the company were not invited the White House’s EV summit.

    At the time, White House Press Secretary Jen Psaki was asked whether Tesla had been excluded because its employees were not part of an automotive union.

    "I'll let you draw your own conclusion," she said.

    Musk has said that powering more electric vehicles will require double the electrical output than what is currently being produced.

    "If we shift all transport to electric than electricity demand approximately double s, this is going to create a lot of challenges with the grid,
    " he said during a late-September press conference, according to Barron's.

    "We need large sustainable power generation developments, paired with battery packs, for continuous power. A lot of good things are happening in this regard.”"

    MY COMMENT

    The ultimate helicopter parent......defending her son. UHHHHH.....this is an American company...guys. Not to mention that without this busines leader and his genius and management skills we would NOT have a space program any longer. You might want to give him some credit.
     
  19. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    4,912
    Likes Received:
    2,077
    WELL.....that was a waste of a perfectly good market day. If ONLY we could convince the FED to sit down and STFU.

    I was medium red today. AND....to add insult to injury I got beat by the SP500 by 0.56%.

    My ONLY green holdings were......APPLE, COSTCO, HOME DEPOT, and........YEA......TESLA.

    Whoops.....I thought I ended the day green on my new Tesla buy.....looks like I was in the red by about $7 per share. At least my prior Tesla shares were green today.
     
  20. WXYZ

    WXYZ Well-Known Member

    Joined:
    Oct 2, 2018
    Messages:
    4,912
    Likes Received:
    2,077
    This headline should read......."NASDAQ and SP500 Pull Back After FED Nominees Cant Keep Their Mouths Shut About Inflation".

    Stock market news live updates: Stocks mixed, Nasdaq pulls back after Biden nominates Powell for Federal Reserve chair

    https://finance.yahoo.com/news/stock-market-news-live-updates-november-22-2021-125346855.html

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

    "Stocks ended a choppy session mixed on Monday at the start of a holiday-shortened week, as traders considered the highly anticipated renomination of Federal Reserve Chair Jerome Powell to the top role at the central bank.

    The Dow ended just slightly higher after adding as many as 328 points, or 0.9%, at session highs. The S&P 500 ended lower after rising to a record intraday high earlier in the session, with technology stocks underperforming and extinguishing earlier gains. The Nasdaq lagged to drop more than 1% after opening higher.

    President Joe Biden on Monday announced he was nominating Federal Reserve Chair Jerome Powell for a second term leading the central bank, ending weeks of speculation over who would be tapped for the role. Financial stocks jumped following the announcement.

    Biden was expected to select either Powell or current Fed Governor Lael Brainard as Fed chair. Following the nomination, Powell will go before the Senate Banking Committee for approval, and if confirmed, will serve another four-year term.

    I think this was largely expected by markets. Certainly there were some conversations in markets over the last couple of weeks about Brainard potentially being elevated to the Fed chair position. But by and large the expectation was for consistency,” Erin Browne, Pimco managing director and portfolio manager, told Yahoo Finance Live on Monday. “You may see a little bit of a rally on the back of this with the expectation that policy is going to remain in place and intact, and everything that’s been articulated already by the Fed is likely to continue into 2022 and beyond.”

    Powell, who led the central bank throughout the COVID-19 period, would be tasked with helping further guide the Fed as it grapples with whether the economic recovery has progressed enough to warrant a deeper reduction in monetary policy support.

    "The most important question in the moment right now is how high the Fed ultimately hikes interest rates," John McClain, portfolio manager for Brandywine Global's high yield and corporate credit strategies, told Yahoo Finance Live on Friday. "Right now, expectations are for about two and a half to three hikes in 2022, and probably getting to about 175 basis points on Fed funds ultimately."

    "The market and the media are focused on a faster Fed tapering and hiking sooner than June of next year," he added. "And importantly, we're seeing inflation and things that matter to the consumer, prices at the pump, food, rent, all are going higher. And the list kind of goes on and on."

    More data on the inflation front is set to be released this week, which will further provide data hinting at whether the Fed may need to step in sooner rather than later to curb persistently elevated prices. The core personal consumptions expenditures (PCE) index from the Bureau of Economic Analysis out Wednesday, which serves as the Fed's preferred inflation gauge, will likely show a 4.1% over last year, based on Bloomberg consensus data. This would be the biggest annual jump in about three decades.

    Optimism over new deal-making activity across numerous industries also helped push stocks higher on Monday. Constellation Brands (STZ), the maker of Corona beer, is reportedly exploring a deal to combine with Coca-Cola-backed (KO) energy drink company Monster Beverage, according to a Bloomberg report on Monday. And private equity firm KKR & Co. made an about $12 billion bid to bring Telecom Italia private, sending shares of the Italian telecommunication giant sharply higher.

    Investors also shook off jitters from late last week, when rising COVID-19 cases globally set off fresh concerns over the virus's spread. The Austrian government implemented a fourth national lockdown since the start of the pandemic, effective Monday and lasting for at least 10 days, to try and stem jumping infections. Germany has considered a similar move. The latest round of stay-in-place orders raised concerns for investors that a drop in consumer mobility might ultimately place renewed pressure on economic activity domestically and abroad.

    "In the United States, COVID cases have declined but remained above summer lows and have been edging up recently," Rubeela Farooqi, High Frequency Economics chief economist, wrote in a note Monday. "We do not expect lockdowns in the United States. Experience with the Delta variant suggests that mandated lockdowns are not needed to suppress activity. Wary of health risks from rising case counts, people may voluntarily avoid high-contact activity."

    3:15 p.m. ET: 'U.S. stocks are the best asset in the world in terms of equities': BMO's Belski
    Brian Belski, chief U.S. equity strategist for BMO Capital Markets, struck an upbeat tone on the path forward for U.S. stocks with Yahoo Finance Live on Monday. The S&P 500 set a record intraday high during the session, buoyed by optimism over Fed Chair Powell's renomination.

    "I think at the end of the day, investors around the world are learning finally that U.S. stocks are the best asset in the world in terms of equities," Belski said. "We think that consistency continues and so our 4,800 target for the end of this year ... I think it's in jeopardy of being higher than that."

    "As we begin to moderate in terms of a lot of trends, whether it's price or earnings or valuations or inflation, interest rates ... the key thing is going to be about consistency and the high-quality asset value that U.S. equities afford investors around the world," he added.

    12:34 p.m. ET: What economists, strategists are saying about Powell's renomination
    Federal Reserve Chair Jerome Powell's renomination to the top leadership role at the central bank was expected to be the most likely outcome by many market participants, even as some uncertainty grew in recent weeks that President Joe Biden might instead nominate Fed Governor Lael Brainard.

    According to a number of economists and strategists, the continuity of policy provided through Powell's nomination is by and large positive for U.S. stocks. Here's what some pundits had to say about the decision in commentary provided to Yahoo Finance:

    • "I have to think that maybe Biden has been wounded by inflation. His job approval numbers are way down. It looks like the Democrats may lose the House next fall. So maybe Biden was thinking, you know, 'This inflation issue has really hurt me – maybe there's somebody else.' And that may have been a factor in this taking so long [to announce the Fed chair nomination]." – Greg Valliere, chief U.S. policy strategist

    • "By large, the expectation was for consistency at the Fed to remain and for Jerome Powell to be renamed or renominated as Fed chair ... I think having a consistent hand in place is really what the market is looking for in order to guide us through potentially raising rates next year." – Erin Browne, PIMCO managing director and portfolio manager

    • "Jerome Powell's renomination provides significant certainty for markets, as investors have grown accustomed to Powell's easy money policies and steady hand during the Covid-19 crisis ... It’s clear that President Biden went with splitting the ticket in renominating Powell as Chair and nominating Lael Brainard as Vice Chair. This is not the time for change at the Federal Reserve, given inflation and supply chain worries and a rebound in Covid-19 cases." – Robert Schein, chief investment officer for Blanke Schein Wealth Management

    • "Powell is sound, tested, respected and familiar to markets ... replacing him could have triggered major downward pressure on stocks, as investors dislike uncertainty and the unknown." – George Ball, chairman of Sanders Morris Harris

    • "Biden may have felt his hands were tied since ushering Brainard's nomination to be Chair through the Senate would have been difficult ... With Brainard replacing [Fed Vice Chair Richard Clarida] and Quarles out, that means Biden now has three Board vacancies to fill. The statement today suggests that we can expect announcements on nominees as early as next month. It is those appointments that could generate a more marked shift in the outlook for monetary policy." – Capital Economics U.S. economics team

    10:17 a.m. ET: Big Tech stocks rally as investors after Powell renomination; Apple and Microsoft set records
    Big Tech stocks jumped Monday morning after Biden said he was nominating Powell to remain Federal Reserve chair for another four years.

    The announcement was at least momentarily taken favorably by investors in technology and growth stocks, which are typically viewed as beneficiaries of lower rates. Apple's (AAPL) stock, a heavily weighted component in the major U.S. equity indexes, jumped 3% to reach a record intraday high, and Microsoft (MSFT) rose nearly 2% to reach an all-time high of its own. Both stocks commanded market capitalizations well over $2.6 trillion following the gains.

    10:06 a.m. ET: Existing home sales unexpectedly rose in October to reach highest level since January
    Sales of previously owned homes in the U.S. unexpectedly jumped to their highest level in nine months in October, signaling housing demand was picking up against a backdrop of relatively low mortgage rates and strengthening labor market conditions.

    Existing home sales rose by 0.8% month-over-month in October, reaching an annualized rate of 6.34 million
    , according to data from the National Association of Realtors. Consensus economists were looking for existing home sales to fall to an annualized rate of 6.2 million for October, from September's 6.29 million, based on Bloomberg consensus data.

    For the year-to-date, existing home sales have risen by 11% compared to the same period in 2020 and by 13% compared to 2019, or before the pandemic. Existing home sales are on track to reach at least 6 million units this year, which would mark the best sum in 15 years."

    MY COMMENT

    CONTRARY to this little daily article......I dont see ANY real discussion or interest in how many interest rate jumps......might....happen in 2022. The typical little retail investor does not care.

    Constelation Brands mentioned above.......I have owned this stock a couple of times over the years. It NEVER lasts long in my portfolio. I always have high hopes for it.....but.....it just never seems to be able to make me happy. At this point since I have never been happy with it in the past....I dont anticipate ever owning it again. Looks like they are UP about 49% over the past FIVE YEARS. Pretty pathetic.

    I do really like the inclusion in this article of the content that AMERICAN STOCKS are the best in the world. the only issue I would take with this statement is......it is NOT AMERICAN STOCKS that are the best in the world......it is AMERICAN BUSINESS. American stocks are just a representation of American companies.

    "at the end of the day, investors around the world are learning finally that U.S. stocks are the best asset in the world in terms of equities," Belski said. "We think that consistency continues and so our 4,800 target for the end of this year ... I think it's in jeopardy of being higher than that."

    "As we begin to moderate in terms of a lot of trends, whether it's price or earnings or valuations or inflation, interest rates ... the key thing is going to be about consistency and the high-quality asset value that U.S. equities afford investors around the world," he added."

     
    #8540 WXYZ, Nov 22, 2021
    Last edited: Nov 22, 2021

Share This Page