The Long Term Investor

Since it is a day foo for the markets.......I will post this article that is a long one.

Doom and Gloom: When Will It End?

https://www.schwab.com/learn/story/doom-and-gloom-when-will-it-end?cmp=em-QYC

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

"Bearish sentiment is becoming a contrarian support; but for now, aggressive Fed action, tightening financial conditions, and the liquidity drain may keep downward pressure on stocks.

It's been a very rough four-and-a-half months to start the year—the third worst at this point on record for the S&P 500 and the worst since 1970. The S&P 500 has had its longest stretch of lower weekly closes since mid-2011. More than $10 trillion of "paper wealth" (measured via equity market valuation contraction) has been lost since the start of 2022.

As shown in our crowd-favorite drawdowns table below, both the Nasdaq and Russell 2000 (small caps) are in bear market territory (at least -20% on a closing basis), with the S&P 500 so far avoiding the same fate at the index level. Relative to either this year's high (second column) or the 52-week high (sixth column), the S&P 500 is down less than 20%. But the details in the table are more telling, with the S&P 500's average member maximum drawdown now at -24% from the members' year-to-date highs (fourth column) and -28% from the members' 52-week highs (seventh column).


Source: Charles Schwab, Bloomberg, as of 5/13/2022.

Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly. Past performance is no guarantee of future results. Some members excluded from year-to-date return columns given additions to indices were after January 2022.

More than half of S&P 500 stocks are now in a bear market. The primary culprit is the drain of liquidity, both in terms of the “fiscal cliff” and monetary tightening underway. There are only two other periods in the past 40 years when financial conditions tightened more than they have in the past four months: the Global Financial Crisis and the COVID-19 bear market eras. As shown below, there has been an epic round-trip in M2 money supply growth—helping explain both the market's surge coming off the pandemic low in March 2020, and the bear market(s) that recently got underway.

Money supply's round-trip

Source: Charles Schwab, Bloomberg, Federal Reserve Bank of St. Louis, as of 3/31/2022.

M2 is a measure of the U.S. money stock that includes M1 (currency and coins held by the non-bank public, checkable deposits, and travelers' checks) plus savings deposits (including money market deposit accounts), small time deposits under $100,000, and shares in retail money market mutual funds.

Not much has been spared
The liquidity drain has not spared three primary asset classes: stocks, bonds, and commodities. Over the past 30 trading days, all three asset classes are down simultaneously—a "feat," since it has occurred less than 9% of the time since 1965. Relatedly, credit spreads are up more than 150 basis points since the start of this year. Given that the stock market is generally a discounting mechanism as it relates to the economy, equities' message about the impact of draining liquidity on the economy is fairly dour.

In addition to the liquidity drain underway, there has also been the popping of what might be described as the stay-at-home (SAH) bubble. Piper Sandler Cornerstone tracks an SAH basket of stocks (Peloton, Meta/Facebook, Shopify, Under Amour, Wayfair, Tupperware, Amazon, Sleep Number, Tempur+Sealy, Restoration Hardware, Netflix, Carvana, and Carmax), which is down more than 54% from its peak about six months ago.

Rampant speculation-driven segments of the market have gotten hit particularly hard. The chart below shows drawdowns for several key spec areas, with recent peak-to-trough declines all worse than -40%. The rout in the crypto space has garnered much media attention, with a less-publicized, but probably important driver of equity market contagion being crypto-related margin calls.

Spec areas' epic drawdowns

Source: Charles Schwab, Bloomberg, as of 5/13/2022.

Goldman Sachs (GS) non-profitable technology basket consists of non-profitable U.S.-listed companies in innovative industries. Technology is defined quite broadly to include new economy companies across GICS industry groupings. Goldman Sachs (GS) retail favorites basket consists of U.S. listed equities that are popularly traded on retail brokerage platforms. Goldman Sachs (GS) most-shorted basket contains the 50 highest short interest names in the Russell 3000; names have a market cap greater than $1 billion. ISPAC Index is a passive rules-based index that tracks the performance of the newly listed Special Purpose Acquisitions Corporations (“SPACs”) ex- warrant and initial public offerings derived from SPACs since August 1, 2017. The Meme Index is constructed by Bloomberg and contains 37 stocks that are considered actively traded and/or discussed among day-traders, retail investors, and chatrooms. Individual stocks shown for informational purposes only. Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly. Past performance does not guarantee future results.

Consistent with rising recession risk (we believe the needle points more definitively to recession vs. soft landing), the following S&P 500 industries are all down between 20% and 35% from their peaks: Autos, Media/Entertainment, Homebuilders, Asset Managers, Retailers, Software, Banks, Investment Banking, Employment Services, Consumer Finance, and Hotels/Restaurants/Leisure. The Bloomberg consensus of economists' odds of recession has jumped to 30%, which may not seem high, but it's nearly double the norm of 17% for a group that generally tends to skew quite optimistic about the economy. (Hat tip to my friend David Rosenberg of Rosenberg Research.)

In terms of history, there have been a dozen recessions since WWII, with a median peak-to-trough S&P 500 decline of 24%, and an average decline of 30%.

Silver lining in form of sentiment?
If there is a silver lining to the market's carnage, it's that investor sentiment has turned quite sour, which often can serve as a contrarian indicator. However, although attitudinal measures of sentiment (which I'll get to) are showing extreme bearishness, behavioral measures may have to deteriorate further to establish a firmer contrarian base.

Mentioned above was equity market contagion associated with margin calls. Shown below is a margin debt chart with data from our friends at Ned Davis Research (NDR). Buy signals per this data are triggered when the rate-of-change rises above -21%; sell signals are triggered when the rate-of-change falls below +48% (orange dotted lines).

As shown, this indicator remains on a sell signal, with more of a retreat in margin debt rate-of-change needed to get to a zone that might bring on a buy signal. As shown in the accompanying table, although the S&P 500 performance following prior sell signals was fairly weak three-to-18 months later, the declines were not extreme. Conversely, the gains following buy signals were quite strong.

Margin debt off boil

Source: Charles Schwab, ©Copyright 2022 Ned Davis Research, Inc.

Further distribution prohibited without prior permission. All Rights Reserved. See NDR Disclaimer at www.ndr.com/copyright.html. For data vendor disclaimers refer to www.ndr.com/vendorinfo/, as of 4/30/2022. Sell signals generated when rate of change in margin debt falls below 48%; buy signals generated when rate of change in margin debt rises above -21%. Past performance is no guarantee of future results.

Another behavioral sentiment indicator not yet hitting the kind of extremes that have worked well as contrarian indicators is the equity-only put/call ratio. As shown in the chart below, the ratio plunged to historic lows in the aftermath of the COVID-19 bear market in 2020, but the rebound higher has not (yet) brought to an extreme. A sharper shift away from call buying to put buying may still be needed for a sustainable market bottom to form.

Put/call not yet at extreme

Source: Charles Schwab, Bloomberg, as of 5/13/2022.

There are a few behavioral sentiment indicators that are flashing a more optimistic signal for stocks, including fund flows. NDR tracks fund flows back further than we have access to data, hence the cut-and-paste version of their chart below. As shown, the four-week total of equity fund flows (including mutual funds and exchange-traded funds) has recently sunk into negative territory. In fact, outflows during the final week of April were the largest in three years. As shown in the accompanying table, annualized returns for the S&P 500 were historically healthy in the lowest zone, where flows fell recently.

Fund flows reverse



Past performance is no guarantee of future results.

Another set of behavioral sentiment indicators that is flashing a more optimistic signal for stocks is the always-popular "Smart Money" and "Dumb Money" Confidence indicators from SentimenTrader. As shown below, the positioning of the former has vaulted to very bullish (non-contrarian) territory, while the positioning of the latter has descended to very bearish (contrarian) territory. "Dumb Money Confidence" is nearing one of the lowest readings in 23 years. Stocks historically rebounded consistently over the subsequent couple of months after similar extremes, even during protracted bear markets.

Smart Money more bullish

Source: Charles Schwab, SentimenTrader, as of 5/13/2022.

SentimenTrader's Smart Money Confidence and Dumb Money Confidence Indexes are used to see what the “good” market timers are doing with their money compared to what the “bad” market timers are doing and are presented on a scale of 0% to 100%. When the Smart Money Confidence Index is at 100%, it means that those most correct on market direction are 100% confident of a rising market. When it is at 0%, it means good market timers are 0% confident in a rally. The Dumb Money Confidence Index works in the opposite manner.

A collective of attitudinal and behavioral sentiment indicators is measured via NDR's Crowd Sentiment Poll, which, as shown below, has moved well into "extreme pessimism" territory. As shown in the accompanying table, although the best historical performance has occurred when sentiment has gotten completely washed out and then begun to rebound, the current zone of < 57 has been met with healthy annualized gains for the S&P 500.

Crowd feeling/acting bearish

Source: Charles Schwab, ©Copyright 2022 Ned Davis Research, Inc.

Further distribution prohibited without prior permission. All Rights Reserved. See NDR Disclaimer at www.ndr.com/copyright.html. For data vendor disclaimers refer to www.ndr.com/vendorinfo/, as of 5/10/2022. Past performance is no guarantee of future results.

Volatility spikes likely to persist
Finally, as shown below, volatility (as measured by the VIX) is up, but not to the extremes seen during the COVID bear market or the Global Financial Crisis. Near-term we are likely to be subjected to extreme "two-way" volatility, with a recent example being last Friday's plunge in UMich Consumer Sentiment being met with a counter-trend surge in stocks. For what it's worth, that is typical bear market behavior. Implied volatility indicates a rash of 2% daily moves is likely between now and at least the summer.

"Fear index" not at extreme

Source: Charles Schwab, Bloomberg, as of 5/13/2022.

In sum
The Federal Reserve is on a mission to squash inflation via the tightening of financial conditions. Investors need to understand the demise (at least for now) of the so-called "Fed put." The Fed had the flexibility to change gears in periods like late 2018—when it shifted away from tightening due to equity market volatility/weakness—because inflation was low. Now the Fed concedes it may have to allow more economic and/or market harm to bring inflation down, with equity market volatility/weakness in a vacuum not likely to trigger a shift in policy.

There is no perfect signal of when bear markets end. What we do know is that in bear markets, from a technical perspective, support becomes less relevant and resistance becomes more relevant. Assessing technicians' consensus, as an example, resistance sits somewhere between 4330 and 4400 on the S&P 500, a range (for now) that represents a key hurdle. Although Friday brought a "volume thrust" (with higher volume associated with stronger stocks), historically persistent declines tend to end (or pause) with a string/series of positive breadth days. For now, rallies are more likely countertrend, while bouts of weakness are the trend." "

MY COMMENT

I dont use any of the "Technical" stuff that is mentioned above. BUT.....it is data.......that is about all I can say.

I dont get caught up in trying to use various measures to call or time the end of a correction or bear market. I simply wait till it is over. I will know it is over when I can look back and see it in.....hindsight.

I dont think we are back to a positive market.....yet. As I have said many times I think we have further to fall. How much....who knows.

AND.....of course it is common to see rallies during bear markets. I wold welcome a nice multi-week bear market rally. It would be nice to build up some gains for a while....even if most of them are lost later on.

 

This....."might".....be a little bit of an indicator for tomorrow.

https://www.barrons.com/articles/stock-market-today-51653902156?siteid=yhoof2&tesla=y

Global Stocks, U.S. Futures Move Higher on Memorial Day—and What Else Is Happening in the Stock Market Today

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

Global stocks and U.S. futures rose on Monday amid a quiet day for markets due to the Memorial Day Holiday.

Investor sentiment was buoyed by fresh stimulus in China and the easing of disruptive lockdown measures in Shanghai and Beijing.

Futures for the Dow Jones Industrial Average DJIA +1.76% rose 230 points, or 0.7%, after the index rallied 575 points on Friday. S&P 500 SPX +2.47% futures were 1% higher with futures tracking the Nasdaq COMP +3.33% 1.4% into the green. U.S. markets are closed Monday in observance of Memorial Day, with stock and bond trading resuming on Tuesday.

Overseas, the pan-European Stoxx 600 climbed 0.8% and Tokyo’s Nikkei 225 gained 2.2%.

Global investors took their hint from a late-in-the-day rally on Wall Street last Friday to advance on Monday. U.S. stocks surged to close out the week amid hopes that the Federal Reserve would be less aggressive in tightening monetary policy, driven by signs that multi-decade high inflation is cooling.

The upbeat mood in the market was helped by positive signs out of China, where disruptive Covid-19 lockdowns have rattled global supply chains and threatened to stoke inflation even higher.

“Shanghai announced a raft of stimulus measures and both Shanghai and Beijing eased Covid-19 restrictions,” said Jeffrey Halley, an analyst at broker Oanda. “Another tailwind was the strong performance by Wall Street on Friday, which closed out a banner week prompting the usual ‘maybe this is the bottom’ response from the financial press and [fear-of-missing-out] investors. “

But the Fed remains top-of-mind. How much the central bank will tighten monetary policy—and raise interest rates—to tackle inflation in the year ahead is a key focus for investors. The risk is that the Fed will move so aggressively as to cause a recession.

“From central banks, investors will be awaiting this Wednesday when the Fed is due to start its balance sheet run off in order to gauge the preliminary impact on the markets,” said Jim Reid, a strategist at Deutsche Bank.

While momentum from the stock market rally of last Friday looks to be continuing into this week, investors are still under pressure after significant declines this year. The S&P 500 remains in correction, down 13% this year, with the tech-focused Nasdaq in a bear market, more than 23% lower in 2022.

“A week of positive developments is not sufficient to call an end to recent volatility,” said Mark Haefele, the chief investment officer at UBS Global Wealth Management. Haefele pointed to Wall Street’s so-called fear gauge, the CBOE Volatility Index, which closed below 26 on Friday from a peak of 35 earlier this month.

“This is still above the long-term average and is consistent with daily moves of around 1.6% in the S&P 500,” Haefele said."

MY COMMENT

About the most positive thing I can say for the short term is........NO ONE is in the dark as to what the FED is going to do over the coming months. It is all TOTALLY baked in.

ALL the other major and minor market issues are also known and have been for many months.

SO.....everything is OLD NEWS. Sooner or later the old news will no longer have any ability to impact the markets.

 

I like this little article about NVIDIA. I believe they are the cream of the crop in the chip business. I also think that the selling of this stock is now simply SILLY with how low the price currently is. That does not mean that it will not drop more. The market reaction to their guidance was way overdone.

Nvidia's 'transformation' is 'underappreciated,' BofA analysts say

https://finance.yahoo.com/news/nvid...appreciated-bof-a-analysts-say-131300006.html

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

"Chip designer NVIDIA (NVDA) Corp. disappointed on guidance in their latest earnings report, but there was a lot in the update that Bank of America (BofA) analysts liked.

"Our positive view on Nvidia is based on its underappreciated transformation from a traditional PC graphics chip vendor, into a supplier into high-end gaming, enterprise graphics, cloud, accelerated computing and automotive markets," Bank of America analysts wrote in a recent note. "The company has executed consistently and has a solid balance sheet with demonstrated commitment to capital returns."

Nvidia's revenue soared 46% year over year to $8.29 billion in its fiscal 2023 third quarter, which ended on May 1. The growth was fueled by a 83% surge in data center sales, to $3.75 billion, and a 31% increase in gaming revenue, to $3.62 billion.

"We delivered record results in Data Center and Gaming against the backdrop of a challenging macro environment," Nvidia Founder and CEO Jensen Huang said in a press release. "The effectiveness of deep learning to automate intelligence is driving companies across industries to adopt Nvidia for AI computing."

NVIDIA also forecasted lower-than-expected revenue in the current quarter, citing the impact of COVID related lockdowns in China and Russia's ongoing invasion of Ukraine.

BofA analysts, who hold a buy rating on the stock, saw a "silver lining" in that the company can refocus "refocus the business back on data center (now 50% of sales)" and prepare for new gaming-related products in the second half of the year.

KeyBanc Capital Markets' John Vinh told Yahoo Finance (video above) that the company is "being conservative with their second half outlook. Obviously. They're pretty optimistic about what they're seeing in terms of data center growth. They're expecting data center to grow sequentially through the rest of the year, but where we think they're gonna be the most conservative is... new product launches on both the data center side and they also hinted on the consumer side.""

MY COMMENT

This company is positioned to be the KING of the chip companies in a number of market areas. In addition they have GREAT management and a laser like focus on running and managing their business.

My only chip holding.

 

This week is one that I have been waiting for......for a long time. I have often been critical of Amazon for not splitting their stock. At the close this coming Friday the 20 for 1 stock split will FINALLY happen........with the new shares trading on Monday.

It is about time. It would be nice if this events helps to propel the market and the stock to some gains as we move forward.

 

I REALLY dont care much about the markets today. They are down as is the current norm and the current market direction. Nothing new is going on to cause this.....it is simply the direction. Nothing you can do about that.

I STILL dont see or hear any panic out there in investors. Perhaps I am out of touch with the younger investor.......but....people seem to be taking the dismal start to this year in stride.

There does not seem to be much conviction behind the drop today.....so....perhaps we will see an attempt to rally as we get to mid to late morning. BUT.....as I said.....I dodnt care. I have more important stuff to do today. My plumbers are coming in about 30 minutes to wrap up the last of my plumbing work on my various remodel projects. The last of my back-ordered.....(supply chain issues).....parts are here and ready to install. When my handyman was here the other day he said he was insanely busy. He is doing lots of big jobs lasting multiple days. EVERYONE is remodeling.

 

HERE is GREAT news for house hunters. I have bought and sold in some really bad markets over the years. BUT....the current market has got to be the worst for house hunters. This should help them a bit.

Home sellers in hot markets are dropping prices as demand wanes
The rise in mortgage rates is pricing out buyers

https://www.foxbusiness.com/real-estate/homesellers-popular-florida-california-new-orleans-markets

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


"Price drops are "becoming increasingly common" in some of the most popular housing markets across the United States.


According to new Redfin data, more than 20% of home sellers dropped their price in seven of the 10 most popular migration destinations last month: Cape Coral, Florida; Sacramento, California; North Port, Florida; Tampa, Florida; Atlanta, Georgia; San Antonio, Texas, and Phoenix, Arizona.

Although the price drops are becoming more common, they are the result of rising mortgage rates, which is pricing out buyers and driving down demand.

"When mortgage rates were at or below 3%, both local and out-of-town homebuyers were more willing and able to tolerate high prices, but at 5%, many are now priced out," Redfin chief economist Daryl Fairweather said in a statement. "A home’s price is driven by the balance of supply and demand, and when demand drops off and supply increases like it is now, rapid price increases evaporate quickly."

Areas that saw a huge surge in migration and sharp increases in home prices over the past two years are now seeing "an abrupt drop-off in demand," which is forcing sellers to "drop their prices with increasing frequency," Fairweather said.

In April, 41% of home sellers in Boise, Idaho, dropped their price, which is up 10% compared to a year ago and the largest share of home sellers in Redfin’s analysis.

Over the past two years, home prices in the area were up 62%, according to Redfin.

Cape Coral, Florida, was not far behind, with 33% of sellers dropping the price of their homes, according to Redfin. In New Orleans and Baton Rouge, Louisiana, 32% and 31% of home sellers, respectively, decreased the price of their home.

The data also shows that 30% of home sellers in Sacramento decided to drop their price.

"For home sellers in these markets, the sharp increase in mortgage rates has knocked some of the wind out of a housing market that had been super-charged by surging migration," according to Redfin.

In fact, those aforementioned sellers are "driving the national rate of price drops to its highest level since October 2019," according to Redfin.

MY COMMENT

Good. House hunters definately could use a break. It is not good for society and our culture for the majority of people to be priced out of the American Dream of owning a house.

 

Looks like the big investment banks and big banks are also tired of the current market. If they are right this is good news. Of course that ASSUMES that they have some idea of what is going on in the short term. Personally I dont believe they have any better track record of predicting market direction than anyone else.

Stocks: We 'have reached peak bearishness' amid recession and Fed fears, Citi says

https://finance.yahoo.com/news/stocks-citi-peak-bearishness-112544163.html

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

"After a couple of days of strength in stocks, one Wall Street investment bank thinks the worst is behind investors — for now.

"Over the near term, our high level takeaway is that the equity markets have reached a peak bearishness related to Fed expectations and recession risk," Citi Strategist Scott Chronert wrote in a new note to clients. "From here, we suspect that volatility will move more down the single stock path. With the Q2 reporting period approaching, we expect to see more evidence of this."

Chronert listed several factors behind his call, mostly related to market sentiment hitting extreme pessimism.

"CFTC futures and options positioning data shows that asset manager net length is near 10-year lows when we normalize notionals by aggregate market cap or gross exposure," the note stated. "Leveraged fund positioning contrasts this as the group appears to have taken profits on shorts in recent weeks. Retail speculation has declined. The sharp underperformance of social sentiment stocks, non-earning names and other more speculative trades basically was hinting at this already. But TRF trading data helps confirm high risk speculation is working its way out of markets."

The strategist adds that flows to U.S. equity mutual funds and ETFs are seeing "improved" flows int he month of May to date, based on Citi's analysis.

Citi's soothing take on a still jittery market arrives after a bounce in the markets last week as investors shrugged off recession worries and locked in on surprisingly good earnings out of retailers Macy's and Nordstrom.

The S&P 500 index ended a seven-week losing streak and posted its best week since Nov. 2020, rising by more than 6.5% and erasing its losses for the month of May to date. The Dow Jones Industrial Average and Nasdaq Composite, meanwhile, tacked on 4.2% and 5.2%, respectively on the week.

Market sentiment was also supported by the defense of the U.S. economy by CEOs at the World Economic Forum. While most top execs noted that business had slowed recently amid inflation and supply chain challenges, they collectively discounted a recession later this year.

"The American consumer is very strong, so that presents a challenge for the Fed — but it's also a good thing to be working against," Bank of America CEO Brian Moynihan told Yahoo Finance in Davos (full interview above).

The consumer's leverage "is in great shape," Moynihan added. "Even though stimulus stopped in March of last year, the account balances of our customers at Bank of America have gone up every month since last June or July. If you think about their ability to borrow, their credit card balances are still down from $100 billion to $80 billion. That means the same customers can go back and borrow the money, they are highly creditworthy.""


AND


Fears of a U.S. recession in 2022 are overblown: Goldman Sachs

https://finance.yahoo.com/news/us-recession-fears-goldman-sachs-110159742.html


"Goldman Sachs, which previously estimated that there was a 35% chance of a recession within two years, is reiterating that a recession in the U.S. is not inevitable despite what stocks say.

"While our growth forecast has long been below consensus, we believe fears of declining economic activity this year will prove overblown unless new negative shocks materialize," Goldman Sachs Chief Economist Jan Hatzius wrote in a note to clients.

Hatzius forecasts second quarter U.S. GDP growth of 2.8%, an improvement from a 1.5% decline in the first quarter, followed by GDP averaging 1.6% growth over the ensuing four quarters and no recession.

"Despite the market narrative of declining business activity and sharply lower management confidence," Hatzius added, "the activity measures of the surveys available for April and May indicate a deceleration rather than a collapse."

Hatzius' analysis arrives after a comeback week for the markets fueled by upbeat earnings reports from retailers Macy's and Nordstrom, which helped alleviate concerns (for now) a recession was taking form.

The S&P 500 index ended a seven-week losing streak and posted its best week since Nov. 2020, rising by more than 6.5% and erasing its losses for the month of May to date.

Meanwhile, the Dow Jones Industrial Average and Nasdaq Composite tacked on 4.2% and 5.2%, respectively on the week.

Market sentiment was also supported by the defense of the U.S. economy by CEOs at the World Economic Forum. While most top execs noted that business had slowed recently amid inflation and supply chain challenges, they collectively discounted a recession later this year.

"I don't want to see us talk ourselves into a recession, first of all, and I think people are a little too pessimistic," Cisco CEO Chuck Robbins told Yahoo Finance Live (video above). "If you go back over the last several years, the challenges we have dealt with as a global society, we should have confidence we are going to deal with whatever comes our way. Whatever happens will likely be short-lived.""

MY COMMENT

FIRST.......I dont invest according to what the big investment banks think. I invest for the long term since it is IMPOSSIBLE to predict the short term markets. I dont think these big banks have any better ability to predict the short term than anyone else.

BUT.....it is good to see some positive thinking starting to make its way into the markets right now. We could use a little positive thinking.

As I said above......I am not seeing the pessimism that I see mentioned in the media.....but....perhaps I am living in a little bubble and am out of touch with the world outside this local area.....especially younger investors.

 

Looks to me like the lack of conviction is continuing for today. So......with no conviction.....the markets will simply follow the recent DOWN direction. I STILL see the day as very much up in the air. So....perhaps we will still have a shot at a good or at least a mixed close later today.

 

ACTUALLY......I am happy with how I ended today......in the GREEN. I got lucky that three of my stocks were in the green enough to carry my portfolio. They were AMAZON, NIKE, and GOOGLE. AND.......they helped me to get in a beat on the SP500 by 0.90%.

I would have never guessed that I was positive today till I looked a few minutes ago.

 

Well here we are at the end of May. Another month down the tube.....I mean in the books. We move forward from here.

Dow drops 200 points, finishes month little changed in turbulent May

https://www.cnbc.com/2022/05/30/stock-market-futures-open-to-close-news.html

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

"U.S. stocks fell in see-saw trading Tuesday as investors closed out a rocky month that saw the S&P 500 flirt with bear-market territory amid inflation and recession fears.

The Dow Jones Industrial Average fell 222.84 points, or 0.7%, to close at 32,990.12. The S&P 500 dipped 0.6% to 4,132.15. The Nasdaq Composite eased 0.4% to 12,081.39. The technology-heavy index was up 0.5% at its highs and down nearly 1.6% at its lows.

After a holiday hiatus Monday, U.S. stocks wrapped up a roller-coaster May. The Dow and the S&P 500 finished the month little changed, supported by a major rally the week prior. The Nasdaq lost about 2.1% on the month.

S&P 500 in May

“The market is digesting the sharp rally late last week and trying to figure out its footing,” Peter Boockvar, chief investment officer of Bleakley Advisory Group, said. “We’re still far from being out of the woods here in terms of the major overhangs, being inflation, monetary tightening and rising rates.”

Tuesday’s market action underscored fears that high inflation is weighing on economic growth. In Europe, euro zone inflation readings released Tuesday hit a record high for a seventh straight month, surging 8.1% in May.

Action in the oil market was also front-of-mind for investors. Oil prices initially jumped following the European Union agreeing to ban most crude imports from Russia. Then, oil prices eased from highs as The Wall Street Journal reported the Organization of the Petroleum Exporting Countries was weighing suspending Russia from its oil-production deal.



CNBC
Energy stocks comprised the worst-performing S&P 500 sector Tuesday, after being the biggest gainer earlier in the session. Chevron slid 2%, and Schlumberger fell 4.3%.

Industrial stocks linked to the economic cycle also declined Tuesday. Honeywell lost 1.4%, and Nucor fell 3.8%.

Health care was another lagging sector Tuesday. UnitedHealth Group was among the biggest losers on the Dow, off by 2%.

Meanwhile, a rally in some mega-cap technology stocks provided a bit of support to the broader indexes. Amazon rose 4.4% and Google parent Alphabet gained 1.3%.

At the start of May, the Federal Reserve hiked interest rates by half a percentage point in a bid to tamp down generationally hot inflation. Recession fears have mounted as market participants fear the Fed’s policy tightening will trigger an economic decline.

“Higher inflation and slower growth are now the consensus view but that doesn’t mean it’s fully discounted,” Morgan Stanley’s Mike Wilson said in a note Tuesday.

Disappointing quarterly reports in May from the likes of Walmart and Snap showed inflation hurting American consumers and eating into corporate profits.

Investors also eyed the continuing war in Ukraine and Covid outbreaks in China, raising concerns about global commodities and supply chain challenges.

Stocks struggled during the month amid the negative cross currents. The S&P 500 on May 20 dipped into bear-market territory briefly, falling 20% below its high at one point during the session. Meanwhile, the Dow saw its longest weekly losing streak since 1923, falling for eight consecutive weeks before last week’s rally.

Last week, the Dow and the S&P 500 notched their best weekly gains since November 2020. The blue-chip average closed up 6.2% for the week, ending an eight-week losing streak. The S&P 500 gained 6.5%, and the Nasdaq added 6.8% on the week, ending positive after seven continual weeks of losses.

Still, stocks remain well off their highs. The Dow is 10.7% below its record. The S&P 500 is down 14.2%, and the Nasdaq is off by 25.5%.

“Bear markets are incredibly difficult to navigate, because they are inherently volatile and prone to sharp upside rallies,” Wolfe Research’s Chris Senyek said in a note Tuesday."

MY COMMENT

Nice to see that two of the three averages ended an entire month......FLAT. At least that is progress.

We are just going to have to continue to ride it out for some number of months or perhaps for this entire year. I am now down by about (-20.2%) year to date.

What I find AMAZING is that after everything we have gone through this year the DOW is.....ONLY......10.7% below its record high. AND....the SP500 would only have to gain 14.2% to be back at its high.

PATIENCE is the name of the game.....it will happen. It takes time to get through this sort of screwed up environment.

 

I have noticed lately that many of the places where we eat lunch every day have significantly raised their prices. One place raised the daily special from $7.99 to $9.99 and no longer include a drink. That is a raise of about $4.50 considering the drink is no longer free. Another place that we went to today.....the price used to be about $35 for what we get. Today it was $45 and that was if you paid cash. There was a higher charge for using credit.

We tend to go to mom and pop.....down-home.....regular places.

These are really significant price increases. I am sure they are going to see a drop in business with these higher prices. I heard two of the waitresses discussing customers being mad about the daily special price increase at the first place mentioned above.

 

YES.....I got my plumbing all done today....at last. We now have a fully complete primary bedroom and bath.

UNFORTUNATELY......projects beget projects. We have decided to add new door hardware to the front portion of the house and to paint the entire inside of the house except for the secondary bedroom wing. We will do the painting in December or January.

I ordered the door hardware, hinges, and locks, for the main living areas a few nights ago. Yesterday......I received the first notification that some of my parts are back-ordered.

You got to love the supply chain issues.

 

Today seems very negative in all the commentary and opinion I am seeing and hearing. A necessary thing in order to get to the bottom of this little market drop.

We seem to be headed for an......obvious.....typical day in recent terms.

This is part of the necessary process.......for the markets.

 

Here is the lesson that people need to learn. Notice I said "people"......not investors. There were a lot of people speculating and doing crazy things in the markets in the year or two before this year. They were NOT investors.

The stock market 'casino' is closed

https://www.cnn.com/2022/05/31/investing/stock-market-investing-trading/index.html

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

"New York (CNN Business) Investors have learned a bunch of hard lessons so far in 2022. The stock market doesn't always go up. And factors such as the economy, earnings and valuations, which might sound like quaint relics of a bygone era, still matter even in a world seemingly dominated by memes and Reddit boards.

Picking winning stocks isn't easy, especially at a time when the Federal Reserve is raising interest rates and inflation is starting to hurt consumers and the broader economy. Shares of many speculative tech companies are now tumbling due to worries about weakening fundamentals and unsustainable stock prices.

But this isn't necessarily the worst news for the markets. Investors just need to once again do more homework to find good bargains.

"The casino is closed," said Peter Mallouk, president and CEO of Creative Planning, a wealth management firm.

"The days of stimulus are over. This is now more of a thinking person's market. Total speculation is dead," Mallouk said, adding that traders can no longer pass around blank check SPAC stocks, cryptocurrencies, unprofitable tech firms and other risky investments like hot potatoes and hope someone else will want to catch them.

Stock picking seemed a lot easier when the Fed was doing everything in its power to try to stimulate the economy. Many investors do not have experience navigating the market when the central bank is jacking up rates in a bid to cool things down.

"The world is waking up to the fact that zero percent interest rates are done," said Max Wasserman, co-founder of Miramar Capital. "Rates were real low and people took on excess risk because anytime the stock market pulled back, the Fed cut rates. The message was to buy the dips because the Fed has your back. But the party's over."

Forget the memes and focus on fundamentals

Some investors who were flush with Covid stimulus cash last year and chased meme stocks like GameStop (GME) and AMC (AMC) may now be less bullish on individual stocks.

"The excitement of stock-picking and the active investing strategies approach reached new levels of popularity during the meme stock trading phenomenon in early 2021," Lindsey Bell, chief markets and money strategist for Ally, said in a report late last week. "Now, stock market losses have made some investors sour on the strategy."

But Bell noted that investors who do their homework can still "make smart investing decisions" as long as they maintain "a very hands-on style of investing" and don't panic.

"When stocks are declining, a bear market is near and volatility is high, second-guessing investments is normal," she wrote.

Wasserman said that stock picking isn't dead per se. It's just that now is a time for investors to look for quality companies that can perform well even as interest rates go up and the economy potentially slows as a result.

That means doing more than just buying the tech-heavy S&P 500, which is dominated by the likes of big Nasdaq leaders Apple (AAPL), Tesla (TSLA), Google owner Alphabet (GOOGL) and Facebook parent Meta Platforms (FB).

"You can't just keep throwing money in the air and expect everything to go up. When you buy an ETF, you're just buying a basket of stocks and everyone is buying that same basket" Wasserman said. "We're not chasing the same things everyone else is chasing. There is more volatility to come and we hope to take advantage of that."

Wasserman specifically recommends blue chip stocks that pay steady dividends and thinks investors should have their portfolios diversified throughout a variety of sectors.

With that in mind, he owns stocks ranging from brand name giants UPS (UPS), Coca-Cola (KO) and Pepsi (PEP) to dividend-paying techs such as Corning (GLW), Microsoft (MSFT) and Texas Instruments (TXN). Wasserman said Timberland, The North Face and Vans owner VF Corp. (VFC), medical devices leader Medtronic (MDT) and gold miner Newmont (NEM) are also solid values.

The good news — if you want to call it that — is that the current market turbulence doesn't mean that a long bear market necessarily lies ahead.

"This could be bumpy, but not a crash. This whole turmoil may last less than a year and it's already underway," Mallouk said. "This is not like 2000 or 2009. This is a normal bear market."

"The best place to build long-term wealth is still the stock market," Mallouk added. "You may just have to hold your nose if you buy today.""

MY COMMENT

Lots of good statements above. Boil it all down and it means we are in a normal market where what really counts is......fundamentals.

What also counts......as always......is quality.

Lots of people are discovering that they are NOT investing geniuses.

Investing is a long term process. It requires strategic use of.....PROBABILITY. What will give you the PROBABILITY of returns for the long term.

 

The more I see and hear from Elon Musk the more I like his style.

Elon Musk’s Ultimatum to Tesla Execs: Return to the Office or Get Out

https://www.msn.com/en-us/money/oth...cs-return-to-the-office-or-get-out/ar-AAXX7HA

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

(Bloomberg) -- The world’s richest man appears to have had it with this whole working-from-home business.

Elon Musk, chief executive officer of Tesla Inc., waded into the return-to-office debate on Twitter by elaborating on an email he apparently sent Tuesday to the electric-car maker’s executive staff.

Under the subject line “Remote work is no longer acceptble” [sic], Musk wrote that “anyone who wishes to do remote work must be in the office for a minimum (and I mean *minimum*) of 40 hours per week or depart Tesla. This is less than we ask of factory workers.”

The CEO went on to specify that the office “must be a main Tesla office, not a remote branch office unrelated to the job duties, for example being responsible for Fremont factory human relations, but having your office be in another state.”

While Musk didn’t directly address whether the email is authentic, he strongly suggested it is by responding to a follower asking him to address people who think going into work is an antiquated concept. “They should pretend to work somewhere else,” he replied.

It’s not the first time Musk’s tough-love treatment of employees has come up.

Roughly two weeks before Musk reached a deal to acquire Twitter Inc., Keith Rabois, a Silicon Valley venture capitalist and entrepreneur, tweeted an anecdote that speaks to his friend’s management style. At Space Exploration Technologies Corp., Musk once noticed a group of interns milling around while they waited in a line for coffee.

Musk viewed this as an affront to productivity. According to Rabois, who knows Musk from their days at PayPal Holdings Inc., Musk threatened to fire all the interns if it happened again, and had security cameras installed to monitor compliance.

Rabois wrote in April that employees at Twitter -- one of the most prominent companies to allow permanent remote work -- are “in for a rude awakening.” Musk’s apparent email to Tesla’s executive staff suggests Twitter’s policy will change once he takes over.

The reference to Tesla factory workers is also interesting in light of the situation at the carmaker’s plant in Shanghai.

Thousands of staff there have been effectively locked in for months, working 12-hour shifts, six days a week. Until recently, many were sleeping on the factory floor as part of a closed-loop system meant to keep Covid out and cars rolling off the production line.

Workers brought in to bring the factory back up to speed are being shuttled between the facility and their sleeping quarters -- either disused factories or an old military camp -- with day- and night-shift workers sharing beds in makeshift dorms."

MY COMMENT

I totally agree. I consider the statement below one of the best that I have seen about the "work from home"......stuff:

".....responding to a follower asking him to address people who think going into work is an antiquated concept. “They should pretend to work somewhere else,”..."

I love it that he is willing to state the OBVIOUS on many issues. He is one of the few that has the GUTS to point out over and over on various issues that........"the emperor has no cloths".

 

I have not looked at my account yet today. I know that earlier most of the big tech companies were up nicely. Here is the......supposed.....items that are impacting the markets today.

Stock market news live updates: Stocks slide after data impresses, Dimon warns

https://finance.yahoo.com/news/stock-market-news-live-updates-june-1-2022-112445431.html

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

"U.S stocks gave up gains early Wednesday following stronger-than-expected readings from the U.S. manufacturing sector and stern comments from JPMorgan (JPM) boss Jamie Dimon.

After rallying to start the trading session, led by a 1% advance from the Nasdaq, all three major indexes turned negative about 80 minutes into the trading day.

The S&P 500 and the Dow both lost as much as 0.7% while the Nasdaq was off as much as 0.3%. The Russell 2000 was down by the most, falling as much as 0.9%.

Data from the Institute for Supply Management showed the U.S. manufacturing sector grew faster-than-expected in May, another signal that fears of an imminent downturn in the U.S. economy may be overblown.

Manufacturing data was quickly followed by headlines from Dimon, who told Bernstein's Strategic Decisions Conference the U.S. economy is facing a "hurricane" as the Federal Reserve continues its process of normalizing interest rates.

The April report on job openings from the BLS also showed a decline in the number of job openings, a data point the Federal Reserve is likely to view positively as it works to cool the labor market.

An upbeat earnings report from Salesforce (CRM) late Tuesday gave investor sentiment a boost early Wednesday after the software company raised its profit forecast and said it did not see any significant impact on operations from macroeconomic uncertainty.

The outlook comes in contrast with some downbeat quarterly results from some corporate peers that signaled struggles with rising costs and supply chain imbalances ahead. Shares of Salesforce surged as much as 12% at the open.

“We’re just not seeing material impact on the broader economic world that all of you are in,” Salesforce Chief Executive Officer Marc Benioff said in an earnings call.
In a meeting with Federal Reserve Chair Jerome Powell on Tuesday, President Joe Biden discussed inflation — a "top economic priority" of his administration — while shifting responsibility to the central bank and emphasizing its independence. The meeting followed a Wall Street Journal op-ed by Biden underscoring his focus on taming soaring prices.

“At the end of the day, inflation is the biggest political challenge that is out there,” John Hancock Investment Management Co-Chief Investment Strategist Matthew Miskin told Yahoo Finance Live on Tuesday. “To bring down inflation, [the Fed has] got to bring down the economy.”

June also marks the beginning of the Federal Reserve process to begin shrinking its $8.9 trillion balance sheet. The central bank is also expected to raise interest rates by another 50 basis points when officials meet for their next policy-setting meeting later this month.

Wednesday's early moves follow an eventful May on Wall Street marked by worries of a recession, decades-high inflation levels and rising interest rates.

Despite a month of sharp gyrations in equity markets, the S&P 500 churned out a small gain of less than 1% – even after seven consecutive weeks of losses briefly dragged the index into bear market territory. The Dow Jones Industrial Average also closed slightly up for May, while the Nasdaq Composite deepened losses for the month amid a continued rotation out of technology stocks.

In the past decade, the month of June has returned an average 1.4%, ranking it the fourth best month of the year, according to data from LPL Financial. Over the past 20 years, however, the month has been weak, with only September worse for stocks.

“June has something for everyone, as it is no doubt a very weak month historically, but the past decade it has been strong,” LPL Financial Chief Market Strategist Ryan Detrick said in a note. “Still, after the big bounce in late May, we wouldn’t be surprised at all if this recent strength continued into a potential summer rally.”

Bespoke Investment Group pointed out in a note Tuesday that summer months have historically seen weaker stock market returns relative to winter and early spring. According to data from the firm, the Dow Jones Industrial Average has averaged a gain of 0.47% in June over the last century, but has been a “coin flip” for positive returns during the month, logging gains only 52% of the time.

10:46 a.m. ET: Jamie Dimon says 'hurricane' coming for the U.S. economy

JPMorgan (JPM) CEO Jamie Dimon is making waves on Wednesday with his comments at an investor conference.

Speaking at Bernstein's Strategic Decisions Conference, Dimon said the U.S. economy is facing a "hurricane" as the Federal Reserve continues its process of normalizing interest rates. Dimon said he'd previously referred to impending challenges facing the economy as "storm clouds."

"Right now, it's kind of sunny, things are doing fine," Dimon told the conference, according to a transcript from S&P Capital IQ. "Everyone thinks the Fed can handle this. That hurricane is right out there down the road, coming our way. We just don't know if it's a minor one or Superstorm Sandy...or Andrew or something like that. And you got to brace yourself."

Dimon added that he thinks the banking industry is in great shape, as are consumers sitting on over $2 trillion in savings.

"Jobs are plentiful, wages are going up, consumers are spending," Dimon said. "[The] lower income folks, not quite as much as before, but everybody else, it looks like they have $2 trillion more savings... I don't think that's going to stop...spending [in] 6 or 9 months. And so that to me is the bright clouds out there."

10:20 a.m. ET: Manufacturing activity remains resilient in May

Two readings on the U.S. manufacturing sector in May showed continued growth amid investor concerns of an impending economic slowdown.

The Institute for Supply Management's Manufacturing PMI for May hit 56.1, up from 55.4 in April and marking the 24th straight month of growth. S&P Global's U.S. Manufacturing PMI hit 57 in May, down from 59.2 in April.

For both reports, any reading over 50 indicates expansion in the sector while readings below 50 indicate contraction.

The data wasn't all sunny, however, with the ISM's employment index showing an unexpected decline last month. Additionally, S&P's report showed business confidence falling to the lowest level since October 2020.

"A solid expansion of manufacturing output in May should help drive an increase in GDP during the second quarter, with production growth running well above the average seen over the past decade," said Chris Williamson, chief business economist at S&P Global Market Intelligence. "However, the rate of growth has slowed as producers report ongoing issues with supply chain delays and labor shortages, as well as slower demand growth."

Commenting on the ISM's latest report, Tim Fiore, chair of the ISM's Manufacturing Business Survey Committee, said, "The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment. Despite the Employment Index contracting in May, companies improved their progress on addressing moderate-term labor shortages at all tiers of the supply chain.

10:07 a.m. ET: Job openings slide in April

The latest JOLTS — or Job Openings and Labor Turnover Survey — report showed 11.4 million jobs were open on the last business day of April, down from 11.86 million the prior month. Economists expected this report to show 11.35 million jobs were open at the end of April.

According to the BLS, the biggest decreases by industry were in health care and social work, retail, and food services, which all saw openings drop by more than 100,000 from March to April.

Job openings are being closely watched by economists for signs of potential cooling in the labor market, with Fed chair Jay Powell telling reporters last month the number of job openings relative to unemployed workers shows an "imbalance" in the labor market.

Wednesday's data suggest a potential step towards re-balancing this market."

MY COMMENT

YES......I still believe we are in a recession. People are going to be shocked when they find out that they can not find a job....because business pulled back.

There will come......(soon).....a time when business can not simply raise prices to stay alive. Once that point is reached they will start to look for other ways to stay in business. They will be cutting what they can and that will mean operating on a shoestring.

 

Unfortunately.....looks like the little rally from last week is over.

I am NOT saying.......the below....... from a mind set of negativity.......simply clinical observation.

1. The issues plaguing the economy are far from over.

2. We have a totally incompetent government that has no awareness or understanding of what is going on.

3. The FED is........"probably"......about to tank the economy.

4. At least number 3 above will help to lessen inflation.

5. The economy is STILL extremely distorted and far from recovering from the......"two week".....economic shutdown that lasted for about 2 years. It is EXTREMELY difficult to get a world wide economy back up and running after it is disrupted.

The good news......we are probably about 1/2 to 2/3 through the above. Perhaps another 4-10 months to go........and.....another potential 10-20% drop in the markets......at worst. At BEST......the markets are near......within 5% of a bottom.......and will simply muddle along for a good number of months about where we are right now.

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