The Long Term Investor

If you pay taxes:

IRS Announces New Tax Brackets for 2023 — What It Means for You

https://marketrealist.com/taxes/new-tax-brackets-2023/

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

"The Internal Revenue Service (IRS) is bumping up income tax brackets by 7 percent in 2023 to adjust for rising inflation. What will the changes mean for your taxes? The increase in the federal income tax brackets is part of 60 tax adjustment provisions announced by the IRS on Oct. 18.

The changes will apply to 2023 tax returns filed in 2024. The top tax rate will be at 37-percent for individuals earning more than $578,125 and married couples filing jointly making $693,750

The IRS increased the tax brackets for 2023.
Here are the new 2023 tax brackets for everyone else:

Tax Rate Single Taxpayers Married Couples Filing Jointly
10% $0 to $11,000 $0 to $22,000
12% $11,000 to $44,725 $22,000 to $89,450
22% $44,725 to $95,375 $89,450 to $190,750
24% $95,375 to $182,100 $190,750 to $364,200
32% $182,100 to $231,250 $364,200 to $462,500
35% $231,250 to $578,125 $462,500 to $693,750

The boost in the federal income tax brackets is good news for most Americans who may be able to pay fewer taxes on their income. For example, if you’re an individual taxpayer making $43,000 annually, your taxable income is 12 percent in 2023 versus 22 percent in 2022.

So next year, even if your income doesn’t increase, your paycheck may be a little higher because, with the adjustments, you fall into a lower tax bracket.

Why does inflation cause IRS to raise tax brackets?
The IRS adjusts the federal tax brackets every year to reflect changes in the cost of living and inflation, and when inflation is high, the brackets are raised. Right now, inflation is higher than its been in 40 years, prompting the IRS to make the recent changes.

Recent data shows that the Consumer Price Index (CPI), a key measure of inflation, is up 8.2-percent over last year.

IRS increases standard deductions for 2023.

As part of the new adjustments for 2023, the IRS is also increasing the standard deductions you can take on your income tax returns. Individual taxpayers can claim $13,850, up from $12,950 in 2022. Married couples filing jointly can claim $27,700, up from $25,900 in 2022.

The increase in the standard deductions may also help to reduce the taxes you owe when you file your 2023 return if you take the standard deduction over itemizing your deductions.

Other provisions in the 2023 tax changes include increases to:

• The maximum Earned Income Tax Credit to $7,430 from $6,935 in 2022
• The dollar limit on health flex-spending accounts to $3,050
• The amount of inheritance you can receive before estate taxes kick in, to $12,920,000

Social security benefits are also increasing due to rising inflation. The Social Security Administration recently announced an 8.7 percent cost-of-living adjustment increase to benefits in 2023. It is the largest COLA increase since 1981."

MY COMMENT

ONE of the benefits of.......inflation.

 

I remember this day very well......I was driving to Seattle......listening to business radio.

It’s the 35th anniversary of the 1987 stock-market crash: What investors can learn from ‘Black Monday’

https://www.marketwatch.com/story/i...estors-need-to-know-11666131409?siteid=yhoof2

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

"Investors suffering motion sickness from the stock market’s wild October swings probably don’t want to hear about it, but Wednesday marks the 35th anniversary of the single ugliest day in stock-market history.

On Oct. 19, 1987, the Dow Jones Industrial Average DJIA, -0.33% plunged 508 points, a decline of almost 23%, in a daylong selling frenzy that ricocheted around the world and tested the limits of the financial system. The S&P 500 SPX, -0.67% dropped more than 20%. At current levels, an equivalent percentage drop would translate into a one-day loss of over 7,000 points for the Dow.

Could it happen again? There are some important differences between the 1987 and 2022 market environment.

Slowing the slide

Marketwide circuit breakers put in place following the crash force 15-minute trading halts after declines of 7% and 13% and then close the market for the day after a drop of 20%.

“Is it possible to be down 20% in a day? Sure, but not before we have to check our wits a couple of times first,” Liz Young, head of investment strategy at SoFi, told MarketWatch in a phone interview.

Those circuit breakers were last triggered in March 2020, when stocks plunged sharply at the onset of the COVID-19 pandemic.

“The other big difference is that we’ve already gone down 20% this year,” Young said. While there may be more downside, it’s difficult to see what could trigger a comparable one-day downdraft.

Setting the stage for Black Monday

Black Monday didn’t come out of the blue. The S&P 500 fell 3% on Oct. 14, 2.3% on Oct. 15, and 5.2% on Oct. 16, the Wednesday-Friday stretch before the fateful day, recalled Nicholas Colas, co-founder of DataTrek Research, in a note earlier this week.

But the S&P 500 had gained 32.9% from January through September 1987, while it’s been downhill for stocks this year since the large-cap benchmark scored a record finish on Jan. 3.

It’s also a reminder that stock-market drops don’t have to happen all at once. 2008 was a “longer slog lower with bouts of deep selling,” noted Ross Mayfield, investment strategy analyst at Baird, in a phone interview.

And while risk versus return dynamics are starting to look more attractive for long-term investors, the market can still go lower from here, he said.

Current carnage

The Dow and S&P 500 ended Friday at their lowest levels since 2020. They’ve bounced back over the first two trading sessions of this week, leaving the S&P 500 down 22% year to date through Tuesday’s close, the Dow down 16% and the tech-heavy Nasdaq Composite COMP, -9.12% off more than 30%. All three major indexes are mired in bear markets.

Stock indexes moved lower in choppy trading Wednesday afternoon.

Aggressive tightening of monetary policy by the Federal Reserve in an effort to rein in persistently hot inflation has sparked a sharp rise in Treasury yields, unsettling stocks as investors fear the effort will push the economy into recession.

This October, however, has certainly been volatile. The S&P 500 has finished with a gain or loss of more than 1% in 8 of the 12 trading days seen so far this month. The Cboe Volatility Index VIX, 1.74%, an options-based measure of expected volatility over the next 30 days, remains elevated above 30, signaling investors expect choppy trading to continue.

Buying a big dip

The 1987 crash remains a “relevant case study in extreme volatility,” Colas wrote.

The S&P 500 bounced back the next two days following the Oct. 19 crash by 5.3% and 9.1%, but stumbled 8.3% the following Monday, leaving it essentially unchanged from its Black Monday close to its closing level a week later, he observed. The S&P 500 didn’t bottom until Dec. 4, then went on to rally 10.3% into year-end.

That shows that buying the close of an outsize “dip” may yield good short-term trading returns, but the market might still need to retest the lows before moving sustainably higher, Colas said.

Farewell, Fed put

It’s also worth noting that the 1987 crash is often described as the origin of the so-called Fed “put,” he said. That’s the idea that the Fed will respond to plunging asset prices with extraordinary measures.

With inflation soaring, the Fed is widely seen as unable or unwilling to ride to the market’s rescue, with some arguing that the central bank may actually be cheering for market-based pain to tighten financial conditions and help get inflation under control. The analyst noted that year-over-year inflation as measured by the consumer-price index was 4.4% in October 1987, around half its September 2022 level of 8.2%.

“Just to be clear, we don’t think there is a another 1987-style crash in the offing, but the current economic environment certainly leaves the Fed with fewer options and less desire to support equity prices than 35 years ago,” Colas said."

MY COMMENT

I remember this event very clearly. It was extremely SURREAL. There was no all day financial media and constant talk about the markets like now. BUT.....listening to the radio as the event was happening was VERY strange. Kind of like an out of body experience.

As it was happening no one had any idea of where or when it would stop.....for all I knew the markets were going to simply collapse to ZERO. I imagine it was....."somewhat"......but not as extreme of an experience..... as listening to the radio as the Japanese attacked Pearl Harbor.

Over the months that followed there was MUCH fear and panic. Of course....I simply did the same thing I do now.....NOTHING. I simply stayed fully invested.

The whole thing was caused by TOTAL MARKET ARROGANCE by the professionals. They had ALL initiated a hedging strategy called "Portfolio Insurance". It was an early computerized strategy that was supposed to be a NEW ERA.....a NEW NORMAL for them as "the professionals"......they could not lose money.

It ALL COLLAPSED in a single day......as the markets started to drop the computer programs kicked in and set off a self sustaining.......CHAIN REACTION of selling that FED ON ITSELF. When the computers were done......the DOW was down a WHOPPING 23% in a single day. The GREATEST SINGLE DAY MARKET LOSS in history.

I am LUCKY enough to have lived and invested through nearly EVERY historical market event except for the Great Depression.......the inflation and disaster of the late 1970's and early 1980's.....the FLASH CRASH of 1987......the DOT COM disaster and the market drop/recession of 2000/2002......the "NEAR" world banking collapse of 2008/2009.....the PANDEMIC of 2020 and the market drop it caused.......and NOW.....the little recession, bear market of 2022.

In addition...many NORMAL bear markets.

In spite of it all.....by following a long term strategy......I have made HUGE money in the markets over the past 50+ years for myself and family members. The POWER of COMPOUNDING and LONG TERM INVESTING.

If you are interested in HISTORY....here you go:

Black Monday

https://corporatefinanceinstitute.com/resources/equities/black-monday/

AND

What Caused Black Monday, the 1987 Stock Market Crash?
Key Takeaways:

• 
  
  • The "Black Monday" stock market crash of Oct. 19, 1987, saw U.S. markets fall more than 20% in a single day.
  • It is thought that the cause of the crash was precipitated by computer program-driven trading models that followed a portfolio insurance strategy as well as investor panic.
  • Precursors of the crash also lay in a series of monetary and foreign trade agreements that depreciated the U.S. dollar in order to adjust trade deficits and then attempted to stabilize the dollar at its new lower value.1

https://www.investopedia.com/ask/answers/042115/what-caused-black-monday-stock-market-crash-1987.asp

 

HERE is the TESLA earnings:

Tesla comes in light on revenue, beats on earnings

https://www.cnbc.com/2022/10/19/tesla-tsla-earnings-q3-2022-.html

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

"Tesla reported third-quarter earnings after the bell. Shares fell by about 4% after hours following the results.

Here are the results.

• Earnings: $1.05 vs99 cents per share (adjusted) expected
• Revenue: $21.45 billion vs $21.96 billion expected

Tesla’s net income (GAAP) for Q3 2022 reached $3.3 billion, with automotive gross margins holding steady at 27.9%, exactly where it stood in the second quarter of 2022.

During the same period last year, Tesla reported $1.62 billion in profits.

Automotive revenue came in at $18.69 billion, an increase of 55% from a year ago. Cost of revenue for Tesla’s core automotive business rose to $13.48 billion during the quarter, up from $10.52 billion during the second quarter, in line with the increase in automotive sales.

Tesla reiterated previous guidance in its shareholder deck on Wednesday, saying: “Over a multi-year horizon, we expect to achieve 50% annual growth in vehicle deliveries.”

The company reiterated that deliveries of its Semi electric heavy duty truck will begin in December. The product was first announced in Dec. 2017. It offered no firm timeline for the start of production of its Cybertruck pickup, saying only that it would be produced in Texas after the ramp-up of Model Y production there.

The company previously reported that its deliveries for the quarter ending September 30 reached 343,000 and vehicle production reached 365,000. Deliveries are the closest approximation of sales reported by Tesla. Shares have dipped more than 17% since that weekend report on October 2.

Tesla’s energy unit generated $1.12 billion in revenue for the quarter. This division sells backup batteries for residential, commercial and utility use, and installs solar rooftops."

HERE IS MORE:

Tesla stock falls 5% after missing revenue expectations

https://finance.yahoo.com/news/tesla-q-2-earnings-124821562.html

Electric car giant Tesla (TSLA), reported its Q3 earnings after the bell on Wednesday, missing analysts' expectations on revenue, but slighting beating on earnings. Here are the most important numbers from the report.

• 
  
  
  • Q3 Revenue: $21.45 billion versus $22.09 billion expected
  • Q3 Adjusted EPS: $1.05 versus $1.01 expected

Shares of the automaker fell more than 5% following the announcement.

The company says it still expects to see 50% average annual growth rate on vehicle deliveries for the year. The automaker also said it believes it has enough liquidity to continue to build out its roadmap.

Still, Tesla says that it's facing year-over-year headwinds from the increased cost of raw materials and inefficiencies at its Gigafactory Berlin. A strengthening dollar is also impacting Tesla sales abroad, cutting into profitability.

Prior to its earnings report, Tesla announced that it produced 365,932 vehicles in the quarter and delivered 343,830. That's up from the 258,580 it produced and 254,695 it delivered in Q2, when the company was beset by COVID-related shutdowns in China. In Q3 2021, the company produced 237,823 vehicles and delivered 241,300.

As for the company's future products, Tesla says it expects to roll out its semi to Pepsi in December, and that it will begin producing its Cybertruck in Texas after ramping its Model Y production."

MY COMMENT

Not much data here....but about what you would expect. TESLA is probably a quarter or two from being able to put up BIG numbers that will drive the stock. For now.....more of the same.

I actually dont think revenue is that far down considering all that is going on. And it is nice to see EPS...a nice BEAT.

 

Good for you Zukodany. Good expectations and rational thinking.

 

As for me today.....my loss was less than I expected. As it was....I was in the red for the day....very moderately. AND....I got beat by the SP500 by 0.07%.

I actually had three stocks UP today.....TESLA, APPLE, and NVIDIA.

 

That article about the FLASH CRASH of 1987.....and all the other catastrophic market events that I have lived and invested through......is why I have trouble getting very shook up about the current inflation and bear market. This current event is MINIMAL in comparison.

I do see potential that this little current event......."MIGHT".....in the worst case last another 2+ years. BUT on the other hand the election in November might give us back a pretty good chunk of the losses.....at least for a while.

 

WE LIVE TO FIGHT ANOTHER DAY.

 

I am actually amazed that that the markets are lingering in or near the green today. The Ten Year Treasury is UP to 4.16%. That is a hefty increase over the past few days and something that the markets....usually.....dont like.

We are seeing a little bit of strength in the markets as we get into the day....but....it is a lingering market and i dont see much confidence at the moment.

TESLA has got to ge a DRAG on the markets today....being down by over 7%. The impact of their earnings report....no doubt.

 

Here is the opening news today that is driving the short term traders and markets. The usual economic news on the jobs front and earnings.


Stock market news live updates: Stocks teeter as earnings roll in, jobless claims drop

https://finance.yahoo.com/news/stock-market-news-live-updates-october-20-2022-113418593.html

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

"U.S. stocks continued a streak of choppy trading to start Thursday as third-quarter financial results from companies continued to barrel in against a backdrop of persisting growth concerns on Wall Street.

The S&P 500 (^GSPC) slipped 0.1%, while the Dow Jones Industrial Average (^DJI) nudged up 50 points, or 0.2%. The technology-heavy Nasdaq Composite (^IXIC) fell 0.1% below the flatline. Meanwhile, Treasury yields held at multi-year highs, with the rate-sensitive 2-year note topping 4.6% for the first time since 2007.

The U.K. had U.S. investors' attention again Thursday morning with the resignation of Prime Minister Liz Truss after her administration set forth a failed economic package including plans for tax cuts that roiled financial markets. The pound strengthened and U.K. bonds nudged higher following news Truss will step down by the end of next week.

Back in the U.S., the Labor Department reported an unexpected drop in the number of Americans filing for unemployment insurance for the week ended Oct. 15 to 214,000 from a revised 226,000 last week, a sign the labor market remains tight despite efforts to tamp down the economy to cool inflation. Economists surveyed by Bloomberg expected applications to total 230,000.

"The drop in initial jobless claims supports our view that the increases in the past two weeks were noise rather than signal, triggered by seasonal adjustment problems," Pantheon Macroeconomics Chief Economist Ian Shepherdson said in a note. "Note too that the low claims numbers are not a guarantee of strong payrolls; when demand first softens, firms cut back gross new hiring before they start laying off existing staff."

Mike Loewengart, head of model portfolio construction at Morgan Stanley's Global Investment Office also noted that the figure may not be enough to shift investors’ focus off earnings, but strong jobs data and hot inflation readings in the coming weeks will ramp up projections for a 75-basis-point rate hike to end the year.

"Earnings season is in full swing so as investors parse through with an extra eye on guidance expect volatility to remain elevated," Loewengart said in emailed commentary.

On that note, AT&T Inc. (T) and American Airlines (AAL) were the latest names to unveil third-quarter results that came in better than analysts expected.

Telecommunications giant AT&T on Thursday rolled out figures that beat sales and earnings forecasts and raised its profit guidance, also revealing 964,000 new subscribers and asserting its confidence to deliver on previously estimated cash flow for the rest of the year. Shares gained nearly 5% Thursday morning.

And American Airlines Group said Thursday that travel demand remains robust despite higher airfares as it raised its profit forecast for the current quarter. The stock bounced 1.5% at the start of trading Thursday, further boosting what's been a strong week for airline stocks as financials show the industry has bounced back from the pandemic.

Shares of Tesla (TSLA) sank roughly 6% after the electric-vehicle maker posted results late Tuesday that disappointed Wall Street, beating on earnings per share estimate but falling short on quarterly revenue expectations.

The company reiterated its previous guidance of a 50% average annual growth rate on vehicle deliveries for the year, even as it admitted to headwinds from increased costs on raw materials and inefficiencies at its Gigafactory Berlin.

“I can’t emphasize enough that we have excellent demand for Q4 and we expect to sell every car that we make for as far into the future as we can see,” Chief Executive Officer Elon Musk said, adding: “North America’s in pretty good health, although the Fed is raising interest rates more than they should, but I think they’ll eventually realize that and bring them down again.”

Federal Reserve Bank of St. Louis President James Bullard said in an interview with Bloomberg TV Wednesday that he expects policymakers to halt the‘’front-loading” of hefty interest-rate increases by early next year and move to smaller moves as needed until inflation abates.

The Fed’s Beige Book, a publication of economic assessments across the U.S. central bank’s 12 districts, showed businesses have largely remained resilient amid the macroeconomic stage of higher rates and policy tightening thanks to solid pricing power. But some expressed struggles with pushback from consumers over increased prices and inflation that continued to drive up wages.

Corporate earnings have so far reflected resilience, but Wall Street strategists have largely cautioned that earnings-per-share forecasts will continue to come down.

“We're becoming skeptical this quarter will bring enough earnings capitulation from companies on next year's numbers for the final price lows of this bear market to happen now,” Morgan Stanley’s top equity strategist Mike Wilson said earlier this week in a podcast. “The final price lows for this bear are likely to be closer to 3000-3200 when companies capitulate and guide 2023 forecasts lower during the fourth quarter earnings season that's in January and February.”"

MY COMMENT

A busy day today. Earnings coming in much better than predicted by all the "experts". Of course in reality it is likely that most of the "experts" have never run a business and many of them have probably NEVER had any sot of management position. The usual FOOLS spouting nonsense......they have uniformly been WRONG on earnings over the past 4-5 quarters....or more.

YES......in spite of the continued attempts to gin up some hope for a lower rate increase in November.....the increase WILL BE.....0.75%. In fact I believe that the next couple of increases will be 0.75%. I dont know how anyone can RATIONALLY expect anything else.

As usual......there is absolutely NOTHING new going on to impact tha markets. What we continue to hear day after day is just ridiculous speculation.

 

As I was reading and typing the above....I briefly saw on the morning business TV that the average 30 year mortgage rate figure released today is just under 7%......to be specific 6.94%. Home sales are down....yet.....prices are continuing to go up.

We are NOW fully back to normal mortgage rates. NOW.....it is a question of where the rates will peak as the FED continues on their campaign to try to crush the economy.....whoops.....I mean inflation. With the continued increases to the Ten Year ahead of us for at least another 4-6 months......if not more........we could see 30 year mortgage rates in the 8-9% range when the peak. BUMMER....for home buyers.

 

Speaking of the housing markets.

Existing home sales fall to a 10-year low in September, as mortgage rates soar

https://www.cnbc.com/2022/10/20/existing-home-sales-fall-to-a-10-year-low-in-september.html

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

Key Points

• Sales of previously owned homes fell 1.5% in September from August to a seasonally adjusted annual rate of 4.71 million units, according to the National Association of Realtors.
• Sharply higher mortgage rates are causing an abrupt slowdown in the housing market.
• The average rate on the 30-year fixed-rate home loan is now just over 7%, after starting this year around 3%.

Existing homes are selling at the slowest pace since September 2012, with the exception of a brief drop at the start of the Covid 19 pandemic.

Sales of previously owned homes fell 1.5% in September from August to a seasonally adjusted annual rate of 4.71 million units, according to a monthly survey from the National Association of Realtors.

That marked the eighth straight month of sales declines. Sales were lower by 23.8% year-over-year.

Sharply higher mortgage rates are causing an abrupt slowdown in the housing market. The average rate on the 30-year fixed home loan is now just over 7%, after starting this year around 3%. That is making an already pricey housing market even less affordable.

Despite the slowdown in sales, inventory continues to drop. There were 1.25 million homes for sales at the end of September, down 0.8% compared with September 2021. At the current sales pace, that represents a 3.2-month supply. Six months is considered a balanced supply.

“Despite weaker sales, multiple offers are still occurring with more than a quarter of homes selling above list price due to limited inventory,” said Lawrence Yun, chief economist of the NAR. “The current lack of supply underscores the vast contrast with the previous major market downturn from 2008 to 2010, when inventory levels were four times higher than they are today.”

Tight supply continues to put pressure on home prices. The median price of an existing home sold in September was $384,800, an increase of 8.4% September 2021. Prices climbed at all price points. This makes 127 consecutive months of annual increases.

Prices are cooling, however. September marked the third straight month-to-month price decline, which usually fall this time of this year.

They’re falling harder this year, though, particularly on the lower end of the market, where inventory is much leaner. Homes priced between $100,000 and $250,000 fell 28.4% from a year ago, while sales of homes priced between $750,000 and $1 million dropped 9.5%.

Homes did sit on the market slightly longer in September, an average of 19 days, up from 16 days in August and 17 days in September 2021.

Higher mortgage rates aren’t just spooking potential buyers. They’re keeping sellers on the sidelines as well, which adds to the inventory crunch.

“Homeowners love their 3% mortgage rate, and they don’t want to give that up,” Yun said."

MY COMMENT

EVERYONE that got in on the mortgage rates in the 2's, 3's, and even the 4,s is going to have to think really hard to sell that home. Those are EPIC once in a century....low rates. Rates have NEVER been that low in my lifetime and I doubt anyone alive right now will ever see rates that low again.

A good amount of what is going on right now in the market is the normal seasonal slow down....plus a little bit of the other factors. There is no reason anyone is going to have much incentive to put their home on the market unless they have to.

 

This is GREAT NEWS. WAKE UP corporate America.......it is INSANE to manufacture and give away your business and technology to China.

China, ‘factory of the world,’ is losing more of its manufacturing and export dominance, latest data shows

https://www.cnbc.com/2022/10/20/chi...ld-is-losing-its-manufacturing-dominance.html

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

"Key Points

• The latest data in the CNBC Supply Chain Heat Map shows China is losing more manufacturing to Vietnam, Malaysia, Bangladesh, India, and Taiwan.
• Exports in furniture, apparel, footwear, travel goods and handbags, minerals, and science and technology are all declining.
• China’s ‘Zero Covid’ policy is a big factor, with Port of Ningbo, the world’s largest port, the latest to be impacted.

China is losing more manufacturing and export market share in key sectors to Asian neighbors, with recent “Zero Covid” policies a significant factor leading to further erosion in its long-time dominance of global trade.

According to data shared with CNBC by transport economics firm MDS Transmodal, China has lost ground in key consumer categories, including clothing and accessories, footwear, furniture, and travel goods, while also seeing declines in its share of exports from minerals to office technology.

“China’s Zero Covid approach is impacting production and manufacturers are seeking for alternatives to the current ‘factory of the world’,” said Antonella Teodoro, senior consultant at MDS Transmodal.

“Drilling down to the individual commodity groups exported from China, we observe that China has been continuing to lose market share, with Vietnam amongst the countries gaining importance on the international landscape,” Teodoro said.

That view matches other recent market research on the gains being made by Vietnam in particular.

Teodoro said Vietnam’s close proximity to China and cheap labor are reasons why Vietnam is considered a suitable alternative.

Ocean carrier MSC, along with the Vietnam Maritime Corporation, announced in July the creation of a new transshipment container terminal project near Ho Chi Minh City. Once completed, this terminal would become the largest in the nation. Both Maersk

and CMA CGM are investing in their own facility expansions in that region.

“Shipping lines are looking for new markets and investing and expanding new markets,” Teodoro said. “They perceive demand and are creating a market with these investments.”

The competition had been intensifying in the years before Covid. Vietnam has taken the lion’s share of the manufacturing trade away from China with an almost 360% increase in far-distance trade since 2014 — the year the country started to invest in its maritime and manufacturing sector.

Malaysia and Bangladesh have taken apparel manufacturing away from China, according to MDS Transmodal, while Taiwan has seen a marginal uptick in metal manufacturing.

Since U.S. trade tariffs in 2018, there has been a hunt for alternative sourcing locations to China, initially limited to fashion and footwear, according to Akhil Nair, Asia Pacific region director of commercial for SEKO Logistics. The compounding impact of Covid lockdowns in China (Shenzhen, Ningbo, etc.) and the disruptions in supply chains led to what Nair called “a quick ramp up in clients hedging their sourcing geographies, especially with countries like Vietnam.”

Nair says SEKO has seen an increase in intra-Asia trade for raw material flows and subsequent finished goods exports rising from Vietnam and other southeast Asian countries.

“While recent China lockdowns don’t impact vessel operations or the terminal itself, it is clear that there remains impact on other highly dependent parts of the supply chain like trucking, CFS warehousing, and container yards in some cases,” Nair said.

Data from freight tracking firm Project44 shows that the total vessel TEU (container) capacity departing Chinese ports has been dropping since the onset of the pandemic lockdowns at the beginning of 2021.

A pre-2021 monthly vessel capacity of around 11.2 million TEU dropped to 8.6 million TEUs departing Chinese ports in September, representing a 23.2% decrease in vessel capacity leaving Chinese ports, according to Josh Brazil, vice president of supply chain insights for Project44.

There has been a continued decline in shippers placing orders for container transport by ocean carriers, according to ocean bookings tracked by FreightWaves SONAR.

Logistics managers tell CNBC orders for cargo arriving from China to the U.S. in November are expected to be down by 40% to 50%.

“The combination of excess inventory coupled with reduced demand continues to weigh on Pacific import volume,” said Alan Baer, CEO of OL USA. “Vessel operators have increased the number of blank sailings and terminated several vessel strings pulling out approximately 30,000 TEU per week of USWC space.”

Ningbo port hit by Covid policies

The Port of Ningbo, the world’s largest port and the third-largest container port, is the latest Chinese trade hub to see an impact from the government’s “Zero Covid” policies. A Covid outbreak was detected on Thursday of last week and spread to Beilun, which is the area that has the most terminals for the Port of Ningbo, leading to a decrease in productivity, according to global maritime analytics provider MarineTraffic.

On Monday, MarineTraffic tracked what supply chain in-transit visibility lead Alex Charvalias described as an “important decrease of containership arrivals at the Ningbo port,” and which he attributed to the latest Covid outbreak in the area. “Even though it seems from MarineTraffic data that the number of vessels that arrived during the next day was higher than the previous days, we can still see that there is a growing TEU capacity waiting off port limits over the past few days,” he said.

These delays are also showing up in the latest CNBC Supply Chain Heat Map.





“A large number of warehouses and container yards are located in Beilun, so since October 16th, the Beilun District temporarily closed management,” said Joe Monaghan, CEO and president of Worldwide Logistics Group. “A large number of Ningbo warehouses cannot open to receive cargo and can’t pick up empty containers from container yards, and truckers need to apply for a special pass for delivery to the Ningbo dock area. The situation in Ningbo may last for a week.”"

MY COMMENT

It is nice to watch China shoot themselves in the foot. The question will be what happens when they ditch their covid policy.....will companies simply pile back in. Lets hope that American companies are in WAKE UP phase when it comes to turning their business technology, manufacturing processes, and FUTURE over to.......the worlds most brutal communist dictatorship and greatest source of business and technology THEFT in the history of the world. This stuff is simply MANAGEMENT MALPRACTICE on the part of the companies doing business in China.Shareholders should be UP IN ARMS.

 

Well....well. We have settled into a nice UP day at the moment. LETS GO MARKETS.......lets hang in there to the close. Keep working that phone bank Emmett.

 

Zukodany......I nearly feel sorry for England and the EU......but not quite. They are the source of all their failures and the most recent problems.

I have not said it in a while.....but.....I dont EVER invest in International companies.......ie: companies outside the USA. I have plenty of options here in the USA for investing....there is no need to go outside. I particularly NEVER invest in any of the developing countries....I have noticed over many, many, decades that somehow that list of countries simply stays the same decade after decade.....they NEVER seem to "develop" into anything different than what they are.

 

Yeah I hate that number....I remember it in this thread from a while back.

 

The markets just got away from themselves today. They gave in to the usual BS that has been around for the past six months. No doubt TSLA did not help much today.....AND....the rate on the Ten Year Treasury is probably the primary cause for the down day today.

I was RED of course.....between moderate and medium. I did happen to beat the SP500 by....drum roll please....0.02%.

If market forces can not stem the quickly rising Ten Year Treasury rate.....we will have a good probability of another day like this tomorrow to end the week.