4.276%.......that is the yield on the Ten Year Treasury right now. We are pushing toward 4.5%.....in the near future. BUT....for today....the increase is probably the greatest market negative. At the moment it is not having an impact ince the market averages are mixed with the DOW and the SP500 Up and the NASDAQ near unchanged. I can see today ending up just like yesterday.....if the Ten Year sticks and weighs on the markets as the day progresses. At least we dont have TSLA down much today....that was a real market drag yesterday.
Speaking of the Treasury deal and QT... The Fed’s Next Crisis Is Brewing in US Treasuries (Bloomberg/Wash Post) Markets have been whipsawed in recent weeks, first by talk that a cooling labor market would allow the Federal Reserve to “pivot” away from its aggressive interest-rate hiking campaign, and then by comments from central bankers that any such move would be premature — as Thursday’s hot consumer price index report proved. Perhaps there’s a solution that would allow the Fed to continue to battle inflation while also addressing what is rapidly becoming a potential crisis in the world’s most important market — US Treasuries. The word “crisis” is not hyperbole. Liquidity is quickly evaporating. Volatility is soaring. Once unthinkable, even demand at the government’s debt auctions is becoming a concern. Conditions are so worrisome that Treasury Secretary Janet Yellen took the unusual step Wednesday of expressing concern about a potential breakdown in trading, saying after a speech in Washington that her department is worried about a loss of adequate liquidity” in the $23.7 trillion market for US government securities. Make no mistake, if the Treasury market seizes up, the global economy and financial system will have much bigger problems than elevated inflation. But rather than slow, or even stop, the pace of rate increases, which would only resurrect the notion that there’s indeed a Fed “put” designed to bail out investors, the central bank could choose to slow quantitative tightening. Whereas quantitative easing, or QE, injects liquidity into the financial system through bond purchases, QT has the opposite effect. Instead of selling bonds, the Fed is allowing the $9 trillion or so of US Treasuries and mortgage securities it has accumulated on its balance sheet since the 2008 financial crisis to mature without replacing them. The amount of QT conducted by the Fed ramped up to the maximum of $95 billion per month in September from $47.4 billion. The thing is, just like there’s no strong evidence that many years of QE had the desired effect of sparking inflation, it’s unlikely that QT will help temper inflation. What it is more likely to do – and is probably already doing – is cause havoc in the government bond market, the benchmark for all other markets that determine the cost of money for governments, companies and consumers. What should be most concerning to the Fed and the Treasury Department is deteriorating demand at US debt auctions. A key measure called the bid-to-cover ratio at the government’s offering Wednesday of $32 billion in benchmark 10-year notes was more than one standard deviation below the average for the last year, according to Bloomberg News. Demand from indirect bidders, generally seen as a proxy for foreign demand, was the lowest since March 2021, data compiled by Bloomberg show. Although the Treasury is in no jeopardy of suffering a “failed auction,” lower demand means the government is paying more to borrow. A Bloomberg index shows liquidity in the Treasury market is worse now than during the early days of the pandemic and the lockdowns, when no one knew what to expect. Similarly, implied volatility as measured by the ICE BofA MOVE Index is near its highest since 2009. And in an unusual development that shows just how dysfunctional the Treasury market has become, the newest, most liquid securities, known as on-the-run notes, trade at a discount to older, tougher-to-trade off-the-run securities, according to data compiled by Bloomberg. Daily swings in interest-rate swaps have become extreme, proving further evidence of disappearing liquidity. All this is coming as Bloomberg News reports that the biggest, most powerful buyers of Treasuries – from Japanese pensions and life insurers to foreign governments and US commercial banks – are all pulling back at the same time. “We need to find a new marginal buyer of Treasuries as central banks and banks overall are exiting stage left,” Glen Capelo, who spent more than three decades on Wall Street bond-trading desks and is now a managing director at Mischler Financial, told Bloomberg News. The US bond market, which sets the tone for debt markets worldwide, is hardly alone. The ructions in UK gilts the last two weeks laid bare the liquidity crisis bubbling in most major sovereign debt markets. From the Fed’s perspective, it’s probably hesitant to tinker with QT for fear of being seen as more concerned with bailing out Wall Street fat cats than taming inflation. But, again, QE and QT have been shown to have more of an impact on the smooth functioning of the financial system than the real economy. And it’s not like the Fed hasn’t tweaked its QT program before to address disruptions in the market’s plumbing. Recall that in 2019 the central bank halted QT and flooded the banking system with cash to arrest a large and unsettling rise in repo rates that led to undue stresses. Another option is for the Fed to use its standing repurchase facility to provide a liquidity backstop to the Treasury market, which Yellen said, “can be helpful.” The thinking among market participants is that the Fed will keep raising rates until something “breaks.” That something increasingly looks like it may be the Treasury market, which would be the worst-case scenario on anyone’s scorecard. Time is running out for the Fed to act.
Remember the RR near strike awhile back? Well, it appears it is back on the table. This would only add to our list of issues at the moment. Railroads reject sick time demands, raising chance of strike (AP) OMAHA, Neb. (AP) — The major freight railroads appear unwilling to give track maintenance workers much more than they received in the initial contract they rejected last week, increasing the chances of a strike. The railroads took the unusual step of issuing a statement late Wednesday rejecting the Brotherhood of Maintenance of Way Employes Division union’s latest request to add seven days of paid sick time on top of the 24% raises and $5,000 in bonuses they received in the first five-year deal. Union Pacific CEO Lance Fritz said Thursday that he thinks the main reason the BMWED rejected its initial contract last week was that the details of improved expense reimbursement in the deal were still being negotiated at UP while workers were voting. So it wasn’t clear exactly what those workers would receive for their travel expenses when they go on the road to repair tracks. Six of the 12 railroad unions that represent 115,000 workers nationwide have approved their tentative agreements with the railroads so far, but all of them have to ratify their contracts to avoid a strike. The unions have agreed to put any strike on hold until at least mid-November while the BMWED negotiates a new deal and the other unions vote on their proposed contracts. That means there’s no immediate threat the trains most businesses rely on to deliver their raw materials and finished products will stop moving. A railroad strike could devastate the economy. “Ultimately, I remain confident that we’re going to get our temporary agreements ratified and be able to avoid a strike. That’s still a possibility but I don’t think it’s a probability,” Fritz told investors after his railroad released its quarterly earnings report. The group that negotiations on behalf of the major railroads, including UP, BNSF, Norfolk Southern, CSX and Kansas City Southern, said the new contracts should closely follow the recommendations of the special board of arbitrators that President Joe Biden appointed this summer. The railroads said that board rejected union demands for paid sick time. “Now is not the time to introduce new demands that rekindle the prospect of a railroad strike,” the railroads said. BMWED spokesman Clark Ballew said providing paid sick leave “has become a norm in this society” and railroads should step up and provide that to its employees. “It is not unreasonable and the railroads can very easily afford it, and they’d still be making record profits if they agreed to provide railroad workers paid sick leave,” Ballew said. The railroads say workers do have significant short-term disability benefits that kick in after four or seven days and last up to 52 weeks that the unions have negotiated for over the years. They said the unions have repeatedly agreed that short-term absences would be unpaid in favor of higher wages and more generous benefits for long-term illnesses. Concerns about quality of life and the ability for workers — particularly the engineers and conductors who drive the trains — to take time off without being penalized have weighed heavily on the negotiations. The maintenance workers in the BMWED union generally have more predictable schedules than the train crews, but they and the rest of the rail workers lack traditional sick leave. Railroad workers did temporarily receive paid sick leave during the pandemic for COVID-related absences, but railroads rescinded those policies once vaccines became widely available. If both sides can’t agree on contracts, Congress could step in to block a strike and impose terms on the workers. Ballew said the railroads seem to be banking on the assumption that Congress would likely impose terms similar to what the Presidential Emergency Board recommended to refuse offering more than that report called for. But he said the railroads are free to negotiate more than the board recommended if they want to.
I like this little article. A Counterpoint to Dour Economic Forecasts Rising bank lending is one factor arguing against a global recession. https://www.fisherinvestments.com/en-us/marketminder/a-counterpoint-to-dour-economic-forecasts (BOLD is my opinion OR what I consider important content) "Recession forecasts have dominated financial headlines this year. That is understandable given the global economy’s soft patches (e.g., Europe’s energy situation), and today’s economic headwinds heighten the prospect of recession in certain regions. That said, expectations of a severe global downturn seem overstated, in our view. Fundamental drivers—key among them bank lending—suggest reality isn’t as poor as many anticipate and underpin the recovery we think is coming. Many prominent outlets and voices think things are going to get worse before they get better. A recent Wall Street Journal survey found a majority of polled economists expect the US will enter recession in the next 12 months. World Bank President David Malpass warned of a “real danger” of a worldwide contraction next year. The International Energy Agency lowered its global oil demand growth forecast because “major institutions” downgraded their latest global GDP estimates. But the kicker: Last week the IMF’s “World Economic Outlook” (WEO) cranked headlines’ recession warnings into overdrive. Interestingly (and unsurprisingly), most coverage focused on one line in the WEO’s foreword: “In short, the worst is yet to come, and for many people 2023 will feel like a recession.” (boldface ours) We don’t dismiss people’s emotions or hardships, but feelings don’t predict people’s actions. Looking a bit deeper, the IMF isn’t even forecasting a global GDP contraction next year—it is predicting annual growth of 2.7%, 0.2 percentage point below its July WEO estimate. Yes, that is slower growth—but it is still growth. Now, to be clear: Though we don’t think forecasts are assured to prove prescient, they don’t seem completely off base, either. For example, among major economies, the IMF forecasts annual GDP contractions in Germany, Italy and Russia next year. In the IMF’s view, the Continent’s high energy prices will knock the first two due to their reliance on natural gas—and for Germany in particular, due to its dependency on Russian energy. Russia’s projected contraction is tied to economic sanctions due to its despicable invasion of Ukraine. We wouldn’t be surprised if those estimates held up, as we have seen evidence of soft patches in Europe and other parts of the global economy and German industry is uniquely dependent on petrochemical feedstocks. However, while a shallow recession is possible, global stocks’ behavior this year implies they have been digesting these prospects for a while. This is how forward-looking markets work: They don’t wait for official confirmation of recession. Rather, they pre-price probabilities and move on. In our view, economic forecasts have value for investors, but not because they are crystal balls. Rather, they provide a useful snapshot of sentiment. Forecasts reveal supranational organizations’ views, which can influence others’ opinions, including other research outfits, policymakers, commentators and investors. The reaction to popular, widely followed forecasts also reveals insight about people’s feelings. This combination sets baseline expectations—critical information for investors as they assess how outlooks square with reality. On that reality front, economic fundamentals argue against a deep, severe recession, in our view—and firm loan growth in major developed economies is one telling piece of evidence. Consider: America’s biggest banks recently reported Q3 earnings, and we have seen myriad analysts scour the numbers to paint a picture about the US economy. Similar to the chorus of concerns tied to recent global economic forecasts, many focused on weak spots (cooling mortgage lending due to rising rates) or dour outlooks (e.g., bank executives’ recession concerns). But this negative focus overshadowed some positive news in banks’ bread and butter business: lending. America’s big banks reported brisk Q3 loan growth, which brought in more interest income. This isn’t a blip, either. Lending has picked up over the past 12 months. (Exhibit 1) Exhibit 1: US Lending Has Been Picking Up Source: St. Louis Federal Reserve, as of 10/18/2022. Loans and leases in bank credit for all commercial banks, in billions of USD, seasonally adjusted, monthly, September 2015 – September 2022. Outside America, loan growth has also picked up in other major developed nations, albeit at slower rates. (Exhibit 2) Exhibit 2: Loan Growth Is Up in the UK, Eurozone and Japan, Too Source: European Central Bank, Bank of Japan and Bank of England, as of 10/11/2022. August 2015 – August 2022. HT: Fisher Investments Research Analyst Shayan Saeri. Loan growth implies money is flowing to businesses, which can underpin investment in growth-oriented endeavors. US nonresidential private investment (i.e., business investment) suggests this has been happening, as the measure rose 7.9% annualized in Q1 and 0.1% in Q2. Note: These numbers are adjusted for inflation, so though investment may have slowed due to elevated prices, it didn’t crater, either. Moreover, Q2’s headline business investment figure doesn’t tell the whole story. On a category basis, a double-digit contraction in structures investment (-12.7% annualized after Q1’s -4.3%) detracted most.[ii] Equipment spending didn’t slide as drastically (from Q1’s 11.4% to Q2’s -2.0%) and intellectual property products spending remained steady (10.8% in Q1, 8.9% in Q2).[iii] If a deep recession loomed, we would expect to see investment plunge broadly, and we don’t see that in these data. Looking to the more recent past, the St. Louis Federal Reserve Real GDP Nowcast—a compilation of incoming data that comprise GDP—points to 1.2% annualized growth in Q3.[iv] The Atlanta Fed’s “GDP Nowcast” projects a stronger number: 2.9% annualized Q3 growth (and 5.1% growth in business investment).[v] These nowcasts aren’t ironclad, and they will shift and change as data arrive. And no Q3 data are likely make-or-break for markets, which tend to look further out. But given that pessimists have been saying worse lies ahead month after month this year, we figure a result approximating those figures would highlight how excessively dour many observers are these days. Again, that isn’t assured. But maybe, just maybe, keep an eye on it. Lending isn’t the only positive. Others include easing supply chain pressures and gridlocked politics in many developed nations. While the pessimism of disbelief dominates now, low expectations mean reality has a low bar to clear. For investors, stocks don’t need perfection to rise—better-than-expected is the grounds for a recovery." MY COMMENT We seem to be hitting on all cylinders when it comes to the impact of inflation, the FED, and all the other DOUR events going on right now and for the past 19 months. It is still my belief that when we look back in hindsight we will se that where we are now is the bottom of this bear market. BUT.....I dont think it will be over quickly.....and....there will be future drops for the markets over the next year or two. I actually LIKE the very volatile and erratic day to day markets we are seeing right now. to me, that is an indicator of the struggles of a market bottom. I am assuming an outcome to the elections that the market LIKES...taking into account recent data and news. If after the election the make up of congress is unchanged.....all bets are off.
Another headwind that private business has to deal with in the current environment. 'King Dollar' is making a royal feast of corporate earnings: Morning Brief https://finance.yahoo.com/news/king...rporate-earnings-morning-brief-100033429.html (BOLD is my opinion OR what I consider important content) "My word-find function has been going into overdrive this earnings season, looking for a few key phrases in earnings-call transcripts: “Foreign exchange.” “Currencies.” “Dollar.” Netflix (NFLX) Chief Financial Officer Spencer Neumann summed it up succinctly in his company’s conference call: “The FX drag is significant.” The rise of the U.S. dollar, spurred by the Federal Reserve’s interest-rate increases, among other factors, is triggering quite the knock-on effect to corporate profits. While investors might want to strip out currency impacts to get a better idea of fundamental demand, they should also prepare for these hits to last a while. In a report this week titled, “King Dollar Has More Room to Gain,” Wells Fargo strategist Erik Nelson cited multiple drivers for continued dollar strength, including the currency’s traditional resilience at times of market stress. “The dollar index can continue to rally here,” Chris Vecchio, senior strategist at DailyFX, told Yahoo Finance Live earlier this week. “To use an old axiom, the dollar remains the nicest house in a bad neighborhood.” That is, while the U.S. economy may be slowing and even entering a recession, many other global economies are faring worse. In currencies, it’s all relative. That dollar strength is costing companies. Citi strategists estimate that a 10% bump in the dollar index will cut $15 to $20 from S&P 500 earnings per share. The dollar index has rallied more than 17% this year versus a basket of currencies. The greenback is up 14% versus the euro, and a whopping 30% against the Japanese yen. This early earnings season is littered with examples of the ensuing costs. IBM numbers beat estimates, even as the company said currency translation cost it $1.1 billion last quarter. Netflix’s operating margin dropped to 19.3% from 23.5% last quarter — a decline it blamed almost entirely on the dollar’s gain. And Procter and Gamble will take a $3.9 billion, after-tax hit from currency effects this year. Large companies do have the ability to hedge, or offset, the gains in the dollar in various ways, including covering expenses in local currencies. But the dollar’s move has been so big and so rapid this year that even the most seasoned hedgers have had difficulty adjusting. It’s also tough for corporations to predict the dollar’s move six months to a year to even 18 months ahead, as they would need for hedging, Jefferies Managing Director and Head of Corporate Hedging and FX Solutions Joseph Lewis told Yahoo Finance Live recently: “The hardest part for companies right now to determine is, will this persist? You can take 10 economists — they’ll say slightly different things, have slightly different forecasts. I think that’s been really challenging for my clients; there isn’t a consistency in view.” So, what are investors to do when it comes to factoring in the effect of the dollar? The bottom line for Citi’s Scott Chronert: “USD relevant for equities but not the main driver,” he wrote in a recent note. Rather, he said, investors should focus on “underlying business trends and conditions.” Investors have another option, as Yahoo Finance’s Jared Blikre pointed out in Wednesday’s Morning Brief: They can invest in small-cap companies, which generally have less exposure to currency fluctuations than large cap companies." MY COMMENT Welcome to the business world....especially the world for businesses that are international in scope. THIS is one reason why EXCEPTIONAL MANAGEMENT is so important. This is ALSO a reason for some of the lag in earnings right now. A factor that causes those just looking at the raw numbers to UNDERESTIMATE the strength of the BIG CAP ICONIC companies that make up the guts of the American economy. As a long term investor......this "stuff" will all smooth out over time....as usual.
HERE is the markets today.....every erratic. Stock market news live updates: Stocks nudge higher, 10-year Treasury passes 4.2% https://finance.yahoo.com/news/stock-market-news-live-updates-october-21-2022-110339121.html (BOLD is my opinion OR what I consider important content) U.S. stocks were in for another day of seesaw trading Friday as investors parsed through a medley of corporate results and monitored a relentless move higher across bond yields. The S&P 500 (^GSPC) rose 0.4%, while the Dow Jones Industrial Average (^DJI) gained 0.6%. The technology-heavy Nasdaq Composite (^IXIC) was just below flat. Treasuries saw sizable moves again, with the benchmark 10-year note surging towards 4.3%, a fresh 2008-high, before taking a breather. Investors assessed a Wall Street Journal report indicating Federal Reserve officials are poised to deliver another interest rate increase of 0.75% at their meeting Nov. 1-2 and are expected to debate then whether to and how to hint at plans to green light a smaller increase in December. Despite the past two down days, equities are poised to end the week higher after a rally Monday and Tuesday gave all three major averages a boost and helped the S&P 500 churn out a 4% gain before the index lost its momentum. The S&P 500 was up 3.1% for October as of Thursday’s close – a respite for investors after its 9.3% loss in September. “We’re closer to the end than we are to the beginning, and the more bear market rallies we see, the fewer are left before we finally flush it all out,” SoFi's Head of Investment Strategy Liz Young said in a note. “Still some more things to check off the list, but if or when earnings crack and just before economic data falls into contraction conditions, is when you start to pounce on market opportunities – that could be just around the corner.” Third-quarter earnings season has so far held up better than many analysts have expected, with beats from companies like Netflix (NFLX), AT&T (T), and IBM (IBM) countered by big misses from names such as Snap (SNAP), which tumbled 31% Friday after disappointing Wall Street with its results. The social media platform reported a fifth-straight quarterly deceleration, along with lackluster profits and a warning that sales trends in the current three-month period may get worse. “It's difficult to parse out how many of Snap's issues are transitory,” Jefferies analyst Brent Thill said in a note. “The weakening macro backdrop is partially to blame for soft results, but we question how much is due to the iOS privacy issues and competitive threats.” Snap’s declines also extended to other social media and tech peers Friday morning, with shares of Meta (META) down 3% and Twitter (TWTR) shares off by nearly 5%." MY COMMENT Obviously the big issues today.....the Ten Year Yield......and.....once again the wishful thinking on the part of the "professionals and the media"....that the rate increases will moderate after November. I continue to see little to nothing in the financial media about the impact that will come from the election in about 2-3 weeks. At that time....it will be clear that the election impact will be significant for the markets over the remainder of 2023.....for better or worse. The election will also be a HUGE indicator of what the markets will do over the next two years. It is all going to be about the double "EE's" for a long time to come.....the ELECTION and EARNINGS. In fact....this is reality and probably exactly how it should be.
The markets are jumping around like a jumping bean today. The day is very much opaque and totally up in the air. We see the markets trying torally and being knocked back....especially in the NASDAQ. Where we close....nobody knows. AND....as usual....in case anyone has any doubts: I continue to be fully invested for the long term as usual.
A good MOMENT for me in the market right now. I say that since my account is nicely UP....at this moment.....there is no way you can extrapolate this to where we close today. I have 9 of 10 stocks UP right now. My one LOSER is GOOGLE. If we can hang on till the close we are on the way to a POSITIVE WEEK.
Good stuff today....Smokie. I especially like the commentary you posted on the Treasury rates and the FED.
You know......I continue to hear and see more and more today about a FED pivot. This speculation just will NOT stop in the financial media. My guess is that this PIVOT stuff is being constantly floated out there in the media by short term traders that are using it to drive the markets for trading profits. I cant believe that anyone really believes any of the pivot stuff. The FED has been extremely clear in their intent to continue to raise rates till inflation is defeated. AND....since we have seen ZERO impact of their rate increases on inflation so far.....we are a good ways from any pivot. This pivot stuff is either DELUSIONAL or INTENTIONAL market (legal) manipulation for and by traders. Since I dont think the traders are delusional....I have to think it is an intentional trading strategy that happens to make for nice media speculation.
As usual, I continue to make extra contributions every month and added some more this morning. It can seem like standing in front of a flaming furnace with a shovel tossing it in at times like we have been going through. LOL, But it is part of the process for long term payoff. I just simply do it and move on without regard to the market gyrations or any noise. More shares at a lower price that will be worth more later down the road.
I have seen that little "pivot" talk resurface as well. I don't get it either. Maybe it seems appealing to the large masses of people who have never seen an inflationary environment or such things as interest rates. I think the quick/short covid bounce back have some younger investors fooled that things would bounce back quick. This deal we are in now is going to be tough to unwind without some trouble. The amount of free money, stimulus, low or zero cost borrowing, and a total disregard for monetary obligations has created a huge issue. History will not look kindly on this event. At some point, we have to get back to a more normal/rational economic environment. Everything being free and costing nothing and people sitting on their asses is not normal. Or is it now?
Some news for those with 401k contributions and some news on IRA's.... Unprecedented 401(k) boost: IRS increases amount you can save for retirement in 2023 (CNN Business). The IRS on Friday announced a record increase in contribution limits to 401(k) and other tax-deferred retirement plans for 2023. Starting next year, you will be allowed to contribute up to $22,500 into your 401(k), 403(b), most 457 plans or the Thrift Savings Plan for federal employees. That’s $2,000 – or roughly 9.8% – more than the current $20,500 federal contribution limit. The jump is largely due to inflation, to which the contribution limits are indexed. The catch-up contribution in the 401(k) and other workplace plans– the amount plan participants who are 50 and older may save on top of the federal contribution limit – also will get a big boost. In 2023,it will rise to $7,500, up 15.4% from $6,500 today. That means if you’re 50 or older you can contribute up to $30,000 in 2023. And that doesn’t count any matching contributions your employer may kick in. While the increases could help those hoping to power charge their retirement savings, most 401(k) participants do not save anywhere near the federal limit. Based on an analysis of the 401(k) plans it provides employers, Vanguard estimates that only 14% of participants maxed out their contributions in 2021, and only 16% of those eligible to make catch-up contributions took advantage. Contributions to traditional IRAs and after-tax Roth IRAs will increase as well – to $6,500from $6,000 currently, an 8.3% rise. But the IRA catch-up contribution limit stays the same at $1,000. Eligibility to deduct an IRA contribution or contribute to an after-tax Roth IRA is based on income and access to a workplace retirement plan. (Here are the IRS rules.) But next year, more people will be able to take advantage. To put any money in a Roth in 2023 your modified adjusted gross income must be below $153,000 ($228,000 if married filing jointly). That’s up from$144,000($214,000for joint filers) currently. For traditional IRAs, to get to deduct at least some of your contributions your modified AGI must be below $83,000 ($136,000 for joint filers) next year, up from$78,000 ($129,000 for joint filers)this year. If you personally don’t have access to a workplace plan but your spouse does, then your modified AGI must be less than $228,000, up from $214,000 currently, to get some deduction for your IRA contributions. And stay tuned: The changes the IRS just announced may not be the only ones in store for next year. More may be on the horizon if lawmakers pass a popular piece of legislation that would make several changes to tax-advantaged retirement plans, especially for workers 50 and up. That said, negotiations may change when provisions take effect. “Some of the problematic 2023 effective dates in the legislation could be pushed out a year or more, but lawmakers will be somewhat constrained by how the bills are scored for budget purposes,” said Margaret Berger, a partner in the Law & Policy Group of Mercer, a benefits consulting firm. The retirement contribution limits weren’t the only inflation-related news from the IRS this week. It also announced the inflation adjustments that would be made to federal income tax brackets and other provisions for 2023. The upshot for anyone with earned income: A likely boost in take-home pay early next year.
As usual the FED just simply can't stay away from a mic. Fed Daly gave her little speech and the market appeared to respond. Maybe that isn't the reason, but maybe it is. Nothing really changed in context, but she cracked the door open just enough at the end to gin everyone up. I really don't like all the chatter they do and this veiled type of talk. Maybe they do have something "riding" on the day to day. Oct 21 (Reuters) - The U.S. central bank should avoid putting the economy into an "unforced downturn" by raising interest rates too sharply, and it's time to start talking about slowing the pace of the hikes in borrowing costs, San Francisco Federal Reserve President Mary Daly said on Friday. The Fed is widely expected to raise its benchmark overnight interest rate by three-quarters of a percentage point for a fourth consecutive time at a Nov. 1-2 policy meeting, as the central bank battles the highest inflation in 40 years. The aggressive policy tightening has lifted that rate from the near-zero level in March to the current 3.00%-3.25% range. "We might find ourselves, and the markets have certainly priced this in, with another 75-basis-point increase," Daly said at a meeting of the University of California, Berkeley's Fisher Center for Real Estate & Urban Economics' Policy Advisory Board in Monterey, California. "But I would really recommend people don't take that away and think, well it's 75 forever." Fed projections released last month show most of its policymakers believe the federal funds rate will need to rise to between 4.5% and 5% next year to start bringing inflation down toward the central bank's 2% goal. Those projections are still "reasonable," Daly said, adding that she's pinned them to her wall to remind herself of where the rate will end up. "I hear a lot of concern right now that we are just going to go for broke. But that's actually not how we, I think about policy at all," Daly said. With rates near the neutral level, where economic activity is neither constrained nor stimulated, Daly said the Fed is moving to a second phase in policy tightening that should be "thoughtful" and "incredibly data-dependent." "We have to make sure we are doing everything in our power not to overtighten, and we can't pull up too fast, and say we are done," Daly said. Headwinds including the war in Ukraine, an economic slowdown in Europe and ongoing policy tightening by central banks around the world could impact the U.S. economy, she added, and ultimately how high U.S. rates need to go. With inflation by the Fed's preferred measure running at more than three times the 2% goal and the labor market still strong, Daly said "it's really challenging to step down right now ... We are not there yet." But, she added, "the time is now to start talking about stepping down. The time is now to start planning for stepping down."
Regardless of the above....I will take the GREEN today and however and whenever we can get one at this point.
YEP......me too Smokie I was busy sealing all the Quartzite and Marble in the house so I missed what was going on. I checked in about 30 minutes after the close and saw that the markets had given me a great big present today. I ended with a nice BIG green day today. PLUS....I managed to beat the SP500 by 0.60%. My YTD LOSS is now down to....."only".....(-27.94%) I will take it.
HERE is how we ended the week.......a BEAUTIFUL WEEK.....even if I say so myself. DOW year to date (-14.46%) DOW for the week +4.89% SP500 year to date (-21.26%) SP500 for the week +4.74% NASDAQ 100 year to date (-30.70%) NASDAQ 100 for the week +5.78% NASDAQ year to date (-30.59%) NASDAQ for the week +5.22% RUSSELL year to date (-22.41%) RUSSELL for the week +3.59% LOL......as I was typing the above....when I got to "for the week" on the DOW and the SP500....I automatically put a parenthesis and a minus sign. Than I caught myself and put in the + sign. YES.....Spud......ONLY THE STRONG....have the guts to be long term investors through thick and thin. "Neither snow, nor rain, nor heat, nor gloom of night, nor the FED, nor bear markets, nor the media, stays these INVESTORS from the swift completion of their appointed rounds in the markets." Sorry mail-people.....I stole your motto....you dont seem to be using it anymore, anyway. AND “Sometimes, The Thing You've Been Looking For Your Whole Life Is Right There By Your Side All Along.” At least if you are a long term investor. Sorry.....Star Lord. HAPPY DAYS ARE HERE AGAIN......well at least till Monday. We can at least enjoy the weekend.
Ok FED.....now what? American Express CEO: 'We're not seeing any changes in consumer spending' https://finance.yahoo.com/news/american-express-ceo-consumer-spending-125222199.html (BOLD is my opinion OR what I consider important content) "American Express (AXP) CEO Stephen Squeri has a message for investors sending the stock lower on Friday following the company's third-quarter earnings release: Read the release again. "We're not seeing any changes in consumer spending," Squeri told Yahoo Finance. "We have strong credit quality." The CEO also addressed concerns about a business slowdown should a recession materialize. "If anything changes, we have plans in place to pivot," Squeri added. "If I didn't say that, you would think I was an idiot. What CEO doesn't have plans in place for recession? You know, I mean, everybody has, but I had plans in place in 2019. And I was able to pull it off the shelf to navigate the pandemic and that worked out pretty good for us." Amex stock fell more than 4% in pre-market trading. Here is how American Express performed compared to Wall Street estimates: Net Sales: $13.6 billion vs. $13.49 billion Diluted EPS: $2.47 vs. $2.40 Segment Performance: U.S. Consumer Services: Sales +27%/Profits +4.8% Commercial Services: Sales +23%/Profits +10.7% International Card Services: Sales +19%/Profits -38% Global Merchant & Network Services: Sales +26%/Profits +54% American Express reiterated its full-year sales forecast for 23% to 25% growth. Earnings are now expected to be "above" the top end of Amex's prior range of $9.25 to $9.65 per share. And on top of strong consumer spending last quarter, Squeri thinks it will be a good holiday season. "So my view is I think we're going to have strong retail spending, and we'll have strong travel spending through the holiday season," the CEO said. Squeri's comments echo those from other CEOs this earnings season, including Bank of America's (BAC) Brian Moynihan, who described the American consumer as "resilient" in a Yahoo Finance interview." MY COMMENT A good early indicator of a BIG holiday season this year? Perhaps. It might ALSO be an extremely early indicator of 4th Quarter Earnings. HUmmmmmm.....seems like what the FED is doing is not having much of an impact......at least on consumer behavior. Why should it.....the economy is flooded with money. The people being PUNISHED by the FED are stock investors and the housing markets....that is about it.
