The Long Term Investor

I have been watching the markets since before the open......while vacuuming the house this morning. the open was negative.....but we moved positive and now all the averages are positive. HERE is the market news of the day.....which continues to be positive.

Stocks rise, Intel shares crater, as inflation data cools

https://finance.yahoo.com/news/stock-market-news-live-updates-january-27-2023-131503567.html

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

"U.S. stocks moved higher on Friday as investors weigh in on fresh economic data including consumer spending data, a closely watched measure by the Federal Reserve.

The S&P 500 (^GSPC) edged higher by 0.3%, the Dow Jones Industrial Average (^DJI) added 0.4%. The technology-heavy Nasdaq Composite (^IXIC) up by roughly 0.5%.

The yield on the benchmark 10-year U.S. Treasury note ticked up to 3.52% from 3.497% on Thursday. The dollar index added 0.28% to $102.12. WTI crude oil was higher by about 1.5% to trade at $82.24 a barrel.

U.S. core personal-consumption expenditures price index (PCE), excluding energy and food, rose 0.3% month-over-month, while the annual rate fell to a one-year low of 4.4% in December from 4.7% the prior month, in line with consensus forecasts.

Pending Home Sales increased 2.5% in December, ending a sixth month slide, according to the National Association of Realtors.

Meanwhile, consumers remain optimistic. The consumer sentiment index rose to 64.9, a slight increase from 64.6 reading two weeks ago, according to preliminary results from the University of Michigan’s consumer survey. Economists surveyed were expecting a reading of 64.6.

Shares of Dow Jones chipmaker Intel (INTC) sank Friday after the company's bleak outlook dragged chipmakers lower. The company reported a quarterly earnings miss. Adjusted revenue for the fourth quarter of $14.04 billion came in below the consensus estimates of $14.49 billion. The company’s adjusted earnings per share came in at 10 cents compared to forecasts or 19 cents, while guidance came in weak.

Stocks rallied on Thursday as investors digested other data that showed the U.S. economy ended the year on a solid foot despite higher interest rates and recessionary fears looming.

Gross Domestic Product (GDP) — the sum of all goods and services – expanded at a 2.9% annual pace in the final quarter of 2022. For the full year, GDP grew 2.1%.

Separately, durable-goods orders in December increased by 5.6% topping expectations for 2.4%, the sharpest gain since July 2020. Meanwhile, the resilience of the U.S. job market has been a major surprise. Initial jobless claims fell again to 187,000, the lowest level since April 2022.

“Markets deciphered a lot of mixed clues [on Thursday] and, after some cause for concerns, decided that it was easier to shrug it all off and drive equities to fresh 2023 highs,” Jim Reid and colleagues at Deutsche Bank wrote in an early morning note Friday morning. “Earnings also helped the mood, to be fair.”

Visa (V) shares were higher Friday after the company reported results late Thursday. Revenue increased to $7.94 billion compared to expectations of $7.69 billion. And adjusted earnings per share came in at $2.18 versus estimates of $2.00. The company announced that Ryan McInerney will be stepping in as chief executive officer starting February 1st.

Hasbro (HAS) also joined the wave of company layoffs announcing it will cut its workforce by 15 percent, or 1,000 employees, effective in the coming weeks. The move comes as the toymaker seeks to save around $250 million and $300 million annually by the end of 2025.

Elsewhere in stock moves, Chevron (CVX) shares were down after reporting fourth quarter profit of $6.4 billion, down from the $11.2 billion in the third quarter. Ahead of Friday's report Chevron, announced it was hiking its dividend by 6% along with massive $75 billion share repurchase plan.

Shares of American Express (AXP) rose after the credit card company reported fourth quarter net income of $1.57 billion. On a per-share basis, it had a profit of $2.07. American Express expects full-year earnings to be $11 to $11.40 per share."

MY COMMENT

Nothing but positive news above. Earnings continue to be good as the beats come in better than expected. The economic data is.. .......all good. Inflation is cooling. AND....no one seems to care at all about the FED anymore.

Somehow.....I have a strong feeling that all of this would have happened without the FED. This is mostly related to the recovery of the economy which is now picking up steam....plus....earnings. About all the FED achieved is tanking the stock markets for a year.....which has nothing much to do with inflation.

LETS MAKE SOME MONEY TODAY.

 

Of course........there is always this little bit of doom & gloom........trying to rain on the party.

The 2023 rally bears an 'eerie resemblance' to last summer's headfake: Morning Brief

https://finance.yahoo.com/news/the-...summers-headfake-morning-brief-102530149.html

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

"It's been "risk on" for investors in the first few weeks of 2023.

The Nasdaq has gained 9% after losing one third of its value last year.

And some of 2022’s hardest-hit trades — the very ones investors judged most vulnerable to higher interest rates — are clawing back in a big way.

Tesla (TSLA), for example, is up 30% year to date as of Thursday's close. The ARK Innovation ETF (ARKK), a bellwether for speculative tech, is up 20% in 2023. From their lows reached last year, Netflix (NFLX) shares have more than doubled.

But one Wall Street strategist isn't convinced this year's rally isn't a move we've seen before. Which could spell trouble for emboldened stock market bulls.

"So far, price action in January 2023 bears an eerie resemblance to that in July 2022, when risk assets rallied and rates fell as investors bought into the idea of a 'soft landing,'" wrote Gargi Chaudhuri, head of BlackRock's iShares Investment Strategy, in a note to clients this week. "That argument faded and price action reversed as the Fed held firm and went on to hike policy rates by 75 basis points in September."

Just like in July 2022, investors again seem convinced inflation is in the rearview mirror, and that weaker economic data will do away with any more rate hikes.

In fact, market pricing suggests investors see rates ending the year where they stand today, according to the CME's FedWatch Tool. This means investors are effectively ignoring the Federal Reserve's latest forecast published last month, which suggested interest rates would likely close 2023 at 5.1%.

"We think, just as in July 2022, that markets are misreading the outlook for inflation," Chaudhuri said, adding inflation is likely more persistent than the market hopes and pointing to still stubborn shelter costs.

The Consumer Price Index (CPI) released earlier this month showed prices rose 6.5% over last year in the final month of last year, a marked slowdown from the 9.1% high seen back in June.

But while the headline figure is down from its peak, underlying pressures remain prevalent. The cost of shelter, for example, a "stickier" component of inflation that accounts for about one-third of the total index, continued to run hot, rising 0.8% over the prior month and 7.5% from the prior year.

And Fed Chair Jerome Powell's new preferred measure of inflation — services excluding housing — rose 7.4% over the prior year in December.

"We need activity weakness to translate to job losses to address Powell’s preferred services ex-shelter inflation metric, where wages are the primary driver," Alexandra Wilson-Elizondo, head of Multi-Asset Retail Investing at Goldman Sachs Asset Management, said in recent emailed comments.

"We continue to think that we should not fight the Fed because they will demonstrate a slow reaction function on inflationary risk management."

Moreover, incoming economic data continues to show the U.S. economy remaining resilient in the face of elevated inflation and higher rates. The labor market has breezed through monetary tightening, adding 223,000 jobs in December and an average 375,000 per month across 2022. Meanwhile, data out Thursday showed gross domestic product (GDP) grew a faster-than-expected 2.9% in the fourth quarter.

"Just as importantly, markets are disregarding theconsistent Fedspeak suggesting that the FOMC is more inclined to keep policy tight to ensure that inflationary pressures do not return," Chaudhuri added.

According to BlackRock data, year-to-date flows to fixed income ETFs stand at $30 billion, higher than equity ETF inflows of $16 billion. The last time this happened was, you guesse it, in July. Bond prices rise and interest rates fall, hence the argument these flows suggest the Fed will not raise rates as high as it is forecasting.

According to BlackRock data, year-to-date flows to fixed income ETFs stand at $30 billion, higher than equity ETF inflows of $16 billion. The last time this happened was, you guessed it, in July. Bond prices rise and interest rates fall, hence the argument these flows suggest the Fed will not raise rates as high as it is forecasting.

Moreover, many of Wall Street's forecasts have stocks ending the year little changed or even lower if a recession unfolds.

"We expect inflation to stay persistently high and we take the Fed at its word that it remains committed to achieving its mandate of long-term price stability (which it defines as about 2% inflation) and raise rates to between 5-5.25%," Chaudhuri wrote.

"We do not expect the Fed to ease this year, even as growth slows, making it likely that we will see a recession in the U.S. in the second half of 2023.""

MY COMMENT

What a joke. This entire article is based on the view of.......one.....economist. NOTHING right now is remotely similar to last June/July. Hello......we all lived through that time only about 6 months ago. I have a very clear memory of the market hitting a year bottom in June and the little July rally. We are in a totally different situation this month. will it continue.....probably.....but who knows, the short term is opaque.

ALL of the economic data has been very positive for all month.......and.....earnings are coming in very nicely. the FED is close to ending their rate hikes, etc, etc, etc.

BUT.....for those that want to doubt....here you go.

One final comment......even if he is right why would I care? I am not going to do anything but sit and watch and if I can rack up gains right now I will take them.

 

No.....I am not worried about eggs.

An Inflation Microcosm in Eggs

https://www.fisherinvestments.com/en-us/insights/market-commentary/an-inflation-microcosm-in-eggs

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

"While egg prices have surged lately, a sunnier side seems to be emerging—following the same pattern as prices generally.

US Customs and Border Patrol officials have reported a curious spike in people crossing the border from Mexico carrying … eggs. Yes, literal eggs. Huevos. The incredible, edible kind from chickens. According to a New York Times report, “U.S. Customs and Border Protection agents had more than 2,000 encounters with people trying to bring eggs into the United States from Mexico between Nov. 1 and Jan. 17, an agency spokesman said. In the same 11-week period a year earlier, there were about 460 such encounters.” This isn’t smuggling, per se. It is people bringing the eggs into America for their own consumption. Why? Prices have surged, fueling yet more inflation angst among consumers—even if the category is just 0.147% of the US Consumer Price Index (CPI) basket of goods and services. But now, there are early signs that price surge has cracked, which should bring more relief—a microcosm of the process underway globally, easing a key fear that weighed on stocks last year.

Eggs prices are sizzling lately. While the seasonally adjusted CPI fell -0.1% m/m in December, prices of this culinary staple jumped 11.1%—the fastest rise of any CPI subcomponent.[ii] In year-over-year terms, egg prices were up 59.9% in December. In raw commodity price terms, USDA grade A large eggs rose 232% in 2022.[iii] And in so doing, commentators have scrambled to opine on the subject, with some advocacy groups alleging collusion and trying to whip up government intervention.[iv]

But those allegations seem both over-egged and poorly timed. For one, while egg-flation likely does in part owe itself to the general rise in consumer prices, the turbocharged increase seemingly stems more from the vast outbreak of avian flu last year. The government requires farmers to euthanize any flock when bird flu is detected, as it was in many parts of the US last year. As Glenn Hickman, the president of one fairly large egg producer, told Bloomberg’s “Odd Lots” podcast this week, this resulted in the loss of about 15% of America’s egg-laying chickens this year.[v] That coincided with high and rising costs tied to grain prices, which farmers tried to pass on to grocers. At the same time, demand for eggs jumps seasonally around the holidays, tied to increased baking. That is a perfect storm for big spikes in prices. Collusion? We doubt it.

But now, with demand waning post-holiday season and producers starting to recover from the flu outbreak, there are early signs of improvement in benchmark egg prices. (Exhibit 1)

Exhibit 1: Is Egg Spike Ebbing?


Source: FactSet, as of 1/25/2023. 1/24/2020 – 1/24/2023.

Ultimately, what has happened in the egg market is a microcosm of prices generally. As supply and demand come into better balance, input costs improve. That then flows through to producer prices, wholesalers, retailers and, eventually, to consumers. That likely doesn’t show yet in the egg market, but if the trend above continues, it should in time. This is the very same process that has taken place in other areas, slowing overall CPI—and providing investors some relief.[vi]

So before US Customs catches you with egg on your face, take note of the above. And, remember: Whatever happens with prices, there is a $1,000 fine for crossing the border with eggs. In egg smuggling, it is clear even soft-boiled crime doesn’t pay."

MY COMMENT

Thank God for the FED.....they have stopped the egg crisis. Yes....It is all about supply/demand.....just like all the economic issues we have seen since the pandemic and the idiotic 2 year shut down of the USA economy.

I so like the little chicken and egg references scattered through this little article.....it does not hurt to have some fun once in a while.

 

Looks like the markets are trying to trend lower at the moment. The DOW and SO500 are now slightly red.

Around and around we go....and where we stop nobody knows. At least in the short term.

 

I actually saw an article this morning talking about all the money Elon Musk just made over the past week or so. I guess we are beyond the media advocacy to cancel TESLA.....at least for a while.

 

This is massively good news.....but.....it is just a prediction.....and....DUH, this is blatantly obvious to everyone.

Fed seen ending rate hikes by March as inflation slows

https://finance.yahoo.com/news/fed-seen-ending-rate-hikes-142055522.html

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

"(Reuters) -Federal Reserve policymakers are finally seeing some sustained progress in sapping high inflation, cementing their plan to raise interest rates by a quarter percentage point next week, with traders betting they'll end their hiking campaign in March.

The U.S. central bank's preferred gauge for inflation, the personal consumption expenditures (PCE) price index, rose 5.0% in December from a year earlier, slower than the 5.5% 12-month gain as of November, the government reported on Friday, and the lowest level since September 2021.

Core PCE, which the Fed uses to gauge the underlying momentum of inflation as it strips out volatile components, rose 4.4% from a year earlier, the slowest pace since October 2021. In the most recent three-month average it increased around 3.2% on an annualized basis.

That cooling has traders betting the Fed will soon wind down its most aggressive policy-tightening since the 1980s, designed to dampen demand across the economy in a bid to bring inflation, which surged to a 40-year high last year, back down to its 2% target rate.

"The Fed can legitimately downshift the pace of rate hikes next week as inflation cools," said Jeffrey Roach, chief economist at LPL Financial.

Futures tied to the Fed's policy rate are pricing in near certainty for the central bank to raise its benchmark rate to 4.5%-4.75% at the conclusion of its Jan. 31-Feb. 1 meeting, from 4.25%-4.5% now, with another quarter-point hike priced in for March.

Other pricing data is also falling into line. A survey released later on Friday showed U.S. consumers' inflation outlook for the year ahead fell to levels not seen since April 2021. The University of Michigan said one-year inflation expectations in its final January reading dropped to 3.9%, from a preliminary reading of 4.0%. The five-year inflation outlook also declined to 2.9% from 3.0%.

DOUBTS OVER HOLD IN RATES

Fed policymakers have signaled they expect interest rates ultimately to go a bit higher - to just over 5% - and have warned they do not expect to cut rates this year so as to make sure they definitely win the war on inflation.

But traders see just a one-in-three chance of a further quarter-point increase post March, and after the government report, which also showed consumers pulling back on spending, they firmed up their bets on rate cuts starting as soon as September.

Consumer spending accounts for more than two-thirds of economic activity so signs of slowing economic growth, with manufacturing also in the early stages of a downturn, ups the risk of a recession by the second half of the year.

The central bank, while maintaining that rates will be held at a peak for some time, is seen buckling should inflation continue to ebb while the economy sags too much under the weight of its monetary tightening.

"With higher interest rates evidently weighing heavily on demand now, we expect core inflation to continue moderating this year, which will eventually persuade the Fed to begin cutting interest rates late this year," said Paul Ashworth, chief north America economist at Capital Economics."

MY COMMENT

It is OBVIOUS that we are down to the final months of rate increases.....regardless of if it is March or April. As to how long they intend to hold rates high.....I really dont care. The FED is quickly losing relevance in the markets.....at least the forward looking investors.

At this moment the stars are lining up for a good year. We will find out what happened this year on.....December 31.

 

I dont mind being an early adapter....when it comes to declaring a new bull market. I will either be right or wrong....and....either way I will still be fully invested for the long term so there will be no impact on me in the slightest.

Right now is either the beginning of the end of the bear market.....or it is not. In any event anyone that has sat through this little event will be rewarded in the future. Those that actually had the money and bought during this nasty bear market will be significantly rewarded.

Those that sold out of the markets......have a long road ahead of them as they sit and try to figure out when to get back in. That answer is NEVER clear or obvious.....and the end result is usually missing out on 10% to 20% of the gains that come early in a market recovery.

 

Get on those phones Emmett. We need to end the day with a gain.

 

I can see that you have already had a nice impact on the markets. the averages have now gone back to all green. WAY TO GO....Emmett.

 

I own some TESLA stock.....so I follow it. I see that is is once again kicking ass today. Currently UP by $13,50.....or....8.42% for the day. The current price is $173.77.

I bought some shares a few weeks ago at $122. That is a gain of over $50 in just a few weeks. I cant remember when I bought those shares....but that is a huge gain. Of course......the stock is still significantly down due to the big loss in 2022.

Looking back......at the post I made when I made that purchase...... I see that that purchase of additional TESLA shares happened on January 9, 2023.

 

About half way through the day we are on track for a good close today and a good week for the markets. As we approach the end of January......we should see a flood of articles talking about the January effect.

It is simply superstition......but.....if it makes people feel good and changes some perceptions of the markets....I will take it.

 

A nice big gain for me today....way to go Emmett. I only had a single stock down today.....HON. On the uP side the big winners were TELA up by $17.63 or 11%.......AMZN was up by 3.04%.....and....NVDA was u by 2.84%.

I got in a big beat on the SP500 today by 1.08%.

As a result I go into the weekend with a YTD gain in my account of......10.47%. Very nice for just four weeks and a dismal year last year for the markets.

 

A BOOMER of a week for the markets this week. Only two market days left in January. If you believe in the January effecct we should be in for massive gains this year. Of course.....I dont believe.....in superstition.

DOW year to date +2.51%
DOW for the week +1.81%

SP500 year to date +6.02%
SP500 for the week +2.47%

NASDAQ 100 year to date +11.23%
NASDAQ 100 for the week +4.79%

NASDAQ year to date +11.04%
NASDAQ for the week +4.32%

RUSSELL year to date +8.53%
RUSSELL for the week +2.36%

Those are some really impressive numbers. We need to carry this through to next week. I suspect that the FED might actually help us some next week by raising rates by 0.25%. That seems to be the expectation. I would be happy with that or even 0.50%. the main thing is that they only have one or two more increases to go.

 

If this little rally continues....at some point we will see it snowball as money comes back into the markets and managers jump in. Of course it is helping Cathy Wood.

Tesla, ARKK rally as 2021 energy returns to 2023 stock market

https://finance.yahoo.com/news/tesl...2021-energy-technology-markets-195153458.html

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

"A market rally on Friday accentuated by rips higher in some battered and bruised technology stocks that faltered last year are making this year's price action look a lot like 2021's rally.

Beaten-down names including Tesla (TSLA), Carvana (CVNA), and Coinbase (COIN) were each up more than 10% on Friday.

Cathie Wood's ARK Innovation (ARKK) ETF, a bellwether for high-flying tech, advanced 5.5%. ARKK has gained more than 25% this month alone, which Reuters notes puts the fund on pace for its best monthly gain on record.

A mini meme trade was also in the works on Friday.

Shares of BuzzFeed (BZFD) skyrocketed as much as 150% midday after an internal memo reveled the media giant was planning to lean heavily into AI to generate content. Shares closed up 85% on Friday.

That marks a big turnaround for the company, which has lost about three-fourths of its value since going public through a SPAC combination in late 2021.

Reddit-trader favorite GameStop (GME) rose 14% to cap a volatile session.

And Lucid Group (LCID), an electric vehicle manufacturer known for its mega SPAC merger in 2021, surged 43%.

Tesla, which wiped out 65% of its value in 2022 for its worst year on record, rallied 11% on Friday. For the year, Tesla is up 44%.

The stock's rally this week also comes after Tesla's quarterly results beat expectations, with the company telling investors it plans to begin production of its Cybertruck later this year.

"The recent rally in meme stocks and profitless tech stocks is a headfake and there is still plenty of excess capital in the system, even with all that the Federal Reserve has done over the past year," David Trainer, CEO of investment research firm New Constructs, told Yahoo Finance on Friday.

Wall Street’s risk-on mood comes as investors speculate moderating economic data will prompt the Federal Reserve to end its rate hiking cycle sooner than expected. The U.S. central bank is expected to downshift its pace of interest rate hikes to 25 basis-points at its meeting next week.

Friday's moves come in tandem with a broader push higher across the major stock averages that has all three indexes higher to start the year.

The tech-heavy Nasdaq Composite, which shed a third of its value in 2022, is leading the way with a 9% gain so far this year."

MY COMMENT

HAPPY DAYS ARE HERE AGAIN.........at least at the moment. LOL....I still have no interest in the ARKK ETF and never will. Way too risky and volatile for me and of course as said a number of times I dont like how Cathy Wood trades and in and out of stocks at the drop of a hat.

 

As noted above TESLA is Up by 44% for the year.

Tesla just notched its best week in a decade, as stock soars 33%

https://www.cnbc.com/2023/01/27/tes...eek-in-a-decade-as-stock-soars-33percent.html

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

"Key Points

• Tesla shares surged 33% this week, marking their best weekly performance since May 2013.
• CEO Elon Musk said earlier this week the company was on target to potentially produce 2 million vehicles in 2023.
• The rebound followed a six-month period in which Tesla shares declined more than 40%.

Tesla shares surged 33% this week, marking their best weekly performance since May 2013 and second best on record.

The stock rose 11% on Friday to close at $177.88. The rebound followed a six-month period in which Tesla shares had declined more than 40%. The stock’s 65% plunge in 2022 was its worst in Tesla’s 12-plus years as a public company.

Tesla’s rally this week was aided by an upbeat fourth-quarter earnings report. During the call with shareholders and analysts, CEO Elon Musk said the company was on target to potentially produce 2 million vehicles in 2023, and he suggested demand would support sales of those cars as well.

Official guidance called for production of 1.8 million vehicles this year. The company has not revised its longstanding target for 50% compound annual growth rate over a multi-year horizon.

Tesla beat on both the top and the bottom lines, recording total revenue of $24.32 billion, including $324 million of deferred revenue related to Tesla’s driver assistance systems. The company cut prices for its cars dramatically in December and January, leading to concern about demand and a buildup of inventory.

Analyst reaction to Tesla’s numbers was mixed.

“For bulls, the growth story is alive and well,” Bernstein’s Toni Sacconaghi, who has an underperform rating on the stock, wrote in a note on Thursday. “For bears, the numbers don’t lie.”

In early January, Tesla reported fourth-quarter vehicle deliveries and production that fell shy of expectations.

Tesla’s stock jump came amid a broader market rally. The S&P 500 was up 2.2% for the week and the Nasdaq gained 4.3%.

Other U.S.-based electric vehicle makers saw their shares climb higher. Rivian rose 22% during the week, while shares in legacy automakers Ford and General Motors each gained more than 7%.

Rival electric car manufacturer Lucid spiked on Friday as well, rising 43% on reports of rumors that Saudi Arabia’s sovereign wealth fund, the Public Investment Fund, intended to take the company private.

Some of Tesla’s underperformance last year was attributed to Musk’s shift of focus to Twitter, which he acquired for $44 billion in October. Under Musk’s leadership, Twitter has experienced mass layoffs and fleeing advertisers, gutting morale.

Tesla remains the second most-shorted stock in U.S. markets, behind only Apple , meaning that a large numbers of investors are betting on a decline. Over 94 million of the automaker’s shares are shorted, according to data from S3 Partners.

Despite the rally, active short selling continues, S3 managing director Ihor Dusaniwsky told CNBC. Short sellers view Tesla’s appreciation as having created “an overheated and overbought stock that is due for at least a short-term reversal,” he said. In the last week, S3 Partners said it’s seen a 3.9% increase in total shares shorted, while investors shorting the stock lost $4.3 billion over that stretch."

MY COMMENT

I dont mean to put emphasis on TSLA in this thread. It only represents a bit over 1% of the total value of all of my portfolios. BUT....it is nice to see this company come back to....positive...... reality after the big drop last year.