The Long Term Investor

A nice big loss for the markets today and for me as well. Every one of my stocks was in the red today. I also got beat by the SP500 today by 0.62%.

At least we will get the FED and the majority of the BIG CAP TECH companies out of the way this week. After that we can simply watch the markets in peace for the rest of earnings and until the FED pop back up in six weeks.

 

I think we already know this.

Stock market news live updates: Stocks sell off to start blockbuster week

https://finance.yahoo.com/news/stock-market-news-live-updates-january-30-2023-124137866.html

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

"U.S. stocks tumbled Monday as investors await a blockbuster week that includes the latest Fed meeting, a flurry of heavyweight earnings reports, and jobs data.

The S&P 500 (^GSPC) was down 1.3%, while the Dow Jones Industrial Average (^DJI) lost nearly 0.8%. The technology-heavy Nasdaq Composite (^IXIC) declined by roughly 2%.

The yield on the benchmark 10-year U.S. Treasury note ticked up to 3.546%on Monday morning. The dollar index ticked up 0.32% to $102.26.

Stocks closed a winning week Friday following data that pointed to stronger-than-expected U.S. economic growth. All the major market averages finished higher for the week, with the S&P 500 gaining 2.5%, the Dow Jones Industrial average ending up 1.8% and the Nasdaq climbing north of 4%.

The Commerce Department said Friday the personal consumption expenditures price index, excluding energy and food, showed prices rose 4.4% from a year earlier. Friday’s report came in a day after the government reported a better-than-expected 2.9% gain in gross domestic product for the fourth quarter, boosting hopes that the Federal Reserve may head toward the elusive "soft landing" scenario.

Fed officials will be meeting in Washington, D.C., Tuesday and Wednesday. The meeting will wrap up with Fed Chair Jerome Powell holding a press conference Wednesday afternoon as he offers signs of the central bank’s path forward on rate hikes.

“The FOMC's work is not yet done, even if the recent declines in inflation and wage growth give it more time to assess the effects of past policy actions. A key challenge for the FOMC will be to execute its transition to smaller rate hikes without furthering expectations that an end to its hiking cycle is imminent,” the team at Barclays wrote.

At the end of week, investors will get another clue of the Fed’s path as the government’s January jobs report is set to be released Friday morning. Economists surveyed by Bloomberg expect 185,000 jobs were added to the economy last month, a slowdown from the gain of 223,000 jobs in December.

Meanwhile, it's the biggest week of the fourth-quarter earnings season, with Big Tech results taking the spotlight amid thousands of layoffs in the industry. Despite the already announced job cuts, the tech companies’ are in part to blame for the disaster, Yahoo Finance's Dan Howley writes.

The heavy earnings slate includes reports from tech heavyweights Amazon (AMZN), Apple (AAPL), Alphabet (GOOG), and Meta Platforms (META).

Elsewhere in markets, shares of Lucid (LCID) sank nearly 9%. On Friday, the electric-vehicle maker surged more than 88% following speculation that a Saudi Arabia Public Investment Fund (PIF) is considering buying its remaining stake in the company.

Alibaba (BABA) shares fell 6% Monday after reports that the Chinese e-commerce site is moving its headquarters out of the country, suggesting the new campus could be in Singapore, according to reports.

SoFi Technologies (SOFI) shares rose 12.5% Monday after the digital financial services company posted an upbeat earnings guidance for the year ahead.

Shares of Johnson & Johnson (JNJ) fell nearly 4% Monday after an appeals court said the company can't use bankruptcy to end cancer lawsuits.

In the cryptocurrency market, Bitcoin (BTC-USD) has fallen over 1% to $23,168 over the last 24 hours, according to CoinMarketCap. However, the largest token is on its way for its best January since 2013, per Bloomberg, on bets that monetary tightening and the sector’s crisis are both receding."

MY COMMENT

OK....moving on from here. I see that Johnson & Johnson got some bad news. That litigation risk from baby powder is the primary reason I sold that stock back when I did....I think it is mentioned somewhere in this thread. They have HUGE exposure.

 

LOL.....it is a good thing that I am not some short term trader doing critical day trading.......I have been having issues with the internet and have been on the phone with Technical support since the open today. I am back on now....obviously.

 

Markets look good so far. Actually I am surprised since I expected the markets to be down again today....still plenty of time left. Perhaps it is just wishful thinking for a down week......since......some time in the middle to the end of this week my kids money ($18,000) will hit their Schwab account and be ready to invest in the SP500 Index Fund.

This is NOT the money that I discussed perhaps investing in February......that money, for myself, will still be pushed back to the March to July time span......as I wait for it to be available through normal cash flow.

 

Here is what is going on today.....to bring my self up to date now that I can connect.

Stocks rise as earnings continue to roll in

https://finance.yahoo.com/news/stock-market-news-live-updates-january-31-2023-130611137.html

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

U.S. stocks inched forward at Tuesday's opening as a flurry of corporate earnings rolled in.

"The S&P 500 (^GSPC) edged up nearly 0.2% Tuesday morning, while the Dow Jones Industrial Average (^DJI) ticked up 0.1%. The technology-heavy Nasdaq Composite (^IXIC) added roughly 0.4%.

The yield on the benchmark 10-year U.S. Treasury note ticked down to 3.501% from 3.546% on Monday. The dollar index ticked down 0.06% to $102.22.

The major U.S. stock averages tumbled on Monday, kicking off a week packed with macro events and major tech earnings. For the session, tech underperformed, as the Nasdaq lost 2% in the index's worst day since December 2022.

Oil traded sharply lower, with WTI Crude, the U.S. benchmark, down more than 1% ahead of the OPEC+ meeting on Wednesday as oil ministers will review levels of output. The Joint Ministerial Monitoring Committee of OPEC+ is expected to endorse the group's current oil output policy.

The biggest item on the calendar is the FOMC’s policy meeting, which commences on Tuesday ahead of an anticipated Wednesday decision to hike rates by quarter percentage point, bringing the federal funds to a target range of 4.5 to 4.75%. Yet It's unclear what could come next.

“[We] expect Powell to be quite hawkish in the press conference,” Michael Feroli, chief U.S. economist at JP Morgan, wrote in a note. “We look for him to stress two themes: (i) slowing is not stopping, and (ii) don’t expect rate cuts in ’23.”

It's also a significant week for the European Central Bank and the Bank of England, as it’s widely expected for officials to raise benchmark interest rates by 50 basis points on Thursday. Such a move would mark a slowdown from last year’s aggressive hikes, as inflation cools and unemployment levels remain low.

Earnings season in full force

The busiest week of the fourth-quarter earnings season kicked off, with more than 100 companies representing nearly one-third of the S&P 500's market value reporting results.

Exxon Mobil (XOM) shares fell nearly 2% Tuesday after the company reported earnings that beat expectations in the fourth quarter, while revenue came in short. The oil giant posted adjusted quarterly earnings per share of $3.40 compared to analyst forecasts of $3.29. Revenue in the quarter was $95.43 billion, lower than expectations of $97.3 billion.

McDonald’s (MCD) shares declined after the company reported fourth-quarter earnings Tuesday morning that beat expectations as more customers visited the fast-food chain amid higher menu prices. Revenue for the quarter came in at $5.93 billion compared to $5.75 billion expected, while the company posted adjusted earnings per share of $2.59 compared to analysts forecasts of $2.44.

General Motors (GM) shares added 7% Tuesday after the car maker reported a 15% rise in net income in the fourth quarter amid weak consumer spending.

United Parcel Service (UPS) posted a decline in revenue for the fourth quarter as the company delivered fewer items during the holiday season. Revenue for the quarter fell 2.7% to $27.0 billion, missing analyst expectations of $28.09 billion. UPS reported an adjusted profit of $3.62 per share for the quarter ended Dec. 31, higher than expectations of $3.59 per share.

Caterpillar Inc. (CAT) posted lower-than-expected quarterly profit, the first time since the start of the pandemic. Caterpillar reported Tuesday adjusted fourth-quarter earnings of $3.86 a share, while analysts expected $3.97.

Spotify (SPOT) reported fourth-quarter results that gave investors a mixed outlook ahead, as the company delivered a wider-than-expected loss and a beat on gross margins. Revenue for the fourth quarter missed. Meanwhile, total monthly active users surpassed expectations, coming in at 489 million compared to 478 million expected.

Finally, Pfizer (PFE) shares dipped after the pharma giant reported adjusted earnings of $1.14 per share on $24.29 billion in sales. The company said it expects lower sales in 2023, including a steep fall in sales for its COVID vaccine.

Elsewhere in markets, shares of Carvana (CVNA) surged on Monday by as much as 33% and rose again in early Tuesday trading. According to Bespoke Investments data, Carvana is part of the list of the 35 most heavily shorted stocks in the Russell 1,000 at the moment. These stocks on average are up 18.8% this year.

Meanwhile, things will quickly turn to tech after the bell. Snap (SNAP) is set to provide an early look into what is cooking in the world of online advertising, user growth and consumer spending, following Microsoft (MSFT) signaling a continued slowdown in cloud growth in December.

Meta Platforms (META) is set to report quarterly results Wednesday, while Amazon (AMZN), Apple (AAPL), Alphabet (GOOG) are gearing up for Thursday.

Overseas, the International Monetary Fund said on Monday that it expects the global economy to slow. In the U.S., economic growth will slow to 1.4% this year as central banks continue to work to tame inflation, the IMF said."

MY COMMENT

Obviously at least a couple of big items that will impact how we end the week this week. The FED will do their rate increase......and more importantly......will deliver remarks. this will send the markets and everyone into the depths of despair or the highs of extreme elation. Either reaction is of course......ridiculous.

AND....of course the second event is the BIG CAP TECH earnings. I suspect those earnings....even if mixed......will be better than expected in general or very close to expectations. No doubt the markets will find some forward looking commentary or other issue to totally nit-pick to the negative side. Typical.

 

Looks to me like EARNINGS continue to come in nicely. Companies that I would expect to not beat are doing as expected......while many other companies are BEATING expectations. There is no doubt that earnings are coming in better than the DREARY EXPECTATIONS that have been pushed lately.

 

AMEN....to this little article.

Weekly Market Pulse: First, Kill All The Speculators

https://alhambrapartners.com/2023/01/30/weekly-market-pulse-first-kill-all-the-speculators/

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

"The Fed meets this week and is widely expected to raise the Fed Funds rate by 0.25% to a range of 4.5% – 4.75%. The market has factored in a small probability that they do nothing and leave rates alone, but they’ll probably do what’s expected because they’ve spent the last couple of months preparing the markets for exactly this outcome. If you’re looking for drama, you’ll probably need to look somewhere else this week.

Stock markets have started the year strong based on the belief that the Fed is nearly done punishing the economy – causing pain to use Jerome Powell’s formulation. I don’t think the Fed has actually caused all that much pain but it surely isn’t from a lack of trying. Price rises are moderating and my guess is that they would be today if the Fed had done absolutely nothing. That isn’t to say that rates didn’t need to rise because certainly holding short-term rates at such ridiculously low levels is not healthy for a modern economy.

But I think we’d all be better off if the Fed had never manipulated rates so low to begin with. The fact they’ve corrected their mistake doesn’t absolve them of making it in the first place. Likewise quantitative easing and tightening. The Fed itself has struggled to explain the exact impact of QE on markets and the economy but they have persisted in it for over a decade in the apparent belief that doing something – even if they don’t understand it – is better than letting the economic chips fall where they may.

What exactly did the Fed accomplish by continuing to buy Treasuries and MBS until March of last year? The Fed’s balance sheet has shrunk by roughly a half trillion dollars since peaking in April of last year. That takes the balance back to where it was in October of 2021, roughly 16 months ago. Is the economy the same today as it would have been had they stopped their purchases at that time? What additional good did they expect to generate from that extra half trillion? Did they get it? I don’t know the answers to those questions but more importantly, neither does the Fed. One thing I’m certain of is that the Fed’s serial interventions in markets have changed people’s behavior and not for the good.

We have become a nation of gamblers, everyone trying to hit it big. Sports broadcasts are now dominated by commercials for gambling. Once upon a time, you had to “know a guy” to be able to put down a wager on your favorite team. Now you can bet on how many points they score in the second quarter and you only need a “smart” phone. If you don’t hit the big one gambling on sports, the state has another great game you can play with the potential payoff in the hundreds of millions of dollars. If that doesn’t work, Wall Street has invented any number of new instant satisfaction games. Have you heard about 0DTE options? No reason to wait around for weeks or months to find out if you won because these babies expire today! That’s right, these are 0 days to expiration options.

Wall Street has even managed to turn ETFs, which were supposed to just be better index funds, into objects of speculation. They started with inverse ETFs for those who couldn’t figure out where the short button was in their trading app. But that wasn’t enough excitement so they applied a little borrowed money and voila, leveraged ETFs – 1X, 2X, 3X – which only track their underlying index from day to day and the issuers warn should only be used for short-term trades. As if they really give a horse’s patoot.

But that wasn’t exciting enough so now they’ve moved on to ETFs that trade a single stock. ETFs were invented to provide broad, diversified exposure to certain markets or sectors but are now non-diversified trading vehicles for one stock. Why not just trade the actual stock? In a word, leverage. If you’re wondering why you wouldn’t just use a margin account, well you must have missed the diversification of counterparties. What’s that you ask? Suffice it to say that a single stock ETF isn’t an ETF that holds one stock. No, that wouldn’t make anyone any money, certainly not the firms that sponsor these things, which is all they really care about. A single stock ETF enters into swap agreements with multiple counterparties who will pay the daily return of the underlying security, minus fees and expenses of course. So, they’re diversified! Here we are in the early 21st century and the big innovation on Wall Street is the virtual bucket shop.

If the Fed has spent the last nine months “tightening” monetary policy, why is this kind of activity still ubiquitous? Why are hundreds – thousands? – of worthless cryptocurrencies still trading? How would our economy be performing today if all this capital dedicated to purely speculative activities – gambling – was instead directed to more productive activities? I don’t usually spend a lot of time blaming the Fed for whatever ails the economy but I have no doubt that they have pushed the average American to take actions they wouldn’t have taken in the absence of the Fed’s easy money policies. And it works both ways. There are investors who have spent the last decade or more scared to death that the economy is about to fall off another cliff like it did in 2008. They’ve accepted negative real returns for years to avoid something potentially worse that didn’t come to fruition. And there are the gamblers who decided that getting rich was the only thing that mattered including how you accomplished it. They had plenty of role models in the top 1% and the Fed’s cheap money to take their shot at joining them.

The economy is in a cyclical downswing that includes a moderation of the price hikes that have plagued us for the last 2 years. Whether this slowdown ultimately turns into a recession is something I can’t predict although the slowdown to date has been pretty mild. Despite the fact that the Fed’s rate hikes had little to do with the slowdown, they’ll get credit for killing inflation – for now. But if we don’t end the easy money policies, which very much includes fiscal policy by the way, we’ll ultimately get another dose of rising prices. The rising prices next time may well include a falling dollar too, in which case it will be a lot harder to kill than this outbreak."

MY COMMENT

GAMBLING in the form of trading is now rampant in the markets. New products continue to be invented for people to......"invest"......into speculative, non-real, investments. The constant emphasis on social media, advertising, TV, etc, etc, is all speculative trading oriented. Wall Street has managed to create this mentality......and....even pushes it as INVESTING.

No doubt much of this is being done by YOUNG MALES. The Millennial generation is now the largest population bulge in history and contains a massive....larger than ever before....number of young males. Young males are of course more subject to taking risk and engaging in risky behavior than females and older makes and females.

The investment industry and the gambling industry are not idiots....they know full well how to take advantage of this gambling mentality and how to foster it with addictive social media and online apps.

I have only one word to anyone......BEWARE.

 

I still say......as a lonely voice.....there will be NO recession this year. Although.......they refused to call the actual one we were in last year.....so I guess they could call one this year even if it is not really happening......that way they can all be right....even when they are wrong.

You’re so vain — you’re probably betting on a recession

https://nypost.com/2023/01/29/youre-so-vain-youre-probably-betting-on-a-recession/

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

"In my 50-plus years of managing money — which started back in the days when Carly Simon was cranking out hits — recessions have mostly been surprises. Now, almost everybody expects one.

The Philadelphia Fed’s Recession Probability gauge has hit a record high. A survey from The Conference Board shows 98% of American CEOs expect an economic downturn within 12 to 18 months, with 99% forecasting the same for Europe. KPMG found that 63% of Asia-Pacific CEOs expect recession. In Taiwan, it’s 9 out of 10. It is, surely, the most- and longest-anticipated recession in modern history.

That’s where Carly Simon comes in. No stranger to life’s surprises, in her 1971 single “Anticipation” she crooned, “We can never know about the days to come but we think about them anyway.” That’s key because, as I noted in this column on Christmas Day, forewarned is forearmed. When you beware, you prepare. In short — to concoct a rhyme that I would never accuse Carly of writing herself — anticipation is mitigation.


Recession chatter perked up last spring with the Ukraine war. Growth forecasts and CEO confidence plunged. Two quarters of (barely) shrinking US GDP raised alarms, causing many to think we were already in recession. Now, recession warnings are at DEFCON 2. If you think CEOs aren’t preparing, you must take them all for idiots. (And if you aren’t preparing, maybe you’re the idiot — or “so vain” you probably think this column isn’t “about you”).

More specifically, gloomy business leaders are nixing growth endeavors and cutting costs as if recession were already here. There have been 364,000 global layoffs since April. US job openings are off 12% from March’s peak. Over a third of Asia-Pacific CEOs are freezing hiring. Firms are leaning toward lean and mean fast.

Beyond headcount, the World Federation of Advertisers found almost a third of multinationals slashing ad budgets, with 75% putting spending plans under “heavy scrutiny.” Firms are squeezing operations—accelerating receivables collections, scrapping productivity-sapping meetings, even kiboshing free coffee.

This isn’t how firms historically acted before downturns. On recession’s eve in Q4 2007, the Business Roundtable’s CEO Economic Outlook Index ticked higher. Respondents expected rising or flattish capital expenditures and employment. Headlines touted Big Tech and telecom expansion plans well into 2008. The subsequent surprise deepened recession’s pain.

Recessions wring out the excesses of prior expansions — indeed, that is their very reason for being. But this time, firms have been increasingly at it since spring. How much wringing remains? Enough for a brutal recession and another bear market implosion? Unlikely. Widespread anticipation renders mild downturns — or none at all.


A mild recession would be consistent with 2022’s 24.5% decline through October’s bear market bottom — a cub by historical standards. And if we actually sidestep recession, nearly everyone will be shocked — and positively. Stocks move most on surprise — hence the bull market ahead (smaller or bigger, as I detailed Christmas Day).

Note that, since good data start in 1925, 9 of 10 US bear markets tied to recessions ended long before the recession bottomed. An ounce of prevention is worth a pound of cure. Nearly a year of increasing corporate sobriety means any downturn can’t cut as badly as feared.


As Carly ended Anticipation, “These are the good old days.” Be bullish."

MY COMMENT

I am of course....very bullish right now. We are at the end of the FED insanity. We are at the begining of the real end of all the supply/demand/job distortions that were caused by the shut-down.

We are at the start of a.....NEW NORMAL. That "new normal" being the restoration of........yep......the OLD NORMAL to the markets.

 

BUT.....you know me.....I am BULLISH....JUST BECAUSE. I tend to be a perma-bull because the long term market record is massively (70% or more in any one year) POSITIVE. So....why would I be otherwise with that sort of long term market record?

 

As we head into the FED days....here is some good news for them.

Important wage inflation measure for the Fed rose less than expected in Q4

https://www.cnbc.com/2023/01/31/employment-cost-index-q4-2022.html

Treasury yields decline as Fed meeting kicks off

https://www.cnbc.com/2023/01/31/treasury-yields-decline-as-investors-await-fed-meeting-kick-off.html

MY COMMENT

I have not said it for a while now.....but.....even with all the events of the past couple of years.....my view is that the longer term economic trend is DEFLATION. We are just at the very begining of the impact of AI and TECHNOLOGY on society and the economy and the work world.

 

NOW.....we have moved nicely into the green for the day.

COME ON MAN.....SHOW ME THE MONEY.

 

I just checked my kids account and there was the money that is needed for the SP500 Index Fund trade that I mentioned above. So being.......NO GUTS NO GLORY......I put in the order to buy $9000 of SP500 Index Fund. It will execute at the close today. The other half of the $18,000 will be put in the SP500 in their spouses account which I do not control.

YES.....I could have waited for the FED rate hike......or....the BIG CAP TECH earnings on Thursday.....but......I dont do market guessing or market timing or trying to "GUESS" entry or exit points. When funds are available they go in.....all in all at once. I am convinced that this is the best long term course.....to get money exposed to the markets and working ASAP.

By Friday.....I would put the odds at 50/50 that this new money has a gain or a loss. SO.....why would I wait to invest it based on GUESSWORK and RANDOM CHANCE?

AND......YES.....I do post on here every market move made in any account controlled or owned by me......usually right after it happens.

 

Of course.....the above is LONG TERM MONEY. In our family we dont do.....trading or short term investing.

 

We are in the middle of a potentially big ICE STORM today and tomorrow. We did still go out for lunch. I doubt we will go out tomorrow. A few days ago it was in the 70's.

Sounds like the market action.

 

I am 10 for 10 to the UP-side going into the last hour. If we can avoid or hold off the LATE DAY FADE.....I should end up with a nice big gain. Probably not enough to get back yesterday's loss.....but close.

 

In my life I have lived through......the nuclear bomb attack scare of the 1950's.......the ozone hole crisis......the global cooling crisis.....the global warming crisis......the fear mongering that all oil would be used up by the early 1990's......the acid rain crisis.......etc, etc, etc. I have heard "wolf" cried so many times......there must be a wolf around every corner.

So....at this point I dont get really excited about any of it.