The Long Term Investor

Here is the TRUE cause of the markets today.....Treasury Yields...other than short term trading manipulation.

TREASURIES-Yields hit four-week highs, Fed expected to hike above 5%

https://finance.yahoo.com/news/treasuries-yields-hit-four-week-151207129.html

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

"NEW YORK, Feb 6 (Reuters) - Benchmark 10-year U.S. Treasury yields hit four-week highs on Monday after Friday’s blowout employment number raised expectations that the Federal Reserve’s rate hikes will not end with a hard economic landing, and that the U.S. central bank may have more than one more rate increase left.

Employers added 517,000 jobs in January, while the unemployment rate hit 3.4%, its lowest reading for more than 53 years.

Other data on Friday also showed that U.S. services industry activity rebounded strongly in January, with new orders recovering and prices paid by businesses for materials continuing to rise at a moderate pace.

“That was a big rebound (in ISM) that took away some of the fears of December weakness,” said Jim Vogel, a senior rate strategist at FHN Financial in Memphis, Tennessee. Meanwhile, investors are looking at the jobs report and, seeing a “nice improvement in January”, have “turned it into inflation that we’re going to see soon”, Vogel said.

Average hourly earnings increased 0.3% last month after gaining 0.4% in December. That lowered the year-on-year increase in wages to 4.4%, the smallest rise since August 2021, from 4.8% in December. But wage growth was revised up for 2022, suggesting a more moderate pace of cooling than previously thought.

Benchmark 10-year yields rose as high as 3.640%, the highest since Jan. 6, and are up from a low of 3.333% on Thursday before the data. Two-year yields reached 4.435%, also the highest since Jan. 6.

The 10-year yields have fallen from a 15-year high of 4.338% on Oct. 21 on expectations that Fed tightening will lead to a recession this year.

EXPECTATIONS REVISED

Traders ramped up bets on rate cuts in the second half of this year after Fed Chairman Jerome Powell seemed unconcerned about loosening financial conditions and cited progress in bringing down inflation after the Fed’s meeting on Wednesday, when it raised rates by another 25 basis points.

But Friday’s data led to a repricing in these expectations. Fed funds futures traders now see rates rising above 5% in May and dropping to only 4.76% by December. On Thursday, traders had expected the rate to peak at 4.88% in June, and then fall to 4.40% by December.

Some banks are also readjusting their Fed forecasts in light on last week’s events.

“Chair Powell did not push back against market pricing for near-term monetary policy, nor the recent easing in financial conditions. Despite Powell’s dovish tone, front-end yields finished the week higher after Friday’s surprisingly strong labor market report. Hence, we’re adding an additional 25bp hike to our forecast and now see the Fed funds target range peaking in May at 5-5.25%,” JPMorgan analysts said in a report.

The Treasury Department will sell $96 billion in coupon-bearing supply this week, including $40 billion in three-year notes on Tuesday, $35 billion in 10-year notes on Wednesday and $21 billion in 30-year bonds on Thursday. (Editing by Kevin Liffey)"

MY COMMENT

Thank you.....MORONS at JP Morgan....for stating the obvious. It has been clear for many months that the FED was going to push rates into the mid.....5.25% to 5.50%....range. After that they will leave them there ALL YEAR. The only exception wold be if inflation drops much more than expected before year end.

Do these so called experts....know how stupid they look when they say this stuff?

 

As we recover from the bear market and move stronger into the next bull market....there will be many down weeks and down times in the markets. Will this be one of them? Who knows.....and....who cares.

THE power of long term investing.

COURAGE......ENDURE.

 

There was at least "ONE"....financial media news site today....that got the REAL story right.

Stocks close lower Monday as higher rates rattle investors

https://www.cnbc.com/2023/02/05/sto...-more-earnings-and-a-powell-speech-ahead.html

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

"U.S. stocks fell Monday, led downward by the tech-heavy Nasdaq Composite, as investors grew increasingly cautious of rising bond yields.

The Dow Jones Industrial Average lost 34.99 points, or 0.1%, to end at 33,891.02. The 30-stock index made up some ground after losing more than 240 points earlier in the session.

The S&P 500 slid 25.40 points, or 0.61%, to close at 4,111.08. The Nasdaq Composite
posted the biggest loss of the three, sliding 1%, or 119.50 points, to end at 11,887.45.



CNBC

Investors were taking some profits after the stock market’s hot start to the year. The S&P 500 is up more than 7% for 2023, while the Nasdaq Composite has advanced for the last five weeks, a streak not seen since November 2021.

Treasury bond yields rose, with benchmark 10-year yield up by nearly 11 basis points at 3.64% and the 2-year yield adding around 18 basis points to 4.48%. The ICE U.S. Dollar Index rose as much as 0.76% Monday, further contributing to the decline in stocks.

Apple shed 1.8%, pressuring the Dow as concerns over higher rates weighed on some tech stocks. Retail stocks Target and Nike also ended the session down, while defensives such as Merck and Coca-Cola
advanced.

“Most stock market participants are a little shook ... by the huge increase in yields for a second straight day,” said George Cipolloni, portfolio manager at Penn Mutual Asset Management. “The move in the 2-year over two days is incredible. And I think that’s driving most of the moves.”

Monday marked the start of another week packed with earnings. Tyson Foods fell 4.6% on the back of a weaker-than-expected earnings report. The Children’s Plac, a kids’ apparel retailer, lost 4% after it pulled back its outlook for its fourth quarter.

Disney , Chipotle, DuPont and PepsiCo are among the major companies reporting earnings later this week, which investors will be watching for any indications that prior interest rate hikes have hurt companies’ finances. With the earnings season about halfway over, profits for S&P 500 companies are on pace to be 2.7% lower for the fourth quarter, according to Refinitiv.

“Last week was kind of all about monetary policy and the Fed, the European Central Bank and the Bank of England,” said Tom Hainlin, the U.S. head of global investment strategy of U.S. Bank’s Ascent Private Capital Management. “This is really about corporate America and what they’re seeing.”

Investors will also watch Tuesday for Federal Reserve Chairman Jerome Powell’s remarks before the Economic Club of Washington. Last week, Powell’s comments on disinflation caused investors to bid shares higher and overlook another rate hike out of the central bank."

MY COMMENT

How refreshing to see an accurate and non-hype article about the markets today. The drivers......the yield jumps in the Ten year and the Two year......and.....some profit taking.

That is about it. Neither of these items make the slightest difference to.....long term investors.

 

A typical market today. Trying to decide what to do and what direction to carry to the end of the day. Two big drivers of the markets today of course......the Ten Year Treasury yield......and.....the Powell talk at mid day today.

 

I like this little article.

Where’s All That Bad Earnings News That Stock Investors Were Braced For?

https://www.morningstar.com/article...ngs-news-that-stock-investors-were-braced-for

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

"As fourth-quarter earnings season rolls on, the news for stock investors may not be all that great, but it’s shaping up to be better than many expected.

Forecasts had centered on stock market earnings posting an overall low- to mid-single-digit decline compared with a year ago, as companies wrestle with a tough mix of higher costs and worries about a recession.

With about one third of earnings season in the rearview mirror, companies that have reported results have instead posted a small gain in earnings. Even amid the big technology stocks, where investors have been especially concerned about the direction of earnings, the results have been mixed but not disastrous.

As of Feb. 2, about 30% of the companies in the Morningstar US Market Index have reported their results for the final quarter of 2022. Based on those reports, earnings are up 0.7% from a year prior. While this is subject to significant change as the rest of the market reports, it’s painting a different picture than expected.

However, results could quickly snap the other way, as indicated by the so-called blended earnings-growth rate of negative 4.7%, which calculates earnings growth using both actual data from reported companies from the Morningstar US Market Index and estimated data from those that haven’t. In that sense, there’s still negative sentiment toward companies that have yet to report.

Should earnings decline once all results are in, it would mark the end of the rapid earnings growth era brought on by the postpandemic economic resurgence. A negative quarter to close out 2022 would be the first decline in earnings since the third quarter of 2020.

Still, the somewhat better-than-expected results have helped extend a rally that has left the Morningstar US Market Index up 8.4% for the year to date.

“Given all the concerns going into this earnings season … it’s not as bad as we expected,” says Quincy Krosby, chief global strategist at LPL Financial.

One item to watch for as earnings season progresses is margin compression, Krosby says. So far that too has held up much better than expected. “Margins are coming down, there’s no doubt about it … but not enough to signal that the markets are going to have to pull back 20% to 25%,” she says. With less compression than expected, companies were able to better preserve their bottom line, which is contributing to more buoyant earnings growth.



While aggregated reported results suggest that earnings are on track to be flat or increase slightly from a year prior, it’s a different story on a sector level. There, results have mostly tracked closely with negative expectations.

Most notably in the past week, Big Tech companies have reported negative earnings growth during the fourth quarter. Apple AAPL missed both earnings and revenue estimates, and net income declined 13.4% year-over-year following weaker sales during the quarter. Alphabet GOOGL earnings also fell short of estimates, as advertising revenue took a hit and costs rose 8%, leading to a net income decline of roughly 34%. Meanwhile, Amazon.com saw net income fall to $300 million from $14.3 billion, driven by pre-tax losses of $12.7 billion from its investment in Rivian Automotive RIVN.

That earnings are in positive territory has mainly been a function of stronger-than-expected consumer cyclical and utilities earnings.

Much of the strength in the consumer cyclical sector has come from the automobile industry, which is typically among the earliest to report. Companies with surprising positive earnings results included Tesla TSLA and General Motors GM, which both beat revenue and earnings estimates thanks to a higher volume of vehicle sales than expected.

The strength of consumer cyclical companies is likely reflecting the resilient U.S. economy. Many analysts have been anticipating a slowing in consumer spending ahead of a potentially tougher economic environment, says Krosby.

So far that isn’t the case. “People still have jobs … consumers are still spending,” she says. “This is where the U.S. economy is defying what we’re hearing from the companies.”

However, the consumer cyclical sector is far from having fully reported results. Retailers and travel companies make up the bulk of the 80% of companies that have yet to report in the sector, and expectations for those companies is deeply negative. Although reported results so far have shown consumer cyclicals’ earnings up 26.3%, the blended earnings-growth rate is currently at negative 18.4%, indicating significant downside.

“It would be prudent to wait for more earnings before we grade it,” Krosby says.



Utilities stocks, likewise, have been surpassing expectations. While only 11% of the utilities stocks in the Morningstar US Market Index have reported, their earnings have grown about 25.1%, led companies like NextEra Energy NEE and Xcel Energy XEL, which both beat estimates and reported earnings growth of more than 20%. On the other hand, the blended growth rate is negative 3.6%, which suggests an overall decline in earnings for utilities is still on its way.

In the event earnings overall remain flat or positive, Krosby warns that even if companies may be holding up better than expected now, with margins somewhat guarded, “they are coming down.” Whether earnings swing the other way during this earnings season, or for the next, it will be critical to “hear what the companies are telling us. What are they doing to help the bottom line?”"

MY COMMENT

EVERYONE is underestimating the strength of the underlying economy.

Our system of "experts" predicting (guessing) earnings for every company and that being used as a measure of success or failure is a JOKE. Many of these people that are doing the predicting have some BIAS one way or another......they work in the investment industry.......and.....they often dont have any real hands on experience with management of a business or even work in the business they are predicting.

My view is that the ONLY thing that counts is the actual earnings. Measuring those earnings against some prediction or some whisper number is a waste of time and irrelevant. Earnings should simply stand alone. That is all that counts over the long term. No one looks back years later and talks about what the earning predictions were or were not.

If you want to measure earning results against something.....weigh them against the past five years of REAL earnings from the same company.......taking into account the current business and economic conditions. There is no need to have some third person making predictions.

 

As we start another market day.

Stock market news live updates: Stocks fall ahead of Powell appearance
Here's what's moving markets on Tuesday, February 7, 2023.

https://finance.yahoo.com/news/stock-market-news-live-updates-february-7-2023-120657185.html

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

"U.S. stocks edged lower Tuesday morning ahead of a highly anticipated public speaking appearance by Federal Reserve Chair Jerome Powell in Washington, D.C.

The S&P 500 (^GSPC) edged down 0.3%, while the Dow Jones Industrial Average (^DJI) shed roughly 170 points, or 0.4%. The technology-heavy Nasdaq Composite (^IXIC) was off by 0.1%.

Powell is scheduled to be interviewed by billionaire Carlyle Group co-founder David Rubenstein at the Economic Club of Washington, D.C., around 12:40 p.m. ET.

Investors are largely expecting the U.S. central bank chief to strike a hawkish tone in his remarks after markets cheered his indication of "disinflation" in the economy after the Fed's rate-setting meeting last week and after Friday's blowout jobs report showed payrolls grew by 517,000 in January.

"If the Fed are unhappy with how the market interpreted last week’s meeting, then this is the opportunity for them to try and address things," Quant Insight head of analytics Huw Roberts said in a note. "This will be a critical speech. Even if he’s says nothing of interest, that’s important. More benign neglect from Powell will be interpreted as a green light for risky assets to keep rallying."

In other central bank news, the Reserve Bank of Australia raised interest rates by 25 basis points to an over 10-year high of 3.35%, following suit on the U.S. Federal Reserve's move last week.

Back in the U.S. stock market, shares of Chinese search engine Baidu (BIDU) jumped 12% Tuesday morning after indicating it’s on track to unveil its ChatGPT-like AI service in March.

Wild swings continued for meme stock Bed Bath & Beyond (BBBY). Shares sank more than 40% after the beleaguered retailer announced plans to raise $1 billion through an equity offering. The plunge follows a surge of as much as 120% on Monday.

Shares of education technology company Chegg (CHGG) tanked 23% in on the heels of disappointing guidance from executives on sales expectations.

Pinterest's (PINS) stock fell 3.4% after the platform reported quarterly revenue late Monday that missed Wall Street estimates, renewing concerns about weakness in the ad market.

Equity markets have been on a climb higher in 2023, with risk-on sentiment fueled by expectations that waning housing and manufacturing data and a cooldown in inflation would prompt the Federal Reserve to pause and even cut rates sooner than expected.

Minneapolis Federal Reserve President Neel Kashkari said during an interview with CNBC Tuesday morning that Friday's shock jobs data suggests he and his central bank colleagues must stay the course on fighting inflation.

“We know that raising rates can put a lid on inflation,” Kashkari said in an interview on CNBC's “Squawk Box.” “We need to raise rates aggressively to put a ceiling on inflation, then let monetary policy work its way through the economy.”"

MY COMMENT

As I have said about 100 times......anyone that does not have a clear handle on what the FED is going to do is living in a fantasy world. they have made it very clear.

So......IGNORE......the constant media blather about a pause in rate increases and an early cut in interest rates. We have another 2-3 rate increases ahead of us this year.......and.....after that it is very likely that the FED will stand firm for the rest of the year. It is that simple......and......that is very positive for investors......the end of the rate hikes is in sight in the next 2-3 months.

 

May as well not waste your time market watching today. Nothing matters today till Powell talks at mid day. This is simply going to be one of those days when nothing actually matters except for the Powell remarks. AND....in reality the actual remarks don't matter.....it will all be the "interpretation" of the remarks by all the usual "experts".

So......a wasted day for actual investors......it is simply a media day for the markets.

Having just looked I am very slightly down today. ALL my BIG CAP classic TECH companies are currently green.....AAPL, MSFT, NVDA and GOOGL. Looks like someone is taking advantage of the market drop yesterday and Friday to do some catch-up buying.

 

Right now is a very good time for people that want to lock in some very nice rates on "SAFE" money. Many people simply want income that is safe and secure. Rates have been dismal for a long time now. With the active FED there are very nice rates on CD's right now and over the coming months.

‘Best in 15 years.’ This investment is now offering a guaranteed return of up to 4.78%. Should you bite?

https://finance.yahoo.com/m/dfbbda2d-f6f2-3453-b92f-20d2d0082f5f/‘best-in-15-years-’-this.html

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

"Certificates of deposit (CDs) let you deposit your money for a predetermined amount of time at a fixed interest rate and collect your earnings when they mature. And they are now offering the highest yields we’ve seen in over a decade — will many paying more than 4.5%. (See some of the highest rates on CDs you may get now here.) But with some many choices to choose from, what should you opt for?

Historically jumbo CDs — which may have minimum deposit requirements in the realm of $100,000 — paid the best rates, but these days you don’t need to sink the big bucks into a jumbo CD to access great rates. Indeed, you can access CDs paying upwards of 4% with deposits as little as about $500 — and sometimes nothing at all.

“Jumbo CD rates tend to be slightly better than regular CD rates when you’re comparing options at the same bank, but they’re not the best deals out there,” Chanelle Bessette, banking specialist at NerdWallet, says, adding that “the best CD rates tend to have far lower minimums.”

That said, “jumbo CDs can be a useful option for consumers who have just received a large amount of money as a windfall, perhaps as an inheritance or from the sale of a house, and who wish to let the money earn interest without needing to access it,” Bessette says.

Here are some of the best rates that both jumbo CDs and shorter term CDs are paying, and what to know before you buy in.

Shorter term, lower minimum CDs with the best rates

• Popular Direct:
  • Rates:
    • 3-month rate of 4.10% APY
    • 6-month rate of 4.50% APY
    • 12-month rate of 4.75% APY
  • Minimum deposit: $10,000
  • Other things to know: Although that initial investment is high — and comes with a steep 270-day simple interest withdrawal penalty — the rates here are highly competitive.
    
• First Interest Bank:
  • Rates:
    • 3-month rate of 2.02% APY
    • 6-month rate of 4.39% APY
    • 12-month rate of 4.75% APY
  • Minimum deposit: $1,000
  • Other things to know: The 3-month term offering has a 90-day interest early withdrawal penalty while the 6- and 12-month offerings have a 180-day interest penalty.
    
• Alliant Credit Union:
  • Rates:
    • 12-month rate of 4.60% APY
    • 18-month rate of 4.25% APY
    • 24-month rate of 4.25% APY
  • Minimum deposit: $1,000
  • Other things to know: While there is no penalty for monthly dividend withdrawals at Alliant, early withdrawal penalties apply if the CD is closed ahead of its maturity date. You can also keep your account open with as little as $5.

Jumbo CDs with the best rates
But while jumbo CDs historically offer better rates across the board, these days the space has become more competitive. Nevertheless, here are some areas where it still pays to go jumbo, if you can afford the large account minimums:

• Lafayette Federal Credit Union:
  • Rates:
    • 1-year rate of 4.58% APY
    • 3-year rate of 4.68% APY
    • 5-year rate of 4.78% APY
  • Minimum deposit: $100,000
  • Other things to know: Certificates automatically renew and charge an early withdrawal penalty for leaving early. You must also establish an account with Lafayette Federal Credit Union or be an existing member.
    
• Connexus Credit Union:
  • Rates:
    • 1-year rate of 4.76% APY
    • 3-year rate of 3.96% APY
    • 5-year rate of 3.76% APY
  • Minimum deposit: $100,000
  • Other things to know: No membership is needed to open an account, however you will be asked to make a $5 donation to the Connexus Association for charitable giving purposes.
    
• Credit One Bank:
  • Rates:
    • 1-year rate of 4.70% APY
    • 18-month rate of 4.70% APY
    • 5-year rate of 4.45% APY
  • Minimum deposit: $100,000
  • Other things to know: Manage your account with a mobile app and take advantage of the bank’s Loyalty Rate increase of 0.05% for renewing your CD at the end of its term.
    
• Navy Federal Credit Union:
  • Rates:
    • 1-year rate of 4.45% APY
    • 3-year rate of 4.25% APY
    • 5-year rate of 4.25% APY
    • 7-year rate of 4.25% APY
  • Minimum deposit: $100,000
  • Other things to know: Renewal for each of these offers is available after reaching their respective maturation dates.

Things to know before you buy a CD

One feature that is pretty common across the board among CDs are their minimum deposit requirements to open an account. CDs that are locked in for the shortest terms of three months generally come with the lowest requirements of $500 for CDs from Citibank or America First Credit Union, for example. Although those offer rates at 3.25% APY and 2.35% APY, respectively, providers with higher account minimums, as you can imagine, offer higher rates: Popular Direct’s 3-month term CD has a 4.10% APY but requires a minimum account deposit of $10,000.

For those with longer terms, the minimums are generally higher. For example, the BMO Harris 5-year term CD has a rate of 4.50% APY, but comes with a $1,000 deposit minimum; while the 5-year term CD at Bread Savings has a rate of 4.25% APY and requires a $1,500 deposit minimum.

Just about all of the available offers for jumbo CDs these days require a minimum deposit of $100,000. Although that isn’t for everyone, Greg McBride, senior analyst at Bankrate, says the high buy in doesn’t always equal bigger rewards.

“As with any certificate of deposit, be fully aware of the policies and penalties involved with early withdrawal,” says McBride. “Locking into a longer maturity CD typically involves a more significant penalty for early withdrawal than a shorter maturity, yet the yields are actually a bit higher for shorter maturities. If in doubt about your ability to live without the money for the entire term, go with a shorter maturity.”

Why are CD rates going up?

From December 2015 to 2018, the Federal Reserve raised its benchmark interest rate nine times before later changing course in late 2019. In 2020, when the COVID-19 pandemic hit, the Fed then took benchmark rates down to near-zero to assist in the recovery. Flash forward to 2023 and the fed funds rate has climbed to 4.50% to 4.75%, resulting in a direct impact on savings rates, according to Bankrate.

“CD yields are the best in 15 years, and the returns on shorter maturity CDs — one year and less — have a bit more room to run before peaking,” says McBride. “Longer maturity CDs — those longer than one year in length — may not get much better and could pull back if you wait too long so lock those in the next month or so to get the best yields.”

But that’s not to say CD rates won’t keep climbing. In the 1980s, 5-year term rates for CDs were more than double where they are today at around 12%, according to Bankrate data. Also around that time; the fed funds rate was at its highest level ever of 14.6%.

“Though no one knows for sure whether interest rates will continue to increase in 2023, it seems like a solid possibility since inflation is still high,” Bessette says.

Are there better options?

Although the rates that come with CDs and jumbo CDs are often higher than traditional or high-yield savings accounts, one of its most inherent features is one that also works to its detriment, says Marianela Collado, a certified financial planner with Tobias Financial Advisors.

“The rate on short-term instruments is so attractive that I don’t see value in anything where funds are locked in for a long period of time,” Collado says when considering terms associated with CDs and jumbo CDs.

Offerings from money market accounts, she notes, are paying over 4% and short-term U.S. Treasurys are generally a little shy of 5% for maturities of six months or less. “The reason for pause is the idea of putting amounts in excess of the FDIC insurance with any one bank,” Collado says. “Why not go straight to U.S. Treasurys for government backing?”

One thing to keep in mind is that any accounts that exceed $250,000 are not FDIC protected, “which is necessary if a bank goes belly up,” Collado says. “If you go directly into U.S. Treasurys, this FDIC is a moot point because you are investing directly in the government system that backs the FDIC insurance.”"

MY COMMENT

I AM NOT RECOMMENDING ANY OF THE SPECIFIC CD"S in this article. THEY ARE EXAMPLES ONLY. YOU HAVE TO RESEARCH AND FIND WHAT IS RIGHT FOR YOU.

When I have bought CD's for safe or short term money I bought them through Schwab. I have access to CD's all over the country through Schwab. I also prefer to keep all my investments in one place.

For people that are afraid of stocks and funds.....or....have money that must be kept safe......CD and Treasury rates are very nice right now and over the coming months.

 

Since NOTHING is going on today....it is all about me, me, me. So lets talk about my little local real estate market. the latest data that I saw yesterday shows that:

The number of homes sold in 2022 was down 26%.

Median price in my little local area was UP by 14% in 2022.

Year 2022 was a year of extreme low inventory.

In my area of 4200 homes there were 189 homes sold in 2022 with a median sales price of $930,000.

In the city of Austin the median home price went up 10% in 2022.

In Travis County where Austin is located the median price went up 11% in 2022.

At the moment we continue to have severely decreased inventory but better than 2022. Spring will tell the story of where we are headed in 2023. Issues for potential buyers in my area......higher mortgage rates combined with high property taxes. I am very lucky that my property taxes are mostly frozen due to being age 65 or above.

 

Emmett......yeah. If rates were 8% there that would challenge the stock markets. A rate at 8% that is a sure thing year after year is outstanding. Of course.....we are not going to see those rates.....we are close to peak rates now and over the next 6 months.

For someone that is just a year away from retirement the current rates would be good to lock in the portion of your retirement funds that you intend to keep as a cash or safe buffer.....using a CD or Treasury ladder.

I would think that anyone a year or less from retirement would want to keep 3-5 years of money in safe and secure interest paying investments......at least initially......to give themselves time to see what it is like living from their own investments as a retired person and how the REALITY of managing their own retirement funds works out.

 

A good day today. I had a nice gain in my ten stocks......Plus.....a beat on the SP500 by 0.36%.

I did have three stocks down today.....AMZN, NKE, and HD. I am very happy with my gain considering that three of my ten stocks were down today.

 

Looks like we might have a good end to the week.....emphasis on...."might". Thank you FED. As usual Powell just confirmed what they have been saying for the past SIX MONTHS......but....for some reason the "professionals" and their buddies in the financial media simply refuse to believe what he says over and over.


Stock market news live updates: Stocks soar after Powell embraces 'disinflation'

https://finance.yahoo.com/news/stock-market-news-live-updates-february-7-2023-120657185.html

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

"U.S. stocks closed out a volatile session sharply higher Tuesday after Federal Reserve Chair Jerome Powell embraced the presence of disinflation in the economy during a speech in Washington, D.C.

The S&P 500 (^GSPC) soared 1.3%, while the Dow Jones Industrial Average (^DJI) jumped 265 points, or 0.7%. The technology-heavy Nasdaq Composite (^IXIC) advanced 1.9%.

In an interview with Carlyle Group co-founder David Rubenstein at the Economic Club of Washington, D.C., Tuesday afternoon, Powell said the "disinflationary process" in the U.S. economy has begun, while maintaining that rate hikes will likely be necessary to bring inflation back to its 2% target.

"We will likely need to do additional rate increases," Powell said, while adding that restoring price stability "is going to take quite a bit of time, and is not going to be smooth."

“The disinflationary process, the process of getting inflation down, has begun, and it's begun in the goods sector,” Powell also said, though adding "it has a long way to go," and "these are the very early stages of disinflation.”

Investors had largely expected the U.S. central bank chief to strike a hawkish tone in his remarks after Friday's blowout jobs report showed payrolls grew by 517,000 in January.

“Powell is in wait-and-see mode," David Russell, vice president of market intelligence at TradeStation said in a note. "He refrained from walking back his disinflation comment. If anything, he reiterated it in a guarded way."

"Today’s comments do nothing to undermine the recent strength in the market," Russell added.

In other central bank news, the Reserve Bank of Australia raised interest rates by 25 basis points to an over 10-year high of 3.35%, following suit on the U.S. Federal Reserve's move last week.

Back in the U.S. stock market, shares of Chinese search engine Baidu (BIDU) jumped 12.2% Tuesday after indicating it’s on track to unveil its ChatGPT-like AI service in March.

Wild swings continued for meme stock Bed Bath & Beyond (BBBY). Shares sank more than 48.6% after the beleaguered retailer announced plans to raise $1 billion through an equity offering. The plunge follows a surge of as much as 120% on Monday.

Shares of education technology company Chegg (CHGG) tanked 17.1% in on the heels of disappointing guidance from executives on sales expectations.

Pinterest's (PINS) stock fell 5.2% after the platform reported quarterly revenue late Monday that missed Wall Street estimates, renewing concerns about weakness in the ad market.

Equity markets have been on a climb higher in 2023, with risk-on sentiment fueled by expectations that waning housing and manufacturing data and a cooldown in inflation would prompt the Federal Reserve to pause and even cut rates sooner than expected.

Minneapolis Federal Reserve President Neel Kashkari said during an interview with CNBC Tuesday morning that Friday's shock jobs data suggests he and his central bank colleagues must stay the course on fighting inflation.

“We know that raising rates can put a lid on inflation,” Kashkari said in an interview on CNBC's “Squawk Box.” “We need to raise rates aggressively to put a ceiling on inflation, then let monetary policy work its way through the economy.”"

MY COMMENT

OK...nothing new. My expectation 2 or 3 more rate increases into the mid 5% range before the FED stops the hikes. So it will be over some time in the next 12-18 weeks. At that point they will sit for the rest of this year and into next year as theyevaluate what is going on......not that they really know or have any ability to control anything.

In other words....as usual....exactly what we already knew.

BUT....I welcome the PSYCHOLOGICAL BOOST to the markets and hopefully the next days which are now....."probably".....more likely to be positive for investors. At the worst....hopefully....the financial media with SHUT UP with the FED fear mongering and rampant speculation about a pivot.

 

Looks like this might just be a new boost to the big tech companies especially GOOGL and MSFT. Time will tell.

Microsoft CEO Nadella calls AI-powered search biggest thing for company since cloud 15 years ago

https://www.cnbc.com/2023/02/07/mic...alls-ai-search-biggest-thing-in-15-years.html

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

"Key Points

• Microsoft’s Satya Nadella told CNBC that AI-powered search is the biggest thing to happen to the company in the nine years he’s been CEO.
• “I have not seen something like this since I would say 2007-2008 when the cloud was just first coming out,” Nadella said.

CEO Satya Nadella said on Tuesday that search powered by artificial intelligence is the biggest thing to happen to his company in the nine years he’s been at the helm.

“I have not seen something like this since I would say 2007-2008, when the cloud was just first coming out,” Nadella told CNBC’s Jon Fortt in an interview.

Microsoft invited reporters to its headquarters in Redmond, Washington, for an event that centered around new AI-powered updates to the company’s Bing search engine and Edge browser. Bing, which is a distant second to Google

in search, will now allow users to chat in a way that provides more detailed answers to queries.

The updates to Bing and Edge will launch on Tuesday on desktop in a limited preview, meaning users will get a finite number of queries to search during the initial period.

Nadella said search is a very profitable business, so these developments reflect a big opportunity for Microsoft.

“I’ve never ever felt this liberated in terms of opportunity in the days ahead,” he told CNBC.

Microsoft’s event Tuesday follows the company’s January announcement regarding a multibillion-dollar investment in ChatGPT-maker OpenAI. The deal marks the third phase of the partnership between the two companies, after Microsoft’s previous investments in 2019 and 2021.

ChatGPT automatically generates text based on written prompts in a fashion that’s much more advanced and creative than past chatbots. The web-based tool went viral after its debut in November. Tech executives and venture capitalists gushed about it on Twitter, even comparing it to Apple’s debut of the iPhone in 2007.

On Monday, Google announced an AI chatbot technology called Bard that will begin rolling out in the coming weeks. Bard will compete directly with ChatGPT.

OpenAI CEO Sam Altman attended Microsoft’s Tuesday event and confirmed that Microsoft incorporated some of OpenAI’s GPT-3.5 language technologies into Bing to improve its capabilities.

“I feel like I’ve been waiting for this for 20 years so I’m very happy it’s here,” Altman said during the presentation.

Nadella was promoted to CEO in 2014 after running the company’s cloud business. He presided over Microsoft’s expensive and risky move from on-premises servers to cloud infrastructure. It turned out to be a massive boon for a company that largely missed the transition to mobile computing.

Microsoft Azure, the centerpiece of the company’s cloud unit, is second to Amazon Web Services and ahead of Google in the cloud infrastructure market.

“You can only be relevant in technology if you are good enough to see the waves of change and then to reorient your technology and innovation agenda and the business model agenda,” Nadella said. “We’ve gone through some very harsh ones. The last one we went through was obviously the mobile and cloud. We caught one, we missed one.”"

MY COMMENT

For better or worse.....we are only scratching the surface on what the impact of computers and AI will be going forward. the key for these BIG CAP TECH companies will be to retain their relevance and keep up over the longer term. That will depend on great management.

 

As to the FED balance sheet.

UPDATE 1-Powell: A "couple of years" before Fed nears end of balance sheet decline

https://finance.yahoo.com/news/1-powell-couple-years-fed-193321888.html

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

"Feb 7 (Reuters) - Federal Reserve Chairman Jerome Powell said Tuesday the U.S. central bank has some distance left to run in terms of shrinking its balance sheet.

When it comes to setting a stopping point for shedding bonds from the central bank's holdings, "we haven’t put a specific target on it,” Powell said at an appearance before the Economic Club of Washington.

"It will be a couple of years" before the balance sheet reduction process concludes, Powell said. Noting that the current effort is passive, Powell also said selling bonds, rather than allowing them to mature and not be replaced, is "not something on the list of active things” officials are considering.

The Fed's process of reducing its holdings of Treasury and mortgage bonds began last summer and is designed to largely on autopilot alongside the central bank's ongoing effort to raise rates to lower high levels of inflation.

As of last autumn, the Fed began to allow just under $100 billion per month of bonds to mature, and it has been sticking to that pace without signaling any looming changes.

The Fed more than doubled the size of its balance sheet since the advent of the coronavirus pandemic. It used bond purchases first to calm markets in the spring of 2020 and then as a form of stimulus to augment the near zero short-term rate target then in place.

The Fed's balance sheet peaked out at right around $9 trillion and is now at about $8.4 trillion. Some market participants had been warning that what they saw as dwindling bank reserves could cause the Fed to end its drawdown this year.

But officials, in recent comments, have said that bank liquidity, when properly measured, is still quite large, which gives the Fed a lot of room to run on cutting holdings."

MY COMMENT

WHATEVER.....most people are not thinking about this in the slightest.