The Long Term Investor

AMEN Brother.

We......the typical retail investor in it for the long term...... are a HUGE silent majority in the markets. It is very telling how people invest their retirement money. It is......very rare......to see anyone trading or day trading their retirement money.

Of course......"we".....are the ones that are being punished by the delusional FED policy of constantly TRASHING the markets.

I pity all the Baby Boomers that are retiring at this moment......after the FED trashed their accounts every time the markets tried to go back up over the past year.

 

Good for you Zukodany.

I am seeing the same thing as a collector or art and other items. Prices are strong....especially for QUALITY. I have seen ZERO drop in prices over the past couple of years. There is a HUGE amount of money chasing quality items.

So much for the FED......there is plenty of money sloshing around out there in the economy right now.

 

A negative open....but....nowhere near as bad as thee futures were indicating. So.....since I have no choice anyway.....I will take it.

 

Here is my Home Depot earnings reported before the bell today.

Home Depot misses revenue expectations for the first time since 2019

https://www.cnbc.com/2023/02/21/home-depot-hd-q4-earnings-2022.html

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

"Key Points

• Home Depot missed Wall Street’s revenue expectations for the first time since November 2019.
• The home improvement retailer provided a muted outlook for fiscal 2023 and expects sales growth to be approximately flat.
• The company attributed the flat outlook to a tougher consumer backdrop and a pivot away from goods toward services.

Home Depot’s revenue fell short of Wall Street’s estimates in its fiscal fourth-quarter earnings report Tuesday.

The company also provided a muted outlook for the next year amid a tough consumer backdrop.

Here’s what Home Depot posted, compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:

• Earnings per share: $3.30 vs. $3.28 expected
• Revenue: $35.83 billion vs. $35.97 billion expected

It’s the first time Home Depot missed Wall Street’s revenue expectations since November 2019, before the Covid pandemic. Shares of the company fell Tuesday morning.

In the quarter ended Jan. 29, Home Depot reported $35.83 billion in sales, up 0.3% from the year ago period, which saw $35.72 billion in revenue. The retailer’s reported net income of $3.36 billion, or $3.30 per share, was also 0.3% higher than the year ago period, which was $3.35 billion, or $3.21 per share.

Amid record levels of inflation, a shift in consumer behavior and a housing market slowdown, the home improvement retailer has repeatedly beat the Street’s expectations over the last year but fell a bit short in sales estimates.

The company attributed that solely to a drop in lumber costs, which had surged in price due to nationwide shortages in fiscal 2021. The drop in lumber negatively impacted comparable sales by 0.7%, it said.

“But for that we would have been right in line with our expectations,” Home Depot CFO Richard McPhail told CNBC.

“After two years of high volatility, we’ve seen a little more stability in recent weeks and months, but it’s hard to predict lumber prices.”

Home Depot said it expects sales and comparable sales to be approximately flat for the new fiscal year. It projects an operating margin rate of about 14.5%, which is impacted by a $1 billion investment Home Depot is making in wage growth.

Home Depot expects a mid-single-digit percent decline in diluted earnings per share.

The retailer issued the muted outlook because it expects some pressure in the goods sector and flat consumer spending, McPhail said.

“So we work from kind of a fundamental assumption that consumer spending will be flat. We know that our market has seen a gradual shift that reflects the broader shift in the economy, in consumer spending from goods to services,” he said.

“During Covid, we saw a shift into goods. Over the last really almost two years, we’ve seen a gradual shift back away from goods into services and we think our market has reflected that and we think that that dynamic could put some pressure on our market.”

These days, shoppers are using their discretionary dollars toward experiences and travel as many burn through their savings amid consistent inflation.

Still, McPhail insisted investments Home Depot has made positions it to “take share in any environment” and the company is confident it’ll overcome any market pressures.

Pressure catches up to Home Depot

Total customer transactions dropped 6% in the quarter compared with the year ago period but the average ticket cost – $90.05 – was up 5.8%.

“After a year of defying gravity, the slowing economy and pressures on consumers have finally caught up with Home Depot,” Neil Saunders, managing director of GlobalData, said in a statement.

“To be fair, the final quarter results are not terrible – especially as they come off the back of a long period of extremely good growth – but they nevertheless represent a material slowdown and are the worst quarterly performance in two years.”

Saunders said Home Depot’s earnings reflect a slowdown in the housing market, which is a key driver of spend for the home improvement sector.

“Unfortunately for Home Depot, the dip in the housing market also coincided with a fall in the number of people undertaking DIY,” said Saunders.

“Our data show that the number of improvement projects done by consumers fell over the prior year as people conserved cash for other activities over the holiday period.”

Still, despite a relatively stagnant housing market following a red-hot 2021, the retailer thinks high mortgage rates could prove beneficial for its results.

“As mortgage rates increase, we see a kind of an interesting dynamic in homeowners who are happy with their fixed-rate mortgage and then decided to improve in place,” said McPhail.

“You just don’t have very many willing sellers in the market today ... that is driving the tendency to improve in place.”

Overall, the company saw $157.4 billion in sales in fiscal 2022, up 4.1% from fiscal 2021, and $17.1 billion in profit, a small jump from $16.4 billion.

The company will host an earnings call with investors at 9 a.m. ET."

MY COMMENT

Not bad in my opinion. Sales were up, profit was up, EPS was up, Revenue was slightly down. Average ticket up, and operating margin of about 14.5%. Actually writing this it sounds ok.

As the company said the data is skewed by the extreme drop in lumber prices as it normalizes.

I continue to like this long term holding. It is the dominant leader in their area of business with no end in sight. A great company with superb management.

 

The markets today.

Stock market news today: Stocks slide after economic warnings from Walmart, Home Depot
Here's what's moving markets on Tuesday, February 21, 2023.

https://finance.yahoo.com/news/stock-market-news-today-february-21-2023-110046104.html

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

"U.S. stocks were in a downswing Tuesday morning to start a busy holiday-shortened week as investors weighed earnings letdowns from big-box retailers and considered the prospect of higher-for-longer interest rates.

The U.S. stock and bond markets were closed on Monday for Presidents Day.

The S&P 500 (^GSPC) fell 0.9%, while the Dow Jones Industrial Average (^DJI) dropped roughly 300 points, or 0.9%. The technology-heavy Nasdaq Composite (^IXIC) sank 1.3%.

Investors evaluated quarterly financials from Walmart (WMT) and the Home Depot (HD) for updates on the health of the U.S. consumer, which has so far remained resilient in the face of stubbornly high inflation — most recently evidenced by January's stunning retail sales data out last week.

Walmart, however, warned Tuesday morning that it was cautious about the outlook for the economy and said consumers pressured by inflation shopping for lower-priced items may negatively impact margins. The retail giant also issued full-year earnings guidance below Wall Street estimates. Shares declined about 1.8% at the start of the session.

"The consumer is still very pressured, and if you look at economic indicators, balance sheets are running thinner and savings rates are declining relative to previous periods," Walmart chief financial officer John Rainey said during an earnings call. "And so that’s why we take a pretty cautious outlook on the rest of the year."

The picture was similar for home improvement retailer The Home Depot, which also reported disappointing fourth quarter results and said it was in for a challenging 2023. Shares slid 3.8%.

On Friday, the Dow Jones Industrial Average logged its third-straight losing week for the first time since September, closing down 0.1% for the five-day trading period. The S&P 500 fell 0.3% for the week, its second consecutive week in the red, while the Nasdaq was an outlier, notching a weekly gain of 0.6%.

"There’s a quiet pulse of positivity on the markets with investors still cautious about the direction of interest rates in the United States, but hopeful that recovery elsewhere will lend a hand to trade," Susannah Streeter, head of money and markets at Hargreaves Lansdown, said in a note. "Worries are still hanging around that US inflation will still take significant time to be whipped into a shape which will mean higher rates will have to linger for longer, sentiment which has been supporting the dollar."

In other areas of the market, Treasury yields ascended, with the benchmark 10-year note rising 5 basis points to yield 3.88% early in the day. The U.S. dollar also climbed higher. On the commodities side, West Texas Intermediate (WTI) crude futures — the U.S. oil benchmark — gained 0.9% to trade around $77 per barrel.

Later in the week, Wall Street will get a readout of minutes from the Federal Open Market Committee's last meeting earlier this month.

The release will offer clues about the next rate increase in March, which some investors are now expecting to be 50 basis points after strong economic data and hotter-than-projected inflation readings.

Last week, Fed President Loretta Mester said she would have favored raising interest rates by 50 basis points Feb. 1 rather than the smaller quarter-point rate increase her colleagues opted for.

Traders fretting over inflation and the path forward for interest rates also await the Personal Consumption Expenditures (PCE) price index — the Fed's most closely watched assessment of how quickly prices are rising across the economy — which is set for release Friday morning."

MY COMMENT

Really nothing to see today in the markets. The Walmart and Home Depot earnings and commentary are being hyped to the down side, along with inflation and interest rates.....as the typical fear mongering continues.

 

Here is an alternative view.....interesting how two sources can view the same event.

Home Depot Beats Earnings Expectations. Why the Stock Is Falling.

https://finance.yahoo.com/m/ff27c3ed-63f9-32de-8110-36175d0bf90e/home-depot-beats-earnings.html

"Home Depot beat fourth-quarter earnings expectations but missed on revenue and issued disappointing guidance for fiscal 2023. “The softness related to the housing and macro environment should eventually weigh on the broader home improvement demand and HD (and others) would likely not be insulated from industrywide headwinds,” wrote Credit Suisse analyst Karen Short last week."

MY COMMENT

YEP.......amazing difference in tone and content. Although I can not post the entire article.....I have viewed most of it.

 

Want another example of media......here you go.

Home Depot's strong quarter overshadowed by 2023 outlook

https://finance.yahoo.com/news/home-depots-strong-quarter-overshadowed-120131650.html

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

"ATLANTA (AP) — The Home Depot posted strong profits in its final quarter of 2022 but said it expects profits to slip this year, sending shares of the home improvement retailer skidding at the opening bell Tuesday.

Home Depot has excelled over the past several year with so many people hunkered down at home, or searching for a new home in a pandemic. That boom has eased for a number of reasons and Americans are spending more on services outside the home now, diminishing some of the supercharged ring-ups of recent years at Home Depot.

The Atlanta company had a fourth-quarter profit of $3.36 billion, or $3.30 per share, which is 3 cents better than Wall Street had expected, according to a survey of analysts by Zacks Investment Research.

Quarterly revenue of $35.83 billion was just shy of forecasts, but the focus was on the retailer’s expectations for 2023.

Home Depot expects a decline in annual per-share earnings in the mid-single-digit percentage, which caught industry analysts off guard. Wall Street was also projecting a slight uptick in sales, but Home Depot said that would likely be flat.

The company also said Tuesday that it would spend $1 billion on wage increases for its U.S. and Canadian hourly workers, starting this month.

Starting pay will be at least $15 per hour in all markets.

Shares fell almost 4% when markets opened.

Home Depot posted huge numbers during the pandemic as millions stuck at home either reworked the space where they lived, or found more spacious accommodations. All of that put the world's largest home improvement retailer in high demand, both for home owners, and on Wall Street.

The global economy, however, has been distorted as it tries to put the pandemic behind it, with inflation elevated everywhere and the booming housing market cooling down, partly due to actions taken by the Federal Reserve to cool inflation, namely raising interest rates.

U.S. home sales tumbled to the slowest pace in nearly a decade as soaring mortgage rates and sky high prices in 2022 pushed homeownership out of reach for many Americans.

“After a year of defying gravity, the slowing economy and pressures on consumers have finally caught up with Home Depot,” said Neil Saunders, managing director of GlobalData. “To be fair, the final quarter results are not terrible – especially as they come off the back of a long period of extremely good growth – but they nevertheless represent a material slowdown and are the worst quarterly performance in two years.”

The company also said it would increase its quarterly dividend by 10%, to $2.09, for an annual dividend of $8.36 per share."

MY COMMENT

This is what the story looks like without all the breathless headlines and fear mongering. These three articles are a very nice little lesson in media and perception by investors.

 

If you want to live in the world of REALITY.......the "average" investor is siting and doing nothing because they are long term. The day to day media focus is on the story lines and topics that are being driven by the short term and day traders. Once in a while the two align....most of the time they do not.

So as usual....it is a question of......are you a "trader".....or......are you an "investor".

 

A wasted day today. I ended the day with every stock down for the day. Plus....I got beat by the SP500 by 0.91%.

A good day to have out of the way as we move forward......as usual.

 

Simply a ridiculous day today.

Dow closes nearly 700 points lower in broad selloff, as all indexes cap their worst day of 2023: Live updates

https://www.cnbc.com/2023/02/20/stock-market-today-live-updates.html

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

"U.S. stocks dropped Tuesday as higher rates continue to pressure market sentiment, and the latest batch of retail earnings raised concern about the state of the consumer.

The Dow Jones Industrial Average dropped 697.10 points, or 2.0%, to close at 33,129.59. This was the index’s worst downturn since Dec. 15, when it fell 2.3%. The S&P 500 slid 2.0% to close 3,997.34, marking its worst day since Dec. 15, when it fell 2.5%. All sectors ended lower, with discretionary stocks seeing the largest decline of 3.2%. The tech-heavy Nasdaq Composite
pulled back by 2.5%, ending at 11,492.30.



CNBC

The benchmark 10-year Treasury yield climbed to 3.9%, while the 2-year rate advanced to 4.7%. Both rates also reached levels not seen since November, as traders grappled with hotter-than-expected inflation data. Traders are worried that stubborn inflation will lead the Federal Reserve to keep rates higher for longer — which could tip the economy into a recession.

“I think it’s the equity markets that finally caught up to what the Treasury markets have been saying for a couple of weeks,” said B. Riley Wealth’s chief market strategist Art Hogan. “We’ve had a string of better-than-expected economic data. With every new data point, we saw a tick up in yields in the Treasury market.”

Hogan added that rather than one major catalyst for the market downturn, the cumulative effect of the data and the Fed’s messaging caused investors to take notice.

“Now, I think the equity market is catching up to the fact that the Fed speakers mean business, and this data may well mean higher-for-longer interest rates … It’s just a catchup that was overdue,” he continued.

Home Depot as the worst-performing Dow member, losing 7% after the home improvement retailer posted weaker-than-expected revenue for the fourth quarter. The company also issued a muted outlook.

The Fed on Wednesday is scheduled to release the minutes from its meeting of Jan. 31 and Feb. 1. The central bank hiked rates by 25 basis points after that meeting.

Opportunities for upsides in the market still ahead, according to KKM Financial

KKM Financial CEO Jeff Kilburg thinks that investors should still remain optimistic despite the ongoing market downturn.

Kilburg believes that the uptick in the bond market is attributable to a “lag effect” from higher Fed rates rather than an indication of a bear market, adding that the 10-year note is “a tremendous buying opportunity” with the yield this high.

“The market seems [composed] despite the fact that it’s going lower at the current moment — this is just the way some investors got ahead of themselves,” Kilburg said. “There is some emotion in the market, but this downdraft is going to be bought. It’s still buoyant.”

Markets are beginning to listen to the Federal Reserve, says LPL Financial

Markets have started to listen to the Federal Reserve’s message, LPL Financial said on Tuesday.

Strategists Jeffrey Buchbinder and Quincy Krosby wrote that recent economic indicators, including the Consumer Price Index and retail sales, show that inflation is still inching higher.

“The fed funds futures market quickly adjusted probabilities as well, pricing in a potential third interest rate hike at the Fed’s June meeting,” the strategists wrote.

“What has caught the market’s attention, however, is the slight probability for a 50 basis point rate hike at the March meeting has been climbing higher, as two non-voting members of the Federal Open Market Committee (FOMC), Loretta Mester and James Bullard, made comments suggesting a 50 basis point rate hike in March may be necessary to help tackle inflation. Markets are listening,” they added.

Investors will be looking toward important economic data this week that will give insight into how the Fed will continue with its monetary policy. February’s GDP growth rate will be released on Thursday, as well as the Personal Consumption Expenditures Price Index (PCE) on Friday."

MY COMMENT


YAWN.......as usual. It does not matter if the next rate hike is 0.25% or 0.50%. In the end the FED is going to end up at the same place.....between 5.5% and 6%....after another two or three rate hikes. If the next hike is 0.50%....it simply means that we will hit the FED rate target one FED meeting sooner and will go into pause mode.

As usual.....I can not believe there is a single person invested that does how know what the FED is going to do. So this is just meaningless DRAMA.......as is typical in the short term.

Wake me up when it is over.

 

Since I am bored with the markets today.

How do rich people avoid taxes? Wealthy Americans skirt $160 billion a year in tax payment

https://finance.yahoo.com/news/rich-people-avoid-taxes-wealthy-192633039.html

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

"More than $160 billion in tax revenue is lost every year because the top 1% finds ways to avoid paying “their fair share,” according to academic research cited by the Treasury Department.

What tactics, though, do uber-wealthy people use to avoid the taxes?

It turns out that not only can they afford tax attorneys, accountants, and estate planners, but there are also some tax benefits that require lots of money to even access. We’ll shed light on some of those strategies available only to the extremely rich.

“As long as it’s done legitimately and there’s no fraud, I’m okay with it,” said Ed Smith, senior tax and estate planner at Janney Montgomery Scott.

How much do rich people avoid in taxes?

According to U.S. Treasury estimates, the top 1% of wealthy people underpay their taxes by $163 billion annually.

How the super-rich avoid paying taxes

• Foundations
  
• Gifting
  
• Family offices
  
• Investments
  
• Moving residency
  

1. Foundations: Some begin with as little as $250,000, but a more feasible amount begins in the millions.

• Immediate income tax deduction of up to 30% of adjusted gross income (AGI) for your contribution but only distribute about 5% each year for charitable purposes. Because that 5% is calculated off the previous year’s assets, the first year requires no distribution.
  
  
• Avoid high capital gains tax and grow money tax efficiently. You can deduct the full fair-market value of the stock you contribute and not pay capital gains tax. If the foundation sells, it only pays 1.39% excise tax on the capital gains.
  

Example: By investing $250,000 in a private foundation each year for five years, earning 8% annually, yields about $1.43 million after excise taxes and minimum annual distributions of 5% to charitable activities. Contrast this with $1.38 million had the money been invested in a taxable account and paid capital gains taxes along the way.

2. Gifting:

• Annual gift tax exclusion. In 2022, the limit was $16,000 and in 2023, it’s $17,000 per person. “If you have three kids and 10 grandkids, times two (me and spouse), that’s $34,000 per year to all 13 people that’s out of your estate and a tax-free gift,” said David Handler, Trusts and Estates Practice Group partner at Kirkland & Ellis LLP.
  
  
• Lifetime gift tax exclusion, which is separate from the annual gift. For 2023, it’s $12.92 million ($25.84 million for a married couple), and that amount generally rises each year based on inflation.
  

Note: The 2017 Tax Cuts and Jobs Act (TCJA) doubled the lifetime gift tax amount until December 31, 2025. The amount reverts to the pre-TCJA amount of $5 million, adjusted for inflation, unless Congress extends it.

3. Family office: Typically, you need at least $100 million in assets to create a single-family office.

If properly structured, it can offer personalized services that include investment management, financial planning, estate and tax planning, philanthropic investing, concierge services, and more for family members with all the tax deductions of a business. The TCJA stopped individual taxpayers from deducting investment, accounting, tax and similar advisory fees until 2025, but a family office might be able to take them.

“Big wealthy families have the capability to do this if they all agree and get along by making it a business and deducting what would be non-deductible,” said Ed Smith, senior tax and estate planner at Janney Montgomery Scott.

Bonus: if your kids have skills that can be used in the family office or other business, you can hire them and pay them a hefty salary that’s expensed for the business and passed on to the kids, Smith said.

4. Investments:

The average U.S. chief executive salary as of Jan. 26 was $812,100, according to Salary.com. How can that be when we always hear that CEOs earn millions per year?

In contrast to the lower 99% who earn most of their income from wages and salaries, the top 1% earn most of their income from investments. From work, they may receive deferred compensation, stock or stock options, and other benefits that aren't taxable right away. Outside of work, they have more investments that might generate interest, dividends, capital gains or rent if they own real estate.

Note: Real estate investments offer another benefit because they can be depreciated and deducted from federal income tax -- another tactic used by wealthy people.

5. Changing residency:

“Jake Paul promoted it with a whole new section of the population,” said tax attorney Adam Brewer.

Professional boxer and American social media personalities Paul and his brother Logan, who is also an actor and wrestler, moved to Puerto Rico partly to avoid high American taxes.

Puerto Rico is particularly attractive because U.S. citizens who become bona fide Puerto Rican residents – simply relocating doesn’t count -- can keep their U.S. citizenship, avoid U.S. federal income tax on capital gains, including U.S.-source capital gains, and avoid paying any income tax on interest and dividends from Puerto Rican sources.

Normally, U.S. taxpayers would have to give up their U.S. citizenship or green card to reap federal tax benefits.

Not everyone’s ready to take that leap, though. ”A lot of people move to avoid state income tax,” Brewer said.

If you're a big earner, you could benefit from no income tax especially since the Tax Cuts and Jobs Act capped at $10,000 how much state and local taxes (SALT) you can deduct from your federal taxes through 2025. If Congress doesn’t act to keep this cap, SALT deductions will revert to unlimited.

States without income tax:

1. Alaska
   
   
2. Florida
   
   
3. Nevada
   
   
4. New Hampshire
   
   
5. South Dakota
   
   
6. Tennessee
   
   
7. Texas
   
   
8. Washington
   
   
9. Wyoming
   

Can we get rich people to pay more taxes?

These are just a handful of ways ultra-wealthy people can legally avoid taxes. Although President Joe Biden proposed a national wealth tax when he took office, that's gone nowhere and now some states are trying to impose their own.

California, Connecticut, Hawaii, Illinois, Maryland, Minnesota, New York and Washington are introducing proposals to tax the rich. Each state has its own approach, but typical strategies include taxing assets and lowering the threshold for estate taxes."

MY COMMENT

Sorry....this is not tax avoidance.....it is simply doing what is legally allowed under the tax code. If the congress really wanted to they could close all these.....but they dont. After all.......many of the people in congress are rich themselves and using these same legal tactics.

AND....do I want the super rich to pay more taxes......NO. Government is the problem and they will simply squander more money. The less money we can pay the government....the more money will be invested in the economy, jobs, business, investments, real property, etc, etc, etc. ALL to the benefit of the country and everyone in it.

 

It is amazing to me all the "stuff" you see all the time about wanting the....so called "rich"....to pay more taxes. After all.....the money belongs to the government.....right?

On the other hand it is always amazing to me when I see someone like Bill Gates or others.....talking about how they think their taxes should be higher. Ok....get rid of your foundation, your family office, your estate and tax planing.....and you will get your wish. Of course it never happens.

The real ........VICTIMS......of government and tax policy are the upper middle class and small business owners who end up paying the VAST majority of income taxes.

In the end it is very simple.......taxes are too high for everyone, there is too much government regulation, there is too much government spending, there are too many incentives for people to not work hard, government is too big and bloated. During the .......few.......rare......times when we see the above actually acted on.....the economy BOOMS.

 

This little headline is off a bit.

Stock market news today: Stocks edge higher after sharp sell-off

https://finance.yahoo.com/news/stock-market-news-today-february-22-2023-120842564.html

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

"U.S. stocks rose modestly early Wednesday following a broad-based sell-off to start the short week as investors await a readout of the Federal Reserve's latest meeting minutes due out in the afternoon.

The S&P 500 (^GSPC) teetered up 0.1%, while the Dow Jones Industrial Average (^DJI) added about 50 points, or 0.2%. The technology-heavy Nasdaq Composite (^IXIC) gained 0.4%.

Coinbase (COIN) was among morning movers, rising 3.5% after the cryptocurrency exchange reported fourth-quarter results that beat Wall Street estimates and losses for the full year that were narrower than feared.

Elsewhere in specific names, Palo Alto Networks' (PANW) stock jumped nearly 12% after the cybersecurity firm raised its annual profit outlook and said it was working on managing costs.

Chinese search engine Baidu (BIDU) reported better-than-expected fourth quarter results, boosted by strength in its cloud, advertising and artificial intelligence segments. Shares climbed 6%.

Meme stock darling AMC Entertainment (AMC) was on watch after the Allegheny County Employees’ Retirement System filed a class action lawsuit in Delaware alleging the movie theater company created preferred shares without their permission. The stock rose about 3.7% Wednesday morning.

In the bond market, Treasury yields were steady early into the day after rising sharply Tuesday to the highest levels since November.

The moves follow a steep sell-off Tuesday that saw the S&P 500 nosedive 2% below 4,000, the Dow wipe out 700 points and the Nasdaq plunge 2.5% — the moves coming as investors adjust their expectations to higher interest rates for longer.

St. Louis Fed President James Bullard in a televised interview with CNBC Wednesday morning said the U.S. central bank must bring the federal funds rate to a range of 5.25% to 5.5% in order to bring inflation back down to its 2% target.

New York Fed President John Williams is also slated to speak later in the day. In a speech earlier this month, he asserted that Fed officials plan to stay the course on their rate-hiking campaign until inflation falls down to their 2% target.

Minutes from the Federal Open Market Committee's (FOMC) meeting Jan. 31-Feb. 1 will offer insight into the thinking behind officials' 25-basis-point interest rate increase earlier in the month. Cleveland Fed President Loretta Mester admitted in a speech last week she would have favored raising interest rates by 0.50% but officials did not want to surprise the markets, which were pricing in 25 basis points.

"While the stock market has staged an impressive rebound so far this year, markets are still trying to adjust to the reality that the Federal Reserve is unlikely to pivot and is instead still focused on fighting inflation, which suggests that investors should be prepared for interest rates to stay higher for longer," Carol Schleif, chief investment officer of BMO Family Office said in a note.

"Wednesday's FOMC minutes report is bound to reveal a closer look into the Fed's thinking, especially given the recently released inflation and jobs numbers, which are still elevated and illustrative of a hot economy."

Wall Street banks have revised their expectations for upcoming rate hikes by the Federal Reserve.

Teams at Goldman Sachs and Bank of America said last week they estimate three more rate increases this year. Ahead of February's interest rate increase, some market participants had seen that move potentially marking the end of the Fed's rate hiking cycle."

MY COMMENT

The SEINFELD MARKETS continue.......a market that is all about NOTHING. Today is a particular day about nothing. Absolutely nothing in the article about anything important going on today.

Nothing is happening except for the FED being out in force talking us down and trashing the markets.....as usual. In addition the GASP......big BREATHLESS.....event of the day is the release of the "old" FED minutes. Old news since the reflect the prior rate increase and anything in them has been talked to death by now.

Simply the daily insanity of the short term market action based on.........nothing.

 

I like this little article.

Why the New Bull Market Breakout Is the Real Deal
If this is the start of a new bull market, some investors will make fortunes this year

https://investorplace.com/hypergrow...he-new-bull-market-breakout-is-the-real-deal/

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

• The stock market just did something it has only done 10 times before over the past 70 years. And every time it has, stocks went on to soar over the next few months.
• Since 1950, the S&P 500 has risen 6% or more in January in just 10 separate years. And every single time, stocks didn’t stop rallying after January; they kept rallying for the rest of the year, with an average return of 23%.
• The results are even better when stocks popped in January after having a bad showing in the previous year – the exact situation we have in 2023.

After a red-hot start to the year, the stock market stalled out in February. And now some investors are questioning whether what we’ve been seeing is a new bull market breakout – or a bear market fake-out.

I have one chart that decidedly proves the bear market is truly over.

In it, we can see that the stock market just did something it has only done 10 times before over the past 70 years. And every time it has, stocks went on to soar over the next few months.

That “something” is having a red-hot January.

The S&P 500 popped 6.2% in January – one of its best January performances ever. In fact, since 1950, the S&P 500 has risen 6% or more in January in just 10 separate years.

And every single time, stocks didn’t stop rallying after January. They kept rallying for the rest of the year, with an average return of 23%. The only notable exception here is 1987, in which stocks rallied up until Oct. 19, 1987 – better known as “Black Monday” – which resulted in just a 2% gain on the year.

The results are even better when stocks popped in January after having a bad showing in the previous year – the exact situation we have in 2023.

That has happened four times since 1950. Each time, stocks rose by more than 20% through the entire year, with an average annual return of 26%!




The Final Word on the New Bull Market

So, if you’re worried that the stock market’s big January performance was just another bear market rally, worry not. Barring a black swan event, history says there’s a very good chance this is the start of a big stock market breakout that lasts for the rest of the year, at least.

If this is the start of a new bull market, then some investors will make fortunes this year.

Simply consider that back in 2020 – the last time a new bull market emerged – more than 20 stocks rose 1,000%-plus in that year.

Already here in 2023, two stocks have soared more than 1,000%.

Most years, it is impossible to find stocks that soar 10X in less than 12 months. But that’s not the case during times like 2023; not when bear markets become bull markets. In those rare years, it is actually very possible to find stocks that rise 10X in 12 months."

MY COMMENT

I agree with this little article in concept. BUT......in the end since I am invested all the time it really does not matter.....right or wrong.....for me, it is all about the long term results.

My primary rule....I have to be in the markets to get the long term market returns.

 

This is good news for the markets.

Treasury yields fall as investors await Fed meeting minutes

https://www.cnbc.com/2023/02/22/us-treasury-yields-investors-anticipate-fed-meeting-minutes.html

"U.S. Treasury yields fell on Wednesday as investors awaited the release of the Federal Reserve’s latest meeting minutes and assessed the outlook for monetary policy.

At 10:30 a.m. ET, the yield on the 10-year Treasury was down 4 basis points at 3.914% after hitting its highest level since November earlier in the day. The 2-year Treasury yield was last trading at around 4.66%, down 4 basis points.

Yields and prices move in opposite directions. One basis point is equivalent to 0.01%.

Treasurys
TICKER COMPANY YIELD CHANGE %CHANGE
US1M
U.S. 1 Month Treasury 4.567 -0.019 0
US3M
U.S. 3 Month Treasury 4.833 -0.001 0
US6M
U.S. 6 Month Treasury 5.097 -0.013 0
US1Y
U.S. 1 Year Treasury 5.04 -0.028 0
US2Y
U.S. 2 Year Treasury 4.662 -0.042 0
US10Y
U.S. 10 Year Treasury 3.898 -0.055 0
US30Y
U.S. 30 Year Treasury 3.912 -0.064 0

Investors considered what the Fed’s next policy moves might be, including regarding interest rates, after various Fed officials hinted that further increases could be on the horizon.

Many are hoping for fresh clues on Wednesday, when the minutes from the central bank’s last meeting on Jan. 31 and Feb. 1 are due to be published. The Fed hiked interest rates by 25 basis points then, though several central bank officials confirmed they were in favor of a 50 basis point increase.

It was the eighth consecutive rate hike as the Fed’s fight against persistently high inflation continued.

Earlier this month, both consumer and wholesale inflation readings came in higher than expected on a monthly basis for January. Meanwhile, Fed speakers indicated that economic data will form the basis for future policy decisions, sparking concerns about further, and potentially steeper, rate increases.

Many investors are concerned about the impact of high interest rates on the U.S. economy and fear that the pace of rate hikes could lead to a recession."

MY COMMENT

It is amazing to me that investors are so concerned with rates like the Ten Year that are still at historic LOW levels. It is also amazing to me that no one points this out. Everyone simply continues with the FANTASY that rates are......high.

Welcome to the modern world of.......IGNORANCE.

Actually.....in a world where everyone refuses to see reality......there is no reality....except for whatever the consensus says reality is at the moment.