The Long Term Investor

Sorry....I have to zip out of here right now. I have to leave in 10 minutes for a show tonight so I will miss the close. Not that it matters today anyway.

 

Here is the irrelevant economic data today.....that no one will remember or care about a month from now.

Jobs report: US economy adds 311,000 jobs in February, topping expectations

https://finance.yahoo.com/news/february-jobs-report-march-10-2023-124602371.html

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

"The February jobs report showed the U.S. labor market remains strong even in the face of stubborn inflation.

The U.S. economy added 311,000 jobs last month, more than expected, while the unemployment rate ticked higher on a rise in labor force participation. Economists had expected to see 225,000 were added to the economy last month with the unemployment rate holding steady at 3.4%, according to data from Bloomberg.

Here were the key figures investors were looking for in Friday's report, with results compared January's figures:

• Nonfarm payrolls: 311,000 vs. 504,000
  
• Unemployment rate: 3.6% vs. 3.4%
  
• Average hourly earnings, month-on-month: 0.2% vs. 0.3%
  
• Average hourly earnings, year-on-year: 4.6% vs. 4.4%
  
• Labor force participation rate: 62.5% vs. 62.4%
  
• Average weekly hours worked: 34.5 vs. 34.6
  

Friday's report comes less than two weeks before the Federal Reserve's next policy meeting, with markets now expecting the central bank will raise interest rates by a more aggressive 0.50%.

Fed Chair Jay Powell told lawmakers this week "the ultimate level of interest rates is likely to be higher than previously anticipated."

Data from the CME Group ahead of Friday's release showed markets pricing in an 60% of a 0.50% rate hike on March 22."

MY COMMENT

Wake me up when it is all over. Is there anything new here? We have been seeing this sort of data and jobs figures for about a YEAR now. NO.....as usual I do not expect any sort of recession any time soon.

As usual the experts..."the economists".....were once again wrong as usual. Are these people ever right?

 

Wishful thinking is not a substitute for business ability.

Jay Powell now has another problem: Morning Brief

https://finance.yahoo.com/news/jay-powell-now-has-another-problem-morning-brief-103100176.html

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

"For the last year, the Federal Reserve has tried to accomplish one goal, using one tool — lower inflation by raising interest rates.

The result has been benchmark interest rates rising by 4.5% in a year and headline inflation falling from a peak of 9.1% in June to 6.4% as of January. As Fed Chair Jerome Powell reiterated in testimony on Capitol Hill this week, there is still work to be done for the Fed to achieve its goal.

But over the last week, acute challenges at two banks have surfaced another issue now facing the Powell Fed. And that is the stability of the financial system.

On Wednesday, Silvergate Capital (SI), which had become one of the crypto industry's biggest banking partners, announced it will liquidate and wind down operations after suffering significant deposit outflows from its digital asset clients.

That same day, Silicon Valley Bank (SIVB), the preferred banking partner of the venture and startup worlds, announced it would take a $1.8 billion loss while liquidating its entire short-term securities book and raising $2.25 billion fresh capital.

In a letter to investors, CEO Greg Becker assured investors the bank had "ample liquidity," and said it took these actions "because we expect continued higher interest rates, pressured public and private markets, and elevated cash burn levels from our clients as they invest in their businesses."

The Information reported Thursday afternoon that Becker told investors on a call, "I would ask everyone to stay calm and to support us just like we supported you during the challenging times."

Few statements have a tougher audience than investors being told to remain calm in times of market stress.

On Thursday, U.S. stocks got crushed during a steady, relentless sell-off that centered on the financial sector. Regional banks were hammered. Big banks were hammered. The S&P 500 fell 1.8%. Bitcoin fell 7%.

The challenge for Powell, however, is that some of the stress facing Silicon Valley Bank has been induced by the Fed's actions to fight inflation. And the fear is they may not be alone.

In the simplest terms, Silicon Valley Bank took a nearly $2 billion hit selling bonds at a loss to buy different bonds that offer a higher yield. The firm's latest annual report showed the bank owned about $14 billion in Treasury securities with an average maturity between one and five years. Today, one-year Treasury bills yield 5.25%.

One day's drop in the stock market, of course, is not cause for concern about the financial system. Even the liquidation of one bank and deep investor concerns about another need not constitute a Fed-level worry about the U.S. banking system.

But these moves serve as reminders that while the central bank's role in raising or lowering interest rates has become the focal point of investor attention over the last decade, the Fed also serves the central role in stabilizing markets and quelling investor fears during uncertain moments like the present.

Almost exactly three years ago, Powell held an emergency Sunday night call on March 15, 2020, to announce a series of measures aimed at supporting the economy as the pandemic rapidly shut down global business.

On that call, Powell reminded the assembled press, "[That] central banks were originally designed to ...provide liquidity to financial systems in stress, so we take that job very seriously. It's probably the most important thing we're doing now is that."

Rising anxiety in the banking system as the ripples from a crypto collapse in 2022 and the icing over of a red hot venture market pale in comparison to the financial emergency the Fed faced three years ago. But their actions then were a reminder of the central bank's power, and, indeed, its centrality to financial markets.

When the February jobs report is released Friday morning, investors will pore over the data to decipher whether a 0.25% or 0.50% rate hike from the Fed is likely warranted on March 22.

This is the moment markets have been building towards for weeks.

But the unforeseen stress now being injected into the banking system makes Friday and the days ahead notable for the Fed in an entirely different manner.

That presents to Jay Powell another wrinkle in the challenge of trying to bring order to an economy that busted and boomed in a few short months."

MY COMMENT

Well.....businesses fail all the time. Banks fail all the time. These failing banks are very minor players. The outsize importance this story is being given is perhaps the HYPE story of the year.

NO.....there is nothing to see here and nothing Powell can or will do. The FED can not walk and chew gum at the same time. These are empty suit Washington DC bureaucrats......with highly polished resumes....but no real competence. These people are part of the insider group that give each other medals, and honorary degrees, and awards, and shiny sashes to wear. Most of them have ZERO actual business experience or outside of government experience. They are mostly FOOLS and CLUELESS.

 

For those that are MASOCHISTS.....here is more jobs data.

Payrolls rose 311,000 in February, more than expected, as jobs growth stays hot

https://www.cnbc.com/2023/03/10/jobs-report-february-2023.html

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

"Job creation decelerated in February but was still stronger than expected despite Federal Reserve efforts to slow the economy and bring down inflation.

Nonfarm payrolls rose by 311,000 for the month, the Labor Department reported Friday. That was above the 225,000 Dow Jones estimate and a sign that the employment market is still hot.

The unemployment rate rose to 3.6%, above the expectation for 3.4%.

There was some good news on the inflation side, as average hourly earnings rose 4.6% from a year ago, below the estimate for 4.8%. The monthly increase of 0.2% also was below the 0.4% estimate.

Though the jobs number was stronger than expectations, February’s growth represented a deceleration from an unusually strong January. The year opened with a nonfarm payrolls gain of 504,000, a total that was revised down only slightly from the initially reported 517,000. December’s total also was taken down slightly, to 239,000, a decrease of 21,000 from the previous estimate.

Stocks were mixed following the release, while Treasury yields were mostly lower.

Leisure and hospitality led gains, with an increase of 105,000, about in line with the six-month average of 91,000. Retail saw a gain of 50,000, government added 46,000 and professional and business services saw an increase of 45,000.

Information-related jobs declined 25,000, while transportation and warehousing lost 22,000 jobs for the month.

The jobs report comes at a critical time for the U.S. economy, and consequently for Fed policymakers.

Over the past year, the central bank has raised its benchmark interest rate eight times, taking the federal funds rate to a range of 4.5%-4.75%.

As inflation data appeared to cool towards the end of 2022, markets expected the Fed in turn to slow down the pace of its rate hikes. That happened in February, when the Federal Open Market Committee approved a 0.25 percentage point increase and indicated that smaller hikes would be the case going forward.

However, Fed Chairman Jerome Powell this week told Congress that recent metrics show inflation is back on the rise, and if that continues to be the case, he expects rates to rise to a higher level than previously expected. Powell specifically noted the “extremely tight” labor market as a reason why rates are likely to continue rising and stay elevated.

He also indicated that the increases could be higher than the February hike.

Though Powell emphasized that no decision has been made for the March FOMC meeting, markets recoiled at his comments. Stocks sold off sharply, and a gulf between 2- and 10-year Treasury yields widened, a phenomenon known as an inverted yield curve that has preceded all post-World War II recessions."

MY COMMENT

No.....I dont rely on or really care about this sort of data. It is meaningless....it simply is what it is. That assumes that it is even accurate.

Outside of the financial media and the economic insiders.....I dont think I will run into any "normal" or "regular" people anywhere today that will be talking about the jobs figure.

 

Some helpful tax tips from the IRS.

Twitter users erupt at IRS's calls for thieves to report stolen income: 'Good to know'
Some users asked if getaway cars and ski masks are eligible deductibles

https://www.foxbusiness.com/financi...-calls-thieves-report-stolen-income-good-know

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

"The IRS's bewildering rule about self-reporting income from crimes has caused some Twitter users to mock the federal agency.

According to IRS Publication 525, taxpayers are legally required to report the value of whatever property they stole during the tax year.

"If you steal property, you must report its FMV (Fair Market Value) in your income in the year you steal it, unless in the same year you return it to its rightful owner," the rule reads.

The same rule applies to bribery, drug deals and other income-earning crimes.

The IRS purportedly uses the information solely for tax purposes and does not hand over any evidence to law enforcement.

The only situation where law enforcement may have access to the information is through court orders.

"The IRS be like: Get money wherever you can, but I need my cut!" one Twitter user said.

"This is the best thing I've learned in a while," an amused commentator wrote.

"Don't forget to fill out a 1099 after a game of Monopoly," another said facetiously.

Unsurprisingly, many Twitter users humorously pretended to be criminals themselves.

"Does anyone know if you can deduct costs for the getaway car, masks, etc?" one user said.

"In what section do you disclose that you are cheating on your tax return? Asking for a friend," another asked.

Criminals who don't report their income from stolen goods may be penalized. There were 370 tax fraud offenders sentenced in the 2021 fiscal year."

MY COMMENT

CLASSIC.....but this has been the law for a long time.

 

This bank garbage today is a total tempest in a teapot. A small California bank with ties to Silicone Valley companies gets into trouble.....there is a run on the bank basically......and they go under. Not a big deal. It happens very day.

BUT....because this bank is a bank that is linked to Bitcoin and many young tech companies that borrow from it....it is the news of the day.

I had to turn off the TV financial news because every channel is HYPING the potential for a banking collapse. I even heard references to Lehman Bros. You have got to be kidding.

This is the problem with the......"new normal".....financial world right now. It is all basically one big chat room or message board. Rampant rumor mongering, rampant fear mongering. With the most sensational guest you can find....... put on the air to tell us how it is going to be the next world banking collapse.

And of course they all jump on the bandwagon like a bunch of lemmings with the story. The markets jump on board.......and you basically have financial INSANITY.

If this becomes the norm.....even more than it already is.....and the markets disconnect from all reality......we will see the end of the long term historical norms for investing results. At that point everything will simply be speculative gambling and there will not be any rational markets anymore.

This is a perfect recipe to KILL the markets. Companies will not matter, fundamentals will not matter, results will not matter, earnings will not matter......it will ALL be based on speculative fantasy day to day BULL SH*T.

 

In other words to continue......this is not a REAL crisis.....it is a mass psychosis on the part of the markets and especially the financial media. Unfortunately being a sane person in an insane investing world.....does not lead to good investment returns.

If this trend escalates and continues.....there will come a time when the numbers of the INSANE will overwhelm any ability of the few left that are rational, to have any positive impact on the markets or business.

 

To continue.....this is exactly what I mean. This is simply IDIOCY.

Yellen says Treasury Department 'carefully' watching crisis at 'a few banks'

https://finance.yahoo.com/news/yell...watching-crisis-at-a-few-banks-153243680.html

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

"Treasury Secretary Janet Yellen said there are "a few" banks the department is closely watching as a crisis at Silicon Valley Bank roils the financial world.

During a hearing before the House Ways & Means Committee Friday morning, Yellen said she is closely watching Silicon Valley Bank, which is scrambling to raise fresh capital sparking fears that other banks could be forced to take losses and raise cash.

"There are recent developments that concern a few banks that I'm monitoring very carefully and when banks experience financial loss it is and should be a matter of concern," Yellen told lawmakers.

Shares of Silicon Valley Bank's parent company, SVB Financial (SIVB), were halted for trade early Friday after falling 60% on Thursday and another 68% in pre-market trading.

The latest reports from CNBC's David Faber indicated the firm was seeking a buyer after its efforts to raise new capital had failed. On Wednesday, SVB said it would book a $1.8 billion after-tax loss on sales of investments and seek to raise $2.25 billion by selling stock.

Shares were also halted in Signature Bank (SBNY), a New York institution that serves some cryptocurrency clients, after its shares dropped more than 16%.

First Republic Bank (FRC), which serves some companies in the venture world and also targets high-net worth clients from the tech industry, saw shares fall as much as 40% early Friday. Its shares were also halted, along with those of other regional banks Western Alliance Bancorp (WAL) and PacWest Bancorp (PACW).

Concerns about risks to other banks spread on Thursday as stocks of giant financial institutions tumbled. A major bank index fell by the most Thursday in nearly three years. Shares of JPMorgan (JPM) fell 5.41% Thursday and shares were roughly flat during Friday's open. Shares of Bank of America (BAC) fell 6.20% Thursday and opened Friday down as much as 2%.

Yellen's appearance on Capitol Hill also comes after Friday's key February jobs report, which showed the economy added 311,000 new jobs last month as labor market strength persists amid stubbornly high inflation and aggressive rate hikes from the Fed. Speaking about the jobs report on Friday, Yellen said the data showed, "a continued strong labor market putting Americans back to work."

The turmoil at SVB and the broader banking sector, however, appears to have tempered market expectations with data from the CME Group now reflecting a roughly 60% chance the Fed matches its February rate hike of 0.25% on March 22.

'Economic and financial catastrophe'

Yellen's testimony — originally scheduled to address on President Biden’s 2024 proposed budget — also warned lawmakers to raise the debt ceiling to avoid an economic calamity.

"I urge all members of Congress to come together to address the debt limit – without conditions and without waiting until the last minute. …Since 1789, the United States has always paid its bills on time. It must continue to do so," Yellen said.

"In my assessment – and that of economists across the board – a default on our debt would trigger an economic and financial catastrophe."

Asked about prioritizing certain debt payments once Treasury's extraordinary measures run out, Yellen said that's not the solution to raising the debt ceiling.

"Prioritization is simply not paying all of the government's bills when they come due. That really is just default by another name," said Yellen.

"What's critical is that we maintain our commitment to pay all the government's bills when they come due and if we don't do that, and think that there's some shortcut around it that will avoid economic chaos, we're kidding ourselves because not paying the government's bills will produce economic and financial collapse."

Yellen also noted that Fitch Ratings has already said failure to pay all of the government bills would potentially prompt a downgrade of the U.S. government's debt."

MY COMMENT

Perfect timing for this lady to come out and ramp up the fear mongering. You have got to be kidding......this is like throwing gasoline on a fire.

If this does lead to contagion it will NOT be due to actual financial risk....it will be because these MORONS caused a minor bank failure to become a PANIC.

 

Today is a lost cause in the markets due to this......"stuff". Whether we close in the green or in the red.....is irrelevant.....we are watching MASS INSANITY happening in the financial world

 

What we are seeing is typical......banks close and go under....ALL THE TIME. It is not a rare event. That is why we have the FDIC.

I suspect that the link to Silicon Valley and the VC tech world.......is what is driving this stuff. They want a special bailout.....after all........ this little bank is special as are the people that it serves.

SORRY.....businesses and banks fail all the time. AND.....that is a good thing.

This is a bank with ONLY 17 branches. They focus their lending on start-up companies. In other words they are a HIGH RISK lender.

 

In my view is has to do with being a very speculative, high risk lender to start-up tech companies that fail all the time. It is also a classic case of a.....run on a bank.

I dont think there will be any collateral damage that matters in the slightest......when you look back in a month.

This is a perfect example why I NEVER invest in.....BANKS....FINANCIAL COMPANIES....INSURANCE COMPANIES.....AUTO COMPANIES.....DRUG COMPANIES......they are classic boom and bust businesses.

 

I have ignored the markets since this morning. Now looking at my account I see that I was in the red today.....DUH. I did have a couple of stocks that were UP today.....HON and TSLA. The best I could do today was a beat on the SP500 by 0.21%.

 

A DISMAL week for the markets since they were hit by the dismal FED testimony and the bank panic of 2023.

DOW year to date (-3.73%)
DOW for the week (-4.44%)

SP500 year to date +0.58
SP500 for the week (-4.55%)

NASDAQ 100 year to date +8.34%
NASDAQ 100 for the week (-3.77%)

NASDAQ year to date +6.42%
NASDAQ for the week (-4.71%)

RUSSELL year to date +0.65%
RUSSELL for the week (-8.07%)

At least all the averages except for the DOW are still YTD positive......although the SP500 is by the skin of the teeth.