Seems WAY LATE to me....but better late than never. It’s Time to Rethink Love for Cash With Fed Most Likely ‘Done’ https://finance.yahoo.com/news/time-rethink-love-cash-fed-200000526.html (BOLD is my opinion OR what I consider important content) "(Bloomberg) -- Wall Street investors sitting on a pile of cash could start considering other opportunities, with the Federal Reserve possibly heading for a pause in interest-rate hikes, according to Tom Kennedy, chief investment strategist for global wealth management at J.P. Morgan. “Cash very rarely outperforms, and it takes a long time for rates to go up, but they can come down really fast,” Kennedy said on the What Goes Up Podcast. He also estimated that his company’s clients are the most overweight cash now than they’ve been in a decade. Here are some highlights of the conversation, which have been condensed and edited for clarity. Click here to listen to the full podcast or subscribe below on Apple Podcasts, Spotify or wherever you listen. Q: What do you expect from the Fed going forward? A: The Fed has been on a five-step journey to bring inflation down toward trend. The first step is to tighten financial conditions. The primary tool to do that is to hike rates. And for all of us regular people, that should change your decision. Step two is those rate hikes impact the most interest-rate-sensitive sectors of the world. When interest rates go up, housing is the part of the economy that tends to respond first. Home-sale prices in America are going down sequentially — not a lot. Home prices went up a lot, they’re coming down a little bit. But it’s evidence now that rates are high enough and people need to change their decisions. It’s a very short cycle and we have seen the impact there. So step one is raise rates. The Fed did that — 500 basis points. Step two is the most interest-rate-sensitive sectors respond — we’re there. Step three is now those high rates have to impact corporations. How do rates do that? Higher rates actually limit the ability to borrow money and do capital investment. J.P. Morgan does billions of dollars of capital investment every year. If rates are too high, we can’t borrow and can’t do the capital investment. If that’s true, we’re taking money or revenue from another business and so on. We’re in that phase. And when revenues in the system start to slow, as we’ve seen in in the S&P 500 as an example — in Q1 revenues relative to year ago are down 4%, give or take. What do businesses do? They tend to defend their earnings and they can either cut capex more or more likely end up having to do some sort of layoffs — and then finally inflation comes down. So a five step process, I think we’re about halfway there. We should expect to see some level of layoffs in the back half of this year. Q: You say that your clients are the most overweight cash they’ve been in the last 10 years. I’m wondering — for somebody who is in cash right now, what are you recommending that they actually be doing? A: The first is to acknowledge why they have such overweights to cash. For the first time since 2006, you can get 5% yields risk-free. A really important anchor point is to say, well, for the last 10 years I’ve been really investing in equities. Great — they’ve done very well for you. Over a long horizon, say since the year 2000, the S&P 500 has annualized you 7%, give or take. Wow, man, that felt great. Well, now you can take almost no risk or near-zero risk and get 5%. So the raising of cash makes sense to me. But is it possible that a 5% rate, which is only an overnight rate, can change and change very quickly? Think yes. More likely than not, I think the Fed is done with the hiking cycle. Rates are restrictive enough, the employment picture’s still strong, things are softening. But you’re also getting an inflation stabilization, which means that they may not need to chase it. So I really challenge clients: I know you love 5% overnight. If you love it overnight, why don’t you lock in that yield for three, four, five years? Cash very rarely outperforms, and it takes a long time for rates to go up, but they can come down really fast. The last seven business cycles, when you have the last rate hike from the Fed, in the two years after that, cash tends to underperform duration assets by 14%. Q: Where do you think investors can put money to work right now? A: Year to date, the S&P 500 has performed well. The top mega-cap names — let’s not even call them tech names — have pulled the index higher. Over a longer horizon, let’s say the last year, the last 15 months, the S&P 500 been trading in a very tight range. The same can be said about bonds. So in a late-cycle environment, you have to be active, you have to be using statistical valuation tools to try to navigate this process. First question is what’s inexpensive? If we’re worried about a recession, what’s pricing in that risk already? Mid-cap stocks in America, European stocks. What’s really interesting about those two things is our clients in the J.P. Morgan community globally are underweight both. This is something to talk about. We can diversify late cycle and these things are giving me a little bit more cushion, should we hit the unfortunate recession. In America, same process, where can I find defensives, things like health care and even some reasonably priced tech names. Where is there valuation support? That’s more or less critical for our investment committee." MY COMMENT The trading and market timing mentality at work. The ONLY one making money is your advisor or your broker. Well also......the IRS.....as you cash in and out with many short term capital gains taxed as regular income. CHURNING an account by a broker used to be a very bad thing. Now we have people gladly churning their own accounts with the trading and market timing mentality. Go figure. Fortunately for ME.......I dont have to worry about when to put cash back to work since I dont sit on any cash.
A nice little open today for the markets. ALL the averages have been green since the open and they are starting to push up a little bit from the early gains. As I sit and listen to business TV.....the debt ceiling is the main topic today. I would think that most investors are old enough to know that all this "stuff" is simply BALONEY. Perhaps it is the media people that are young and dont understand that this BS is just a BIG JOKE.
I like this little article......in spite of the headline. 10 Bad Takes On This Market https://ritholtz.com/2023/05/10-bad-takes-on-this-market/ (BOLD is my opinion OR what I consider important content) " " "Let’s see if I can find something to counter and/or undercut each of these 10 items listed in this morning’s tweet above: 1. Only 5 stocks driving markets?! Then why are Equal-weighted indices doing so well? 2. Recession is inevitable? If you interpret that literally, then yes, one day there will be a recession. But people have been forecasting an imminent recession for 18 months — and we still have yet to have one. This tweet by Steve Rattner — who I consider a better-than-average, rational market analyst — was exactly a year ago today: 3. Breadth is terrible There are many ways to depict how broad market participation is, but the simplest is the ADVANCE/DECLINE line. It measures how many stocks are going up versus down. Here are the NDX & SPX (Redlines at bottom). Both seem to be doing fine thread#showTweet" data-screenname="ritholtz" data-tweet="1659560391641317378"> 4. AI is a bubble! The top 3 AI companies? Microsoft $MSFT PE is 33, about its 10-year avg $GOOG PE 27, below its 10-year avg And Facebook? $META is giving away their AI, making it open-source. None of that sounds bubblicious… 5. Debt ceiling = disaster I like Jim Bianco’s comments that the media seems to think it’s a 50/50 proposition, but the implied probability of default according to market prices is 3%. 6. New lows are problematic (I heard this earlier in the week)NYSE – High Low Ratio for the past 3 years thread#showTweet" data-screenname="ritholtz" data-tweet="1659576265219756032"> 7. Consumers are running out of money (unless we look at their spending) Personal Consumption Expenditures ( (Seasonally Adjusted Annual Rate) thread#showTweet" data-screenname="ritholtz" data-tweet="1659603772174221332"> 7. Earnings will fail THIS Q Earnings forecasts are hilariously wrong most of the time, as are revenue forecasts… 8. HH Debt! American household debt may be at record highs, but so too are Assets and Incomes + the ratio between debt + income is near record lows. It’s not the total debt but rather the ability to service those debts that matters most… 10. Rally faltering Nasdaq is having a banner, nearing ATH (15.7% below); SPX up 10% is a good year (in only 6 months). Russell 2000 is the big laggard in 2023, and has been much of the year. As I keep saying, one day, this cycle will end, a recession to worse will occur, and the secular bull market that began in 2013 will end. That day is not here yet…" MY COMMENT I dont see any indication of a recession at all right now. AND.....even if we have one it will probably be so mild as to be completely meaningless to long term rational investors. I have ZERO fear of a recession.
The poor DOW has slipped nicely into the RED. NASDAQ is still strong.....SP500 is just lingering. Sounds about right for what we have been seeing lately for the past couple of weeks.
HERE is the market today. Stocks flat ahead of renewed debt talks https://finance.yahoo.com/news/stock-market-news-today-live-updates-may-22-112411210.html (BOLD is my opinion OR what I consider important content) "US stocks were broadly flat on Monday as President Joe Biden and House Republican Speaker Kevin McCarthy prepared to meet to resume debt-ceiling negotiations later in the day, amid warnings a disastrous default is less than two weeks away. The S&P 500 (^GSPC) edged up slightly above the flatline at the open. The Dow Jones Industrial Average (^DJI) was flat, while the technology-heavy Nasdaq Composite (^IXIC) rose 0.15%. Wall Street is bracing for crunch time in the debt-ceiling showdown, as the risk of a government default of some sort becomes more real. Anxiety is mounting, and Wall Street banks and asset managers are preparing for the fallout from a potential default, in case an extension or agreement fails to be hammered out in Washington. After a weekend of near deadlock, Biden returned back to Washington Sunday, ending his trip to Asia short to resume talks. Treasury Secretary Janet Yellen reiterated the US faces a June 1 "X-date" deadline for default. In the Treasuries market, the yield on the two-year note rose to 4.3%, while that on the 10-year Treasury traded up to 3.69%. Minneapolis Fed President Neel Kashkari, a voting member of the Federal Reserve, signaled he’s open to holding interest rates steady in June so the central bank can assess the impact of its outsized hikes on inflation. Against the current uncertain backdrop, several Fed board members are on the speech circuit this week, and the minutes of the last policymakers' meeting is set for release on Wednesday. Also on Wall Street’s plate this week are earnings from retailers Dollar General (DG), Costco (COST), and BJ's (BJ) which should give a deeper understanding of the health of the consumer. In single stock moves, Micron Technology, Inc. (MU) shares sank about 4% after Beijing banned some Chinese tech manufacturers from using the US company's chips. The move could further stoke existing tensions with the US over technology and security. Shares of Meta Platforms, Inc. (META) moved higher after the Facebook owner was hit by a record €1.2 billion ($1.3 billion) European Union privacy fine and given a deadline to stop sending European users’ data to the US. Shares in Adani Enterprises (ADANIENT.NS), the flagship company of Adani Group, jumped more than 18% after a committee appointed by India’s top court cleared the conglomerate of any regulatory failure, as alleged by US short seller Hindenburg Research. NVIDIA (NVDA) shares dipped over 1% after the chipmaker said on Monday it has worked with the UK's University of Bristol to build a new supercomputer using a new Nvidia processor. The move gives the world's top maker of AI-focused graphics processing units (GPUs) its own central processing unit (CPU), a market dominated by Intel (INTC) and Advanced Micro Devices (AMD). Shares of PacWest Bancorp (PACW) climbed more 8% Monday morning after the regional lender said on Monday it had agreed to sell a portfolio of 74 real estate construction loans, posing fresh risk to the regional banking sector. Still, on the banking front, JPMorgan Chase (JPM) boosted it outlook a month after the government-brokered takeover of First Republic. President Daniel Pinto said during investor day “We cannot ignore that there are plenty of challenges." But “the US economy at the moment is doing fine,” he adds, though the bank sees “signs of deterioration.” Shares rose more 1% Monday following the announcement." MY COMMENT Yet another NOTHING day in a NOTHING week. NOTHING is going to happen this week so the markets are simply adrift. SO.....I have to think that the general direction any day this week will be POSITIVE.....since that has been the general trend for many months and the specific trend for the past few weeks.
I think this is actually the best news of the week. We are now seeing the end of the distortions and disruptions from the economic closure. Retailers have fixed a major profit-crushing problem: Excess inventory Retailers are getting a better grip on inventory and it's a big win for investors https://finance.yahoo.com/news/reta...shing-problem-excess-inventory-120056608.html (BOLD is my opinion OR what I consider important content) "After struggling with swelling stockpiles for much of 2022, retailers have finally cleaned up their bulging aisles. Recent earnings reports from retail heavyweights Target (TGT), Walmart (WMT), Home Depot (HD), TJX Companies (TJX), and Ross Stores (ROST) showed marked improvement in inventory levels. With their inventory levels under better control — requiring fewer profit-killing markdowns — retailers were able to show stronger profit margins even in the face of a sluggish economy. Target's inventory levels plunged 16% from the prior year as the discounter cleared through excess inventory in the home goods and apparel departments. Gross profit margins expanded to 26.3% compared to 25.7% a year ago. The company's chief operating officer John Mulligan told analysts on a conference call that last year's "excess inventory" problem was now in the "rearview mirror." TJX Companies — the owner of T.J.Maxx, Marshalls, and HomeGoods — also posted better margins as inventory levels declined 8% and cost pressures eased. On a call with analysts, TJX CFO John Klinger said the off-price retailer is “strongly positioned” to take advantage of the current deal-hunting environment and feels “great” about current inventory levels. Walmart's US inventory fell 9.4% in the first quarter from a year ago, but profit margins still declined. In part, that was because shoppers spent more on lower-margin groceries and less on big-ticket, higher-margin items like home goods and electronics. The inventory plunges represent a dramatic reversal from less than a year ago. That's when levels were at record highs after stores over-ordered and were sitting on more than $730 billion of merchandise that more cautious consumers weren’t interested in buying. "We're way past the peak [on inventory]," Bernstein Analyst Aneesha Sherman told Yahoo! Finance Live. "Many leading brands and retailers have cleared it off their balance sheets." Further improvements in supply chains — after the COVID-19 pandemic wreaked havoc on the flow of goods —have also helped retailers. "Many of the pandemic-fueled supply chain issues have resolved, so retailers can again count on delivery accuracy," former Toys 'R' Us CEO Gerald Storch told Yahoo Finance Live. Storch added, "This allows a more 'just-in-time' approach to function," which gives retailers the ability to keep their inventory lean and adapt to changing demands. More retailers slated to report earnings this week, such as American Eagle Outfitters, Lowe's, and Big Lots, could also deliver welcomed inventory declines to investors. So far, investors appear to have ignored the improvements in inventory levels — instead paying closer attention to what looks to be a slow start to the second quarter for retail. Target, Walmart, and Foot Locker (FL) all served up cautious comments on the state of the consumer as they battle with elevated inflation. The VanEck Retail ETF (RTH) has risen slightly in the past five trading sessions as retail earnings have trickled in. The S&P 500 is up 1.5% over that same stretch. "There'll be winners and losers. Not all boats rise. And just because you have value attached to your name doesn't mean you'll win, either," Storch said. But provided the economy doesn't fall off a cliff, lean inventories at retailers set the stage for more margin gains during the crucial upcoming back-to-school and holiday shopping seasons. That may ultimately get the attention of skeptical investors." MY COMMENT The normalization of supply chain and inventory issues has taken a lot longer than most people imagined. We are FINALLY there......nearly back to normal. This will be HUGE going forward for all businesses. I believe this is a bigger issue than the current big EARNINGS BEATS that we are seeing. This has the potential to drive great earnings for the rest of this year and well into next year. I am surprised how long it took to get here. It just shows that the economy of the world is more fragile and intertwined than people know and it takes a long time to get over a major shock. WELL......we are finally there......a HAPPY DAY.
Thank goodness this person is NOT a voting member of the FED. Fed’s Bullard Sees Two More Interest-Rate Hikes Needed in 2023 to Cool Prices https://finance.yahoo.com/news/fed-bullard-sees-two-more-125651188.html
I like these headlines.......they show we have a lot more room to run in the current very young bull market: FEAR MONGERING is an industry. It drives clicks. It is dramatic and creates a soap opera atmosphere.......which people love to wallow in. It is the investing equivalent of GOSSIP. Of course......being a long term investor means that you can simply never have to click on any of this INVESTING PORN. Stocks Poised to Fall There’s Rarely a Case for Pulling Out of the Market. This Might Be One. Morgan Stanley Says US Rally Isn’t Start of Bull Market How damage from a US debt default could cascade across the global economy etc, etc, etc.
The poor DOW is continuing to suffer today.......the only one of the general averages that is in the red. The BULL MARKET that we are seeing lifting all the other averages does not exist in the DOW......it is up by a minuscule 0.61% for the year at this moment. I have not done any sort of dive into why the DOW is performing so poorly. Just a quick look at the companies that make up the DOW shows a lot of great companies that are doing very well right now. I just dont see the DOW as ever having much relevance anymore. In the old days it was the GOLDEN average. It was a proxy for the markets and when the DOW was up or down it meant something. NOW.....it is basically meaningless. The SP500 has not totally eclipsed the DOW as the general PROXY for the markets and the US economy.
It is graduation season......High School and College. As these young adults move into the work world it is CRITICAL that they give some thought to......retirement. Of course......it is a rare 18-28 year old that gives any thought to retirement. Why it’s important to start a retirement plan in your 20s A larger retirement fund isn't the only reason to begin saving early https://www.foxbusiness.com/personal-finance/why-important-start-retirement-plan-20s (BOLD is my opinion OR what I consider important content) "If you’re in your 20s, it may seem like retirement is a long way off, but experts say putting a retirement plan in place is a smart financial move. "Retirement is the biggest goal that we save and invest for throughout our lives, and it’s important to save for your future now – no matter how young or old you are," says Rita Assaf, vice president of retirement at Fidelity Investments. Here are important reasons to start now if you’re in your 20s: Protect yourself from economic downturns Assaf explains that by saving for retirement in your 20s, or as early as you can, you have the benefit of time, which allows you to recover from any economic downturns that may impact your retirement savings. Take advantage of a longer time horizon Having an age-appropriate asset mix that includes appropriate levels of risk and growth potential can help you meet your goals, Assaf says. "Investing too conservatively when you're younger might require more savings down the line," she says. "It's also smart to prioritize saving before you take on expenses like a mortgage or the cost of supporting a family." Compounding growth of your savings Mindy Yu, director of investing at Betterment at Work, tells FOX Business that every dollar saved now is an investment toward your future. "As you contribute to your retirement plan, the earnings this investment generates grow alongside the market over time," Yu says. "It’s important not to underestimate the power of compound interest, which means every dollar saved will be worth exponentially more when it comes time for retirement. It’s a marathon, not a sprint, to build up financial security." Consider how your employer can help Yu says employers may offer various financial wellness benefits, which typically include a 401(k) and may include other offerings such as a wellness stipend, access to a financial advisor, and more. "Make sure that you understand the benefits your employer offers, and consider how they can help you more effectively invest and save – for example, if your employer offers a health savings account, or HSA, money invested can help you pay for future medical expenses," she says. In addition, Yu says to take advantage of match programs. "Some employers also offer 401(k) matching programs, which are essentially free retirement money for employees," Yu tells FOX Business. This means that companies will match up to a certain percentage of an employee's salary toward their retirement fund, assuming the individual contributes enough to meet the match, she says. If you can contribute through work, what’s the target amount? While every situation is unique, Assaf says Fidelity generally recommends aiming to contribute 15% of your pre-tax income each year for retirement, including any contribution matches you may get from your employer. "If saving 15% isn’t possible, start where you can," she recommends. If your employer provides a match, she says you should aim to contribute enough to get the entire match. "Otherwise, it’s like leaving free money on the table, so you should absolutely be taking advantage of your employer match. Then increase your contribution rate by 1% each year until you get to the 15%," Assaf says. What if a young person in their 20s says they can’t budget retirement savings? Yu says it may feel difficult to save money for retirement when you’re younger and, likely, making less money. "While it’s important to make sure that you can support basic costs of living first, I would encourage every young worker to contribute even just a tiny portion of their paycheck towards their retirement fund – even if only 1-2% to start, though ideally enough to meet their employer’s match if one is offered," Yu tells FOX Business. "While most experts suggest saving at least 10-15% of your paycheck, that can be a stretch goal that you work up to over time. Putting away small amounts is better than saving nothing at all, and compound interest will help that investment snowball down the line — time in the market is critical." Assaf with Fidelity agrees that individuals in their 20s should make retirement savings a priority. "People in their 20s have the benefit of time on their side, so staying invested and making steady contributions – even through market volatility and recession fears – can help your retirement savings grow long-term and recover from any downturns," Assaf says." MY COMMENT If you are young.....pay yourself first. Make your retirement and savings a monthly bill....just like all the other bills you pay. This is the first step in becoming an investor. Make it a lifetime habit and before you know it you will be a long term investor. Think of it as building your NET WORTH....rather than retirement. This makes it a current issue rather than something that will happen 50 or more years into the future.
Having just looked today I am siting just slightly in the red. Four stocks UP and six DOWN. I still see great potential to end up in the green by the end of the day. NIKE is the big drag on my portfolio today being down by about 3%. Nike Stock Cut To Sell As U.S. Business Faces Challenges https://finance.yahoo.com/m/2a0a7d15-347c-36d0-836b-ec2cfd5d5c92/nike-stock-cut-to-sell-as.html My winners early in the day today are.....TSLA, GOOGL, NVDA, and MSFT. No surprise there. Other than NKE my worst performing stock today is AMZN. The rest of my down stocks are very slight....no real direction. I have noticed that poor AMAZON is now just a mature company. It is rare to see much in terms of articles about the company anymore.....the BUZZZZZ seems to be gone. They are just lumped in with the other beg retail companies. It is so hard to get old......as many of us know. They do have a very good gain so far for 2023......+34%.......but are generally ignored. Their 5 year gain in share price is about +43%. As to current management......I am STILL very much on the fence.
Definitely on the fence with Nike… not worried at all about Amazon. Nike is a one trick pony that had a good ride for a long while, it now has SERIOUS competition from LULU and a ton of problems on the distribution level, mainly china. doesn’t help that their woke agenda of late has alienated a substantial amount of buyers. Amazon is a household name. It has been punished just because it lost its Wall Street cache. But it is after all Amazon, so just a matter of time before the naysayers will regain interest in the company again, if for any reason, just because it is Amazon, the biggest and by far most reputable online retailer, among many many other things
YEP.......to AMZN above.......and sooner of later EVERY company becomes a mature company. The glory moves on to the young up-and-comers......BUT.....a lot of money can be made by owning mature companies for many decades and religiously reinvesting dividends.
I ended the day with a small loss today. I was held back by NIKE with a loss of about 4% today. PLUS....I only had three stocks in the green today......MSFT, GOOGL, and TSLA. I got beat by the SP500 by 0.38% today. A wasted day.....that had so much market potential early. Still.....a NOTHING day....very boring. That is probably a good thing after the past 1.5 years.
Here is how things look after the close today. S&P 500 closes little changed on Monday as pivotal debt ceiling meeting looms, Nasdaq hits highest level since August https://www.cnbc.com/2023/05/21/stock-market-today-live-updates.html (BOLD is my opinion OR what I consider important content) "The S&P 500 finished little changed on Monday as Wall Street awaited a pivotal debt ceiling meeting and government officials scrambled to avert a default. The benchmark index inched 0.02% higher to finish at 4,192.63, while the Dow Jones Industrial Average lost 140.05 points, or 0.42%, to end at 33,286.58. The Nasdaq Composite gained 0.5% to settle at 12,720.78. Monday’s moves brought the tech-heavy index to its highest close and highest intraday level since August. President Joe Biden and House Speaker Kevin McCarthy are set to meet Monday at 5:30 p.m. ET to continue debt ceiling talks, with just 10 days left before the earliest date that Treasury Secretary Janet Yellen said the U.S. could realistically default. Veteran negotiators on both sides resumed talks Monday morning in the Capitol, but mandatory government spending cuts remain a major obstacle. Republicans insist on paring back spending to baseline 2022 levels, but Biden said that any cuts across the board without additional tax hikes are out of the question. “Investors are starting to get concerned about what’s happening with the debt ceiling talks, but on the other hand, the economy still is pretty strong, the job market’s really strong,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance. Major averages are coming off a winning week. Led by technology stocks, equities continue grinding higher despite uncertainty in Washington and sticky inflation, with the S&P 500 hovering just below the 4,200 level. While the technology trade may have further to run, some on Wall Street say stronger market breadth is needed for a rally to continue longer term. “If the rest of the market doesn’t participate, then there’s an end to this,” said Sylvia Jablonski, CEO at Defiance ETFs, adding that stronger market breadth could come after the Federal Reserve’s June meeting. Monday ushered in a relatively light week for economic data, with a second reading for first-quarter GDP slated for Thursday and the personal consumption expenditures gauge, the Fed’s preferred inflation measure, due Friday. The release of Fed minutes on Wednesday from the May meeting could shed light on how central bankers are thinking about the possibility of further rate hikes. First-quarter earnings season is winding down, but notable reports loom from Zoom Video, Lowe’s and Dick’s Sporting Goods." MY COMMENT Thats about it.....a dull day. At least the averages that count....the SP500 and NASDAQ.....ended the day positive. Can you say BULL MARKET. NO......I dont buy the "stronger market breadth needed" stuff above.....after all the SP500 is currently up by +9.64% in only FIVE months. A significant gain for that length of time and perhaps an early indicator of a year that will end up between......+16% to +25%.......for the average. I am NOT however....discounting the probability of a pull back or correction some time before the end of the year......a normal process in any bull market.
I have been ignoring the markets today. Screwing around with my irrigation controller to try to get it running properly. But having just taken a glance at the averages....it looks like a typical DEBT CEILING day. It will all be over in a week or two.
I did get a chance to scope out a few articles....here is a good one. Why fears of a banking crisis were overblown — bad regulation is the real problem https://nypost.com/2023/05/21/why-fears-of-a-banking-crisis-were-overblown/ (BOLD is my opinion OR what I consider important content) "Is there really some banking crisis? In March, I told you Silicon Valley and Signature Bank were isolated episodes—not systemic threats. First Republic’s subsequent demise and plunging regional bank stocks furthered fears of an imploding domino effect. Yet these episodes and emerging data reinforce my point. Contagion isn’t the risk now, potential bad regulation is. Hear me out. Hoopla aside, since SVB’s failure, the S&P 500 is up 6.5%. Yes, regional bank stocks are down. But larger S&P 500 Financials are off just -1.6% since SVB’s collapse. Overall bank deposits are down -2.5% — smaller banks’ -4.6%. Not great but not catastrophic, either. And lending hasn’t imploded. The Fed’s Q1 Senior Loan Officer Opinion Survey showed slightly tighter lending standards and lower demand — neither new nor severe. I had argued SVB and Signature chiefly failed from hyper-concentrated deposit bases — the former in Venture Capital, the latter in cryptocurrency. Few banks are so concentrated with such mutually communicative depositors. Tightly knit depositor communities make bank runs easier. FRC was somewhat similar, courting wealthy clients that were geographically and culturally overlapped with SVB’s — pushing specialized products with uncommonly high uninsured deposits. US regulator seizes First Republic Bank, to sell assets to JP Morgan Depositors fearfully yanked savings, the stock imploded, and fearing total failure the FDIC interceded, took control and brokered a near failure, sweetheart takeover by JPMorgan on May 1. Yet no calamity ensued. Why? Inflation adjusted, these few banks weren’t huge. Just the clucking was. Second tier and smaller banks fail regularly — averaging 63 per year since 1975. They often collapse in clumps, like 1989 — 1990’s 912 or 2007 — 2008’s 305. The only years with none? 2021 and 2022! But now we notice. Hyping these few confuses exceptions with the norm. The overall system is near its healthiest in 10, 30 or 50 years based on loan-to-deposit ratios and cash relative to total assets. There are 4,200-plus US banks. We want a vibrant, dynamic capitalist economy — including innovative banks. Ex-SVB CEO Greg Becker grilled by lawmakers: ‘You made a really stupid bet’ With that comes some failing, always. We should want that. Regulators try to ring-fence risk. They can’t fully. And shouldn’t. When banks need emergency liquidity, they first borrow from their regional Federal Reserve District. There are 12 nationally. Those regional loans are reported weekly. Only the New York District (Signature’s home) and the San Francisco District (SVB and FRC) saw upticks. The other 10? Nada! In any systemic crisis, that borrowing would be widespread, everywhere. You say regulators should have “done something” before all this? Really? Be careful what you wish for. Throughout government there is almost no actual inside-banking, real world, work experience. Treasury Secretary Yellen was just a pinhead academic economist who, ironically, ran the now-maligned San Francisco Fed District where all these SVB/FRC issues spawned — before becoming Fed Chair. Incompetence promoted! Current Fed Chair Jerome Powell is a born-and-bred DC lawyer, politico, swamp critter with zero real banking experience. Pretty much all are. Congress? Worse! A lot of smart lawyers on relevant committees. I know and like lots of them but can count on one finger anyone senior in actually running any bank ever — Rep. French Hill (R-Ark.). But they itch to “do something.” Anything they do is likely worse than nothing — because they know nothing. Altered banking rules routinely backfire. Calls for smarty-pants “fixes” to this non-crisis are why the SLOOS survey shows many banks now tightening credit — citing, “concerns about … future legislative changes.” Congressional banking inaction beats reaction. Less is more. Doing nothing is best. Republicans should get that cold but, seemingly, don’t. So far, most regulation talk is abstract politicking." MY COMMENT You have to love Ken Fisher. He is not afraid to say what he really thinks......as a big time money manager that emphasizes long term investing. I love his take on Yellen and Powell above: "Treasury Secretary Yellen was just a pinhead academic economist who, ironically, ran the now-maligned San Francisco Fed District where all these SVB/FRC issues spawned — before becoming Fed Chair." "Incompetence promoted! Current Fed Chair Jerome Powell is a born-and-bred DC lawyer, politico, swamp critter with zero real banking experience." Of course this bank stuff has now been knocked out of the news by the Debt fear mongering. Both are just about as SILLY......and....irrelevant to any actual investor with a long term horizan.
To continue with the general topic of.....FEAR MONGERING. Politicians Acting Badly https://alhambrapartners.com/2023/05/22/weekly-market-pulse-politicians-acting-badly/ (BOLD is my opinion OR what I consider important content) "Should investors be worried about the impending breach of the US debt ceiling? A default would be catastrophic according to numerous news articles I’ve read recently. Well, to be honest, I didn’t read past the first few paragraphs of most of those articles because if you’ve read one of them, you’ve read them all. Obviously, a default would be bad and I don’t need anyone to explain that to me. So, maybe we should concentrate on whether a default is likely rather than what the consequences of doing so would be. Politicians like to spend our money. It doesn’t really matter which political party is in power, they all spend more than they manage to take in with taxes. The deficit expanded every year during the Trump presidency and approached $1 trillion even before COVID. The deficit shrunk every year under Obama but his best year was still worse than every year prior to him occupying the Oval Office. The deficit has shrunk under Biden too and is still 40% bigger than any year prior to 2020. So, yes, politicians love to spend our money. All of them. Given that reality, does anyone really think the politicians are going to push us to actual default? If they do, it will make it harder to borrow in the future – raise the cost – which will directly impact their ability to do what they do best. So, no, I don’t think we have to worry about an actual default. Treasuries will get paid on time. There are other outcomes, such as a government shutdown, that could impact the economy and I wouldn’t be surprised if they push this to that point. If there is one thing politicians enjoy more than spending tax dollars, it is raising money from donors and this is a perfect opportunity to rile up the base and open some pocketbooks. Based on the number of recent emails I’ve received, that effort is in full swing by both parties. If you’ve been longing for bipartisanship, well, here it is. We haven’t seen a lot of market reaction to the debate but you wouldn’t know that from the media reaction. I’ve read numerous articles that state confidently that the reason the 1-month T-Bill is trading at a higher yield than the 3-month is because investors are scared of a default in the next 30 days. I’m not sure that makes any sense but then no one ever said investors act rationally, except for a bunch of economists. If it is true, then the cost of default seems pretty puny since the yield spread is a mere 50 basis points. I’ve also read that investors are selling stocks out of fear of default. If that is true, they’ve been afraid for 11 of the last 14 months. It is true that stocks fell 15% during the debt ceiling debate of 2011 but if you’re selling based on that you might want to think back to what else was going on back then. As I remember it, Europe was having some issues with potential actual defaults, Greece teetering on the brink. You know, a real crisis rather than a manufactured one. But, sure, blame it on the debt ceiling silliness. I don’t know exactly how this debt ceiling standoff will end but I am confident of two things. One, our debts will be paid. Two, the federal government will spend more next year than it does this year. Investors need to find something else to worry about." MY COMMENT I am not sure any real world investor is concerned about the debt ceiling. In fact as I make the rounds in my day to day life I dont see or hear anyone talking about this.....except....to curse the politicians and their games. EVERYONE knows this is a JOKE.
If you have any interest in the markets today....here you go. I have a little "hint" for you.....there is NOTHING happening of any substance today or this week......so I will leve it to you to read this if you wish. Stocks slip as debt crunch continues https://finance.yahoo.com/news/stoc...tinues-stock-market-news-today-115225906.html
I mentioned Ken Fisher above.....here is another little comment from him.....which is contained in a larger article on a couple of his holdings: Don’t Miss the Next Bull Market: Billionaire Ken Fisher Stays Heavily Invested in These 2 ‘Strong Buy’ Stocks https://finance.yahoo.com/news/don-t-miss-next-bull-141748117.html (BOLD is my opinion OR what I consider important content) "After the bear market of 2022, the markets have made a recovery in 2023, with both the S&P 500 and, in particular, the NASDAQ showing healthy year-to-date gains. Therefore, it might be a natural instinct for investors who have nursed heavy losses to be eyeing the exit gate now that the market is rebalancing and the initial investment is back to breaking even. However, legendary investor Ken Fisher says that kind of thinking is a big mistake. “As initial bull market rallies build, investors — raw from the prior drop — sell. It feels smart,” says Fisher. But it’s the wrong move. While There might be many bears prowling Wall Street right now, according to Fisher, the pendulum has already swung the other way and we are in the early innings of a bull market. The key, now, is to stay in the game. “While many will suffer breakevenitis, you can avoid it — by keeping long-term goals top of mind,” says the billionaire. Putting his money where his mouth is, Fisher is staying fully invested."....... MY COMMENT I did not post the part of the article about the two stock picks. I am NOT touting any stocks.....good or bad. If you are interested in the two stocks you can click on the link and read about them. BUT......the opening to this article is CLASSIC long term investing. It is refreshing to see a big time money manager that is an advocate for long term investing.
