We are in the middle of what has been a STEALTH BULL MARKET since the end of last June. It is now one of the most disrespected and IGNORED bull markets I have seen in a very long time. That is just fine with me....the longer it is ignored....the longer it will last. Sooner or later all the money siting on the sidelines WILL come pouring back into the markets. When that happens we will see an explosive boom in the general averages. Of course......as usual.....all those waiting for the right time to come back into stocks or for some MYTHICAL entry point which will somehow appear by MAGIC......will have missed out on gains ranging from 20-40%. S&P 500 notches fourth straight positive week, touches highest level since August: Live updates https://www.cnbc.com/2023/06/08/stock-market-today-live-updates.html (BOLD is my opinion OR what I consider important content) "The S&P 500 rose slightly Friday, touching the 4,300 level for the first time since August 2022 as investors looked ahead to upcoming inflation data and the Federal Reserve’s latest policy announcement. The broad-market index gained 0.11%, closing at 4,298.86. The Nasdaq Composite rose 0.16% to end at 13,259.14. The Dow Jones Industrial Average traded up 43.17 points, or 0.13%, closing at 33,876.78. It was the 30-stock Dow’s fourth consecutive positive day. CNBC For the week, the S&P 500 was up 0.39%. This was the broad-market index’s fourth straight winning week — a feat it last accomplished in August. The Nasdaq was up about 0.14%, posting its seventh straight winning week — its first streak of that length since November 2019. The Dow advanced 0.34%. Investors were encouraged by signs that a broader swath of stocks, including small-cap equities, was participating in the recent rally. The Russell 2000 was down slightly on the day, but notched a weekly gain of 1.9%. “It’s the first time in a while where investors seem to be feeling a greater sense of certainty. And we think that’s been a turning point from what had been more of a bearish cautious sentiment,” said Greg Bassuk, CEO at AXS Investments. “We think that as we walk through these next few weeks, that will be increasingly clear that the economy is more resilient than folks have given it credit for the last six months,” said Scott Ladner, chief investment officer at Horizon Investments. “That will sort of dawn on people that small-caps and cyclicals probably have a reasonable shot to play catch up.” The market is also looking toward next week’s consumer price index numbers and the Federal Open Market Committee meeting. Markets are currently anticipating a more than 71% probability the central bank will pause on rate hikes at the June meeting, according to the CME FedWatch Tool. Tesla shares on pace to match longest winning streak Tesla’s stock is on track to match its longest winning streak of 11 straight positive days, should it end the day positive Friday. The last time the stock sustained as long of a consecutive rally in January 2021. The stock was up about 4% as of Friday afternoon. Market bears are ‘capitulating,’ Wolfe Research says The bulls clearly have the upper hand in this market, Wolfe Research’s Rob Ginsberg wrote. “The bears are capitulating,” he wrote. “Persistently negative since early ’22, the bulls exploded this week to levels last seen in late ’21, right around the market’s peak. Add into the mix the collapse in the VIX, explosion in IWM call volumes and a drop in put/call ratios, and it’s evident that complacency is rapidly building.”" MY COMMENT Are "YOU" in or out of the markets? If so......why? AS USUAL......I remain fully invested all the time for the long term. I am committed to capturing each and every market gain. I am content to ride out the down days and longer down times in order to do so. The research tells me that this is the way to MAXIMIZE returns over the long term. Of course......many people dont seem to realize.....that this requires that you invest is REALISTIC and RATIONAL companies that are DOMINANT and have long term staying power. The best....simple....way to do this is to invest in the SP500 Index.....in my opinion.
Of course there is ONLY one event this week that matters.....the FED. Inflation and the Fed: What to know this week https://finance.yahoo.com/news/inflation-and-the-fed-what-to-know-this-week-142010317.html (BOLD is my opinion OR what I consider important content) "Inflation data and the Federal Reserve's latest monetary policy decision will highlight the week ahead for investors celebrating the dawn of a new bull market in stocks. Tuesday morning will bring investors the Consumer Price Index (CPI) for May, a release that will come just hours before the start of the Fed's two day Federal Open Market Committee (FOMC) meeting which culminates with Wednesday afternoon's policy announcement. Investors currently expect the FOMC will announce a pause in the Fed's rate hiking cycle after having raised interest rates at the conclusion of each of its previous 10 meetings. Tuesday's inflation reading could still shift this outlook. Other key economic data this week will include retail sales for May and the first reading of consumer sentiment in June from the University of Michigan. The corporate earnings schedule will be sparsely populated. The S&P 500 officially entered bull market territory on Thursday after the longest bear run since 1948. Stocks celebrated with modest gains on Friday as the Nasdaq extended its winning streak to seven weeks. Research from Bank of America indicates the S&P 500 rises 92% of the time in the 12 months following the start of a bull market, compared to the historical 75% average over any 12 month period dating back to the 1950s. Wall Street expects headline CPI, which includes the price of food and energy, rose 4.1% over last year in May, a noted decrease from the 4.9% headline number in April. Prices are set to rise 0.4% on a month-over-month basis. April's data was the slowest year-over-year inflation reading in two years; a 4.1% increase in headline CPI in May would be the slowest since April 2021. On a "core" basis, which strips out the food and energy prices, inflation is forecast to rise 5.2% over last year in May, a slowdown from the 5.5% increase seen in April. Monthly core price increases are expected to clock in at 0.4%. The CPI report will be closely watched as the final piece of data for the Fed to digest after the recent jobs report and recent readings on the manufacturing and services sector showed an economy more resilient than many experts expected. Entering this week's meeting the central bank's benchmark policy rate, the fed funds rate, sits in a range of 5%-5.25%, the highest since September 2007. "Ultimately, whether the Fed hikes in June and beyond will come down to core CPI inflation," economists at Citi wrote in a note to clients on Friday. Citi sees potential for this report to show prices rising more than expected given used car prices remain stubbornly high. This week's data on consumer and producer prices comes after the June jobs report shocked economists and showed the largest labor market growth since January. But the report also revealed slowing wage growth while unemployment ticked higher, leaving some economists to believe the Federal Reserve's tight fiscal policy is already taking hold. "There is little in the incoming data to suggest the Fed will not follow through on the clear guidance for a pause at next week's Federal Open Market Committee meeting," Michael Pearce, Oxford Economics lead US economist wrote in a note to clients on Friday. "Even if the core [inflation] number comes in hot, Fed officials are paying more attention to the trend, which is likely to be downward over the second half as base effects work in their favor," Pearce added. Some pockets of the market have been on a tear since Fed Chair Jay Powell hosted his last press conference on May 3, which followed the Fed raising rates by another 0.25%. The Nasdaq Composite (^IXIC), driven in part by artificial intelligence hype, has been the clear winner amid expectations the Fed's rate hiking campaign may be winding down, rising 10% since early May. The S&P 500 (^GSPC) is up 5% over that period while the Dow Jones Industrial Average (^DJI) has seen the smallest gains, adding around 1.4% between Fed meetings. Between the May and June FOMC meetings, investors have been offered a heavy dose of commentary from Fed officials, which taken together reveal a central bank that appears largely undecided about its next move. Among voting members of the FOMC, Dallas Fed president Lorie Logan, Minneapolis Fed president Neel Kashkari, and Fed Governor Miki Bowman are among the notable "hawks," or those suggesting more rate hikes are likely required to bring down inflation. Fed Governor Philip Jefferson and Philly Fed president Patrick Harker are notable "doves," or those in favor of a pause this week, among FOMC voters. The Fed's interest rate decision on Wednesday will also be accompanied by an updated Summary of Economic Projections, which includes Fed officials' forecasts for inflation, economic growth, and the "dot plot" mapping out expectations for future interest rates. How the Fed acts on Wednesday, however, doesn't change that recent data has likely shifted the longer outlook for the central bank. After May's robust jobs report and with expectations for a stubborn inflation print on Tuesday, UBS economist Jonathan Pingle expects an interest rate hike from the Fed in July and rate cuts starting later than initially anticipated. "We expect the incoming data overall to bolster the case being made by the FOMC participants arguing for further monetary policy tightening," Pingle wrote in a note last week. "Our guess is that the slow progress on core inflation and lack of slowing in the trend gains in employment will erode the arguments against further tightening." Away from the economic calendar this week, investors will continue to track the market's march higher though the corporate calendar will bring few catalysts. Earnings from Oracle (ORCL), Adobe (ADBE), Kroger (KR), and Lennar (LEN) will serve as the week's only notable earnings reports. "We believe we are back in bull territory, which might be part of what it takes to get investors enthusiastic about equities again," Savita Subramanian and the equity strategy team at Bank of America Global Research wrote in a note on Friday. "Sentiment, positioning, fundamentals and supply/demand support that being underinvested in stocks and cyclicals is still the key risk today — the more likely direction of surprise is still positive."" MY COMMENT The poor FED.....now one cares about them anymore. Even the financial media is now much more muted. I see little to no fear mongering of the meeting next week. This is because everyone knows that the FED is at the end of the interest hike rope. They are done....even if they do another one or two hikes.
EVERYONE....is now jumping on the BULL MARKET bandwagon. Where were all these people last July? Where were they in last August through October? Where were they all through the start of this year? I will tell you where they were.....wallowing in negative predictions. 'New bull market has legs': These are the 5 questions investors should ask now that the bear market is officially over https://finance.yahoo.com/news/bull-market-legs-5-questions-201500597.html (BOLD is my opinion OR what I consider important content) "The bear market in stocks is officially over and a new bull regime has begun after theS&P 500 closed 20% above its October 12 closing low on Thursday. And according to a Friday note from Bank of America's equity strategist Savita Subramanian, the stock market gains could continue as investors slowly buy into the bullish environment and macro headwinds like rising interest rates near their end. Additionally, stocks do well after the 20% bull market threshold is reached, based on historical data. "We don't put a lot of stock (pun intended) in arbitrary definitions, but note that after crossing the +20% mark from the bottom, the S&P 500 continued to rise over the next 12 months 92% of the time, returning 19% on average," Subramanian said. That's based on data since the 1950s and is compared to a 12-month winning ratio of just 75% and an average overall 12-month return of 9%. While there are still risks to the rally, the stock market has a way of continuing to climb a wall of worry while investors sit on the sidelines due to negative sentiment and lingering worries. But now is the time for investors to get ready for a new bull run and start asking questions to prepare. These are the five things investors should ask now that the bear market is officially over and a new bull regime has begun, according to BofA. 1. "What will it take to get investors bullish again?" "The wall of worry could continue until investors feel pain in long bonds or FOMO in equities. Investors have bought into a singular equity theme (AI, more below) but a broader bull case for stocks can be made: we are off of ZIRP and real yields are positive again, volatility around rates and inflation has subsided, earnings uncertainty has declined and companies have preserved margins by cutting costs and focusing on efficiency. After a fast hiking cycle, the Fed has latitude to ease. The equity risk premium could fall from here," Subramanian said. 2. "Should I invest in actively managed funds?" "After decades of passive equity funds taking share from active, the active approach in public equity now makes sense. Less eyeballs means inefficient markets (more alpha), higher dispersion and a reversal in passive inflows argue for stock picking over indexing. The index primacy this year from record narrowness is unsustainable," Subramanian said. 3. "Which equity index, equal-weighted or cap weighted?" The equal-weighted S&P 500 could yield double the returns of the S&P 500 index based on various signals. These include breadth reversion, relative value (the equal-weighted index trades at 15x), lower duration risk vs. the cap weighted index and more upside vs. the cap weighted index based on our analysts' price targets," Subramanian said. 4. "If stocks are reviled, why is the S&P 500 trading at 20x?" "Wall Street is rife with conviction-less bears, and individual investor outflows are at capitulation levels somewhat at odds with high snapshot multiples. 20x is not the reason to be bearish - when earnings fall as they are today, P/E ratios expand. It's just math," Subramanian said. 5. "How can I make money off of AI?" "The obvious beneficiaries, capex takers, are semis and select software companies that can provide AI services. But not all Tech wins, many need to spend just to remain competitive. The larger benefit may be had by old economy, inefficient companies that can increase earnings power more permanently from efficiency and productivity gains," Subramanian said. Bank of America" MY COMMENT Nice of them to get on the BULL MARKET train. ONLY....about 6-12 months late. But better late than never.
ANOTHER....typical open today....at least we are all in the green with the major averages right now. HAPPY FED WEEK. Stocks open higher to kick off key week for US economy https://finance.yahoo.com/news/stoc...conomy-stock-market-news-today-110707386.html (BOLD is my opinion OR what I consider important content) "Stocks opened Monday's trading session higher to kick off a busy week for US economic data with key readings on inflation and consumer spending set for release while Wednesday's Federal Reserve decision will be week's big highlight. Shortly after the opening bell on Monday, the S&P 500 (^GSPC) was higher by about 0.3%, the the Dow Jones Industrial Average (^DJI) rose about 0.2%, while the Nasdaq Composite (^IXIC) gained 0.4%. Monday's gains come after the S&P 500 entered a bull market last week and closed at its highest level since August 2022 while the Nasdaq continued a streak of seven-straight winning weeks." MY COMMENT That is it.....nothing else going on today. It is a TOTAL no news day for the markets other than the FED later in mid-week. I did hear on the business TV in the back ground that TSLA stock is now UP by.......GASP........35% over the past twelve days. That is an EPIC gain.
Speaking of TSLA....over the medium to long term this has the potential to be a HUGE source of income for TSLA. If they can capture dominant market share and continue to expend their charging network....this advantage and income source for the company could last for decades. Tesla’s Shrewdest Product Is Proving to Be Its Charging Network https://finance.yahoo.com/news/teslas-shrewdest-product-proving-charging-200020051.html
After this week we will have MORE CLARITY as to the thinking of the FED. It will be relatively clear whether we are going to now pause.....or.....are we going to do one or two more rate hikes and than pause. It is likely that any pause will last till at least year end. My view actually is.....that any pause will last till at least mid year in 2024. We are about to enter a NORMAL market environment. The FED is either over or nearly over. The banking crises....over. the economic shut-down.....mostly recovered from. ALL the fear mongering issues of the past year......done. Hopefully this means that fundamentals and earnings will now take the lead as what counts going forward for stocks and funds. It has been a good while since we have been able to experience a totally normal market. That does not mean that stocks will just go UP. A normal market means periods of rising prices....explosive jumps up....pull backs....corrections....etc, etc, etc. The last time we were in this sort of environment was from 2009 to 2020. Over that time span the SP500 was UP 10 of the 12 years.
I have a nice gain so far today....to start FED WEEK. Eight stocks are UP and only two are DOWN. The down......NKE, and HON. Poor NKE has just had a dismal year. They are STILL struggling with trying to recover from COVID and China issues. In addition I cant help but wonder is their results over the past year or two reflect their decision to pull their products from many retail sellers and attempt to switch to online sales. I have not seen anything about this....so it is simply speculation on my part. They do STILL have a gain over three years and five years. Over five years they are averaging about 8% per year in stock appreciation. They are scheduled to report earnings on June 26.....so......we will know more at that time.
Funny. These were some of the same folks running around last year telling everyone "what they should be doing." Now, here they are again with a different narrative. Of course that is what they do to play on both sides of the emotional investing roller coaster.
What a strong market day today. This shows really well the underlying strength of.......both......the markets and the economy now that the FED is going to be out of the way. BUT.....dont worry....."they" will soon come up with new and different issues to FEAR MONGER. I just hit a new high for the year today.......+29.44%. In addition I had a nice large gain for my stocks. ALL ten were in the green. Plus....I got in a beat on the SP500 by 0.50% on a day when the SP500 did very nicely itself. My largest winners today....over 2% each for the day.....were TSLA and AMZN.
HERE was the markets today. S&P 500 closes at highest level since April 2022 as traders hope the Fed will skip a rate hike https://www.cnbc.com/2023/06/11/stock-market-today-live-updates.html (BOLD is my opinion OR what I consider important content) "The S&P 500 jumped to its highest level in 13 months on Monday as traders hoped the Federal Reserve will skip hiking rates when the central bank decides on policy Wednesday. The S&P 500 added 0.93% to close at 4,338.93, with gains steadily increasing throughout the trading day. The benchmark surpassed its high from last August and reached the best levels since late-April 2022. The Nasdaq Composite popped 1.53% to finish the day at 13,461.92, also reaching the highest level since April 2022. The Dow Jones Industrial Average climbed 189.55 points, or 0.56%, to close at 34,066.33. Markets have come to expect that the Fed will skip a rate increase at this week’s meeting, with traders pricing in a roughly 72% chance that there will be no hike, according to the CME Group’s FedWatch tool. The Fed has hiked 10 consecutive times since starting this latest policy-tightening cycle in March 2022. Tuesday’s inflation data could help reinforce the case that inflation is subsiding, as economists expect the consumer price index to show inflation dropping to a 4% annual rate in May. That’s down from 4.9% in the prior month. The central bank will ultimately decide to skip a rate hike for June, according to Certuity co-chief investment officer Dylan Kremer, but the Fed likely isn’t done raising rates overall. “We don’t necessarily believe that there’s no more hikes in the cards, but we do think it’s a 50/50 chance of another hike happening in this cycle,” Kremer said. “All else equal, [the CPI report] could be a short-term tailwind as markets continue to grind higher.” However, market expectations are that Fed officials will emphasize a commitment to keep inflation at bay and come back with a final rate increase at July’s meeting before going on hold for the rest of the year. The S&P 500 last week reached a significant milestone, gaining more than 20% off its October low. The move caused many investors to signal the bear market is over. The benchmark has been on a bit of a hot streak, gaining four weeks in a row. The Nasdaq Composite has been on an even bigger tear, up 33% from its 52-week low. The Nasdaq and technology stocks led the way on Monday again, with Amazon and Tesla each up more than 2%." MY COMMENT What can I say.....the BULL MARKEt is picking up some steam. As more and more people abandon the BS notion that this is a sucker rally and stocks are going to re-test the October lows....people will come back into the markets. At the same time they will have missed out on most of the big gains since last July. BUMMER.
These are ALL big time stories today. Apple hits record high one week after announcing Vision Pro VR headset https://www.cnbc.com/2023/06/12/app...k-after-announcing-vision-pro-vr-headset.html Oracle beats on top and bottom lines as cloud revenue jumps https://www.cnbc.com/2023/06/12/oracle-orcl-q4-earnings-report-2023.html
We will see if the actual numbers support this.....but.....what the heck......I will say.....where is the recession? Inflation outlook hits two-year low in latest New York Fed survey https://www.cnbc.com/2023/06/12/inf...o-year-low-in-latest-new-york-fed-survey.html (BOLD is my opinion OR what I consider important content) "Key Points The New York Fed’s monthly Survey of Consumer Expectations for May showed one-year inflation expectations down 0.3 percentage point to a 4.1% rate. That’s the lowest annual outlook since May 2021, just as inflation was beginning to spike to its highest level in more than 41 years. Household spending is expected to increase 5.6% over the next year, up 0.4 percentage point from April Consumers are growing more optimistic that inflation is on the way down, according to a New York Federal Reserve survey released Monday. The central bank’s monthly Survey of Consumer Expectations for May showed one-year inflation expectations down 0.3 percentage point to a 4.1% rate. That’s the lowest annual outlook since May 2021, just as inflation was beginning to spike to its highest level in more than 41 years. The one-year expectation then was 4%; inflation as measured by the consumer price index actually would rise to 8.6% a year later. In the current case, the survey matches general expectations that while prices are still well above the Fed’s 2% annual target, the general trend is lower as some of the Covid pandemic-specific factors such as outsized demand for big-ticket goods and supply chain clogs are easing. Still, median inflation expectations over the longer run edged higher. The three- and five-year outlooks both increased 0.1 percentage point to respective readings of 3% and 2.7%. Some of the inflation rise has been fed by accelerating wages, and the survey showed the outlook there is also diminishing. One-year expected earnings growth fell to 2.8%, down 0.2 percentage point since April and in keeping with the general range since September 2021. The survey also reflected how resilient the labor market has been. Expectations for losing one’s job fell 1.3 percentage points to 10.9%, the lowest since April 2022. The mean likelihood of leaving one’s job also fell half a percentage point to 19.1%. The job market strength has come despite a series of 10 Fed interest rate hikes aimed in large part at correcting a labor imbalance in which there were 1.8 job openings for every available worker in April. Markets largely expect the Fed to skip hiking rates at its meeting this week as policymakers process the impact that their moves have had on economic conditions. The survey also showed household finances remain solid, with spending expected to increase 5.6% over the next year, up 0.4 percentage point from April but below the 6.7% average over the previous 12 months." MY COMMENT This data really cuts the legs out of the recession prediction. The final data on household finances and spending is very solid.....and if anything....probably low for the next year. If this sort of "stuff" keeps up we are going to see a whole lot of new investors joining the markets over the next year. The issue will be how many of them stick with investing.....for the long term.
You know what I think about remote work......as a former business owner......hint......I dont like it. Paul Graham says remote work ‘does work initially,’ which is why it ‘fooled’ leaders who have since ‘changed their minds’ https://finance.yahoo.com/news/paul-graham-says-remote-does-225728000.html (BOLD is my opinion OR what I consider important content) "While the debate over remote work and return-to-office mandates rages on, one venture capitalist has identified what he sees as part of the problem. In 2005, Paul Graham cofounded Y Combinator, a Silicon Valley startup that invested early in Airbnb, Stripe, and other successful ventures. On Saturday, Graham mused on why some company leaders have soured on remote work after embracing it. “I’ve talked to multiple founders recently who have changed their minds about remote work and are trying to get people back to the office,” he tweeted. “I doubt things will go all the way back to the way they were before Covid, but it looks like they will go most of the way back.” He didn’t name individuals or companies, but examples abound. In April, Lyft’s CEO issued a return-to-office mandate one day after laying off more than a thousand employees, despite the company boasting a year earlier about letting staff choose where to work. A similar thing happened at the insurance company Farmers Group recently, with some employees getting angry because they made life changes—like moving to a new city—after being told they’d be remote workers. Graham suggested on Saturday that the effectiveness of remote work fades over time. That could help explain why some company leaders have grown slowly less enamored with it. “Why were all these smart people fooled?” he wrote. “Partly I think because remote work does work initially, if you start with a system already healthy from in-person work…and partly because it seemed to solve recruiting, which is always a bottleneck.” He isn’t the only prominent VC to question remote work. Keith Rabois, a general partner at venture capital firm Founders Fund, told The Logan Bartlett Show last month that younger workers “learn by osmosis,” which requires in-person interaction—and supervisors discover hidden talent by watching them. Neither he nor his firm, he added, would invest in a startup centered around remote work. OpenAI CEO Sam Altman, who led Y Combinator after Graham’s tenure, recently described remote work as a mistake. “I think definitely one of the tech industry’s worst mistakes in a long time was that everybody could go full remote forever, and startups didn’t need to be together in person and, you know, there was going to be no loss of creativity,” he said at a Stripe event in San Francisco. “I would say that the experiment on that is over." Meanwhile companies are getting stricter about enforcing return-to-office mandates. Google told employees this week that office attendance would be an element of their performance review if they didn’t comply with the three-day minimum for in-office work. A union slammed the move, saying “professionalism has been disregarded in favor of ambiguous attendance tracking practices tied to our performance evaluations.” At Amazon, employees staged a walkout this month over the company’s return-to-office mandate, which requires employees be in the office at least three days a week. The company seemed unfazed by the protest and is sticking with the mandate. “There’s more energy, collaboration, and connections happening," a spokesperson told Fortune, "and we’ve heard this from lots of employees and the businesses that surround our offices." Graham acknowledged that “there will definitely continue to be remote-first companies.” “There were before Covid,” he noted. “It works for some businesses. And there will be types of jobs, like customer service, that will commonly be done remotely. But remote-first won't be the default.”" MY COMMENT As a former business owner this is EXACTLY what you would expect. It is also exactly what I said from the start......remote work will KILL mentoring, company culture, work ethic, etc, etc, etc. Many companies are having a horrible time with young workers under 30 having any work ethic at all and strange ideas of how the work and business environment should work. With remote work this group of young employees will be a disaster. It somewhat worked at the start because you had all sorts of experienced workers that already had work ethic, company culture, experience on a personal level with management and personal relationships with fellow employees.
A quick look at the inflation numbers as they have moved the past five months. Date Value May 31, 2023 4.05% April 30, 2023 4.93% March 31, 2023 4.98% February 28, 2023 6.04% January 31, 2023 6.41% https://www.slickcharts.com/inflation
A nice open today......so far. Stocks higher after inflation data shows price increases cool https://finance.yahoo.com/news/stoc...s-cool-stock-market-news-today-133500345.html (BOLD is my opinion OR what I consider important content) "Stocks were higher on Tuesday morning after inflation data showed prices rose less than expected in May, likely clinching a pause in the Federal Reserve's rate hiking campaign on Wednesday. At the market open, the S&P 500 (^GSPC) advanced 0.41%, the Dow Jones Industrial Average (^DJI) climbed 0.29%, or 100 points. The Nasdaq Composite (^IXIC) gained 0.71%. The Consumer Price Index (CPI) report for May showed headline inflation rose 4% over the prior year in May, the slowest since April 2021 and below expectations for a 4.1% increase. There will be no Fed drama tomorrow According to data from the CME Group, there is now a 97% chance the Fed does not raise interest rates tomorrow. Expect the focus to instead be on what the next move is from the central bank and what the latest Summary of Economic Projections suggest the balance of this year has in store. In March, the SEP suggested rates would not go higher than today's level of a range between 5%-5.25%; tomorrow's forecast will be closely watched. Inflation shows further signs of cooling in May, likely clinching Fed pause The Consumer Price Index (CPI) for May showed headline inflation rose 4% over last year in May, the slowest increase since April 2021 and below expectations for a 4.1% jump. This slowdown in price increases likely clinches that a pause in the Federal Reserve's rate hiking campaign will be announced tomorrow. While headline inflation did come more than expected, so-called "core" inflation — which strips out the more volatile costs of food and energy — did fall less than expected, rising 5.3% over the prior year in May after a 5.5% increase in April. Economists had expected a 5.2% rise in core prices." MY COMMENT The above is ALL that matters today. I dont think any one can say that anything is "clinched" with the FED.....but I do agree that they will "probably" pause and "perhaps" do a final hike in July. We should now have a very clear runway for stocks over the rest of June and into July. We could even see a nice summer rally. To all that have held through the bear market of 2022 and are now reaping the rewards in 2023.....WELL DONE.
The story of the day.....of course. Inflation: Consumer prices in May rose at slowest annual rate since April 2021 https://finance.yahoo.com/news/may-cpi-inflation-data-june-13-2023-123207667.html (BOLD is my opinion OR what I consider important content) "Consumer prices rose at the slowest pace since April 2021 as inflation showed further signs of cooling in May, according to the latest data from the Bureau of Labor Statistics released Tuesday morning. The Consumer Price Index (CPI) revealed headline inflation rose 0.1% over last month and 4% over the prior year in May, a slowdown from April's 0.4% month-over-month increase and 4.9% annual gain. Both measures were roughly in line with economist forecasts of a 0.1% month-over-month increase and 4.1% annual increase, according to data from Bloomberg. Although the 4% jump in headline inflation represents a continued slowdown, it's still significantly above the Federal Reserve's 2% target. The Fed has been raising interest rates to try to bring down inflation, but the central bank risks sending the economy into a recession by hiking rates too high too fast. The Fed has signaled it could pause its hikes, saying it would continue to assess incoming data ahead of the June meeting. On a "core" basis, which strips out the more volatile costs of food and gas, prices in May climbed 0.4% over the prior month and 5.3% over last year. Both measures were also in line with economist expectations. Core inflation remained especially sticky last month as rent prices continue to surge. The index for both rent and owners' equivalent rent rose 0.5% each. Owners' equivalent rent is the hypothetical rent a homeowner would pay. The shelter index, which jumped 8% annually and 0.6% between April and May, was the largest factor in the monthly increase of core inflation, accounting for over 60% of the total increase. Among the other indexes that rose in May was the index for used cars and trucks, which increased 4.4% for the second straight month, and the index for motor vehicle insurance, which increased 2%, the BLS noted. The energy index decreased 11.7% for the 12 months ending in May, while the food index increased 6.7% over the last year. The energy index decreased 3.6% from April to May on a seasonally adjusted basis, led by a 7.7% drop in fuel oil prices, while food prices rose 0.2%. Egg prices fell a whopping 13.8% in May after dropping 1.5% in April and 10.9% in March. U.S. stocks edged higher in early trading following the release of the data. Treasury yields fell about 7 basis points to around 3.70%. The inflation data set will be a critical economic indicator ahead of the Federal Reserve's monetary policy decision on Wednesday. It's the last piece of data following a strong May jobs report, coupled with resilient readings on both the services and manufacturing sectors. Markets were pricing in a roughly 95% chance the Federal Reserve keeps rates unchanged in June immediately following the release of the data, according to data from the CME Group. The Fed raised interest rates at each of its previous 10 meetings. “It would likely have taken a meaningful upside inflation surprise to convince the Fed to hike in June," Seema Shah, chief global strategist at Principal Asset Management, wrote in reaction to the data. "With inflation coming broadly in line with expectations, the pressure is off." "Tomorrow is likely to be the first FOMC meeting since March 2022 without a policy rate hike. Yet, with annual core inflation actually rising further in May and coming hot off the heels from the very strong jobs report, the July FOMC meeting is very much live," the strategist added." MY COMMENT When I say this is the story of the day......that is exactly what I mean. This is a story for ONLY one day. It will be quickly forgotten. It is not a significant or substantial issue going forward for stocks and funds. It is a simple short term.....few day event. As a long term investor......I do NOT invest based on economic news or data. BUT......I will ride this little wave that this will create for this week. The REAL DISCUSSION should be on the FED's inflation target. it is totally false and not based on anything real. There have been a few articles on this issue in this thread but it is uniformly ignored by the media and investment community. It is just ASSUMED that the fed inflation target is NORMAL. Those of us that have been around for many decades KNOW that this inflation target is WRONG and NOT representative of where the USA economy should be.
Was watching an interview with Ray Dalio (Bridgewater) on Squawk yesterday. Man, that guy really REALLY thinks that we’re fcuked. Never heard such harsh bearish predictions since Ackman’s big meltdown in 2020 before covid. I mean this guy is subscribing to geopolitical escalation, civil tear, debt crisis … the WORKS! It doesn’t help that he was right about 2008. … Good night everybody!
Forward guidance..... Two More Lessons on Central Bankers’ Unpredictability https://www.fisherinvestments.com/e...e-lessons-on-central-bankers-unpredictability (BOLD is my opinion OR what I consider important content) "Surprise rate hikes confirm forward guidance is feckless. What happens when two central banks pause rate hikes, say some dovish things, then U-turn and hike rates? Evidently, what happens is people keep parsing their statements for clues as to what will happen next, as if they didn’t just see the fruitlessness of this endeavor firsthand. So it goes this week, with pundits trying to divine what the Reserve Bank of Australia (RBA) and Bank of Canada (BoC) will do next after this week’s hikes. Dear readers, we suggest you not fall into the same trap—if central bankers can’t predict their own moves, how can mere mortals? To see this, let us start with the RBA and simply take a tour of its recent policy decisions and statements. In February, as the bank hiked rates by 0.25 percentage point (ppt) or 25 basis points (bps), Governor Philip Lowe’s statement said the bank’s “Board expects that further increases in interest rates will be needed over the months ahead.” So no one was too surprised when the RBA hiked again in March—or that Lowe’s March statement said the “Board expects that further tightening of monetary policy will be needed to ensure that inflation returns to target and that this period of high inflation is only temporary.”[ii] But then the RBA paused in April, surprising onlookers. That month’s statement referred several times to slowing economic growth, falling inflation forecasts and monetary policy’s tendency to hit the economy at a lag. The forward guidance—a fancy term for what central bankers say they expect to do—also got more dovish (or non-rate-hikey, if you aren’t into overused bird metaphors), saying more rate hikes “may well be needed.”[iii] Not “will,” just “may well.” Many pundits figured this meant rate hikes were off the table for the time being. Surprise! The RBA hiked by 0.25 ppt in May, defying expectations for more pausing. What changed? After assessing rate hikes’ impact, the Board decided it would take too long to get inflation back down to target if they didn’t resume hiking. Yet their guidance was still squishy, saying more rate hikes “may be required.”[iv] Evidently that was indeed the case, as they hiked another 0.25 ppt Tuesday despite a raft of slowing economic indicators. And they have kept the “may be required” guidance, spurring another round of what will they do next?[v] We just don’t get it. “Will be needed” preceded hikes and a rate pause. “May well be needed” preceded a hike. “May be required” preceded a hike. None of it means anything, because—as every statement acknowledges—decisions depend on the evolution of economic and inflation data. These folks are reacting to changing economic indicators and forecasts based on their biases and viewpoints and how those influence policymakers’ expectations, which are always impossible to pin down exactly. For lesson 2, see the BoC, which hiked Wednesday after pausing in March and April. When they had last hiked in late January, the Governing Council said that if the economy performed in line with their forecasts, they expect “to hold the policy rate at its current level while it assess the impact of the cumulative interest rate increases.”[vi] But they also left the door open for more hikes “if needed to return inflation to the 2% target.” So March’s pause wasn’t a huge surprise. Neither was April’s, with both statements focusing on moderating inflation and weak GDP forecasts. Both statements also said the Governing Council “remains prepared to raise the policy rate further if needed to return inflation to the 2% target,” but with nothing like the clear-cut guidance in January’s statement, expectations for a move were low.[vii] So of course they hiked this week! And jolted Canadian bond markets in the process, sending interest rates up more than 15 bps across all maturities through 10 years.[viii] The statement said the economy was running hotter than anticipated and conceded monetary policy to date “was not sufficiently restrictive to bring supply and demand into balance and return inflation sustainably to the 2% target.”[ix] For those who don’t speak central banker, the translation is oopsie daisy. And perhaps aware that their past forward guidance wasn’t terribly useful, they didn’t even try to set expectations—instead, they just rattled off what they are watching for. But that didn’t stop investors from trying to read the tea leaves. Futures markets quickly priced in another 0.25 ppt hike by September’s meeting.[x] No doubt reporters will grill Deputy Governor Paul Beaudry about the BoC’s next move at the speech and press conference he is holding Thursday. Some unsolicited advice to him: Don’t cave. Jettisoning forward guidance is a good thing. The less you commit to, the fewer U-turns you make, and the more credibility you store up. Central banks globally have defied their own guidance repeatedly since the concept became popular under former Fed head Ben Bernanke many years ago. The intent was to earn plaudits for transparency. Instead it earned mockery for the endless mind changing and, in one infamous exchange with politicians, the moniker “unreliable boyfriend” for former Bank of England chief Mark Carney. If more central banks stopped trying to preview their next moves—and everyone stopped trying to guess what comes next—we would probably all be happier. Markets could go about their daily business of pricing in developments and data signals. Speeches would get far less attention, so we would get far fewer of them. Central banks could rebuild credibility. We could use automation and AI for things other than unnecessarily parsing central banker statements for small wording differences that don’t indicate anything about what they will do. All good things, except maybe that last one, which is pretty neutral. But for now that seems to be a pipe dream, so let us all remember, always, that forward guidance isn’t reliably predictive, monetary policy isn’t predictable and interest rate decisions have no pre-set market impact. Central bankers do what they do when they do it, and it hits the economy at a significant lag, giving investors plenty of time to assess the merits and reposition, if necessary, after the fact. MY COMMENT Who knows......and.....who cares. NOT relevant to actual long term investors.....till these morons destroy the markets for good.
