The Long Term Investor

EARNINGS is not over yet. I still have a few stocks to report.......

HD on August 15 before the bell.
NVDA on August 23 after the bell.
NKE on September 25 or perhaps October 5, (waiting for the date to firm up).
COST on September 26 after the bell.

I am sure the BIG ONE for the general markets will be NVDA. That one will have the power to kick off a good rally.....or.....kick off a little slump.

 

Ended the day a lot better than earlier in the day in terms of my loss. I had nine of ten stocks in the RED today. My lone winner......in typical perverse market style.....APPLE. I got beat by the SP500 today by 0.43%.

A totally wasted day today due to the rating and China news. Talk about meaningless events driving the markets. The best thing I can say about today is that the markets recovered nicely through the day to moderate my loss.

 

Here is the close today.

Dow sheds more than 150 points as Moody’s bank downgrade rekindles market selloff

https://www.cnbc.com/2023/08/07/stock-market-today-live-updates.html

"Stocks retreated Tuesday as an August selloff was reignited by a downgrade of the banking sector by credit rating agency Moody’s.

The Dow Jones Industrial Average was down 158 points, or about 0.5%, led by a decline in Goldman Sachs. At session lows, the index dropped more than 450 points.

The S&P 500 dipped 0.4%, bringing the broad index’s month-to-date loss to 1.9%. The Nasdaq Composite pulled back by 0.8%, putting it down more than 3% month to date. Tuesday was the fifth negative day out of six sessions for both the S&P 500 and the Nasdaq.

Banks fell broadly after Moody’s downgraded the credit rating on several regional banks, including M&T Bank and Pinnacle Financial, citing deposit risk, a potential recession and struggling commercial real estate portfolios. The credit agency also placed Bank of N.Y. Mellon and State Street on review for a downgrade.

Goldman Sachs and JPMorgan Chase traded around 2% and 0.5% lower, respectively, while the SPDR S&P Bank ETF (KBE)
dropped more than 1%.

The SPDR S&P Regional Banking ETF (KRE) also slid more than 1%, as did M&T Bank. The regional bank ETF lost 28% in March amid the failure of Silicon Valley Bank.

“It’s not optional to have good credit ratings, because they need faith,” said Jay Hatfield, CEO of Infrastructure Capital Advisors, of regional banks. “Any sort of reduction of faith in the regional banking system is really terrible for market sentiment.”

Traders also parsed through the latest batch of earnings. UPS
shares slipped close to 1% after the delivery giant reported weaker-than-expected revenue for the second quarter. The company also lowered its full-year revenue outlook.

The corporate earnings season has so far been better-than-anticipated. With 89% of S&P 500 stocks done reporting quarterly results, about four-fifths of them have beaten Wall Street’s expectations, according to FactSet. But it appears a lot of those results were already priced into the market, given the pullback the last two weeks.

Investors got a short respite from the selling on Monday with the 30-stock Dow posting its best day since June 15.

Investors are assessing recent rally and future of economy, CIO says

Investors are wondering how much of the impacts of previous economic tightening measures from the Federal Reserve have yet to be felt, according to Yung-Yu Ma, BMO Capital Management’s chief investment officer.

“For a while, there was a belief that a lot of the the impact of the Fed tightening and central bank tightening globally had already taken place,” he said. “There’s starting to be a bit more of a realization that the impact of those higher interest rates still have a while to permeate through the U.S. and global economy.”

Ma attributed Tuesday’s slide as a “moment of assessment” as investors contemplate the strength of the 2023 market rally and what lies ahead for the economy after the Fed’s interest rate hikes. And now may not be the time to “go maximum aggressive” in the stock market, he said, given the uncertainty."

MY COMMENT

LOL....a lot of the earnings beats were already priced into the markets.......yeah right. NO.....the media and experts were all expecting and anticipating much worse earnings.

I find it interesting that now......"well, this was what we expected"......."we already priced those earnings in". These people have no shame.

 

I have been watching the markets since the open today. Another day of PSYCHOSIS for the short term. NOTHING to do but sit and watch the crazy fun going on.

We are back to fear mongering and doom & gloom for the very short term. Nothing to is really going on with any substance so time to drag out Inflation, the FED, the CPI, China growth, interest rates, and every other issue and throw them all on the markets at once.

Of course many of the East Coast elites and money people are on their annual August vacation in their enclaves till after Labor Day......so we are stuck with shallow and irrational markets just blowing in the wind.

So.....I sit and wait out the insanity.

 

I see this as the underlying issue to all that is happening today.

Rising bond yields emerge as a pressure point for the US stock rally

https://finance.yahoo.com/news/analysis-rising-bond-yields-emerge-051052313.html

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

"NEW YORK (Reuters) — Rising U.S. bond yields are unnerving investors and worsening stocks turbulence as markets confront a pileup of unwelcome news, from last week's downgrade of the U.S. credit rating to revived worries over regional banks.

Surging yields contributed to last year’s plunge in equities, when the Federal Reserve hiked interest rates to fight soaring inflation. This year, it’s largely been a different story, with bond yields rising on better-than-expected economic data. The S&P 500 has rallied over 16% from its March lows, despite a roughly 50 basis point increase in the yield on the benchmark 10-year Treasury note over that time.

That dynamic has changed in recent days, however, as Treasury yields have approached last year’s high while the S&P 500 has fallen 2% from its July peak. One worry is that higher yields on Treasuries, seen as basically risk-free because they are backed by the U.S. government, will make stocks less attractive at a time when equity valuations have ballooned.

Data from BofA Global Research showed one-month correlations between the S&P 500 and the 10-year yield stood at their most negative since 2000, meaning the two assets were once again moving sharply in opposite directions. The bank’s analysts called rising yields "an underpriced risk" for the equity market. The S&P 500 fell 2.3% last week, its biggest weekly drop since March.

"The market has looked at the rising yields as consistent with a better economy and what the market perceives as lower recession risk," said Keith Lerner, co-chief investment officer at Truist Advisory Services. However, "If yields continue to move higher, it’s going to be more challenging to get further valuation expansion."

A series of developments has weighed on the ebullient market mood that had persisted over the last few months. Moody's cut the credit ratings of several small to mid-sized U.S. banks on Monday and said it may downgrade some of the biggest lenders in the United States. That news followed a downgrade from Fitch of the U.S. credit rating last week.

Meanwhile, weak trade data from China undercut hopes for a swift recovery in the world’s second-largest economy, while Apple shares sold off on Friday following disappointing earnings from the world's most valuable company.

The Cboe Volatility Index, which measures investor demand for protection against market swings, shot to its highest level in over two months on Tuesday after falling near an over three-year low late last month.

While markets may have grown complacent heading into August, recent developments "have kind of slapped people in the face a little and brought the notion that there is risk in markets back to the forefront of people’s minds," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

Valuation inflation

Rising equity valuations have been a concern for investors studying the relationship between bonds and stocks.

As stocks have rallied this year, valuations have become more expensive. The price-to-earnings ratio for the S&P 500 has increased from less than 17 times forward 12-month earnings estimates at the end of 2022, to 19.6 times as of Monday, according to Refinitiv Datastream. The index's long-term average is 15.6.

Meanwhile, the equity risk premium (ERP), which compares the attractiveness of stocks over risk-free government bonds, has been shrinking for most of 2023 and is around its lowest levels in well over a decade.

According to Lerner, of Truist, the current ERP level has historically translated to just a 1.3% average 12-month excess return of the S&P 500 over the 10-year Treasury note.

The markets will have an important test with Thursday's release of the consumer price index inflation data for July. A hotter-than-expected reading stands to raise expectations for more hawkish Fed policy and drive bond yields up further.

Even as the economy has staved off a downturn so far, some investors feel rising interest rates could hurt growth in coming months by crimping consumer spending or pressuring corporate earnings.

The market is trying to gauge at what levels will yields or rates start to have negative consequences for stocks, "whether that is a valuation re-rating or economic damage or earnings drag," said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management.

So far, however, stocks have been "amazingly resilient" to the rise in yields, he added."

MY COMMENT

A good little summary of the current short term market INSANITY that is going on right now.

In addition it seems to me that people in general in the USA are having trouble shaking off the negativity of the past few years. Everyone is tiptoeing around waiting for some big shoe to drop.

SO.....fine with me......the more worry the better. I would rather see this stuff happening compared to mass euphoria.

 

You know.....when this thread started......as commented on by EMMETT.....I owned many of the same stocks that I own now. I have ditched a few.....BOEING, CHEVRON, JOHNSON & JOHNSON, and 3M.

Boeing and Chevron have always disappointed me. I have owned each a number of times over the years and they never seem to do anything for me.

J&J and 3M were holdovers from my BIG CAP consumer conglomerate, dividend paying, portfolio of the past. I HATE the litigation exposure that J&J now has. I dont anticipate EVER adding any of the above back to my portfolio.

 

About all I can say today.....considering the lack of any realistic or rational reason for the recent markets is........

YES......I remain fully invested for the long term as usual.

 

GOOD to see TomB16 back posting. He is enjoying retirement too much.

 

WELL......I ended the day as expected......a loss in my stocks. The averages tired to make a come-back about mid-day or so....but obviously it petered out and turned back more negative. I had a nice fat loss today......although....four of my stocks helped to moderate the loss. Those stocks were......NKE, HON, COST, and HD. Nike was dead flat at 0% today.....the other three were in the green.

We move on from here........hump day is now officially over.

 

Yep....a sad day for stocks.

Stocks skid for second day, Nasdaq leads way down

https://finance.yahoo.com/news/stoc...y-down-stock-market-news-today-153323247.html

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

"Stocks sputtered on Wednesday, as worries lingered on the US banking sector and attention shifted to a key US inflation report in the wake of disappointing Chinese price data.

The Dow Jones Industrial Average (^DJI) fell 0.54%, or 190 points. The S&P 500 (^GSPC) slipped 0.7%, while the tech-heavy Nasdaq Composite (^IXIC) led the way down, 1.17%.

With the crucial July US inflation report looming on Thursday, data released Wednesday showed China's consumer sector fell into deflation in July. It's another sign that Beijing is struggling to revive demand in the world's second-biggest economy, spurring fears about a prolonged slowdown with global repercussions.

Meanwhile, investors continued to digest Moody's downgrade of midsize US banks, a reminder that the problems that roiled the financial world in the spring are not yet in the past. The health of the banking sector, as well as inflationary pressures, has played a part in the Federal Reserve's decision making during its rate-hiking campaign.

Disney (DIS) is the highlight on the earnings docket, with its after-hours results closely watched for how it will tackle advertising headwinds and escalating streaming losses. Its shares ticked higher in premarket trading after its ESPN network signed a landmark sports betting deal with PENN Entertainment (PENN)."

MY COMMENT

That is about it.....a conglomeration of news items that together add up to a negative day. NONE of these are earth shattering items....but together......along with very jumpy investors.....it is enough to push the markets down today.

I see NOTHING that really is a concern long term.

 

If you care about DISNEY....here you go.....I dont.

Disney+ subscribers decline as company's streaming loss narrows

https://finance.yahoo.com/news/disn...ompanys-streaming-loss-narrows-201144508.html

 

HERE is the news of the day....as the markets open to the green.

July CPI report shows inflation gauge rose 3.2%, less than expected

https://www.cnbc.com/2023/08/10/cpi-inflation-july-2023-.html

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

"The consumer price index rose 3.2% from a year ago in July, a sign that inflation has lost at least some of its grip on the U.S. economy.

Prices accelerated 0.2% for the month, in line with the Dow Jones estimate, the Bureau of Labor Statistics reported Thursday. However, the annual rate was slightly below the 3.3% forecast though higher than June.

Excluding volatile food and energy prices so-called core CPI also increased 0.2% for the month, matching the estimate and equating to a 12-month rate of 4.7%, the lowest since October 2021. The annual rate for core also was slightly below a Dow Jones consensus estimate for 4.8%.

Markets reacted positively to the report, with futures tied to the Dow Jones Industrial Average up nearly 200 points and Treasury yields mostly lower.

Almost all of the monthly inflation increase came from shelter costs, which rose 0.4% and were up 7.7% from a year ago. The BLS said more than 90% of the increase came from that category, which accounts for about one-third of the CPI weighting.

Food prices increased 0.2% on the month, and the BLS said energy increased just 0.1% even though crude prices surged during the month and prices at the pump jumped as well.

Used vehicle prices declined 1.3% and medical care services were off 0.4%.

The comparatively tame inflation levels helped raise worker pay. Real wages increased 0.3% on the month and were up 1.1% from a year ago, the BLS said in a separate release.

The annual rate for headline inflation, while below expectations, actually marked an increase from the 3% level in June.

Together, the latest batch of data shows that while inflation has come well off its 40-year highs of mid-2022, it is still considerably above the 2% level where the Federal Reserve would like to see it and high enough that cuts in interest rates are unlikely anytime soon.

“While inflation is moving in the right direction, the still-elevated level suggests that the Fed is some distance from cutting rates,” said Seema Shah, chief global strategist at Principal Asset Management. “Indeed, disinflation is unlikely to be smooth and will require some additional economic pain before the 2% target comes sustainably into view.”

Decelerating levels, though, are at least taking some of the pressure off the Fed to keep tightening policy.

After hiking benchmark interest rates 11 times since March 2022, central bank officials are widely expected to take a break in September. However, it’s up for debate what happens from there, and public statements from policymakers have shown disparate opinions.

Earlier this week, regional Fed presidents John Williams of New York and Patrick Harker of Philadelphia made comments indicating they could see the rate hikes at an end. However, Governor Michelle Bowman said she expects more increases, while fellow Governor Christopher Waller also has pointed towards the possible need for additional hikes ahead.

Regardless of whether the Fed approves any additional hikes, virtually all members have agreed that the higher rates are likely to stay in place for some time.

The higher rates have yet to put a dent in economic growth: The first half of 2023 has seen GDP post gains of 2% and 2.4% in the first two quarters respectively, and the Atlanta Fed is tracking third-quarter growth of 4.1%. Payroll gains have been slowing but are still solid, and unemployment is near its lowest since late in 1969.

Consumers have begun to be a bit stretched and increasingly are turning to credit cards and savings for their spending. Total credit card debt surpassed $1 trillion for the first time this year, according to New York Fed data.

However, more economists are beginning to expect the U.S. can avoid a recession despite the aggressive rate hikes. Bank of America, Goldman Sachs and JPMorgan Chase all recently have forecast that a contraction is becoming less likely."

MY COMMENT

A good report compared to expectations. ALSO....a pretty good summary article of where we are at this moment.

I dont have a voice........but.......but if I did I would be screaming to the hills that this inflation rate of 3.2% is PERFECT. A normal economy is inflation of 3-4%.......NOT....2%. If we get down to 2% we will be flirting with DEFLATION. If you think inflation is bad wait till we end up in deflation. Just ask the Japanese how much fun that is and how hard it is to recover.

NO.....we are not going to see rate cuts anytime soon. Probably not till the end of next year at earliest. I dont know why the media keeps pushing the story-line that people are expecting rate cuts. That is FANTASY.

AND.....as noted above there is NO RECESSION and the economy is still STRONG.