In like this little article. Stock Market Falling Deeper Into Undervalued Territory Stocks have retreated since hitting fair value at end of July and are now looking very undervalued on historical perspective https://www.morningstar.com/markets/stock-market-falling-deeper-into-undervalued-territory (BOLD is my opinion OR what I consider important content) "Key Takeaways Current Market Valuation Has Only Been This Undervalued 12% of Time Since 2011 Magnificent 7 Earnings Roundup Utility Stocks Very Undervalued, but Probably Not for Long Economic Outlook: Growth Stronger Than Expected, but It Will Slow The stock market peaked on July 31, just briefly touching our fair value composite, and has slid ever since. There are three main reasons for this pullback. First, long-term interest rates have risen substantially in a short period of time. Between July 31 and Oct. 31, the yield on the 10-year U.S. Treasury has risen 64 basis points to 4.82% and had hit as high as 5.00% in mid-October. These are the highest interest rates that Treasuries have traded at since 2007, and have become increasingly attractive to investors, many of whom have begun to increase their fixed-income allocations at the expense of reduced equity allocations. Yield on 10-year U.S. Treasury Source: Board of Governors of the Federal Reserve System and Morningstar. Data as of October 31, 2023. Second, while third-quarter gross domestic product was much more robust than expected, the market continues to expect that tight monetary policy, high interest rates, and rising lending standards will take their toll on the economy. The only question is, How much and how fast? While our base case remains no recession, we recently lowered our projection for real GDP in 2024 to 1.4%. According to our projections, we forecast the rate of GDP growth will decelerate sequentially until bottoming out in the third quarter of 2024 and then begin to accelerate thereafter. GDP Growth, Quarterly Forecast Source: Bureau of Economic Analysis and Morningstar. Data as of October 31, 2023. Lastly, already heightened geopolitical risks have worsened and cast a negative sentiment across the equity markets. Investors are keeping a close eye on the conflict between Israel and Hamas, and are watching for any potential contagion to other regional actors. Current Market Valuation Has Only Been This Undervalued 12% of Time Since 2011 In our August 2023 Market Outlook, we noted that the stock market had traded up enough to reach our fair value estimate. We also opined that was a good time to lock in profits and sell those stocks that had become overvalued and overextended. Between July 31 and Oct. 31, the Morningstar US Market Index dropped approximately 8.8%, with 2.5% of the decline occurring in October. According to a composite of the more than 700 U.S.-exchange-traded stocks that we cover, as of Oct. 31, the U.S. equity market was trading at a price/fair value ratio of 0.89, representing an 11% discount to our fair value estimate. Since 2011, the market has traded at this discount (or more) to our fair value only 12% of the time. Month End Price/Fair Value of Morningstar’s U.S. Equity Research Coverage Source: Morningstar. Data as of October 31, 2023. The pullback in October has been relatively broad-based as each of the style categories has fallen by similar amounts. As such, based on our valuations, we continue to advocate for an overweight position in value, underweight in core/blend, and market weight in growth. By market capitalization, large-cap stocks fared better to the downside whereas mid-cap and small-cap took the brunt of the selloff, making those categories even more undervalued compared with our valuations. Price/Fair Value by Morningstar Style Box Category Source: Morningstar. Data as of October 31, 2023. The current price/fair value on small-cap stocks is near the greatest discount we’ve seen since 2011. However, the risk to small-cap stocks’ performance over the near term is that we project the rate of economic growth to slow sequentially until third-quarter 2024. We suspect small-cap stocks will have a difficult time performing until the market begins to price in an economic rebound. In fact, market sentiment is such that we will need a much more “normalized” economic environment before investors become more comfortable going back into smaller-cap stocks. In a slowing (or recessionary) economic environment, institutional investors will have the predilection to hide out in large-cap stocks as opposed to taking the risk of greater earnings volatility inherent in small-caps. In addition, small-caps will be more negatively affected the longer interest rates stay high. Their debt funding is much shorter duration than large-caps, which can easily issue 10- and 30-year bonds. Large-cap companies had the benefit of being able to term out a substantial amount of their debt in the public bond markets while interest rates were low in 2020 and 2021. Magnificent 7 Earnings Roundup Considering that attribution from the “Magnificent 7″ accounts for 68% of the markets’ gains thus far this year, investors are watching their earnings and guidance even more closely than ever. Alphabet GOOGL Morningstar Price/Fair Value: 0.79 Morningstar Rating: 4 stars Morningstar Economic Moat Rating: Wide Revenue and earnings growth were both better than expected, but the stock traded down on concerns that its cloud business is growing more slowly than Microsoft’s MSFT, which may indicate Alphabet is losing market share. We are not concerned. In our opinion, the differential is explained by the type of end client served by Alphabet as compared with Microsoft. We held our $161 fair value estimate unchanged. Alphabet Earnings: Google Search and YouTube Are Strengthening, and Cloud Is Likely to Accelerate Amazon.com AMZN Morningstar Price/Fair Value: 0.88 Morningstar Rating: 3 stars Morningstar Economic Moat Rating: Wide Amazon.com reported good third-quarter results and provided better-than-expected guidance for the fourth quarter. We increased our fair value estimate to $155 per share, from $150. Amazon.com Earnings: E-Commerce Improves, AWS Stabilizes, and Margins Surge AAPL[/paste:font] Morningstar Price/Fair Value: 1.16 Morningstar Rating: 3 stars Morningstar Economic Moat Rating: Wide Earnings to be released Thursday evening, Nov. 2. Meta Platforms META Morningstar Price/Fair Value: 0.97 Morningstar Rating: 3 stars Morningstar Economic Moat Rating: Wide We increased our fair value estimate slightly to $322 from $311. Third-quarter results demonstrated strength on all fronts: user growth, engagement, and monetization. The stock pulled back slightly as traders were looking for more cost containment, but the stock quickly rebounded. Meta Earnings: Still Impressive but the Shares Remain Fairly Valued Microsoft MSFT Morningstar Price/Fair Value: 0.94 Morningstar Rating: 3 stars Morningstar Economic Moat Rating: Wide We increased our fair value estimate to $370 from $360. The company is running on all cylinders and exceeded expectations. Microsoft Earnings: All Segments Are Good, With Azure Expected to Remain Strong Throughout 2024 Nvidia NVDA Morningstar Price/Fair Value: 0.88 Morningstar Rating: 3 stars Morningstar Economic Moat Rating: Wide Nvidia’s earnings release is scheduled for Nov. 21. Tesla TSLA Morningstar Price/Fair Value: 0.98 Morningstar Rating: 3 stars Morningstar Economic Moat Rating: Narrow We lowered our fair value estimate to $210 from $215 on lower short-term margins as Tesla ramps up its Cybertruck production. However, similar to the Model 3 ramp-up, we forecast automotive profit margins will rebound as production scales up. Our long-term forecasts remain unchanged. After Earnings, Is Tesla Stock a Buy, a Sell, or Fairly Valued? ........(see article for additional content) MY COMMENT YES.....before the five day rally we just had....there were some good buys in the markets. many of the big cap names were on sale. In fact I think compared to long term potential many of them are still on sale. I like the EARNINGS portion of this article covering the BIG SEVEN. If you simply look at the big picture.....of each of these companies and avoid the constant nit-picking.......ALL of them but TSLA had very good earnings BEATS. I have no doubt that NVDA will soon join them with a good BEAT. In other words.....se are seeing STELLAR earnings this time around. AND....it is interesting that the near complete media blackout on earnings in general seems to continue with little being said in any daily content on the good earnings that we are seeing in general this time around. I also find it interesting that the three reasons for the drop in stocks listed in this article.....have now ALL simply faded away.
Another nice little article. Apple’s mixed results hide strength in India, services, and future Mac growth https://finance.yahoo.com/news/appl...services-and-future-mac-growth-195506916.html (BOLD is my opinion OR what I consider important content) "Apple (AAPL) on Thursday announced better-than-expected results for its fourth quarter, but an underwhelming outlook for Q1 sent shares tumbling more than 1% in afternoon trading Friday. While Apple’s latest results weren’t exactly bad — they beat on revenue, earnings, and iPhone sales — they didn’t engender much relief among investors who were already wary about a slowdown of iPhone sales in China. It also didn’t help that Q4 marked the fourth straight quarter of year-over-year declines in overall revenue, down 1% versus 2022. And with Apple CFO Luca Maestri expecting the company’s iPad and Wearables, Home, and Accessories businesses to “decelerate significantly” from the September quarter, it would seem that Apple is facing serious trouble. But there were a handful of positive signs in the company’s report and first quarter guidance that could give the tech giant a boost moving forward, including its performance in India and an expected jump in Mac sales. India and emerging markets get a boost Apple has been investing a good deal in India over the past several years. Not only is the company leaning on the country as a new manufacturing hub for its products, including the all-important iPhone, it’s also opened up its first physical stores in the region in Mumbai and New Delhi. According to UBS analyst David Vogt, while India accounted for just 4% of total iPhone sell-through in the 12 months prior to September 2023, unit sales were up 31% in the country. That’s compared to declines in the US, China, and Europe. “We had an all-time revenue record in India,” Apple CEO Tim Cook said during the company’s earnings call. “We grew very strong double digits. It's an incredibly exciting market for us and a major focus of ours. We have a low share in a large market. And so it would seem that there's a lot of headroom there.” According to Cook, Apple is banking on more people moving into the middle class and better distribution in the country as boons for its presence there. “I couldn't be happier with how things are going at the moment,” he added. It’s not just India, though. Apple also launched new online stores in Chile, as well as Vietnam, where the company set new revenue records. Mac sales to rebound Apple’s Mac segment has been one of its biggest laggards among the company’s various businesses over the last several quarters. In Q4 of this year, in particular, revenue fell 34% year over year from $11.5 billion to $7.6 billion. But things could be turning around. During the company’s earnings call, Maestri specifically called out the Mac business moving forward, saying that he expects year-over-year performance to “significantly accelerate in the current quarter.” That’s because Apple just launched its new M3 line of chips, as well as its M3-powered MacBook Pros and iMac. The systems should help drive an uptick in sales, compared to the same time last year when sales were falling. It’s important to also note that Apple’s iPad and Mac revenue in particular were stung by year-over-year comparisons that were warped by production slowdowns and a subsequent jump in sales during 2022. How long the M3 chips will buoy Mac sales, however, remains to be seen. Services is still a standout While Apple’s hardware sales weren’t enough to knock anyone’s socks off, the company’s Services business was a solid standout. Revenue jumped from $19.2 billion in Q4 2022 to $22.3 billion this year. In fact, Services revenue rose each quarter last year, a stark contrast to the rest of Apple’s segments, which fell across various quarters. “The Apple flywheel is alive and well, following a 20-year success story in which consumers buy one Apple product, fall in love, buy another product, add a service, upgrade, and repeat,” Deepwater Asset Management managing partner Gene Munster wrote in an investor note. Services has long been seen as Apple’s best hedge against falling iPhone sales, and with the declines over the last year, Services has been a help for the company’s margins. For 2024, Vogt says he expects Services revenue to increase to $95.4 billion, 12% higher than 2023. While worries still abound among investors as to whether Apple’s hardware segments will bounce back after a difficult 2023, next year has a number of potential opportunities ahead, including more MacBooks running Apple’s new M3 chips, and, importantly, the launch of the Vision Pro headset. And while that won’t be a volume seller out of the gate, it could goose numbers in the future." MY COMMENT This is an ICONIC company with iconic products and a very broad line-up of products and services. They made a big mistake in the past tying their future to China while China was screwing them stealing their tech. The push into India and Viet Nam is a good change from their past behavior. The China impact will continue for some time....but....I believe the company is now dealing with China with their eyes more open. I dont have any concerns about APPLE and will continue to hold it as a core investment for many, many years to come. personally on a......."whole company basis".....I thought earnings were good.
Good to hear from you zukodany. I wondered just the other day if you were looking at getting back in your PLTR. In case you missed it the other day I posted their latest earnings. I'm sure you have been watching that anyway, but here it is again if you want to check it out. Palantir Reports Its Fourth Consecutive Quarter of GAAP Profitability; GAAP EPS of $0.03 (PLTR)
YES......the very rich have options.....or......taxes matter. Jeff Bezos to leave Seattle for Miami https://www.cbsnews.com/news/jeff-bezos-move-to-miami-from-seattle-amazon-ceo/ (BOLD is my opinion OR what I consider important content) "Amazon founder Jeff Bezos is moving to the Sunshine State. In a sentimental Instagram post Thursday, which included old footage of the very first Amazon office located in Bezos' former garage in the Seattle suburb of Bellevue, the billionaire said he's moving to Miami. His reasons for relocating include a desire to be closer to his parents; his partner, Lauren Sanchez; and Cape Canaveral, where operations for his space exploration company Blue Origin "are increasingly shifting," according to the post. "As exciting as the move is, it's an emotional decision for me," Bezos said in the post. "Seattle, you will always have a piece of my heart." Bezos established Amazon in Seattle in 1994, contributing to the city's transformation into a vibrant technology hub. He helmed the company until 2021, at which time he stepped down as CEO to focus on other ventures, such as his aerospace company. Influx of billionaires Bezos' cross-country move comes months after the billionaire bought two South Florida mansions worth $79 million and $68 million, respectively, Bloomberg reported. However, being close to friends and family won't be the only perk to living in Miami for Bezos. The move could also save him loads of money on taxes. Washington State, where Bezos currently lives, recently passed a 7% tax on capital gains, which could cost wealthy individuals like Bezos millions, according to the state's Department of Revenue. Under that new tax, Bezos would owe $70 million in state taxes for every $1 billion of Amazon stock he sells, according to CNBC Wealth Reporter Robert Frank. By comparison, Florida is one of nine states that does not have state income or capital gains taxes, according to Investopedia. Several other ultra-wealthy individuals have recently made the move to Miami to take advantage of the state's generous tax laws. Last year, Ken Griffin, the wealthiest man in Illinois, moved his family and his Chicago-based hedge fund to Miami. Hedge fund tycoons Dan Loeb and Josh Harris have also purchased palatial mansions in Miami Beach in recent years, Insider reported." MY COMMENT Not mentioned is the even WORSE........the pending Washington state wealth tax. Washington state senator behind wealth tax proposal responds to Bezos’ departure https://www.geekwire.com/2023/washi...lth-tax-proposal-responds-to-bezos-departure/ "“Jeff Bezos is far from the only billionaire in Washington state,” Frame added. Frame sponsored a wealth tax bill in the Washington state legislature earlier this year that would have triggered a 1% wealth tax on financial assets such as stocks and bonds, excluding the first $250 million."
AND.....of course we all know this previous departure. Fisher Investments pulls out of Washington in wake of capital gains tax decision https://www.kuow.org/stories/fisher...hington-in-wake-of-capital-gains-tax-decision "In a seemingly sarcastic statement, Fisher Investments says: "In honor of the Washington State Supreme Court's wisdom and knowledge of the law, and in recognition of whatever it may do next, Fisher Investments is immediately moving its headquarters from Washington state to Texas." The move is expected to be completed by June 30. Fisher Investments is based in Camas, Washington. The company's headquarters will relocate to Plano, Texas. Fisher is an independent money management firm, founded by billionaire Ken Fisher. The company notes that it manages more than $197 billion in assets globally, and more than $156 billion in private investments. The Seattle Times reports that Fisher employed about 1,800 people in Camas in 2020 (it employs 3,700 globally)."
Speaking of taxes and people having options......this is the primary reason that I decided to retire at age 49 in early 1999. My business was very successful and had been for many years. BUT....at that time the Clinton tax hikes had been passed.....and....when I looked at my finances I was paying about 55% of my income to the government. It was ridiculous that I was putting my personal assets at risk every year to run my business and the government was taking more than I was. At least I was in a state with no state income tax....otherwise....the government would have been taking at least 60%. Here is my tax list: Real Property tax (Office/business property and home) Personal Property tax (business) Social Security Self Employment tax Federal Income Tax Federal Unemployment tax State unemployment tax State Labor and Industries tax State B&O Tax (on the gross income) County B&O Tax. City B&O Tax So......since I could.....I simply said SCREW IT. Government can just get along without a big chunk of my tax money.
Here is the markets this week. Stocks look to build on best week in a year: What to know this week https://finance.yahoo.com/news/stoc...-a-year-what-to-know-this-week-141049604.html (BOLD is my opinion OR what I consider important content) "Another slew of corporate earnings reports awaits investors in the week ahead as the stock market will look to extend its recent rally. Disney (DIS) highlights the week of quarterly reports while Uber (Uber), Rivian (RIVN), Occidental Petroleum (OXY), and Warner Brothers Discovery (WBD) also highlight the schedule. The calendar will be quiet on the economic front, with the first reading of November consumer sentiment from the University of Michigan slated for Friday the most notable release. On Tuesday, Yahoo Finance will host its Invest conference, with voices including DoubleLine founder Jeffrey Gundlach, Meredith Whitney, and media leaders Jeff Zucker and Kevin Mayer among the scheduled speakers. Stocks enter the first full trading week of November after their best week in roughly a year, as increased investor confidence the Federal Reserve's rate hiking campaign may be over sent equities soaring into the weekend. The Dow Jones Industrial Average (^DJI) gained about 5% last week, while the S&P 500 (^GSPC) added nearly 6%. The tech-heavy Nasdaq Composite (^IXIC) soared more than 6.6%, marking the best weekly performance the major indexes in 2023. Friday's jobs report showed job growth last month was cooler than expected, with the US economy adding 150,000 jobs in October and the unemployment rate reaching its highest level since January 2022 at 3.9%. The labor market slowdown is a welcome sign for the Federal Reserve, which has noted more softening in the labor market will likely be needed to keep inflation on its downward trajectory. "It is still likely to be true — not a certainty, but likely — that we will need to see some slower growth and some softening ... in labor market conditions to fully restore price stability," Fed Chair JeromePowell said in a press conference last Wednesday. Powell didn't explicitly turn down the possibility of further rate hikes, noting Fed officials are not discussing rate cuts right now. Still, the market took Powell's comments to mean the central bank is likely done with interest rate hikes for the foreseeable future. As of Friday afternoon, markets were pricing in a roughly 95% chance the Fed doesn't raise rates at its next meeting, per the CME FedWatch Tool, up about 15 percentage points from the day prior. A month ago, markets had priced in just a 53% chance the Fed wouldn't hike again. "The October jobs report seemed tailor-made to match Powell's soft landing message from earlier this week," JPMorgan chief US economist Michael Feroli wrote in a research note on Friday. "At the end of the day, the economic data are going to call the shots, and the data say we're done with rate hikes." Disney leads the earnings rush this coming week with the media giant set to report results after the bell on Wednesday. Investors will be focused on the company's new reporting structure, specifically any additional details on ESPN, which recently released individual financials for the first time. In February, Disney CEO Bob Iger restructured the company into three core business segments: Disney Entertainment, Sports (ESPN), and Experiences. Inside the report, key metrics will include Disney+ subscribers and the success of pay increases on the platform. Investors will likely be on the lookout for any update on Hulu as well, following an announcement last week that Disney is buying Comcast's remaining stake in the streaming platform. "We expect the new Linear standalone segment to continue to decline from the loss of pay TV subs, and advertising to remain weak," Macquarie media tech analyst Tim Nollen wrote in a research note on Oct. 24. Broadly, a solid earnings season hadn't served as much of a market catalyst in recent weeks, as higher bond yields and fears of another Fed rate hike had been driving market action leading into the Nov. 1 FOMC meeting. But those fears are abating, for now, as the 10-year yield hit its lowest level in more than a month on Friday, easing off 16-year highs that Wall Street strategists believed could be a consistent headwind for stocks. In a note to clients on Friday, Evercore ISI senior managing director Julian Emanuel noted the fact that the 10-year Treasury yield never stayed above 5% during its recent surge has "changed market psychology," given stocks had recently been falling as yields rose. Importantly, this comes as earnings have largely been better than expected. According to data from Evercore ISI, 404 S&P 500 companies had reported earnings as of Friday morning. Using updated projections based on earnings reports so far this period, the firm expects S&P 500 companies to report sales growth of 2.2% and earnings growth of 3.6% for the third quarter. If those stats hold, it would mark the first time companies have reported earnings growth since the fourth quarter of 2022. "This week reminds investors that you can make money in stocks with interest rates at these levels or higher; it happened for a decade+ prior to the GFC," Emanuel wrote in a research note on Friday. "While we continue to view the medium term as challenged in light of earnings uncertainty, troubling geopolitics and the potential for recession, the rationale for remaining hedged in the here and now no longer applies."" MY COMMENT For the first time in a long time....we are going to have a "clean" week. Absolutely nothing going on except for earnings. it is about time.....the great earnings season we have been having has been totally ignored and disrespected. It is time for the markets to take control and SHINE.
It is always a good sign when the short term "lemmings" come piling in. Hedge Funds Pile Into US Stock Rally https://www.newsmax.com/finance/streettalk/hedge-funds-stocks-investments/2023/11/06/id/1141120/ (BOLD is my opinion OR what I consider important content) "Hedge funds last week "aggressively" bought U.S. stocks at the fastest pace in two years, said a Goldman Sachs note, with traders jumping into a stock rally fueled by hopes that the U.S. central bank rate pause might stick. Global funds bought up U.S. equities in the week up to Nov. 3, in the largest five-day buying spree since December 2021, according to Goldman's prime brokerage trading desk in a note dated on Friday. This left some caught in a squeeze, the bank said in a note on November 2, when short positions became too expensive to hold as stock prices rose. Many got tangled up trying to flee crowded trades which became losing positions, Goldman Sachs said in that note. All three major U.S. stock market indexes soared into Friday after a multi-session rally - five consecutive days for the S&P 500 and six for the Nasdaq - to nab their biggest one-week percentage gains of 2023, so far. Hedge fund long positions in information technology stocks reached the largest in eight months, said Goldman Sachs. A long position expects stockprices to rise, whereas a short bet hopes they will fall. Speculators favored tech for long positions, including software companies. They were also bullish towards consumer discretionary companies like restaurants and fashion with products and services that people buy but don't need, said the note. Health care and financial stocks were net sold, the note said. The largest hedge fund buying centered on North America, while Europe and Asia apart from Japan which were subject to the net short positions, said Goldman Sachs. October had seen fund managers dump $3 billion of China equities sharply, according to a Morgan Stanley report citing data from fund flow tracker EPFR." MY COMMENT This is the short term trading community. There is no other group that is as much of a bunch of lemmings as the Hedge Funds.
LOL....I like this little article. Central Bankers’ Busy Week Yields Little of Note https://www.fisherinvestments.com/e...ntral-bankers-busy-week-yields-little-of-note (BOLD is my opinion OR what I consider important content) "Lots of talk, precious little action. For people with such a busy calendar, the world’s central bankers did a whole lot of nothing this week. The Fed continued its rate pause. So did the Bank of England (BoE). And Norway’s Norges Bank. The only “action” of note—if you wish to call it that—came from the Bank of Japan (BoJ), which refrained from hiking rates but did tweak its “yield curve control” (YCC) program of capping 10-year Japanese Government Bond (JGB) yields. Unsurprisingly, with scant action to analyze, headlines’ attention turned to the words accompanying all the announcements—particularly in the US and UK. We happen to find the BoJ’s move much more interesting, but we doubt any of it means much for stocks. On our shores, pundits made rather a big to-do of a slight tweak to the Fed’s policy statement. Where September’s statement described the economic growth rate as a “solid pace,” November’s statement opted for “strong pace.” Several outlets chose to interpret this as an upgrade and let loose some modest cheers, which we find, well, a bit weird? For one, last week’s GDP report confirmed growth accelerated in Q3, which would seem to match folks’ interpretation of the Fed’s edits, but that news seemed to make pundits pretty curmudgeonly. Those who didn’t see it as overheating warned it would be a short-lived sugar high, giving way to a wintertime hangover. Sooo … faster growth is bad when it shows in the data but good when the Fed looks it in the face? Then, too, we won’t know for five years whether the Fed people actually intended to raise their economic assessment this month. We searched the Fed’s publication archives and did not find a style guide that arranges all possible adjectives for the economy in order from worst/weakest to best/strongest. So there is no way to know, officially, whether “strong” outranks “solid,” and what the range of official adjectives actually is. In everyday life, many people use those words interchangeably. And depending on the emphasis/tone, solid could actually be, um, stronger than strong. We just don’t know! But we suspect the transcripts of this meeting, when available in 2028, will show a debate on par with the FOMC’s past haggling over a single adverb. Don’t read into it. We wouldn’t read into the BoE’s much-discussed 2024 forecast, either. The BoE has stolen a lot of headlines over the past year-plus for revising its projections as it chased the latest results. Last year it kept pushing out the start date of its anticipated recession as growth stayed resilient. Eventually it wiped recession out of the forecast entirely, conceding output would grow this year. So far, that has held true. But now the BoE again sees tough times ahead. Where initially it projected 0.5% growth in 2024, it now pencils in flat GDP for the full year with a 50/50 chance of a recession at some point. It is tempting to dismiss this ad hominem with a their prior recession forecast was wrong so why would this one be right. But that is a logical fallacy, so we will instead make a couple of points. One, like the prior forecast revisions, this one follows data. Better-than-expected growth preceded last year’s upward revisions, and now some wobbling purchasing managers’ indexes and occasionally contracting monthly GDP seem to be informing the downgrade. The BoE isn’t alone in this approach—central banks globally seem much better at summarizing what just happened than actually predicting what comes next. Two, the BoE seems to be drinking its own Kool-AidTM here, presuming its 14 straight rate hikes will conquer inflation and hurt the economy as an unfortunate side effect. This is standard monetary policy thinking, but we think it is too simplistic. Maybe rate hikes do come home to roost as lending continues falling, and maybe that does pinch output. But the small recent drops in lending and broad money supply come off a very high base—one inflated by BoE-generated, largely inexplicable pandemic-era distortions—so we think some wait-and-see is in order. It could well be that we are simply seeing some zombie companies, kept afloat artificially by cheap COVID-era support, finally roll off the books as market forces return and failing firms finally go under. While this is bad news for those directly affected, it isn’t a negative leading economic indicator, and it tends to free up capital for more productive use. And markets tend to suss all that out long before filings hit. As for the BoJ, its change was mostly semantic. Before this week, YCC involved pegging 10-year JGB yields to 0% plus or minus half a percentage point. What this meant, in practice, was that the BoJ would buy bonds on the open market to get yields where it wanted them. Pegs like this are inherently unstable, as markets eventually test the bank’s resolve, and markets tested the BoJ throughout the summer and early autumn, pushing 10-year yields well past 0.5% and close to 1.0%. Along the way, the BoJ said it would purchase JGBs at yields at as high at 1.0%, but it wasn’t an official YCC change. This week, the BoJ went one step further, saying it would use 1.0% as a “reference rate” when buying bonds on the open market, giving it wiggle room to buy at higher yields if policymakers deemed necessary. Headlines heralded this as a big change, and we agree … to a point. By dropping a firm target, the BoJ is giving market forces the most influence they have had over Japan’s long rates in over a decade. That is noteworthy and a step toward policy normalization. But only a small one. The BoJ hasn’t stopped buying bonds. It isn’t unwinding its balance sheet. And it retains the right to intervene. So it is a long way behind the Fed, BoE and ECB on the normalization front. And, again, central banks taught a MasterClass™ in the fact you can’t take their words to the bank just last year. This could be another layer to the lesson. In terms of the practical effect, however, it mostly extends the status quo. 10-year yields had already crept very close to 1.0%, which the BoJ seemed to be allowing in the name of putting a floor under the yen. Thing is, for months now, pundits have argued higher long-term JGB yields would strengthen the yen as bigger payouts enticed more overseas money. Yet the yen remains near 30-year lows relative to the dollar. Higher JGB yields didn’t strengthen the yen or weaken the greenback. Money still flowed to the highest-yielding asset, as it typically does. So we doubt the BoJ’s latest move means much for Japanese stocks. The weak yen creates winners and losers. The beneficiaries tend to be the big Japanese multinationals that can reap big profits from currency translation. Companies more focused on Japanese demand tend to face more headwinds. But this divergence has been a major theme of Japanese stocks for years now. MY COMMENT I dont really care about the EU or Japan since I dont do international investing. Of course the economic health of Japan and England and the EU indirectly impact American companies......but I am not going to waste time monitoring countries outside the USA.
Here is the....good....open today. S&P 500 is little changed after best week of 2023 https://www.cnbc.com/2023/11/05/stock-market-today-live-updates.html (BOLD is my opinion OR what I consider important content) "The S&P 500 hovered near the flatline on Monday as Wall Street struggled to maintain its momentum from last week’s strong performance. The S&P 500 was little changed, while the Nasdaq Composite advanced 0.1%.The Dow Jones Industrial Average inched lower. Nvidia shares rose more than 1% boosted by optimism for Bank of America ahead of its earnings report. Tesla rose 1% following a Reuters report that the company plans to build electric vehicles at its Berlin factory that will sell for 25,000 euros. All of the major averages are coming off their best weeks of the year, kicking off November trading on a positive note. The Dow ended last week up by 5.1% for its biggest weekly advance since October 2022. The S&P advanced 5.9% in that time, and the Nasdaq Composite jumped 6.6%. It was the best week since November 2022 for both indexes. A soft monthly jobs report also drove bond yields lower, giving a boost to equities. “The stock market has had a strong start to November, and the move seems deserved in light of what we’re seeing in most, though admittedly not all, of our sentiment indicators,” wrote Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets. “Generally, our view over the last month or so has been that if the surge in yields stopped soon, US equities could escape without incurring too much additional damage,” she added. This week will be light on economic data and company earnings, but seasonal tailwinds could help propel the recovery in stocks. November is the best-performing month for the S&P 500, according to the Stock Traders’ Almanac. LPL Financial’s Adam Turnquist noted that it also kicks off the best six-month return period for the market since 1950. The S&P has generated an average return of 7% from November through April since then, he said. Earnings season is winding down, with more than 400 S&P companies having already reported quarterly financial results. Investors this week await updates from Walt Disney, Wynn and MGM Resorts, Occidental Petroleum and D.R. Horton. Traders will also be watching Federal Reserve Chair Jerome Powell, who is scheduled to speak twice in the coming days. Last week, the central bank kept rates unchanged for a second straight meeting as bond yields tumbled. Investors are hoping the Fed’s rate-hiking campaign may be nearing an end." MY COMMENT The averages have gone up more since the above was posted. They are all moderately green and the Ten Year yield is down. A good start to the day with good potential to improve more as the day progresses. YES.....as noted above earnings have been good. Although I have yet to see many of the mainstream sources report the percentage of BEATS this time around. I am sure it must be around 80% or more. BUT....for some reason there is nothing much being said about the good general earnings.
This is the primary reason I would pick an ETF over a Mutual fund. ".....There are three big reasons investors, in aggregate, have preferred ETFs over mutual funds, experts said. For one, ETFs are generally more tax-efficient, experts said. When asset managers buy and sell securities within mutual funds, those trades may trigger capital gains taxes for fund investors. (This is largely the case for “actively” managed mutual funds. More on that later.) Due to ETFs’ structure, U.S. investors largely escape those taxes, experts said. “It’s such a huge advantage for ETFs,” Armour said. “It gives investors control of when they take capital gains and when they don’t.” Those tax benefits are important for investors in taxable accounts, but less so for those who invest in tax-advantaged retirement accounts. ETFs also tend to have lower costs relative to mutual funds — an attractive feature as investors have generally become more price-conscious, Armour said. The average asset-weighted annual fee for mutual funds and ETFs was 0.37% in 2022, less than half the cost 20 years earlier, according to Morningstar data. Asset-weighted fees take investor behavior into account, therefore showing that investors have been seeking out less expensive funds. ETFs don’t carry distribution fees, such as 12b-1 fees, that tend to come with certain mutual funds. However, investors may pay commissions to buy and sell ETFs, eroding the fee differential. A recent University of Iowa study found that the average annual cost of “passive” mutual funds is 0.45% of investor assets, more than double the 0.21% average for ETFs......." https://www.cnbc.com/2023/11/06/3-b...ded-funds-went-mainstream-with-investors.html
HERE.....is the earnings results so far.....at least as of November 3, 2023. Unfortunately you have to search for this information....it is generally not being reported this time around. I guess all the WRONG experts got tired of being made fun of. EARNINGS INSIGHT https://advantage.factset.com/hubfs/Website/Resources Section/Research Desk/Earnings Insight/EarningsInsight_110323.pdf (BOLD is my opinion OR what I consider important content) "Key Metrics Earnings Scorecard: For Q3 2023 (with 81% of S&P 500 companies reporting actual results), 82% of S&P 500 companies have reported a positive EPS surprise and 62% of S&P 500 companies have reported a positive revenue surprise. Earnings Growth: For Q3 2023, the blended (year-over-year) earnings growth rate for the S&P 500 is 3.7%. If 3.7% is the actual growth rate for the quarter, it will mark the first quarter of year-over-year earnings growth reported by the index since Q3 2022. Earnings Revisions: On September 30, the estimated (year-over-year) earnings decline for the S&P 500 for Q3 2023 was -0.3%. Nine sectors are reporting higher earnings today compared to September 30 due to positive EPS surprises and upward revisions to EPS estimates. Earnings Guidance: For Q4 2023, 48 S&P 500 companies have issued negative EPS guidance and 27 S&P 500 companies have issued positive EPS guidance. Valuation: The forward 12-month P/E ratio for the S&P 500 is 17.8. This P/E ratio is below the 5-year average (18.7) but above the 10-year average (17.5)"..... MY COMMENT If you want lots of detail and more information....this is a 37 page document. This is verification that EARNINGS are coming in very nicely. For the SP500 an EPS beat rate of 82% is very good. So much for the expectations of the experts....as usual....they are never right. I do note that the experts are lowering their earnings expectations for the forth quarter. Sounds good to me...it will simply make it easier to beat their......always wrong....predictions. I expect forth quarter earnings to be even better than this time around.
The market averages continue to slowly and steadily rise today. The current BIAS is to the positive side of the markets. to me....it looks like we might be in for a very good month of November. Of course....there is always black swan potential....but for the most part I see a relatively news neutral month ahead and if we get a bit of luck a positive news month for the markets. I dont invest based on news....but over the short term it is certainly a big factor. There is certainly plenty of room for sentiment to change from the extreme negative we have seen lately. As usual....if you are not in the markets....you will not enjoy the gains as they come out of nowhere.
Well...I just did my mid-morning look at my primary account. A nice gain at the moment. the big cap tech stocks are doing very nicely today. I have two down stocks at this moment.....HD and HON......the "H" stocks in my portfolio. A very good start to the week. SHOW ME THE MONEY.
The market today.....at the moment....has got to be one of the most ridiculous things i have seen in a long time. They Ten Year yield ticks up by 0.098a and the big averages go red. I dont believe for an instant that this reflects "human" trading. I believe it is simply all the BIG BANK....AI trading programs....kicking in all at once.
A nice little article here. How to Become a Millionaire https://awealthofcommonsense.com/2023/11/how-to-become-a-millionaire/ (BOLD is my opinion OR what I consider important content) "American households have never been wealthier but that wealth is not evenly distributed. The top 10% controls more than 70% of the total wealth in this country as of year-end 2022.1 The good news is, there are those outside of the top 10% who are catching up. Based on the latest estimates from the Federal Reserve there are around 16 million American households with a net worth of $1 million or more. That’s up from fewer than 10 million millionaire families in 2019.2 Most of these newly minted millionaires came from the 10% below the top 10%. The Wall Street Journal says the most significant wealth gains went to the upper middle class: Indeed, the biggest wealth gains between 2019 and 2022 were among the approximately 13 million families in the 80th to 90th percentile of the income distribution. Their median wealth jumped 69% from 2019, adjusted for inflation, to $747,000 in 2022. I’m sure some of these members of the two-comma club got there by making a lucky bet or winning the proverbial lottery in crypto or start-ups or something exciting. But most got there taking a more boring, long-term approach. The Journal explains: Rather than being swallowed by the 1%, the economy, according to these numbers, is creating a growing upper middle class. Many people got there by pursuing college degrees, steadily building retirement accounts and purchasing homes. For the most part, they became wealthy slowly, and were well-positioned when pandemic-era stimulus programs boosted asset values. I know some people think the American dream is dead but that sounds like it to me. Get an education. Get a good job. Buy a home. Save in a workplace retirement plan. Build wealth over time. Life might be easier if you could become rich overnight but building wealth slowly is more realistic. Getting wealthy is not easy for most people but staying wealthy is harder than it sounds as well. I wrote about this in Don’t Fall For It: The top 10 families by wealth in 1918, 1930, 1957, and 1968 saw their wealth cut in half in 13 years, 10 years, 13 years, and 8 years, respectively. There’s an old saying that the first generation builds the wealth, the second generation maintains it, and the third generation spends it. Research shows this saying may be too lenient to the second generation. Grouping the top 30 members of the Forbes 400 list by generation, Arnott, Bernstein, and Wu found it was the first generation that maintained their wealth over their lifetimes, but the second generation saw a half-life of 24 years, while it took the grandkids just 11 years to cut their inheritance in half. High-income earners have a similarly difficult time staying at the top. Research shows over 50% of Americans will find themselves in the top 10% of earners for at least one year of their lives. More than 11% will find themselves in the top 1% of income-earners at some point. And close to 99% of those who make it into the top 1% of earners will find themselves on the outside looking in within a decade. One of the reasons these wealthy families blow through their money is because it’s like winning the lottery. Slow wealth is stickier because it doesn’t hit you all at once. You become accustomed to it in bits and pieces as opposed to experiencing a one-time jump that shocks the system. People appreciate slow wealth more than fast wealth. There are many different ways to become a millionaire. Starting your own business. Betting big on a winning investment. Marrying into wealth. For most people, your best bet is making more money over time, saving a decent chunk of that income, investing wisely and getting out your own way. Building wealth slowly works." MY COMMENT Yes....slow and steady wins the money race. I have not known a single person in my lifetime that created lifelong wealth by some get rich quick.....investing..... method. It simply never works. That means the key to success in patience and the ability to think long term. Unfortunately these traits rule out a significant percentage of the population.
I now see all the averages are nicely green again. That did not take long. When I look at the charts of the NASDAQ, SP500, and the DOW....it appears that the sudden turn to red happened in all of them......at the same time. More proof that this was not "human" behavior. It was too coordinated to be regular human trading....it had big money behind it and was too uniform across all the averages. Want to see market manipulation....here you go.....here is what I see on the charts: SP500.....went red today at 1:05.....it returned green at 2:45. DOW....went red at 1:05.....it returned green at 2:45. NASDAQ.....went red at 1:05....it returned green at 2:45. This data completely defies all odds. Someone or something....like trading programs acting in concert.....moved the markets.
I just looked at my account to see if there was any indication of the strange....uniform...market behavior above. NOPE....I have basically the same gain as I had in the morning....and the same two stocks down....HD and HON. VERY STRANGE. This sort of market behavior is how you cause people to lose trust and faith in the market system. If trust is lost....it will be the end of the markets.
I ended the day the same way I was all day.....a strong gain. Only two stocks in the red....HD and HON. Plus a nice bonus....a good beat on the SP500 by 0.93%. This is now SIX DAYS in a row in the green.....for the markets. A minor RALLY....lets keep it going.
The close today. Stocks rise slightly after huge week of gains https://finance.yahoo.com/news/stoc...ghtly-after-huge-week-of-gains-174709367.html (BOLD is my opinion OR what I consider important content) "Stocks were little changed to close out the trading session on Monday after logging their best week this year, as hopes continued to prevail that the Federal Reserve is ready to call an end to tightening. The tech-heavy Nasdaq Composite (^IXIC) ticked up by 0.3%, continuing a notable stretch of gains, while the benchmark S&P 500 (^GSPC) gained about 0.2%. The Dow Jones Industrial Average (^DJI) increased by 0.1% or roughly 35 points. The yield on the 10-year Treasury note (^TNX) ticked up about 10 basis points to trade near 4.66%. The major US stock indexes soared on Friday after US jobs growth slowed more than expected and wage inflation cooled, cementing optimism for an end to Fed interest rate increases that persisted into the new week. Investors will be listening out for confirmation when several Fed officials step up to speak this week, including two appearances by Chair Jerome Powell. Regional Fed Presidents John Williams and Raphael Bostic are among those on the docket. Some on Wall Street have cautioned that the optimism could be overdone and to brace for volatility in stocks. Morgan Stanley strategist Mike Wilson warned last week's stock comeback "looks more like a bear market rally rather than the start of a sustained upswing." Meanwhile, the market still has a stream of quarterly earnings ahead, while the calendar is quiet on the economic front. Disney's (DIS) results due Wednesday are the highlight. In commodities, oil prices jumped after top exporters Saudi Arabia and Russia confirmed last weekend that they will continue with their voluntary additional production cuts. West Texas Intermediate crude futures (CL=F), the US benchmark, rose more than 1% to just under $82 a barrel, while global benchmark Brent crude futures (BZ=F) put on a little less than 1% to trade under $86 a barrel. MY COMMENT If the markets can just get out of their own way....we will do just fine this week. There is NOTHING on the calendar this week and NOTHING negative going on. As to the FED.....just more talk. People need to quit obsessing over nothing and move on with life.
