The Stock Market thread

[Edward64]

The "Dot Plot" has been in news since yesterday when Jerome paused/skipped the rate hike but the dot plot projected there would be 2 more rate hikes this year.

I may have read about it previously but never paid it much attention until now. For those wondering, see below. I love this tool, provides good info for what the Fed governors are thinking and gives the markets a heads up, fair warning.

The Federal Reserve's Dot Plot, Explained | Bankrate

The Fed’s dot plot is a chart that records each Fed official’s projection for the central bank’s key short-term interest rate. The dots reflect what each U.S. central banker thinks will be the appropriate midpoint of the fed funds rate at the end of each calendar year three years into the future, should the economy evolve as they expect. Officials also provide a dot for the longer run, which represents the so-called “neutral rate of interest,” or the point where rates are neither stimulating nor restricting economic growth.

Each dot represents one Fed official — from Powell to board member Lael Brainard, from New York Fed President John Williams to Chicago Fed President Charles Evans. Of course, it’s all kept anonymous, and no one knows which official is which dot.

[Edward64]

I have a love/hate relationship with Jerome.

But yeah, he's probably right to publicly reinforce (again) that more rate hikes are likely to come.

[Edward64]

I guess the big banks passing the test is reassuring. No idea how valid the test actually is but assume it's halfway decent and definitely better than nothing.

https://www.cnbc.com/2023/06/28/fed-...recession.html

All 23 of the U.S. banks included in the Federal Reserve’s annual stress test weathered a severe recession scenario while continuing to lend to consumers and corporations, the regulator said Wednesday.

The banks were able to maintain minimum capital levels, despite $541 billion in projected losses for the group, while continuing to provide credit to the economy in the hypothetical recession, the Fed said in a release.

Begun in the aftermath of the 2008 financial crisis, which was caused in part by irresponsible banks, the Fed’s annual stress test dictates how much capital the industry can return to shareholders via buybacks and dividends. In this year’s exam, the banks underwent a “severe global recession” with unemployment surging to 10%, a 40% decline in commercial real estate values and a 38% drop in housing prices.

[Edward64]

You go Joe, nice 1Q.

If we go with the traditional definition of 2 consecutive quarters negative growth, this would mean the earliest a recession would be called is Q4 2023. I'm sure parts of the economy is suffering (commercial real estate) but doesn't feel like we're near a recession anytime soon.

First-quarter economic growth was actually 2%, up from 1.3% first reported in major GDP revision

Gross domestic product increased at a 2% annualized pace for the January-through-March period, up from the previous estimate of 1.3% and ahead of the 1.4% Dow Jones consensus forecast. This was the third and final estimate for Q1 GDP. The growth rate was 2.6% in the fourth quarter.

[Edward64]

Originally Posted by Arles

JEPQ and JEPI have variable dividends which means they will increase as the share price does. So it’s better to DCA than make a lump purchase as the shares are a little pricey now. The annualized dividends tend to be 12-15% so buying over time should work out.

@arles, morningstar had an article worth reading about JEPI. I've bought some in JEPI and JEPQ so getting those articles in my news.google.

The Most Successful ETF Launch of All Time Raises Questions | Morningstar

Overall, good but cautious. From what I gather, JEPI is doing great now because tremendous inflows (people are investing in it). It also had great 2020 & 2021, whereas 2022 is not as good. If and when that slows down, we'll have to see what happens then.

Can investors in this ETF eventually earn a dollar-weighted return that approaches the fund’s time-weighted return? Yes, if they continue to shovel money into the ETF and returns trend higher, then their dollar-weighed returns would exceed the fund’s total returns—at least for a time—and that would close the gap that has formed. Even if investors were simply to hold on, the gap should narrow over time.

[Edward64]

Great months of May & June, and congrats to Apple for being the first US company to hit $3T and also the biggest company (market cap) in the world.

Nasdaq books best first half since 1983 as inflation data power Friday stock surge

There seems to be less concerns of a recession now with the bigger than expected GDP revision. Inflation seems to be stabilizing some but still the likelihood of at least 2 rate hikes.

The Personal Consumption Expenditures price index rose 3.8% for the 12 months ended in May, which was down from the revised 4.3% annual increase seen in April, according to the report.

The headline PCE index is at its lowest annual level since April 2021. On a monthly basis, prices were up a mere 0.1%.

Personal spending ticked up by just 0.1%, a more moderate pace than April’s revised 0.6% growth rate. When adjusting for inflation, consumer spending was flat.

The economy, inflation, markets etc. may just be humming along just in time for Joe.

Good times are here again.

(Famous last words)

[Edward64]

Couple great days with CPI & PPI coming in lower than expected.

Then this guy had to throw cold water over everything. I actually don't disagree with him but couldn't he at least give us a couple days of feeling good before the Jul 26 decision date.

Federal Reserve Board Gov. Christopher Waller said Thursday he was not swayed by June’s benign consumer inflation data, and said he wants the central bank to go ahead with two more 25-basis-point rate hikes this year.

“I see two more 25-basis-point hikes in the target range over the four remaining meetings this year as necessary to keep inflation moving toward our target,” Waller said in a speech to bond-market experts, known as The Money Marketeers of New York University.

That would bring the Fed’s benchmark rate to a range of 5.5%-5.75%.

Waller said that, while the cooling of CPI data for June was welcome news, “one data points does not make a trend.”

He noted that inflation slowed in the summer of 2021 before rocketing higher.

[Edward64]

Not complaining about the markets last week and this week so far.

But everyone knows Jerome is going to raise rates right? And we aren't out of the clear for a recession?


Stock tip (with the usual disclaimers):

Because my big company ETFs can get boring, I put a little play money into Rocket Labs (RKLB) last week in anticipation of a satellite launch (their 35+ so far) and, for the first time, recovery and reuse of the rocket. The launch & recovery were successful, no news yet on reuse. But it's gone up about 18%+ since last week (so much better than my Bumble at IPO).

Do you own research but if you've been wanting to buy into a smaller version of SpaceX, look into RKLB. They won't get as big as SpaceX anytime soon, they are focused on the smaller stuff for now. Last night's launch was from New Zealand and streamed live, you can find it on YT.

I remember when NASA announced ending the Shuttle program and said the strategy is to work with commercial firms for space stuff. I thought they were crazy. But 20 years later, here we are. I was wrong, it's worked out pretty well.

[BYU 14]

My portfolio is over up 11% since January and now 9+ % last 12 months. I don't think we will get any major shake ups through years end, and if that maintains I can go more conservative next year

[Edward64]

I tend to agree with you about less chance of negative shakeups and am optimistic about the economy & markets going forward.

We won't enter a formal recession this year (e.g. needs 2 quarters of negative growth). But the biggest fear is Jerome over doing it with rate hikes. 2 more are predicted this year and if he hints at more next year (e.g. sticky inflation), I can believe the markets will take a dive and increase chance of recession.

Do think the bank fears are over with now. Congrats to Jerome & SEC in navigating us past that.

re: going conservative. There are no guarantees but if your prediction is correct, we are in the first phase/half of a bull market and it should continue. I'm going more aggressive vs conservative.

[Edward64]

Nice milestone today. My Zillow home price has fully 100% recovered to its high in early 2022. It dropped to about -17% and then started recovering Feb'ish this year. The combination of house value dropping and the double-dip in the markets in 2022 was depressing.

I know its not a guaranteed sale price, but still nice as a directional indicator. Think I'll celebrate today and get some more Strawberries & Creme Zero.

[Ksyrup]

I haven't checked Zillow in months, but if it is correct, I probably should sell. But I don't think they know what they are doing. They have our house incorrectly listed as a 3/2.5. First, it's 4 bedroom, but they also don't include the basement which has a full bath plus another 1500 sq. ft. of livable (carpeted) space. So really, it should be a 4/3.5 with about 4400 sq. ft. And yet they have my estimate as $50K more than the house behind me that sold 3 months ago with close to the specs that my house should be listed at. None of it makes sense.

[Edward64]

When we finished the basement we manually updated the specs. Suggest you do the same

[PilotMan]

Originally Posted by Ksyrup

I haven't checked Zillow in months, but if it is correct, I probably should sell. But I don't think they know what they are doing. They have our house incorrectly listed as a 3/2.5. First, it's 4 bedroom, but they also don't include the basement which has a full bath plus another 1500 sq. ft. of livable (carpeted) space. So really, it should be a 4/3.5 with about 4400 sq. ft. And yet they have my estimate as $50K more than the house behind me that sold 3 months ago with close to the specs that my house should be listed at. None of it makes sense.

You can claim the listing and edit the characteristics for a more accurate listing if you haven't already.

[Ksyrup]

That would require creating an account, which I really have no reason to do.

My main point is that they have our house for one less bathroom and one less bedroom and 1500 sq. ft. less space than the house that sold directly behind us for $50K less than Zillow is estimating our house could be sold for. That doesn't give me much confidence in their estimates.

[Edward64]

Finally here. Wonder what took so long.

https://www.cnbc.com/2023/07/27/regu...big-banks.html

Regulators unveil sweeping changes to capital rules for banks with $100 billion or more in assets

Nothing on the current FDIC guarantee of $250K. They should definitely increase it for small businesses. I'm okay leaving it at $250K for everyone else (and enforcing it). Individuals with > $250K in a bank account have the resources to spread out the risk.

[GrantDawg]

Originally Posted by Ksyrup

That would require creating an account, which I really have no reason to do.

My main point is that they have our house for one less bathroom and one less bedroom and 1500 sq. ft. less space than the house that sold directly behind us for $50K less than Zillow is estimating our house could be sold for. That doesn't give me much confidence in their estimates.

When we did our assessment for a refinance 2 years ago, the value came back exactly what Zillow had. YMMV. I think there are some greater variables in areas were some houses have added value versus others that aren't that far away. And then some areas have inflated prices based on older sales, and new sales might not have hit Zillow yet.

[Flasch186]

Regarding this

Appraisals from human appraiser have to be phased out and I may be the last domino to switch to say so

I recently had a well known appraiser Say out loud what we’ve suspected which is that they believe that it’s their job to protect the buyers from over paying for homes so they consider that when reviewing versus considering the value of the collateral for the loan which is their only licensed motivation.

So now that he’s admitted to affecting the market place and basically being a regulator between buyers and sellers there’s just no choice. They have to go to an automated model that will stick to their lane like us real estate licenses have to.


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[Edward64]

Seems weird to be downgrading right now. I could understand as we were still fighting over the debt ceiling but right now, things are humming somewhat ... or at least, less uncertainty than during the debt ceiling fight.

Fitch downgrades US long-term credit rating to AA+ from AAA | CNN Business

Fitch Ratings downgraded its US debt rating on Tuesday from the highest AAA rating to AA+.

The downgrade comes after lawmakers negotiated up until the last minute on a debt ceiling deal, risking the nation’s first default.

Fitch pointed to “the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions” in explaining its downgrade.

We'll see what tomorrow brings but right now ...

Markets on Tuesday were unfazed by Fitch’s downgrade in after-hours trading.

[Edward64]

Originally Posted by Edward64

Only Apple earnings (Thu) can save us now. Apple expected to announce buybacks and dividend increases.

Dear Apple,

I know I've been praying to you a lot to save us. The Fitch & Jerome has really messed things up, so can you do it one more time?

I promise I'll be really good and eat my collard greens.

[Edward64]

Good inflation news.

https://www.cnbc.com/2023/08/09/stoc...e-updates.html

July consumer prices gained 3.2% on an annual basis, less than the 3.3% consensus from economists polled by Dow Jones. On a month-to-month basis, inflation increased 0.2%, in-line with estimates. The report also said real average weekly earnings were unchanged last month in another positive sign.

Bad inflation news.

Still, excluding food and energy, the so-called core July CPI reading was up 4.7% on an annual basis, far above the Fed’s 2% target.

I'm tired of inflation, dragged on way too long. Can everybody just stop buying wants (vs needs)?

(... with the exception of BG3 & Starfield of course).

[Ghost Econ]

As with climate change, I appreciate have shifted the blame to consumers as opposed to their need for record profits

[Flasch186]

This


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[Edward64]

Originally Posted by Edward64

Dear Apple,

I know I've been praying to you a lot to save us. The Fitch & Jerome has really messed things up, so can you do it one more time?

I promise I'll be really good and eat my collard greens.

Nvm, I was wrong.

Nvidia > Apple

Up 9% after market because of their blowout quarter. We'll see if the overall market follows the leader. Jerome is up next Fri from Jackson Hole.

Nvidia Corp. shares rallied in the extended session Wednesday after the graphic processing-unit maker leading the AI-hardware charge reported a 141% surge in data-center sales and record results.

Nvidia shares rallied 9% after hours, following a 3.2% rise in the regular session to close at $471.16

[GrantDawg]

Just an update on our "is Zillow acurate?" evergreen question. Just had an assessment done for a second mortgage, the assessment was $8k higher than Zillow.

[Edward64]

Originally Posted by GrantDawg

Just an update on our "is Zillow acurate?" evergreen question. Just had an assessment done for a second mortgage, the assessment was $8k higher than Zillow.

I assume $8k is an acceptable difference to you? e.g. no idea what that is a % of. I checked today and we've exceeded the high from last year.

A somewhat funny story. We got our property taxes and, no surprise, it went higher. Wife and I talked about appealing it to see if we can get it lower. She researched on the county FB and learn that others tried appealing but their property taxes went higher after the process. So we decided not to appeal.

[Edward64]

Originally Posted by Edward64

Jerome is up next Fri from Jackson Hole.

Yup, true to form, the markets react positively to Jerome's speech but as he continues talking, it turns red. It "burns" but keep acting like the adult in the room and tell it the way it is.



https://www.cnbc.com/2023/08/25/fed-...s-further.html

While acknowledging that progress has been made, the central bank leader said inflation is still above where policymakers feel comfortable.

The speech resembled remarks Powell made last year at Jackson Hole, during which he warned that “some pain” was likely as the Fed continues its efforts to pull runaway inflation back down to its 2% goal.

A strong economy and decelerating inflation also give the Fed room to “proceed carefully” at upcoming meetings.

[GrantDawg]

Originally Posted by Edward64

I assume $8k is an acceptable difference to you? e.g. no idea what that is a % of. I checked today and we've exceeded the high from last year.

A somewhat funny story. We got our property taxes and, no surprise, it went higher. Wife and I talked about appealing it to see if we can get it lower. She researched on the county FB and learn that others tried appealing but their property taxes went higher after the process. So we decided not to appeal.

Yeah, $8k off with what accounts as a guesstimate is pretty good. If it where like $15-20k off then it would be a much bigger deal.

[Edward64]

I can confirm this.

How the stock market’s performance under Biden is worse than under Obama or Trump — in one chart - MarketWatch



Article is kinda sloppy and incomplete. Better if they also show S&P, Dow & Nasdaq comparisons. Still hope for Biden but he's behind the curve.

[Ksyrup]

Coincidence or not that the Fed continues to push for interest rates to stay higher, longer, with Goldman Sachs suggesting a fed rate cut likely wouldn't happen until 4th quarter of 2024 - conveniently around (or after) the election takes place? Seems like everything economically is stacking up against Biden.

In what ways can the President - any President - actually influence the price of goods in the grocery store? Because that seems to be what's primarily feeding the negativity - despite pretty good economic numbers, actual prices we pay are largely remaining high, so people don't see (or care) about economic indicators of a good economy. A piece of a larger puzzle, of course, but one of the most important.

[QuikSand]

it's the grocery store, stupid

[NobodyHere]

Originally Posted by QuikSand

it's the grocery store, stupid

Don't forget about gas prices too.

[Ksyrup]

Or the price of whiskey at the Newark airport. You choose.

[Edward64]

Originally Posted by Ksyrup

In what ways can the President - any President - actually influence the price of goods in the grocery store? Because that seems to be what's primarily feeding the negativity - despite pretty good economic numbers, actual prices we pay are largely remaining high, so people don't see (or care) about economic indicators of a good economy. A piece of a larger puzzle, of course, but one of the most important.

Joe can't directly influence grocery prices but indirectly he can influence (supply chain issues, transportation costs etc.). But is that 80% of the price increases or 20% ... probably more like 5%.

IMO the big ticket item is overall inflation. Grocery stuff is just once piece of CPI. Yeah, grocery prices are going to ding him, but (fair or not) so is gas prices, home prices, car prices etc.

If overall inflation is tamed, grocery prices will follow. But he is running out of time.

[miked]

But most of this is made up, right? I keep hearing that profits for most of these companies are soaring...so it would appear that capitalism is at odds with inflation. So is it inflation, or are there just perceptions that are being used by companies to jack up prices on everything.

Kroger's profit also topped $2.2 billion, up 35.6% from 2021, outpacing the 7.5% sales growth for the year. The company also reported fourth quarter results that beat Wall Street estimates on Thursday. The nation's biggest supermarket chain notched a $450 million profit on sales of $34.8 billion in the three months ended Jan. 28.

Perhaps nothing more needed to be said when the numbers do all the talking. Publix’s net earnings in Q1 jumped 100.8% at $1.2 billion compared to the first quarter of 2022, when net earnings were $618 million. Publix, headquartered in Lakeland, Fla., also rolled up $14.3 billion in net sales during the first quarter that ended April 1. That is an 8.2% increase vs. Q1 2022, and the retailers comparable store sales increased by 6.4%.

All this and my Kroger usually has 1 lane open that is manned, and 10 self-checkouts that have long lines and no room for anything but a few items.

[Flasch186]

This


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[thesloppy]

In hindsight seems like some (more) price-gouging, profit-limiting regulations would have been useful, at least on some targeted sectors like groceries. Instead we have legislation making it practically illegal for publicly traded companies to do anything other than maximize profits, and this is the obvious result.

[miked]

It's not inflation folks, it's capitalism. Pull yourselves up by the bootstraps and make more money.

[RainMaker]

It's not inflation, it's greed. These companies are making a killing. There's very little Joe can do to change things unless he wants to build a time machine and somehow stop QE or other actions taken over the past decade. Although nominating Powell for another term was horrendous.

That shouldn't let him off the hook though. A lot of the conditions that have led to this are things he supported happening in the Senate and as Vice President.

[flere-imsaho]

Publix's effective tax rate in 2022 was, apparently, 9.31%.

[Edward64]

Thank you Jerome for not crashing the markets this month.

[NobodyHere]

The stock market is looking good in pre-trading today due to good inflation data.

October CPI report: Stock futures surge, Treasury yields drop after subdued inflation data

[Edward64]

Yeah, I saw that. And perfect timing for the holiday season.

Joe's stock market performance in past 3 years has been abysmal. Hopefully, reduced inflation and no more Fed increases will help him in the "It's the grocery store/prices" category.

How's your Lean FIRE plans coming along?

[NobodyHere]

Originally Posted by Edward64

How's your Lean FIRE plans coming along?

Dating has kind of derailed those plans for the moment.

[flere-imsaho]

Honestly, we'd know exactly when I was retiring right now if it wasn't for the unbelievable variability in college costs.

Well, plus our extremely low risk tolerance. There's definitely a world where I could be retired now. Check with me in a year.

[Edward64]

And futures points to the party continuing. Hoping we get back to the 2 days up, 1 day down cadence.

The producer price index, which measures final-demand costs for businesses, declined 0.5% for the month, against expectations for a 0.1% increase from the Dow Jones consensus, the Labor Department reported Wednesday. The department said that was the biggest monthly decline since April 2020.

Excluding food and energy, core PPI was unchanged, also below the forecast for a 0.3% increase. Excluding food, energy and trade services, the index increased 0.1%.

FWIW, since my last post about Zillow, house price has not changed which is unusual. It's still higher than last year's high and maybe dropped a tad from this year's high, so still very happy with the theoretical worth. Currently 2 houses for sale in our 400+ house subdivision which is better than last year.

Wonder if the stability means we've finally reached the new normal equilibrium where prices will now return to increasing 2-3-4% a year.

[Edward64]

I'm thinking ChatGPT made an ooopsies and Microsoft has come out ahead.

https://www.cnbc.com/2023/11/20/oust...ella-says.html

OpenAI’s board announced late Friday that it was removing Altman and replacing him on an interim basis with technology chief Mira Murati.

Then late Sunday night, OpenAI said it was bringing on board former Twitch CEO Emmett Shear to run the artificial intelligence company.

And just hours after, the story took another twist with Nadella announcing that Altman and Greg Brockman would be absorbed in-house into the Microsoft team.

My guess is the Board will resign en-masse and write books on "How not to do a corporate coup".

Hundreds of OpenAI employees, including co-founder Ilya Sutskever, have signed a letter demanding that either OpenAI’s remaining board members resign or those OpenAI employees will join Sam Altman’s new venture at Microsoft, Wired and Kara Swisher reported Monday morning.

[Ksyrup]

I've been seeing a number articles suggesting an improvement in prices and stocks recently. One was the CEO of Wal-Mart suggesting price deflation coming soon, and another was that with signs that inflation is retreating and the Fed possibly holding off on more increases, that in similar historical situations, the market has increased around 14% in the year following the last rate hike. I sure hope both of those things happen.

[Edward64]

Specific to Fed & inflation, from what I've read, very good chance the Fed is done with increasing rates (unless there is a major CPI/PPI surprise) which is good for the markets. The real questions are (1) when will the Fed start to decrease rates and (2) will we have a soft landing or will we slip into a recession.

I really hope 2024 will be a banner year. It'll go a long way to helping Joe.

Stock market under Biden | U.S. Bank

[Edward64]

Let's really hope rate of inflation is down for good (at least for this cycle). It's be good for the economy/markets to get back to normal for Joe in 2024.

Fed’s Beige Book finds economy has slowed — and so has inflation - MarketWatch

The U.S. economy slowed in November while inflation also tapered off, according to a Federal Reserve survey, suggesting the central bank could be finished raising interest rates if those trends continue.

The survey, known as the Beige Book, said the economy has softened since the previous report at the end of summer. The latest survey covers the period of Oct. 6 to Nov. 17.

A slew of top Fed officials have pointed to a recent slowdown in the economy as a sign that higher interest rates are working to reduce growth, ease shortages in the labor market and reduce the rate of inflation.

The economy expanded at a sharp 5.2% annual rate in the third quarter, but it’s on track to grow just 1% to 2% in the final three months of the year, according to the most recent Wall Street forecasts.