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Post by Chahta on Nov 1, 2022 13:38:42 GMT
I believe the interest rate controls the market. Interest should go up until buyers want to participate.
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Post by xray on Nov 1, 2022 21:10:18 GMT
MoneyWise With new mortgages down 55%, US lenders are starting to go bankrupt — could this one factor trigger the worst surge of failures since 2008? Chris Clark Tue, November 1, 2022, 6:00 AM
With new mortgages down 55%, US lenders are starting to go bankrupt — could this one factor trigger the worst surge of failures since 2008? The real estate market just can’t catch a break, with inventory of resale homes remaining low and rising interest rates making it harder for buyers to justify making the leap. And now we can add mortgage lender financial troubles — and the rise (and fall) of “non-qualified mortgages” — to the factors aggravating an already uncertain market.
A report from Fitch Ratings shows new mortgage originations were down 55% in the second quarter of 2022 compared to the year before. And while the chill in the market affects all lenders, non-bank lenders — especially those who deal in NQM — are bearing the brunt of it. But what does the trouble around these NQM mortgages really mean? And what does it mean for non-traditional buyers trying to get a foothold in the market? NQMs use non-traditional methods of income verification and are frequently used by those with unusual income scenarios, are self-employed or have credit issues that make it difficult to get a qualified mortgage loan. They’ve previously been touted as an option for creditworthy borrowers who can’t otherwise qualify for traditional mortgage loan programs.
But with First Guaranty Mortgage Corp. and Sprout Mortgage — a pair of firms that specialized in non-traditional loans not eligible for government backing — recently running aground, real estate experts are beginning to question their value. First Guaranty filed for bankruptcy protection in the spring while Sprout Mortgage simply shut down early this summer. In documents tied to its bankruptcy filing, First Guaranty leaders said once interest rates started to climb, lending volume dropped and left the company with more than $473 million owed to creditors.
Meanwhile, Sprout Mortgage, which leaned heavily on NQMs, abruptly shut down in July. And real-estate tech startup Reali has shuttered as well. Other non-bank lenders are being forced to streamline to stay afloat. A report from HousingWire says retail lenders Angel Oak, Lower.com and Keller Mortgage have all had to introduce layoffs given the tough market conditions.
Do NQM’s signal another housing meltdown? Probably not
Most housing market watchers believe today’s conditions — led by stricter lending rules — mean the U.S. is likely to avoid a 2008-style housing market meltdown. But failures among non-bank lenders could still have a significant impact. The NQM share of the total first mortgage market has begun to rise again: NQMs made up about 4% of the market during the first quarter of 2022, doubling from its 2% low in 2020, according to CoreLogic, a data analysis firm specializing in the housing market. Part of what has contributed to the recent popularity of NQMs is the government’s tighter lending rules. Today’s NQMs are largely considered safer bets than the ultra-risky loans that helped fuel the 2008 meltdown. Still, many NQM lenders will be challenged when loan values start falling, as many are now with the Federal Reserve’s moves to raise interest rates. When values drop, non-bank lenders don’t always have access to emergency financing or diversified assets they can tap like larger banking lenders.
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Live Long and Prosper
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Post by xray on Nov 1, 2022 22:22:56 GMT
Sara: Your: xray, Do you concur with the danger in the bond market of not having sufficient buyers and no choice but for the Fed to step in?
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Can't really answer that question (a good one). I believe it was a "warning" across the bow of our ships to use "CAUTION" in any of our investments (of all types)....
Live Long and Prosper....
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Post by retiredat48 on Nov 1, 2022 23:13:57 GMT
xray , Very good post. Do you concur with the danger in the bond market of not having sufficient buyers and no choice but for the Fed to step in? The 60-40 return stat is eyebrow raising. A lot of retirees have been hurt. I cannot emphasize enough that the messages of the death of the bond bull market should have been shouted from the rooftops as it was well predicted with the huge monetary increase. We can argue until the cows come home, but this denial of the effects of monetary policy and a zero interest rate policy are concerning. My bold added to Sara post. I still have a lot of black and blue marks from such shouting on the Morningstar Forum two years ago. Also took quite a beating stating that balanced funds were not such good investments going forward...due primarily to bond component. Was early by about a year on this one. I do notice "All quiet on the Western Front"...balanced fund forum recently. R48
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Post by xray on Nov 4, 2022 18:52:57 GMT
Home / Investing Here's the Inevitable Outcome From the Fed's Monetary Tightening Jerome Powell is putting the central bank in a position that will trigger a huge amount of damage. By BRET JENSEN Nov 04, 2022 | 10:30 AM EDT
On Wednesday the Federal Reserve hiked the Fed Funds rate by another 75bps. Stocks initially rallied as the statement that accompanied the announcement was interpreted to be 'dovish'. However, in the press conference that followed, a hawkish Chairman Powell made statements that were discouraging for investors hoping for a 'pivot' in the near future. Equities tanked accordingly late that afternoon.
"It's premature to discuss pausing. It's not something that we're thinking about. That's really not a conversation to be had now. We have a way to go," he said.
My long-held view was that there were three possible scenarios as the Federal Reserve began monetary tightening.
The first was the central bank would be able to achieve a 'soft landing'. However, this is the same gang along with Treasury Secretary and former Fed head Yellen, that maintained inflation was 'temporary' and 'transitionary' throughout 2021, and waited far too long to act. I always put the chances of this outcome somewhere between slim and none. Given GDP contracted in the first two quarters of this year and a slew of more recent economic readings, I think 'slim' has already left town on this possibility.
The second potential scenario was that Powell would raise rates until things got uncomfortable in the market and for politicians. He would then end up blinking before getting inflation under control. However, after four straight 75bps rate hikes in quick succession, it's getting harder to doubt the Fed Chairman's determination to slay the inflation dragon even if it means putting the economy into a recession.
Which leads us to our third possibility and the one I always put the most weight on. That is the central bank moves its Fed Funds rate up to a point that it seriously breaks something in the economy and the markets. That is looking more and more like the inevitable outcome from monetary tightening. Yes, inflation levels have not come down much and the jobs markets are still strong. However, both of these economic readings have long lag cycles before they show the impacts of recent rate hikes.
By not allowing enough time for the recent huge move upward in rates to be properly assessed, Powell is putting the central bank in a position that it will trigger a huge amount of damage. It then will be unable to reverse course until the economy is deep in a recession.
Already, rate hikes have tanked the housing market. Now the average interest rate on car loans is 6.3%, the highest rate since 2019. With the just implemented 75bps point hike, rates on auto loans would soon be at their highest levels since the aftermath of the Financial Crisis. This will hit another core growth driver of the economy.
The rise in interest rates has already triggered a 15% gain in the dollar in 2022. This is hitting export growth and profit margins for a wide swath of the American economy. For these reasons, I remain very cautious on the markets despite a nice October for investors. I believe we will at least retest yearly lows if not break through them before the Federal Reserve finally gets to a true 'pivot' point. I am positioning my portfolio accordingly.
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Comment: Many investor Buy/Sell decisions remain in question as the "Baron interview" (100% invested) this morning, vs "pivot point" are in conflict. Some "Dividend Oriented investors" continue to play the neutral game and remain 50% invested (in a volatile market) as previously discussed in a earlier posting....
Live Long and Prosper....
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Post by xray on Nov 5, 2022 22:13:36 GMT
Market Snapshot New stock-market lows ahead? What investors need to know as Fed signals rates will be higher for longer. By Isabel WangFollow
The Fed wants to see financial conditions tighten, and that means bear market could continue: strategists
Federal Reserve Chairman Jerome Powell sent a clear signal interest rates will move higher and stay there longer than previously anticipated. Investors wonder if that means new lows for the beaten-down stock market lie ahead.
“If we don’t see inflation start to come down as the fed-funds rate goes up, then we’re not getting to the point where the market can see the light at the end of the tunnel and start to make a turn,” said Victoria Fernandez, chief market strategist at Crossmark Global Investments. “You don’t normally hit bottom in a bear market until the fed-funds rate is higher than the inflation rate.”
U.S. stocks initially rallied after the Federal Reserve Wednesday approved a fourth consecutive 75 basis point hike, taking the fed-funds rate to a range between 3.75% and 4%, with a statement that investors interpreted as a signal that the central bank would deliver smaller rate increases in the future. However, a more-hawkish-than-expected Powell poured cold water over the half-hour market party, sending stocks sharply lower and Treasury yields and fed funds futures higher.
In a news conference, Powell emphasized that it was “very premature” to think about a pause in raising interest rates and said that the ultimate level of the federal-funds rate would likely be higher than policy makers had expected in September.
The market is now pricing in an over 66% chance of just a half percentage point rate increase at the Fed’s December 14 meeting, according to the CME FedWatch Tool. That would leave the fed-funds rate in a range of 4.25% to 4.5%.
But the bigger question is how high will rates ultimately go. In the September forecast, Fed officials had a median of 4.6%, which would indicate a range of 4.5% to 4.75%, but economists are now penciling in a terminal rate of 5% by mid-2023. For the first time ever, the Fed also acknowledged that the cumulative tightening of monetary policy might eventually hurt the economy with a “lag.” It usually takes six to 18 months for the rate hikes to get through, strategists said. The central bank announced its first quarter-basis-point hike in March, which means the economy should be starting to feel some of the full effects of that by the end of this year, and will not feel the maximum effect of this week’s fourth 75 basis points hike until August of 2023.
Mace McCain, chief investment officer at Frost Investment Advisors, said the primary goal is waiting until the maximum effects of rate hikes are translated into the labor market, as higher interest rates bring home prices higher, followed by more inventories and less constructions, fueling a less resilient labor market.
However, government data shows on Friday the U.S. economy gained a surprisingly strong 261,000 new jobs in October, surpassing a Dow Jones estimate of 205,000 additions. Perhaps more encouraging for the Fed, the unemployment rate rose to 3.7% from 3.5%.
U.S. stocks finished sharply higher in a volatile trading session Friday as investors assessed what a mixed employment report meant for the future Fed rate hikes. But major indexes posted weekly declines, with the S&P 500 SPX, +1.36% down 3.4%, the Dow Jones Industrial Average DJIA, +1.26% falling 1.4% and the Nasdaq Composite COMP, +1.28% suffering a 5.7% decline.
Some analysts and Fed watchers have argued that policy makers would prefer equities remain weak as part of their effort to further tighten financial conditions. Investors may wonder much wealth destruction the Fed would tolerate to destroy demand and squelch inflation.
“It’s still open for debate because with the cushion of the stimulus components and the cushion of higher wages that a lot of people have been able to garner over the last couple of years, demand destruction is not going to happen as easily as it would have in the past,” Fernandez told MarketWatch on Thursday. “Obviously, they (Fed) don’t want to see equity markets totally collapse, but as in the press conference [Wednesday], that’s not what they’re watching. I think they’re okay with a little wealth destruction.”
Meskin of BNY Mellon Investment Management worried that there is only a small chance that the economy could achieve a successful “soft landing” — a term used by economists to denote an economic slowdown that avoids tipping into recession.
“The closer they (Fed) get to their own estimated neutral rates, the more they try to calibrate subsequent increases to assess the impact of each increase as we move into a restricted territory,” Meskin said via phone. The neutral rate is the level at which the fed-funds rate neither boosts nor slows economic activity.
“This is why they are saying they’re going to, sooner rather than later, start raising rates by smaller amounts. But they also don’t want the market to react in a way that would looseen the financial conditions because any loosening of financial conditions would be inflationary.”
Powell said Wednesday that there remains a chance that the economy can escape a recession, but that window for a soft landing has narrowed this year as price pressures have been slow to ease.
However, Wall Street investors and strategists are divided on whether the stock market has fully priced in a recession, especially given relatively strong third-quarter results from more than 85% of S&P 500 companies that reported as well as forward looking earnings expectations.
“I still think that if we look at earnings expectations and market pricing, we don’t really price in a significant recession just yet,” said Meskin. “Investors are still assigning a reasonably high probability to soft landing,” but the risk resulting from “very high inflation and the terminal rate by the Fed’s own estimates moving higher is that ultimately we will need to have much higher unemployment and therefore much lower valuations.””
Sheraz Mian, director of research at Zacks Investment Research, said margins are holding up better than most investors would have expected. For the 429 index S&P 500 members that have reported results already, total earnings are up 2.2% from the same period last year, with 70.9% beating EPS estimates and 67.8% beating revenue estimates, Mian wrote in an article on Friday.
Investors are debating whether stocks can gain ground following a close-fought battle for control of Congress since historical precedent points to a tendency for stocks to rise after voters go to the polls.
Anthony Saglimbene, chief market strategist at Ameriprise Financial, said markets typically see stock volatility rises 20 to 25 days prior to the election, then dip lower in the 10 to 15 days after the results are in.
“We’ve actually seen that this year. When you look from mid and late-August into where we are right now, volatility has risen and it’s kind of starting to head lower,” Saglimbene said on Thursday.
“I think one of the things that’s kind of allowed the markets to push the midterm elections back is that the odds of a divided government are increasing. In terms of a market reaction, we really think that the market may react more aggressively to anything that’s outside of a divided government,” he said.
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Live Long and Prosper....
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Post by Fearchar on Nov 5, 2022 23:59:49 GMT
Market SnapshotNew stock-market lows ahead? What investors need to know as Fed signals rates will be higher for longer. By Isabel WangFollow..... But the bigger question is how high will rates ultimately go. In the September forecast, Fed officials had a median of 4.6%, which would indicate a range of 4.5% to 4.75%, but economists are now penciling in a terminal rate of 5% by mid-2023. For the first time ever, the Fed also acknowledged that the cumulative tightening of monetary policy might eventually hurt the economy with a “lag.” It usually takes six to 18 months for the rate hikes to get through, strategists said. The central bank announced its first quarter-basis-point hike in March, which means the economy should be starting to feel some of the full effects of that by the end of this year, and will not feel the maximum effect of this week’s fourth 75 basis points hike until August of 2023. If the six to 18 month lag is correct, then six months works out to May 2023 and 18 months works out to May 2024.
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Post by xray on Nov 7, 2022 14:26:41 GMT
The market will never look 18 months ahead (no one can because of world events). Six months has always been the standard when looking at today....
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Post by xray on Nov 7, 2022 14:34:01 GMT
Bloomberg Billions in Capital Calls Threaten to Wreak Havoc on Global Stocks, Bonds Sofia Horta e Costa and Richard Henderson Sun, November 6, 2022, 8:05 PM
(Bloomberg) -- The private market is coming to collect -- and it threatens to wreak havoc across global stocks and bonds. As financial conditions tighten around the world, private-market funds are demanding that investors stump up more of the cash they pledged during the easy-money days of the pandemic. While many big pensions and endowments are expected to have sufficient cash flows to meet these capital calls, the fear is that a large number of other investors will have to offload liquid assets to meet the obligations. That would likely mean even deeper losses in public markets for equities and debt, where returns are already down more than 20% this year.
Early signs of trouble are evident in the shrinking distributions that these private-market partnerships are delivering to investors, according to data from the Burgiss Group LLC. Five of the six private-market fund categories tracked by the research firm registered negative net commitments in the third quarter, meaning investors were required to pour more money into them than came back as returns. Buyout funds saw the largest gap, at minus $7.66 billion, the most since the second quarter of 2020, the data show. “We see cause for concern,” Burgiss analysts Patrick Warren and Luis O’Shea wrote in a note last month. “Venture capital’s net distributions are now at a multi-decade low, and senior and distressed debt are also calling capital on net.” Three of the fund types distributed the lowest amount of money to investors in at least seven years.
Capital calls have accelerated this year, in particular for private credit funds, said one senior executive from an institutional investor overseeing more than $50 billion. Portfolios known as trigger funds, which request client capital once certain thresholds are met, have been among the most active in making capital calls, the executive said, requesting anonymity to discuss internal matters. “It is possible to imagine large institutions engaging in forced selling of liquid public equities to meet capital calls in private-fund investments,” Benn Eifert, founder and chief investment officer at boutique volatility hedge fund QVR Advisors, wrote in his October letter to investors.
Capital calls are not the only problem for investors in private markets. Even their successes are creating headaches. As many alternative assets outperformed public markets in recent years, institutions have broken past fixed limits on the proportion of their portfolios that can be allocated to private markets. While this so-called denominator effect may be exaggerated -- because there is a lag in revaluing private assets to reflect the very latest market conditions -- it does have the potential to trigger increased selling at a time when it is least wanted. And the sums involved could be huge. A significant amount of the easy money pumped into the financial system by central banks during the pandemic found its way into unlisted assets, which grew to $10 trillion globally by September 2021, a fivefold increase from 2007, according to figures from investment data firm Preqin.
“There’s a regime change of sorts in the macro world and in markets that we need to take hold of,” Stephen Klar, president and managing partner of Wellington Management Co., said at the Global Financial Leaders’ Investment Summit in Hong Kong on Nov. 3. “We’re working with our clients on thinking through how to really get that asset allocation back to a more diversified and rebalanced manner.”
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Live Long and Prosper....
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Post by uncleharley on Nov 7, 2022 14:55:20 GMT
“There’s a regime change of sorts in the macro world and in markets that we need to take hold of,” Stephen Klar, president and managing partner of Wellington Management Co., said at the Global Financial Leaders’ Investment Summit in Hong Kong on Nov. 3. “We’re working with our clients on thinking through how to really get that asset allocation back to a more diversified and rebalanced manner.”
Whodathunkit!!!
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Post by xray on Nov 7, 2022 22:17:01 GMT
uncleharley, One Chart S&P 500 earnings estimates for 2023 take ‘complete U-turn’ as recession risks loom, according to BofA Published: Nov. 7, 2022 at 12:50 p.m. ET By Christine IdzelisFollow 'Forward estimates have been cut much larger than usual,' says BofA. The S&P 500 risks another leg down after a “complete U-turn” in 2023 earnings-per-share estimates for the U.S. stock-market index, according to a BofA Global Research note. “Forward estimates have been cut much larger than usual,” BofA equity and quant strategists said in a research note Monday. They said that estimates for earnings per share, or EPS, for the S&P 500 in 2023 are down 3.6% since the start of October to $233 — 2.9 times the typical cut. While the 2023 EPS consensus remains “well above” BofA’s forecast of $200, estimates are 8% below the June peak of $252, according to the note. Revisions so far this year are “now trending in line with the historical average,” and if the 2.9x pace of cuts continues through year-end, the S&P 500 could see “no EPS growth next year” as 2023 consensus would fall to around $220, the strategists warned. The chart shows how 2023 EPS revisions stack up against the historical average, while also considering exclusions of the COVID-19 crisis and 2008 global financial crisis. “Actual EPS historically came in 4% below where consensus stood in the beginning of the year, which also points to potential for negative growth,” the strategists said. Meanwhile, estimates for S&P 500 EPS in the fourth quarter are down 4.3% since the beginning of October, or 2.5 times the typical estimate cut “at this point in earnings season,” they wrote. Analysts at Goldman Sachs Group said in a research note Friday that they lowered their 2023 EPS growth forecast to 0%, from a previously expected increase of 3%, after the S&P 500’s net margins contracted in the third quarter for the first time since the pandemic on a year-over year basis. They wrote that “weak” third-quarter margins presage “a headwind” next year. Goldman kept its price target for the S&P 500 at year-end at 3,600 and also maintained its 2023 forecast of 4,000. Equity risk premium The BofA strategists said in their note Monday that they continue to expect that “rising earnings risk will lead to a higher equity risk premium.” Their forecast for a 9% earnings drop in 2023 should translate into an increase in the equity risk premium of 100 basis points, according to the note. And that size increase translates into an S&P 500 price of around 3,200 based on today’s rates, they said, pointing to a 1.7% real yield for the 10-year Treasury note. Volatility is temporary. Financial freedom is forever. That valuation for the S&P 500 is below current trading levels, as well as the index’s 2022 closing low of 3,577.03 on Oct. 12, according to Dow Jones Market Data. The S&P 500 has tumbled 20.9% this year through Friday. The U.S. stock market was trading mostly higher early afternoon Monday, with the S&P 500 SPX, +0.96% rising 0.2%, according to FactSet data, at last check. The Dow Jones Industrial Average DJIA, +1.31%, a blue-chip gauge of stocks, gained 0.7% in early afternoon trade, while the technology-heavy Nasdaq Composite COMP, +0.85% was about flat. All three major stock benchmarks fell last week amid investor anxiety over aggressive interest rate hikes by the Federal Reserve as it battles high inflation. The BofA strategists expressed concern over “looming recession risk” and falling corporate sentiment. “Mentions of weak demand have spiked to prior recession levels,” they said in their note Monday. --------- Comment: Charts (looking forward for the next three months ending 3/31 and 1st Qtr company reporting) indicates a current volatile market cycle by analysis. Add to this that 4/15 is the normal time when traders and some investors sell everything and don't return return after Labor Day. 1st and 2nd Qtr's of 2023 will be when we say "WE LIVE IN INTERESTING TIMES" (IMHO).... Live Longer and Prosper....
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Post by xray on Nov 8, 2022 22:59:40 GMT
Yahoo Finance The stock market ‘has cracked this year,’ strategist says, and there are 2 things to watch for next Brad Smith·Anchor Tue, November 8, 2022, 6:39 AM
As an economic slowdown weighs on earnings, corporations are reviving the "trust the process" slogan made popular by the Philadelphia 76ers in the post-Iverson era. Markets, for their part, have already started pricing in risks of a recession, with the S&P 500 and Nasdaq falling into bear markets this year — down 20% and 32% year to date, respectively — while the Dow has fallen more than 9%. "The market goes first, so the market has cracked this year," Liz Young, head of investment strategy at SoFi, told Yahoo finance Live (video above). "The market has shown us its pessimism. It's shown us its reaction to the microenvironment."
The market decline is largely contingent on the Federal Reserve's aggressive raising of interest rates, and thereby slowing the economy, in the fact of decades-high inflation: Fed Chair Powell recently acknowledged the risk of tipping the economy into a recession but said that thinking about pausing interest rate hikes at this juncture would be "very premature." "Until we see consecutive months of inflation coming down in a meaningful way, I expect them to continue hiking and continue tightening," Young said. "I think that they are quite comfortable with tightening maybe a bit too far, and then trying to sort of ask for forgiveness from markets later with the tools that they have to stimulate." In the meantime, Young suggested that investors watch for two other signs that the business cycle may be turning over.
Earnings contraction
A sweeping earnings contraction may be the next shoe to drop, according to Young. The market has not seen a wave of downward revisions in its earnings estimates since the onset of the coronavirus pandemic. "I think the piece of it that hasn’t quite been priced in entirely is that earnings contraction,” she said.
In a Nov. 4 note, Goldman Sachs shrunk its earnings target for the S&P 500 for the rest of the year as well as through 2024. The bank now sees earnings for 2022 coming in at $224, down from $226. Furthermore, strategists at the firm revised their earnings expectations for 2023 down to $224 ($234 previously) and to $237 in 2024 (from $243). Young added that if the U.S. were to fall into a recession, she would expect a 10% to 15% contraction in earnings. At the same time, she noted, earnings faltering would vary across sectors due to inflation. “Goods inflation is likely to come down much more quickly and to a more manageable level than services inflation, which tends to be more sticky and includes things like rents, and businesses are also dealing with sticky wage inflation,” Young said. “So the sectors that are goods intensive and can benefit from goods inflation coming down and commodity prices coming down are likely to do better and maybe don’t take as big of an earnings hit.”
Economic wobble
The U.S. unemployment rate is currently hovering near 50-year lows, and the Fed broadly sees an overheated labor market with demand for employees exceeding the supply of labor market participants. But that could change as the Fed continues to raise rates. “The last piece of the puzzle is that the economy falters, and you see real data in the economy, the labor market, inflation comes down, that things are actually contracting,” Young said. The bright spot for investors would be that by the time the economic data stumbles, the stock market may already be in recovery mode as equities tend to bottom well before the conclusion of a recession. According to historical data from JPMorgan, on average, the S&P 500 sees a bottom three months after the beginning of a recession and reaches a cyclical low 10 months before the end of a recession. "A recession is pretty likely at this point — doesn’t mean it has to be bad, doesn’t mean it has to be armageddon," Young said. "Recessions reset the business cycle, and that might be a positive in this environment."
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Live Long and Prosper....
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Post by xray on Nov 8, 2022 23:08:37 GMT
Yahoo Finance Biden overlooked diesel fuel inflation. Why that's extra bad for the economy. Rick Newman·Senior Columnist Tue, November 8, 2022, 3:19 PM
For the last six months, President Biden and his top advisors have obsessed over gasoline prices, for obvious reasons. That's because no single price rattles consumers as much as the cost of gas, which crept up to a new record high of $5 per gallon in June. So it comes as no surprise that soaring gas prices corresponded directly with Biden's sinking approval rating.
Since then, gas prices have fallen by about $1.10 per gallon. Biden may have helped a little by releasing oil from the US strategic reserve. Market forces, tough, have been a bigger factor. Still, that hasn't stopped Biden from touting the drop in prices and claiming he deserves the credit. But Biden has largely ignored another important type of fuel: diesel fuel, which is critical for the production and transportation of many everyday products. There's a reason for Biden's silence: Diesel prices remain uncomfortably high, and they're contributing to food inflation and other consumer pain points. Around the same time gas hit $5, diesel hit a record high of $5.81 per gallon. Gas prices are now 22% below their peak, but diesel is just 8% lower. On a year-over-year basis, gas prices are up 15% while diesel is up 43%.
High diesel prices are a kind of hidden inflation, because most consumers never buy diesel. But it’s an important input in the production and transportation and of many things, including food and consumer goods shipped around the country. Inflation, at 8.2%, is still uncomfortably high, a huge reason Biden’s approval rating is underwater and Democrats seem headed for resounding defeat in the midterms. A big part of the reason is rising input costs for everyday consumer products.
The American Farm Bureau Federation sent a letter to Biden on November 4 drawing attention to the problem. “Our nation’s food supply is driven by diesel,” Farm Bureau president Zippy Duvall wrote. “High diesel prices are severely impacting our farmers and ranchers, causing increased costs to consumers, and adding to food insecurity.” While the pace of gasoline inflation has moderated substantially in recent months, food inflation has generally gotten worse, and now stands at 13% year-over-year. Wages are only rising by around 5%, so it takes a bigger chunk of the family paycheck to fill the refrigerator.
The US energy market is complex and there’s no single cause for higher diesel prices. Part of the explanation is a 4% reduction in diesel refining capacity that began in 2020, when oil prices crashed and many producers lost money. There’s less refining capacity for gasoline, too, which is why the “spread” between the cost of oil and the cost of refined products has been higher than normal for most of this year—there’s a bottleneck in the conversion of crude oil into consumer products, which tends to push the cost of finished products up.
After Russia invaded Ukraine on Feb. 24, Biden imposed a ban on US purchases of Russian oil and oil products. That barely affected the supply of raw crude, since only 3% of US oil imports came from Russia, and those have been easily replaced with oil from other sources. But Russia supplied 20% of America’s imported oil products, includes grades of oil and certain distillates ideal for conversion into diesel. The loss of those imports has created marginal shortages of the input fuel that becomes diesel, which is not really a problem for gasoline supplies.
Demand for diesel has also remained strong due to robust spending on goods shipped by truck during the Covid pandemic, which seems likely to hold up into this year’s holiday shopping season. Droughts have lowered water levels on rivers such as the Mississippi, moving some cargo off of barges onto trucks. There are also season factors that affect diesel prices, such as increased demand in the winter for heating oil, which is very similar to diesel. All of these things have left diesel prices sitting close to record highs.
Biden has tried to combat high gasoline prices by releasing nearly 200 million billion barrels of oil from the US reserve, which has probably brought down oil prices a bit, and kept both gasoline and diesel prices lower than they would be otherwise. But global energy markets remain tight, with sanctions on Russia diverting global flows of oil, oil products and natural gas and causing way more uncertainty than usual.
The energy war between Russia and the west is far from over. In early December, a European ban on purchases of Russian oil will got into effect, along with a corresponding US-led effort to impose a price ceiling on Russian oil. The goal is to reduce the oil revenue going into Russia’s coffers, which is its largest source of funding for the illegal war in Ukraine. But Russia won’t easily abide by the price caps and could seek ways to punish US and European energy consumers. Nobody’s sure what will happen and one possibility is more turmoil that pushes prices up. Biden's options have always been limited, and he could be more constrained going into 2023. The last of Biden’s oil releases from the strategic reserve should come in December. Biden could order another release, but the dwindling size of the reserve and the end of the midterm election season probably mean he won’t. The loss of that reserve oil could mean tighter supply and higher prices. Biden could do other things to help encourage more US fossil-fuel capacity, such as speeding the federal permitting process and approving more drilling on federal territory. But he has been channeling progressive Democrats' antipathy toward the oil and gas industry and seems unlikely to change. It’s also true that the fossil-fuel industry is undergoing long-term retrenchment as the whole world shifts from oil and gas to greener forms of energy. Oil and gas firms are very reluctant to invest in new refineries or other types of expensive infrastructure, knowing that the future of the business is murky.
So keep an eye on diesel prices if you want to know where inflation is heading.
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Live Long and Prosper....
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Post by xray on Nov 13, 2022 20:50:36 GMT
My previous Comment: Many investor Buy/Sell decisions remain in question as the "Baron interview" (100% invested) this morning, vs "pivot point" are in conflict. Some "Dividend Oriented investors" continue to play the neutral game and remain 50% invested (in a volatile market) as previously discussed in a earlier posting....
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Some "Dividend Oriented investors" have currently revised their neutral game and still remain 50% invested (in a volatile market) as previously discussed in a much earlier posting. The revision is now maintaining 10 securities with their 5 securities (previously owned) dollar cost averaged "UP" to 6% of portfolio and adding 5 additional securities for a total of 10 securities in current portfolio's (same approximately 50% cash remaining)....
Live Long and Prosper....
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Post by xray on Nov 16, 2022 21:15:27 GMT
MoneyWise Morgan Stanley expects the S&P 500 to plunge another 15%-25% within the next four months Jing Pan Tue, November 15, 2022, 6:00 AM
Morgan Stanley expects the S&P 500 to plunge another 15%-25% within the next four months. If you think the stock market selloff has come to an end, Morgan Stanley has some bad news. The S&P 500 is already down 16% year to date, but the Wall Street juggernaut believes the market has yet to hit a bottom.
“Our '22/'23/'24 base case estimates are now 3%/13%/14% below consensus, respectively,” a team of Morgan Stanley analysts led by Mike Wilson wrote in a note to investors earlier this fall. “In our base case, 2023 now marks a modest earnings contraction (-3% year-over-year growth), though we do not embed an economic recession in this scenario.”
“While acknowledging the poor performance in equities year-to-date, we do not think the bear market is over if our earnings forecasts are correct.”
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Live Long and Prosper....
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Post by retiredat48 on Nov 16, 2022 21:27:37 GMT
MoneyWise Morgan Stanley expects the S&P 500 to plunge another 15%-25% within the next four months Jing Pan Tue, November 15, 2022, 6:00 AM Morgan Stanley expects the S&P 500 to plunge another 15%-25% within the next four months. If you think the stock market selloff has come to an end, Morgan Stanley has some bad news. The S&P 500 is already down 16% year to date, but the Wall Street juggernaut believes the market has yet to hit a bottom. “Our '22/'23/'24 base case estimates are now 3%/13%/14% below consensus, respectively,” a team of Morgan Stanley analysts led by Mike Wilson wrote in a note to investors earlier this fall. “In our base case, 2023 now marks a modest earnings contraction (-3% year-over-year growth), though we do not embed an economic recession in this scenario.” “While acknowledging the poor performance in equities year-to-date, we do not think the bear market is over if our earnings forecasts are correct.” ---------- Live Long and Prosper.... From interview memory, MS/Mike Wilson also expects greater then 50/50 that market will rally thru December of this year. R48
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Post by xray on Nov 16, 2022 21:35:56 GMT
What he is telling us (IMHO) is that we are in the "GREATEST" trading market in many many years and there is money to be made. Considering that many investors only have "50%" invested in their portfolio's (rest cash), they are confirming what Mike Wilson is saying. April 15, IMHO, will tell us the "REST OF THE STORY"....
Live Long and Prosper....
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Post by xray on Nov 17, 2022 23:17:57 GMT
Yahoo Finance JPMorgan expects 'a Category 1 economic hurricane' in 2023 Grace O'Donnell·Assistant Editor Thu, November 17, 2022, 6:38 AM
The economic hurricane that JPMorgan CEO Jamie Dimon warned about in June may be less intense than originally feared, according to a new report from the bank.
On Wednesday, JPMorgan economists Michael Feroli and Daniel Silver wrote that they see the U.S. in a "mild recession" in the second half 2023 as the Fed looks to complete its mission to flatten inflation.
"We’re effectively looking for a Category 1 economic hurricane," the economists wrote. "What are the risks? Weakness could build on itself, requiring a larger response by the Fed to get the economy back on track."
The note comes on the heels of a better-than-expected Consumer Price Index (CPI) report, which showed that there are signs that prices are beginning to moderate amid persistently-high inflation.
The market rallied following the report as investors wondered how the positive inflation news would alter the Fed's course. Central bank officials, for their part, reiterated that more interest rate hikes would be need to quell inflation while also acknowledging the encouraging print.
Feroli and Silver see the Fed continuing to tighten monetary well into 2023 before pausing. The economists laid out expectations that Federal Reserve will raise the federal funds rate by another 100 basis points, with a 0.50% hike coming in December and two additional 0.25% increases in February and March.
That would bring the federal funds rate near 5%, a level of financial tightening that many economists think would certainly push the U.S. economy into a recession.
At the same time, the U.S. economy has remained relatively resilient: Job growth has remained fairly durable in the face of what has been the Fed's most aggressive tightening cycle in decades while consumers continue to spend — albeit less and less on discretionary items.
The tight job market will likely deteriorate in the coming months, Feroli and Silver warned. And even in a mild-recession scenario, a weaker labor market at the hands of the Fed may cause the U.S. to shed over 1 million jobs by mid-2024.
"There are already signs that firms’ appetite to hire is easing, and we expect that to continue next year to the point where we see outright declines in the monthly job figures in 2H23," the economists stated. "Markets are now rewarding companies that prioritize cutting costs, and labor costs are often the largest cost category."
Declining job growth is likely required to bring down inflation and recalibrate the economy after several years of pandemic disruptions, the economists argued, and would likely be a key factor for the Fed to start cutting rates again in 2024.
"Whatever the eventual peak in rates might be, Fed officials lately have been stressing that equally important is how long rates remain in that restrictive setting," the economists explained. "But even taking them at their word, we do think there will be enough evidence of a lasting disinflation that we project easing in 2024. Under the assumption the economy slips into recession later next year and significant job losses ensue, we see the funds rate being reduced 50bp per quarter starting in 2Q24, leaving the funds rate at 3.5% by ’24 year-end."
Another reason why a recession would not necessarily wreak the kind of havoc past economic storms: Investors and CEOs have been bracing for a downturn since the Fed started hiking rates.
“If we do have a downturn next year, it will be the most well-telegraphed recession in modern memory,” the economists wrote. "That fact alone should change the nature of the slowdown."
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Live Long and Prosper....
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Post by xray on Nov 18, 2022 16:36:03 GMT
Bloomberg Record Options Trading Shows Jitters Before $2 Trillion ‘OpEx’ Lu Wang Thu, November 17, 2022, 4:06 PM In this article:
^GSPC +0.36%
(Bloomberg) -- Nowhere better illustrates Wall Street’s febrile sentiment than the stock-derivatives market, where trading volumes are breaking records heading into Friday’s $2.1 trillion options expiration.
The monthly event, known as OpEx, has a reputation for stoking volatility as traders and dealers rebalance their big exposures en masse. Now, with demand for both bullish and bearish index contracts booming while hedging in single stocks explodes in popularity, OpEx comes at a precarious time.
Twice this week, the S&P 500 has briefly surpassed 4,000 -- a battleground threshold for traders that has garnering the highest open interest among contracts set to roll out on Friday. The benchmark gauge has fallen in three of the past four sessions, after jumping more than 5% last Thursday on promising inflation data that sparked a wave of short covering and call buying. The index fell 0.3% to close at 3,947 Thursday.
Amateurs and professionals have been flocking to short-dated contracts to cope with the market whiplash of late, an activity that has exerted outsize impact on the underlying equities. That suggests Friday’s options runoff may expose stocks to further price swings.
Not everyone buys into the idea that derivatives wield this kind of power. But to some market watchers, it’s no coincidence that the OpEx week has seen stocks falling in eight out of the last 10 months.
“Option prices and tails have dropped sharply and present a good opportunity” to add protective hedges, said RBC Capital Markets’ strategist Amy Wu Silverman, citing the possibility that entrenched inflation renews pressure on equities.
Federal Reserve-induced market gyrations are encouraging investors to go all-in on options to place bullish and bearish bets alike. About 46 million options contracts have changed hands each day in November, poised for the busiest month on record, data compiled by Bloomberg show. That’s up 12% from last month.
The boom was in part driven by derivatives maturing within 24 hours. Such contracts made up a whopping 44% of S&P 500 options trading in the past month, according to an estimate by Goldman Sachs Group Inc. strategists including Rocky Fishman.
At the same time hedging activity in single stocks just exploded. The Cboe equity put-call ratio on Wednesday soared to the highest level since 1997. From earnings blowups at tech giants to the uncertain path of the Federal Reserve’s monetary policy, volatility has been the only certainty in the market.
Still, nothing is ever simple in this corner of Wall Street given mixed signals on investor positioning to glean sentiment. For example, judging by the S&P 500’s skew -- the relative cost of puts versus calls that has hovered near multiyear lows -- traders appear more sanguine.
And thanks to the short shelf-life of options that are currently in demand, open interest in S&P 500 contracts has increased at a much slower pace, rising only 4% from the day before the last OpEx. Though with 20 million contracts outstanding, the open interest was the highest since March 2020.
“We did see a lot of recent interest by call buyers and short-covering,” said Steve Sosnick, chief strategist at Interactive Brokers LLC. “One can argue that leaves us a bit more exposed to a down move, but the mood generally remains hopeful. That’s why Fed governors feel the need to continually remind us of their resolve to fight inflation.”
While it’s not easy to get a clear picture about investor positioning in options, dislocations create opportunities for traders.
Easing interest rate volatility will help the equity market stay contained, according to Goldman’s Fishman. He recommends buying puts on Cboe Volatility Index, or VIX, to bet on potential calm into the yearend. The Cboe VVIX Index, a measure of the cost of VIX options, sat below its 20th percentile of a range in the last decade, an indication of attractive pricing, per Fishman.
“Low skew and vol-of-vol point to diminished concern about tail risk,” he wrote in a note.
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Live Long and Prosper....
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Post by uncleharley on Nov 18, 2022 17:19:38 GMT
Increased trading volume usually indicates a turn in the market. That seems to jive with my BPI indicators for common stock indexes.
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Post by anitya on Nov 18, 2022 20:15:04 GMT
Increased trading volume usually indicates a turn in the market. That seems to jive with my BPI indicators for common stock indexes. Up or down? In a long time, this Friday, I feel uncertain about the market move for next week. So, had to ask for your take? Why is my crystal ball cloudy? On the positive side, next week being a short week, complacency may augur for a drift up. Macro tail risks too seem well balanced for any surprises. On the negative side, the general malaise in a Fed tightening cycle is still there.
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Post by uncleharley on Nov 18, 2022 21:23:37 GMT
Increased trading volume usually indicates a turn in the market. That seems to jive with my BPI indicators for common stock indexes. Up or down? In a long time, this Friday, I feel uncertain about the market move for next week. So, had to ask for your take? Why is my crystal ball cloudy? On the positive side, next week being a short week, complacency may augur for a drift up. Macro tail risks too seem well balanced for any surprises. On the negative side, the general malaise in a Fed tightening cycle is still there. Up for the shorter term. Crystal Balls frequently cloud up during a consolidation pattern which is what we have been in for the past 3 or 4 weeks. The good news is that a consolidation pattern most frequently will resolve in a continuation of what it was doing prior to the consolidation. The bad news is that the frequency is about 60%. So the final news is that there is a 60/40% chance that the market will resume its previous rally which was very strong. I am going with the 60% because of seasonal factors and economic reports. In short, it looks to me like Santa is trying to bring in a soft landing for the economy and hopefully that will make a lot of people happy. Give Santa a hug and go long for the Christmas trade.
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Post by xray on Nov 19, 2022 23:11:48 GMT
Bloomberg Beyond the Crypto Crash, a Big Squeeze Jolts Stock Markets Anew Lu Wang and Isabelle Lee Fri, November 18, 2022, 4:12 PM In this article:
^GSPC +0.48%
(Bloomberg) -- Being glued to crypto news this week meant missing adventures in regular markets that while lacking the same high drama, made up for it in terms of money at stake.
In case you missed it, stock and bond traders spent the last five days still caught in the thrall of an event that may be hard to recall for people mesmerized by the FTX.com collapse: Nov. 10’s inflation report, which ignited a short squeeze among traders expecting a worse number. Reverberations continued to be felt in terms of positioning, trading in derivatives and probably also in wrongly prepared portfolios.
As usual in 2022, the biggest venue of impact was the US stock options market, where trading volumes are smashing records as investors of all stripes rush into short-dated contracts to catch up. It’s creating snags for what had been billed as the great inflation trade, with the mighty dollar losing luster and technology shares reclaiming their long-lost leadership, at least briefly.
The recalibration was prompted when a soft print on consumer prices triggered a reset of the perceived path for Federal Reserve monetary policy. Exacerbating it are money managers who had cut equity exposure to the bone during the bear market and found themselves caught out. With almost everyone sitting on the same side of the trade and exiting at once, an already-turbulent market got weirder.
“Crypto is just part of a broader mosaic of an almost dysfunctional market,” Doug Fincher, hedge fund manager of Ionic Capital Management, said by phone. “Not to be cynical, but look at CPI last Thursday. It was two basis points better than expected, and the market exploded. There’s a massive amount of technical factor rotation. There’s just a lot of crosscurrents in a really volatile, strange market.” The trend abated some during the week, with the S&P 500 closing lower over the period. Short-term Treasury yields regained some ground and the dollar edged higher as Fed officials reiterated their intention to keep raising rates.
Still, whether inflation has peaked is up for debate. There won’t be another reading for more than three weeks, and investors and policy makers alike have misjudged price trends since the pandemic hit. With data mostly coming in ahead of expectations this year, everyone from currency traders to bond investors were bracing for another big inflation number last week. When it didn’t pan out, a cascade of unwinding ensued. The dollar, darling asset of the inflation trade, is losing momentum. Down more than 4% in November, the US currency is poised for its worst month in two years. Two-year Treasuries, where large speculators built up record short positions before the CPI report, saw a rally that pushed yields down 25 basis points when it was released, the most in more than a decade.
Tech stocks, among the biggest casualties during the Fed’s aggressive inflation-fighting campaign, got a respite. Up more than 9% since the day before the CPI data, the industry has beaten all other major groups in the S&P 500, in a partial reversal of dismal returns earlier this year.
“These things are certainly bound to happen at around key critical junctures in economic and monetary policy, which is where we’re at -- the Fed shifting from raising rates toward more of a deceleration in terms of hikes,” said Layla Royer, a senior equity derivatives salesperson at Citadel Securities. “It is a significant shift.”
A basket of the most-shorted stocks soared 18% over the four days through Tuesday, dealing a fresh blow to hedge funds who boosted bearish wagers during a 10-month rout and turning them into forced buyers. Their total short covering over the stretch hit levels not seen since the retail-driven squeeze in January 2021, data compiled by JPMorgan Chase & Co.’s prime broker show.
For a third time this year, the S&P 500 mounted a recovery of more than 10%. Such counter-trend rallies have spurred demand for bullish call options from those who have been defensively positioned in the market. As a result, the index’s skew -- the relative cost of puts versus calls -- this month fell to the lowest level in more than a decade.
“Market screams back up. You’re at risk of losing your job because you’re going to underperform everybody,” said Dennis Davitt, founder of Millbank Dartmoor Portsmouth LLC, an investment firm that specializes in volatility strategies. “So the remedy for that is just by turning some of your equities into cash and then buying upside calls as a stock replacement.”
The Fed-induced market gyrations are encouraging investors to go all-in on options to place bullish and bearish bets alike. About 46 million contracts have changed hands each day in November, on course for the busiest month on record, data compiled by Bloomberg show.
Helping drive the boom is the frenzy trading in derivatives maturing within 24 hours. Such contracts made up a whopping 44% of S&P 500 options volume in the past month, according to an estimate by Goldman Sachs Group Inc.
For now, the fireworks following the CPI shock appeared to be dying down. The S&P 500 has moved less than 1% for six straight sessions on a closing basis, the longest stretch of calm since January.
To Mike Bailey, director of research at FBB Capital Partners, the tranquility may not last. For one, the cross-asset rally has contributed to easing financial conditions that’s working against Fed Chair Jerome Powell’s goal to slow the economy.
“We may get some buyer’s remorse over the next few weeks as investors fret over a potentially hot jobs number and any whiff of hawkishness from Powell and the Fed,” said Bailey. “Investors are coming up for air after a nice run since mid-October. The next question is, are we pricing in too much good news?”
--With assistance from Melissa Karsh and Vildana Hajric.
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Live Long and Prosper....
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Post by archer on Nov 20, 2022 5:33:41 GMT
Increased trading volume usually indicates a turn in the market. That seems to jive with my BPI indicators for common stock indexes. How do you track trading volume? I look at the bar chart that comes standard under the price chart on Stockcharts.com, but it doesn't really tell me anything. I suppose I don't know how to read it or what to do with it, but it seems this year so far volume increases at the dips and recedes as the market makes its little recoveries. So does the increased volume mean a turn around or do the dips mean the turnaround? We haven't yet seen a dip that continued after volume decreased. I'm just trying to understand how to use it as an indicator for timing turns.
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Post by uncleharley on Nov 20, 2022 12:27:06 GMT
Stockcharts also has a volume by price overlay which gives you an alert in a different way than volume over time. I have found this overlay to be very useful, especially when looking for support/resistance levels. I also add a 60 dma overlay on my daily & weekly volume bar chart and watch the trend in volume the same way one would watch the trend in price. You may also be confusing seeing a signal with seeing an alert. I have found that most of these indicators give off something that alerts us to look further and confirm rather than a signal to buy or sell. A buy or sell signal usually shows up in a number of different ways at the same time. The situations that you describe are probably telling you that the market would like to turn around, but so far can't do it.
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Post by xray on Nov 20, 2022 19:37:01 GMT
MoneyWise ‘Stocks and bonds are toast’: Robert Kiyosaki warns central banks can’t fix inflation and that ‘fake’ money is forcing state pensions to pivot Jing Pan Sun, November 20, 2022, 6:00 AM
Bank of England recently bought £19.3 billion of U.K. government bonds to prevent a collapse in the country’s pension industry. In the eyes of Rich Dad, Poor Dad author Robert Kiyosaki, that’s a sign to acquire three specific alternative assets. “Bank of England pivot means buy more GSBC,” he says in a recent tweet, referring to gold, silver and bitcoin. “When pensions nearly collapsed it exposed Central Banks cannot fix … INFLATION. Pension have always invested in G&S. Pension funds now investing in Bitcoin. They know Fake $, stocks & bonds are toast.” Of course, gold, silver and bitcoin aren’t exactly perfect investments. Here’s a closer look at those assets — and what Kiyosaki suggests you should do to get around their limitations.
Gold and silver
Precious metals — particularly gold and silver — have been a popular hedge against inflation and uncertainty. They can’t be printed out of thin air like fiat money and their value is largely unaffected by economic events around the world. Kiyosaki has long been a fan of gold — he first purchased the yellow metal in 1972. “I’m not buying gold because I like gold, I’m buying gold because I don’t trust the Fed,” he said in an interview last year. Kiyosaki likes silver, too. In fact, he recently tweeted “Silver best investment in Oct 2022” and “Everyone can afford $20 silver.” To be sure, precious metals aren’t immune to the sell-off that’s been going on this year. The price of gold is actually down about 4% in 2022, while silver has fallen by nearly 9%. While there are many ways to gain exposure to gold and silver, Kiyosaki prefers to just buy the metal directly. Earlier this year, he tweeted that he only wants “real gold or silver coins” and not the ETFs. The author also called silver “a bargain” recently. So it might be time to visit your local bullion shop.
Bitcoin
Bitcoin investors have learned the hard way just how volatile it can be. Last November, bitcoin reached a high of $68,990. Today, it’s hovering around $16,750. But Kiyosaki points to a potential catalyst for the world’s largest cryptocurrency: pension funds. “Pension funds are biggest investment businesses in the world,” he comments in a recent tweet while sharing a Forbes story Your State Pension Is Now Gambling On Cryptocurrency. The article cited a 2022 study from the CFA Institute that shows 94% of state and government pension plans have invested in cryptocurrencies. There are many ways to tap into bitcoin. You can buy the cryptocurrency directly, invest in bitcoin ETFs, or own shares of companies that have tied themselves to bitcoin.
A side hustle
While Kiyosaki likes gold, silver and bitcoin, he didn’t say they’re all the protection you need. “Gold, silver, Bitcoin may protect your WEALTH…but not your INCOME,” he writes. But the author also provides a solution. “As economy crashes, stock markets go bust, pensions crash and unemployment rises a SIDE HUSTLE may provide you income.” Side hustle is something you get paid for doing in addition to your full-time job. It allows you to earn extra income — and could even be a way of testing the entrepreneurial waters. “Who knows? Your side hustle may grow into the next Amazon or Bitcoin,” Kiyosaki says.
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Live Long and Prosper....
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Post by uncleharley on Nov 20, 2022 21:06:59 GMT
Stockcharts has a more complete answer to your question. xray , uncleharley , richardsok , yogibearbull , steelpony10 , rhythmmethod , Fearchar , retiredat48 , steadyeddy , Archer, 2. When prices trade in a narrow range with little volatility, look for a volume increase to confirm the direction of the next move. Subsequent strength on higher volume is bullish, while subsequent weakness on higher volume is bearish. school.stockcharts.com/doku.php?id=overview:donchian_trading_guidelines
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Post by archer on Nov 21, 2022 5:47:43 GMT
Stockcharts has a more complete answer to your question. xray , uncleharley , richardsok , yogibearbull , steelpony10 , rhythmmethod , Fearchar , retiredat48 , steadyeddy , Archer, 2. When prices trade in a narrow range with little volatility, look for a volume increase to confirm the direction of the next move. Subsequent strength on higher volume is bullish, while subsequent weakness on higher volume is bearish. school.stockcharts.com/doku.php?id=overview:donchian_trading_guidelinesGood article UH. A lot to remember though. Pretty much any profession takes some years of education and thousands of hours of practice to become really proficient. It's easy to understand how many investors are hit and miss with success rate.
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Post by xray on Nov 21, 2022 20:57:55 GMT
Fortune The bear market will end early next year and create a ‘terrific buying opportunity,’ Morgan Stanley’s Mike Wilson says Will Daniel Mon, November 21, 2022, 12:02 PM
Morgan Stanley’s chief investment officer Mike Wilson has made a name for himself with some offbeat yet prescient stock market forecasts over the past few years. And now, despite consistent recession predictions from economists, Wall Street’s top strategist says stocks are in “the final stages” of the bear market. You're going to make a new low sometime in the first quarter, and that will be a terrific buying opportunity," Wilson told CNBC in a Sunday interview. But before anyone rushes out to buy stocks, Wilson also warns that the last few months of the bear market will be turbulent, to say the least. “It's the path that's going to be really tricky,” he said.
Despite a more than 5% rally in the S&P 500 over the past 30 days, the blue-chip index is still down more than 17% year to date. And Wilson argues that corporate earnings estimates for 2023 are still 20% too high, given the staying power of inflation and the rapid increase in interest rates so far this year. That could mean more downside lays ahead for equities before the bear market is over.
In a Monday note to clients, Wilson wrote that he sees three key “inflection points” coming in the stock market over the next year. The first is the ongoing bear market rally, which should last two months and take the S&P 500 roughly 5% higher, to 4150. Then, Wilson expects earnings estimates to fall as “fire” and “ice”—Federal Reserve interest rate hikes and slowing economic growth—work together to slash corporate profits leading to more conservative forecasts from management teams. Falling earnings estimates will then cause the S&P 500 to plummet to between 3,000 and 3,300 in the first quarter of next year, he says.
Billionaire investor Carl Icahn made a similar prediction earlier this month, arguing that the recent rebound in stocks is nothing more than a bear market trap for investors. “I still think we are in a bear market,” Icahn told CNBC. “I don’t think inflation is going away…not for the near term. I think you’re going to have more of a recession, more of an earnings decrease.”
But unlike Icahn, Wilson doesn’t foresee stocks continuing to struggle next year due to a severe recession. Instead, the CIO expects “a rebound” off of the first quarter low as investors begin to anticipate a comeback in economic growth and the end of the bear market. It’s an ideal buying opportunity, according to Wilson—and the Morgan Stanley CIO isn’t the only big name on Wall Street who believes strong returns are possible in 2023. Wharton Professor Jeremy Siegel said on Monday that he believes stocks could rally as much as 20% next year as inflation falls back toward the Fed’s 2% target. And Fundstrat’s Tom Lee said last week that the S&P 500 could rally 25% after the latest inflation print came in lower than expected.
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Live Long and Prosper....
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Post by xray on Nov 21, 2022 21:33:48 GMT
Home Markets In One Chart In One Chart Is the stock-market rally running out of road? Watch this number. Published: Nov. 21, 2022 at 8:34 a.m. ET By William WattsFollow
VIX near current levels has signaled tops in the past 4 bear market rallies: DataTrek’s Colas
The VIX has served as a warning track for investors chasing bear-market rallies in 2022. A popular gauge of expected volatility may be signaling that the stock market’s bounce off the October lows is running out of room, according to a closely followed Wall Street analyst. A narrow trading band for stocks over the past six trading sessions saw the Cboe Volatility Index VIX, -3.37%, an options-derived measure of expected volatility in the S&P 500 over the next 30 days, pull back from around 26 on Nov. 19 to end near 23 on Friday, noted Nicholas Colas, co-founder of DataTrek Research, in a Monday note.
Colas said the chart tracking year-to-date activity, “shows why we get worried about U.S. equities once the VIX breaks 24 to the downside and starts to edge its way down to 20.” The red line tracks the S&P 500 SPX, -0.39%, and the black dotted line is a reading of the VIX that’s been inverted to make its correlation with the S&P 500 easier to visualize. “The 2 horizontal lines highlighting the 20 and 24 VIX readings have been the warning track for each of this year’s 4 bear market rallies. Once the dotted VIX line crosses into this area, the solid red S&P line starts topping out and soon declines,” Colas wrote.
Stock-index futures pointed slightly lower early Monday. Major indexes posted a weekly decline on Friday, leaving the S&P 500 up nearly 11% from a nearly 2-year low finish set on Oct. 12. It remains down 16.8% in the year to date. The Dow Jones Industrial Average DJIA, -0.13% is up more than 17% from its Sept. 30 closing low, trimming its year-to-date loss to less than 8%. The Nasdaq Composite COMP, -1.09% is down nearly 29% for the year to date.
Colas said that the Thanksgiving holiday-shortened week could see a light volume drift higher for U.S. stocks, which would likely see the VIX continue to move lower. “We are already at VIX levels which say, ‘Let’s be careful,’ however,” he noted.
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Live Long and Prosper....
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