[Tyga11]

Originally Posted by RickFLM4

You guys really think inflation and rate hikes are done or are you joking?

I'm not sure the next hike of 75 bps in September is a sure thing anymore. There will be another CPI report before that Fed meeting. If it's still encouraging that inflation is coming down we could be in the clear.

[chassis]

Originally Posted by Tyga11

Looks like we're back in business! If you had cash on the sidelines you missed a huge rally already. That's why you should always be invested

Nice green screen today.

But no one has missed out if they have stayed in the market. SPY still has more than 10% to go to reach the ATH.

Anyone who went to cash in the past 8 months should decide what their criteria is for getting back in.

I am likely to start putting new money to work. I have remained fully invested for more than 30 years. I intend to do so, as long as I remain on the right side of the dirt.

[RickFLM4]

Originally Posted by Tyga11

I'm not sure the next hike of 75 bps in September is a sure thing anymore. There will be another CPI report before that Fed meeting. If it's still encouraging that inflation is coming down we could be in the clear.

I think that’s pretty optimistic. I expect they will continue hiking until we get to the 4% range and Nasdaq in particular will remain volatile.

[Tyga11]

Originally Posted by RickFLM4

I think that’s pretty optimistic. I expect they will continue hiking until we get to the 4% range and Nasdaq in particular will remain volatile.

I'm with you. I think the bottom is in. If the market crashes next week I will say the opposite. I'm very emotionally driven when it comes to the stock market

[XKxRome0ox]

Originally Posted by RickFLM4

You guys really think inflation and rate hikes are done or are you joking?

I think we are just seeing the tip of the iceberg
there is so much wrong with the overall economic health of the country (US) and the world ... it can't keep going this way until inflation is forcefully curbed

[chassis]

Originally Posted by XKxRome0ox

I think we are just seeing the tip of the iceberg
there is so much wrong with the overall economic health of the country (US) and the world ... it can't keep going this way until inflation is forcefully curbed

What are you seeing in the economy?

[Chick Webb]

Originally Posted by chassis

What are you seeing in the economy?

Well, let's see:

1. At the current unemployment rate - 3.5%, which went down last month from 3.6% - and rate of wage inflation, 4.5% overall inflation is baked into the economy.
2. Food prices continue to rise, as does rent/housing, and that is going to continue through the next several months, at least.
3. The money supply has only just begun to contract, and the "terminal" rate of Fed tightening is going to start in September ($90 B/month, I think).
4. The level of consumer debt jumped 13% last month, the most in 20 years.
5. The price of energy is just now starting to make its way into the price of end goods. The production cost of plastics, for example is up 25%.
6. Energy is still way up (9x Nat Gas in Europe, for example) and is not going to come down this fall. The SPR drawdowns are ending, OPEC+ hasn't increased production, the LNG terminal in LA that blew up isn't coming back online until October (earliest), and you know that Putin is going to turn the screws on NordStream1 come the fall. It's easily possible that oil goes back to $120/bbl before Thanksgiving.

As much as part of me is enjoying this rally, none of me thinks it's going to last. The Fed needs to get the real interest rate at least 0.5% above the inflation rate to kill off demand. That's closer to 5% than it is to 3.5%. And, that high rate is going to have to be maintained for a lot longer than people think, I believe, in order to make sure it doesn't come roaring back at the first sign the Fed's lost its nerve.

[antzcrashing]

Originally Posted by Chick Webb

Well, let's see:

1. At the current unemployment rate - 3.5%, which went down last month from 3.6% - and rate of wage inflation, 4.5% overall inflation is baked into the economy.
2. Food prices continue to rise, as does rent/housing, and that is going to continue through the next several months, at least.
3. The money supply has only just begun to contract, and the "terminal" rate of Fed tightening is going to start in September ($90 B/month, I think).
4. The level of consumer debt jumped 13% last month, the most in 20 years.
5. The price of energy is just now starting to make its way into the price of end goods. The production cost of plastics, for example is up 25%.
6. Energy is still way up (9x Nat Gas in Europe, for example) and is not going to come down this fall. The SPR drawdowns are ending, OPEC+ hasn't increased production, the LNG terminal in LA that blew up isn't coming back online until October (earliest), and you know that Putin is going to turn the screws on NordStream1 come the fall. It's easily possible that oil goes back to $120/bbl before Thanksgiving.

As much as part of me is enjoying this rally, none of me thinks it's going to last. The Fed needs to get the real interest rate at least 0.5% above the inflation rate to kill off demand. That's closer to 5% than it is to 3.5%. And, that high rate is going to have to be maintained for a lot longer than people think, I believe, in order to make sure it doesn't come roaring back at the first sign the Fed's lost its nerve.

I can argue with very little of this, but I will argue that debt increasing by greatest amount is a relative metric and we are coming off debt being at historic lows. So I am going to take that with a grain of salt.

The idea that many are following as to why their is optimism is that inflation will continue to fall back to earth with rates settling well below 5 percent, like 3, or gasp 2. Hard to imagine right now, but it could be around the corner.

I'm not as pessimistic as you nor am I as optimistic as some including this market rally recently

[antzcrashing]

So all you bears that were in 100 percent cash or only blue chips and heavy cash, how you feeling as the market (especially growth stocks) is rallying right now? And what is your re-entry criteria?

[RickFLM4]

Originally Posted by antzcrashing

So all you bears that were in 100 percent cash or only blue chips and heavy cash, how you feeling as the market (especially growth stocks) is rallying right now? And what is your re-entry criteria?

We are at about 20% cash and mostly invested passively in index funds. My wife has been adding to her Roth 401(K), but otherwise, I expect to stay with around that much in cash into 2023 unless the bottom falls out of the market and creates some incredible long-term buying opportunities. I don't believe in going 100% cash and then trying to guess when to jump back in. But I also don't believe a week or a month of rallies means the only way to go is up.

In terms of what I think of the growth stock rally, I took the opportunity to sell the little bit of Amazon I bought before the market went south since it recovered to a small gain. I am no longer interested in owning these types of stocks right now other than via exposure through index funds, which is already significant.

[antzcrashing]

Bitcoin might become a teenager again, just November it was collecting social security

[tgrundke]

Originally Posted by Chick Webb

As much as part of me is enjoying this rally, none of me thinks it's going to last. The Fed needs to get the real interest rate at least 0.5% above the inflation rate to kill off demand. That's closer to 5% than it is to 3.5%. And, that high rate is going to have to be maintained for a lot longer than people think, I believe, in order to make sure it doesn't come roaring back at the first sign the Fed's lost its nerve.

A few additional variables to add to the "inflation has not yet peaked" discussion:

1. 40 years of "exporting inflation" by using cheap Chinese labor is coming to an end and is now reversing. In the short run this means that prices for consumer goods will increase. Over time, we may find ways to once again push down the cost of manufacturing, but for now those prices will increase

2. The mad rush to renewables is going to contribute to cost pressure in the next 10 years. Nothing against renewables, but I sense that there is a dangerous mania that has taken hold which, like Europe at the moment, is going to bite us hard.

3. Workplace efficiency is declining in the US - this is a somewhat startling and dangerous long-term trend that has settled in since COVID. See "Quiet Quitting" for more details.

4. Boomer retirements are increasing and there aren't enough qualified younger workers to fill their shoes. Labor costs will continue to remain elevated as a result.

In short: I agree that the Fed needs to lay the hammer down on the funny money with serious rate hikes. For what it's worth, Wolf Richter has said that privately, big real estate brokers are actively planning on 8% mortgage rates in 2023. His thesis is that the markets are refusing to take the Fed seriously and as such, are not transmitting the rate increases. The Fed knows this and is going to continue to drain liquidity and to tighten rates to teach Wall Street a lesson. It's a theory worth contemplating as it will lead to some significant pain if it plays out this way.

[chassis]

Originally Posted by tgrundke

A few additional variables to add to the "inflation has not yet peaked" discussion:

1. 40 years of "exporting inflation" by using cheap Chinese labor is coming to an end and is now reversing. In the short run this means that prices for consumer goods will increase. Over time, we may find ways to once again push down the cost of manufacturing, but for now those prices will increase

2. The mad rush to renewables is going to contribute to cost pressure in the next 10 years. Nothing against renewables, but I sense that there is a dangerous mania that has taken hold which, like Europe at the moment, is going to bite us hard.

3. Workplace efficiency is declining in the US - this is a somewhat startling and dangerous long-term trend that has settled in since COVID. See "Quiet Quitting" for more details.

4. Boomer retirements are increasing and there aren't enough qualified younger workers to fill their shoes. Labor costs will continue to remain elevated as a result.

In short: I agree that the Fed needs to lay the hammer down on the funny money with serious rate hikes. For what it's worth, Wolf Richter has said that privately, big real estate brokers are actively planning on 8% mortgage rates in 2023. His thesis is that the markets are refusing to take the Fed seriously and as such, are not transmitting the rate increases. The Fed knows this and is going to continue to drain liquidity and to tighten rates to teach Wall Street a lesson. It's a theory worth contemplating as it will lead to some significant pain if it plays out this way.

What actions are you taking with your current investment holdings, and in which direction are you deploying additional (new) capital?

[antzcrashing]

Originally Posted by tgrundke

A few additional variables to add to the "inflation has not yet peaked" discussion:

1. 40 years of "exporting inflation" by using cheap Chinese labor is coming to an end and is now reversing. In the short run this means that prices for consumer goods will increase. Over time, we may find ways to once again push down the cost of manufacturing, but for now those prices will increase

2. The mad rush to renewables is going to contribute to cost pressure in the next 10 years. Nothing against renewables, but I sense that there is a dangerous mania that has taken hold which, like Europe at the moment, is going to bite us hard.

3. Workplace efficiency is declining in the US - this is a somewhat startling and dangerous long-term trend that has settled in since COVID. See "Quiet Quitting" for more details.

4. Boomer retirements are increasing and there aren't enough qualified younger workers to fill their shoes. Labor costs will continue to remain elevated as a result.

In short: I agree that the Fed needs to lay the hammer down on the funny money with serious rate hikes. For what it's worth, Wolf Richter has said that privately, big real estate brokers are actively planning on 8% mortgage rates in 2023. His thesis is that the markets are refusing to take the Fed seriously and as such, are not transmitting the rate increases. The Fed knows this and is going to continue to drain liquidity and to tighten rates to teach Wall Street a lesson. It's a theory worth contemplating as it will lead to some significant pain if it plays out this way.

Agree with basically all of this. I am not sure I would call it teaching the market a lesson by the fed, but it certainly feels (and it's true) that the market is not getting the message, and it needs to shake more trees to do so. I find it so counterproductive for the fed to talk about specific rate hike numbers, especially when they are being data dependent. The market over-reads those statements often in a dovish sentiment

[tgrundke]

Real estate has quite a ways to go before it returns back to the trend-line that was in place before April 2020. When prices and volume in some key markets spiked by 75-150%, a 15% decline today is pissing in the ocean compared to the drop necessary to get back to a nominal growth rate.

Buyers are finally balking, which means price discovery is returning. It' a slow process that will start in the real estate markets and then make its way through the economy.

[RickFLM4]

Originally Posted by tgrundke

Real estate has quite a ways to go before it returns back to the trend-line that was in place before April 2020. When prices and volume in some key markets spiked by 75-150%, a 15% decline today is pissing in the ocean compared to the drop necessary to get back to a nominal growth rate.

Buyers are finally balking, which means price discovery is returning. It' a slow process that will start in the real estate markets and then make its way through the economy.

Generally agree, but some markets had been fairly stagnant since the financial crisis before this run up. So it really depends on where you start the trend line. Where I live, the price went nuts over the past 12-18 mos. like everywhere else, but if you look at a 10-12 year trend line (post-crash), they were somewhere growth rate was 3-4%, which is not at all out of line when there has been a growing hius8ng shortage.

[Tyga11]

Seems pretty obvious the bottom is already in and it should be smooth sailing from here. Even with these negative days the market is moving pretty well with everything being down 2% and no outliers amongst the mega caps. Even TSLA which is high beta is moving great.

My price target for the S&P EOY is $5000

[antzcrashing]

My SQQQ calls won big today

[Tyga11]

Originally Posted by antzcrashing

My SQQQ calls won big today

Nice call. I was going to buy calls on Zoom and so glad I didn't. I can't buy puts for some reason...it's hard for me to root against stocks

[antzcrashing]

Originally Posted by Tyga11

Nice call. I was going to buy calls on Zoom and so glad I didn't. I can't buy puts for some reason...it's hard for me to root against stocks

Don't have to root against stocks: root for giving yourself a payday when your gut feeling of a downturn happens. And when it does, ring the register and have that to play into a market in which things are on-sale

[Tyga11]

Originally Posted by antzcrashing

Don't have to root against stocks: root for giving yourself a payday when your gut feeling of a downturn happens. And when it does, ring the register and have that to play into a market in which things are on-sale

Yeah, I get that. Just hard for me to do mentally...

[Tyga11]

TSLA split today...