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Well, stocks flipped down sharply on lower CPI (but higher than expected), but higher core CPI. It seems some volatile part of the CPI is creeping into the core part.
Then, the (wholesale) PPI tomorrow is expected to be higher than (retail) CPI and that also means that wholesale inflation will continue to creep into retail inflation.
August CPI came in 8.3%, not much improvement. While gasoline price is down but food and others went up. Consumer spending remains strong. Core-CPI went up to 6.3% from that of July’s 6.1%.
Today, 10 years treasury moved up to 3.431% and the market falls.
And the good news if we can find any, the social security increase for 2023 is, I believe, based on these 3rd quarter inflation numbers. Small conciliation I know.
I’ve never seen such carnage across both stocks and bonds this far into a year.. No place to hide except cash. PRWCX had an unusually rough day - off nearly 3%. No longer own. Just a watcher. Banks were hammered again today. Many major banks are now down 25-30% for the year, off 5+% today alone. We used to rag on Cathie Wood when her fund was down that much. (Last I looked ARKK was off 60-70% for the year.)
Somehow it feels as if the damage YTD is worse than what the major indexes reflect. Not sure why. Might be that bonds of every stripe have been hit. Might be the damage in the financial sector which ISTM was more of a safe “value” play in the past.
Three excellent funds tailored for conservative investors that I track tell the story. All are YTD performance figures (from Fidelity) as of last night.
VWINX -10.24%
TRRIX -12.26%
PRSIX -12.86%
If you really want to freak out … Dodge & Cox’s global stock fund (DODWX) is outpacing all of the above with a -8.5% return YTD. Board favorite PRWCX is also doing better than the three noted above. Probably many more exceptions.
Franklin might have said, “When bonds go dry we know the worth of ballast.”
Sometimes it pays to be lucky. I've been picking up shares of Store Capital (STOR) by bits and pieces even after Berkshire disposed of their large stake a few weeks ago. Today STOR popped up 20%+ on a buyout offer from a private equity firm. I'll take it.
STOR was in the news a while back about all sorts of management issues when they fired the ex-CEO and co-founder from his position as executive chairman without giving a reason. That is probably why Buffet bailed, as did I.
SELL: STIP. short TIPS. -1.56% YTD. Not only failing to fight inflation but failing to keep pace with my grandson’s piggy bank which is even YTD. 3.9% 1 year CD’s or a CD ladder seem better to me than losing on the safe side of my portfolio. I just don’t see TIPS etf turning around soon. I will miss the ridiculously high monthly income but losing is losing.
Yesterday market after hr verything slightly pass critical 50d ma Let see if support hold end of day Lots big whales retail investors betting sp500 finish near 3950-4000 w puts calls quadruple witching day.... If no support below 3900 we may test June lower lows soon
Sp500 near 3900 critical keys levels
Equities appears cheaper again w this cycles rsi very low/very attractive prices, oil maybe screaming buys too... How low can we go though. UUP-USD, Ust2 yr ust5 yr ust 10 yr so expensive now.
I added little more RIVN SOXL XLF SLV SP500 But very little yesterday
Cryptos slight mixed morning hrs, not sure equities follow w market openings /rally later
Big whales institutions holding record cash now maybe short squeezes rally follow soon??
Lots hedgy managers /money managers saying Feds and QT/Demand destruction/ overshoot-deflation/Feds may pivot (slow down ease down gas paddles) soon in ?12 16 wks. Maybe 1% this time w another 0.25% hike next month then iddle in few months by Xmas.
@larryB, individual TIPS held to maturity (at brokerages or Treasury Direct) should follow the CPI ($$CPI) less the premium/discount at purchase. TIPS mutual funds have many other drivers; in the chart, ST STIP and VTIP are almost indistinguishable; IT/LT TIP is the worst. https://stockcharts.com/h-perf/ui?s=VTIP&compare=STIP,$$CPI,TIP&id=p23210538339
Curious...do you think the technicals would indicate something like $95B coming off the CBs balance sheets and the impact on stonks, rate hikes and the impact of policy errors contributing to inflation continuning on and on....why do many think the fed will pivot anytime soon with inflation still running so hot (and even hotter in reality than what the gov't says it is)....that 4% 1year Tbill looks purdy good to me right now...
Hi Sir Baseball fans Think everything maybe priced in... Mr Market know 95b QT restrictions for several wks now since Uncle Powell spoke few months ago before Jackson Hole. IMHO Feds maybe slow down first then maybe pivot in 4 6 months next spring but maybe not right away... Lots pundits screaming deflationary actions soon (least we see lots supplies at major retail chains causing them slash prices, woods timber took big hits, over supplies oil also large 20s% haircuts, less demands for silver copper/commodities because of recession/expect severe global economic slow down next yr, and China economy continued shut down from c19 (perhaps late fall winter too) .. Lots economists expert expect inflation may slow down in the near future then stay above 4% until late 2023.... Think next cpi forcast is expect lowered than 8.1%
I think slv copper charts look very good (? Bottom consolidation) but we don't know if prices could be slashed further down in 4 6 wks
Cathy Woods/ Musk screaming deflationary soon but who really knows
Friends say feds may pivot sp500 slashed below 3500 and inflation cooled off
In the -$95 billion/mo QT (full level starting mid-September), -$60 billion/mo in Treasuries can just roll-off, but -$35 billion/mo in MBS may not be from roll-off alone, so the Fed may actually have to sell MBS. The mortgage rates are already above 6%. This may not be priced in as there isn't much history or experience with QT (Fed doesn't claim that it knows). https://apnews.com/article/inflation-mortgages-mortgage-rates-90d3b63fe4dd8b81d6765375d403cb8e
Curious...do you think the technicals would indicate something like $95B coming off the CBs balance sheets and the impact on stonks, rate hikes and the impact of policy errors contributing to inflation continuning on and on....why do many think the fed will pivot anytime soon with inflation still running so hot (and even hotter in reality than what the gov't says it is)....that 4% 1year Tbill looks purdy good to me right now...Baseball Fan
@Baseball_Fan - I’m trying to cut through your rambling macro analysis. Would you please address some of the following questions? Best Wishes
“Curious … Do you think the technicals … ” What technicals? Not everyone uses technical analysis. Please identify which “technicals” you watch and base your investment decisions on? I’ve tried to help out by listing a few common technical indicators below:
- Moving Averages - Moving Average Convergence and Divergence - Relative Strength Indicator (RSI) - Bollinger Bands - Volume - Exponential Moving Average - Money Flow Index
“ … would indicate something like $95B coming off the CBs balance sheets” Over what period of time? Do you have a source verifying this will be completed within a definite time period? It took over a decade for the Federal Reserve to amass their bond holdings, beginning with the near depression that threatened the economy between 2007 and 2009.
“and the impact on stonks” (sic?) Not all stocks are the same. Financials? Commodities? Growth? Domestic or foreign? Also omitted here is any reference to time frame. Do you mean by the end or 2022 or are your concerns related to further out (5-10 years)?
“rate hikes” Why would you consider rate hikes to be bad for equities? Financials tend to do very well when longer term rates rise. It is true that the most speculative areas tend to suffer as the cost of borrowing increases. (However, many are already down 50-70% this year.) But it’s not as cut & dry as you would have us believe. Rates have been extremely low for many years now. Bound to rise some day. Yet you and many others have over that time invested in equities for the long term - even knowing rates would someday rise. What changed?
“the impact of policy errors” That’s a sweeping assertion based it seems on conjecture. Please explain why that risk is higher now than in March 2020 (the covid related financial crisis) or March 2009 (the beginning of the last bull market). Policy errors can occur at any point in time. So can other negative factors like war, political chaos, natural disaster. As investors in companies we’re accustomed to accepting those risks.
“inflation continuing on and on … “ Says who? Do you have some psychic in mind who can forecast inflation years out?
“(Will) the fed pivot any time soon … ?” What particular “pivot” are you referencing? After you explain that, please explain why an equity investor should base long term decisions on this ill defined hypothetical concept.
“inflation still running so hot” That’s redundant as you referenced it above. Here you seem to prophesy inflation will remain “so hot” ? … There’s no definitive way I know of to confirm / predict the level of inflation 1, 2 or 3 years out. Shall we base our long term equity investment decisions on such speculation?
“even hotter in reality than what the gov’t says it is …” Isn’t this something folks have long ragged about on this forum and elsewhere? There’s been numerous threads over the years examining the various inflation measures (there are several). So, you’re entitled to your prejudice on that point. But why do you find the discrepancy between your own numbers and what the Federal Bureau of Statistics determines to be of greater importance today than it was 3 years ago or 10 years ago?
“that 4% 1 year TBill looks puffy good to me right now” Good. Glad you find TBills a good investment for your needs. Bear in mind that’s for just 1 year. Equity investors by nature are investing for much longer periods. Contemplate that if you harvest your 4% TBill a year from now, you might find that stocks in general have appreciated more than 4%. I don’t think it’s at all unreasonable to think they might. (Some I own move 4% in a single day.) In such case, you will have lost ground and possibly face buying in to equities than at a net loss. If inflation is running as “hot” as you think, why are you comfortable with just 4%?
Thankyou sir - Mr Hank [indeed maybe master at technicals analysis/macro-economic themes, and trading strategies]. I started trading last yr so very new to this field/still very inexperience compared to one whom may have traded ++ 20 30 yrs plus. Before just buy and hold couch potatoes/ learnt so much last year /continued learning today. Thankyou for the informative insights.
the 95B coming off balance sheets probably monthly priced by WALSTREET TRADERS, and Mr Hank exactly right probably not priced in yet [rather maybe monthly priced in actions due to diminished monies supplies]
What point do you think the inflictions will end? Many institutional traders keep saying when you have a few days 95% stock gain sp500/nasdaq /small caps/techs despite horrible news and occurred after capitulation, market breadth indicator upswings, then maybe near market bottom formation. We have those references near first wk of June, and we have not seen those pivot points recently.
Its indeed a bear market out there, so many resistance broke off today/bears are having a good day. Could be double bottoms 2008-09 all over again. Recent SPY chart maybe showing - head and -shoulder pictures [ too early to tell]
I don’t give investment suggestions @JohnN. ….. Just don’t like people throwing out a bunch of largely unsupported assertions in an attempt to shutter somebody else’s stated point.
As I said on another thread, be careful. The downturn could go on for a number of years. (But might not). Don’t think you know all the answers. Nobody does. I believe Chairman Powell is quite unpredictable. He’d make a good poker player because it’s hard to know what’s really going on in his mind. So, people making decisions based on what he says or what they think the FOMC may do are taking a big gamble.
One non-investment suggestion is to watch some benchmark funds that you think approximate your risk level. (Don’t have to own them.) Than see how your portfolio holds up against those benchmarks. If you’re doing a lot worse over time, that’s something to worry about, Being very conservative I use a number of conservative allocation funds for guidance: VWINX, TRRIX, PRSIX, ABRZX and AOK. And I keep an eye on the excellent PRWCX even though I no longer own it. Some really outstanding long-term conservative allocation funds (like PRSIX) are down double-digit this year. Tells you something.
Generally speaking I’d rather buy something that’s down 40% over one year than something that’s risen 40% over the same time. But it’s not quite that simple. You really need to look at the stock or fund’s longer term history as well as the nature of the investment.
Comments
Well, stocks flipped down sharply on lower CPI (but higher than expected), but higher core CPI. It seems some volatile part of the CPI is creeping into the core part.
Treasury yields are flying, with 2-yr at 3.73%,
https://www.cnbc.com/quotes/US2Y
Then, the (wholesale) PPI tomorrow is expected to be higher than (retail) CPI and that also means that wholesale inflation will continue to creep into retail inflation.
https://www.google.com/amp/s/www.cnbc.com/amp/2022/09/12/stock-futures-are-higher-as-wall-street-awaits-key-inflation-report-.html
Fire sale...
Today, 10 years treasury moved up to 3.431% and the market falls.
Hot inflation report. Stinky doggy poopies. But no surprise. Winter energy prices: there's a thing to watch.
I’d think the S&P is now officially in a bear market.
1-day decline is the worst since mid-2020.
It was 95% down-volume day.
See major indexes since 1/3/22, https://stockcharts.com/h-perf/ui?s=$SPX&compare=$COMPQ,$INDU,$TRAN,IWM&id=p13443845664
Somehow it feels as if the damage YTD is worse than what the major indexes reflect. Not sure why. Might be that bonds of every stripe have been hit. Might be the damage in the financial sector which ISTM was more of a safe “value” play in the past.
Bushmills.
MacAllan Single Malt.....
I already had a headache, woke up with it from yesterday. (Not hung over)
I guess I WILL look forward to my SS "raise" at the New Year.
TUHYX junk bonds were down less than my stocks.
If PRWCX dips below $33.00, I will buy some more. ($33.05 today.)
VWINX -10.24%
TRRIX -12.26%
PRSIX -12.86%
If you really want to freak out … Dodge & Cox’s global stock fund (DODWX) is outpacing all of the above with a -8.5% return YTD. Board favorite PRWCX is also doing better than the three noted above. Probably many more exceptions.
Franklin might have said, “When bonds go dry we know the worth of ballast.”
As Rukeyser would say, “You betcha!”
Jump into 23:40 for Rick Rieder (Fixed Income, Blackrock.)
Let see if support hold end of day
Lots big whales retail investors betting sp500 finish near 3950-4000 w puts calls quadruple witching day.... If no support below 3900 we may test June lower lows soon
Sp500 near 3900 critical keys levels
Equities appears cheaper again w this cycles rsi very low/very attractive prices, oil maybe screaming buys too... How low can we go though. UUP-USD, Ust2 yr ust5 yr ust 10 yr so expensive now.
I added little more RIVN SOXL XLF SLV SP500 But very little yesterday
Cryptos slight mixed morning hrs, not sure equities follow w market openings /rally later
Big whales institutions holding record cash now maybe short squeezes rally follow soon??
Lots hedgy managers /money managers saying Feds and QT/Demand destruction/ overshoot-deflation/Feds may pivot (slow down ease down gas paddles) soon in ?12 16 wks. Maybe 1% this time w another 0.25% hike next month then iddle in few months by Xmas.
Who knows things may get better in 9 12 months?!!
Ray Dalio Says Stocks Could Fall 20%. Here's What the Charts Say.
https://www.thestreet.com/investing/ray-dalio-says-stocks-could-fall-20-heres-what-the-charts-say?puc=yahoo&cm_ven=YAHOO&yptr=yahoo
https://stockcharts.com/h-perf/ui?s=VTIP&compare=STIP,$$CPI,TIP&id=p23210538339
Curious...do you think the technicals would indicate something like $95B coming off the CBs balance sheets and the impact on stonks, rate hikes and the impact of policy errors contributing to inflation continuning on and on....why do many think the fed will pivot anytime soon with inflation still running so hot (and even hotter in reality than what the gov't says it is)....that 4% 1year Tbill looks purdy good to me right now...
Best,
Baseball Fan
Think everything maybe priced in... Mr Market know 95b QT restrictions for several wks now since Uncle Powell spoke few months ago before Jackson Hole. IMHO Feds maybe slow down first then maybe pivot in 4 6 months next spring but maybe not right away... Lots pundits screaming deflationary actions soon (least we see lots supplies at major retail chains causing them slash prices, woods timber took big hits, over supplies oil also large 20s% haircuts, less demands for silver copper/commodities because of recession/expect severe global economic slow down next yr, and China economy continued shut down from c19 (perhaps late fall winter too) .. Lots economists expert expect inflation may slow down in the near future then stay above 4% until late 2023.... Think next cpi forcast is expect lowered than 8.1%
I think slv copper charts look very good (? Bottom consolidation) but we don't know if prices could be slashed further down in 4 6 wks
Cathy Woods/ Musk screaming deflationary soon but who really knows
Friends say feds may pivot sp500 slashed below 3500 and inflation cooled off
https://apnews.com/article/inflation-mortgages-mortgage-rates-90d3b63fe4dd8b81d6765375d403cb8e
“Curious … Do you think the technicals … ”
What technicals? Not everyone uses technical analysis. Please identify which “technicals” you watch and base your investment decisions on? I’ve tried to help out by listing a few common technical indicators below:
- Moving Averages
- Moving Average Convergence and Divergence
- Relative Strength Indicator (RSI)
- Bollinger Bands
- Volume
- Exponential Moving Average
- Money Flow Index
“ … would indicate something like $95B coming off the CBs balance sheets”
Over what period of time? Do you have a source verifying this will be completed within a definite time period? It took over a decade for the Federal Reserve to amass their bond holdings, beginning with the near depression that threatened the economy between 2007 and 2009.
“and the impact on stonks” (sic?)
Not all stocks are the same. Financials? Commodities? Growth? Domestic or foreign? Also omitted here is any reference to time frame. Do you mean by the end or 2022 or are your concerns related to further out (5-10 years)?
“rate hikes”
Why would you consider rate hikes to be bad for equities? Financials tend to do very well when longer term rates rise. It is true that the most speculative areas tend to suffer as the cost of borrowing increases. (However, many are already down 50-70% this year.) But it’s not as cut & dry as you would have us believe. Rates have been extremely low for many years now. Bound to rise some day. Yet you and many others have over that time invested in equities for the long term - even knowing rates would someday rise. What changed?
“the impact of policy errors”
That’s a sweeping assertion based it seems on conjecture. Please explain why that risk is higher now than in March 2020 (the covid related financial crisis) or March 2009 (the beginning of the last bull market). Policy errors can occur at any point in time. So can other negative factors like war, political chaos, natural disaster. As investors in companies we’re accustomed to accepting those risks.
“inflation continuing on and on … “
Says who? Do you have some psychic in mind who can forecast inflation years out?
“(Will) the fed pivot any time soon … ?”
What particular “pivot” are you referencing? After you explain that, please explain why an equity investor should base long term decisions on this ill defined hypothetical concept.
“inflation still running so hot”
That’s redundant as you referenced it above. Here you seem to prophesy inflation will remain “so hot” ? … There’s no definitive way I know of to confirm / predict the level of inflation 1, 2 or 3 years out. Shall we base our long term equity investment decisions on such speculation?
“even hotter in reality than what the gov’t says it is …”
Isn’t this something folks have long ragged about on this forum and elsewhere? There’s been numerous threads over the years examining the various inflation measures (there are several). So, you’re entitled to your prejudice on that point. But why do you find the discrepancy between your own numbers and what the Federal Bureau of Statistics determines to be of greater importance today than it was 3 years ago or 10 years ago?
“that 4% 1 year TBill looks puffy good to me right now”
Good. Glad you find TBills a good investment for your needs. Bear in mind that’s for just 1 year. Equity investors by nature are investing for much longer periods. Contemplate that if you harvest your 4% TBill a year from now, you might find that stocks in general have appreciated more than 4%. I don’t think it’s at all unreasonable to think they might. (Some I own move 4% in a single day.) In such case, you will have lost ground and possibly face buying in to equities than at a net loss. If inflation is running as “hot” as you think, why are you comfortable with just 4%?
the 95B coming off balance sheets probably monthly priced by WALSTREET TRADERS, and Mr Hank exactly right probably not priced in yet [rather maybe monthly priced in actions due to diminished monies supplies]
What point do you think the inflictions will end? Many institutional traders keep saying when you have a few days 95% stock gain sp500/nasdaq /small caps/techs despite horrible news and occurred after capitulation, market breadth indicator upswings, then maybe near market bottom formation. We have those references near first wk of June, and we have not seen those pivot points recently.
Its indeed a bear market out there, so many resistance broke off today/bears are having a good day. Could be double bottoms 2008-09 all over again. Recent SPY chart maybe showing - head and -shoulder pictures [ too early to tell]
thankyou for any suggestions
Just don’t like people throwing out a bunch of largely unsupported assertions in an attempt to shutter somebody else’s stated point.
As I said on another thread, be careful. The downturn could go on for a number of years. (But might not). Don’t think you know all the answers. Nobody does. I believe Chairman Powell is quite unpredictable. He’d make a good poker player because it’s hard to know what’s really going on in his mind. So, people making decisions based on what he says or what they think the FOMC may do are taking a big gamble.
One non-investment suggestion is to watch some benchmark funds that you think approximate your risk level. (Don’t have to own them.) Than see how your portfolio holds up against those benchmarks. If you’re doing a lot worse over time, that’s something to worry about, Being very conservative I use a number of conservative allocation funds for guidance: VWINX, TRRIX, PRSIX, ABRZX and AOK. And I keep an eye on the excellent PRWCX even though I no longer own it. Some really outstanding long-term conservative allocation funds (like PRSIX) are down double-digit this year. Tells you something.
Generally speaking I’d rather buy something that’s down 40% over one year than something that’s risen 40% over the same time. But it’s not quite that simple. You really need to look at the stock or fund’s longer term history as well as the nature of the investment.
Maybe wrong end of trade if keep buying them
Maybe good buy small portions dca spy iwm and wait 12 36 months