Economy:
Retail sales in March 2021 explode as consumers use stimulus checks
Sourced: Census Bureau Press Release.pdf
The Fed - Industrial Production and Capacity Utilization - G.17 ("For the first quarter as a whole, total industrial production rose 2.5 percent at an annual rate. . . At 105.6 percent of its 2012 average, total industrial production in March was 1.0 percent higher than its year-earlier level, but it was 3.4 percent below its pre-pandemic (February 2020) level. Capacity utilization for the industrial sector increased 1.0 percentage point in March to 74.4 percent, a rate that is 5.2 percentage points below its long-run (1972–2020) average.")
Powell says it's 'highly unlikely' the Fed will raise rates this year, despite stronger economy
U.S. CPI March 2021: Consumer prices rise more than expected (seasonally adjusted +.6% vs. consensus at .5%) In annual non-seasonally adjusted rate was reported at 2.6%, inflated by the recent rise in energy prices.
Sourced: Consumer Price Index Summary
I would emphasize that the 1 year U.S. treasury bill has had a coupon of close to zero for the past year, producing a negative real rate of return before taxes of almost 2.5%. 1 Year Treasury Rate - 54 Year Historical Chart | MacroTrends; 2021 Daily Treasury Yield Curve Rates In my book, that is just obscene.
The initial response to a higher than expected 2.6% annual inflation rate was to take the 10 year treasury down in yield. U.S. Treasury yields slip despite surge in inflation to 2½-year high - MarketWatch
I currently have an overweight position in Canadian reset equity preferred stocks, which reset their coupons at a spread to 3 month Canadian government treasury bill or its 5 year bond.
That is one way to play the possible increase in interest rates that may result from a combination of higher current inflation and anticipated inflation.
I say "may" rather than will since central banks including the one in Canada have been and are likely to continue suppressing interest rates below the current and anticipated inflation rates.
Canada's central bank IMO is more likely to lose total control over its 5 year bond yield than the FED, meaning simply that the 5 year Canadian government bond will likely have a higher percentage yield increase compared to the 5 year U.S. treasury due to inflationary pressures. Canada 5 Year Government Bond Overview
Policy and fiscal risk could hamper a long-term economic recovery
The economy is on the cusp of a major boom and economists believe it could last
++++
Markets and Market Commentary:
JPMorgan Sees ‘a Bad Omen’ for Chinese Stocks. Here’s Why. | Barron's
Pfizer CEO says third Covid vaccine dose likely needed within 12 months
Portfolio Management:
My bond portfolio is in a run off phase as securities mature or are called early. From my perspective, there is no reason to bother with redeploying the proceeds into new bond purchases given the current or likely negative real yields.
The operating company of Corporate Office Properties Trust (OFC) has just redeemed its 3.6% SU note that would would have matured on 5/15/23. To exercise that optional redemption right, the issuer had to pay a 6.49% premium to par value as a result of a "make whole" provision.
Sourced - Fidelity |
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Trump hits McConnell as "dumb son of a bitch" in Florida speech - The Washington Post The republican mega-donors cheered Donald's attacks on a few republicans and his usual array of demonstrably false statements. Donald is viewed as honest by 81% of Republicans, which is just tangible proof of how a lying, demagogic authoritarian can acquire and maintain power in the U.S. (sourced: Question 11 National (US) Poll - June 18, 2020) The greatest threat to America's Democracy and freedoms comes from within our borders. Hopefully, more voters will come to that realization before it is too late.
Texas Senate advances voter restrictions as part of bigger Republican push | The Texas Tribune Lying is just normal in certain quarters. PolitiFact | Yes, the Texas Senate's election bill SB7 changes early voting rules Dan Patrick, the republican Lt. Governor claimed there was no change, rated a pants on fire false statement.
Domestic terrorism data shows right-wing violence on the rise - Washington Post
Tucker Carlson Leans Into White-Power Hour, Promotes Racist Replacement Theory | Vanity Fair; Tucker Carlson sneers at critics as he doubles down on 'replacement theory' remarks; Lachlan Murdoch dismisses Anti-Defamation League complaint, says Fox sees no problem with Tucker Carlson's 'replacement theory' remarks
Watching Fox "news" is potentially hazardous to one's health and life. PolitiFact | Tucker Carlson falsely claims COVID-19 vaccines might not work; Study Finds More COVID-19 Cases Among Viewers Of Fox News Host Who Downplayed Pandemic: NPR
DOJ sues Trump ally Roger Stone, wife over alleged $2M in unpaid taxes; Roger Stone Sued For $2 Million In Unpaid Taxes
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1. Small Ball:
This post will only include pares and eliminations, a constant process now given the elevated stock valuations and my emphasis on capital preservation.
Shares purchased with dividends are currently being eliminated in most stocks since I can do so profitably and the current prices are outside of my consider to buy range.
The objective for me is to mitigate risk while still participating to a limited decree in the stock market.
A. Pared GIS in Fidelity Account-Sold 4 at $61.37:
General Mills: Brands overview
General Mills Inc. Interactive Charts
I mentioned this pare in a 3/25/21 comment.
Profit Snapshot: +$9.95
Last Buy Discussions: Item # 1.G. Added to GIS in Fidelity Taxable Account-Bought 5 at $55.9; 5 GIS at $55.5; 5 at $55.2; 5 at $54.9; 5 at $54.5; 5 at $54 (2/6/21 Post); Item # 1.A. and 1.B. Started GIS in Schwab Taxable account and Added to GIS in Fidelity Taxable Account (1/9/21 Post); Item # 1.F. Bought 2 GIS at $47.88 (3/28/20 Post); Item # 5 A. Bought 2 GIS at $40.25, 2 at $39.45, 10 at $38.3 and 5 at $36.75-Used Commission Free Trades (12/29/18 Post)
Average Cost Before Pare: $56.34 (65+ shares)
Average Cost after Pare: $56.17
Dividend: Quarterly at $.51 per share
I will continue to reinvest the dividend in this account when the likely reinvestment price is less than $65.
Yield at AC = 3.63%
Last Ex Dividend: 4/8/21
Last Earnings Report (Fiscal Q/E 2/28/21): General Mills Reports Fiscal 2021 Third-Quarter Results This report was released the day after my pare and was for the third fiscal quarter.
Diluted E.P.S. = $.96
Adjusted E.P.S. = $.82, missing consensus by 2 cents.
Investors will judge performance based on the adjusted numbers.
The adjustments include mark-to-market effects arising from commodity positions; restructuring costs, and investment activities.
Net Sales = $4.52B vs. FactSet consensus at $4.454B
GIS will resume share buybacks which were suspended after the Blue Buffalo acquisition.
Pet Food Revenues: +14% to $436M with segment operating profit increasing 9% to $102M.
"Third-quarter net sales for General Mills’ North America Retail segment increased 9 percent to $2.73 billion, reflecting positive competitive performance amid elevated demand for food at home due to the pandemic. Organic net sales increased 9 percent, driven by higher organic pound volume. Net sales increased 15 percent in U.S. Meals & Baking, 13 percent in Canada, 9 percent in U.S. Cereal, and 3 percent in U.S. Yogurt. U.S. Snacks net sales were down 3 percent. Segment operating profit increased 14 percent to $606 million . ."
"Third-quarter net sales for the Asia & Latin America segment increased 12 percent to $456 million, driven by volume growth and favorable net price realization and mix, partially offset by 3 points of unfavorable foreign currency exchange. Organic net sales increased 14 percent."
"Third-quarter net sales for the Europe & Australia segment increased 15 percent to $484 million, primarily driven by 9 points of favorable foreign currency exchange and positive net price realization and mix. Organic net sales increased 7 percent, led by growth for Old El Paso Mexican food and Häagen-Dazs ice cream. Segment operating profit of $29 million was up 33 percent as reported and up 24 percent in constant currency."
The convenience store and foodservice segment continued to hit by the pandemic with net sales declining 10% to $417M.
Sell Discussions: Item # 1.A. Eliminated GIS-Sold 27+ at $54.86 (3/21/20 Post)(profit snapshot = ($426.37); Item # 1.A. Sold 13 GIS at $55.02-Used Commission Free Trade (8/17/19 Post)(profit = $134.13); Item 1.B. Sold Highest Cost GIS lots at $51.69 (4/7/2019 Post); Item #2.A. Sold 10 GIS at $56.18-Used Commission Free Trade (12/21/17 Post) Snapshots of 2007 through 2017 round-trip trades can be found in Item 1.B. The largest single gain was $1,285.51 realized on a 52 share lot in 2016. There have not yet been any realized losses.
Purchase Restriction: Each subsequent purchase, other than through dividend reinvestment, must reduce my average cost per share.
Depending on the price, I may go as high as 1000 shares in all accounts, though I will need a price below $50 to go that high with no material adverse development causing the price decline. Aggregating shares in all of my accounts, I currently own close to 100 shares.
The current approach is to consider selling a few of my highest-cost shares when the price goes over $61 and then buy whatever is sold when and if the price falls below my average cost per share.
B. Eliminated LARK in Schwab Taxable-Sold 10 at $27.75:
History this Account:
Quote: Landmark Bancorp Inc. (LARK)
Investment Category: Regional Bank Basket Strategy
Profit Snapshot: +$79.73
Last Purchase Discussion: Item # 1.F. Bought 5 LARK at $21; 5 at $20.5 (9/19/20 Post)
During my ownership period, LARK paid a 5% stock dividend that Schwab turned into cash ($11.54) rather than giving me a factional share.
Dividend: Quarterly at $.20 per share
I received 2 quarterly dividends.
Last Ex Dividend: 2/16/21
Last Earnings Report (Q/E 12/30/20):
As with other small regional banks, LARK's earnings have received an unusually large boost from mortgage banking activities.
Prior Sell Discussions: Item # 3 Sold 52 LARK at $18.75 (1/9/12 Post); Item # 4 Sold 50 LARK at $23.5 (6/29/14 Post); Item # 3.B. Sold 50 LARK at $22.42 (9/29/14 Post); Item # 2 Eliminated LARK: Sold 50 AT $25.27 and 50 at $25.4 -Update For Regional Bank Basket Strategy As Of 7/1/16 - South Gent | Seeking Alpha
LARK Trading Profits to Date : $586.05 ($506.32 in prior trades)
C. Pared SCM in Fidelity Taxable Account-Sold 13+ at $12.46 and 13+ at $13.25:
Quote: Stellus Capital Investment Corp. (SCM)- an externally managed BDC
Website: Stellus Capital
Profit Snapshot: $69.04
New Average Cost Per Share this account = $7.46 (63+ shares)
Snapshot Intraday on 4/8/21 after second pare |
Dividend: Monthly at $.083 per share ($.996 annually, recently transitioned from a $.25 per share quarterly dividend)
Dividend reinvestment has been turned off.
Yield at New AC = 13.35%
Last Substantive Buy Discussions: Item # 1.E. Bought 5 SCM at $7.41 in Fidelity Account (8/15/20 Post); Item # 3.J. Added 10 SCM at $7.85; 5 at $7.65; 10 at $7.5 (7/18/20 Post); Item # 2.B. Added 10 SCM at $7.8; 2 at $6.26, 3 at $5.30; 5 at $7.53 (5/9/20 Post)
Net Asset Value Per Share History:
12/31/20: $14.03 10-K at page 74
12/31/19: $14.14
12/31/18: $14.09
12/31/17: $13.81
12/31/16 $13.69
12/31/15: $13.19
12/31/14: $13.94
12/31/13: $14.54
November 2012: IPO at $15 ($14.46 after underwriters discount)
5 Year Financial Data:
NII per share = $.26 per share
Net Asset value per share = $14.03
Sell Discussions: Item # 1.F. Pared SCM in Fidelity Taxable-Sold 20 at $11.08 and Item #1.G. Pared SCM in Vanguard Taxable-Sold 20 at $11.17 (12/19/20 Post)(profit snapshots = $14.23); Item # 3 Sold 50 SCM at $13.72 (9/21/19 Post)(eliminating position as of that date; profit snapshot = $3.75); Item # 1.I. Sold 20 SCM at $7.61 (8/22/20 Post)(contains snapshots of prior trades; profit snapshot = $10.84); Item # 1.B. Sold 32+ SCM at $14.22-Used Commission Free Trade (2/2/19 Post)(profit snapshot = $78.09); Item # 1.A. Sold Highest Cost Lot-50 Shares at $12.63 (5/3/18 Post)(profit snapshot = $34.24); Item 2.B. Sold 100 SCM at $14.23 (2/27/17 Post)(profit snapshot=$285.96); Item # 2 Sold 100 SCM at $13.02 (1/12/17 Post)(profit snapshot= $141.96)
Goal: Total Return in excess of the dividend payments which has been accomplished so far for this BDC stock
SCM Realized Gains to Date: $638.11
D. Pared WEC-Sold 1 at $92.27; 1 at $94; 1.058 at $97.18:
Quote: WEC Energy Group Inc.- a Utility Holding Company
WEC Analyst Estimates | MarketWatch
Investment Categories: Bond Substitute/Dividend Growth
Buy Discussion: Item # 1.I. Started WEC in Fidelity Taxable Account-Bought 2 at $87.8; 1 at $86.9; 1 at $86.5; 1 at $85.1; 1. at $84.25; 1 at $82.8 and 1 at $81.9 (2/20/21 Post) I discussed the 2020 4th quarter report in that post. SEC Filed Press Release
Profit Snapshot: $21.81
New AC after pares this account = $83.91 (7 shares) :
Snapshot Intraday 4/16/21 after 3rd pare |
Dividend: Quarterly at $.6775 per share ($2.71 annually); last raised from $.6325 effective for the 2021 1st quarter payment.
Yield at new AC = 3.23%
Last Ex Dividend: 2/11/21
Dividend History:
History this Account:
I still own the ordinary shares priced in CADs and traded in Toronto which I intend to keep. .
Website: Corus Entertainment
Quotes:
USD Pink Sheet Exchange: CJREF
Symbols that end in "F" denote ordinary shares, rather than an ADR, of a foreign company stock.
CADs in Toronto: CJR-B.TO (I currently own 200 CAD priced shares bought on the Toronto exchange)
Profit Snapshot: +US$121
Last Discussions: Item # 1.D. Added 50 CJREF at $3.8 (2/12/20 Post); Item # 1.D. Bought 100 CJREF at $4.08 (1/22/2020 Post)(last substantive) The timing was less than optimal.
Dividend: Quarterly at C$.06 per Class B shares
Last Earnings Report before CJREF elimination (Fiscal Q/E 11/30/20): Corus Entertainment Announces Fiscal 2021 First Quarter Results
Net Income Per Share = C$76.7M or C$.37 per share
Revenues declined 10%.
Free Cash Flow = C$62.4M
The pandemic has caused a decline in advertising revenues.
Cord cutting is a longer term headwind.
Last Earnings Report released after CJREF elimination (Q/E 2/28/21): Corus Entertainment Announces Fiscal 2021 Second Quarter Results
Net Income: C$35.3M or C$.17 per share
Free Cash Flow for the Quarter: C$89.7M
Revenues: C$358.874, down 5% Y-O-Y
"Achieved recent milestone of over 500,000 paying subscribers on streaming platforms, doubled from the prior year."
F. Pared FISI in Schwab Taxable Account-Sold 5 at $29.15:
Last Buy Discussions: Item # 1.C. Restarted FISI-Bought 10 at $16.17 (6/6/20 Post); Item # 1.D. Added to FISI-Bought 5 at $15.85; 5 at $15.20; 10 at $14.9; 10 at $14.6 and Sold Highest Cost 10 Share lot at $18.07 (8/22/20 Post)
Profit Snapshot: +$69.85
New Average Cost per share this account = $14.78 (20+ shares)
Snapshot Intraday 3/24/21 after pare |
"fourth quarter 2020 net income of $3.64 million, or $.35 per share, compared to 2019 fourth quarter net income of $3.30 million, or $.31 per share"
Snapshot Intraday 3/25/21 after pare |
6.938 SJR Shares-All Bought with Monthly Dividends |
Last Buy Discussions: Item # 1.L. Added to Kellogg (K)-Bought 2 at $61; 1 at $60.5; 1 at $59.9; 1 at $59.4; 1 at $58.8; 1 at $58; 1 at $57.6 (1/30/21 Post); Item # 3.D. Added to Kellogg-Bought 4 at $62.7; 2 at $62.44; 2 at $61.3 (12/19/20 Post)(last substantive discussion)
Last Buy Discussion: Item # 2 Bought 100 JQC in Vanguard Account at $5.82(7/11/20 Post) This lot has been sold.
Snapshot Intraday 3/20/21 Day of Pare |
Disclaimer: I am not a financial advisor but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sell of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep". Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals and situational risks. I can only make that kind of assessment for myself and family members.
I spent the weekend on organizing and disseminating medical records. Not done yet. I can't wait until our tech systems catch up. Mycharts is owed by Epic Systems Corporation and I see no indication they're going public. They handle 54% of U.S. patient's portals.
ReplyDeleteSo finally getting a chance to look at the blog update.
This is interesting
"manufacturing... but it was 3.4 percent below its pre-pandemic (February 2020) level."
So there's plenty of room for growth. Does it mean P/Es are too high since they're higher than feb 2020, while production is down. Or does it mean that economy is doing well, but has a lot of room still to grow and with it earnings and P/es?
If Powell is promising not to raise rates even if it's needed based on data... isn't that duplicating the problems of the past, where the Fed didn't act in tune in a way that matched a heating up economy?
Wonder if the pretty minor higher CPI is causing today's pullback. Or if it's just because it's been rallying for so many days?
----
I'd like to try the replacement theory out on Tucker. For a while a boycott of his advertisers was working at reducing the funding his program was bringing in. (I just typed "his problem" was bringing in. Freudian slip?) I don't know if it's still in place.
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Just sold my remaining 4 PFE at 38.93 into today's rally over it being one of the remaining vaccines. I made $21. There are better drug companies to be in. And 4 is too trivial to keep around.
Looks like a wide variety of paring. Some of my tech could use a little paring on the next rally point (SOXX, TXN, I'm keeping Garmin.)
Land: Epic is privately owned and was founded in 1979 by Judith Faulkner with a $70K investment. She is viewed as the most successful female founder of a technology company.
DeleteEpic System revenues are running over $3B annually.
Several other digital medical record companies are public. The largest is probably Cerner (CERN).
I own the ETF EDOC to gain some exposure to this sector. I will average down but not up.
MTB reported earlier today:
https://www.sec.gov/Archives/edgar/data/36270/000156459021019283/mtb-ex991_6.htm
GAAP E.P.S. at $3.33 vs. $2.96 estimate
M&T Bank Corp.
$154.79 +$0.93 +0.60%
Last Updated: Apr 19, 2021 at 2:18 p.m. EDT
https://www.marketwatch.com/investing/stock/mtb?mod=over_search
I mentioned earlier buying 2 shares in my Schwab account where I am the most likely to keep PBCT until I receive MTB shares in exchange. The 2 shares are my welcoming committee.
I am likely to liquidate the PBCT held in my Vanguard and Fidelity taxable accounts and in my Roth IRAs. I am not in a hurry.
My "big" buy so far today was 5 shares of the ETF GNOM.
Global X Genomics & Biotechnology ETF
https://www.marketwatch.com/investing/fund/gnom?mod=over_search
Cern? Is a difficult system to use. It might be okay sometimes, but the hospital I used it with, made it so it was user unfriendly & information impoverished.
DeleteThe public companies are often not the best products. Was true in security software too. I imagine that's not accidental. They go public to get funds, which aren't as needed when your product is great and doing well.
But I'll look at them. Maybe a better stock than a software tool at this hospital.
I finally uploaded and sent all my records. I realized I could merge them to get around the limit on # to upload at one time.
Yet another subsector ETF that's a good niche! Does it impact your choice to invest that a lot of them have .6 or .7 fees compared to bigger index ETFs? GNOM too? Interesting subsector too.
That's a lovely welcoming committee for M&T, so demure in size.
That's 2 days of down market. For a long time even 1 day was all that happened. This feels like another pullback. Maybe over the end of stimulus coming (though this one will keep being spent, but a funeral is needed because there won't be any more), and inflation.
I'm not convinced this market can notice that covid isn't over safely yet. I haven't seen any new news on variants and upticks. But I could have missed news while not putting on news channels as much lately.
The infrastructure bill is a future big market booster.
A friend is trying to figure out if housing a good buy now. I suggested it will pullback but then go back up. This is a little overinflated, but not a big bubble again.
International Business Machines Corp.
ReplyDeleteAFTER HOURS $136.30 ++3.18 +2.39%
After Hours Volume: 1.8M
Last Updated: Apr 19, 2021 at 5:09 p.m. EDT
So far the Stock Jocks are reacting positively to IBM's first quarter report released after the close.
https://www.businesswire.com/news/home/20210419005873/en/
Operating E.P.S. at $1.77, consensus at $1.632 according to Fidelity;
"Revenue of $17.7 billion, up 1 percent (down 2 percent adjusting for currency);
Total cloud revenue of $6.5 billion, up 21 percent (up 18 percent adjusting for divested businesses and currency);
net cash from operating activities of $4.9 billion, up $0.4 billion; adjusted free cash flow of $2.2 billion, up $0.8 billion;
Debt reduced by $5.1 billion since year end 2020"
It's nice that they're going in the right direction. Still a long way to go...
DeleteU.S. 10 Year Treasury Note
ReplyDelete1.572% -0.031%
Last Updated: Apr 20, 2021 11:38 a.m. EDT
https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx
IMO, as previously stated, the FED has not lost control over intermediate and longer term interest rates notwithstanding the uptick in inflation.
Unlimited QE and ZIRP will continue to suppress interest rates substantially below the inflation rate and normalized market determined levels. There is no free market in bond land which is dominated by CB manipulation.
My general observation about regional bank earnings so far is that the key driver to earnings growth is still a no show. NIM is down significantly from the 2020 first quarter and up or down from the 2020 4th quarter.
I am not anywhere near as optimistic about the pandemic as the Stock Jocks. The reason is a belief that vaccinations worldwide will likely fail to prevent mutations into more deadly and resistant strains.
The Stock Jocks have shifted, at least for today, into recognizing that possibility based on the sectors that are outperforming.
E.G.
General Mills Inc.
$62.66 +$1.36 +2.22%
https://www.marketwatch.com/investing/stock/gis?mod=over_search
Kimberly-Clark Corp.
$142.44+$3.51 +2.53%
https://www.marketwatch.com/investing/stock/kmb?mod=over_search
Clorox Co.
$194.42 +$5.57 +2.95%
S & P 500 -35.5 or -.85%
As of 11:49 E.D.T.
Pharma stocks are also up.
I lightened up a tad in IBM.
Cramer is blaming the 2 down days on bonds lowering interest rates... and undoing the market's theory that everything is honky dory and will recover fast and well.
DeleteYou'd pointed that out as reason behind some of the recent market moves.
The Fed's going to keep rates down and the market forgot that. I wonder if regional banks not being that strong is playing into the market's worries at all?
The technical of VIX reaching near 15 can't be ignored either.
Land: Cramer is engaged in inconsistent thinking which is frequently the case for Stock Jocks in general.
DeleteOn the one hand, the Stock Jocks are unnerved one day when interest rates decline a few basis points since that purportedly calls into question their robust growth thesis until the end of days.
Then, on another day, interest rates rise a few basis points, an that unnerves many since it calls into question multiples using a discount model for future earnings based on the 10 year treasury.
Most of the time, those trepidations, anxious thoughts and reconsiderations of the bullish thesis last a day or two-so far.
As I have discussed earlier, none of it makes any sense when the the movement in interest rates is so trivial.
The underlying assumption in those concerns is that investors, rather than the FED, are controlling interest rates and interest rate movements reflect a market consensus on the economy and inflation which IMO is an erroneous assumption.
It is conceivable that the FED will lose control over intermediate and longer term rates with ZIRP and unlimited QE in place, but not likely IMO.
That was a lesson taught when inflation was substantially higher than now after WWII and the FED successfully kept the 10 year treasury anchored near 2.5%. When they lifted that control around 1951, the yield normalized to around 4% to 4.5% with much lower inflation numbers in the 1950s to around 1965. The FED is using much bigger bazookas now than in the Post WWII rate control period.
History lesson received. I didn't know any of that rate history via Fed control.
DeleteThat the market thinks it's reflecting market consensus change of view, makes sense out of why it's being acted on when it's so trivial.
It all reflects a general nervousness about valuations. I think that datapoint is important.
Google puts Cramer articles into my feed. Sometimes I forget my head as I'm waking up, and glance at them. He changes his mind with every tick up and down.
Years ago I'd researched and studies were done that discovered that if you bet opposite to Cramer, you made more money. I always wanted an ETF that did that.
I suspect the market is more tech driven than in the past due to computer trading, but news reporting isn't. So a lot of moves are explained by looking for reasons and there isn't much behind them, other than someone at a big company set a trip point in a computer a few days ago based on tech indicators.
That history says, the market and economy has a lot of shakiness based on what moves the Fed decides on, if they miscalculate what's needed.
Land: The 1945-1951 FED history is discussed in this paper:
Deletehttps://www.nber.org/system/files/chapters/c11485/c11485.pdf
CPI Inflation during that period:
1945 +2.3%
1946 +8.5%
1947 +14.4%
1948 +7.7%
1949 -1.0%
1950 +1.1%
1951 +7.9%
https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator/consumer-price-index-1913-
Yet the FED was able to peg the ten year treasury at 2.5%. It probably could have pegged at a lower yield notwithstanding the inflation numbers.
Ending the rate manipulation after that period was the starting point of a 32 year bear market in bonds, with the first move being just a return to normalized rates based on 2% inflation. A normal spread to the that inflation rate for the 10 year bond would be 2% to 2.5% creating a 4% to 4.5% 10 year T bond yield. I don't think the FED can allow the rates to normalize given the federal debt problem.
The problem for those who believe in market signals conveyed by price/yield is that bond yields are not determined by the market.
Even if yields were determined in a market free from FED interference, which has not been the case for over a decade, minor changes in interest rates, up and down, that have no meaningful economic significance in the real world can not rationally form the basis for investment decisions and allocations.
The more realistic assumption is that the FED may allow interest rates to tick up from one extremely low number to a less extreme one before stepping up its interference activities, but overall interest rates are not likely to be a negative factor for stocks for years.
Thanks! That's interesting laid out that way.
DeleteBottomline is the market is using minor moves as indicators and worry points. But reality is that rates aren't going to be the undoing of high valuations.
...Since rates can be managed for decades under less favorable situations to them, and will less ammunition, and less dire motivation by gov't to keep them down due to debt.
So that leaves inflation (to effect prices and sales and buying), and some type of corruption that we haven't seen indicators of, or pure worry over the end of stimulus... to bring down the market when it's the only place to invest.
OR if covid recovery hits a scary looking snag.
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To get a reasonable income off principle in the future as rates don't rise, that may take buying rental properties. Bonds won't work.
Typos
Delete"under less favorable situations to now, and with less ammunition"
Just noticed on Finviz, the pullback was that SPY hit the top of the channel.
Deletehttps://finviz.com/quote.ashx?t=spy
Well above the moving averages.
I hit send too soon.
DeleteIWM looks like a stall is happening.
https://finviz.com/quote.ashx?t=iwm&ty=c&ta=1&p=d
It could catch up, but usually and when factors are healthy, it's running in a similar pattern to SPY.
Maybe because it climbed faster, it's burning off in place...
Land: Last week ended with the S & P 500 16% above its 200 day SMA line which is in the 97th percentile. And, for only a few times in recent history, the S & P 500 closed at least 2 standard deviations above its 50 day moving average over a 2 week period. Those indicators point to excessive overbought territory.
DeleteMost valuation measures are well above their arithmetic means:
https://www.advisorperspectives.com/dshort/updates/2021/04/09/is-the-market-still-overvalued
I can spot what caused the drop today! First time in a while the cause is obvious.
DeleteThe charts (at the link) look awful. First reaction was a gasp. But they've been above the norm for 10 years now. The same data needs to be compared to interest rates (not sure how that'd be done because this manipulated low hasn't been before).
Still, this is getting ridiculous.
Short term of 2 SDs over MAs... hum. To state the obvious, that's a lot.
Land: The decline coincided with a Bloomberg report that Biden was considering the possibility of proposing a 39.5% tax rate on capital gains for those making more than $1M per year.
DeleteWho could have even dreamed that the democrats would milk rich folks?
The tax can be avoided by refusing to sell appreciated assets until the republicans regain control and pass another billionaire's tax relief act in exchange for a few billion in campaign contributions.
That far left idea, of what they call socialism (safetynets), that instead adopts the communism idea of spreading wealth equally... doesn't work well.
DeleteSeems like a bad time to announce this. In the middle of everything else? Or as my parent's put it, in mitten drinnen? It's all moot. No votes for anything to pass both houses.
But lol, I hadn't thought of that reaction. Just wait for the next election or two. Makes it hard for traders, but it's the buy and holders who are rich anyway. Or they'll invest in a hedge fund and somehow that will do the change-ups, while they haven't sold the fund. Or some method.
My question is whether to buy this now same spot as the two day dip. Or figure this is the start and there's a mood to pullback again a little. 2nd feels right, but I've underestimated this market's drive for highs a lot. I doubt this rich person bill will bother the market for long.
Land: There are not that many individual U.S. taxpayers who report over $1M a year in income.
DeleteBased on the latest data, the top 1% already pay more than the bottom 90% combined.
https://taxfoundation.org/publications/latest-federal-income-tax-data/
The increase in taxes could lead some to renounce their U.S. citizenship and move to a more friendly tax haven.
I doubt that the increase, assuming it becomes law through a budget reconciliation process (50/50 in the Senate with Harris breaking the tie), will have much of an impact on stock prices, particularly if it is made retroactive to the 1/1/21 which would trap the impacted persons. There could be some negative blowback if the change is made effective next year, causing a lot of rich people to sell stock this year.
There needs to be exceptions such as exempting taxpayers who move into the $1M income bracket because they sold their business or farm.
Apple is an Intel competitor and has just introduced a line of computers with its new chip.
https://www.apple.com/newsroom/2021/04/imac-features-all-new-design-in-vibrant-colors-m1-chip-and-45k-retina-display/
There is a trend for companies to move away from Intel chips to their own designs and then use a company like Taiwan Semiconductor to manufacture the chips.
AMD is a competitor as is ARM and Nvidia (NVDA)
https://www.arm.com/company
Nvidia may be blocked from acquiring ARM which is currently owned by SoftBank.
https://www.bbc.com/news/business-56804007
Good verdict. Nice not be hear news of protests or riots as a result.
ReplyDeleteI don't understanding the finding as all 3. I thought 3 were offered so they could determine which one fit.
I think the nausea from his actions will never leave the world. I didn't understand the defense yesterday. Playing the tape over and over again seemed like a poor defense.
Doing a retro look. Very roughly. What are the competitors for INTC?
ReplyDeleteMy 1 stock of INTC is up 20% from that bad news drop. A $10 profit. Still at 13 PE.
Meanwhile it's competition:
AMD is up 14% from Aug. $70 is now $80. At 40PE.
MU is up over 100%. PE 32
MU was down more, and tends to a lot of movement. So it's probably other factors too for MU.
But in comparison while it seemed and originally looked like a good idea to buy AMD, the better growth, but not by huge amounts is INTC. So more important in each case is probably how stable the company is otherwise. Debt. But hard to guess. But it's not necessarily a bad move to buy the one that slipped up.
And that's the end of this retro look.
Pfizer has decided that it will not cut its quarterly dividend based on what it calls strong financial performance.
ReplyDeletehttps://investors.pfizer.com/investor-news/press-release-details/2021/Pfizer-Declares-Second-Quarter-2021-Dividend/default.aspx
Previously PFE had stated that it would cut the dividend by an amount equal to what its shareholders would receive from their new holdings in VTRS.
That decision is not helping the stock so far today:
Pfizer Inc. $38.52 -$0.12 -0.32%
Last Updated: Apr 23, 2021 10:01 a.m. EDT
https://www.marketwatch.com/investing/stock/pfe?mod=over_search
Of my owned stocks, the worst earnings report so far was the one released by Kimberly Clark (KMB) this morning. I own less than 5 shares so I am coping:
Kimberly-Clark Corp.
$133.24 -$7.09 -5.05%
https://www.marketwatch.com/investing/stock/kmb?mod=over_search
Inflation in raw material costs is starting to crimp earnings.
Of my regional bank stocks, the best report so was released by SBSI earlier today. It was just excellent:
Southside Bancshares Inc.
$39.93 +$1.79 +4.69%
Last Updated: Apr 23, 2021 10:04 a.m. EDT
https://www.marketwatch.com/investing/stock/sbsi?mod=over_search
The report will keep me from selling more shares for now.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2021/04/acwv-airr-bxmx-cmcsa-ebgef-enbprpca-gld.html