So....anyone else waiting for the correction?
09-02-2022, 08:45 AM
#171
https://www.reuters.com/markets/euro...rg-2022-08-29/
09-18-2022, 10:38 AM
#172
Options IRA rollover account is now down 3%.
I have some dry powder ready in numerous accounts waiting for fed minutes on Wedneday the 21st. I'm expecting another 75 basis point rate hike, though, I would welcome 100 points.
09-26-2022, 04:45 AM
#173
New lows hit.
So, where's the new bottom? Crystal balls. S&P 500 P/E ratio is currently around 16 or so. Historical bear markets have seen bottoms at around 12-13. At current prices, that means around 3100 for the S&P 500. That's another 13% drop from the current 3600.
So, where's the new bottom? Crystal balls. S&P 500 P/E ratio is currently around 16 or so. Historical bear markets have seen bottoms at around 12-13. At current prices, that means around 3100 for the S&P 500. That's another 13% drop from the current 3600.
09-27-2022, 08:42 PM
#175
They're trying to kill consumer demand (because supply can't keep up) to stem inflation.
I would hope that it's all baked in, and the contrarian in me wants to go against the grain of all of the billionaires out there saying that it's going to get worse.
Also, the rate hikes are global (UK raised rates too), and inflation is currently a global problem, not a US problem.
09-28-2022, 06:58 AM
#176
The narrative has been that every rate hike has been "baked in." That narrative helped to head off fears until it didn't any longer because it may never have really been credible, especially to the extent that the hikes have gone up. Sure, one 75 point hike isn't going to completely shift things but do that a few months in a row and unless things have gone down significantly, it's hard to call it baked in. J-Pow has also become much more stern/hawkish in how he talks about markets needing to come down. I think it's one of two things: He expected the earlier rate hikes to slow things much more than they did so now he's being more aggressive or he feels that a crash is going to happen anyways at this point so may as well raise interest rates way up so that there's more room for them to come down over time.
One of the Economic commentaries I listen to consistently talks about the Fed operating from "credible threats" rather than actual policy. What they mean is that expectations of Fed actions and expectations of how the market will react to those actions mean more than the Fed action itself. A few months ago, even though rate hikes were happening, the language surrounding them was fairly soft to try to not scare the market. The more recent speeches have been much more harsh and upped the expectations of the credible threat. Obviously policy matters but people's perception and expectation of future policy and implications of it are what really shifts markets. By telling people it was baked in actually undermined the effectiveness of the changes. That is, unless another goal was to soften the blow of raising up interest rates, in the short term, as much as the market can withstand so that lowering them is a possibility in the future.
I do think the YOY domestic inflation rate is going to stop increasing and start decreasing. IIRC, prices of things notably started going up in Fall 2021. I'm not saying that the inflation rate will not be highly positive but that it will probably decrease to 5-7%ish by the end of the year instead of the 9% it's been at. That could start to trigger a halt or reversal of Fed action and consumer sentiment. At the same time though, I think layoffs are coming and there are some bearish fundamentals to be seen. I also do think deflation is a real possibility in late 2023. All it takes is for the CPI to be lower a year from now than it is now. I hope that to be the case but it will spook markets if it happens. As bad as inflation is, deflation can be significantly worse, especially if it is persistent. I also think a housing crash is necessary but will trigger problems of its own. Global food and energy prices could unfortunately soar too though, so who knows on overall CPI.
The foreign currency market is impossible for me to even try to fathom with all the moving pieces. Only thing I can gather for almost certain is the dollar will be strong and strengthen, relatively speaking. So much debt issued in dollars over the last two years and now rising interest rates. Demand for dollars will be massive.
Today, I heard that bailout commitments are being made.... Idk how credible that is or what it means but it would take fear out of the markets.
One of the Economic commentaries I listen to consistently talks about the Fed operating from "credible threats" rather than actual policy. What they mean is that expectations of Fed actions and expectations of how the market will react to those actions mean more than the Fed action itself. A few months ago, even though rate hikes were happening, the language surrounding them was fairly soft to try to not scare the market. The more recent speeches have been much more harsh and upped the expectations of the credible threat. Obviously policy matters but people's perception and expectation of future policy and implications of it are what really shifts markets. By telling people it was baked in actually undermined the effectiveness of the changes. That is, unless another goal was to soften the blow of raising up interest rates, in the short term, as much as the market can withstand so that lowering them is a possibility in the future.
I do think the YOY domestic inflation rate is going to stop increasing and start decreasing. IIRC, prices of things notably started going up in Fall 2021. I'm not saying that the inflation rate will not be highly positive but that it will probably decrease to 5-7%ish by the end of the year instead of the 9% it's been at. That could start to trigger a halt or reversal of Fed action and consumer sentiment. At the same time though, I think layoffs are coming and there are some bearish fundamentals to be seen. I also do think deflation is a real possibility in late 2023. All it takes is for the CPI to be lower a year from now than it is now. I hope that to be the case but it will spook markets if it happens. As bad as inflation is, deflation can be significantly worse, especially if it is persistent. I also think a housing crash is necessary but will trigger problems of its own. Global food and energy prices could unfortunately soar too though, so who knows on overall CPI.
The foreign currency market is impossible for me to even try to fathom with all the moving pieces. Only thing I can gather for almost certain is the dollar will be strong and strengthen, relatively speaking. So much debt issued in dollars over the last two years and now rising interest rates. Demand for dollars will be massive.
Today, I heard that bailout commitments are being made.... Idk how credible that is or what it means but it would take fear out of the markets.
09-28-2022, 08:38 PM
#177
Moderator
So, my managed fund has been running around like their hair is on fire shuffling money out of the safer Energy and (big name) Consumer Discretionary and into tech/bio-tech and a bunch of the S&P and Nasdaq darlings that have been taking a beating this year.
I could say I’m regretting moving my self-managed money out of VOO/VEA into VYM/VYMI, but the dividends are still fueling the gains, even on this downturn. I hope the eventual upswing(s) provide some tailwinds on the dividend funds.
I could say I’m regretting moving my self-managed money out of VOO/VEA into VYM/VYMI, but the dividends are still fueling the gains, even on this downturn. I hope the eventual upswing(s) provide some tailwinds on the dividend funds.
09-29-2022, 11:48 AM
#178
Agree with Jub's assessment on the language that that Fed was initially using to try to engineer a "soft landing". That tone has changed and is much more hawkish and harsh in directly communicating what they want to market to do (both stocks and employment) in order to stem inflation.
They want people to feel like crap so that they'll stop buying stuff.
10-03-2022, 11:02 AM
#179
So... Is this the bottom or just a sticky floor? Is the next big indicator the September CPI data released on 10/13 or is there something I'm missing before then? I think there's a decent chance that YOY data is < 8% for Sept. IIRC, it was fall of last year that prices of things really started going up. Therefore, in comparison to now, I think the rate of increase will begin to taper off. Market will trade depending on expectations of Fed's reaction to the CPI data. Do they say that they've started seeing inflation decrease and expect the momentum to continue without taking further action or say it's still too high and take further action?
Housing market, Russia, and auto market data are the other factors that are likely to spook the market further. I think if the Fed continues to project strength on tackling inflation and the labor market this month, we are likely to continue the downward trend and potentially spiral. To be clear, I do not think that another rate hike is "priced in." I do not expect their language to remain as hawkish as last month given the downturn.
Housing market, Russia, and auto market data are the other factors that are likely to spook the market further. I think if the Fed continues to project strength on tackling inflation and the labor market this month, we are likely to continue the downward trend and potentially spiral. To be clear, I do not think that another rate hike is "priced in." I do not expect their language to remain as hawkish as last month given the downturn.
10-03-2022, 01:17 PM
#180
How do you see energy costs fitting into the CPI? With NS1 and 2 making big headlines (inconsequential to actual natural gas movement since neither pipelines were being used) and now OPEC considering cutting production.