OT: Stock and Investment Talk
- Thread starter RU-05
- Start date
PCE core = under 2% over the past 6 months.
(the only inflation metric that matters)
Life is good.
Already a slight recovery.
Clearly 1% is not a big move. But if the market was looking for a low number so as to get moving higher, it's not getting it here.
On to earnings.
All that sideline cash likely to wait a bit. Maybe just the start of an extended dip.
Recovery didn't hold. Wait for today's close. It'll be telling. VIX up 6% at the moment.
Given how low it has been(not sure where it was yesterday) the VIX would have been a great hedge coming into these numbers.
I think upside reward far outweighed downside risk there.
Someone should have mentioned this yesterday.
VIX at historic lows.
Always enjoy dips that you can buy, but this will likely just be a blip.
Also, check out the segment on Buying at ATHs (38 min mark). Interesting data. Buy high and sell higher is how you make money:
Haven't watched/listened yet, usually catch up Wed-Thurs.
Still have to watch the Compound with Francesca. I remember Brown dropping his name a year ago and my ears perked.
I would think towards the end of the year, if at all. I mentioned above I didn't see 3 as likely unless the economy went down but I think that was probably priced into the market. The potential of not even having 1 this year, is probably not priced in yet though.
Great episode last night. Earnings data, Dimon stakeholder letter, and buying at ATHs.
The potential for "goldilocks", ie inflation continues down while economy keeps chugging, was out there, though as the name suggests, probably wishful thinking.
I also think a stronger then expected economy, or better put, stronger then expected earnings, could outweigh a 3.5ish% inflation that would keep rates at current levels. I think that is why the market is up despite expected cuts coming down from 6 to 3. Same could be in play if expected cuts come down from 3 to zero.
A strong economy with cuts in the fed's pocket is a good thing, even if inflation remains a thorn in the side.
Not that it's a new philosophy but this came up in the last Comp and Friends as well.
Joe T is a big proponent of such an investing style. He's big on, as you mention above, buy high, sell higher.
I'm a complete 180 from that. I'm more a "strategic knife catcher" than someone who will ride the wave. I'll enjoy the wave when things turn and most of the time they do. Mind you I do that in the safety of what large/megacap names which I think are quality or have potential for the turnaround.
Admit it though you whiffed on your shelter CPI proclamation last summer that we’d see negative shelter yoy inflation by Q1
The multitude of investing philosophies is one of the things I find so interesting in this whole thing.
Most money is made by buying high and selling higher, especially when using TA.
1. Haven't seen the shelter data, so not sure where we currently stand.
2. Thought I said spring/mid-year.
3. I will admit being wrong. CPI shelter is even more garbage that I thought. Truly devoid of reality and essentially a random number generator.
Happy? :)
T kind of looks like it has broken out through a 5 year downward trend line.
Overall downward trend goes back 20+ years, but I wonder if this wouldn't be a good couple year trade? Not catching it off the bottom but 6+% Div, and I'd say limited downside, though that could have been said when it was 25% higher.
Overall downward trend goes back 20+ years, but I wonder if this wouldn't be a good couple year trade? Not catching it off the bottom but 6+% Div, and I'd say limited downside, though that could have been said when it was 25% higher.
I think the calls for inflation being much lower then the data suggests have been wrong, Prof Siegel was calling for a slowing of rate hikes back in Dec 2022(yet he is still out there ripping the fed which is a little comical).
1. Haven't seen the shelter data, so not sure where we currently stand.
2. Thought I said spring/mid-year.
3. I will admit being wrong. CPI shelter is even more garbage that I thought. Truly devoid of reality and essentially a random number generator.
Happy? :)
But I do wonder if this run of inflation, and the focus on how some of this data is collected and measured, does force the fed to modernize their methods.
Yea I said that's the next support level after 40 and where the 200DMA was. It's in that area now but I'm not buying it. Seeing the TSM and Samsung news lately, I just see more competition even here domestically for them. I don't trust their level of execution. Yesterday they released news about a new chip that's supposedly better than NVDA's. I don't trust it. INTC isn't trust but verify, it's verify then trust lol.
Like I said it would take a dive back into the mid high 20s for me to think okay maybe it's worth a flyer here even if it's a long slog but not where it is now. Maybe they turn it around but risk reward isn't there for me at this level.
Other notes
VZ has been rejected by that 43ish and slightly above area I mentioned could be resistance. I'd be looking to add back some if it drops below 40. It did briefly today but not far enough for me.
UNH I mentioned could definitely revisit the 450 area and it hasn't shown much strength since a slight bounce off it. Back in the low 450s this morning. Still wonder about a double top in it. Strong support in that vicinity (say 440s) but if it breaks definitively and holds that wouldn't be a good sign imo.
MCD is another one I wonder if a double top might be forming for it as well. Fast food prices have gone up a bit with inflation due to input costs from materials and labor. Not as much a bargain as it might have been before, especially on the low end consumer.
The problems over the past 3 years have mostly been about awful inflation metrics and not understanding more modern data sources.
Truflation = 1.8% YoY
It's pretty weird in that, the way they collect some of this information, is obviously archaic/dumb to even the most basic market observer.
I have been waiting patiently for UNH to dip below $450 and COST below $700, but just not happening as of now.
Also eyeing MDB and BA (but I need to do more research on BA).
Even many Fed members, including Powell, have admitted to the problems. Just update the metrics! Heck, at least do a weighted average of old CPI metrics and newer real-world metrics. That would be a step forward.
Still waiting for the FS Insights/Tom Lee breakdown of everything. I will pass it along.
I became a renter for the first time since the 90s last December so I’ve been watching rents here in Philly pretty closely. They softened a little a few months back but are definitely heading back up now
1. Haven't seen the shelter data, so not sure where we currently stand.
2. Thought I said spring/mid-year.
3. I will admit being wrong. CPI shelter is even more garbage that I thought. Truly devoid of reality and essentially a random number generator.
Happy? :)
Got my first batch at $1.89. Will add to the position when appropriate. I have a few small positions I am playing around with (ONDO and RARI). ONDO seems to be a favorite of the new Blackrock tokenized fund. RARI is another BASE L2 play.
September and/or December are viable for the Fed's next move: a minimal rate cut. But a Fed move in September (just before the election) may be politically disruptive. Fed "neutrality" is the concern re: impact on the election. So December would be more likely. That said, one more data showing inflation may call for a rate increase rather than a cut.
That means, look for a .25% cut in July. The market doesn't need much. Just 1 or 2 modest cuts to get us moving in the right direction. As for rate hikes, remember, PCE core is 2.8% YoY. This is all that matters to the Fed. So let's calm down and keep this a serious conversation. :)
Just got the FS Insights/Tom Lee breakdown report. We have one specific ridiculous culprit and it's not shelter! Got a work meeting at 3pm. Will post this later.
Auto insurance.... LOL....
https://finance.yahoo.com/news/why-...t-the-fastest-rate-in-47-years-130004238.html
From The Man and his team. Seriously, auto insurance? Good grief, what are we doing with these garbage metrics.
TL:
March CPI released came in “hot” with Core CPI of +0.36% vs Street of +0.30% and this is triggering a sizable sell-off in equities. This is fueling the skepticism of the “inflation is stubborn” cohorts, but as we discuss below, this is a “maximum pain” moment for stocks — that is, today’s reaction is the worst moment of the reaction. Meaning, this is arguably a buy the dip moment.
Are the Fed and markets going to bother to look at auto insurance and explain away CPI? That is unlikely. We know:
TL:
March CPI released came in “hot” with Core CPI of +0.36% vs Street of +0.30% and this is triggering a sizable sell-off in equities. This is fueling the skepticism of the “inflation is stubborn” cohorts, but as we discuss below, this is a “maximum pain” moment for stocks — that is, today’s reaction is the worst moment of the reaction. Meaning, this is arguably a buy the dip moment.
- Core CPI came in above consensus at +0.36% vs Street of +0.30%. This is a disappointment because this is not really an improvement from Jan and Feb Core CPI (Feb was +0.36% too). After all, we expected seasonality and other distortions to be removed from March. March is the first clean CPI reading of 2024.
- What caused March Core CPI to be “hotter”?
- It was all automobile insurance related:
– Auto insurance MoM soared to +2.58% March
– Feb MoM was +0.85%
– YoY surged to 22.20% vs 20.58% - The surge in auto insurance is still causing upward pressure in Core CPI MoM and YoY. How much?
– CTG (contribution to growth)
– Auto insurance-related March CTG MoM +0.14%
– Auto insurance-related Feb CTG MoM +0.08%
– explains entire upside reading vs consensus - Is the fact that auto insurance accelerating a reason to see inflation generally surging? That is not our take. Auto insurance is surging in the real economy because of the prior surges in auto prices and related repairs as well as sloppier driver habits.
– is this something the Fed needs to quash?
– keeping interest rates high will not arrest this
– besides, this is just a timing issue as tweet by @AnnaEconomist shows
– this is a lag to the surge in other auto areas - The tweet shared by @AnnaEconomist highlights the various surges of costs related to autos:
– first, car prices new and used
– second, vehicle parts
– third, vehicle repair
– fourth, now auto insurance
Are the Fed and markets going to bother to look at auto insurance and explain away CPI? That is unlikely. We know:
- markets tend to over-react, and today is the example
- today is arguably max pain
- But there are offsets to inflation
- Foremost, U Mich consumer inflation expectations are making multi-year lows
- Why would consumers see lower inflation yet CPI is showing “hot”?
- This argues for statistical lags
- March PPI is released Thursday and likely better
- March Core PCE released 4/26 (2 fridays from now)
Similar threads
