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ZiaHunter

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    Friend sent this to me. Been around long enough to see where we are headed and getting my ducks lined up. 2023 is going to be a shit show.

    Subject: FW: The Ross Rant













    As usual, the Street had not listened to what Powell has been consistently saying for months, that the Fed will keep raising until inflation is back to 2%, and that stopping inflation is their only goal right now. As I watched the presser on Wednesday, and the movement of the market as he spoke, it was clear the Street was still not paying attention carefully even as he was repeating they will keep raising. It was not until he finished that traders woke up to what he really had said, and the market dropped 500. The Fed is not stopping until inflation is back down a lot from here, and stopping inflation is the key driver of their actions, even if it means considerably more unemployment. Expect the Fed to go at least 50 in December, and very possibly another 75, and then 50 in January, and after that maybe 25 for several more months. Traders are living in dreamland if they really think the Fed is going to pivot anytime soon. They will stay the course, the stock market topped out this week, and it is headed back down to 3,300 or maybe 3,000 on the SPX. FF will get to 5%, and maybe a tiny bit more, and the ten year will get to 4.5% with the two year to 4.75%. The Street is missing what is happening, as usual. This is a replay of 2008 in that the Street refuses to believe what is really happening because it does not fit what they want. Services costs continue to rise as wages continue to rise more than they had been. Services are 70% of the CPI, so until unemployment increases, and wages slow, inflation will remain too high.



    The savings rate is now 3.1%, the lowest since the forties. Clearly consumers do not now have the extra cash to save from their paychecks, and are not getting the free Covid money anymore. So if you take the big jump in credit card use, and the huge, near historic drop in savings rate, you can conclude, consumers are very stretched, which is consistent with reports that 65% are now living paycheck to paycheck and are not flush as Moynihan of B of A claims. There is a disconnect between the people who say consumers are in good shape, and those people living on the edge now. And the layoffs are just beginning, and inflation is still around 8%, but wages are only up around 5%, and rising. Anyone other than Biden can get that math. Talking heads on TV are not understanding what is really happening, and those who say inflation is now declining a lot, and the Fed is going to slow or stop soon, are wrong. Job numbers may stay decent for a while, but don’t be mislead, labor participation has not moved all year from its very low level.. It is not the start of a long term rally, but just a classic bear bounce. Good time to sell some more.



    As the cold settles in, and heating oil and utility bills mount up, consumers will be pressed a lot further. It is very likely this week was the top of this latest rally before the market heads back to 3,300 or maybe even 3,000. Maybe as the Republicans get control of the senate, the rally lasts a little longer, but when Q4 earnings come out, and the Fed raises 50, or maybe even 75 in Dec, and inflation is still at 7.5%+ in December, then the market will return to its downward spiral. There will be a major black swan in the finance arena, or from Russia, in the next few of months, and then we will see the market go further down. We are not at the bottom, so don’t rush in unless you just want to trade in the very short term. Just be patient. My energy portfolio is up over 20% all in returns, and I am staying in. More big dividends ahead. Even if the Republicans can force through a lifting of all the regs and restraints on oil production, very unlikely, it will take time to do that, and then it takes 6 months at least for the oil producers to fully ramp back up, and that assumes they can find the workers and the parts they need which they cannot do easily. Oil and gas will remain in short supply for a long time. They need to put back over 300 million barrels into the SPR. That alone will keep prices up despite Biden claiming he is going to buy oil at $70. The Saudis will just reduce production further to force Brent prices up over $90.



    Wheat prices shot up 6% this week, but settled back a bit. Corn and sunflower oil are back in decent supply. Putin seems to be striking out in any way he can to destroy and disrupt since he is losing the war itself, so he might stop the ships again. His new conscripts are getting chewed up and sent home in body bags, which is going to make the Russian people much more against the war than had been the case. There are several different people maneuvering to take Putin’s place, but nobody is going to make a near term move. According to the Ukrainians, a very unreliable source, over 70,000 Russian soldiers have died, which would mean another 150,000 might have been wounded or captured using the standard 3 wounded for one dead ratio. Independent sources say the number is a lot lower, but still unsustainably high for the Russians to succeed in the invasion. It is unknown how many fully functional tanks he really has left, or how many fully trained tank crews. As a result he has to resort to missiles and drones, and we don’t know how many of those he has, so he will do whatever he can to cause other problems and shutting off food is one way. Result, inflation is not going away quickly due to food prices and diesel shortages, on top of wage pressure.



    The dollar continues to be too high, pressuring less developed nations to the point that there will be a currency and inflation crisis soon. The Yuan has declined 11% this year. The lockdowns continue. There is no way to know what is the real GDP of China. In addition, China has loans out to numerous countries for infrastructure projects. China does not cooperate in loan workouts with the rest of the world, so it is unknown how some of these defaulting nations are going to get out of the mess. The Yen is also down considerably. Argentina again is one of the big problems as usual. The longer and worse this gets, the worse for deeply indebted nations whose capital is flooding into the US for safety. This is not going to go well.



    European growth last quarter was better than expected by a little, but all the EU officials are warning the worst is coming soon. Germany has told its manufacturers that its sales to China and other major customers will now change and be much worse. A large trade delegation from Germany is in China this week to try to reinvigorate exports despite everyone else working on pulling out of China. There is a widespread push to move production and operations out of China by international companies due to the lockdowns and political uncertainties. The entire trade pattern is changing, and Germany will come out worse. The Germans have also let it be known that it is not going to bail out Italy again. Things in Europe are going to be ugly in 2023. You do not want to invest there.



    The Germans were under intense pressure from protestors to reopen the pipeline. The Brits and US had to prevent that. The Russians probably have it right. It is very possible it was the UK that blew the pipeline, but the story that Liz Truss gave it away by texting Blinken is considered by my knowledgeable friends to not be true. The Swedes appear then to have gone out and picked up the evidence and destroyed it so the Russians could not get it. We will now see what Russia does to retaliate. Germany has to be really pissed off at the UK now.



    There is a potential major debt crisis brewing. As I have previously mentioned, the US pension funds are losing heavily this year, down 10%-15% on average, with some down 25%They cannot sustain that. It is the government union pension funds that are the problem, not the private companies which switched from defined benefit years ago. There is a increasing shortfall in these government funds that will need to be funded at some point, and that means higher taxes are coming at the local and state level. The shortfalls very possibly will be so large that the federal government may be pushed to fund these shortfalls. States like IL and KY are in major trouble, and in IL they are just making it worse. IL may become unaffordable for companies and upper income residents to live there. It is going to become Detroit with the new criminal law they just passed. The far left are pushing very hard to tax IRAs and other deferred tax plans. They will not succeed so long as Republicans can stop that, but it may happen in state taxation like in IL. This is going to get very nasty over the next couple of years. In time, there will be no companies nor rich people left in IL. In addition, rising rates will cause some junk bonds to default. Stay away from any investment in companies that do not have good cash liquidity, and short term debt maturities. 2023 is going to have a lot of pressures on companies.



    Cap gains constitute around 50% of CA state tax revenue. Not this year, and not anymore, as companies continue to move out in growing numbers. CA lived off Silicon Valley huge profits, but now that Meta is crashing and others, CA has a major revenue problem on top of all the other self-inflicted problems it has. Why anyone with money lives in CA anymore is a mystery. The US deficit is now so large that if rates continue to increase over the long term, which they will, then financing the deficit becomes unsustainable. If Treasuries require a 5% rate to get sold, then when compared to where rates were one year ago, there is no room in the budget for increasing defense the way it needs. We have a real problem at the national level. We will see what the Republicans do once they take over in January, but we can’t continue as we have been now that rates are rising.



    The geopolitical risk is now so high that capital continues to flow into the US. This has kept US Treasury rates lower than they should be at this point. This is especially true of the 2 year. The 2 year will rise further, but is a good place to park cash once it rises a little further. There is likely a flood of cash that will come in when it reaches 4.75%. The problem is the dollar will continue to rise as more capital comes here, and that puts even more pressure on foreign debt denominated in US dollars.



    Google may be charged as making in-kind contributions to Democrats by pushing go vote messages to people identified as Democrat. That is illegal. The DOJ will not touch it but Congress might. The election is very likely to be a pleasant surprise for Republicans and the pollsters will be wrong again. R’s take PA, AZ, NV and OH and maybe even GA. Kemp is going to crush Abrams, and she will claim the new voting law suppressed her voters. The media will make the same claim as will Sonnenfeld, who created the All Star boycott by big companies about the voting law. It is now clear the vote is bigger than ever and nobody is suppressed. Sonnenfeld is now claiming all the oil experts are wrong and there is no diesel shortage. I can assure you he is wrong, and there is a major diesel supply problem. I asked Sonnenfeld to apologize for his misinformation that created the boycott. I am still waiting for he and the CEOs to apologize for what they did.
     

    Hobo Hilton

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    I am in the belief that we need demand destruction. We need unemployment to tick up.
    The "up tic in unemployment" needs to be in the workers that are making a 6 figure salary... America has consistently moved to unemploy the minimum wage workers.... Now, the result is people who were working for minimum wages have figured out they are better off to simply not work and enjoy the luxuries of the government "safety nets" like food, housing, medical care, transportation, education / training, free ISP hook up and a host of other things.


     
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    S3th

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    1667605138123.jpeg
     
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    S3th

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    Tesla has filed an application to offer telecom services in its vehicles in Canada.

    Tesla says it'll provide machine-to-machine cellular data service for in-vehicle infotainment access, internet access, & “mobile terminating SMS to wake up vehicles"
     
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    Hobo Hilton

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    Tesla has filed an application to offer telecom services in its vehicles in Canada.

    Tesla says it'll provide machine-to-machine cellular data service for in-vehicle infotainment access, internet access, & “mobile terminating SMS to wake up vehicles"
    So will Twitter be included at no cost for Tesla owners ?;)
     
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    Hobo Hilton

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    Quick question? Can someone give a good way to invest for my granddaughter’s education besides a 529?
    That is a good question. posed to men with varied backgrounds. Doubt we would all do the same.
    How old is your granddaughter?
    Are you going to invest monthly, yearly or a lump sum ? How much ?
    Just because you want her well educated, that may not be her plan. Leave some flexibility in your plan so taxes don't kill you if she decides to get married and have a house full of your grandchildren?
    1667668863192.png
     
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    Hobo Hilton

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    ROTH IRA? Pay her to make her bed.
    I set up a ROTH the first year they were offered... It was a good deal. Then the politicians began changing the rules.. After some changes the deal was not as good. Remember to put your money where the politicians and tax collectors can't get their hands on it. Never put all your eggs on one basket.
     

    Lightning8

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    I set up a ROTH the first year they were offered... It was a good deal. Then the politicians began changing the rules.. After some changes the deal was not as good. Remember to put your money where the politicians and tax collectors can't get their hands on it. Never put all your eggs on one basket.
    This is just one tool but I was specifically referring to an option to save for a grandchild. Other than burying in yard, what savings techniques are safe from government, etc.?
     

    Hobo Hilton

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    This is just one tool but I was specifically referring to an option to save for a grandchild. Other than burying in yard, what savings techniques are safe from government, etc.?
    Great question that will require a lot of research.. We are all different. Think outside the box. What's right for me would not be right for you.
    Grandpa could buy a plot of land and leave it to Graddaughter in his will... She can sell it and pay of the student loans, if any.
    Grandpa could just save the money and gift it to her in small amounts while in school so she can pay for education.
    Grandpa could just give her an envelope full of $100's every Christmas.
    Look at some annuity advantages.
    When you dig into any of these plans like 529... Google in "disadvantages of 529" and look at the disadvantages
    Face it, the Government and the investment experts are running the odds against Grandpa. They are well hedged.

    A bit off topic. My Dad had a term he used frequently.. "Ruling from the Grave". Parents and Grand parents want to stipulate the where, when and how their money will be used by an heir. It's a control thing. Again, this line of reasoning will end up being the worst option of all.
     

    Lightning8

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    Great question that will require a lot of research.. We are all different. Think outside the box. What's right for me would not be right for you.
    Grandpa could buy a plot of land and leave it to Graddaughter in his will... She can sell it and pay of the student loans, if any.
    Grandpa could just save the money and gift it to her in small amounts while in school so she can pay for education.
    Grandpa could just give her an envelope full of $100's every Christmas.
    Look at some annuity advantages.
    When you dig into any of these plans like 529... Google in "disadvantages of 529" and look at the disadvantages
    Face it, the Government and the investment experts are running the odds against Grandpa. They are well hedged.

    A bit off topic. My Dad had a term he used frequently.. "Ruling from the Grave". Parents and Grand parents want to stipulate the where, when and how their money will be used by an heir. It's a control thing. Again, this line of reasoning will end up being the worst option of all.
    I would be interested in your thoughts on "annuity advantages" for grandchildren. Not a fan of 529 plans anyway.
     

    NoDopes

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    My understanding is that you can use your own IRA or 401K to pay for education for child or grandchild. 529 had the advantage of locking in credits for current state school costs but what if she doesn't go?
    What if college is free in 10years?
    Perhaps gold or silver. Tax free, doesn't usually lose value. Coming massive inflation proof. Looks pretty to keep if she doesn't go to school. Easy to bury. Just tell somebody first.

    Lots of these stories.
     

    Hobo Hilton

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    I would be interested in your thoughts on "annuity advantages" for grandchildren. Not a fan of 529 plans anyway.
    An annuity is a contract between you and an insurance company in which you make a lump-sum payment or series of payments and, in return, receive regular disbursements, beginning either immediately or at some point in the future.

    I will often swap the term "annuity" with "life insurance"... Let's don't squabble over the fine points.
    Here is a "what if" situation. Depending on the age of Grandpa and Granddaughter. Grandpa could take out an annuity / life insurance policy on himself and have it payable to his Granddaughter when he dies. Again, up to her if she wants to apply the payoff to her college debt or something else..
     

    S3th

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    The above are why I suggested a custodial account. It may not be the most tax-advantageous but my parents did it for me and it worked out. They purchased ~5-10 shares of Home Depot as a new born and by the time I graduated I had over 100 shares due to splits and DRIP. So even if your grandchild doesn't use it for student loans either because they are free, she has a scholarship, or other... she can use the funds to purchase a vehicle (or to pay for a Tesla robotaxi), down payment on house, etc.
     

    Hobo Hilton

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    My understanding is that you can use your own IRA or 401K to pay for education for child or grandchild. 529 had the advantage of locking in credits for current state school costs but what if she doesn't go?
    What if college is free in 10years?
    Perhaps gold or silver. Tax free, doesn't usually lose value. Coming massive inflation proof. Looks pretty to keep if she doesn't go to school. Easy to bury. Just tell somebody first.

    Lots of these stories.
    I agree on physical gold. Just don't leave it in a safe deposit box. I have to think a bit on gold ADR's. That is a control issue. If I was putting something aside for a grandson, the possibility of collector grade guns would be on my radar. Again. leave the collection (guns, gold, investment trade collectables) to him in my will. Never underestimate the power of a properly recorded will... A lot of trust funds are set up... Another control issue that must be properly dealt with.

    Another option is a DRIP account set up directly with the company and not a brokerage outfit. I did that for my daughter. she is still holding it and it is still adding shares... She is in Louisiana and made straight A's in high school and the state of Louisiana paid her tutition at LSU where she left with a Masters Degree.... Again we don't have a crystal ball as to the situation of a child 18 years from now...
     
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    Lightning8

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    The above are why I suggested a custodial account. It may not be the most tax-advantageous but my parents did it for me and it worked out. They purchased ~5-10 shares of Home Depot as a new born and by the time I graduated I had over 100 shares due to splits and DRIP. So even if your grandchild doesn't use it for student loans either because they are free, she has a scholarship, or other... she can use the funds to purchase a vehicle (or to pay for a Tesla robotaxi), down payment on house, etc.
    I used custodial account for my two kids - both in 30s now. Started right as they were born. One used for college and other used for down payment on first house. I agree on the flexibility vs "pure" college savings instruments
     

    Hobo Hilton

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    An interesting phenomenon... Investors continuing to hold stock in companies that are buying back stock as the price per share falls.
    Comments ?
    _______________
    Berkshire spent $1.05 billion in share repurchases during the quarter, bringing the nine-month total to $5.25 billion. The pace of buyback was in line with the $1 billion purchased in the second quarter. Repurchases were well below CFRA’s expectation as its analyst estimated it would be similar to the $3.2 billion total in the first quarter.
    1667837118411.png


     
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    S3th

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    Read those tea leaves for those of us who enjoy your forecast.
    Looks like the bottom for the SPX will be 2500 by 2024.
    View attachment 7993583
    Nothing has really changed with my forecast or short-term outlook. I purchased more Tesla today at $202. To think, Tesla is trading at a 2023 PE of 35x is mind blowing to me and I’m happy to add. The most difficult question I have found myself in recently is “Do I diversify into other stocks which are priced well or do I just keep consolidating into Tesla?”.

    I’m curious if Tesla will join all other auto’s in having a financing arm. It wouldn’t be a bad move at their current cash position and would likely add to margins due to the securitization model.

    (I also wouldn’t be shocked to find out tomorrow that Elon has been selling shares since Thursday.)
     
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    Hobo Hilton

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    Nothing has really changed with my forecast or short-term outlook. I purchased more Tesla today at $202. To think, Tesla is trading at a 2023 PE of 35x is mind blowing to me and I’m happy to add. The most difficult question I have found myself in recently is “Do I diversify into other stocks which are priced well or do I just keep consolidating into Tesla?”.

    I’m curious if Tesla will join all other auto’s in having a financing arm. It wouldn’t be a bad move at their current cash position and would likely add to margins due to the securitization model.

    (I also wouldn’t be shocked to find out tomorrow that Elon has been selling shares since Thursday.)
    Your question is Deja Vu:
    “Do I diversify into other stocks which are priced well or do I just keep consolidating into Tesla?”.
    Over the year's I have had friends who spent many years working for big corporations and faithfully adding the "company stock" to their holdings. They asked that same question. Some held steadfast through the good times and bad times. Others grew impatient and diversified.
    Those that stayed with the company long term and purchased regularly came out nice when they retired. Perhaps they had a more conservative philosophy... IDK... In all fairness a lot of faithful employees lost their entire retirement.. Enron, the Great Atlantic & Pacific Tea Company and others.
     

    S3th

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    Your question is Deja Vu:
    “Do I diversify into other stocks which are priced well or do I just keep consolidating into Tesla?”.
    Over the year's I have had friends who spent many years working for big corporations and faithfully adding the "company stock" to their holdings. They asked that same question. Some held steadfast through the good times and bad times. Others grew impatient and diversified.
    Those that stayed with the company long term and purchased regularly came out nice when they retired. Perhaps they had a more conservative philosophy... IDK... In all fairness a lot of faithful employees lost their entire retirement.. Enron, the Great Atlantic & Pacific Tea Company and others.
    No doubt. Very risky and a complete loss would set me back.
     

    S3th

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    Added to Tesla today and will be purchasing Tesla with all my available cash in my ROTH tomorrow. Hell, even my father, who has been admittedly against my bullishness, opened a position today.
     
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    Bigfatcock

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    I’m still shorting crude.

    I’d also like to thank big tech laying off a ton of people to cure inflation.

    My SPY calls straight ripping. Going to take those shares away.
     

    Lightning8

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    Elon Musk now only second to Trump in liberal hate. Calls to investigate Musk by Democrats. How will that impact Tesla?
     

    atepointer

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    Elon Musk now only second to Trump in liberal hate. Calls to investigate Musk by Democrats. How will that impact Tesla?
    If they can't find something they will invent it....he is on an egg timer for some level of beat down from Dems. How about Cathie Wood she must be thrilled with today's bump as her 5 year return finally went back to positive at 3.8% today although still down 63% YTD.
     

    Hobo Hilton

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    Stock Markets all over the World are taking their biggest jump they have seen in the past 2 years.. Why ?.. Because the headlines are saying inflation is cooling. Getting down into the numbers, here is what the bottom line is:
    Inflation was cooler than expected in October, although household staples such as shelter, food and energy remained among the largest contributors to consumer prices still rising at a historically fast pace, the U.S. Bureau of Labor Statistics said Thursday.
    1668131825186.png


     

    lariat

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    Stock Markets all over the World are taking their biggest jump they have seen in the past 2 years.. Why ?.. Because the headlines are saying inflation is cooling. Getting down into the numbers, here is what the bottom line is:
    Inflation was cooler than expected in October, although household staples such as shelter, food and energy remained among the largest contributors to consumer prices still rising at a historically fast pace, the U.S. Bureau of Labor Statistics said Thursday.
    View attachment 7996390


    Don’t believe the hype. Inflation being “cooler” than expected doesn’t mean inflation isn’t still actively inflating. It only means that it is slightly less inflated than the inflation they were expecting.

    IOW, your savings are still wasting away. Don’t let them bullshit you.
     

    S3th

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    Today jump was due to CPI coming in better than expectations. But more importantly, jobless claims came in higher than expected. This all points towards lower inflation going forward and likely a lower terminal fed rate. You even see this turn to risk on in the FX market by the USD weakening.
     
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