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^^ yepppp
Real earnings last year for companies was like 0%. Actual was fueled by passing on inflation. Not happening this year. First thing to go when companies need to tighten up is labor. Look for unemployment back around 5% by year end. Wage inflation has been meandering down already. PMIs largely under 50.
Maturity wall for company debt is a bit of a thing in 2024, but not until 2025 is there a large % of market that will need to refinance or pay down debt. So there’s that.
I've been saying, to anyone that cared to listen, for months that they needed to stop the rate increases as the cooling was happening on multiple fronts already. Some of it was organic, and some of it was because the supply chains filled back up to the point of oversupply for some key channels and hiring stopped cold. Sure there are still lots of jobs being advertised because everyone wants to look strong in their respective industries but they're not actually hiring. Retail is crashing due to the reduction of cheap money and oversupply, shipping and transport has slowed, and warehouses are stuffed. Yes there have been mass layoffs but IMO that's just companies that grew too much, too quickly due to pandemiconomics. The media needs to shut up and stop the doom talk and the Fed needs to back off and watch for a little while. Of course this is just from a dumb layman's perspective but I have been paying attention for 40 years.
Oh, and the war got the whole world confoozled.
The diverse allocation I bought last year, in April, is now yielding 6.5% up from 5.2%. I’m currently down 2% including dividends on the whole thing. Not great but not dire. More comfortable with the mix now than 9 months ago. The income is great.
Biggest mistake was FMSDX right before it cratered. Although, the monthly income on it has basically doubled and I like the active management and portfolio mandate.
A sidewise to slightly higher stock market and moderating inflation is perfect for me. All of my active funds are increasing duration and therefore more durable income. Creep to maturity helps the short duration and capital return.
I set 2 put orders and 2 call orders last night. I wanted to be covered either way the market went after the CPI data. Set a Mar 17 put on O with a strike of $60 for .75, and a Jan 20 put on F with a strike of $12 for .05. Neither one of them filled, F was up for the 10th session, O was also up for the day.
Set an XOM call for Feb 17 with a strike of $125 for .50, and a MRO call for Feb 17 with a strike of $30 for .70. Both of these filled. I was down .50 on the XOM call and up 10.34 on the MRO by the end of the day. Even though I’ve wanted off of both of these stocks for a while if we get the pullback tomorrow that I think we will I’ll buy them both back if I can make $20-$30 (apiece) and still keep my shares.
The Fed let inflation build for 2 years before doing anything. They’ll crater the economy guaranteed. We were on the verge of recession when the pandemic started. I think we’ve kicked the can down the road long enough to require a significant correction. Unfortunately.Quote:
Originally Posted by gravitylover
The markets have been saying the same thing so you aren't exactly some lone voice in the wilderness. It takes at least a year for a rate hike to fully take effect throughout the economy and they just jacked rates through the roof during a 9 month period. Markets have been predicting that J-Pow is going to walk some of that back for a while now.Quote:
Originally Posted by gravitylover
I would venture to say that " jacked rates through the roof" is a bit of hyperbole. IMO rate were raised back to more realistic and sustainable levels after a decade or more of QE. Do those higher rates benefit the stock market? Who cares, that is not the point.
Bad choice of words I guess, my point was that the pace of the rate increases was very fast (the fastest ever last time I checked)Quote:
Originally Posted by Bunion 2020
…Paul Volcker wants a word…Quote:
Originally Posted by JaytaeMoney
Also, the rate of price increases (known as inflation) was also very fast.
If you look at the rate hikes over time horizon what the Fed did from March to December 22 is the fastest ever, by far. 425 basis points in 9 months. The cycle in 88-89 is a distant second and Volcker wasn't even the chair at that time, it was Greenspan.Quote:
Originally Posted by Brock Landers
How does the last decade+ compare to that metric in the converse. As in, lowest time at record low rates? I mean, we basically kept rates low for a really long time, kept fueling the fire with gunpowder, and everything just got overheated. Then the pandemic and "money printer go bbrrrrrrrrrr" didn't help thing either. Every action has an equal and opposite reaction and all that.Quote:
Originally Posted by JaytaeMoney
I'm not an economic historian, but I do know that the recent period from 2008 to present doesn't really have any historical comparison as far as how low the rates have been. In 2018-19 things were starting to look a little more normal (but still pretty low historically) and then the pandemic hit and the rest is history.
The only point I'm trying to make is that since the Fed hiked rates so fast in such a short period, it is very possible that they over-corrected. And that is not a niche view. Markets are betting on it, the WSJ referred to it as a game of chicken with the Fed a couple days ago.
So go back to Volcker. Is 900bps in 6 months a lot?Quote:
Originally Posted by JaytaeMoney
There hasn’t been a recession in 15 years and we are bitching about fed policy? Coming out of a pandemic? Man tough crowd.
Attachment 442529Quote:
Originally Posted by Brock Landers
Fair enough I guess but that was a super volatile time. It was more like 900 in 2+ years. Not as hard to go up 900 in 6 months when you just went down like 700 in 3 but I retract my previous statement.
Yeah, I was aware that rates had risen drastically during that time to quell inflation, but had never looked at a chart and seen the crazy swings. Not sure what they were thinking.Quote:
Originally Posted by JaytaeMoney
It is wild, it looks like they dropped them nearly 7% in one meeting.
Sorry for the thread drift, I will stop posting and let the stock talk resume.
Rate of change is the metric to measure things like inflation and rate hikes. The rate of change in this Fed cycle is probably far greater than the Volker cycle.
As for inflation. In the 70’s rate of change inflation when gasoline went from .25c to $2.00 and that trickled into every corner of the economy from record albums to soybeans.
That would be like gasoline going to $16 a gallon in todays prices.
If nothing else, over the next 12 months, we'll get some insight into who is in control of the rates, the Fed or the bond market.
I've been happily buying very boring dividend stocks; stagnant market A-ok with me.
If the Fed continues to raise the curve inversion will just continue to grow. The answer is bothQuote:
Originally Posted by dschane
25bps more for the fed then pause. I think a larger than expected recession and ~2-2.5 inflation print 4q pushes the inversion over 100bps.Quote:
Originally Posted by 4matic
The larger point, to me, is that we haven’t seen inflation like that over the last 40 years. That’s why we haven’t seen hikes like that. Get inflation prints near 10% yoy….get rate hikes like that. Those are the tools they have to fight their mandate. Just so happens a solid (to say the least) jobs market (at the time) allows them to fight inflation with missles instead of bullets.Quote:
Originally Posted by JaytaeMoney
When unemployment becomes a problem…they can put that fire out then.
Bought back my XOM and MRO calls today, made about $28 on the two of them. Not quite what I wanted, but I took the cash. I’ve made 1k/year trading options the last few years. I’ve only lost money on an options trade twice, both times when I had the contract set wrong. (Buy instead of sell.)
I’m thinking of writing a bit more this year. I miss Lee and Covert being here to give us all some advice. I’m just a moron and don’t take any advice from me.
Pogs, what dividend stocks have you been buying? Midstream’s, materials, reits, blue chips?