[2020] A little stock market sense

[MULTIZ321]

I-Bonds: Long-Term Buying Opportunity Coming

I-Bonds: Long-Term Buying Opportunity Coming

I-bonds currently offer a 0.4% fixed rate which is expected to increase to 0.7-1.0% in May 2023. Click here to read more.

seekingalpha.com

Richard

 

[Brett]

Dow Notches Longest Winning Streak Since 1987​

https://www.wsj.com/articles/global-stocks-markets-dow-news-07-26-2023-26888502

 

[PigsDad]

So where is the recession everyone was predicting for this year? Do you think it is still coming? I'm so glad I didn't panic sell and miss out on this big bull move as of late.

Kurt

 

[WaikikiFirst]

So where is the recession everyone was predicting for this year? Do you think it is still coming? I'm so glad I didn't panic sell and miss out on this big bull move as of late.

Kurt

Something to note that few seem to understand: NET Interest Expense for US corps has been falling, maybe be dramatic and say "plunging".
A main cause of the recession is supposed to be Corps feeling the pinch of higher rates as their Interest Expense rises. Te pinch is supposed to make them stop hiring, cancel projects, eventually fire people. Corps are overall net borrowers. Well, they've made so much money over the last "N" years and stashed so much into short-term T-bills etc, that as rates have risen quickly, they've seen their Interest Income rise much more quickly than their Interest Expense has risen. "That ain't supposed to happen" said the bureaucrat. Note that long-term rates (they mostly borrow long-term) have risen far less than short rates have.
I suppose a moral is that when the govt spasmodically jerks the economy around and goes to extremes like ZIRP, there are many unintended consequences.
Or not. ;-)

 

[rickandcindy23]

So where is the recession everyone was predicting for this year? Do you think it is still coming? I'm so glad I didn't panic sell and miss out on this big bull move as of late.

Kurt

Yes! So glad we didn't bail. The U.S. remains strong.

 

[dago]

So where is the recession everyone was predicting for this year? Do you think it is still coming? I'm so glad I didn't panic sell and miss out on this big bull move as of late.

Kurt

I inherited some cash earlier this year and bought into the market rather than sell. Also kept a portion of it in cash (A CD paying 5% interest).

 

[DrQ]

The 'freight recession' rocks global shipping, fueling a 75% plunge in container rates​

• Since peaking during the pandemic, the transportation industry has faced a protracted slump.
• An index that tracks global container rates has plunged 75% from a year ago.
• The downturn has also affected the US trucking business, prompting the Fed to acknowledge the "freight recession".

The US economy may have dodged a recession so far, but some of its sectors have been hit hard by instabilities created by the pandemic.

Case in point: a downturn in the freight industry.

MSN

www.msn.com

 

[PigsDad]

The 'freight recession' rocks global shipping, fueling a 75% plunge in container rates​

• Since peaking during the pandemic, the transportation industry has faced a protracted slump.
• An index that tracks global container rates has plunged 75% from a year ago.
• The downturn has also affected the US trucking business, prompting the Fed to acknowledge the "freight recession".

The US economy may have dodged a recession so far, but some of its sectors have been hit hard by instabilities created by the pandemic.

Case in point: a downturn in the freight industry.

MSN

www.msn.com

Is it really a "recession" in the freight industry when prices are just returning back closer to normal after the unprecedented Pandemic price increases? Seems like it should be categorized as a bubble popping vs. a "recession".

Kurt

 

[MULTIZ321]

Dividend-Stock Investing: Which Funds Are the Best Long-Term Bets?

Dividend-Stock Investing: Which Funds Are the Best Long-Term Bets?

A different approach to finding investment options.

www.morningstar.com

Richard

 

[DrQ]

The US is facing a debt storm. Here's 5 charts that show trouble is brewing.​

• There's a storm of private and public debt troubles that's headed for the market.
• Warning signs have sprung up in rising credit card balances, delinquencies, and other indicators.
• Here are the signs that the US is dealing with troubles stemming from its mountain of debt.

The US is facing a debt storm. Here's 5 charts that show trouble is brewing.

Hedge fund legend Ray Dalio and economist Nouriel Roubini are among commentators who have warned of a full-blown debt crisis headed for the US.

markets.businessinsider.com

 

[HitchHiker71]

The US is facing a debt storm. Here's 5 charts that show trouble is brewing.​

• There's a storm of private and public debt troubles that's headed for the market.
• Warning signs have sprung up in rising credit card balances, delinquencies, and other indicators.
• Here are the signs that the US is dealing with troubles stemming from its mountain of debt.

The US is facing a debt storm. Here's 5 charts that show trouble is brewing.

Hedge fund legend Ray Dalio and economist Nouriel Roubini are among commentators who have warned of a full-blown debt crisis headed for the US.

markets.businessinsider.com

The US and most countries around the world will face debt default within the next 3-10 years or so. Some call it the impending "Great Reset" that will be a defining moment (or several of them) not if but when this time arrives. Plan accordingly.

 

[easyrider]

So where is the recession everyone was predicting for this year? Do you think it is still coming? I'm so glad I didn't panic sell and miss out on this big bull move as of late.

Kurt

Bankruptcy rates are high in 2023 and we are only a bit over half way through the year. Interesting is that what causes a problem for one company creates an opportunity for other companies so things seem to be balancing out. I think there will be a global recession by mid 2024 because of the BRICS trading gold backed currencies for oil beginning next month and that next year is a presidential election year.

Bill

 

[HitchHiker71]

So where is the recession everyone was predicting for this year? Do you think it is still coming? I'm so glad I didn't panic sell and miss out on this big bull move as of late.

Kurt

It may come later this year or early next year from the looks of it. Things are slowing down from what I've noted anecdotally in my sector (tech software sales), particularly the last couple of months. My company missed Q2 2023 goals against plan - and our goals were already adjusted down at the beginning of the year given expected headwinds. Activity is down overall as well. Could just be my vertical of course, but we're also seeing M&A activities fall - which is the primary area where my software sells. In general, less M&A activity indicates economic softening. IPOs are also way down year over year. The consumer remains somewhat optimistic/stalwart - and given 70% of US GDP is consumer driven, this matters a lot, but we'll see new consumer data this week published, so pay attention, because if the consumer sentiment/spending starts pulling back, that matters a lot given it's 70% of US GDP.

That said, economists are seeing what they affectionately call "rolling recession" at present. So certain sectors are in contraction, meanwhile other sectors are in expansion, so we don't have a general downward trend across most sectors. This could likely result in the "soft landing" that the Fed has been aiming for. Then again, everything could head south. I personally think we're only one major external shock away from a recession, such as another war similar to Ukraine (Taiwan for example), whether a geopolitical shock, an unexpected economic shock (a debt crisis somewhere that creates some contagion), a financial shock (like more US bank failures for example). You name it really. Anything is possible bigger picture. We certainly do live in interesting times.

 

[easyrider]

Occasionally it's difficult to talk about the stock market without talking about global economies, geopolitical decisions including military conflicts and politics in general that drive the markets. We need to keep these types of posts off this thread. Especially opinions of politicians.

Bill

 

[ScoopKona]

The US and most countries around the world will face debt default within the next 3-10 years or so. Some call it the impending "Great Reset" that will be a defining moment (or several of them) not if but when this time arrives. Plan accordingly.

Just watch the amount of brazen shoplifting occurring at any location which sells "the basics." Consumer debt is off the charts.

 

[WaikikiFirst]

difficult to talk about the stock market without talking about global economies, geopolitical decisions including military conflicts and politics in general that drive the markets.

as a stock mkt pro for 20 yrs, I'll say that this depends greatly on the sectors you invest in and whether you own things for DIRECTIONAL moves or you do many RELATIVE trades. I did really well sticking mostly to certain sectors and hedging out macro issues, and letting others worry about DC.
btw, The Fed drives the mkts MUCH MORE than politicians do, other than the Lockdowns of 2020/21. For decades, any significant mkt move on "geopolitics" has been a great opportunity to take the other side.

 

[Ralph Sir Edward]

Now is the time of massive economic cross-currents. It make investing both difficult and perilous.

On one hand, the Fed is squeezing the money supply, which has led to a recession every time in the past. On the other hand, there seems o be a quiet trend to on-shoring of economic activity, which drives economic growth. Debt levels are high and rising, but at the same time inflation is making that debt worth less and less.

I'm keeping my "powder" dry for now, and have been for over a year. The only thing I can recommend is to lower your cash flow needs, if you can.

 

[DrQ]

Now is the time of massive economic cross-currents. It make investing both difficult and perilous.

 

[PigsDad]

Consumer debt is off the charts.

No, actually it is not. You have probably been reading the "shock" headlines where they state the amount of consumer debt in dollars is the highest it has been. But that doesn't include two important factors: inflation and population growth. The real indicator is household debt as a percentage of income, and we are currently at a relative low -- below current historical levels. Just look at this chart from the Federal Reserve Economic Data:

You can see that it has jumped up from the artificial lows we hit during the pandemic, but it is nothing compared to the early 2000's.

Kurt

 

[joestein]

Just watch the amount of brazen shoplifting occurring at any location which sells "the basics." Consumer debt is off the charts.

No, actually it is not. You have probably been reading the "shock" headlines where they state the amount of consumer debt in dollars is the highest it has been. But that doesn't include two important factors: inflation and population growth. The real indicator is household debt as a percentage of income, and we are currently at a relative low -- below current historical levels. Just look at this chart from the Federal Reserve Economic Data:

View attachment 80335

Kurt

THANK YOU!!!!!!. Whenever I say this, people look at me like I have 2 heads. I usually quote household debt as a percentage of GNP, which is also at a low of 75% vs over 100% around 2008.

All comes down to Wizards First Rule.... "People are stupid; given proper motivation, almost anyone will believe almost anything. Because people are stupid, they will believe a lie because they want to believe it's true, or because they are afraid it might be true. People's heads are full of knowledge, facts, and beliefs, and most of it is false, yet they think it all true. People are stupid; they can only rarely tell the difference between a lie and the truth, and yet they are confident they can, and so are all the easier to fool."

 

[joestein]

I personally believe that we are in a long term period of minimal flat growth. I think we are going to see a continual shift of markets. Consumer purchasing of products and services will become a larger portion of the economy. Commercial real estate will struggle - not sure if it will ever come back (except for warehouses). Residential real estate will take a bit of a hit, but it will continue to perform over time. Any products or sectors that involve bringing goods and services to people will perform over time.

In a way, the stock market is the worst. At least if it crashed, I would start to invest at lower prices. I think we are going to have minimal returns over time. Dividend Stocks and Interest paying securities will be king for a while.

 

[DrQ]

No, actually it is not. You have probably been reading the "shock" headlines where they state the amount of consumer debt in dollars is the highest it has been. But that doesn't include two important factors: inflation and population growth. The real indicator is household debt as a percentage of income, and we are currently at a relative low -- below current historical levels. Just look at this chart from the Federal Reserve Economic Data:

You can see that it has jumped up from the artificial lows we hit during the pandemic, but it is nothing compared to the early 2000's.

Kurt

While the macro numbers may be low, those that due use credit card are carrying balances:

Consumer credit card debt tops $1 trillion for the first time ever​

• Consumer credit card debt just topped $1 trillion for the first time ever, according to the Federal Reserve.
• "Credit card balances saw brisk growth in the second quarter" of nearly 5%, the New York Fed's Joelle Scally said.
• A recent survey from BankRate found 47% of consumers are carrying credit card debt from month to month.

Consumer credit card debt tops $1 trillion for the first time ever

The $1 trillion milestone in credit card debt comes at a tricky time for consumers amid a period of elevated interest rates.

www.businessinsider.com

Those higher interest rates hurt consumers that carry credit card debt from month to month, which Bankrate found in a recent survey makes up about 47% of consumers. That's an increase from 46% in December 2022 and 39% in December 2021, suggesting that the average consumer is getting more financially stretched.​

​

Lower-income households were more likely to carry credit card debt from month to month, according to the survey, with 53% of cardholders with annual incomes below $50,000 carrying debt. That's compared to just 38% of households with incomes of more than $100,000 carrying debt from month to month.​

​

A worrying sign for consumer health is the fact that serious delinquency rates for credit cards have seen a steady increase over the past year to 5.08% from 3.35% last year, according to the Fed.​

 

[PigsDad]

While the macro numbers may be low, those that due use credit card are carrying balances:

Consumer credit card debt tops $1 trillion for the first time ever​

• Consumer credit card debt just topped $1 trillion for the first time ever, according to the Federal Reserve.
• "Credit card balances saw brisk growth in the second quarter" of nearly 5%, the New York Fed's Joelle Scally said.
• A recent survey from BankRate found 47% of consumers are carrying credit card debt from month to month.

Consumer credit card debt tops $1 trillion for the first time ever

The $1 trillion milestone in credit card debt comes at a tricky time for consumers amid a period of elevated interest rates.

www.businessinsider.com

Those higher interest rates hurt consumers that carry credit card debt from month to month, which Bankrate found in a recent survey makes up about 47% of consumers. That's an increase from 46% in December 2022 and 39% in December 2021, suggesting that the average consumer is getting more financially stretched.​

​

Lower-income households were more likely to carry credit card debt from month to month, according to the survey, with 53% of cardholders with annual incomes below $50,000 carrying debt. That's compared to just 38% of households with incomes of more than $100,000 carrying debt from month to month.​

​

A worrying sign for consumer health is the fact that serious delinquency rates for credit cards have seen a steady increase over the past year to 5.08% from 3.35% last year, according to the Fed.​

That is exactly the "shock" headline that I was talking about. It sounds so scary to "top $1 trillion for the first time ever", but it means absolutely nothing if you don't take into account inflation and population growth. And the huge percentage jumps mentioned in your clip are based off of the artificial lows during the pandemic.

I would take that article with a huge grain of salt -- it is just meant to get hits.

Kurt

 

[CalGalTraveler]

A big reason to keep powder dry for now. With CD and Treasury rates exceeding 4 and 5% why bother adding to a stock market portfolio when you can achieve guaranteed return on principle and interest?

We also have a small portion of our portfolio in Section 1202 qualified small business stock in Silicon Valley startups. If we hold the shares for 5 years or more and there is a capital gain, the gain is tax free from the Fed, and possibly from the state depending on the year/rules.

Given risky stock and public equity positions, we are not adding to our equity so it makes a lot of sense to offset with additional contributions to CDs and Treasuries.

 

[Superchief]

• "Credit card balances saw brisk growth in the second quarter" of nearly 5%, the New York Fed's Joelle Scally said.
• A recent survey from BankRate found 47% of consumers are carrying credit card debt from month to month.

Consumer credit card debt tops $1 trillion for the first time ever

The $1 trillion milestone in credit card debt comes at a tricky time for consumers amid a period of elevated interest rates.

www.businessinsider.com

Those higher interest rates hurt consumers that carry credit card debt from month to month, which Bankrate found in a recent survey makes up about 47% of consumers. That's an increase from 46% in December 2022 and 39% in December 2021, suggesting that the average consumer is getting more financially stretched.​

​

Lower-income households were more likely to carry credit card debt from month to month, according to the survey, with 53% of cardholders with annual incomes below $50,000 carrying debt. That's compared to just 38% of households with incomes of more than $100,000 carrying debt from month to month.​

​

A worrying sign for consumer health is the fact that serious delinquency rates for credit cards have seen a steady increase over the past year to 5.08% from 3.35% last year, according to the Fed.​

These credit card debts and balance carryover trends are what worry me. Credit card interest rates rose over 5% in the past year and even the best cards are charging 12%+ interest rates. In combination with inflation, these consumers will keep falling further behind in their payments unless they dramatically change spending habits. Younger people are accustomed to charging things on their apps and don't realize how much they are spending until it is too late. We were fortunate to not have these easy spend tools and were forced to learn to balance check books. I think there is more of a 'live for today' mentality today than when I was younger, so many aren't saving for emergencies.

The stock market over the last few days indicates that concern is growing about the overall economy.