Down goes the Dow

From a macro portfolio manager:

This one was during the mini-financial crisis earlier in the year. The idea was that we were facing a lose-lose situation;

If the banking crisis spread, financial assets would tank

If the crisis receded, we'd have higher interest rates, which would cause financial assets to tank.

Well...six months later, the crisis has receded, the economy is surging and nothing tanked. Dude was very wrong.

From the tweet:

Stocks +13%

Bonds -2%

Bob Elliott
@BobEUnlimited
If the economy ends up anywhere close to ok following this 'crisis' it's gonna be pretty bad for asset prices as tighter monetary policy gets priced back in.
11:07 AM · Mar 16, 2023
·
116.6K
Views

As much as I like David Kelly's work...this prediction was a dud. Sorta. If you followed it you made money so that's good. But the macro work was wrong.

His thesis, from a year ago, was that the US economy would falter, forcing a Fed Pivot in 2023. That did not happen - the US economy has remained resilient and strong, and the Fed did not pivot.

But stocks did well as he forecasted. +11% since the tweet.

Seth Golden
@SethCL
J.P. Morgan's global strategist David Kelly: Fed Pivot
📢 Demand pressure in early 2023 stoked by controlled inflation will force a Fed pivot as early as Q1.
📢Equities and Fixed income become attractive once again, as in previous low #inflation cycles.

2:15 PM · Sep 10, 2022

A year ago in the teeth of chaos, this analyst said:

Buy NVDA

Buy Alibaba

Not bad...

NVDA rose 214%

BABA fell 4%.

finance.yahoo.com

‘Take opportunities on days like today’: Kevin O'Leary says it could be the best time to buy stocks. Here are the 2 places he finds most attractive

You can't guess the bottom. But a bargain is a bargain.

Link:finance.yahoo.com/news/opportunities-d...

Well, the guy that bought $100,000 10 Year Treasury Bond at 1.35% in 2020 now has an asset worth $56,000 paying interest well below the rate of inflation. That can get worse, and it can happen to stocks too. And by the way, will still only be worth $100,000 when it matures in 2030. By the way, how much discount did that fancy hotel in San Francisco take at sale recently? Or the folks that bought Bitcoin at $60,000? I suppose they can wait for the rebound, or eat the loss when they realize it ain’t happening soon enough to meet their cash flow needs.

For the record, it was me who liked both of your two most recent posts. Keep up the good work!

Well thanks Seattle. I rarely vote any post, though I read all except those I have blocked. I left the 50+ Masters thread when posting my 70 year old’s running workouts became subjected to serial down voting. OK, lunatics in my opinion; I don’t need your crap.

Igy, two things. Politics, esp. at the extremes brings out the worst in many. And second, from my exposure to investing websites, shorts (those shorting stocks) are spared absolutely no level of disdain and ridicule by interested longs. Both get blown way out of proportion (and quickly).

Absolutely agree. Since I had two major careers, athletics and finance I gravitate toward those threads. Making innocuous posts on masters running would generally fall into the “who really cares category.” There are good people on that thread, and some rather compulsive behavior that is not healthy. My departure was good for me, and the masters thread. Wasting time for me, the Johnson brothers, and the moderators became pointless.

I suspect the same troll that shadows my posts here followed me over to the masters thread. And, since he has created close to a dozen handles to harass, he has an equal amount of voting capacity. Not sure what motivates such lunacy.

Kevin O'Leary sells his branded wine on QVC wearing a medallion around his neck. That tells you all you need to know.

How many different handles have you used?

an asset manager explaining a year ago why he sold equities. Now we know the result...stocks did fall for the next month but then rallied and are now 9%ish higher than this tweet.

Charts and tables and logic don't work! The tweeter's main mistake was thinking inflation hadn't peaked by 9/22. It most certainly had and was starting a very steep fall.

but good to see an explanation of the fear a year ago, esp vs the complacency of today. Markets are always changing.

1/6
Why we reduced the weight of #equities - a thread
The underlying data from the August US CPI report revealed that inflation has not peaked.

a year ago Fedex stock tanked 20% in a day on recession fears.

From that day to its 52 week high it rose 75%.

Picking up blue chip stocks when they tank is often very profitable.

But also important not to sell stocks on daily news. there's nothign positive in this WSJ story from a year ago. Downright scary. Wild that the CEO forecast recession but instead we had economic strength.

WSJ, 9/16/22

FedEx didn't deliver. The express delivery company's competitors look like they won't either.
FedEx shares fell 21.4% to $43.85 Friday, making them the S&P 500's worst performer. It was the biggest one-day fall for the shares going back to at least 1978, according to Dow Jones Market Data, and their lowest close since 2020. That's more than the 16% plunge it took on 1987's Black Monday.
The company's downbeat forecasts, announced Thursday, intensified investors' macroeconomic worries. FedEx CEO Raj Subramaniam, asked on Friday by CNBC's Jim Cramer whether the world was headed for recession, said "I think so."
Delivery companies are the proverbial canary in the coal mine for the economy. FedEx warned of a $500 million revenue miss, including in its European operations, a sign the energy crisis there is strangling activity.
Competitor UPS dropped 4.5%. Shares in FedEx's big European rivals such as Deutsche Post and Royal Mail also tumbled Friday, adding to already mounting losses this week.

FWIW these CPI data today caused the Fed to materially lower its expectations for future inflation. So that's a positive.

clevelandfed.org

Inflation Nowcasting

Office description

Link:www.clevelandfed.org/indicators-and-da...

“The thing many retail investors don't seem to grasp about $AAPL is this: at 30 P/E, it's priced for growth.

It doesn't have any.

If revenue drops 10%, $345B is still massive, but that justifies a 15x multiple, not 30x.

Nobody is saying $AAPL is going bankrupt.”

—RJR Capital

From Charlie Bilello:

Increases over last 3 years...
CPI Medical Care: +4.3%
CPI Apparel: +12.7%
US Wages: +14.7%
CPI Shelter: +17.2%
CPI Food at home: +20.3%
CPI Food away from home: +20.5%
CPI New Cars: +21.9%
Actual Rents: +23.4%
CPI Electricity: +24.2%
CPI Transportation: +28.5%
CPI Used Cars: +32.4%
CPI Gas Utilities: +34.5%
Actual Home Prices: +40.2%
CPI Fuel Oil: +68.1%
CPI Gasoline: +73.3%

I-Bonds check-up time.

Seems that the rates they pay on ones bought a year or two ago are now lower than they were originally, and you may want to review if these remain the best option for you or if you want to cash them out for other alternatives.

Here's a very informative site I came across that digs down into optimal liquidation times for Ibonds bought at different times.

linkedin.com

When To Sell I Bonds?

When To Sell I Bonds? If you purchased US Treasury Series I savings bonds designed to protect from inflation (I bonds) in 2021-2022, the best time to sell them is between August 2023 and January 2024. Inflation has significan...

Link:www.linkedin.com/pulse/when-sell-i-bon...

Have to think about this...my general view on iBonds is that they are 'own forever' assets...what other risk-free cash account is guaranteed by the government to keep up with inflation? And have no interest rate risk? Any other cash type investment will trail inflation over the years.

That said, I have a small stake so a percent does not translate into many dollars.

A year ago stocks were screaming downwards toward their ultimate early October lows.

A brave call here from JPM saying 'eh really the economy looks fine, soft landing scenario is stil on, buy risky assets'

And that was a great call.

Carl Quintanilla
@carlquintanilla
JPMORGAN: “.. economic data and investor positioning are more important factors for risky asset performance than central bank rhetoric. And the data appear to be increasingly supportive of a soft landing .. should thus continue to provide tailwinds for risky assets..” [Kolanovic]

2:50 PM · Sep 12, 2022

A very bad call here from hedgie Ray Dalio.

He said a year ago that interest rates in the 5-6% range would cause stocks to fall 20% and crush the economy.

Yeah nah nothing like that happened despite rates getting over 5%.

DALIO: “It looks like interest rates will have to rise a lot (toward the higher end of the 4.5% to 6% range) .. This will bring private sector credit growth down, which will bring private sector spending and, hence, the economy down with it.”