Is The Bottom Almost Here?

[changegonnacome]

3 minutes ago, bizaro86 said:

Ah, gotcha, I would agree.

 

Yeah should have given a shout out to my peeps on the non-W2 side of the house.......and serious respect to your COVID journey as a travel business owner. I can only imagine how difficult it must have been to manage through that - hope your back to killing it right now!

[changegonnacome]

12 minutes ago, SHDL said:

so I have a hard time believing they will try to wreck the economy just to get from 4 to 2. 

 

Its possible for sure......betting on people do what is the most convenient and repent later is usually a pretty good bet - what I would say is if they move the goal post higher........dont expect equities, especially long duration ones, to have a good day in the office that day......as permanently higher inflation expectations would get imbedded into the long bond.......and by extension discount rates

[SHDL]

11 minutes ago, Gregmal said:

Ive got another theory and thats that anyone who isnt utilizing the stupid CPI measure to gauge inflation, wouldnt even be able to tell the difference between 2 and 4. Thats how irrelevant it is. In fact, you could go from 3% positive to 3% negative probably doing little else but switching from name brand to white label or keeping the heating 5 degrees cooler in the winter and AC 5 degrees warmer in the summer. These are all largely nonsensical measures that are used to fabricate policy. Is reported car price inflation simply based on enough people wanting a used car with 10,000 miles vs 14,000? Or an extra half bath in their home? You wouldnt know the difference...

 

Yes I think that would be a good way for them to move the goal post while maintaining credibility. 

[SHDL]

4 minutes ago, changegonnacome said:

 

Its possible for sure......betting on people do what is the most convenient and repent later is usually a pretty good bet - what I would say is if they move the goal post higher........dont expect equities, especially long duration ones, to have a good day in the office that day......as permanently higher inflation expectations would get imbedded into the long bond.......and by extension discount rates

 

Yes I am ready for that ... ready to buy the dip on that beautiful red day that is. 

 

But then again I'm not holding my breath as I think the Fed will go out of its way to avoid disrupting the market in a big way...

[mattee2264]

I don't think they will wreck the economy. But I think it is a bad look if they start cutting rates before inflation is back towards target and I also think that disinflation will run out of steam once we hit the mid single digits. Supply chain inflationary pressures easing will probably be offset by wage inflationary pressures rising. 

 

And if inflation does fall below target this year it will be because we are having a hard landing and while that might well result in the Fed being able to cut the damage to earnings will more than offset any benefit to valuations from lower rates and certainly the Fed won't be able to go back to ZIRP and unlimited QE the way they could at any hint of trouble before inflation reared its ugly ahead. 

 

 

[changegonnacome]

 

 

 

Q > Is the bottom almost here?

A > One possible answer..........

Not until retail as a percentage of total market volume drops back down to a more normal sub-10% level 

 

If this is accurate though that today exceeded peak meme stock mania in percentage volume terms.....its quite something.

 

Edited February 2, 2023 by changegonnacome

[Gregmal]

Idk how they calculate it, but a common theme I see often is these shit bag short sellers going equally reckless with the puts and short selling, and they turn around and blame retail traders and MEME stocks for getting squeezed when really it’s their own buddies on the short side getting blown out. It’s like peak GameStop…when the crooks at the brokerages made it impossible for retail to buy….there was still tens of billions in volume for days on end….uh..that wasn’t retail volume, not at all.
 

This sort of stuff has pretty much become an irrelevant dataset IMO. It’s how a lot of the biggest trades in history have happened. Big guys build up their positions while blaming everyone else or hiding behind noise and then when it’s all said and done everyone wonders why these random hedge funds made a fortune…basically what Melvin and folks like Hwang did for years.

[Spekulatius]

I think you have to look at what the Fed and the economy is doing, not what they are saying.

What they are saying is said with an intent to control the narrative, but a narrative is not necessarily an fact.

Also, the Fed does not control the economy.

Edited February 3, 2023 by Spekulatius

[SHDL]

1 hour ago, mattee2264 said:

But I think it is a bad look if they start cutting rates before inflation is back towards target and I also think that disinflation will run out of steam once we hit the mid single digits.

 

Right - which is why I'm not expecting them to cut rates, just keep them at 4% or so as they "watch carefully how the economy evolves."

 

Which btw is bullish for (some) financials.

[Simba]

Feel like sayin' it 

 

 “There's always a bull market somewhere."

[thepupil]

8 hours ago, TwoCitiesCapital said:

 

If you held long duration, zero-coupon bonds and reinvested the proceeds over that same 50-years, you probably did better. Which one is the inflation hedge again? 

 

Can you show the data to support this?
 

I love my bones and duration more than most but this doesn’t strike me as true (though I couldn’t find a good index for this type of thing that went that far back…and the 30 year tsy didn’t exist for the entirety)

 

Edited February 3, 2023 by thepupil

[Jaygo]

The Amazon call was quite cautious. There are very few companies around that would have the instant economic data feedback that they have access to.  I’d say the tone was not positive on the broader economy. It’s worth a listen imo. 
 

The fed ex call last quarter was similarly negative and provided a really good lens’s to view the broader economy. (Not bad but slowing) Im looking forward to this coming call to see if things have perked up. 
 

as far as I can tell the only things doing really well are the CoVid backlash stuff like travel and restaurants, fast fashion and the payment processors. 
 

ggg.  Graco a company I know very well talked a very confident game yesterday but actually saw lower sales if the inflation was stripped out. Another note on that call was some serious hubris about squeezing margins up 3% in the North American contractor market. Unit sales are down and these clowns are taking record quarters. 
 

my bellweathers say this fall is going to be slow as molasses, time will tell. Invest as you wish. 

[changegonnacome]

Everybody has been poo, poo-ing, the earnings getting whacked shoe to drop thesis...took a little longer than I thought ...but you check out what just got filed after the close today?......E getting whacked story has clearly begun............just went through all the big tech earnings........different calls, same messages.......kind of eerily scarily similar.....and from the best companies & business models the world has ever known....wait till the average no moat ZombieCo starts feeling it/reporting it .....weakening consumer, margins and earnings softening......corporate response to sales/margins/earnings slipping.....pretty much the same........EFFICIENCY programs.......we all know what that means.

 

Lots of enterprises are going to take big techs lead (already have FedEx etc.) and try to save margins & earnings by getting more "efficient" by doing layoffs.....works for a little while........but thinking they can all get to 'earnings heaven' together at the same time, doing the same thing in unison is the great MBA delusion.

 

Henry Ford had a revolutionary idea.......your employee is also your customer........when you fire employees, your also firing customers.

[IceCreamMan]

On 1/9/2023 at 9:14 AM, Gregmal said:

If you ever wanna venture down the rabbit hole of “short term trading”, at least in any manner that would be successful, most of it is simply about capturing those sort of feelings, realizing that they are what “everyone is feeling/acting off of/doing”, and then find the most appropriate way to bet against that consensus. 
 

 

@Gregmal What is the consensus feeling right now?

 

The bear market is over?

[Gregmal]

9 hours ago, IceCreamMan said:

 

@Gregmal What is the consensus feeling right now?

 

The bear market is over?

Just my guess and I’ve been tuned out for a couple weeks now but basically rate hikes are done, and economy will avoid any sort of hard landing. Don’t think we are pricing in much optimism but the recent rally also now makes those pay for certainty that all the doom and gloom is over. IE now pretty much everyone and their mom knows we won’t have 7% treasuries and widespread business+ CRE blowups.

 

My 2c was that the real bottom was June, then the pump and dumpers took another shot at it in October because “ZOMG, did you hear him? HE SAID THERE WILL BE PAIN”, but that wasn’t as pure a capitulation as the tech bottom. All the ponzi and SoftBank stuff signaled a real bottom in June. That stuff was the first to crack, so by the textbook that would have been the first to bottom.

Edited February 3, 2023 by Gregmal

[changegonnacome]

 

BLS Jobs Report and Non-Farm Payrolls:

 

As I've said before - in any economy you can give yourself all the nominal pay increases you want.....money is just pieces of paper......what you get to consume is what you produce......that is constrained by output & productivity growth.......changing the amount of paper money in circulation does not change the amount of goods and services......only the quoted price.........running wage growth way in excess of productivity growth like this gets you inflation excess of 2%.

 

Rate cuts in 2022 are now a fantasy......in fact, I think, that Powell/Fed are more likely now to raise expectations about the ultimate terminal rate at the next meeting & extend the horizon beyond 2023 into 2024 for how long they may have to hold it there.

 

Why does this matter about the bottom? It matters because if you look at market expectations or whats "in the price" right now its for rate cuts in H2 2023 & a soft landing......soft landing is TBC......but rate cuts are completely and utterly out the window IMO........ thats the future, not in market prices right now......higher for much much longer than is expected in light of what I expect to be US inflation persistently & stubbornly stuck above the Fed's target........driven by wage growth which is simply way too high for an economy with such poor productivity growth and completely and utterly inconsistent with 2% inflation.

 

 

 

Edited February 3, 2023 by changegonnacome

[Gregmal]

CNBC: Dow falls as jobs reports suggests Fed will keep hiking

 

Much like with Omicron over Thanksgiving 2021, theyre going to milk this til every last sucker gets fleeced. First, Dow is down 150 points...a rounding error and normal daily fluctuation. Second, blowout jobs show a healthy economy...that is good. Third, so what if the Fed does another 25-50 bps? Weren't folks just clamoring about the market expectation being 5-5.5 FF and how we are gonna go way beyond that? Or did that change already? Fourth, Feds job is dealing with inflation, not killing jobs for no reason....theres been zero link shown between inflation and jobs so far, and the academic wage price spiral theory is still just that.

[changegonnacome]

13 minutes ago, Gregmal said:

Third, so what if the Fed does another 25-50 bps?

 

So your saying the most important price in the economy - the price of money, interest rates....their level and duration of their stay at particular level....now IMO higher, for longer........what Buffet calls gravity..... doesn't really matter......

 

14 minutes ago, Gregmal said:

theres been zero link shown between inflation and jobs so far, and the academic wage price spiral theory is still just that.

 

Jobs/Wages/Income/Spending.........are ALL fundamentally the same thing as it pertains to the quantity of money in any economy......where do most people get their money from pray tell? the money tree or is it their wages? Answer is wages are the largest source of funds in the economy.............saying the wage-price spiral concept is an unproven academic theory..........is functionally the same as saying there is no link between the quantity of money and the price of goods. It's a bonkers to say it out loud and actually believe it.

[Gregmal]

7 minutes ago, changegonnacome said:

So your saying the most important price in the economy - the price of money, interest rates....their level and duration of their stay at particular level....now IMO higher, for longer........what Buffet calls gravity..... doesn't really matter......

Vs what’s priced in? Nope. Doesn’t matter at all.

 

Its why so many continue to sit here and scratch their heads as valuations rebound. Because last years declines priced in a whole lot worse. We are seeing the bid/ask in terms of most probably outcomes narrow big time.

Edited February 3, 2023 by Gregmal

[Gregmal]

8 minutes ago, changegonnacome said:

Jobs/Wages/Income/Spending.........are ALL fundamentally the same thing as it pertains to the quantity of money in any economy......where do most people get their money from pray tell? the money tree or is it their wages? Answer is wages are the largest source of funds in the economy.............saying the wage-price spiral concept is an unproven academic theory..........is functionally the same as saying there is no link between the quantity of money and the price of goods. It's a bonkers to say it out loud and actually believe it.

And then Japan or pre COVID USA pops up and says Hi, welcome to the real world. 

[tede02]

All the bond guys say the Fed isn't going to make it to 5%. Will be interesting to see if they exceed that level and market response. I feel like we're in for one more run up in long-rates before this hiking cycle is over. But this is total conjecture on my part. 

[Gregmal]

Think equations. We had what? 4-5 or whatever 75 bps hikes and a 50. We re at 25 now. 1,2,3,4 more 25 IMO aren’t a big deal because either way we are like 90-95% through the hike cycle. People can already start seeing the other side of things, so they’ll pay up more than they would have last year when most people were at best just guessing and many could still say we are gonna see hikes to 7-8%. Now those people are outed as the scumbag manipulators or total loonies that they are. Simply put, we have a sane bid/ask in terms of outcomes.

[Spooky]

19 hours ago, Parsad said:

Funny thing is that when I was sitting on the beach sucking back a mai tai watching the whales pop up once in a while, what Powell did was completely irrelevant to me...emotionally, financially and physically.  We pay WAY to much attention to the noise!  Just do what you do and keep doing it.  In the meantime, suck back on a delicious mai tai!  Cheers!

 

Wise words! Agree, need to cut out the noise and think long term.

[Gregmal]

Everyone knows the scoundrels I’m referring to. Mainly hedge fund guys and macro traders. The formula was so obvious.

1)Scream to anyone who would listen about the necessity of rate hikes (while shorting the market and buying 4-5% bonds lol). No conflict or agenda there!
 

2)Claim the Fed MUST do this. It’s an issue of ethics and national stability…LOL

 

3)Deliberately and dishonestly point to current CPI as the metric to determine inflation and where rates need to be raised to.
 

4)Quote the 70s stuff and unproven academic theory that doesn’t exist today but sounds scary

 

This game is dead and those folks deserve to get buried.

[Spekulatius]

What is the assumed trajectory of the Fed interest rates here. another 0.25% raise in March and then keep them for the remainder of 2023 there , would be my guess.

 

I do think the futures imply that rates are going to be lowered later this year? I don’t think that’s going to happen.