US Economic News

To be precise in your wording below, "See storms and train wrecks coming..."

If you have been averaging in 2022 I dont think you made money as of now. But if you have bought in 2020 yes. heck if you have bought nasdaq (index not stock which >3/4 dot coms didn't make it, and probably add to this discussion) during dot com peak you would have made money (non inflation adjusted) but probably not that impressive CAGR. Equities is always about your timeline hence also your CAGR... that's why marketing / academics can always shift the timeline to show what they wanna show

Obviously I've always shown in VB that I am not an avid believer of buy-and-hold regardless. I think Asset Allocation including cash allocation is important. As Keynes famously said: "When the facts change, I change my mind -what do you do, sir?" When long term macros and long term companies fundamentals change for whatever reasons and are not short term noise, you can choose to act on it or live on an ideal. Doing nothing and ready to average down is one possible action. Doing nothing up and down is probably not what I would recommend. There's a difference.

We always focus on Buffett's core holdings but in recent years he has not held onto some stocks he bought for not very long either.

(14-04-2023, 08:46 PM)Wildreamz Wrote:

(14-04-2023, 06:44 PM)specuvestor Wrote: All the time. See the yield curve when Powell declared inflation as transitory. Or how SPAC spiked and crashed all within 18 months and other euphorias.

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You will never know when a bubble will pop; but I'm pretty sure if you are experienced enough you can identify a bubble.

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I see. Seeing storms and train wrecks not adequately discounted by market all the time, but don't know when bubble will pop.

Kinda reminds me of Jeremy Grantham.

It's definitely a valid opinion. But I'm not sure how to action upon that. It's also not a world view that I am accustomed to.

I generally see possibilities and a reason to be bullish all the time. It's just personally a more aspirational way to live my life and guide my decisions.

Edit: Also, as you said, tech has deflated and is recovering right? Implying that everyone that stayed invested in QQQ/SPY before 2021 (even during Covid corrections) has outperformed fearing a correction/storm/train-wreck all the time (being not invested in the market) isn't it? Seems to justify a long-term buy and hold mindset.

It's a bit contradictory in your philosophy that you can find bargains in a market that you can't outsmart. Like I mentioned value investors generally don't subscribe to perfect market thesis. Buffett certainly think Mr market borders crazy / irrational.

(16-04-2023, 12:57 PM)Wildreamz Wrote:

(15-04-2023, 11:10 AM)weijian Wrote: Been binary means one is ready to overweight/underweight their cash positions according to the seasons, rather than all in or all out situations.

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On this, personally, overweight and underweight decisions are the result of being able/not able to find interesting bargains in the market, and not macro-predictions, which I don't think I'm able to outsmart the market.

I can't outsmart market by timing macro and predicting sentiment (in SPY/QQQ before everyone realize market about to go hyperbolic, out SPY/QQQ before everyone realize there is a crisis looming that is going to take down the entire market etc.). 

But if there is an opportunity somewhere in an extraordinary company (e.g., Apple at PE 10 in 2016), I would love to take the risk to bet on them long term. After which, cash will naturally build up due to cash flow (salary, dividends etc.), but the same opportunity may no longer be there.

A good watch on US banks


Fed Downplays Bank Crisis As Another Bank Teeters (PacWest) | Jim Bianco
https://m.youtube.com/watch?v=Zp6T0-DDJQo

'23.06.13【豐富│東南西北龍鳳配】Pt.2 「新華盛頓共識」到底是啥？
https://m.youtube.com/watch?v=5mN-Y9p0uGA&t=3s

https://twitter.com/AyeshaTariq/status/1...4124616705


Investor Resilience or In Denial: A Look Back at the First Half of 2023
https://m.youtube.com/watch?v=lp7D1fwjCB...bmlhbCA%3D

If headline CPI is not enough, PCE is also up 3% YoY. US interest rate has peaked in my view and Powell has done well this time placating the doves by symbolic pausing and the hawks by another hike yesterday. I think a mild recession is still coming rather than a soft landing with ~12 months interest hike lag while the market has already factored in hikes peaking -12 months forward when US market double bottomed in June and Sept 2022.

If mild recession really comes sometime 2H23, I think the Fed will blink cause inflation will reach <2% by end of year rather than 3% end of year as Fed forecasted early this year

“A separate report showed the Fed’s preferred inflation gauge, the personal consumption expenditures price index, rose 3% from a year earlier in June, the smallest increase in more than two years. Core prices — which exclude food and energy and are regarded as a more reliable signal of underlying inflation — advanced by a less-than-expected 4.1%, also the least since 2021.”

(13-04-2023, 10:15 AM)specuvestor Wrote: US real interest rate is more or less zero now and I expect the real interest rate to go to 2% by end of the year. Mild recession that the market is expecting since last year is probably around the corner which will challenge the Fed whether to keep to 2% real rates.

How would we position or VB follows Buffett not going to second guess interest rates?


(Bloomberg Economics)
OUR TAKE: Headline CPI inflation that came in slightly below expectations in March will provide a bit of relief for the Fed. But still-elevated core prices show inflation remains sticky, and recent OPEC+ production cuts suggest the good news on headline inflation is likely to be short-lived. 
Shelter should provide a strong disinflationary push over the summer. Even so, given ongoing strength in the labor market and the OPEC+ cuts — as well as pressure from labor-intensive services industries — we expect the FOMC to hike rates by another 25 basis points when it meets next month.
Headline CPI rose 0.1% in March — down from 0.4% in February — slightly below our and the consensus expectation of 0.2%. Year over year, headline CPI rose 5.0% (vs. 6.0% in February), also slightly below our and the consensus forecast of 5.1%.
Core prices rose 0.4% month on month and 5.6% in year-on-year terms, compared to 0.5% and 5.5%, respectively, in February. Both core figures matched our and the consensus forecasts. This was the first time year-over-year core was higher than the headline since January 2021, suggesting the Fed will need to maintain a higher-for-longer posture to sustainably rein in inflation.
Core-goods prices ticked up 0.2% in March (vs. 0.0% in February), and the year-over-year rise (1.5%) was the fastest since December. Prices of new vehicles rose 0.4%, while prices of used cars and trucks dropped 0.9%.
Core services rose 0.4% in March, and the year-over-year rate of 7.1% — while still elevated — was the smallest increase since December. The increase in core services comes mainly from shelter prices, which rose 0.6% over the month and 8.2% over the past year.
CPI inflation remains elevated for core services ex-housing, with prices rising 5.8% year on year. The data indicate ongoing price pressure in labor-intensive services industries, suggesting the Fed will need to cool the labor market to get inflation under control.

(12-01-2023, 09:41 PM)specuvestor Wrote: December CPI came in at 6.5% vs my expectation of 5-5.9% by Dec22. The fluke Aug CPI disrupted the trend and the Fed had hiked more than I expected (fed funds rate to peak 4.5-5%)

Nonetheless it looks like the Fed rates will peak around 5-5.25%. That means Real interest rate will be about zero by April ie CPI to decline to 5% and real interest rate will be 1-2% by August ie CPI will go below 4% by Aug assuming Fed Fund rates maintain at 5-5.25% level

The key would then be if the Fed will cut rates in 3Q, faster than what they indicated and possibly in the face of recession. This is the roadmap I am seeing. Who will blink first?

(29-07-2022, 11:18 AM)specuvestor Wrote: Bearish if CPI is 5-6% end of the year. How full is your glass

Looks like it will be 50bp hike in Sept and 25bp in Nov vs my hope of 50 in July and 25 in Sep for soft landing scenario. Mild recession in 2Q or 3Q should be expected now rather than soft landing. CPI will be below 2% by then. Million dollar question is whether market forecasts this 12 months ahead with the 20-33% decline

(Bloomberg) -- Two bond market giants are diverging on whether the Federal Reserve is doing enough to tame inflation in the aftermath of the central bank’s interest-rate increase on Wednesday.
In one corner, there’s Scott Minerd, the chief investment officer of Guggenheim Partners, which oversees more than $325 billion. He said the Fed’s guidance that it will likely move more slowly through the rest of the year won’t help bring down price growth. He sees inflation ending at still-hot levels this year at between 5% and 6% -- well above the central bank’s target. 
DoubleLine Capital CIO Jeffrey Gundlach, by contrast, said this week’s unanimous decision to raise its benchmark lending rate by another 75 basis points means the Fed is no longer “behind the curve.”

(28-06-2022, 01:13 PM)specuvestor Wrote: ^^ I think it will trend towards 5% by year end but will it be 5.1% or 5.9% I'm not sure. I try to be roughly right than precisely wrong. Inflation is a lagging indicator: the conundrum of low inflation despite QE has come roaring back with Biden's fiscal package when supply chain was tight. this >8% has roots a year ago. PS on gold context do note that Bretton Wood ended in 1971.

I don't think we will go QT again within next 12 months but Burry's view is inline with what I'm thinking as well. If Fed is credible I suspect they should pause or reduce to 25bp hike by September. Powell doesn't have a good track record though

https://www.investing.com/news/stock-mar...SI-2841333

(27-06-2022, 04:12 PM)specuvestor Wrote: Market corrected sharply on 75bp hike and if July Fed hikes 50bp, market will already be relieved, but still an uphill as we stare at 2Q23 recession.

Freight rates and hard commodity are already coming off. Watch 29th June PCE and June CPI numbers that if it comes off the central thesis remains, except no idea whether Fed will gen-chiong even with CPI trending towards 5% by end of year.

Expected July 2023 CPI - 3.37%
Expected July 2023 core CPI - 4.92%

https://www.clevelandfed.org/indicators-...nowcasting

June 2023 CPI - 3%
July 2023 CPI - 4.8%

Why up??? Base effect plus oil and commodities are going up again....

https://m.youtube.com/watch?v=eHgm6RbBtaQ&t=4s

June 2023 CPI - 3%
July 2023 CPI - 4.8%

Expected July 2023 CPI - 3.42%
Expected July 2023 core CPI - 4.92%


Expected August 2023 CPI - 3.92
Expected August 2023 CPI - 4.75


As of 2nd August...
https://www.clevelandfed.org/indicators-...nowcasting

I have followed cleveland Fed for a while and though the trend might be correct but the figures not so. Let's see the next few months for the record

July CPI 3.2%
July Core CPI 4.7%

As of 13 Aug Cleveland Fed expecting
Aug CPI 3.8%
Aug Core CPI 4.5%

Jul PCE 3.2%
Jul Core PCE 4.2%
Aug PCE 3.6%
Aug Core PCE 4%

(02-08-2023, 05:39 PM)Behappyalways Wrote: June 2023 CPI - 3%
July 2023 CPI - 4.8%

Expected July 2023 CPI - 3.42%
Expected July 2023 core CPI - 4.92%


Expected August 2023 CPI - 3.92
Expected August 2023 CPI - 4.75


As of 2nd August...
https://www.clevelandfed.org/indicators-...nowcasting