Anybody Buying Yet? Where’s the Bottom?

[FREAK]

think it's worth taking a nibble on Hanes Brands?

gotta assume they'll rebound at some point. given their 2023 outlook might be worth holding out a little longer.

I’m going all in!

 

[TOGIE]

I’m going all in!

I’ve officially nibbled, even come back for some seconds.

 

[SAJ-99]

I’ve officially nibbled, even come back for some seconds.

Market for the Beefy T looks a little weaker than they expected.

 

[BigHornRam]

So... You think DFLI has hope?

I think it's a good business. Doubtful the stock will be a money maker anytime soon, however.

 

[SAJ-99]

Went long precious metals today in small option position. Looking for bounce back to 50da MA. Need interest rates to come down or at least moderate a bit.

 

[CorkyM]

Someone enlighten me please, as I am not well versed in the FED’S decisions or this interest rate hike to help drive down inflation. Is Powell doing the right thing and will it help in the long run? It seems like all he is doing is raising the interest rate and screwing up everyone‘s 401K and their stock portfolio. But they say with the higher rate you get more interest on a portfolio, if it means anything. But for the time being like today, every time they say that rates will continue to climb for the foreseeable future, the market takes a dive. And if you are someone who is not buying, then it seems like he doesn’t know what he is doing.

 

[TOGIE]

Someone enlighten me please, as I am not well versed in the FEDS decisions or this interest rate hike to help drive down inflation. Is Powell doing the right thing and will it help in the long run? It seems like all he is doing is raising the interest rate and screwing up everyone‘s 401K and their stock portfolio. But they say with the higher rate you get more interest on a portfolio, if it means anything. But for the time being like today, every time they say that rates will continue to climb for the foreseeable future, the market takes a dive. And if you are someone who is not buying, then it seems like he doesn’t know what he is doing.

is he doing the right thing?

i dunno, he's just kinda doing what he has to do. i think there are myriad philosophies and debates to be had on inflation, what even is it and why does it happen to how much inflation is good? and really how sensitive is inflation to fed rates, and if it's all just kids playing in a sandbox at the end of it all.

heck if i know.

SAJ will have some good insight. but without putting some cold water on the money supply and overall demand via rates, we'd likely be more upset with the eventual outcome to our portfolios and more importantly, our livelihoods than what higher rates are and will likely do.

again, heck if i know though.

 

[Mallardsx2]

If everyone would have just weathered the storm through "covid" we wouldn't be in this mess.
But the reality is that most Americans don't have a nickel in their savings account to get them through any form of disaster.

Then everyone runs to the GOVT with their hand out. The govt prints money, gives it to people for "free", and here we sit.

Those "stimulus payments" are going to costs us 100-fold when it's all said and done.

All because most Americans are the most irresponsible people that have ever inhabited planet earth when it comes to money and savings.

Meanwhile, China is laughing the whole way to the bank.

I fear that covid hasn't taught us anything I see the same schmucks making the same financially stupid decisions.

Grrr.....

 

[rogerthat]

But the reality is that most Americans don't have a nickel in their savings account to get them through any form if disaster.

I don’t disagree with anything you said but the fact that the increased rates haven’t cooled off demand much speaks to how much savings people built up during the Covid lockdowns as well as how much govt spending got loaded into the hopper during the most irresponsible federal spending event in my lifetime.

Ps most of that money is still making its way out of the hopper and hence why interest rates need to keep going up

 

[SAJ-99]

Someone enlighten me please, as I am not well versed in the FED’S decisions or this interest rate hike to help drive down inflation. Is Powell doing the right thing and will it help in the long run? It seems like all he is doing is raising the interest rate and screwing up everyone‘s 401K and their stock portfolio. But they say with the higher rate you get more interest on a portfolio, if it means anything. But for the time being like today, every time they say that rates will continue to climb for the foreseeable future, the market takes a dive. And if you are someone who is not buying, then it seems like he doesn’t know what he is doing.

Think of interest rates as the price of money. The Fed controls the price that other banks can borrow from them at. Higher rates generally mean that any new project a company comes up with has a higher return hurdle. I.E, should the company build the new plant if the ROI is only 4% when it can just sit on the money and earn 5%? So, in theory, the economy slows because you have less money flowing into ideas with poor returns.

The stock market has held up very well. Maybe too well. It is still expensive at 18x forward estimates ($222/shr). If the Fed is trying to slow the economy, it is hard to argue you should pay an above average price for those earnings given they may not be all that stable.

You said "...every time they say that rates will continue to climb for the foreseeable future, the market takes a dive.". We need to be clear. He hasn't said that previously, although did today. He has been pretty consistent in saying that rates will need to STAY higher for longer. Bond market seems to be getting the message a little as the 2yr yield starts to creep nearer to 1yr. The yield curve has been messed up for a while (and still is a little).

The Fed's job is to take away the punch bowl when the party gets out of hand. No one like to see the party end (so it's always a "policy mistake") but it's the only way to bring inflation down. Today is a 1.3% drop. That is nothing. A minor blip. The focus will turn to the jobs report on Friday.

 

[SAJ-99]

Went long precious metals today in small option position. Looking for bounce back to 50da MA. Need interest rates to come down or at least moderate a bit.

Add this one to the "bad idea" pile.

 

[Mountain Man]

Those "stimulus payments" are going to costs us 100-fold when it's all said and done.

If the Fed had just kept the rate where it was instead of dropping it to 0% at the beginning of COVID, I think we would be in a much better place. They should have foreseen the impact of the stimulus payments and people shifting their spending to material goods since they couldn’t go anywhere or do anything. At the least, it was a major mistake to not start raising rates until as late as they did.

 

[Deleted member 28227]

If the Fed had just kept the rate where it was instead of dropping it to 0% at the beginning of COVID, I think we would be in a much better place. They should have foreseen the impact of the stimulus payments and people shifting their spending to material goods since they couldn’t go anywhere or do anything. At the least, it was a major mistake to not start raising rates until as late as they did.

This didn't age well...

https://www.nytimes.com/2019/09/11/business/economy/bonehead-trump-jay-powell.html

Trump says he doesn't like what the Fed is doing, central bank is going too fast in raising rates

"I think we don't have to go as fast," the president answered to a question about the Fed raising rates by CNBC from the south lawn of the White House.

www.cnbc.com

 

[SAJ-99]

If the Fed had just kept the rate where it was instead of dropping it to 0% at the beginning of COVID, I think we would be in a much better place. They should have foreseen the impact of the stimulus payments and people shifting their spending to material goods since they couldn’t go anywhere or do anything. At the least, it was a major mistake to not start raising rates until as late as they did.

No way to foresee any of that. Every country reacted differently at different times. It is unrealistic for anyone to see the supply shock. Measuring the response and its effectiveness is hard. Without the stimulus and checks we can assume a pretty deep recession. Extended Unemployment has a cost too.
I do agree they kept rates too low for too long and kept buying bonds well beyond the period that was still making an impact. But given where the economy and markets are right now, from me, Fed’s grade is a solid B, with obviously more work to do.

 

[Mountain Man]

No way to foresee any of that. Every country reacted differently at different times. It is unrealistic for anyone to see the supply shock. Measuring the response and its effectiveness is hard. Without the stimulus and checks we can assume a pretty deep recession. Extended Unemployment has a cost too.
I do agree they kept rates too low for too long and kept buying bonds well beyond the period that was still making an impact. But given where the economy and markets are right now, from me, Fed’s grade is a solid B, with obviously more work to do.

Seems like we mostly agree on things. I do disagree though that there was no way to foresee any of what happened. People were on lock down and flush with stimulus money. What did the Fed think they were going to do with all that extra cash and fewer expenses? Pay down debt…ha! Put it in savings…ha! People are going to spend when they can and if you aren’t allowed to travel or go out to eat because of a pandemic you are going on the internet to buy material goods. I don’t see how you can give the Fed a pass for getting caught off guard that inflation was going to rise.

 

[more_cowbell]

Someone probably already pointed this out, but don't forget in Jan 2021 Powell said they'd welcome some inflation.

“I’m much more worried about falling short of a complete recovery and losing people’s careers and lives that they built because they don’t get back to work in time,” Powell said. “I’m much more concerned about that than the possibility which exists of higher inflation. … Frankly, we’d welcome higher inflation.”

https://www.nasdaq.com/articles/fed-chair-powell:-wed-welcome-higher-inflation-2021-01-27

 

[Mountain Man]

I don’t remember that. Be careful what you wish for I guess. At the same time, I suppose the result is the preferred option of a deep recession. We may still end up in a recession, but it will be a slow bleed that doesn’t destroy people’s careers in one fell swoop.

 

[SAJ-99]

Seems like we mostly agree on things. I do disagree though that there was no way to foresee any of what happened. People were on lock down and flush with stimulus money. What did the Fed think they were going to do with all that extra cash and fewer expenses? Pay down debt…ha! Put it in savings…ha! People are going to spend when they can and if you aren’t allowed to travel or go out to eat because of a pandemic you are going on the internet to buy material goods. I don’t see how you can give the Fed a pass for getting caught off guard that inflation was going to rise.

Well, Monday Morning Quarterback is an easy job that everyone plays with complete confidence they are the best at it. I try to go back and think about the situation at the time and try to be honest in my criticism. When supply chains shut down, it makes sense to believe that the inflation would be transitory and come back to normal once things started back up. What we saw was that people dropped out of the labor force and production didn't get back to normal. We are still dealing with this. It is hard to figure out where all these people went. My criticism of the Fed would be they should have stopped buying bonds when banks said they aren't seeing the demand for loans and can't use the money (mid-2021).

Here is today's JOLTS...
The January JOLTS report showed that hiring increased to 6.37 million from 6.25 million, layoffs surged to 1.72 million from 1.48 million, and quits dropped to 3.89 million from 4.09 million.

Still almost 2 jobs for every unemployed person.

Someone probably already pointed this out, but don't forget in Jan 2021 Powell said they'd welcome some inflation.

For the last decade the Fed has tried to get inflation UP to its 2% target. So yeah, I can see where that comment came from.

Conclusion: Monetary policy on a $25Trillion, dynamic and multi-faceted economy is f**king hard. Even more so when you are tied into the global economy and all the changes that might affect the US. Especially hard when people are all using different things to grade you, like unemployment, stock prices, savings rates, b borrowing rates, Etc.

 

[more_cowbell]

Perhaps the mid 2021 Federal money printing wasn't accounted for either. Now Fed needs to get that unemployment rate up. In my line of work I'm hearing of more and more small businesses not having cash to operate, so that will shave off a few jobs in the aggregate.

 

[rogerthat]

So is there a scenario where unemployment stays super low near current levels and inflation comes down? That’s probably what the best case scenario would be but is that even possible?