Bear market rally #4?

Investment Analysis Clubs Where Angels Fear to Tread
21

I note some big winners on the day:

PATH, FSLY, AMC, MTTR, RBLX, MGNI, GME, NFLX, OLO, ROKU…hmmm.

A poem about fake rallies, sh?tcoins, and junk stocks

Walked out into the rays of the sun
Rallying hard, today will be fun
the future is bright, ignore the bears
they live in the past, surrounded by fear

Elon and crypto, won’t let me down
detractors are fools, obviously clowns
you only live once, all the chips in
hurry and go long, if you want to win

Years from now, we will fondly look back
all my gains piled up in a prodigious stack
my women get thinner as I get fatter
Cause I always knew - valuation don’t matter

Yeah it isn’t very good.
Neither is the premise.

I am sure it will all end well.

Dreamer

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22

My personal theory is that the Fed will continue pushing rates until people stop saying this. It’s possible, yes but I think unlikely. Inflation follows moves like these by six months to a year - if everything goes perfectly, which never happens. We will be diddling and waiting through the year and maybe try to get back on the horse next year,’

My other theory is that 2% is perfection, and if they get to 3% they’re will be thrilled,throw a party, announce victory, and never be heard from again,.

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23

while the above was/is true, I believe, I think we popped so hard, and enough actual finance people were so annoyed, that enough news/soundbites started filtering into the twitterverse and likely tv-land about how this only “looks like QE but isn’t really QE” so anyone getting bullish based on the liquidity injection may be chasing a top that already topped.

Either way, expect McChoppyFest to continue, but think the initial concern about a huge BMR may have been overstated.

We will see.
This market is a crumbled up ball of aluminum foil. You can try and smooth it out by hand all you want, but all the lines will remain. Eventually the music stops and you behind is hitting the ground.

I would do more pointless analogies, but it is Friday! Go enjoy the weekend all.

Dreamer

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24

5-year Breakeven Inflation Rate.

I am sure that we all wake up every day and go straight to the computer to look for the daily 5-year Breakeven Inflation Rate. I know I do. (sarcasm emoji here).

I am on the Stock Market Nerd emailing list. I usually scan the weekly reports and next-to-the-bottom I read this:

5-year breakeven inflation is rapidly plummeting towards 2%.

Google-time! Good or bad? And what the heck is it?

" What is a 5 Year breakeven inflation rate?

“The 5 Year TIPS/Treasury Breakeven Rate is calculated as the difference between the 5 year treasury rate and the 5 year treasury inflation-indexed security rate. Market participants use this value as what they believe the expected inflation should be in the next 5 years, on average.”

So if the average inflation rate over the next 5 years actually does come in at 2%, is that good or bad? 2% is obviously great. Back up the truck!!! But is that consistent with the Fed continuing up to, say, 5.5%. Can we get there or 6% and what would it take to get a 5-year average back down to 2%? If that is really expectation, then why is the market in such a dour mood? Is this just one side of a tug of war that is causing these rallies that cannot be sustained? The choppiness that Dreamer bemoans?

The Nerd continued:

January inflation data stunk. February inflation data has been ideal. Not only was the CPI largely in-line with the PPI very cool vs. expectations, but that progress should continue. Backward looking rent inflation is the source of the still elevated readings. Owner equivalent rent, Apartment List’s rent index and the tanking Truflation reading all point to that inflation falling in real-time. Add to that cratering energy prices and diminishing monetary velocity via banking fragility, and the disinflationary trend is fully back.

Realliy?

Nerd’s conclusion:

“The Fed finally broke something. Time to adjust. As they adjust, monetary policy should get easier, liquidity should get more favorable and long duration assets like growth stocks should fare better. Not in linear fashion… but over time with many fits and starts. We shall see.”.

Not in linear fashion, many fits and starts. Once (if and when) the narrative becomes “the disinflationary trend is fully back”, the market will be off to the races. And of course the narrative will change quite some time before the reality arrives. When does the narrative change, Papa Smurf?
Are we there yet? Can I grasp that straw?. If I look through it, is that light at the end of the tunnel that I see? Any green shoots in the Midwest, folks?

Don’t know, but this is the first data point that I have seen that points in the direction of good inflation “news” or expectations or delusion.

Strap in. Another Monday.

Sort of a PS. Editing to add this. I think it does not require subscription. Dark Forest: The Brutal Game of Modern Banking - Epsilon Theory

KC

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25

I love how it only takes one UP day for narrative everywhere to be “we are mooning!” by the Long-Only-Bros aka LOBs.

Those poor LOBs.
With leadership today from the likes of UPST, ROKU, OLO, ORGN, AFRM, IONQ, U, PATH, AI…I mean…wow…that was a pantheon of legends I just rattled off there.

This rally is surely start of new bull market!

Yep…nothing to worry about here. Solid foundation for growth!

Blocks Wrecked GIF - Blocks Wrecked Fail GIFs

Dreamer

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26

Blast off! folks.

Nope, no volume on most stocks.

I had another +20%, though. ENVX, +21.4% and then another +1.5% AH. 3 times average volume on that one. Then PVH gave back only 3% “the morning after” its +20% pop. Then there was STEM which opened at down 20%. New 12-month low. Dip City, dudes!. Doubled down! End of the session down only 10.4% on nine times average volume… Actually made a few bucks.

Here’s the Insider secret for the day’s performance. Singapore import prices and PPI down 4.4% Y-o-Y. You do follow that closely, don’t you? Jobless claims Thursday coming up, and THREE Fed presidents speaking. I love “investing”.

Up 0.2981% YTD. 16% cash, 2% treasuries.

KC

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27

My view is that the market will keep going up as the fed stops raising rates, which has been the pattern since the 70’s. Retail investors think that no more hikes mean good news as inflation is falling. The FED then keeps rates high for too long until the economy suffers and then the markets crash. It will become obvious that they should have focused on the economy instead of inflation. We should have listened to the bond market that was warning about recession.

BTW I think the FED has one more hike. When the 2 year falls under the FED funds rate it means the FED is about to pivot and stopping rate hikes.

We shall see!

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28

From what i can see, once Fed pivots, typically due to needing to counteract the recession they cause, markets tend to fall further.

So I think it is sort of a false narrative that everything will be fine once they stop raising rates.

Because the markets have gone up since 2022 bottoms, for months now, despite Fed continuing to raise rates.

So the logic doesnt really hold up.

Recession is the king of indicators…stocks should plummet further.

Just my take/gut.

Dreamer

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29

Well, not much of an upward bias toward risk on. Econ news was suitably bad, which should be stock market good. ADP private sector employment report up 145,000 versus consensus 205,000. Manufacturing data was down. But, everything just pukey so far first hour.

Pukey, but not down enough to trigger a buy. Well, I did buy a sliver of a sliver of one of my latest Bert stocks. Kind of a defiant gesture to Mr. Market.

KC

30

I guess I could buy all of Saul stocks right now, in same proportion, and immediately be doing 7% better than him. Hmmm.

I’ll wait.

Dreamer

31

Playbook for a Fed Pivot: Exploring Equity and Fixed Income Market Performance.

Snip:

  • We found the S&P 500 historically trades lower into a Fed pivot by around 2% on average, based on a six-month lookback of pre-pivot performance. However, S&P 500 returns after a Fed pivot appear much more promising. The average peak return for the market has been around 17% across a 12-month timeframe. If you factor in the fed funds futures timeline of a May or June peak in the terminal rate, you could see around an 11% second half rally on the S&P 500 (based on six-month average returns).
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32

people find data / commentary to suit their narrative.
how about some facts:

  • Less than a year into the dot-com bubble bursting, on Jan. 3, 2001, the Fed began an easing cycle that would see the federal funds rate move from 6.5% to 1.75% in about 11 months. However, it took until Oct. 9, 2002, before the stock market reached its nadir. That’s a 645-calendar-day wait from initial decrease to actual bottom.

  • As the financial crisis began to take shape, the nation’s central bank reduced the federal funds rate from 5.25% to an eventual range of 0%-0.25%. Though this rate-cutting began on Sept. 18, 2007, the stock market didn’t bottom out until March 9, 2009, or 538 calendar days later.

  • The Fed, once again, began cutting its federal funds target rate on July 31, 2019, with this easing cycle taking rates from a range of 2%-2.25% back to 0%-0.25%. With the coronavirus crash hitting its bottom on March 23, 2020, we’re talking about a 236-calendar-day difference between initial rate cut and actual market bottom.

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33

Really? That seemed unnecessarily personal - and completely unsupported.

The data you quote is not relevant to the topic. The pivot happens when they change behavior. In other words, when they stop tightening credit and move to neutral, not when they do a full 180 and start to loosen credit. To use your timeline above, that happened in Jun 2006. How did the market perform over the following year? Up about 18%.

Rate cuts are something entirely different. You appear to be incorrectly conflating pivots and rate cuts.

https://www.forbes.com/advisor/investing/fed-pivot/#:~:text=They%20don’t%20necessarily%20need,be%20considered%20a%20Fed%20pivot.

Snip:
They don’t necessarily need to switch from raising rates to cutting rates for a Fed pivot. In today’s economic environment, simply switching to smaller rate hikes or even pausing rate increases could be considered a Fed pivot.

Snip:
We define a policy pivot as simply the end of a rate hike period marked by when the fed funds rate peaked, and not necessarily a shift in policy.

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34

This is about as silly as when Clinton said “it depends what your definition of ‘is’ is”.

By pivot, I mean rate cuts.

Pivot definition from the internet, which is never wrong (when I use it):
(especially in a business context) completely change the way in which one does something.

Pausing rate hikes doesn’t meet that definition, to me.
Going from rate hikes to rate cuts does meet that definition, to me.

Plus, here is the order things would occur:

Rate hikes.
Stop hiking rates.
Do nothing for random amount of time
Cut rates

Either way, the “cut rates” part, as shown by actual data from 3 major market downturns since 2000, shows the market goes down further.

Will it be a perfect straight line? No…I am sure there will be plenty of BMRs.

But it is likely still going down.

This isn’t a safe space. We are allowed to challenge or disagree.
You know…like how college used to be.

Dreamer <— GenX, has no time for coddling.

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35

My sliver of a sliver rebounded so made 6.5% on the sliver of a sliver. That stock till down 7.5% for the day. Do the math. Buy the dip.

UPST up 4.5% for the day. Bounced off a low at 11 a.m. kind’a linearly up to EoS. No news. Volume only 20% above average.

Have to think about trading or options strategy. Obviously, I have been protecting against a rapid rebound and the psych of buying above the recent lows. I can use the cash for one or two weekly options, or I can sell calls against a similar value of a full position. Or I can trade an amount. Or one of each. Or, … buy an index and spend more time with the dog.

Poor dog. She spent hour and a half barking and barking last Friday/Saturday night/morning and we didn’t pay attention Well, not sure we even heard. Video cam shows her waking up and sounding the alarm. Burgled. All 25 Rhode Island Reds carried off. 60 to 70 kilos. Whatever eggs we had in pantry went into incubator. Might get a few chicks.

KC

36

You were hoarding 25 Russians from Rhode Island?
We need context, KC…context!

Dreamer

37

rhode_island_red
rhode_island_red800×534 161 KB

They were KGB that were targeting the US Naval Undersea Warfare Center in Newport R.I. They wanted to defect. Good disguise, no? Not very smart. Keeping them is chicken feed (plus a jug of tuba every couple of days. You know, those Russians…).

I think that they do know when the Fed will pivot, but I didn’t get it out of them, now they’re gone. To bad, so sad.

KC

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38

Personal question

How many eggs do you eat each week?

Also,
And did your 25 hens produce more eggs than your family could eat? What did you do with excess eggs?

You could have a lifestyle blog - think about it
(or maybe you already do - send link)

39

Mostly,

My 25 chickens were of two different age groups. I had eleven that were 2-1/2 to 3 years old. 9 hens, two roosters. These were ready to go 100% free range as 3 Php/day feed and Php9 per egg. Cheaper to buy. Only a hobby but still going below breakeven. The other 14 were just starting to lay eggs. Two batches, 4 weeks apart. 9 hens, 4 roos. I was up/down to 9 eggs a day total produced. I am not consistent in my egg consumption. An egg a day average, I guess. My protein is fish, egg, and some plant sources. No problem disposing of eggs here. At peak production we could sell a few.

No lifestyle blog. We already have too much celebrity/notoriety.

KC

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40

I recently rediscovered a childhood food love…using “Keto” bread from Costco that is basically just lower-carb, along with sugar-free syrup, I started making French Toast again. Usually 2 eggs for 4 pieces of bread, and add in a bit of cinnamon and skim milk as I whisk up the eggs.

Nothing glamorous but was some good nostalgic grub for me.
I do like poached eggs and toast, too. But I try to limit it to 2 eggs/day.

I have a weird version of grilled cheese I do with side of salsa and green chilis to dip them in. Using olive oil to grill them.

Most people would hate my diet. I tend to be streaky and eat same things for many weeks until I get bored of it and then I rotate to something else.

I was having the hardest time losing weight, but being 50 I was kind of pushing back on having a spartan diet to force the weight loss…c’mon…I want to eat what I want, within reason! Intermittent fasting was typically a bit gimmicky to me, but I have been doing it about 2 weeks now and finally seeing some weight loss without any real change to diet.

I wasn’t a huge morning eater, so it isnt hard for me to wait until 10:30-11am to eat. I am also trying to workout in morning to help kill the time before I get to eat and also to force body to burn some fat in fasting state. Trying to stop eating 6:30-7pm. I think that is actually manageable for me…will see.

Dreamer

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