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Thanks for the response Elroy. The recovery in REITs that Wall Street, CNBC, Seeking Alpha and others are predicting seems like wishful thinking. The other problem for REITs will begin when rates begin to fall. Everyone will pile into the bond market as rates continue down. All of that money is money not put into stocks, especially income producing stocks like REITS, utilities and LPs like oil pipelines. And bonds are only one leg of the massive credit market. Money that flowed into stocks during the TINA years, (there is no alternative), will find many other alternative investments.
If tech suffers along with the rest of the market and P/Es moderate there may come a time when piling into big tech will make a lot of sense for value investors. To my mind, today is not that day.
The one year SPX channel I posted last week has failed so now we're looking at the SPX 4,050 to 4,212 channel that held through April and May this year. We held just above that yesterday at 4,216 and so far have traded above that today. If you're bullish however, the trend is not your friend. Even O has fallen below $50 and now trending in a very narrow range. If the bulls give up I don't see much support until the mid $30s.
I've still not begun adding REITs back into my portfolio because I'm having a difficult time valuing them in a higher interest rate environment. Balance that uncertainty with one year CDs and treasuries that are currently trading at 5.7% and 5.45% respectively. Although I'm not ready to go out this far, a 5 year CD is now paying 5.6%. The Fed's higher for longer comment has really taken a jackhammer to the bond market.
An article in the WSJ this morning explained why home mortgage rates are so much higher than the 10-year treasury rate, (currently 4.8%). A standard 30 year mortgage is getting close to 8%. If you count points and fees it may already be there for many borrowers.
The answer: For the last 15 years or so the Fed has been expanding their balance sheet. Now that they, and banks have lessened exposure to mortgage backed securities by over $200B in the first half of 2023, other investors are required to pick up the slack. In a rising interest rate environment these investors demand a bigger spread to offset risk. According to the Journal, this spread should come back into a more normal range once investors are comfortable that interest rates have peaked.
I seemed to me that investors would want some exposure to an MBS based ETF but the dividend rates on ones mentioned below are quite low around 3-3.4%. Maybe someone else here can offer advice. This from Blackrock:
A smart conservative wonk like George Will who is in love with his intellect more than humanity? I've trust issues..:)
Great companies all work like that. When I managed a multi-year project for Chase in the late 90s I was interviewed by the three product managers who I'd be working with through the project. They knew the project goals inside-out. Every moment of the discussion was about our goals and how and when we'd meet them.
Before that I'd managed a similar project for a couple of years for Citi. When I came in for an interview at Citi, I was on stage in front of maybe 100 VPish level people who were mostly bored with the entire project and presentation. When I was done one of them came up to me and threated to destroy our software company if the project wasn't successful.
The lesson: On similar projects we were an annoyance to the team at Citi and a way to move forward at Chase and open new areas of business. Great companies always see problems as an opportunity to change and become more profitable. Citi stock is worth roughly 10% it's value 20 years ago and JPM about 7X. That seems about right.
Or a 1% Rayburn. Naw, just a non-Rayburn. An anti-Rayburn?
I've not had these issues but I was forced to upgrade a week ago. I see nothing useful in this upgrade from W10. I may wipe and go back to 10 as I had to do with 7 a couple times. MFST is counting on their new AI product to move the company forward. I suspect the OS may become the handmaiden. We'll see.
It's a good start and well done considering the opposition. I didn't follow this closely but given that there was a wallpaper of threatened lawsuits a few weeks ago this worked out well, Uncle Joe must have worked some of his a-little-for-you, a-little-for-me magic. Who knows what happened behind closed doors or if it's done. If it is done, no one wants to know what he gave up to make this happen.
Greatest speaker ever until he was railroaded and sent to prison.
I'm actually surprised it's only a one year difference. I suppose it's because people who work for a living stay in better shape but have less access to healthcare at their jobs.
McCarthy apparently has no friends. Dems are obviously flipping a coin to see if they can get someone they and moderate Republicans can work with. Trump finally has a gag order and will hopefully have more before he encourages one of his crazy followers to harm one or more of those involved in his prosecution. What a night.
This is a chickens coming home to roost issue. The Fed left overnight interest rates at functionally 0% and the 10-year note floated under 3% most of the time since the financial crisis, (recently as low as 1/2%-hence the slew of sub 3% mortgages). This made short term loans all but free.
With this as the background we cut taxes and increased spending. Now that the 10-year note has jumped up today to just under 4.8% and stocks are reeling. When the psychological barrier of 5% is broken, not only will short term treasuries be favored, so will long term treasuries.
And now Republicans are taking preliminary votes to remove McCarthy while Dems are all saying they don't trust him and won't vote to save him. This is also weighing on stocks as there will be no speaker. I think that leaves Patty Murray in 2nd succession position.
Just glad you weren't talking to me Nick..LOL!
Jim Cramer's investing club is a classic example of bad investing advice offered by the club leader. It borders on religion - maybe religion-lite. You don't believe the leader, just get out of the club.
All religions are, at their core, clubs of like-minded people. The difference between a truly religious club and other clubs is that they require their participants to not ask questions and just fall in line with the club's beliefs - none of which can be proven. Madoff Securities was an example of an investing club who's members participated using only belief in the leader as their prospectus.
I'll bet there are more people reading this board that actually read a prospectus and quarterly reports than there are on the next 100 Investor's Hub boards. I would exclude Dew's Rising Influence... board as it's quite thoughtful and informative. Most boards are run like the cheering section for a local sporting team, filled with lightly, to unsupported confidence and thoughtless rancor.
I'll avoid the political realm as it's too obvious to be worthy of discussion in this post.
As Elroy said, this contractor is spec'ing a substandard driveway. I'm on my 7th or 8th Silverado 1500. Nice write-off for the business as it meets the 6,000 lb. minimum. All Ford, Chevy, GM, RAM, Toyota full size pick-ups meet this standard. Same for all large SUVs. A friend of mine always drives a full size Range Rover for the same reason. Use another contractor.
I thought we might get a dead-cat bounce this morning but all we got was the dead cat.
Your argument is nicely laid out. If you're correct in your assessment, he's more Madoff and Holmes than dangerously inept and incompetent. His trial starts tomorrow.
Unfortunately, many people are governed by faith as it takes little to no work to accomplish, and not science, or at minimum a semi-rigorous scientific method to reach their conclusions. Charlatans of every stripe depend on this rather common human weakness. Some of them believe what they're saying, the current Pope is a good example and others are just grifters. SBF seems to be somewhere in-between.
Michael Lewis is one of my favorite non-fiction authors. Over the years I've suggested several book ideas here and directly to Mr. Lewis. He, as you might expect, doesn't listen to me. His new book, Going Infinite, is an investigation into flash billionaire Sam Bankman-Fried. Coming out Tuesday. This should be a fun read.
Blocking aid to Ukraine of course means they were able to do Russia's bidding. I'm sure there's some dark money headed their way. Roberts should be proud that he's made money speech. And since it's speech, and corporations are people, this money can have billions of secret conversations. Now we'll deal with these Quisling weasels again in 6 weeks.
Maybe? Better late than never? Possibly the House has passed a 45 day funding bill that the Senate will support and allow politicians to ignore the elephant in the room until mid-November. Or is that the elephant at Mar-a-Lago?
So how can we get people to work for as little as possible? This is not unlike what some states are doing with teaching. It's difficult to get a person with five-six years of education to work for under $50k a year. Solution? Undercut these money-grubbing thankless miscreants by changing the standards..:).
Of course this is exactly what the Reagan, et. al. crowd has wanted for over 40 years. Privatize education so we can "teach" American rug-rats for as little money as possible and pocket as much money as possible. It works really well in the health care system. Same model here.
Ha, ha, I just don't see him testifying against Putin but it would make some great TV.
None of us know a Georgia bail bondsman named Scott Hall but Mr. Hall just did a Watergate level flip. He's no longer a defendant he's a cooperating witness in the Fulton County case who is no longer going to jail, he's going to testify. Now there are 17 more defendants not named Donald Trump. What's the over-under on flipper count? Really reminds me of Watergate. If so, it's going to get a lot worse for the ex-pres. And unlike Nixon, he doesn't have a sweet deal with his VP for a pardon.
Kevin and the Crazy Caucus played the Biden impeachment chorus at the House Chamber. Apparently they were so unprepared that most of the backup band left the stage in embarrassment. As soon as they did Democrats began voting to subpoena Rudy Giuliani. At least there was some entertainment as remaining Republicans had to call the backup band back for an encore to ensure Rudy, who dug up all the dirt on Hunter, did not show up and sing.
So much hope this morning and market disappointment this afternoon. The SPX is down over 5% for the month of September. As I noted at the beginning of the month, the last half of September is almost always worse than the first half and this year was no exception with over 2/3s of the downside happening after the 15th. It doesn't look to be much better in October unless McCarthy shows some backbone...yeah...it doesn't look good.
I think Google's position on the Level 3 vs. Level 4 is fairly well understood. Here are two, more complete, explanations. One assumes Google decided it was bad for business to simply say Americans are too dumb and self-absorbed to be trusted with Level 3.
From the article posted by semi_infinite:
Interesting article, thanks. We'll have to see how this works in the US. Who will be the first American to fall sound asleep on the Santa Monica Freeway and not wake up in 10 seconds? As Waymo has concluded, Americans will get "confused" by Level 3..:).
Support didn't hold on the SPX and it appears we're headed down to the 4,200 area. Same for O which got a nice bounce yesterday at the psychological support area of $50. It's broken down this afternoon and trading at $49.46 with a 6.12% dividend. MO is holding it's own even though they own ~200MM shares of BUD which has been struggling for a decade. UPRO is down more than a dollar and trading at $40.
Very rare for me.
He was. Biden is a student of US political history and he likely understands where we are in this long political cycle. I'll offer this story of the unfortunate WWI soldiers who protested in DC their delayed "bonus" for fighting during the war and the end of the previous fascist cycle in America. I believe this is the beginning of the end of this fascist cycle started by Reagan.
This story is republished here from that radical left group, the National Park Service..:).
Bonus Expeditionary Forces March on Washington
In the years after World War I, a long battle over providing a bonus payment to WWI veterans raged between Congress and the White House. Presidents Harding and Coolidge both vetoed early attempts to provide a bonus to WWI veterans. Congress overrode Coolidge’s veto in 1926, passing the World War Adjusted Compensation Act, otherwise known as the Bonus Act.
The act promised WWI veterans a bonus based on length of service between April 5, 1917 and July 1, 1919; $1 per day stateside and $1.25 per day overseas, with the payout capped at $500 for stateside veterans and $625* for overseas veterans. The catch was this bonus would not pay out until each veteran’s birthday in 1945, paying out to his estate if he should die before then. Although veterans were allowed to borrow against the bonus certificate beginning in 1927, by 1932, banks were short on credit to give.
In May 1932, jobless WWI veterans organized a group called the “Bonus Expeditionary Forces” (BEF) to march on Washington, DC. Suffering and desperate, the BEF’s goal was to get the bonus payment now, when they really needed the money. Led by Walter W. Walters, the veterans set up camps and occupied buildings in various locations in Washington, DC. The largest camp was a shantytown on the Anacostia Flats, across the river from Washington’s Navy Yard.
By summer, at least 20,000 people had joined the camps, with some estimates putting the total number above 40,000. Many were joined by their families. But the camps attracted an undesirable element as well. President Hoover later claimed “the march was largely organized and promoted by the Communists, and included a large number of hoodlums and ex-convicts bent on raising a public disturbance.” Using scrap wood and other salvaged materials, the protesters constructed a vast field of shacks in view of the Capitol dome, prepared for a siege of Congress.
Taking up the veterans’ cause, Congressman Wright Patman (D-TX) - himself a WWI veteran - sponsored a bill that would immediately provide a $2.4 billion bonus payment to WWI veterans. During the debate over the bill on June 15, 1932, Congressman Edward Eslick (D-TN) was making an address on the floor of the House of Representatives when he suffered a heart attack and died. The House carried on with its business, though, and with hundreds of veterans cheering from the gallery, the House passed the bill that same day.
Republicans opposed the Patman bill mainly because it required the government to spend money it did not have in the treasury. The government was no exception to the hard times that had befallen the nation. Although the bill had passed in the House, the bill did not have the votes to pass in the Senate. The Senate voted down the bill on June 17. No immediate relief would be coming to the veterans. Even if the bill had passed the Senate, it most likely would have been vetoed by President Hoover, just as the bonus itself had been vetoed by Coolidge and Harding in the preceding years.
The bill had come to a vote and failed, but many in the Bonus Expeditionary Force refused to pack up and go home. Instead, they continued their occupation of the Anacostia Flats and vacant buildings in the District of Columbia into July.
On July 28, Attorney General William Mitchell ordered the DC police to remove the protesters from government property. At the time, about 50 protesters occupied buildings along Pennsylvania Avenue. When police arrived to move them out, a riot erupted, and police shot and killed two protesters. After that, the Army was called in to restore order.
General Douglas MacArthur led the Army troops, along with his aide Major Dwight D. Eisenhower and an able tank commander, Major George S. Patton.
Realty Income, (O), was trading down below $50 and yielding just over 6%. It's getting a little boost in the last half hour.
Known as Dimonisms. He's certainly correct often enough that people listen to him but as I've said before, Jamie talks his own book so it's sometimes difficult to know why he's making these statements. It could simply be that his brokerage guys are shorting the idea. It wouldn't be the first time he's veering to port while extoling the sunrise to starboard.
Clearly I don't see it but if UAW can get a 40% wage increase maybe it is a 1970s redo.
Biden spoke to striking UAW workers and backed a 40% pay increase. Ford shut down building of a battery plant in Michigan. Ford says the two are not related....It's OK to laugh out loud at that idea.
I have no dog in this fight as I don't know what unionized labor is making today but clearly the Big 3 aren't running their businesses well enough to absorb the cost while building out their "electric future" and still keep investors happy.
According to the Fed, the bottom 80% of income earners in the US have gone through all of their pandemic savings - and that was as of June. As I've been saying forever, Q1 2024 looks good for a recession.
Markets are just ugly today. The SPX is down 65 pts. or 1.5%.
The SPX failed to get back above the resistance area outlined yesterday and traders are more pessimistic this morning. The chart attached below is one I used during the Spring when the SPX was trading in a channel. The upper area in the 4,200 range should provide some support if we continue down. If one were a gambler and thinks this will be settled before midnight Saturday then backing up the truck with UPRO $41 calls, (currently $1.10), would be a good move. Of course you'd want to wait until Friday when the real hand wringing should start and UPRO might be down closer to $39.
One of my favorite quotes which should be a tag line one of these days is from Michael Burry: