Investing Thread

[Pakuni]

Analysts at Goldman Sachs are warning of diminished economic performance if former President Trump is elected and able to implement his agenda.
Trump's plans to crack down on immigration and impose new tariffs on Chinese goods will take a chunk out of gross domestic product (GDP) growth to the tune of a half percentage point in the second half of 2025 before rebounding in the following year, Goldman analysts predicted.
"We estimate that if Trump wins in a sweep or with divided government, the hit to growth from tariffs and tighter immigration policy would outweigh the positive fiscal impulse," they wrote in a Tuesday analysis.

https://thehill.com/business/4861677-goldman-sachs-trump-impact/

[Skatastrophy]

Looks like inflation dropped to ~2.5% so it's well under control. Good news! Inflation was indeed transitory post covid.

That means that the fed doesn't need to cut rates so much. So the market is down.

[rocky_warrior]

Looks like inflation dropped to ~2.5% so it's well under control. Good news! Inflation was indeed transitory post covid.

That means that the fed doesn't need to cut rates so much. So the market is down.

Right, this has been one of my "concerns" (not really a concern, but against people's assumptions).  If we really soft land with reasonable inflation, and reasonable job growth, the fed will just leave things alone.

That said, I think they'll cut a ¼ point here in sept.

[TSmith34, Inc.]

Right, this has been one of my "concerns" (not really a concern, but against people's assumptions).  If we really soft land with reasonable inflation, and reasonable job growth, the fed will just leave things alone.

That said, I think they'll cut a ¼ point here in sept.

We've been talking about a soft landing for like 18 months, are we not there already? If not, when would we officially land softly?

[tower912]

We haven't even been falling, so no need for a soft landing.

[SoCalEagle]

We've been talking about a soft landing for like 18 months, are we not there already? If not, when would we officially land softly?

Soft landing was completed as of last month when the Fed announced that the rate adjustment cycle is done and they will now be cutting rates. 

All is well. 

[rocket surgeon]

emerging from the "market correction" provided a nice buying opportunity for some of the obvious-

  nvidia, avgo, tsm, amd, amzn, gev

still butt hurt with pdd, dg, ccj, dnn and urg, as they took some big hits and seem slower to recover

gnrc is steadily climbing again.  ko and pepsi withstood the carnage and have advanced nicely

appl, meta, crm and msft are also recovering nicely

took advantage of new opportunity to get some mu which has a HUGE upside-anyone care to comment on micron technology?  yahoo analysis has a fairly large number of analysts showing strong buy(8) and buy(21) with an average price target of $157 and as high as mid $300's.  it presently sits at $90

[Hards Alumni]

emerging from the "market correction" provided a nice buying opportunity for some of the obvious-

  nvidia, avgo, tsm, amd, amzn, gev

still butt hurt with pdd, dg, ccj, dnn and urg, as they took some big hits and seem slower to recover

gnrc is steadily climbing again.  ko and pepsi withstood the carnage and have advanced nicely

appl, meta, crm and msft are also recovering nicely

took advantage of new opportunity to get some mu which has a HUGE upside-anyone care to comment on micron technology?  yahoo analysis has a fairly large number of analysts showing strong buy(8) and buy(21) with an average price target of $157 and as high as mid $300's.  it presently sits at $90

MU we agree, though I'm terrible at picking stocks, so ymmv.

[MU82]

took advantage of new opportunity to get some mu which has a HUGE upside-anyone care to comment on micron technology?  yahoo analysis has a fairly large number of analysts showing strong buy(8) and buy(21) with an average price target of $157 and as high as mid $300's.  it presently sits at $90

Semiconductors, generally, is a cyclical industry, prone to big rises and drops in stock prices. MU is as volatile as any of them, and some long-term, buy-and-holdish investors don't like to play with stocks like this.

Although I am that kind of investor and have generally avoided semis (I do have a little NVDA and AVGO), I have decided to play a little ... but only on my MU hoops fan terms.

So I have a limit order out there for 77 shares of MU at $77.77. We'll see if it hits!

[Skatastrophy]

MU's PE was hanging around 11 for a long time and I never pulled the trigger. US is getting their ass kicked in silicon, and chips are cyclical. I don't know enough to pull the trigger on anything in that industry, including NVDA. And I've been an NVDA customer for 20+ years.

[MU82]

With a Fed cut this week a sure thing, here's an interesting chart regarding market reaction after rate cuts:



In my reading the last week or so, the general consensus is that a .25 cut this week would be positive for the stock market, whereas a .50 cut could signal that a more panicky Fed feels the economy is under pressure and therefore could lead to a fall in stock prices.

[TSmith34, Inc.]

With a Fed cut this week a sure thing, here's an interesting chart regarding market reaction after rate cuts:



In my reading the last week or so, the general consensus is that a .25 cut this week would be positive for the stock market, whereas a .50 cut could signal that a more panicky Fed feels the economy is under pressure and therefore could lead to a fall in stock prices.

I would opine that it isn't the amount of the cut, it's where you are in the business cycle. In the case of the two negative return periods, in both cases the economy was in a steep nose dive and the cuts were an attempt to pull up. Don't think that is the case at this point in time.

[MU82]

I would opine that it isn't the amount of the cut, it's where you are in the business cycle. In the case of the two negative return periods, in both cases the economy was in a steep nose dive and the cuts were an attempt to pull up. Don't think that is the case at this point in time.

Excellent point.

I'm hoping for a .25 cut with Powell signaling that more .25 cuts are in the offing.

[rocky_warrior]

We've been talking about a soft landing for like 18 months, are we not there already? If not, when would we officially land softly?

We haven't even been falling, so no need for a soft landing.

Soft landing was completed as of last month when the Fed announced that the rate adjustment cycle is done and they will now be cutting rates. 

All is well. 

https://www.cnbc.com/2024/09/17/fed-to-cut-rates-by-a-quarter-point-with-a-soft-landing-expected-according-to-cnbc-fed-survey.html

[MU82]

From Seeking Alpha:

Before the opening bell, data from the U.S. Census Bureau showed retail sales edging up 0.1% M/M in August, compared to an expected fall of 0.3%. Core retail sales also climbed 0.1%, lagging the consensus of a rise of 0.3%.

The numbers indicated that consumer spending was still going strong, and did little to deter overall market expectations for an interest rate cut tomorrow.

"There are competing narratives about the state of the consumer at this stage of the cycle in which the Fed is poised to finally deliver on long-expected rate cuts. The question isn't will the Fed cut rates at the conclusion of tomorrow's monetary policy meeting, but by how much," Wells Fargo's Tim Quinlan said.

[rocky_warrior]

And I was wrong about the 1/4 point.  That wily fed going with a 1/2!

[MU82]

I thought it would be .25, too, although the buzz going into the day was it would be .50.

The "dot plot" is suggesting a total 1% cut this year, with either .25 at each of the final 2 meetings or .5 at one of the two.

At this point, the market seems neither overly excited nor overly disappointed by the news.

[Tortuga94]

A little surprised by the 50, thought it would be 25 too. I thought the market would freak out a little if they went 50 but looks like it's handling it pretty well as all the indexes are positive for now.
What I seem to have been right about, at least so far, is the rotation out of the mag 7, and large cap growth stocks into value, mid cap and small caps. I posted that a few months back.
Over the last 3 months, S&P 500 is up about 3%, meanwhile mid cap is up about 5.5%, large value is up 8, and small cap is up over 10%.
I still believe these sectors will do significantly better than just straight S&P 500 index. IF you want to invest in the index, maybe consider an equal weight S&P 500 index etf. For small and mid-caps you can also buy an etf, but I honestly prefer managed funds in those categories.

[Herman Cain]

Will be interesting to see what SOFR rates are tomorrow morning. They actually bumped up a little in today AM pricing .

Our borrowing lines are tied to SOFR so today's action at the Fed is very helpful to the bottom line in the coming year .

[TSmith34, Inc.]

A little surprised by the 50, thought it would be 25 too. I thought the market would freak out a little if they went 50 but looks like it's handling it pretty well as all the indexes are positive for now.
What I seem to have been right about, at least so far, is the rotation out of the mag 7, and large cap growth stocks into value, mid cap and small caps. I posted that a few months back.
Over the last 3 months, S&P 500 is up about 3%, meanwhile mid cap is up about 5.5%, large value is up 8, and small cap is up over 10%.
I still believe these sectors will do significantly better than just straight S&P 500 index. IF you want to invest in the index, maybe consider an equal weight S&P 500 index etf. For small and mid-caps you can also buy an etf, but I honestly prefer managed funds in those categories.

All my assets are split evenly between DJT and World Liberty Financial

[SoCalEagle]

And I was wrong about the 1/4 point.  That wily fed going with a 1/2!

After the Fed's comments today, the market may be expecting ANOTHER 50 basis point cut later this year. 

In other news, I heard an analyst speculate that the Fed didn't even need to increase rates AT ALL during the last couple of years.  His rationale is that inflation was caused by post COVID supply chain disruptions, not by anything to do with things the Fed can control like rates / gdp / employment.  Therefore, raising rates was a waste of time and may have worked against the economy unnecessarily.  After supply chains normalized, inflation starting falling "on it's own" and have been doing so ever since. 

Another analyst says that those who are looking for a bump in the economy may be disappointed.  He thinks that billions of dollars in the hands of consumers (think interest earned on high yield savings accounts, etc.) will be going away.  Taking those billions out of the economy will lead to a slower economic output, so he claims. 

Lots of news / ideas floating out there.  Some is just noise, but some of it I find very interesting.   

[rocky_warrior]

Lots of news / ideas floating out there.  Some is just noise, but some of it I find very interesting.

Sure you could question the Fed, but should you?  Whether by luck, greed, or wisdom, they've pretty much nailed it.

And I don't think *anyone* should be looking for an economic bump... The hope is economic continuity. 

[rocket surgeon]

BofA talking about .75 cut in 4th quarter

https://finance.yahoo.com/news/bofa-now-expects-fed-75-073329052.html

[Hards Alumni]

[Lennys Tap]

After the Fed's comments today, the market may be expecting ANOTHER 50 basis point cut later this year. 

In other news, I heard an analyst speculate that the Fed didn't even need to increase rates AT ALL during the last couple of years.  His rationale is that inflation was caused by post COVID supply chain disruptions, not by anything to do with things the Fed can control like rates / gdp / employment.  Therefore, raising rates was a waste of time and may have worked against the economy unnecessarily.  After supply chains normalized, inflation starting falling "on it's own" and have been doing so ever since. 

Another analyst says that those who are looking for a bump in the economy may be disappointed.  He thinks that billions of dollars in the hands of consumers (think interest earned on high yield savings accounts, etc.) will be going away.  Taking those billions out of the economy will lead to a slower economic output, so he claims. 

Lots of news / ideas floating out there.  Some is just noise, but some of it I find very interesting.

Every point has a counterpoint, every intended consequence one or more unintended ones. Often pretty obvious to anyone who thinks beyond the headline.