- Dec 31, 2018
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- 28,104
Anyone want to predict where the bottom is for the S&P?
2022 investing thread
- Thread starter BMF
- Start date
- Jul 29, 2014
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- Jul 29, 2014
- 22,149
- 23,366
This makes me think we could possibly find overall support back at the pre covid Feb 2020 levels since that's when the excess liquidity started being injected. Don't remember where exactly the S&P was but it seems like the DOW was around 28-29K or so before the March/April flash crash.
The other important factor is this looks like a slow leak. It took 1.5 years for the injection and I think it will take about that long to bottom out. The good news(if you can call it that) is we are already about 6 months into it as it seemed to start leaking down mid Nov./Dec.
Or at least that's my all to often wrong outlook....
- Jun 9, 2014
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Founding Member
Markets don’t like uncertainty. This one’s swimming in it with no Fed put to bail it out. Since the Fed chose the path of hiking rates before halting quantitative easing, we’re all left to speculate how many more 50-bps hikes before inflation is under control and just what constitutes under control. 4%? 3.5%?
No one, including all the loudmouth members of the board of governors, knows. So we wait month by month for the data to point toward abatement. Yesterday’s CPI print came in slightly above the forecast but below March’s 8.5%. Another lower CPI print a month from now would point to trend. That would help.
In the meantime, the market will do the talking, and it’s ugly. We’ve entered the liquidation phase in the Nasdaq toward a bottoming. The S&P 500 is more problematic because many of the member companies are just entering a bear market and some haven’t seen it, period.
If you wonder why the Fed doesn’t just go nuclear and blast rates higher, it’s because privately they aren’t thoroughly convinced of the need for as many hikes as is being forecast. Supply chain interruptions are easing. Consumers are altering spending habits. Companies have begun laying off workers. The Fed hopes for a soft landing, another way of saying thread the needle. So they move incrementally.
The waiting is painful and it sucks. Biden’s press conference the other day showed how out of touch he is. It’s up to the Fed, the market and our collective patience.
No one, including all the loudmouth members of the board of governors, knows. So we wait month by month for the data to point toward abatement. Yesterday’s CPI print came in slightly above the forecast but below March’s 8.5%. Another lower CPI print a month from now would point to trend. That would help.
In the meantime, the market will do the talking, and it’s ugly. We’ve entered the liquidation phase in the Nasdaq toward a bottoming. The S&P 500 is more problematic because many of the member companies are just entering a bear market and some haven’t seen it, period.
If you wonder why the Fed doesn’t just go nuclear and blast rates higher, it’s because privately they aren’t thoroughly convinced of the need for as many hikes as is being forecast. Supply chain interruptions are easing. Consumers are altering spending habits. Companies have begun laying off workers. The Fed hopes for a soft landing, another way of saying thread the needle. So they move incrementally.
The waiting is painful and it sucks. Biden’s press conference the other day showed how out of touch he is. It’s up to the Fed, the market and our collective patience.
- Jun 12, 2014
- 5,396
- 9,395
Founding Member
Haven't they said they are looking for 2-3%?
They like to signal what they are going to do long before they do it because as you said, markets don't like uncertainty. But keep in mind the Fed's top priorities are inflation and employment, not the stock market. The thing that would stop rate hikes before hitting the inflation target is mass layoffs, not a drop in the S&P. Of course those two are somewhat related.
- Jul 29, 2014
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I think 2 more sources that should not be overlooked are China's lockdown which has pushed down commodity prices over the last month. If they reopen sooner than later will this cause another spike in inflation?
The second is what happened after the 2020 spring flash crash. Didn't the Fed step in and buy up corporate bonds causing an almost instant surge in the markets? I wonder what their stance will be on this if some of the weaker links in the chain(S&P 500/NASDAQ) start talking about debt burden pushing them into insolvency without the lower rates they were used to borrowing on?
The second is what happened after the 2020 spring flash crash. Didn't the Fed step in and buy up corporate bonds causing an almost instant surge in the markets? I wonder what their stance will be on this if some of the weaker links in the chain(S&P 500/NASDAQ) start talking about debt burden pushing them into insolvency without the lower rates they were used to borrowing on?
- Nov 19, 2014
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I have said from Day 1 when the Fed said this is our target, that there is not a snow balls chance in hell they get there. They will have to stop long before they get there and if they don;t well I will be wiped out b/c I have a thesis and putting my thesis to work in yield curve instruments. It has taken the long end of the curve less than a week to drop 40 basis points. I know that the FED has little control over the long end but they watch it but it is telling quite a different story than the short end.
- Jun 9, 2014
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Founding Member
2-3% is a laboratory goal. Based on the huge spread between inflation and the overnight lending rate, we’re in uncharted territory. My guess is the Fed, with all the other concerns on its plate, would be quite pleased to take its foot off the brakes, at least temporarily, as we approach 3.5%.
You don’t know for months out the total impact of changes to monetary policy. We’re raising rates and shrinking the balance sheet at the same time. Damned if you don’t, damned if you do. The safer path is the slow, moderate, reassess-as-we-go one.
You don’t know for months out the total impact of changes to monetary policy. We’re raising rates and shrinking the balance sheet at the same time. Damned if you don’t, damned if you do. The safer path is the slow, moderate, reassess-as-we-go one.
- Jun 12, 2014
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Founding Member
- Jun 9, 2014
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Founding Member
Yeah, that's how it usually works.
The two don’t always run in parallel paths. In fact, the Fed has come under criticism for not putting greater emphasis on reducing its balance sheet before commencing with the rate hikes.
- Jun 12, 2014
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Founding Member
The Fed directly sets the discount rate, but they set the funds rate through FOMC transactions. Obviously fiscal policy and the market play a role in this, but the FOMC raises rates by either selling securities or reducing the amount they are buying depending on those other two factors.
- Jul 29, 2014
- 22,149
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Keep getting a itch to grab something like AMD at $84 a share....something won't let my finger press the button. I think the reality is finally sinking in to even long time bulls....people are dumping all over the place.
- Nov 19, 2014
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- Jul 29, 2014
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Sittin on the sideline.....waiting for the full 50% discount
- Nov 19, 2014
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How surprisingly patient and disciplined of you, LOL.
- Jul 29, 2014
- 22,149
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It's hard and I almost took the bait on Tuesday...glad I didn't. This is ugly and I think we've still got some room to fall another 20% or so. Your thoughts?
- Nov 19, 2014
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Not to sound cliche, but we never know when the bottom is, but the same talk should happen when markets are running. I tend to sell slowly as markets rise say when S and P was 4600-4700. I did not get everything sold but that is okay. But I always have cash like you and wait for moments like this. I also always have a list and then compare that list to the news, etc. of the world. I have already started purchasing some things, some are even higher as the market continues lower, some not. but my list is usually filled with names that I think will be around for a good long while, as opposed to just looking for trades now. Too old for that, although occasionally I dabble. I look for those names that I feel are getting slashed mainly due to margin calls in some of the high fliers and people or their BD's have to liquidate anything.
Lastly I am not a big ETF guy but heard something 3 times recently about the momentum ETF. It rebalances twice a year and I read about 75% of the holdings are coming out and being replaced b/c you know the names that have been crushed. And some old stodgy stuff will surprisingly be added. I own a lot of those old stodgy stocks and I might take something like this to unload to raise cash to be ready for when things like this happen again.
Lastly, and this is only my own personal view, but I am doing things in credit that are of the belief that short term interest rates will get nowhere near as high as the market is predicting or how tough the talk might be right now. I have my own view of what a recession is beyond the true definition and I look at a lot of different things to form my views, not numbers from the past.
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- Jun 9, 2014
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Founding Member
As if things weren’t bad enough, you’ve now got retail in the tank after back-to-back earnings whiffs from WMT and TGT, sending a message that recession is just around the corner if we’re not in one already.
It’s fairly hilarious to listen to all the hawk talk from the Fed. Even these clowns know they’re only a couple bad steps away from having to consider a policy reversal. Pick your poison, boys.
It’s fairly hilarious to listen to all the hawk talk from the Fed. Even these clowns know they’re only a couple bad steps away from having to consider a policy reversal. Pick your poison, boys.
- Jul 29, 2014
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Scary part besides what's happening here is what the rest of the world is staring at. I hear people talking about not getting the global push even after the fed pivot may not help us as much as people are hoping. China is having major issues with default. Any thoughts on this?
