Am I thinking about this right?

Before Covid, the DOW got to 24000. That's with interest rates beginning to climb. Since then we printed trillions of dollars and that money has to go somewhere. Pre-Covid market of S&P 500 was about 30T. Today it's about 37T. We printed $7T in last two years so assuming half of it went to stock market then fair value for s&p excluding any growth since Covid is about $34T meaning another 10% is absolute bottom based off those assumptions

Multiples and perceived fair value matters.

I have literally never seen fin twit be so bearish. It's like they're acting like we are going to hit 3500 tomorrow. I guess we could, but as soon as the fed admits it can't really raise rates….

Ag CPA said:

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$30,000 Millionaire said:

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Multiples and perceived fair value matters.

I have literally never seen fin twit be so bearish. It's like they're acting like we are going to hit 3500 tomorrow. I guess we could, but as soon as the fed admits it can't really raise rates….

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Why can't it raise rates?

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Debt service on 31T increases with each rate hike. Spending like drunken sailors for the last 20 years has caught up with us.

We can significantly raise rates, but we have to drop them within 24 months to a level that we can afford long term.

When you hear pundits talking about the Fed attempting to find equilibrium, where "growth can be achieved and inflation minimized" it's all a smoke screen. Equilibrium is what rate we can afford the debt service on, but not choke back investment and growth into much quicker recession cycles.

If the hawks get their way, and they will, we are in for stagflation then deflation as producers face the prospects of company failure. We are in for a very dark 24 months.

Bonfire1996 said:

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We can significantly raise rates, but we have to drop them within 24 months to a level that we can afford long term.

When you hear pundits talking about the Fed attempting to find equilibrium, where "growth can be achieved and inflation minimized" it's all a smoke screen. Equilibrium is what rate we can afford the debt service on, but not choke back investment and growth into much quicker recession cycles.

If the hawks get their way, and they will, we are in for stagflation then deflation as producers face the prospects of company failure. We are in for a very dark 24 months.

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I believe you are a CFO, if I remember right. What do you think about the mid term factor? If you're the admin, do you want inflation plus recession or just inflation?

We are already in a recession, it just isn't official yet.

Okay, here's some stuff...

First, want to know what the market looks like as a whole? Here's all 8000+ US equities.



Here are what I consider the top 20.



Notice AMR looks like could be poised for a drop if you are looking for a shorting opportunity.

Complete screener location here:
https://docs.google.com/spreadsheets/d/1N2qehCQEra2iMLe30YFPaBZfCsjJde2cllgnZPAzoj0/edit?usp=sharing

My picks for the week are:



and



I like them because they are at support levels that they've successfully bounced off from in the past. Makes for an easy stop on quote setting to limit your risk. Looking for an easy +10% here.

EXR is also looking good to me. I'm looking for bad news that would be behind the drop, but I'm not seeing any,



Here's how I'm doing. I royally screwed myself with ZIM. I failed to set a stop on quote limit, it moved pretty quickly down, and I failed to keep track. Ended up costing me quite a bit in my portfolio. Oh well, live and learn.

The main issue I have with the market is the very bearish MACD line we entered a few weeks ago. Be careful and have a a bear and a bull scenario when you plan. It's the best way I know how to limit your risk. Be very intentional about executing your plan and do not deviate. Time to start looking for singles and not grand slams with every trade.

You are obviously welcome on the thread but you probably need to dial it back with all the doomsday talk. At least a couple times a week you're cautioning that a Black Monday or Tuesday or Wednesday or Thursday or Friday is looming.

Stocks Meekly Rally...Now Giving It Back... as a Hawkish Powell Looms

Equity market futures tried to rally overnight, but with both London and China closed for May day, the focus was very light... S+P futures hit a high of 4158 at 3 am, but have now given it all back as NY has come in and is now down 15 points... We think equities, after a dismal April, are close to an intermediate bottom, but not today... The focus of the week is clearly Powell and the Fed... If they are uber hawkish and need to get to neutral asap, then it does not matter what neutral is, we are going to have a rough first half of May... WIRP, now has over 10 hikes built in this year, which would bring another 250 basis to fed funds... However, some , like David Folkers-Landaus of DB, have moved their talk of where neutral is from 4% to as high as 6%... The world is not ready for 6% Fed funds... He does hedge himself, but that is the most aggressive...

Rates... Overnight with London closed, the curve mildly bull flattened but moves were small... On Friday you had a big sell off in treasuries even though equities were getting crushed... Our call two weeks ago that the high yields of the year are in, will be challenged this week... Either Powell is middle of the road or aggressive in his Q+A or not... The markets could go either way... Treasuries could sell off on a too aggressive Fed, which would flatten the curve... Or it could rally if rates investors think a recession is imminent... On the other hand a dovish Powell, which the NY Times recommended over the weekend in an editorial, then the curve would steepen... Either way the big move will start approximately 18 hours after the Powell presser and probably peak at the unemployment number Friday... We have near term support for 10 years at 3.01...2.98 was the high... Long bonds 3.03... 5 years 3.05...

Have we seen the bottom of equities?... We were asked that question multiple times over the weekend...Our answer was we think we are getting close on the numbers we look at... But until we see a capitulation trade, we are not ready to do more than stick our toes into the fray.....we heard one podcast over the weekend ,on Macro Voices, where the guest was talking a 50% sell off from the highs, which would put the S+P closer to 3500...THAT IS NOT OUR VIEW...but it is out there, even with sentiment some of the lowest we have ever seen with the bulls at 16.4%

Fed...we expect 50 basis move on Wednesday... And a detailed announcement of the balance sheet run off, which we see starting gradually next month.. The amounts have been predetermined, 60 billion a month on treasuries, and 35 billion a month on mortgage run offs...we saw Larry Summers say the balance sheet run off is worth about 25 basis on rate hikes... Our friends at Brean think 50... We think 100... David Rosenberg thinks 170, but JP Morgan sees it as 210 basis over 4 years... Meaning it will keep the curve steeper... The tone of Powell will be watched carefully...

Central Banks... In the US it seems to us that as high as inflation is, it has peaked and will move down slowly.. The economy is still strong but slowing.. The dollar is strong and will continue.. The ECB is seeing inflation still rising dramatically as their energy costs are soaring... The latest German import prices were higher than 31%...we think the ECB will begrudgingly stop buying but will be slow to raise rates... The BOJ sees their situation very differently with a slower economy and a demographic issue, so they will stay pat buying rates until they own every JGB out there... And China, is beset by Covid supply chain issues that will not resolve quickly, even though China is pulling out the stops about borrowing...so expect the dollar to continue to be strong.

April was an awful month for long only anything funds (except commodities)... BB Global Aggregate bonds was down 6%, US alone down 8%, Nasdaq 100 down 13% (highest in 14 years) and S_P down 9%...we think that will be the biggest monthly numbers we see this year, but it still does not mean the bottom is in.

Maybe we have been watching too many end of the world type moves..but over the weekend we saw multiple stories coming out of Bloomberg concerning the lack of availability of fertilizer due to the war in Ukraine... And that food yields will be down 15-25% across the world... Which means not enough food and famine... We have to do more towards ending the conflict, whatever it takes, or we will be seeing scary food riots globally...

I'll scale it back, no problem. Have oral Boards on Saturday so will be studying and in review course all week anyway. But if a 3.5% drop on the S&P in one day isn't bloody or black, not sure what is. Sure would hate to see real capitulation.

Good luck this week fellas. I'll be back in a week or so.

I'm speaking for myself here, and likely many of those who are inexperienced as myself to stock investment can relate: I'm building up cash for a little while and taking full days off from option investment. Many things seem to be pointing to waiting and enter later this year for some good value.

April blew up my account and it is basically starting over. It wasn't big to begin with but April didn't help. It was a combination of poor discipline and distractions. What lies ahead I am uncomfortable with. I may switch to horse racing if it keeps going this way. At least horse racing is entertaining.