DiabloWags said:

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A poster has made previous comments that the S&P could go down 50% and it would be no "biggie".
Just the other day, they posted that the S&P was simply back to March 2021 levels. No biggie.
But that's a terribly simplistic view of the equity market.

What he doesnt seem to have a clue about is that nearly $900 Billion came into exchange traded and long-only funds in 2021. As a result, the current decline will be having a generational impact.

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I think he was speaking to the impact on his personal finances not on those of others. I too wouldn't be troubled by a massive drop in the market purely from a personal net worth perspective because I'm cash heavy, but there would be knock on effects that I do care about - primarily impact on my current and future business prospects.

I think dimitrig was really talking about proper personal finance practices. If you have money in the market it should be for long term investing. If you need liquidity over a shorter horizon then say 3-5 years, the equity market it's the the best vehicle. I don't think you would disagree with that sentiment. People who have short term liquidity issues impacted by a market downturn have taken on more risk than they should have, basically by definition.

Unit2Sucks said:

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DiabloWags said:

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A poster has made previous comments that the S&P could go down 50% and it would be no "biggie".
Just the other day, they posted that the S&P was simply back to March 2021 levels. No biggie.
But that's a terribly simplistic view of the equity market.

What he doesnt seem to have a clue about is that nearly $900 Billion came into exchange traded and long-only funds in 2021. As a result, the current decline will be having a generational impact.

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I think he was speaking to the impact on his personal finances not on those of others. I too wouldn't be troubled by a massive drop in the market purely from a personal net worth perspective because I'm cash heavy, but there would be knock on effects that I do care about - primarily impact on my current and future business prospects.

I think dimitrig was really talking about proper personal finance practices. If you have money in the market it should be for long term investing. If you need liquidity over a shorter horizon then say 3-5 years, the equity market it's the the best vehicle. I don't think you would disagree with that sentiment. People who have short term liquidity issues impacted by a market downturn have taken on more risk than they should have, basically by definition.

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Exactly.

Why do I care if some hedge funds and overseas investors bought at the top of the market?

In fact, it was that money pouring in from retail investors that was helping pushing prices to unreasonable multiples.

Dumb money frequently gets clobbered and that is unfortunate. Except when said dumb money has invested in a fraud like crypto. That is funny.

Bitcoin could crash 99%, while inflation is at 9%, and the BTC maxis would still call it an "inflation hedge" lol.

— CryptoWhale (@CryptoWhale) June 16, 2022

This is exactly how I would expect this guy to look

pic.twitter.com/QGPipeCTtL

— Crypto Bros Taking Ls (@CoinersTakingLs) June 18, 2022

Direct hit incoming

Replace Crypto Bros with Biotech Investors. Also applies.

— Jiantkwazi (@Jiantkwazi) June 18, 2022

With Quantitative Tightening (QT) now ongoing, Treasuries are on fire and pushing yields sharply lower (the opposite of what Wall Street conventional wisdom would predict). The counter to my post will be that Treasuries are going up because the chances of recession are going up. My counter to that will be, yes Quantitative Tightening and higher Fed Funds rate are growth reducing policies, which is why it should be easy to predict that a higher Fed Funds rate and QT will result in a flight to safety and lower interest rates (just as QT eventually did last time around). I don't know why Wall Street conventional wisdom doesn't understand this but I hope lots of Treasury shorts are getting absolutely wrecked.

The idea that the Fed is suppressing interest rates to keep government debt payments down is a hoax. The Fed is the tail, not the dog.

Data: S&P Dow Jones Indices. Chart: Nicki Camberg/Axios


S&P 500 Has Worst First Half Since 1970 Is No Indicator for Second Half - Bloomberg


https://www.bloomberg.com/news/articles/2022-06-30/brutal-first-half-for-s-p-500-has-little-bearing-on-the-future

One of the near term issues that is massive in nature is that earnings forecasts for the back half havent really budged, and I suspect that is the next shoe to drop.

Over the past week or so, tech analysts have been rushing to slash estimates, but they cant move fast enough with Q2 earnings announcements coming out shortly.

Case in point: Micron reported last Thursday afternoon. Their May quarter results were fine. But guidance was not. Their $7.2 Billion rev forecast for its August quarter was $2 BILLION BELOW STREET ESTIMATES.

In other news, Atlanta GDPNow collapsed to - 2.1% on Friday after the ISM number came out.

Given the collapse in yields over the past 2 weeks (especially in the 2 year yield which serves as a real-time Proxy for Fed pivots), one could make a case that the next 75 basis rate hike in Fed Funds by the Fed in July will be the last tightening move for awhile.

The 2 year yield typically peaks at or before, a Fed tightening cycle peaks.
Moreover, it peaks ABOVE where the policy rate winds up actually topping out.

Food for thought.

DiabloWags said:

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One of the near term issues that is massive in nature is that earnings forecasts for the back half havent really budged, and I suspect that is the next shoe to drop.

Over the past week or so, tech analysts have been rushing to slash estimates, but they cant move fast enough with Q2 earnings announcements coming out shortly.

Case in point: Micron reported last Thursday afternoon. Their May quarter results were fine. But guidance was not. Their $7.2 Billion rev forecast for its August quarter was $2 BILLION BELOW STREET ESTIMATES.

In other news, Atlanta GDPNow collapsed to - 2.1% on Friday after the ISM number came out.

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Actually, stocks were driven downward in q2 by lowered q2 forecasts. Not sure how anybody with a Cal degree missed this. Shocking.

https://www.google.com/amp/s/www.hollywoodreporter.com/business/business-news/amazon-earnings-q1-2022-1235137502/amp/

https://www.google.com/amp/s/www.cnbc.com/amp/2022/06/02/microsoft-lowers-guidance-for-q4.html

DiabloWags said:

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One of the near term issues that is massive in nature is that earnings forecasts for the back half havent really budged, and I suspect that is the next shoe to drop.

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Lisa Shallett of Morgan Stanley Asset Managment quantifies the blind spot.

"We find such resilience by markets and obstinance by analysts to reflect (rising recession probability) in their forecasts as a risk that could cost equity investors another 5 - 10%.

Until 12 month forward earnings estimates fall 5% to 10%, the bear market isnt over, she adds.

To this point of obstinance by the analyst community, analysts expect S&P 500 earnings to grow by about 11% year over year in both the third and fourth quarters.

DiabloWags said:

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DiabloWags said:

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One of the near term issues that is massive in nature is that earnings forecasts for the back half havent really budged, and I suspect that is the next shoe to drop.

---

Lisa Shallett of Morgan Stanley Asset Managment quantifies the blind spot.

"We find such resilience by markets and obstinance by analysts to reflect (rising recession probability) in their forecasts as a risk that could cost equity investors another 5 - 10%.

Until 12 month forward earnings estimates fall 5% to 10%, the bear market isnt over, she adds.

To this point of obstinance by the analyst community, analysts expect S&P 500 earnings to grow by about 11% year over year in both the third and fourth quarters.

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Eventually the analysts will have to come around to reality but I don't think this is a time to pay any attention to earnings estimates as it relates to stock prices. This is a liquidity driven market. The Fed is driving the stock market down. It doesn't matter to me whether you call it declining earnings or declining earnings multiples. There is no number of earnings estimates at which I would think, ok, the market has declined enough - the offset would just be found in the earnings multiple. The signals will come from the Fed.

As of right now, the 10 year Treasury rate has declined by 68 basis points in less than a month and is now inverted against the 2 year Treasury (another recession indicator)

dajo9 said:

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Oil is down about 20% from recent highs but retail gas is only down 5%, which means crack spreads (which some would argue is a measure of how much the American people are being gouged) are continuing to increase into record territory.

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Short-Term Energy Outlook - U.S. Energy Information Administration (EIA)

dajo9 said:

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DiabloWags said:

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DiabloWags said:

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One of the near term issues that is massive in nature is that earnings forecasts for the back half havent really budged, and I suspect that is the next shoe to drop.

---

Lisa Shallett of Morgan Stanley Asset Managment quantifies the blind spot.

"We find such resilience by markets and obstinance by analysts to reflect (rising recession probability) in their forecasts as a risk that could cost equity investors another 5 - 10%.

Until 12 month forward earnings estimates fall 5% to 10%, the bear market isnt over, she adds.

To this point of obstinance by the analyst community, analysts expect S&P 500 earnings to grow by about 11% year over year in both the third and fourth quarters.

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Eventually the analysts will have to come around to reality but I don't think this is a time to pay any attention to earnings estimates as it relates to stock prices. This is a liquidity driven market. The Fed is driving the stock market down. It doesn't matter to me whether you call it declining earnings or declining earnings multiples. There is no number of earnings estimates at which I would think, ok, the market has declined enough - the offset would just be found in the earnings multiple. The signals will come from the Fed.

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I've always maintained that the stock market will reverse from a Bear Market when it is able to rally on bad data. That's been the historical pattern. I just dont think we are there yet. And if analysts are still in LaLa Land about their earnings estimates, then that just sets up market participants for more disappointment.

It would appear that most posters here are not stock specific and are involved in investments that simply track the broad market indexes. To this point, I would think it would be helpful to know what the best Bear Case is (averting a recession and a -20% decline in earnings) vs the base Bear Case where the economy does go into a Recession.

I find it helpful to understand that the S&P (FactSect) showed EPS of $205.63 in 2021.
And the Street is looking for $237.53 for 2022.

Imagine that?

The Street is looking for an increase of 15.6% in earnings during a period where inflation is gonna hammer margins, where we have the biggest fiscal drag since WW2 and the Fed is tightening aggressively. Gee, what could go wrong?

A 20% cut to EPS would send that $237 number down to $190.

At 3900 SPX, the market is trading at 20.5x forward eps.
Hmmmm....

DiabloWags said:

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dajo9 said:

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DiabloWags said:

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DiabloWags said:

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One of the near term issues that is massive in nature is that earnings forecasts for the back half havent really budged, and I suspect that is the next shoe to drop.

---

Lisa Shallett of Morgan Stanley Asset Managment quantifies the blind spot.

"We find such resilience by markets and obstinance by analysts to reflect (rising recession probability) in their forecasts as a risk that could cost equity investors another 5 - 10%.

Until 12 month forward earnings estimates fall 5% to 10%, the bear market isnt over, she adds.

To this point of obstinance by the analyst community, analysts expect S&P 500 earnings to grow by about 11% year over year in both the third and fourth quarters.

---

Eventually the analysts will have to come around to reality but I don't think this is a time to pay any attention to earnings estimates as it relates to stock prices. This is a liquidity driven market. The Fed is driving the stock market down. It doesn't matter to me whether you call it declining earnings or declining earnings multiples. There is no number of earnings estimates at which I would think, ok, the market has declined enough - the offset would just be found in the earnings multiple. The signals will come from the Fed.

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I've always maintained that the stock market will reverse from a Bear Market when it is able to rally on bad data. That's been the historical pattern. I just dont think we are there yet. And if analysts are still in LaLa Land about their earnings estimates, then that just sets up market participants for more disappointment.

It would appear that most posters here are not stock specific and are involved in investments that simply track the broad market indexes. To this point, I would think it would be helpful to know what the best Bear Case is (averting a recession and a -20% decline in earnings) vs the base Bear Case where the economy does go into a Recession.

I find it helpful to understand that the S&P (FactSect) showed EPS of $205.63 in 2021.
And the Street is looking for $237.53 for 2022.

Imagine that?

The Street is looking for an increase of 15.6% in earnings during a period where inflation is gonna hammer margins, where we have the biggest fiscal drag since WW2 and the Fed is tightening aggressively. Gee, what could go wrong?

A 20% cut to EPS would send that $237 number down to $190.

At 3900 SPX, the market is trading at 20.5x forward eps.
Hmmmm....

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The market rallied this week, going up nearly 4% with the NASDAQ going up 6%. How long will this rally last?

dajo9 said:

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Eventually the analysts will have to come around to reality but I don't think this is a time to pay any attention to earnings estimates as it relates to stock prices. This is a liquidity driven market.

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I disagree.

The first leg down was liquidity driven.
The realization that the Fed was not just gonna "talk" up rates, but actually embark on a tightening cycle.

The second leg down will occur when market participants realize that earnings will be nowhere near where the Street consensus is.

I tell you what. I went shopping today and the Biden economy still appeared to be booming despite high prices and Fed activity.

Pretty violent collapse in the oil sector in just one month (-27%)
Tested the 200 day MA on Wednesday and bounced.

meanwhile gas prices haven't budged and conservatives still think "energy independence" whatever that means will somehow result in lower prices at the pump.

Unit2Sucks said:

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meanwhile gas prices haven't budged and conservatives still think "energy independence" whatever that means will somehow result in lower prices at the pump.

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They have been moving lower here in the Bay Area (finally).
Down .30 cents from the high.

DiabloWags said:

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Unit2Sucks said:

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meanwhile gas prices haven't budged and conservatives still think "energy independence" whatever that means will somehow result in lower prices at the pump.

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They have been moving lower here in the Bay Area (finally).
Down .30 cents from the high.

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Same here. Went from just under $7 to
$6.

Unit2Sucks said:

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meanwhile gas prices haven't budged and conservatives still think "energy independence" whatever that means will somehow result in lower prices at the pump.

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Gas prices have dropped about 6% nationally in less than a month and the trend is precipitous.

Unit2Sucks said:

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meanwhile gas prices haven't budged and conservatives still think "energy independence" whatever that means will somehow result in lower prices at the pump.

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Just paid $5.69 here in Concord. Was over $6 a month or so ago.

Great to hear. I'm in Truckee at the moment and it's still just below $7 for regular, which is what it's been for a few weeks.

I think this has been posted in other forms, but in August 2013, WTI was the same price per barrel as it currently is, yet prices at the pump were $1.30 lower nationally. We should be seeing another $1 drop in prices over the next few months and that's without seeing a drastic downward move in the price of oil. Given that it's likely oil drips well below $100, we could be looking at prices more like $4.50 in California come this fall.

82gradDLSdad said:

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Unit2Sucks said:

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meanwhile gas prices haven't budged and conservatives still think "energy independence" whatever that means will somehow result in lower prices at the pump.

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Just paid $5.69 here in Concord. Was over $6 a month or so ago.

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Where did you pay $5.69 at?
Regular at Costco?

I see that Premium at ARCO AM/PM on Monument Blvd is at $6.19

https://gasprices.aaa.com/

DiabloWags said:

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82gradDLSdad said:

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Unit2Sucks said:

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meanwhile gas prices haven't budged and conservatives still think "energy independence" whatever that means will somehow result in lower prices at the pump.

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Just paid $5.69 here in Concord. Was over $6 a month or so ago.

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Where did you pay $5.69 at?
Regular at Costco?

I see that Premium at ARCO AM/PM on Monument Blvd is at $6.19

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Don's on Port Chicago. It's hidden away and it's usually the cheapest around. I'm keeping a close watch on my mileage and how my car runs. Seems too good to be true.

THAT'S PRETTY FUNNY!

These people have no idea how the energy market works, let alone for refined products.
They really should just keep their mouths shut.

82gradDLSdad said:

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Don's on Port Chicago. It's hidden away and it's usually the cheapest around. I'm keeping a close watch on my mileage and how my car runs. Seems too good to be true.

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Both my cars take Premium.

I either go to Arco AM/PM or a nearby Valero station that seems to match the AM/PM prices.
You should ask the guy at Don's what refiner they get their gas from.
They should be able to tell you.

DiabloWags said:

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82gradDLSdad said:

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Don's on Port Chicago. It's hidden away and it's usually the cheapest around. I'm keeping a close watch on my mileage and how my car runs. Seems too good to be true.

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Both my cars take Premium.

I either go to Arco AM/PM or a nearby Valero station that seems to match the AM/PM prices.
You should ask the guy at Don's what refiner they get their gas from.
They should be able to tell you.

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Don's has premium. I wouldn't know a good refiner from a bad. If my car runs smoothly and the gas mileage stays the same I'm good. So far so good. We have two 2018 Mazda 3s. I drive like the old man I am.

Dow indicated - 600

SPX indicated - 72

Gold - $34.00

Silver -1.00

WTI - $5.00

JPM reported a wider than expected drop in Q2 profit of 28%
MS missed analyst expectations.

Jamie Dimon says that the "consumer is in good shape"