Economic outlook

[mrmarket]

Unfortunately the inflation story has persisted and now the Fed has their sledgehammer out to squash the mosquito, claiming that the job market is strong and thus hiking rates can still stem inflation and lead to a soft landing. Unfortunately, the lag affect on employment is a significant lag and what they are doing now won't be seen in employment roles for another 12 months. Once unemployment starts to rise, it will be very hard to stop and then we'll see big layoffs and a bigger recession.

So, with regard to when $$$MR. MARKET$$$ will jump in again with quantitative modeling momentum picks:

1. We'll have to wait until unemployment begins to rise.
2. Then we will see a deep recession followed by a stock market stall and decline.
3. Then the Fed will lower rates.
4. Then we will see the rate of unemployment begin to decrease.
5. I will buy stocks again when the unemployment rate is still rising, but the change in the rate will start to decrease. That will signal the beginning of a very long bull market.

So it is written...we will see how close my prediction is in about 24 - 30 months.

[Louetta]

Not sure we'll actually have to see the Fed lower rates for the market to begin to rise, only that people begin to figure it's about to happen and then the markets will anticipate. Anyway, I've been parking money in 2-4 mo. Treasuries since about 12/15/22.

[mrmarket]

Not sure we'll actually have to see the Fed lower rates for the market to begin to rise, only that people begin to figure it's about to happen and then the markets will anticipate. Anyway, I've been parking money in 2-4 mo. Treasuries since about 12/15/22.

3 month CD's are paying almost 5%. Why even risk the market now?

[Louetta]

3 month CD's are paying almost 5%. Why even risk the market now?

I'm not risking it right now, just saying that when things get better there's going to be some anticipating.

I've set up a ladder of treasuries in my own account (Schwab) going out every week until 5/25, two and three month bills, and a couple of four months going out to July 5. I can make a little money on the interest and have some money maturing each week if I want to buy something. Still have a reserve of cash if I want to buy and don't want to wait 'til the bills mature and I can buy on margin temporarily if I need more money, and then gradually get off the margin as the treasuries mature.

[mrmarket]

I'm not risking it right now, just saying that when things get better there's going to be some anticipating.

I've set up a ladder of treasuries in my own account (Schwab) going out every week until 5/25, two and three month bills, and a couple of four months going out to July 5. I can make a little money on the interest and have some money maturing each week if I want to buy something. Still have a reserve of cash if I want to buy and don't want to wait 'til the bills mature and I can buy on margin temporarily if I need more money, and then gradually get off the margin as the treasuries mature.

Very sound and cogent strategy Louetta

[Louetta]

Bring me your finest meats and cheeses.

I have recently grown partial to salami and American cheese sandwiches. Think of you whenever I have one.

[jiesen]

I'm not risking it right now, just saying that when things get better there's going to be some anticipating.

I've set up a ladder of treasuries in my own account (Schwab) going out every week until 5/25, two and three month bills, and a couple of four months going out to July 5. I can make a little money on the interest and have some money maturing each week if I want to buy something. Still have a reserve of cash if I want to buy and don't want to wait 'til the bills mature and I can buy on margin temporarily if I need more money, and then gradually get off the margin as the treasuries mature.

I bought I-bonds last year that are currently paying 9.6%, and after 6 months will readjust down to 6.5%. Yeah, it's tough to justify buying stocks when bonds are paying over 6% interest.

[jiesen]

Note: Difficulty with this strategy is that I-bonds have limitations. You have to open a Treasury account, which is a pain, and the max you can buy/year is $10k. So I got some for my kids' college funds, too.

[Websman]

I'm sitting in cash for now. I'm not about to lose the nice gains that I've made.

[mrmarket]

The number of datapoints in my model is starting to grow, indicating some depth of strength in the market....could be a pick coming, although the long term outlook is still very cloudy (see my original post in this thread). The fact that Dollar General sales are slumping means that there is less money in the hands of the many. That's not good for the economy.

[jiesen]

The Many got lots of money during the stimulus years, due to COVID emergencies. Now that that's all over, that money is long spent, and the Many are just as broke as they were before they had all those extra dollars to spend. I'd bet that they're actually worse off since they got used to spending money that they weren't earning, and some are probably still spending like that, even without any means to get out of the debt they're running up. Market strength is probably coming from the 1%ers who are doing better then ever now, since all that stimulus money found its way into their pockets eventually, and they're spending plenty on high-end items.

[Louetta]

One swallow does not a summer make (e.g. it's only 46 degrees tonight outside of Boston). Nevertheless I was encouraged by Friday's action. Top performers in my account were MATV, ALB, NUE and CLF. Also Cathie Wood's stuff has done better since May 1, with ARKK up 20%. Shows some sign of strength in deep cyclicals (steel, chemicals) and wild-assed stuff (the Woodstocks).

[jiesen]

I was pretty happy with the MCB price action yesterday, too. Especially since I added more to it around $21, and it's already back up to $30 now. The market is probably rising with the hope that the rate hikes are finally about to ease up a bit, and the assurance that the US government will get to spend another $4T or so at least before its next chance to go bankrupt.

[Louetta]

I'm not risking it right now, just saying that when things get better there's going to be some anticipating.

I've set up a ladder of treasuries in my own account (Schwab) going out every week until 5/25, two and three month bills, and a couple of four months going out to July 5. I can make a little money on the interest and have some money maturing each week if I want to buy something. Still have a reserve of cash if I want to buy and don't want to wait 'til the bills mature and I can buy on margin temporarily if I need more money, and then gradually get off the margin as the treasuries mature.

I have now arrived at the point where having the treasury ladder is interfering with buying more stocks so I have to go on margin. It would take me three months for all the treasuries to mature. Never looked at selling them but many of them do pay more than the current offerings so that might work.

[jiesen]

It's funny, that treasurys have been solidly in 4th place in our contest, right after $$MM's RAVE pick. It ain't a bad place to keep some cash now, just in case. The I-bonds I bought last year paid me about 8% interest over the year that I've held them so far. I also came close to selling, as I was in a cash crunch a bit ago, but I've made it through and am still holding my I-bonds.

I used to get them just with my tax refund money, but when they suddenly went over 7% in yield, I decided it was time to load up with my spare money in hand!