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sweetandsour
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Post by sweetandsour »

Del wrote: 09 Aug 2024, 15:54
sweetandsour wrote: 09 Aug 2024, 14:01 The Fed may or may not be interested in politics, but the politicians are interested in the Fed.

https://www.barrons.com/articles/trump- ... e=20240809
This is nothing new. I remember when President George Bush the First complained that Alan Greenspan ("The most famous civil servant since Pontius Pilate") wasn't lowering rates fast enough during the 1992 election campaigns.

Just as the Supreme Court needs to be independent of Congress and the Executive branch, the Federal Reserve Board needs independence and space to do its job. If the Central Bank becomes political, then America becomes even more like China.

Of course, there are the jabberheads who complain about the Central Bank and argue for abolishing it, because they have no knowledge of history. High inflation and deep recessions used to be regular occurrences in 19th century economic history, along with frequent bank panics. But they had the gold standard then, which was a natural force toward equilibrium.
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The President already "has a say" in the economy. President Biden signed a $1.9T covid relief act.... increasing the money supply by 36%, with no productivity to balance it. That's an economic tropical storm forming in the Atlantic, and there's bound to be cycles of inflation and recession in the forecast.

So basically we sent Captain Powell sailing into a typhoon, and now we want to blame him for taking on some water and spoiling some cargo? Without the FED, we would have sunk.

Every president since FDR signs deficit spending bills that compound our debt. The federal debt increases by $1 trillion every 100 days. That's $5,500 per tax payer. $11,000 per taxpaying family. Let Mr. Trump work on this.
Thanks, I always enjoy getting your thought(s). And speaking of storms ... from Barron's review&preview this evening,

"The bottom line is that this past week was basically a storm that came and quickly went away," writes Apollo Global Chief Economist Torsten Sløk. "And the storm is now basically over. And we will all go back to watching the incoming economic data."

"And boy, is there economic data looming. Next week we get updates on retail sales, consumer sentiment, and—most importantly—consumer price inflation. Buckle up."
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Post by Del »

sweetandsour wrote: 09 Aug 2024, 19:15 Thanks, I always enjoy getting your thought(s). And speaking of storms ... from Barron's review&preview this evening,

"The bottom line is that this past week was basically a storm that came and quickly went away," writes Apollo Global Chief Economist Torsten Sløk. "And the storm is now basically over. And we will all go back to watching the incoming economic data."

"And boy, is there economic data looming. Next week we get updates on retail sales, consumer sentiment, and—most importantly—consumer price inflation. Buckle up."
Yup.... Producer Price Index on Tuesday, and Consumer Price Index on Wednesday.

Low readings will have the market drooling over the possibility of 50 basis point drop when the FED meets on September 18.
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Post by Del »

SPX gapped up this morning, returning to a level last seen before the Panic of August 1.

The panic started when Aug 1 weekly new unemployment claims came in much higher than expected. Fears of mass lay-offs, along with a pull-back of supply orders by manufacturers, triggered the panic. Then total unemployment came in higher than expected, flaming fears of recession.

The News that triggered today's exuberance:

New unemployment claims have been less than expected for two weeks in a row.

Retail sales for July reported much stronger than expected. American consumers are spending confidently.

Berkshire-Hathaway reported their earnings and portfolio. Warren Buffet is optimistic about the American economy and consumer spending.

Also, Mr. Market is counting on the FED to reduce rates by at least 0.25% in September. There is significant hope that it will be a 0.5% cut (to quell recession fears, and some say to help Kamala).
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Post by sweetandsour »

I'm glad I didn't sell my Fidelity Equity Index fund last week. But I'm not glad about having to sit on the sidelines either; I missed some great trading opportunities. But, it couldn't be helped - I've simply been too busy. Re the FED, personally I think you can count on a Sept rate reduction of at least 0.25; I don't think 0.5. We'll see. Keep your powder dry.
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Post by Del »

sweetandsour wrote: 16 Aug 2024, 01:56 I'm glad I didn't sell my Fidelity Equity Index fund last week. But I'm not glad about having to sit on the sidelines either; I missed some great trading opportunities. But, it couldn't be helped - I've simply been too busy. Re the FED, personally I think you can count on a Sept rate reduction of at least 0.25; I don't think 0.5. We'll see. Keep your powder dry.
We don't have to speculate about what the FED is going to do. The Market does that for us.

95% chance of 0.25% cut. "Significant" chance of 0.5%. Mr. Market waivers daily in his confidence on this.

http://primerate.fedprimerate.com/searc ... e_forecast
Prime Rate Forecast

As of right now (Aug 4), our odds are at 95% (very likely) the Federal Open Market Committee (FOMC) will vote to LOWER the benchmark target range for the fed funds rate (TRFFR) by at least 25 basis points (bps) at the September 18TH, 2024 monetary policy meeting.

If a 25 bps cut happens, the United States Prime Rate (a.k.a Fed Prime Rate) would decline from the current 8.50%, to 8.25%.

There is also a very real chance that the FOMC will cut by 50 bps next month, setting the TRFFR at 4.75% - 5.00%. This would result in a U.S. Prime Rate of 8.00%, a level not seen since March of 2023.
Thus far, Powell's FED has earned my trust in their integrity by being very transparent with the core data they are managing and the signals that they are looking for. It is time for a rate cut, and 0.5% would not be imprudent. The FED does not give any indication of succumbing to pressure from Democrats or corporate lobbies.

When the cuts happen, Biden/Harris will crow about the success of their policies.
Trump campaign will remind everyone that Biden/Harris policies caused the high energy costs and inflation, and delayed the economic recovery with their covid policies.

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Post by sweetandsour »

Better hang on for a rough ride for the next week or two, I'm thinking.
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Del, did you look at the options chart for SPX today? Someone placed a huge iron condor bet, apparently.
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Post by sweetandsour »

I bought some NVDA at around 120, after the Deepseek knee jerk this week. I also bought some ET when it dipped back down to ~20, just missing it when it was at ~19. The active portion of my "play account" had been in cash for quite a while.

I'd been watching FTAI for a while, as it climbed from below 100 to as high as 170, but never pulled the trigger. Then a week or so ago they were accused of fixing their books, and their stock price crashed down into the 80s. As of yesterday it was back to 100. I almost bought at 83; I should have bought at 83. But I think I'd rather have the ET anyway, it pays a good dividend and shouldn't be going anywhere. I'll watch the NVDA and sell it if/when it gets back to the 135-140 range.
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Post by Del »

I am a solid buy-&-hold guy. I have 7 stocks in my IRA. 3 of those are also in my trading fund.

I sold some covered calls (expire on Jan 31) on all my stocks.
Amazon (AMZN), Target (TGT), and Novo Nordisk (NVO) are all very close to being called out. That's always a great feeling -- max gain, without losing out on any significant extra gain.

I have 100 NVDA in my trading fund. I had a covered call on it (exp. 1/31) at strike 148. I got $83 for that call.
When NVDA was trading at 147 on Jan 22, I sold another naked call at strike 155. I scalped $131 for that.

Of course, it's trading at $126 this morning. So in two weeks, I grabbed $210 in cash -- over a stock that lost $1500 in market value. Somehow, I feel good about this.

In my trading account, I bought 100 NVDA on July 1, 2024. With calls and all, I am up $960 -- even with the recent downturn. I'll keep holding it.

I expect that NVDA will recover. The Chinese data regarding DeepSeek sounds way too good to be true, and I don't trust the Chinese to be completely honest in their reporting.

Eventually, I expect that businesses will want to go with the high-quality, reliable American AI tech.
Meanwhile, there will be competition and concerns with the cheap Chinese knock-offs.
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FED is expected to hold rates steady today. Maybe some volatility this afternoon as FED press conference discloses guidance for future rate changes and thoughts on Trump reforms.

Tomorrow morning is GDP data announced for Q4 and all 2024. Normally a big deal, but I think that all eyes are on future impact of Trump policies.
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