Off-Topic Stock Market & Crypto Discussion

[90scane]

One big issue is the 2017 capex tax changes. This could be why large-cap tech is firing large numbers to reduce R&D by around 20%. In short, r&d now requires a five year tax deduction vs one year. Thus, earnings in tech will look a ton worse or R&D will have to drop by around 20%.

 

[mr.h]

Per CNBC- the Fed watches this number as a sign of inflation.

USD

Employment Cost Index(Q4) TRADE NOW

1%

-0.47

1.1%

1.2%

It heading in the right direction.

 

[mr.h]

One big issue is the 2017 capex tax changes. This could be why large-cap tech is firing large numbers to reduce R&D by around 20%. In short, r&d now requires a five year tax deduction vs one year. Thus, earnings in tech will look a ton worse or R&D will have to drop by around 20%.

Big tech borrows a lot of money. High interest rates are hurting them.

 

[90scane]

Big tech borrow a lot of money. High interest rates are hurting them.

And on top of that the inability to write off R&D in the same year is MASSIVE.

2021
1m revenue
1m R&D
$0 taxes

2022
$1m revenue
$1m r&d depreciation over 5 years
$800k of taxable profits

Thus, tech was borrowing for R&D and now has a big tax bill because of it. Hopefully congress addresses it

 

[SpikeUM]

Exxon smashes Western oil majors' earnings record with $56 billion profit for 2022

Exxon Mobil posted a $56 billion profit for 2022, setting not only a company record but a historic high for the Western oil industry.

www.cnbc.com

 

[mr.h]

And on top of that the inability to write off R&D in the same year is MASSIVE.

2021
1m revenue
1m R&D
$0 taxes

2022
$1m revenue
$1m r&d depreciation over 5 years
$800k of taxable profits

Thus, tech was borrowing for R&D and now has a big tax bill because of it. Hopefully congress addresses it

Apple sits with 100’s of billions and still borrows. I completely understand why.

USDS&P/Case-Shiller Home Price Indices (YoY)(Nov) <6.8%> 0.336.9% 8.7%
14:45USDChicago Purchasing Managers' Index(Jan) 44.3-4144.9 but below 50.
home prices collapsing..Midwest business conditions up

 

[90scane]

Apple sits with 100’s of billions and still borrows. I completely understand why.

USDS&P/Case-Shiller Home Price Indices (YoY)(Nov) <6.8%> 0.336.9% 8.7%
14:45USDChicago Purchasing Managers' Index(Jan) 44.3-4144.9 but below 50.
home prices collapsing..Midwest business conditions up

Most are borrowing for M&A, not R&D.

 

[mr.h]

Most are borrowing for M&A, not R&D.

a lot more, but the reasoning is the same.
if the Fed stays at a 25 rate rise we may see another bullish month.

 

[mr.h]

Oil tumbles 2% as Putin lets Russian energy companies decide pricing, exports​

Investing.com | Jan 30, 2023 02:39PM ET

By Barani Krishnan
Investing.com -- The official stance of the Kremlin is that it will not adhere to the West’s price caps on Russian oil.
In reality though, President Vladimir Putin’s administration is allowing Russian oil companies to sell however many barrels at whatever price they can get.
This effectively means the companies can apply any discounts necessary to transact oil in their hold, with the G7’s price cap already setting a barrel of Russian Urals at between $25 or $35 below the global crude benchmark Brent.
Media headlines on Monday suggested disparities between Russian government policy and actual activity in the physical oil market. That drove crude prices lower again, after a dip on Friday that came on the back of a rally over two previous weeks.
New York-traded West Texas Intermediate, or WTI, crude for March settled down $1.78, or 2.2%, at $77.90 per barrel after a session low at $77.75.
London-traded Brent crude for March delivery settled down $1.76, or 2%, at $84.90 per barrel. The session bottom was $84.33.
The slide came after the Russian government maintained that it “forbids oil exports that adhere to Western price caps,” according to a headline from Reuters.
That was, however, followed by two other news bulletins that said that “the Russian government has charged oil companies with overseeing contract wording” and that “the Russian government has not set a floor price for oil exports.”
“Decoded, the three messages mean the Russian government’s grandstanding against the West’s price caps remains, while it has opened the backdoor for its oil companies to do whatever is necessary to get their oil moving on the market,” said John Kilduff, partner at New York energy hedge fund Again Capital.
“This is a serious problem for the so-called cooperation within OPEC+, which is predicated on its principals Saudi Arabia and Russia keeping exports as low as possible and prices supported at the higher end.”

 

[mr.h]

USDADP Employment Change(Jan) 106K-0.83 178K 235

ISM Manufacturing PMI(Jan)

47.4

-0.81

48

48.4

USDISM Manufacturing New Orders Index(Jan) 42.5-1.76 46.145.1
USDJOLTS Job Openings(Dec) 11.012M1.73 10.25M10.44M

 

[TheEye]

Another quarter point hike. The most likely scenario played out. This marks the second consecutive time the Fed has increased at a reduced rate from the previous hike. We went from multiple .75 hikes to .5 and now .25. Most are assuming another .25 hike in the future. Some are presuming a rate reduction at the end of the year but I’m not betting on it. One more quarter point hike and then the Fed lets it ride for maybe even an entire year!

 

[90scane]

If inflation isn’t moving downward from Feb to April, I’d expect additional hikes

 

[mr.h]

If inflation isn’t moving downward from Feb to April, I’d expect additional hikes

It will be moving down, but it depends how much…nice little turnaround

 

[TheEye]

If inflation isn’t moving downward from Feb to April, I’d expect additional hikes

Prices this spring will likely be above last year, but they will likely plateau this summer. The anniversary of insane inflationary conditions.

 

[Cmuri]

Looks like market is setting up for a rally tomorrow. META up 20%+ this evening.

 

[mr.h]

With all this to do about raising rates, wouldn’t it be funny if by the EOY we’re cutting rates.? [maybe] lol
Listen to the talking heads changing their views.

 

[mr.h]

Looks like market is setting up for a rally tomorrow. META up 20%+ this evening.

Tomorrow they report payroll and the unemployment numbers. Then they report ISM numbers which is the service sector [non-manufacturing] which should be strong. Meta should pull up tech.

 

[TheEye]

With all this to do about raising rates, wouldn’t it be funny if by the EOY we’re cutting rates.? [maybe] lol
Listen to the talking heads changing their views.

I really believe the Fed will only reduce rates if there's a disastrous bear market in both stocks AND real estate. However, I believe in a steady plateau rather than a crash.

 

[90scane]

IF the Fed pivots before inflation is under control, everyone knows what will happen next. I for one will be buying real estate soon and rates at 6-7% aren't stopping me. Now imagine when they drop below 5%... a large number of people will re-enter the market in hopes of finding a home. This will drive a new round of real estate inflation. Thus, I'm with TheEye. The FED has to keep rates up for an extended period of time to burn off the demand. At worst, it allows wages to catch up to this round of inflation.

 

[Cmuri]

IF the Fed pivots before inflation is under control, everyone knows what will happen next. I for one will be buying real estate soon and rates at 6-7% aren't stopping me. Now imagine when they drop below 5%... a large number of people will re-enter the market in hopes of finding a home. This will drive a new round of real estate inflation. Thus, I'm with TheEye. The FED has to keep rates up for an extended period of time to burn off the demand. At worst, it allows wages to catch up to this round of inflation.

That makes 2 of us