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SpikeUM said:
www.wsj.com

Warren Buffett Has Been Betting Big on Oil. It’s Time to Find Out Why.

One of the most successful stock pickers of all time admitted years ago that he was “dead wrong” on an earlier oil-company investment. What’s changed for Berkshire Hathway?
www.wsj.com www.wsj.com
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Oil stocks are good when oil is under $80. Just because the Western world is “trying” to move away from oil doesn’t mean the developing world won’t suddenly need a boat load of it. India and China will consume a lot more in the next few decades.
 
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90scane said:
Or Congress and the Treasury.

Congress is as much to blame for this as the FED. The FED has very few tools and a narrow mandate. Congress on the other hand writes the rules.
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Banks become insolvent if they hold bonds, and the prices of those bonds fall because of rising market interest rates. That’s all on the Fed, except for the loosening bank regulations, which everyone here said we should have less regulations and oversight.
I‘m not picking a fight with you because I respect your opinions, but you could see this coming from a mile away.
Hopefully this doesn’t become a massive global recession.
 
mr.h said:
Banks become insolvent if they hold bonds, and the prices of those bonds fall because of rising market interest rates. That’s all on the Fed, except for the loosening bank regulations, which everyone here said we should have less regulations and oversight.
I‘m not picking a fight with you because I respect your opinions, but you could see this coming from a mile away.
Hopefully this doesn’t become a massive global recession.
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If you could see it from a mile away, why didn’t you bring it up in ‘22?

The real issue isn’t bonds falling because the Fed window allows banks to get paid back for them with minimal penalty.

The real issue is deposit walking from bank accounts to brokerage accounts to get better returns. Add in the risk to bank investors (another source of bank capital) because the FDIC now allows banks to fail with investors getting $0 for real risk.
 
mr.h said:
Banks become insolvent if they hold bonds, and the prices of those bonds fall because of rising market interest rates. That’s all on the Fed, except for the loosening bank regulations, which everyone here said we should have less regulations and oversight.
I‘m not picking a fight with you because I respect your opinions, but you could see this coming from a mile away.
Hopefully this doesn’t become a massive global recession.
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So why blame the Fed when the "professionals", i.e. the bank risk managers didnt see that too and adjust?!?
 
I mentioned Gold several times in the recent past; its keeps bumping to around these levels and then backs off, lets see if it finally breaks thru resistance.
 
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SpikeUM said:
So why blame the Fed when the "professionals", i.e. the bank risk managers didnt see that too and adjust?!?
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see rules, regulations and oversight..
SpikeUM said:
So why blame the Fed when the "professionals", i.e. the bank risk managers didnt see that too and adjust?!?
Click to expand...
Everyone knew that raising interest rates 5%, in a year, would affect the banks. The Fed raised rates too much too fast. If you want to blame bank mgt., then be my guest.
"Da.mn the torpedoes and full steam ahead"
 
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mr.h said:
see rules, regulations and oversight..

Everyone knew that raising interest rates 5%, in a year, would affect the banks. The Fed raised rates too much too fast. If you want to blame bank mgt., then be my guest.
"Da.mn the torpedoes and full steam ahead"
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I do
 

From Barron's​

​

The S&P 500 will not break above its range soon, says Goldman Sachs. Here are 6 reasons why.​

Stock futures on Friday point to Wall Street snapping a four-day losing streak, helped by strength in Apple shares after the tech giant’s results — though doubtless the nonfarm payrolls report will have something to say about this.
Bulls will be hoping that calmer conditions in the banking sector, easing debt ceiling tensions and acceptance that the Federal Reserve is not now on a preset hiking trajectory, can finally in coming sessions push the S&P 500 (SPX) above the top of the 3,800 to 4,200 channel it has held for about six months.
However, Goldman Sachs reckons the U.S. market — and many of its international peers — will remain in what it terms the ‘Flat and Fat’ range for some time.

True, there are reasons to be positive, says the Goldman portfolio strategy research team led by Peter Oppenheimer. The bank’s economists see developed economies growing at a below-trend pace, but avoiding recession as low unemployment supports consumption. In the U.S., the ISM manufacturing index increased above consensus expectations in April, for example.

Yet, the banking sector ructions are tightening credit conditions and will weaken economic growth much more in the second half of the year, says Goldman.
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Source: Goldman Sachs
And the bank then lists six factors that may keep the lid on any market gains.
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First, inflation remains sticky. “The tightness of the labor market continues to be a double-edged sword, supporting consumption on the one hand, but contributing to a higher-for-longer risk of inflation on the other.”
Yes, U.S. interest rates may have peaked at the 5%-5.25% range, but contrary to market hopes of imminent cuts, Goldman reckons they will stay there until the second quarter of 2024.

Second, investors are “pricing in the best of all worlds”, where inflation moderates and rates fall but there is no recession.
“One risk is that there is a recession -– or at least the market prices a higher probability of one -– perhaps if unemployment starts to rise because of bank lending tightening. Our U.S. strategists expect that under these conditions, S&P 500 earnings per share would fall to $200 and the S&P 500 would decline to 3150,” says Goldman.

Next, such scenarios could cause problems because equity valuations remain high. “At 18.8x [price-to-earnings], the U.S. equity market trades well above its 20-year median (a period during which low interest rates led to quite high valuations),” the Goldman team write.

“Furthermore, high cash returns mean that there are now reasonable alternatives (TARA) and that provides a very high bar for equities. Equity risk premiums have fallen sharply over the past year, implying relatively low prospective returns compared with risk free assets,” they add.
Image
Source: Goldman Sachs
Fourth, equity volatility, as measured by the CBOE VIX index (VIX), remains too low and implies a reasonable degree of complacency, particularly surprising given chances of the debt ceiling being breached by the start of June, Goldman notes.

Fifth, the recent better-than-expected results season is priced in and earnings growth will not be great in coming quarters.
“Our forecasts remain at roughly flat earnings growth in most regions this year and 5% in 2024 for the U.S. and Europe, 6% for Japan and 17% for Asia. With high valuations, the combination does not offer much return for the risk in the face of 5% risk free U.S. dollar cash return.”

Finally, market concentration is a problem. The largest 15 companies have generated 90% of the S&P 500’s rally for 2023 so far, Goldman notes.
“Our U.S. strategy team finds that market breadth has fallen to one standard deviation below average for the first time since 2020. The problem is that when returns get very narrow it is not a good sign. Following 9 sharp declines in market breadth since 1980 (similar to recent experience) the S&P 500 then went on to post below-average returns and larger peak-to-trough drawdowns,” the Goldman team conclude.
 
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8:30USDNonfarm Payrolls(Apr) 253K0.62179K165K
08:30USDU6 Underemployment Rate(Apr) 6.6% -0.636.7% 6.7%
08:30USDUnemployment Rate(Apr) 3.4% -0.673.5% 3.5%

:ibis-roflmao-sm3:
 
mr.h said:
8:30USDNonfarm Payrolls(Apr)253K0.62179K165K
08:30USDU6 Underemployment Rate(Apr)6.6% -0.636.7%6.7%
08:30USDUnemployment Rate(Apr)3.4% -0.673.5%3.5%

:ibis-roflmao-sm3:
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This is a good thing for the average American as it allows for better job opportunities and higher wages. It is a bad thing for investors and companies that need to borrow money as they now have higher input costs across the board (lending/employees/supply chains). If we aren't already in a wage spiral, we are very close to one which is why the FED raised rates. Now we wait to see if the banks cause additional strain leading to a cooling off OR if the FED bumps the rates again.
 
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90scane said:
This is a good thing for the average American as it allows for better job opportunities and higher wages. It is a bad thing for investors and companies that need to borrow money as they now have higher input costs across the board (lending/employees/supply chains). If we aren't already in a wage spiral, we are very close to one which is why the FED raised rates. Now we wait to see if the banks cause additional strain leading to a cooling off OR if the FED bumps the rates again.
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If the Fed raises rates it will add strain to the banking sector. It seems like a no brainer to pause.…..jmo
 
90scane said:
This is a good thing for the average American as it allows for better job opportunities and higher wages. It is a bad thing for investors and companies that need to borrow money as they now have higher input costs across the board (lending/employees/supply chains). If we aren't already in a wage spiral, we are very close to one which is why the FED raised rates. Now we wait to see if the banks cause additional strain leading to a cooling off OR if the FED bumps the rates again.
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An overly leveraged economy is a recipe for disaster. If businesses and individuals can’t pay cash, then they are in danger. Can’t keep encouraging risk.

For the time being, there is a guaranteed 5% return on short term bonds and private savings. Adjustable loans have risen. All risk free places to dump additional funds and save the interest. A much better position to be in, in the face of a market crash. If and when it happens, you have little debt and cash on hand to capitalize .
 
From today's WSJ, re our earlier discussion on the need for the government to rein in spending

The Federal Reserve has a problem with stubborn inflation and fragile banks. Congress and President Biden have a problem with a looming deadline to raise the debt ceiling.

There might be a way to address all these problems at once.

Here’s why. Banks are in trouble because of rising interest rates. Rates have climbed because inflation is high. And inflation is too high because demand is hot. One way to cool demand would be for the federal government to cut spending—which happens to be what Republicans, who control the House, are demanding in return for raising the federal government’s $31.4 trillion borrowing limit.
 
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