Talking Stocks 2.0

[huncho]

Originally Posted by SDGT3

Although I agree, the reason why half the country is hurting is because inflation has been the highest the US has seen in 40 years.

Jobs are still plentiful and the last 3 month's average jobs numbers, with revisions, went from 116,000 jobs per month to 185,000.

Oil up on geopolitical concerns. 10 year treasury approaching 4% again, dollar much stronger, the yield curve tightening between the 2’s and 10’s again to near inversion as short term rates rise on this news. Two candidates that will raise the budget deficit and national debt even higher. I ask, where was the need to cut rates and why even talk about further cuts when you don’t have the “data” yet?

Claudia Som of the infamous Som Rule of economics revealed that layoffs are at the lowest rate in history… what is Powell and the Fed thinking when he says he wants to concentrate on full employment ?

The last Fed decision was not unanimous - the first time that has happened in nearly 20 years - so there is some sense of reality at the Fed, just not with the chairman.

Does anyone here believe or have personally experienced 3% inflation on anything? Housing, Food, all lines of insurance, energy, medical? No way.

yeah inflation isn't 3%, its multiples higher but also the other issue is that new jobs are now paying less than they were in 2021/22 (although that was a bubble) and people aren't getting raises to help offset inflation. salaries haven't moved much over the last 10 years while everything else easily costs twice as much

on the other hand once companies are able to afford giving people more money, inflation would probably tick up again no? i don't really know how this gets solved, i feel like this is just the new normal

[Krash]

Originally Posted by SDGT3

Does anyone here believe or have personally experienced 3% inflation on anything? Housing, Food, all lines of insurance, energy, medical? No way.

Every man, woman and child has personally experienced inflation greater than 3%.

Just going to my favorite restaurants in NE Florida is one example. It's common to get a bill more than a $100 for most of them now. I was just in Seattle to visit my daughter. Seattle seems just as bad or worse, so nobody can tell me it's a Florida thing...

[BroncoOne]

Insurance, rent(or for people on this site, rent equivalent), food at and away from home, taxes and fees are MUCH inflated beyond 3%, and the inflation since 2020 is stacked on each proceeding year’s inflation.

[Krash]

Originally Posted by BroncoOne

Insurance, rent(or for people on this site, rent equivalent), food at and away from home, taxes and fees are MUCH inflated beyond 3%, and the inflation since 2020 is stacked on each proceeding year’s inflation.

Yes, and it’s actually around 22% since 2020.


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[enjoythemusic]

When everyone agrees a 62% raise is appropriate for the longshoremen, we all should receive the same 62% raise, insurance, and retirement fund. Anything less is like FEMA running out of funds to repair USA infrastructure / property while there is funding for out-of-country 'obligations'.

[Krash]

CPI index hotter than expected at 2.5. That adds fuel to the fire when it comes to the 50 basis point cut. That could prove to be a mistake.


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[SDGT3]

Originally Posted by Krash

CPI index hotter than expected at 2.5. That adds fuel to the fire when it comes to the 50 basis point cut. That could prove to be a mistake.


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Completely agree. Shelter, which many argue is driving the inflation rate higher in the CPI actually came down from 5.2% to 4.9% so other parts of the economy are stickier than forecast.

[7sins]

Originally Posted by SDGT3

Completely agree. Shelter, which many argue is driving the inflation rate higher in the CPI actually came down from 5.2% to 4.9% so other parts of the economy are stickier than forecast.

Would not take much consideration into shelter inflation. 3/4 of Shelter Inflation is OER (owner equiv rent) which is basically the BLS surveying home owners what they think they can rent their house out for. Absolutely wild and inaccurate way of measuring. The second largest part, if I recall correctly, are longer duration leases, so even if rents are coming down, it doesn't necessarily adjust downwards immediately. TIPS and CPI Swaps are dirt cheap if anyone wants the opposite trend trade of inflation declining.

[Krash]

I already own a lot of shares of MSFT, but if there were any justification to buy more, this could be it. OpenAI will eventually move from a nonprofit to a for-profit entity, and Microsoft could own a handsome portion of the equity.

Also, this isn’t discussed in the article, but I’d imagine that OpenAI will eventually have an IPO, too. That’s something you wouldn’t want to miss out on.

I know it’s behind a pay wall, but many of you subscribe to WSJ.

https://www.wsj.com/tech/ai/the-14-b..._copyURL_share


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[huncho]

well tesla just had its best day in over a decade. i ended up round tripping it from 215 to 260 last month but it's a very long term hold for me and the fact that everyone thinks it's a dead company and has no future makes me feel more confident. the last time public sentiment was this bad around a company this big was when apple was 160 which was unironically the actual bottom for the stock before it went up 50%

the cybertaxi event felt like a major pivot in the company towards it being a robotics/ai company so we'll see where it goes. i appreciate the fact that the company is not for everyone because elon is very polarizing though so it is what it is

been a pretty rough few months otherwise besides having microstrategy double in 1 month

[Krash]

Originally Posted by huncho

well tesla just had its best day in over a decade. i ended up round tripping it from 215 to 260 but it's a very long term hold for me and the fact that everyone thinks it's a dead company and has no future makes me feel more confident. the last time public sentiment was this bad around a company this big was when apple was 160 which was unironically the actual bottom for the stock before it went up 50%

the cybertaxi event felt like a major pivot in the company towards it being a robotics/ai company so we'll see where it goes. i appreciate the fact that the company is not for everyone because elon is very polarizing though so it is what it is

been a pretty rough few months otherwise besides having microstrategy double in 1 month

I own a 100 shares of Tesla, which is only a modest amount. Have owned it for a while. That stock is a keeper. But I’m not a trader. So every stock I own is a keeper.


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[austinp]

Nice move for SOUN and SERV! Thanks TRF!


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[Krash]

INTC kicked out of DOW. That's a kick in the teeth for them.

NVDA added. It was inevitable.

[brandrea]

I’m buying those boring railroads and utilities.

[SDGT3]

Warren Buffet has sold even more stock in Q3 bringing Berkshire cash holdings to more than $325B - more than the equity holdings. What is his plan or preparing for with this liquidation?

[Krash]

Originally Posted by SDGT3

Warren Buffet has sold even more stock in Q3 bringing Berkshire cash holdings to more than $325B - more than the equity holdings. What is his plan or preparing for with this liquidation?

I don’t know but we probably should be nervous about it.


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[7sins]

Originally Posted by SDGT3

Warren Buffet has sold even more stock in Q3 bringing Berkshire cash holdings to more than $325B - more than the equity holdings. What is his plan or preparing for with this liquidation?

I find it more interesting he is not buying back any of his own stock and he has that much money in tbills given the reinvestment risk. Or perhaps this is some broader part of a succession plan?

[-dustin]

Originally Posted by GB-man

Up 33% since. Yay

Still long PLTR? It hit unreasonable numbers for me today, so I dumped half my load at $50.50. Bought at $14 thinking I was going to hold for a good long while. Instead I made it 368 days.

[SDGT3]

Originally Posted by 7sins

I find it more interesting he is not buying back any of his own stock and he has that much money in tbills given the reinvestment risk. Or perhaps this is some broader part of a succession plan?

Perhaps he thinks his own stock is over priced? From what I read, he owns more TBills than the Fed. Reinvestment risk for sure unless he's positive rates will stay elevated given the debt load.

[7sins]

Originally Posted by SDGT3

Perhaps he thinks his own stock is over priced? From what I read, he owns more TBills than the Fed. Reinvestment risk for sure unless he's positive rates will stay elevated given the debt load.

Regardless of the debt load, that wouldn't impact the FEDs decision to cut interest rates which will directly impact money market and tbill yields, while the int and long part of the curve doesn't have to move in tandem, as we have seen the last 4 weeks since the first fed cut and the 10yr is ~70bp higher. Interestingly enough, if you follow the dot plot and tax Money Market yields come March next year and adjust for inflation, your real after-tax Money Market yield will be close to 0%.

[SDGT3]

B, you've forgotten more about this industry that we will ever know, but I had a question. I Googled my question and had AI assist, but it only gave me individual tax rates.

An individual is taxed at ordinary tax rates on earned interest from TBills up to 37%. How is a C corp like BRK taxed? Is it at the corporate rate of 21%? If so, given your previous post, wouldn't the real rate on TB interest be ahead of the game?

[GB-man]

Originally Posted by -dustin

Still long PLTR? It hit unreasonable numbers for me today, so I dumped half my load at $50.50. Bought at $14 thinking I was going to hold for a good long while. Instead I made it 368 days.

Sadly I cashed out. Kicking myself today. I love the stock but was up strong and frankly wanted to raise some cash. Such is life.

[7sins]

Originally Posted by SDGT3

B, you've forgotten more about this industry that we will ever know, but I had a question. I Googled my question and had AI assist, but it only gave me individual tax rates.

An individual is taxed at ordinary tax rates on earned interest from TBills up to 37%. How is a C corp like BRK taxed? Is it at the corporate rate of 21%? If so, given your previous post, wouldn't the real rate on TB interest be ahead of the game?

That my friend is a good question, I am not an accountant so I am not sure how they would be taxed as a C-Corp entity, I would presume they have many ways they are mitigating their tax bill like most multi-national corporations. My clients are more UHNW families opposed to large corporations.

My last response was geared towards the individual investor parking money in a MM. Even still, lets say he is taxed at 20% for round numbers. Tbills should track the FED funds rate almost 1 to 1, March projected to be at 3.5-3.75, net 20% tax puts you at 2.8% and inflation at 2.4% puts your real after tax yield at 40bp with zero ability to participate in price appreciation when yields inevitably come down. That to me is not very attractive when there are so many other ways to secure higher yields for longer and partake in price appreciation. It will be interesting to see where yields and inflation start to move depending who takes the white house and senate/house. Might be time to put the inflation trade back on, CPI swaps and inflation insurance contracts are insanely cheap at the moment.

[1st amg]

What AI stocks should I park my money in? it seems to be all the talk and craze. I have some money for the kids that rather than sitting in certificates, possibly moving them and trying this avenue.

[Krash]

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[huncho]

Originally Posted by Krash

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interesting thing also is TLT collapsed and yields are flying up

btc is also at all time highs now

[BraveBold]

Originally Posted by huncho

interesting thing also is TLT collapsed and yields are flying up

btc is also at all time highs now

These two moves are based on proposed tariff policies and the big increase in inflation those policies would cause.

There is also a (lesser but still meaningful) impact from fiscal spend / tax policy assumptions…

BTC of course is also impacted by… “policy” support espoused for crypto.

[Krash]

Originally Posted by BraveBold

These two moves are based on proposed tariff policies and the big increase in inflation those policies would cause.

There is also a (lesser but still meaningful) impact from fiscal spend / tax policy assumptions…

BTC of course is also impacted by… “policy” support espoused for crypto.

This is why.



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[BraveBold]

Originally Posted by Krash

This is why.



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No, this is an inflation and tax policy move. Re-read my post.

Edit: I will elaborate briefly here, since I realize this isn’t an econ / finance forum.

* First, the reaction is a combination of the Trump win AND strength in governing ability (re: Senate, etc)
* Trump corp tax policy is significantly more favorable to large companies vs Harris. The tax impact has a meaningful instantaneous impact on projected after-tax cash flows that in turn drive corporate valuations.
* At the same time, tariff policy is a major supply shifter for domestic consumers and pricing power for certain companies - so consider this a shift in value from consumers to corporates and from a deflationary influence from import competition to an inflationary one. This is neutral to positive for companies defended by tariffs and of course highly inflationary to consumers
* higher inflation portends a more hawkish Fed - this explains a stronger USD and the spike higher in yields
* the tax cuts of course drive a higher fiscal deficit and that in turn also is negative for bonds - as it suggests more supply to fund the deficit spending

Because these changes may be considered persistent, it is impacting the yield curve in longer-dated bonds in addition to nearer part of the curve.

Hopefully the tariff policy is more logical and doesn’t cause an inflation surge as expected…

[Krash]

I always thought people invest in TLT if they think interest rates are rising. If they think interest rates are going down, they dump it.

But I generally stay away from TLT anyway. I stick with equities, and thank goodness for that.


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