Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

«1

Comments

  • edited July 2022
    Nice to know you’re on top of this Yogi!

    Been casually viewing markets off and on today. Tech has been strong with the NASDAQ hanging around a 300 point (2.7%) gain for the day as of 2:30 PM.. Generally, not much reaction across the broader stock indexes following the 2:00 PM release. (Powell has yet to speak / answer reporters’ questions.)

    The precious metals continue to play dead, although gold and silver spiked briefly after the announcement. I’m assuming the dollar weakened slightly, as (a relatively minor hold) in foreign equities / ETFs perked up just a bit after the statement.

    PS- Whatever Powell said … markets liked it.
  • The current strength in tech, despite the Fed actions, may be due to the Senate actually passing a $280 B bill to promote science and chip production in the US, mostly as a response to China's increasingly hostile agenda. While (if typical) a fair amount of that will be siphoned off into the pockets of the top 1%, I still believe that it's necessary insurance so that the US will have a reasonable chip production capability given the probability that China will, sooner or later, invade Taiwan.

    It's no secret, but perhaps not common knowledge, that there is only one company in the world presently capable of supplying the most advanced chip-manufacturing equipment. For years that company, located in the Netherlands, has been subjected to enormous political pressure to restrain them from supplying that equipment to China.

    Because of that, China cannot produce the most advanced types of chips, which are highly prized for military and high-end scientific and industrial applications. However TSMC, a major chip-making company, does have a fair amount of this equipment on Taiwan, which I believe increases the odds of China attempting to obtain this equipment by military force.
  • edited July 2022
    Agreed, the chip bill passing was a mild positive when announced but...

    Today is far more about the market reaction to MSFT's unexpectedly strong guidance after their earnings miss yesterday and GOOGL's powerful, after hours move yesterday (and further advances today) after SNAP's debacle. Not all advertising revenue is created equal.

    And of course, the Fed came through as expected and that uncertainty is now resolved. As well, Powell's comments are being received very positively.
    https://www.marketwatch.com/story/surprise-how-the-stock-market-has-reacted-on-each-fed-decision-day-since-march-11658933993?mod=home-page
    NOTE: Above link was posted before chart was updated for today's action, which action is similar to prior meetings. Link is fee and may be updated for the above sometime later.

    Disclaimer: I am LONG GOOGL, MSFT, AAPL and AMZN, as well as FSELX and FBGRX.
  • Notes After Powell’s Press Conference
    Fed funds raised by +75 bps (again) to 2.25-2.5%; more hikes, small or large, would be data dependent. Fed average inflation target remains +2%. Reserve balance rate 2.4%. Primary credit rate 2.5%. Balance sheet QT (-QE) continues at previously announced pace.
    US is not in recession now & the Fed is trying to avoid recession; economic data are mixed. Initial Q2 GDP growth (due 7/28/22) will be subject to revisions (there are speculations whether it would be + or -). There is policy effect lag, but the economy is slowing down in some areas.
    Fed’s preferred inflation measure is PCE (due 7/29/22) although public watches CPI.
    UM Sentiment (due 7/29/22) was not mentioned at all.
    https://ybbpersonalfinance.proboards.com/thread/158/fomc-statements-6-7-weeks?page=1&scrollTo=715
  • The Netherlands company to which I referred, ASML, is currently up 4.8% today, while the general technology index is down some 2.3%.

    That would seem to suggest that the market is reacting to conditions specific to the chipmaking industry and has little to do with "MSFT's unexpectedly strong guidance".

    Disclaimer: I currently hold a position in ASML.
  • edited July 2022
    Yes sirs maybe med-long TQQQ SOXL

    Next three trading days may make-break the babybull back
  • Time to check CD rates or does it take a few days to figure the rate out ?
  • FOMC Statement came out & Powell had his say at Q&A. Fed fund futures traders see, as of 7/27/22 EOD, 50-25-25 bps hikes thru December FOMC to 3.25-3.50% level & then the Fed PAUSING. This until the Fed OPEN MOUTH Committee people start talking gain.
    https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
  • paden and rygel guy, named cleveland, played contrarian on bloomberg tv. pessimistic, clearly, short-term. the fed, according to him, is still---as ever--- painting too rosy a picture. and if they stop raising rates too soon, the inflation will be like an albatross around our neck. pernicious. insidious, long-lasting.

  • BIG surprise this morning is NEGATIVE Q2 GDP! That is 2 quarters of negative GDP now. Atlanta Fed GDPNow has been predicting that for a while.

    When Powell was asked yesterday about it, he said that he had no clue about GDP but don't trust 1st reported GDP as it can be revised. I thought that was a weird comment, but on hindsight, he was already addressing possible negative Q2 GDP. He even said that he doesn't think that the US is in recession now. But this debate will start fresh.

    https://www.cnbc.com/2022/07/28/gdp-q2-.html
  • edited July 2022
    Old_Joe said:

    The Netherlands company to which I referred, ASML, is currently up 4.8% today, while the general technology index is down some 2.3%.

    That would seem to suggest that the market is reacting to conditions specific to the chipmaking industry and has little to do with "MSFT's unexpectedly strong guidance".

    Disclaimer: I currently hold a position in ASML.

    Hmmm...scoring at home, that would indicate to me at least that ONE company is outperforming today but it has little-to-no positive effect on the overall market.

    You're a bright guy and a great resource of info. But you are wrong about this point.

    Yesterday was a Fed and Big Tech move as shown in the link and detail I provided.

    Today? Market is DOWN 0.40%. Tech is DOWN 0.40%. But semis are DOWN 1.40%.
    How does your thesis explain that?

    I can link at least 20 articles that the writers/analysts opined yesterday's market move was largely due to overall tech strength (esp GOOGL and MSFT) and the Fed doing what it was expected to do, along with positively received comments by Powell.

    But why bother? It's widely accepted as the reason for yesterday's sharp move UP. The semi news was simply a small cherry on top. End of the debate for me.
  • that there is only one company in the world presently capable of supplying the most advanced chip-manufacturing equipment

    A minor point - ASML is the clear leader in lithography, but the manufacture of semiconductors, broadly speaking encompasses four phases - lithography (the laying down of the pattern), etching (the actual carving out of the circuitry), deposition (depositing each layer of silicon to be etched), and polishing. If I'm a little off, it's been the better part of a decade since I did any real work in this field. And most of what I did was in etch, though we dabbled with litho - just enough for me to appreciate the complexity.

    As near as I can see (looking at ASML's website), it doesn't offer equipment for most of the steps.
    https://www.asml.com/en/products

    Then there's metrology - the equipment used to take measurements at various phases.
    https://sst.semiconductor-digest.com/2018/02/top-semiconductor-metrologyinspection-equipment-vendors-continue-to-increase-share-of-total-market/

    Don't forget the software, APC/SPC.
    https://www.lntinfotech.com/blogs/advanced-process-control-semiconductor-manufacturing/
  • @stillers- OK... relax... not a big deal here.
  • edited July 2022
    @Old_Joe, Learn to take a complement. He called you “bright.” :)

    “I have always been regretting that I was not as wise as the day I was born.” - Henry David Thoreau
  • @hank- Yes, I did appreciate that. I just meant that the difference in opinion is insignificant in the overall order of things. I also appreciate that some folks find the information that I share to be sometimes interesting or useful... that's nice to hear.
  • edited July 2022
    @Old_Joe. I was amazed at your depth of knowledge in this area and also what @msf added.
    For sure, our economic welfare is entangled with foreign nations in ways we might not always prefer. (Otherwise, you’re both way over my head on this issue.)
  • FWIIW, shortly after opinions were registered late this AM about the market being down, the whole shebang turned positive and finished well in the green.
  • edited July 2022
    Yeah, opinions can be pretty ephemeral. Sometimes mine have a life of about two minutes.:)
  • @Old_Joe: I think you should hang on to ASML. Most foreign funds I respect seem to hold it and many of them also have Taiwan Semiconductor. It may be that China would like to get its hands on that company, but I pray they are level-headed enough not to try to take it by force. Even you and I would be called up if that war occurred.
  • Hi Ben- Yes, I'm going to hold on to ASML. One thing, though- they have such a full order book that they won't be able to increase production significantly for a number of years, barring some major change in the production situation. And as far as production expansion goes, I'd think that they have the same supply-chain limitations as anyone else, so that won't be easy.

    So the upside would seem to be limited to that extent. We will just keep it and see what happens.
  • @OJ - shrug it off my man. Many of my decisions are sometimes tequila's.
  • G&T on this end.:)
  • edited July 2022
    To all...

    Puhlease, don't try to dismiss FACTs as opinions - there's enough of that in the world already.

    And puhlease, don't tell me to "relax" as though I'm the problem or at minimum, I'm out of line.

    What I posted previously on this thread is NOT an opinion. Semis had a nice day (what didn't?) but they did NOT lead the market UP on Wednesday, and they have UNDERperformed the broader market Thursday and today by at least a point EACH day. Semis are freaking RED today!

    Read it again s-l-o-w-l-y and try to understand it.

    So, NO, a thousand times NO, the semis bill is NOT the reason for this week's market pop. If you think it is, the show us all some some REAL freaking data that supports what is in effect, YOUR opinion.

    Overall, maybe TRY to ignore posters' and your opinions and biases and take a freaking minute to look at the data.
  • Old_Joe said:

    G&T on this end.:)

    Better make that a double OJ.
  • Among the post-FOMC data this week, Q2 GDP was yesterday (bad; -0.9%), and today were PCE (also bad; +6.8%, core +4.8%) and UM Sentiment (improved a bit to 51.5 from June low of 50 that spooked Powell at the June FOMC).

    https://www.cnbc.com/2022/07/29/inflation-figure-that-the-fed-follows-closely-hits-highest-level-since-january-1982.html

    https://news.umich.edu/consumers-adjust-to-inflation-as-labor-market-expectations-worsen/
  • Quite a temper tantrum from a seemingly insecure individual.

    Take the high road Dan... and follow hanks recommendation:)
  • On this FOMC thread, posters have mentioned several topics, some serious, others tangential or in fun: techs, semis, Nasdaq, China, Taiwan, CDs, tequila/G&T/double. However, any extended discussion(s) on any of these topics should move to new threads.
  • edited July 2022
    Thanks YBB for starting the thread & all comments taken with a grain of salt.
    Have a good weekend, Derf
  • @yogibb, really appreciate your inputs on this thread.
  • edited July 2022
    Jerome Powell recently stated that the current 2.25% - 2.50% Fed Funds Rate is neutral.
    The Fed's preferred measure of inflation is the PCE Price Index.
    Year over year, PCE prices increased 6.3% for the period ending in May (latest available stats).
    Excluding food and energy, the increase was 4.7% during this period.
    Rent and owners' equivalent rent are important PCE components which typically lag home price growth by approximately a year. Prices for these two components will increase in the months ahead.
    Also, the Employment Cost Index indicated that private workers' wages and salaries increased 5.7% for the 12-month period ending in June.
    Current monetary policy is still too accommodative.
Sign In or Register to comment.