[DrVenture]

I'd love to find some data to make the economic and stock market outlook appear more favorable. I sold more equities on Wednesday, as the opportunity presented itself.

BoA now says that "The bull market could be disrupted by unanticipated economic slowdown". I have no specifics, but this is a big change from only 2 months ago.

Meanwhile, our stock market which has led the global markets for a very long time, falls behind this year. "...stocks in Europe and China are vastly outperforming the U.S. equity market. The S&P 500 is up a little over 1% since Jan. 20, as of the close on Thursday after the latest sell-off, while the broad-based MSCI China ETF has risen roughly 17%. The iShares Eurozone ETF is up roughly 6% in that same time span. The iShares China Large Cap ETF, meanwhile, is up about 16%.

The Dow Jones Industrial Average is barely hanging onto a positive return over the past month.

The leaders of U.S. tech are not faring better against Chinese rivals in the markets. The Invesco QQQ ETF is up about 2.5%, while the KraneShares CSI China Internet ETF has risen roughly 20%."

Apparently, home sales are dropping sharply:

https://www.cnbc.com/2025/02/21/janu...-hit-high.html

"Stocks sold off on Friday as new U.S. data sparked concern among investors over a slowing economy and sticky inflation, leading them in a search for safer assets.

Losses increased into the close as traders feared staying long into a weekend that could bring another barrage of headlines from the Trump administration, which has proposed a flurry of tariffs and other market moving policy changes since taking charge a month ago.

The Dow Jones Industrial Average lost 805 points, or 1.8%, bringing its two-day losses to more than 1,200 points. The S&P 500
traded 1.6% lower, falling for a second day after closing at a record on Wednesday. The Nasdaq Composite dropped more than 2%."

[DrVenture]

Barron's summary points from 2/17/2025:

"Inflation (CPI) was higher than expected; chaotic news is coming out of DC; cyclicals are weak; new highs have been without good follow-through or breadth. The stock market seems to be topping out and its risk-reward has turned negative. Rather than climbing a wall of worry, the market is butting head against a wall of uncertainty. A support may be at 200-dMA around 5,680."

"U.S.A. withdrew from global corporate minimum tax (15%) agreement that wasn’t yet ratified. This Agreement was opposed by US big tech and pharma with operations overseas. But the withdrawal may create complications – the digital services tax (DST) by European countries and Canada were rescinded due to this Agreement, so they may comeback. This will add to the problems created by the new tariffs. The EU is also concerned by the US social-media giants dropping content moderation – there are now the EU Digital Services Act and the AI Act. The US and EU are headed towards long fights over this, and the US big tech and pharma may be caught in the crossfire."

T-Bills 3-mo yield 4.34%, 1-yr 4.23%; T-Notes 2-yr 4.26%, 5-yr 4.33%, 10-yr 4.47%; T-Bonds 30-yr 4.69%;

TIPS/Real yields 5-yr 1.71%, 10-yr 2.04%, 30-yr 2.36%

"Pg 8, UP & DOWN WALL STREET. AI hype now may be comparable to those for Internet during the dot. com bubble of 1999/2000 or for radios in 1920s. The new technologies typically go through several up and down phases (some say that AI has already had a few). The Magnificent 7 are no longer software cash cows but are making huge capex for AI that haven’t translated into profits. Datacenters being built, some with Government incentives, will have uneven demand with demand gaps, and would lead to lumpy earnings (that’s not what is typically expected of growth highflyers).

Other worries include high US budget deficit (6.2% of GDP) and debt (near 100% of GDP). The interest costs are 3.2% of GDP, so higher than the primary deficit of 3% (ex-interest). Many countries are gradually diversifying away from the dollar. Be cautious.

The stock market ignored previous general tariffs, but liked the new reciprocal tariffs (actually, it liked the vagueness of the announcement and longer timeframe for implementation). Some carveouts are also expected for areas of national importance. Markets didn’t pay much attention to MUSK’s DOGE. Deficit reduction from 2.5% of federal workforce leaving will be a drop in the bucket, so DOGE produced more sensational news than meaningful cuts. Interest on federal debt at 3.28% of GDP (2028 est 3.9%) is the largest component of deficit and 10-yr Treasury yield may be the key to reducing that."

"Pg 27 , TECH TRADER. US CHIP TARIFFs may become a stumbling block for its AI leadership. The US now relies on imports of basic and advanced chips because there isn’t enough domestic capacity. New fabs are being built, but those will take several years to start producing. In addition, the related infrastructure developments will require participation of global investors. The US is also taking deregulation steps to address the power needs of AI datacenters. But chip tariffs will be passed on to customers and reduced demand from higher prices will make US AI investments less attractive to global investors. The US and global AI stocks may sell off. It’s also unclear whether chips will be exempted from the newly announced reciprocal tariffs."

Pg 24, INCOME. Several dividend-payors in the following sectors may be tariff-proof: Real estate (STWD, NLY-mREIT), energy (VNOM), consumers (CVS, PM), financials (PFS), utilities (AES, DTE, EVRG, NEW, WTRG).

Pg 25, FUNDS. In the race to zero fees, there are several SP500 ETFs now – SPLG (2 bps), IVV (3 bps), VOO (3 bps), SPY (9 bps). The largest and most liquid is SPY, but VOO and IVV are catching up fast.

[floridaorange]

Same article -

The drop was dramatic, but several mitigating factors show there’s no cause for alarm. Some of it can be chalked up to bad weather, and some to auto sales tanking in January after an unusual surge in December due to fat dealer incentives,” said Robert Frick, corporate economist with Navy Federal Credit Union. “Especially considering December was revised up strongly, the rolling average of consumer spending remains solid,” Frick added.


The market isn’t going to improve drastically until the war in the Ukraine ends, imo. So hang tight folks. I expect a very strong market in 6-12 months you watch

[IanH]

Just gtfo with the "trump will make the markets better" bull crap. We all know that's what you are saying.

Its not grounded in reality and it's not relevant to the thread.

[IanH]

The dollar inflated 16% 2021 to today. S&P went up 60%

Your politics would dictate that the president during that time had nothing to do with that. Regardless of whether that is true, the same standard must be applied to today. "President has nothing to do with it"

Our best case scenario is that the markets do the same thing they did for the past 5 years. That is highly unlikely.

[DrVenture]

Originally Posted by floridaorange

Same article -

The drop was dramatic, but several mitigating factors show there’s no cause for alarm. Some of it can be chalked up to bad weather, and some to auto sales tanking in January after an unusual surge in December due to fat dealer incentives,” said Robert Frick, corporate economist with Navy Federal Credit Union. “Especially considering December was revised up strongly, the rolling average of consumer spending remains solid,” Frick added.


The market isn’t going to improve drastically until the war in the Ukraine ends, imo. So hang tight folks. I expect a very strong market in 6-12 months you watch

The war in Ukraine is only one small variable. It was going on for the last two years of +25% S&P gains. No correlation there. I am looking at consumer sentiment/spending, inflationary pressures, new taxes (tariffs), trade/supply chain disruptions, valuations, interest rates, housing, government spending, corporate earnings projections. These are much bigger contributors to the overall picture.

Things are murky right now, lots of moving parts. I am not a set & forget investor. I used to be, now I try and capitalize on events/circumstances and find that chaos provides opportunity. My fixed income portfolio is beating the S&P, DJIA & NASD YTD, and was only down yesterday 0.1% against market drops of up to 2.55% in Large cap growth stocks. That is a mere loss of $1000 on a million dollar low-risk portfolio. On a very bad market day. This goes a long way to mitigating losses on the equity side of my portfolio.

When/if things change, I will again adjust accordingly. I still own stocks, just quite a bit less than a month ago. And we shouldn't forget that the Nasdaq was down 33% in 2022. The S&P down 20%. My strategy is to reduce risk, when I deem it appropriate. I am still a stock market bull, just a far more cautious one at the moment.

[DrVenture]

Let's delete political comments, please. Or the thread may get wiped. And we don't want to provoke bickering.

I know that many people view the markets through a vague political lens, which is a mistake. Still, actual direct government action, from taxes to rate manipulation to regulation do matter, but only when causal. And as part of the total landscape. An investor cannot ignore taxes, tariffs anymore than FED actions. That would be foolish.

Lots of knowledgeable people with good reputations, said "no cause for alarm" leading up to the Dotcom bubble, the Credit Crisis and even CoVid. We all need to be mindful to not seek views that are appealing and dismiss all else. Long term, everything will work out, I agree. I've made the mistake in the past of sitting idly by while FOMO ruled my thinking and I try and trust my instincts more these days. I did a lot of selling in January of 2020, before CoVid took the markets to their knees, this enabled me to scoop up bargains in late March and April that year. While also sidestepping some losses. I am not saying this is the same situation, but I plan to be prepared if opportunities present themselves.

I am not speaking from a position of fear, rather one of greed. I want to limit risk right now and have dry powder if the right moment arrives. And right now, that dry powder is actually beating the markets. I do understand that many people are "buy and hold" only. and may not have the time, resources or knowledge to capitalize on events or momentum. I speak only of myself. When faced with a market that is only going up, invest everything in growth, sit back and reap the rewards. Still, when faced with a market that is trading sideways or even trending down, there are certain things one can do.

[floridaorange]

I’ll let chat gpt outline my post in more detail:

The war in Ukraine has had significant global economic repercussions, including effects on the U.S. stock market. Below are some key ways the war negatively impacts the market, followed by how its potential end could create a more bullish sentiment.

Negative Effects of the War on the U.S. Stock Market:

1. Energy Price Volatility:
• Russia is a major oil and gas exporter. Sanctions and supply disruptions have led to higher energy prices, increasing costs for businesses and consumers, fueling inflation, and reducing corporate profits.
2. Inflationary Pressures:
• The war has disrupted global supply chains, especially for commodities like oil, wheat, and fertilizer. Higher costs for raw materials contribute to inflation, leading to tighter monetary policy (higher interest rates).
3. Higher Interest Rates & Fed Policy:
• To combat war-induced inflation, the Federal Reserve has raised interest rates, making borrowing more expensive for businesses and consumers, slowing economic growth.
4. Market Uncertainty & Risk Aversion:
• Wars create geopolitical instability, making investors more risk-averse. This often leads to sell-offs in equities, especially in sectors sensitive to uncertainty, such as tech and growth stocks.
5. Defense Spending Overhang:
• While defense stocks have surged, increased government spending on military aid diverts resources from domestic economic growth initiatives, potentially increasing national debt concerns.
6. Supply Chain Disruptions:
• Ukraine is a major exporter of wheat, corn, and essential minerals (e.g., neon gas for semiconductor manufacturing). Disruptions impact industries like food production and tech, affecting corporate earnings.
7. Stock Market Sector Rotation:
• Investors tend to shift toward defensive sectors (energy, commodities, and defense) during wartime, leading to declines in growth-focused areas like technology and discretionary spending.
8. European Economic Weakness Affecting U.S. Markets:
• The war has weakened European economies due to energy dependence on Russia. This indirectly impacts U.S. multinational companies with exposure to European markets.

How the War Ending Could Create a Bullish Sentiment:

1. Lower Energy Prices & Inflation Relief:
• A stable Ukraine-Russia situation could lead to normalized oil and gas markets, easing inflationary pressures, and allowing the Fed to pause or cut interest rates.
2. Easing of Supply Chain Issues:
• A post-war recovery in Ukraine could restore agricultural and industrial exports, benefiting food prices and semiconductor production.
3. Increased Business & Investor Confidence:
• Markets tend to favor stability. The resolution of the war would reduce geopolitical risk, boosting investor confidence and equity valuations.
4. Stronger Global Trade & Economic Growth:
• Reduced sanctions and restored trade between Europe, Russia, and Ukraine could benefit global markets, improving demand for U.S. goods and services.
5. Rotation Back into Growth Stocks:
• If inflation declines and interest rates stabilize, investors may shift back into growth-oriented sectors (tech, consumer discretionary), fueling a broader market rally.
6. Potential for Reconstruction & Economic Stimulus:
• Post-war rebuilding efforts in Ukraine could spur global demand for construction materials, industrial equipment, and technology, benefiting certain market sectors.
7. Stronger European Economies Benefiting U.S. Corporations:
• If European economies recover from the war’s effects, U.S. companies with international exposure could see revenue growth from improved demand.


But we are all entitled to our opinions.

[floridaorange]

Originally Posted by IanH

Just gtfo with the "trump will make the markets better" bull crap. We all know that's what you are saying.

Its not grounded in reality and it's not relevant to the thread.

You seem unsettled, everything ok?

[DrVenture]

Originally Posted by floridaorange

I’ll let chat gpt outline my post in more detail:

...


But we are all entitled to our opinions.

Opinions are fine. Are you trying to bury me in details? From a chatbot, no less? lol Some of those points are valid.

Fact remains that for the last two years, the Ukraine war has continued and the U.S. stock market has had a phenomenal run. The war has had had some impact no doubt. No way to tell how much. Maybe even positive effects as our defense industry produces more products. But many other things are happening right now too.

Why cite Ukraine and not consider all factors? I listed a bunch. Many are far more relevant at this point in time. Should the Ukraine situation become settled, I would expect the markets to respond accordingly, and then do what they always do, react and move on to everything else. I am not ignoring Ukraine, just including it with "everything else". And markets tend to be forward-looking, so the end to the war may be partially priced in, already. Who could say?

An opinion only really matters if it is used for some purpose. I tend to put my money, where my opinion is, literally. That is how I beat the S&P by 5% annually from 2022-2024, one bad year and two great years. With only an 80% stock market allocation. My 3-yr annualized return is 16%, the S&P 11%. I did about 50% better. For 2020 (Covid) I achieved a 23.75% return against the S&P, which did 16.26%. I employed a similar strategy as I am implementing right now. No telling if I manage the same result.

Anything could happen, a peaceful end to the Ukraine conflict, quick new trade deals that eliminate tariffs, lower inflation that spurs rate cuts, etc. My main concern right now is higher taxes (tariffs) impacting earnings and inflation. Conversely, the possibility of significant cuts to government spending, possible rate hikes, if inflation returns, and signs of a weaker consumer. I prefer to be data driven and use what data is presently available. When that data changes, I will make adjustments. Most people should do nothing and ride it out. Not what I do.

[floridaorange]

Not waisting my time is what I was doing.

[Donut Lord]

Anyone here run any finance related YT channels?

[DrVenture]

Originally Posted by floridaorange

Not waisting my time is what I was doing.

I wasn't being sarcastic. Joking around. No offense intended. I just don't put the same singular emphasis on the war ending that you do. Too much else going on.