patrick.net

Logan Mohtashami says

Fed Rate Hike Is Coming

Finally. Do it and move on. We are at the cusp of a major recovery.

bgamall4 says

The only reason the economy is growing is anyone with a pulse can get approved for a car.

We now have Zero unemployment. Anyone who wants to work, can work for Uber.

Strategist says

We now have Zero unemployment. Anyone who wants to work, can work for Uber.

This group is struggling

- Drug users not in jail
- Criminally active Americans not in Jail
- High School Drop outs
- Non college educated Americans
- Non trade school Americans
- Disability
- Someone with a criminal record, hard to find a job with that

Someone said market should be up when there is a rate hike because it signals booming economy. How come it is down?

hanera says

Someone said market should be up when there is a rate hike because it signals booming economy. How come it is down?

The Dow is approaching 18,000.

Logan Mohtashami says

Strategist says

We now have Zero unemployment. Anyone who wants to work, can work for Uber.

This group is struggling

- Drug users not in jail

- Criminally active America not in Jail

- High School Drop outs

- Non college educated American

- Non trade school American

- Disability

- Someone with a criminal record, hard to find a job with that

ha ha ha
Criminals struggling......is a good thing. Some of them should be struggling from the end of a rope.
School drop outs struggling......They will always be poor. $15.00 minimum wage coming to the rescue.
Disability.......lets help them.

bgamall4 says

This may help you understand, Strategist:

I still don't understand.

bgamall4 says

Ironman says

Logan Mohtashami says

Fed Rate Hike Is Coming

So is the Easter bunny....

If there is one it will be for show.

Thanks for taking your meds.

hanera says

Someone said market should be up when there is a rate hike because it signals booming economy. How come it is down?

It means the dollar is up and rates are up: slowing the economy.
Plus lower corporate profits as wages grow.
-> the 'inflation' is moving from assets toward the real economy.
The assets don't like it.

hanera says

Someone said market should be up when there is a rate hike because it signals booming economy. How come it is down?

It recovered last month. Best October ever.

Ironman says

It appears to be going the wrong way for that..

Not if you look at the one month performance.

The amazing thing is some stocks are acting surprised...

In the last few months their was a group of us #JustGoForIT, a group that doesn't agree on everything, but we all agreed that the Fed should raise rates from 0 to 0.25%
As you can imagine we got bombarded by the token line

Fed will never raise rates

Which was similar to the group that said #QE would never end and it ended in America a year ago.

I chart every single economic index we possibly have in the world, no need to have Zero Rates

From the article I wrote back in August
http://loganmohtashami.com/2015/08/16/fed-and-the-first-rate-hike/

Fed has a dual mandate
1. Control Inflation
2. Facilitate Employment
I like to joke that they have a DUEL mandate; count the steps to 10, aim to kill and be first to shoot.
So, we are well below their unemployment metric which triggers a rate hike.
Via Doug Short

http://www.advisorperspectives.com/dshort/updates/Employment-Report.php
U RATE

– In an interview with Bloomberg I said they need to change their metric because unemployment is dropping too fast due to the Labor participation rate and that wage growth won’t likely come until 2015 based on their data metric of ECI wage inflation metric.
CPI inflation is not at a comfortable level for them but they don’t seem to mind this as much.
Via Doug Short
http://www.advisorperspectives.com/dshort/updates/CPI-Headline-and-Core.php
CPI-headline-core-since-2000

– Another view I’ve held for years is that they should raise their inflation metric 2.25%-2.50% on CPI.
In any case they haven’t. So in reality keep a close eye on 2’s — it’s itching to break out to an 80 handle.
It appears they are headed toward their first-rate hike in years.
If you wanted to ask a provocative question ask people what do they believe they will achieve with rate hikes now. You will get some real interesting answers.

I am sticking to my model that 3% FED Funds and 4.7% on 10’s are recessionary rates with some duration after these levels. Those rate metrics would be the lowest rate curve to create a recession post WWII. The best way to counter this call is to get more dollars into labor’s pockets.

Long Term Perspective On Federal Funds Rate, 10 year Yield and Inflation

Via Doug Short
http://www.advisorperspectives.com/dshort/updates/Treasury-Yields-in-Perspective.php

treasuries-FFR-since-1962

bgamall4 says

The only reason the economy is growing is anyone with a pulse can get approved for a car.

However, while in the past we had CRA and Subprime, we can now pull cash out of our cars.
https://www.titlemax.com/title-loans/

Logan Mohtashami says

This group is struggling

- Drug users not in jail

POTHEADUS used drugs - and he had just enough mental acuity remaining to get a JD. He then convinced members of this group who vote to vote. And then they voted.

Entitlemented says

This group is struggling

- Drug users not in jail

When I mean drug users

- heavy hard core drug users
- People who are being supported by SoberLiving.com
- People who can't function in day to day life because of their drug abuse but aren't in a mental health institution because if they're being actually
treated in a institution we can't count them in labor force group

Moronman says

They'll like it later when it makes for higher demand. Jesus! Did everybody forget how this works?

Extra demand is one thing, margin is an other, and p.e. multiple an other still.

Many professionals - doctors, lawyers, judges, etc. - are functional recreational drug users. Folks like to get high just like they like a good brandy or fine meal. Pharmaceutical companies must be allowed to make recreational drugs that get people what they want but that have little or no dangerous side effects. It can happen, but this anal Puritanical aversion to happiness has got to go.

so how do you make money off of rate rise? short stocks , short bonds? what is the shorting code? logan enlighten me :)

They can't raise rates too much because of debt service. Remember as Ironman indicated dear leader will have doubled the budget by the time he leaves office. If my math is right a 1/4 percent would be 50 billion a year. 1 percent would be 200 billion and so on.

You could use an index fund that shorts the market.

KgK one says

so how do you make money off of rate rise? short stocks , short bonds? what is the shorting code? logan enlighten me :)

economic cycles have phases. rate cuts, their is a stall and then their is the hiking cycle.

At some point the rate hikes will impact the economy negatively and if you want to short the markets look for

Claims to rise over 300K on a w 4 week moving average (323K) the key number for me and it needs to happen without an one time economic event. Also, LEI to have 4 straight negative prints with that claims data line. Their is your cycle recession data line which means profit margins are going to be hit due to low demand

Stocks in this cycle have done since 2009 with all the economic data moving positive for the most part

I am always invested in stocks and adding each month, I am not a person who tries to time the market. Obviously a separate trading account for aggressive moves is something different Portfolio Looks like this

80% stocks
15% Bonds
5% Reits

Stock profile
50% S&P Index
20% International
10% Company called MASIMO it's my biggest position single position, ticker symbol MASI

Keep a eye on rate hikes and economic activity, I don't believe we will see 17 rate hikes like we saw in the start of 2004 getting up to 5.25%
3% Fed funds rate and 4.7% 10 year to me is recessionary, we might not even get their as this was my thought 5 years ago. If wage pick up happens then you can get their as CPI should be over 2% soon.

Logan Mohtashami says

50% S&P Index
20% International
10% MASI
15% Bonds
5% Reits

What so good about MASI? Why not BSX or MR?
What kind of bonds? Treasuries or corporate bonds?

hanera says

What so good about MASI?

From my own work, it was a undervalued company for a while, finally kicking into gear, it's had a great 2015, concentrated holdings 20-22 level, only off loaded some shares at 42.43 recently from a different account, adding to it in smaller amounts , it's had a massive run already in 2015, this one is keeper for me.

Bonds are simple ticker symbol PBDAX

As always, I don't care so much for the short term cycle moves that can 2-7 years in directions up or down, it's a long slow and steady race for another 20-25 years, then I will change up the allocation.

The main thing is adding $ each month, that's more cash flow concern, that's the boring truth of it all because even I don't use my own economic cycle tracking to move my allocation, I look at every down turn as a plus until I get into my 60's

Also BSX market cap 25 billion - too big for my taste looking longer term MASI 2.1 Billion

MR went private didn't it recently, it's had bad run since 2013. Not too familiar with that company

Key levels here
2.50%
2.66%
Break those and we test 3.04%

Tell the difference between a analyst and technical chart person

Logan,

Do you think Fed would hike rate? What is the impact of rate hikes on RE in SFBA?

So far, stock market reacted poorly on possible rate hike in December.

bgamall4 says

The only reason the economy is growing is anyone with a pulse can get approved for a car.

Well you forgot that gas is sucking a trillion dollars less a month out of the world ecconomy than it was 2 years ago.

It's all right there doing exactly what I said $2.00 a gallon gas would do. Now Imagine when President Trump fires up those pipelines and gets gas down to .99 cents a gallon.

There will be an Escalade in every driveway like the good ole days.

hanera says

Logan,

Do you think Fed would hike rate? What is the impact of rate hikes on RE in SFBA?

So far, stock market reacted poorly on possible rate hike in December.

Short term, it's algo city, until we break into a new highs, which I believe we can, soon the first rate hike will be forgotten and then the discussion will be how many hikes until we see the next recession.

hanera says

RE in SFBA?

The FED will never raise rates....period

It's so funny to keep hearing people talk about it.

IF THE FED GETS EVERYONE WORKED UP ABOUT AN INTEREST RATE HIKE AND THEN DOES NOTHING IT ACCOMPLISHES THE SAME AS THE HIKE WITHOUT THE NEGATIVE EFFECT! JAMES

that would be a real smart move....

THE FED WILL BE MAKING A TERRIBLE MISTAKE IF IT RAISES THE RATE EVEN A QUARTER POINT AND WILL HAVE TO LOWER IT IN FEBRUARY. IT WILL ALSO CAUSE THE MARKETS TO LOSE FAITH IN THE FEDS. ABILITY TO HANDLE THE ECONOMY!