The 20% Solution Must Be Considered

When there is a major selling environment in the markets the urge emerges to sell everything and wait it out.  A question that must be on the table is the income tax consideration.  If a holding is down 10% adding a 20% to 30% tax tab is the proverbial insult-to-injury.  At the least, make that calculation when deciding.

 

If Twitter and Musk agreed to a price of over $54 why is Twitter right now trading at $50 and change?

Looks like traders are hesitant about the actual times on getting the cash, and maybe even if something interrupts the sale.  Maybe government intervention is a fear?  Perhaps financing could look different on closer examination.  In any event, a negative for the overall market, at least in the near term.

 

 Cnbc proving value of Mute Button as Powell and Yellen cost investors

That was some performance yesterday by the Fed chairman and Treasury secretary.  Probably cost loyal viewers of Cnbc a bundle.  Fresh from his reappointment to helm the Federal Reserve Chairman Powell issued a not-very-veiled threat to start raising interest rates.  And Secretary Yellen seemed obsessed with the debt limit even though that activity seems pointless as Congress pretends not wanting to raise the limit while raising the limit.

President Biden wants to double the capital gains tax for those making over $400,000. Here's what we think will happen.

Here is how CNBC summarizes:  President Joe Biden proposed a top federal tax rate of 39.6% on long-term capital gains and qualified dividends. With average state taxes and a 3.8% federal surtax, the wealthiest people would pay almost 49% total.

We think, predict:  39.6% No, maybe a couple of percentage points up.  And not right away.  As has happened in the past, we see the present holdings in portfolios will be grandfathered so any sales of assets if and when a new tax becomes law will not affect wealth.  Remember, the big product of Congress is The Loophole.

And one more prediction:  Watch that $400,000 come down.

 

What A Week, If We Ignore Thursday

Just another upwards-direction week Til Along Came Thursday.  Looked like food for the down-beaters at CNBC who as the old saying goes, predicted ten of the last three crashes.  Investors who took to the hills, sold to take profits, now have fodder for their 2021 I-Owe-Tax File.  Objective facts indicated nothing happened on Thursday to warrant the negativity.  The proof?  Just look at Friday's market.  

Where is Joe Pagano when you need him?

It was the summer of 1958.  This blogger was working for the Department Of The Army as a civilian, supervised by a WAC captain.  During the numerous nonbusy times I would talk with Joe Pagano, titled Mortuary Specialist.  The office was the Quartermaster for the entire First US Army which in addition to feeding and clothing soldiers, buried the dead.

I helped Joe organize his storeroom and came across a box of forms labeled "Next Of Kin Notifications".  Because there was no pending war I asked Joe if I should trash the box.  "No.  Another war will come along and we will be sending those out again," he said.  

He explained, "This is the time to prepare for a war, not after it starts."

Which leads us to this question:  Yes, the Center For Disease Control probably put in the time, but did they do the work needed to prepare the nation before War Disease broke out?  Another question:  All of us were brought up realizing the CIA was watching everyone including probably us.  So why weren't they watching China?

Joe Pagano was prepared for Vietnam.  If he wasn't retired he would have been prepared for Iraq.  Was the CDC prepared for us?

Mayor Goodman, now in her second term as Las Vegas Mayor

The Lady Said It.

That's Carolyn Goodman, Mayor of Las Vegas.  Today she said the media is destroying the city, frightening the public.  She said:  "In 1933, President Franklin Delano Roosevelt said, 'There is nothing to fear but fear itself.'  I have yet to see a doctor who espouses the voice of social media and what the media is doing here."

To which we add, look how the media is "helping" the financial markets by tossing around meaningless terms such as bear market or the like.  And having guests on who talk their books, like the gentleman who raises fears about stocks while forgetting to mention he sells bond funds.

It's time to talk profits, not fear.

Allan Roth would have been proud of CNBC  Me, Not So Much

Roth was one of the first major league baseball statisticians, working for the Brooklyn Dodgers. Andy McCue wrote a fine mini-bio of him; you can find it at https://sabr.org/bioproj/person/350155ef

Why compare him to CNBC?  Just look at the banner at the bottom of the screen, especially during market volatility.  "Dow is down 3 of last 8 sessions" or "Market Up first time this month" or "Lowest Since Credit Crisis". 

All of which leads us to ask are we watching business news or a sporting event?

When Good Things Are Actually Bad

So Federal Reserve Chairman broke into the trading day to lower interest rates a half point, a large move as rate-raising goes and the markets did the unexpected:  a reasonably good day given yesterday's huge move up turned negative.

Why?  Because the Chairman gave as his reason the concern surrounding Corona.  If he had to act so quickly and so vividly, things must be bad, no?

The Fed has suffered a withering attack from the White House about its reluctance to lower interest rates.

Was this a way for the Fed to give in to that pressure while at the same time hurting the administration by the way it did the cut?  Ah, politics!

These People Control Your Money.

Bet You Can't Identify One Of Them.

A recent photo of the Federal Reserve Board of Governors.  Everyone knows they are set to begin a round of interest rate increases, the only debate on how many, three or four.  So while the IRS will collect less taxes from you and corporations going forward, this group is aiming to do something that will increase the cost of living for everyone.  Increase the cost of home ownership.  Make credit card debt onerous.  Hike the cost of doing business for corporations, especially those with public stock ownership.  Why?  Because they want to.  So while we debate the importance of the Pennsylvania special congressional election, while we ponder the reason for the Secretary of State being fired, while we relish the stories about Stormy, this unelected group goes to work each day, deciding how much money you have.

FARBISSENER

More than 300,000 jobs created in the latest government jobs report.  Maybe we are reading in to this but didn't the economics guy at CNBC seem saddened by the strength-in-economy figures?  Was he:  Farbissener;  person that is never happy; never happy; sour person; sour; never; happy; unhappy; embittered; embitter; bitter person; bitter; person. A person that is never happy; embittered; bitter person; sour person. 

Remember This Fabulous Singer?

Anyone who listened to this or any other album by Julius LaRosa enjoyed beautiful singing.  His stage performances were crowdpleasers.  The Brooklyn native, though, found true stardom after being fired by Arthur Godfrey in 1953.

Maybe the same stardom will attach to Gary Cohn after resigning (fired?) from the White House.  Probably he will have more influence on public opinion writing op-ed pieces for the New York Times.  

The cable tv folks are in a frenzy this morning, gloating that stock market futures are minus about 300 points, all because, they say, Gary is Gone.

If you own stock in good companies nothing has changed.  We suggest not allowing the departure of a Democrat who never should have gone to work for the President influence this opportunity to buy some stocks on Sale.

As expected by just about everyone, Fed Chairperson Janet Yellin raised interest rates by a quarter point.  If you have money in a bank, call them and ask how much more interest you will earn?  Probable answer:  What?  Then call your credit card company and ask them when the interest rate you pay will go up.  Probable answer:  Today.  And that's the saga of interest rates. 

So She Went And Did It

Never Mind the President.  Forget About Congress.  Here is who is raising your cost of living today.

In a few hours the cost of owning a home will go up.  Car buying will cost more.  The bottom line of any business using debt financing will suffer.  Anyone owning bonds will see a capital reduction.
All because Janet Yellin and her Federal Reserve partners will decide to raise interest rates by a quarter point.  No Congressional action needed.  No signature by the President required.  No Supreme Court review.  After she announces the decision banks will instantly raise what they charge borrowers .  No waiting period for this.
And who elected the Federal Reserve?  Nobody.

Follow The Smart Money?
Last night Tesla reported quarterly earnings.  Its loss widened to $293,000,000, up from $184,000,000 in the previous one.  But Elon Musk did his usual superb job of showmanship and before you know it the stock was trading up five or six dollars in after-hours trading.

This morning, again, the stock was up several dollars in premarket. Note that the pre and post markets, outside of regular trading hours, are mostly populated by professional traders, the smart money.
And so:  Tesla opened for actual trading this morning down over ten dollars a share.  

How Many Companies in the Stock Markets?

Over 5,000 or less than 10?

Sure Apple is becoming the world's biggest company? Certainly everyone uses Google.  Who doesn't know about Facebook?  What closet has no Under Armour?

Maybe CNBmute should consider reporting about the other 5,000+ companies once in a while.

A Million Sellers.

What Did You Expect Markets Would Do?

This opinion has nothing to do any which way on the motives or feelings of those who participated in the Big March on Saturday, in DC and around the world.  Maybe they are right, maybe they aren't.

We only comment on the expected effect on the equity markets. When any group voices frustration in an active manner, it is unlikely the members thereof will wake up Monday morning and start buying stocks.  More likely, lots of Sell orders first thing.

So, we expected a market downdraft this morning.  Just as we expect a reversal tomorrow, if not later today.

Tesla Motors, Inc. (TSLA)

 -NasdaqGS  Watchlist

211.17  6.51(3.18%) 4:00PM EDT

After Hours : 203.65  7.52 (3.56%) 4:10PM EDT - Nasdaq Real Time Price

 This morning, before the markets opened, Goldman Sachs put out an upgrade on Tesla.  So the markets reacted positively to the tune of 3.18%.

 Then, minutes after the markets closed today, the company announced the sale of about $2,000,000,000 in new stock, some by the company and some by the company's founder Elon Musk.  Within seconds, shareholders started selling, giving back the day's gain.  In fact, the shares are even lower than the screenshot headlining this post.

  Several Wall Street banks are handling the sale.  Including Goldman Sachs.

Why Is The Fed In The Shpilkes Business?

Later this morning the Federal Reserve releases the Minutes of its last meeting, about a month ago.  Big change in tradition for the Fed which several years ago kept the Minutes secret.

Immediately after the release the market will react one way or the other and then probably reverse after a few minutes.  Because nobody will know what the Minutes really mean.

The Fed meets every so often to set interest rates, releasing enigmatic language afterwards subject to infinite interpretations.  Then individual Fed members fan out across the world, making speeches, giving their own views and sometimes even more dense wordings.

All of this adds up to a free day for market mavens to tell us what they think the Fed will do and that leads to a nervous condition for investors.  

Congress meets in public.  Supreme Court hearings are open to the public.  The President's every move is watched.

But the Fed meets in private and then gives us FedSpeak.

Which leads us to Shpilkes.  From the Wordnik online reference:  A state of impatience or agitation

"Oh, God!  No!  No!  Jack shrieks.  "Pied Piper's product is its stock.  Whatever makes the value of that stock go up, that is what we're going to make."

 In an early episode of HBO's Silicon Valley this year, Jack has a discussion with Richard, the younger founder of Pied Piper, a tech startup struggling to find its market.  Richard wants to perfect his software so that the entire world, even the poorest regions, will have access to high speed internet.  Jack wants to boost the company's stock by concentrating on making a "box" that can be sold at Best Buy.
And that, we believe, is what's holding down shares of many issues today, especially shown in the recent weakness of Apple. Who are we to give advice to the CEO, Tim Cook.  But, why not?  Is he concentrating on the share price or is he working with engineers to help develop a better ear plug for the iPhone?  
Don't honestly know.  But when he appeared for close to an hour on CNBC a couple weeks ago, the stock price went up nicely the next day.  And then he vanished, not from the earth but at least the tv screens of investors.
Tim Cook can be proud of leading a technological miracle of a company.
But he should also be aware his shareholders don't get free stock options, a bonus, or big paychecks.
If he won't promote the stock, who will?