Checks & Balances 101

Checks & Balances is a blog about Finance, Politics, and the checks and balances of life.

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New Blog Post!!!!!!!

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NEW BLOG POST!!!!!!!!!!!!!!

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The market over the last couple of weeks has been stagnating. Leaving investors wondering where to place their money as the market consolidates. Is a pullback upon us? Should you hold cash on the sidelines and let the marketplace figure it out? In my view, four sectors are moving and should work for the rest of the year. We have gotten used to the market always going up. Times like these lead to people making decisions they might not typically make. I know because it happens to me all the time. I rush to judgment and make investment decisions I would not usually make.

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John gives a quick overview of the latest consumer confidence report. 

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It’s finally over! Twenty years of fighting in Afghanistan has finally come to an end. Emotions are high and political games are at the forefront. Republicans have their knives out, ready to stick Joe Biden with the entire blame of the Afghanistan exit.

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Are we starting to see the beginning of the decline of the housing market? June’s new home sale prices were down 6.6% from May. And down 20% from June 2020. It’s looking like we might have hit the peak and now could be facing a downward trend in the housing market. You also see housing inventory starting to increase, leaving me to believe fewer there are fewer out there soaking up supply each month. Rent and mortgage moratoriums will be lifted across the United States. Leaving people with higher payments than they are normally accustomed to paying. Stimulus checks are running out, and the child tax credit can only cover so much. So if you’re looking to buy a house, now might be the time to hold off

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I think it’s time to stop talking about vaccine passports and start implementing them in businesses around the country. The United States has made great progress fighting off the virus, but we still only have around 55% of our population vaccinated. This is unacceptable in my eyes. The vaccine was available to health care workers at the begging of the year and has been available to everyone in the United States for months now. But in recent news from the CDC, they see a slowdown in the vaccination rate. We need around 75% of our society vaccinated to have a chance of reaching herd immunity.

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General Electric is my new stock option pick for this week. I’m trading this stock purely on technicals and market sentiment. GE has an earnings call this week, but next week on August 20th $GE will be doing a 1to 8 stock split. Meaning they will be taking shares out of the market. General Electric currently has 8.78 Billion outstanding shares. The split will bring that number to 1.1 Billion. $GE is trading well above the 200-day moving average, and you see the 200 days moving average moving upwards. On Friday, 7/23/21, in the options market, you saw calls outpace 3/1. Also, if you look at a 1yr standard deviation channel chart, you will see the stock is trading around one standard deviation away from the mean. Usually, we see a bounce in the opposite direction. The market is looking for a big move. Josh Brown, a well-known investor and portfolio manager, has also put his weight behind the stock split, and he sees the stock going higher. When I was looking at the August 20th $14 strike price, I noticed some unusual activity. Volume and open interest are shooting through the roof. This tells me there is a lot of positive sentiment in the market regarding General Electric. The contracts are only selling for $.15 a pop. Is $GE ready to rip upwards? On Friday, we saw 25k contracts still open that expire on August 20th. There are also 10k contracts open at the $15 strike price. So there is still time left; give it a look.

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New consumer price numbers came in, and it wasn’t pretty. CPI increased .9% in June and 5.4% from June 2020 to June 2021. We haven’t seen these types of inflation numbers since right before the 2008 financial crisis. Real earnings are not increasing as fast. Real average hourly earnings for all employees decreased .5% in June, according to the BLS. With prices on goods rising quicker than wages increasing, buying power starts to diminish. If you think about it, as you’re working, the money you are earning is being devalued by the time you cash your check. And diminishing buying power is being felt more by employees and not the managers. According to the BLS (Bureau of Labor Statistics), all employee’s index average hourly earnings decreased 1.7% from June 2020 to June 2021. But the production and nonsupervisory employees saw a 2.2% decrease from the same time period as their bosses. So the burden of price increases is felt by the average hourly worker and not the salaried employee.

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Is one of the hottest cryptocurrencies on the market in a consolidation period? How long will it last? What are the trade options from here? These are the questions being asked on the crypto streets. I was interested in these questions, so I looked at a five-year chart broken down into monthly intervals. I found some exciting things that could help us with our future prognostications.

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In my opinion, everyone is overlooking the money supply. I think the feds and the stock market are complacent and think the good times will keep on rolling. We keep hearing inflation is going to be transitory, but what does that mean? How long is transitory? A year or more? The honest answer is, no one really knows. The fed has no idea how long inflation will last. The Feds are putting on a big smile and cool demeanor, so they don’t spook the market. But in my view, that will end up hurting our economy down the road. This time period reminds me of the book “The Great Crash 1929” by James K Galbraith. We are indifferent economic times for sure, but our attitudes towards the market seem to be the same. Nothing to see here; everything will be fine. Good times will keep on rolling. I don’t think that will be the case. We might have headwinds coming our way. 

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New Addition to the Collection. Check out my blog and grab you a shirt. STAND FOR DEMOCRACY NOT THE FLAG . 

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NEW SHIRTS @ https://checksandbalances101.com/shop/page/2/

GET READY FOR 4TH OF JULY. 

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The federal reserve dot plot is a gauge of expected interest rate hikes. Each dot represents a member of the Federal Open Market Committee. The FOMC members cast an anonymous vote on what their view is on the future for interest rates. For example, you can see two rate hikes in the next two years in the recent dot plot. This year there seems to be a consensus of no change.

Rising rates may be in our future, but it’s going to be a slow and gradual process. We won’t see 2% until at least 2024. What does this all mean? Money will be cheap for a while. Here is fed chair Powell giving his opinion on the Dot Plot.

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Are the democrats going to let news organizations like the New York times clean up America’s mess? When is the Biden Justice Department going to hold the last administration accountable for their atrocities against democracy? We can’t even get the democrats to start moving in the house on investigating January 6th.

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Bitcoin is currently trading 60% from its high at around $40,000. Everyone is wondering if the pullback over? Is it time to jump back into Bitcoin? My answer is a YES!!!!!!! I’m not a big fan of the cryptocurrency space, because of the volatility. But when you see an opportunity present itself you have to jump on it. Especially if you’re an investor and in the business of making money. 

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Trump wants credit for calling out China, but he was fooled like the rest of us.