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Economics

This is NOT a Long-Term Bear Market – Improving Signs Are Underway

Everyone is entitled to their own opinion and mine is that the issues we’ve experienced in the first half of 2022 will be mitigated in the second half….

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Everyone is entitled to their own opinion and mine is that the issues we've experienced in the first half of 2022 will be mitigated in the second half. Until 2022, many of you I'm sure viewed me as a perma-bull. I've always said that isn't true, but that I won't talk bearishly about the U.S. stock market unless I have reason to do so. Since 1950, the S&P 500 has risen on an annual basis 54 years out of 72. You can be like the Peter Schiffs of the world and call for a market collapse every time you open your yap if you'd like, but I'll gladly decline and be right 75% of the time. And if I can call a few of those 18 annual declines, even better!

If you had asked a large audience what the biggest issue was heading into 2022, I'm sure you'd have heard a smattering of the usual suspects - our debt, the Fed, inflation, higher rates, housing bubble, stock market bubble, etc. Throw in the newest issues like the Russia-Ukraine war, soaring crude oil prices, and you'd most definitely have interesting choices.

But I believe the biggest issue of all had nothing to do with any of that. To me, most of that is noise. It's media banter. It's what everyone is talking about right now. I hate to see portfolios ravished over a 4-5 month period, but quite honestly, this is exactly what the U.S. equity market needed - a breather.

From the March 23, 2020 low to the January 3, 2022 high, there were 451 trading days. On the 75-year S&P 500 daily chart below, I've included a 451-day rate of change (ROC) so that you can see the March 23, 2020-January 3, 2022 rally, compared to the history of that 451-day ROC:

The blue arrows mark the March 2020 low and January 2022 high and the blue circle highlights the 451-day ROC above 100%. Note that the U.S. stock market has NEVER moved so quickly to the upside. NEVER!!!! We had simply run way too far. And the 2020 pandemic introduced a whole new set of investors and traders to the stock market. This group only knew one thing - higher prices. Think about the Reddit folks. They thought it only took a quick mention or tweet of a stock and it would triple in price. These were not disciplined investors and/or traders. These were pure speculators and this extreme bullishness showed in the equity only put call ratio ($CPCE).

On January 8, 2022, we hosted our MarketVision 2022 event. I talked extensively about the sentiment issues we faced heading into this year. For sentiment, I want to know what people are doing with their money. Some sentiment readings deal with "feelings" about the current market environment. I couldn't care less about that. Show me what people are doing with their money! Generally speaking, calls traded are bullish, while puts traded are bearish. That's why I like to follow the CPCE. There's no guesswork involved here. I'll share with you a couple charts that I shared back at MarketVision 2022. Here's the first and what the chart looked like at the time of the event:

I highlighted the HUGE gains that were experienced off that March 2020 low and how the 253-day (1-year) average of the CPCE had fallen to a CRAZY bullish level - a level never seen before. The AVERAGE of the equity only put call ratio FOR A YEAR was at .48 and just beginning to rise. Let me illustrate how crazy this is. Below is a daily chart of the CPCE, so that you can see the equity only put call readings every day for the past 18 years:

When the CPCE dropped in mid-2014 below 0.40, the S&P 500 struggled for the next year before finally topping in May 2015. Note that the CPCE barely dropped beneath 0.48 at the time of that top. ONE DAY'S .48 reading!!! Now look at that cluster of readings for the past two years at an unusually low level. Sentiment had NEVER reached this extreme bullish level before and probably never will again. We needed to "reset" sentiment before the stock market had a chance of further appreciation. So now scroll back up and look at that 253-day moving average of the CPCE that was just beginning to turn higher at the start of 2022. Want to know where it is today? Check this out:

The U.S. stock market historically struggles as sentiment is resetting higher. And sentiment was our biggest challenge as we opened 2022, not inflation, not interest rates, not the war, not the Fed. Those were the reasons the media focused on to enable sentiment to reset.

I don't know that we've bottomed, but I do believe we're getting very close. I said in our MarketVision 2022 event that the key to being successful in 2022 was going to be our ability to exercise PATIENCE. That's what I've done. I've traded, but mostly remained in cash. My goal is to be ready with MORE buying power when we ultimately bottom. If you believe we're just getting started to the downside, I want to show you one more S&P 500 chart. On this chart, I'll show you another rate of change at the bottom. This time it'll be the 91-day ROC. Why 91 days? Well, that's the number of trading days it took for us to go from our January 3rd high to the Thursday, May 12th low close. How does this 91-day ROC compare to the rest of history?

I've drawn a green horizontal line on the 91-day ROC panel to highlight times when this ROC has reached -15%. I count 15. Of these 15, 4 (red-dotted vertical lines) have resulted in further downside action. 3 of these 4 occurred during secular bear markets (1974, 2000, and 2008). 11 (green-dotted vertical lines) other times since 1950, we've seen this 91-day ROC hit -15% and they've all essentially marked major market bottoms.

I have said repeatedly that we are in a secular bull market. Feel free to disagree with me. But I've remained steadfast to that argument for the past several years and it's served me well. So I'll stick with it again.

I believe firmly that our biggest challenge heading into 2022 was sentiment. As I've discussed above, you can see that's one challenge that is beginning to take care of itself. I can't go anywhere now that a discussion doesn't break out about the myriad of problems we have now. And the media is going to be on all of them like a dog on a bone. The good news for us bulls is that market bottoms come a lot sooner than rosy media forecasts.

I hope you're ready to pounce on this generational opportunity. I know I am.

To stay abreast of TONS of market-related news and charts, CLICK HERE to join our growing EB Digest community of professional and individual investors/traders. It's completely free and requires no credit card to join.

Happy trading!

Tom

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Economics

Expert on Bath & Body Works: ‘an easy double the next three years’

Bath & Body Works Inc (NYSE: BBWI) might have been painful for the shareholders this year, but the road ahead will likely be a rewarding one, says…

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Bath & Body Works Inc (NYSE: BBWI) might have been painful for the shareholders this year, but the road ahead will likely be a rewarding one, says the Senior Vice President and Portfolio Manager at Westwood Group.

BBWI separated from Victoria’s Secret

The retail chain separated from Victoria’s Secret in 2021, which, as per Lauren Hill, clears the way for a 100% increase in the stock price in the coming years. On CNBC’s “Closing Bell: Overtime”, she said:

[Bath & Body Works] has really strong pricing power. They have 85% of their supply chain in the United States and with the Victoria’s Secret brand now gone, I think it’s a wonderful buy; an easy double the next three years.

Last month, the Columbus-headquartered company reported results for its fiscal first quarter that topped Wall Street expectations.

Bath & Body Works is a reopening play

The stock currently trades at a PE multiple of 6.64. Hill is convinced Bath & Body works is a reopening name and will perform so much better as the world continues to pull out of the pandemic. She noted:

Customers have missed buying their scented products in store and as their social occasion calendars fill up, they are getting back out there and buying more gifts, including Bath & Body Works products.

Hill also dubbed BBWI a great pick amidst the ongoing inflationary pressures because of its reasonably priced products. Shares are down more than 50% versus the start of 2022.

The post Expert on Bath & Body Works: ‘an easy double the next three years’ appeared first on Invezz.

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Economics

Majority Of C-Suite Execs Thinking Of Quitting, 40% Overwhelmed At Work: Deloitte Survey

Majority Of C-Suite Execs Thinking Of Quitting, 40% Overwhelmed At Work: Deloitte Survey

Authored by Naveen Anthrapully via The Epoch Times,

A…

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Majority Of C-Suite Execs Thinking Of Quitting, 40% Overwhelmed At Work: Deloitte Survey

Authored by Naveen Anthrapully via The Epoch Times,

A majority of C-suite executives are considering leaving their jobs, according to a Deloitte survey of 2,100 employees and C-level executives from the United States, Canada, the UK, and Australia.

Almost 70 percent of executives admitted that they are seriously thinking of quitting their jobs for a better opportunity that supports their well-being, according to the survey report published on June 22. Over three-quarters of executives said that the COVID-19 pandemic had negatively affected their well-being.

Roughly one in three employees and C-suite executives admitted to constantly struggling with poor mental health and fatigue. While 41 percent of executives “always” or “often” felt stressed, 40 percent were overwhelmed, 36 percent were exhausted, 30 percent felt lonely, and 26 percent were depressed.

“Most employees (83 percent) and executives (74 percent) say they’re facing obstacles when it comes to achieving their well-being goals—and these are largely tied to their job,” the report says. “In fact, the top two hurdles that people cited were a heavy workload or stressful job (30 percent), and not having enough time because of long work hours (27 percent).”

While 70 percent of C-suite execs admitted to considering quitting, this number was at only 57 percent among other employees. The report speculated that a reason for such a wide gap might be the fact that top-level executives are often in a “stronger financial position,” due to which they can afford to seek new career opportunities.

Interestingly, while only 56 percent of employees think their company executives care about their well-being, a much higher 91 percent of C-suite administrators were of the opinion that their employees believe their leaders took care of them. The report called this a “notable gap.”

Resignation Rates

The Deloitte report comes amid a debate about resignation rates in the U.S. workforce. Over 4.4 million Americans quit their jobs in April, with job openings hitting 11.9 million, according to the U.S. Department of Labor. In the period from January 2021 to February 2022, almost 57 million Americans left their jobs.

Though some are terming it the “Great Resignation,” giving it a negative connotation, the implication is not entirely true since most of those who quit jobs did so for other opportunities. In the same 14 months, almost 89 million people were hired. There are almost two jobs open for every unemployed person in the United States, according to MarketWatch.

In an Economic Letter from the Federal Reserve Bank of San Francisco published in April, economics professor Bart Hobijn points out that high waves of resignations were common during rapid economic recoveries in the postwar period prior to 2000.

“The quits waves in manufacturing in 1948, 1951, 1953, 1966, 1969, and 1973 are of the same order of magnitude as the current wave,” he wrote. “All of these waves coincide with periods when payroll employment grew very fast, both in the manufacturing sector and the total nonfarm sector.”

Tyler Durden Sat, 06/25/2022 - 20:30

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Spread & Containment

Optimism Slowly Returns To The Tourism Sector

Optimism Slowly Returns To The Tourism Sector

Coming off the worst year in tourism history, 2021 wasn’t much of an improvement, as travel…

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Optimism Slowly Returns To The Tourism Sector

Coming off the worst year in tourism history, 2021 wasn't much of an improvement, as travel remained subdued in the face of the persistent threat posed by Covid-19.

According to the United Nations World Tourism Organization (UNWTO), export revenues from tourism (including passenger transport receipts) remained more than $1 trillion below pre-pandemic levels in 2021, marking the second trillion-dollar loss for the tourism industry in as many years.

As Statista's Felix Richter details below, while the brief rebound in the summer months of 2020 had fueled hopes of a quick recovery for the tourism sector, those hopes were dashed with each subsequent wave of the pandemic.

And despite a record-breaking global vaccine rollout, travel experts struggled to stay optimistic in 2021, as governments kept many restrictions in place in their effort to curb the spread of new, potentially more dangerous variants of the coronavirus.

Halfway through 2022, optimism has returned to the industry, however, as travel demand is ticking up in many regions.

You will find more infographics at Statista

According to UNWTO's latest Tourism Barometer, industry experts are now considerably more confident than they were at the beginning of the year, with 48 percent of expert panel participants expecting a full recovery of the tourism sector in 2023, up from just 32 percent in January. 44 percent of surveyed industry insiders still think it'll take until 2024 or longer for tourism to return to pre-pandemic levels, another notable improvement from 64 percent in January.

Tyler Durden Sat, 06/25/2022 - 21:00

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