Ep 171: Inflation Data, Market Bounce, Stock Charts Review

February 15th, 2018

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In today's episode what I'd like to do is share with you:

  • Some insight on what's going on in the marketplace in the economy
  • Look at some inflation data
  • Some big Bank things
  • Some of the cryptocurrencies - what's happening
  • Look at some stocks - how they're doing, how they're performing by the charts
  • Some insights on my take and opinion and how to see the other side of the coin to some of this news and some of this data

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Inflation rose faster than expected in January

They say that it's more good news for Main Street is more bad news for Wall Street.

U.S. inflation came in at 2.1% in January compared with a year earlier, another sign that wages are rising for workers.

It is NOT essential to understand what the article is saying, what is important is the depth of what's happening. They say it's good news for Main Street, bad news for Wall Street. Do you have to understand what is going on when we say inflation came in - what does it mean when wages are rising? They say that for the regular people, this is good news. It's good news if your wage goes up, that's what they're saying. When you make more money, it's good news.

This is what the media is spinning. Some media outlets spin it the other way, and the reason is when you look at it from one side of views, this is good for the regular person he's making more money. He can buy more things.

Keep in mind what happens, and I'll give you an example.

Let's say, my accountant. As they manage my books from the business that I have right here - an educational business that we have and sell products and material, as they raise their rate from let's say $100 to $200 or $200 to $250 what does that mean? That also means that they're making more money. My accountant is making more money. Now, if they've raised their rates, what does that do to the business that they're dealing with? It makes me think I should raise my rates. Everything is now rising.

So, as I raise my rates, my products become more expensive. Then the person was looking and dealing business with my employees or me. They say he's raising his rates, and I should raise my rates. You need to go ahead and give me a bonus or a rise in wages because otherwise, I don't want to work for you anymore.

Again, now those rates get raised as well. So everybody's wages then as they rise with time, of course, it doesn't happen in a weekend, but as that happens, the products' - because I have educational products but what about the cereal boxes what about the gas prices - those also rise with time.

Inflation lowers the value of money. It makes money more useless. It makes money less valuable. That's why cereal boxes in the past would maybe cost $0.20, and now they're to $3. Even they've been playing tricks on you - for example, when you had those big cans of soda, and now you go to the mini sized cans of soda. It's better for you - you drink less, you lose weight, but the price didn't change much. Maybe a few pennies here and there but they shrunk it by half. That's really what inflation is. It just means prices continue to go up and even though you may think you're making more, as far as the absolute dollar amount. A hundred million dollars in your bank account doesn't mean much if all you can get with a hundred million dollars is a box of cereal.

So, think about that for a minute.

Anyways, they say it's good news - for me. I think you know inflation is going to happen. It's just part of life. But the reality is remembered everybody then slowly starts rising and raising their prices with time. Keep in mind that this is what happens with time, and if it rose faster than expected that means your products that you're buying at the superstore or the market the food store, it's going to rise again as well slowly.

Keep your eyes peeled and see what happens. It's part of economics.

Big banks got substantial tax cuts then hike cities' interest rates

 

Imagine this. You get a tax break in. We're going to make more money. I mean they're in business to make more money. So, what are they going to do if they get a tax break?

They're looking out for themselves. Remember, these companies - a lot of these corporations - they're not a one-on-one business like a retail guy or a mom-and-pop store.

They're not out there looking out for your back. They're looking out for

  • them - survival of the business
  • their shareholders
  • their operations

If you dig deeper, it's their skin in the game. It's that person individually. The last person on their mind is you - your money, your family. They don't care because they're so big, there are so many pieces involved in it, that they're not worried about that. They need to hit earnings.

You look at any major corporation, the big SP500 companies, they're looking at how can we hit earnings. How can we please shareholders because otherwise, their stock is going to tank? Most of these CEOs, they don't get paid on an hourly basis or a salary. The majority of their income and salary comes from what from the shares that they get - from the stock price, from the bonuses that they get through the stock. They're always looking to prop up the stock price.

Walmart announces raises and bonuses

It'll cost them $300M -400M.

Why do you think Walmart is doing this?

They have one of the highest turnover ratios of employees-employees quit. They have to get new people. It's costly. It's more expensive than giving them a little raise or a little bonus.

They were going to increase it. It's going to cost $300M. But when you look at some of the numbers, I don't even know if this is accurate, but let's say the estimate Walmart is going to save is around $2B in taxes under the new plan.

What are they looking for?

Yeah, they're trying to please the employees. They can say it is a benefit from the tax cut, but really, the reality is they're trying to reduce their turnover ratio with hiring because that's expensive. Time, commitment, involvement, and liabilities when it comes to employment.

So, whatever the reason is, you could blame it on tax cuts. You could blame it on something else. This is what they're trying to do. They're taking a fraction of that money that they're going to save and trying to improve their company a little bit.

That's the goal with many of these companies. They say they're doing this and this and giving their employees a break due to tax breaks. But there's always that underlying thing that's beneath the surface.

Some of them are going to probably do a lot of buybacks with the shares because then they'll have more of their shares ownership. As that company grows, those have more value within that as well. So think about that in a bigger context or a more significant point of view

Cryptocurrency, some of these Bitcoin scams

More millions of dollars stolen from this different blockchain. If you're trading Bitcoin and those kinds of things, I've talked about this in the past and a blog or two, where you know a lot of these things are trade. You're trading them short-term, and maybe you could throw a hundred bucks, a thousand dollars in it and see what happens and see what sticks.

But the reality is right now there's no sustainability behind them. They don't have like a product or a service that'll grow over time. If more, let's say, gas stations start using them and those kinds of things, then, in that case, yeah this could evolve. But the reality is it's difficult to use - to understand. You don't have a lot of old people that are going to be using this, so it's kind of tough to break it into the world economically.

Of course, if you look at drugs or crime lords and things like that, they use this to send anonymous money. It might be a great benefit for them, but as far as you know everything else it seems to be working out well for the digital thieves to steal a lot of the money. It seems to be working out well in that case, so I would say be very careful what you're doing if you're trading any Bitcoin or cryptocurrencies or anything like that digital currencies.

Let's take a look at some things that are happening here in the marketplace

We had a pretty significant sell-off here. I'm going to use Tradingview, you could use TC 2000, but here we had a little pop right now. I wouldn't be surprised this will be about a 50% pop and retracement if you look from the from the lows to the highs. If we get about 50% right here and reject, this is entirely possible only because I'm also noticing this volume slightly dying out. So it wouldn't surprise me if we get a couple of more follow-through days and have a little bit more of a hard next month or couple of months only because of all that energy and the sell-off and the panic there.

Don't think that it's all over now and it's done the sell-off happened. Keep in mind that these things could follow through further. It always takes a lot longer to climb up than it does to fall. Think about skydiving, how fast does it take to fall off a plane and land on the ground. Same thing here, it'll take a little bit of time to get back here, and you'll probably see a couple more red days coming up, but things seem to be stabilizing a little bit.

I found the option prices especially during these few trading days was very volatile. It was tough to get execution that was at a reasonable rate so that liquidity there was a little bit of a problem for proper implementation.

That's kind of the overall market that I'm looking at. It just watches to see how this comes in and is it going to reject because that's my concern right here - is it going to refuse right here, and are we going to roll over. 2760 could be a line and level to watch. See what happens right there, and then you'll see how this digests. If it's going to play and here for a while and then again you could break out higher, you could break down lower. I mean the debt keep stacking, so we'll see how it plays out. But overall this is this is the market

What you're watching in a lot of these stocks as if they are moving and breaking some of these key levels and now could the momentum start to reverse. It's not going to happen in a day. These things don't happen in a day. But you can see how the momentum is starting to pull back.

Is it a start of something bigger? I don't know. You can't tell until things start to pick up and accelerate. But you start seeing little cracks, and you know the debt starts getting bigger, and you know all these things were coming together and eventually picks it up. Then, before you know, you're in a recession. So this is what you do. You start looking at this like Bank of America.

Also, look how fast this thing ran and look we're right coming right into some trouble areas again. I don't want to scare you or alarm you, I mean things are still looking okay, but I'm just showing you that if you're watching this, look at the overall picture of some of these stocks.

 

Author: Sasha Evdakov

Sasha is the creator of the Tradersfly and Rise2Learn. He focuses on high-level education speaking at events, writing books, and publishing video courses on business development, internet marketing, finance, and personal growth.

I'm Sasha, an educational entrepreneur and a stock trader. In addition to running my own online businesses, I also enjoy trading stocks and helping the individual investor understand the stock market. Let me share with you some techniques & concepts that I used over the last 10+ years to give you that edge in the market. Learn More

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