Stocks fall sharply as Target's woes renew inflation fears

[discocrisco01]

Source: Associated Press

NEW YORK (AP) — The Dow Jones Industrial Average sank more than 1,100 points and the S&P 500 had its biggest drop in nearly two years Wednesday, as big earnings misses by Target and other major retailers stoked investors’ fears that surging inflation could cut deeply into corporate profits.

The broad sell-off erased gains from a solid rally a day earlier, the latest volatile day-to-day swing for stocks in recent weeks amid a deepening market slump.

The S&P 500 tumbled 4%, its sharpest decline since June 2020. The benchmark index is now down more than 18% from the record high it reached at the beginning of the year. That’s shy of the 20% decline that’s considered a bear market.

Read more: https://apnews.com/article/financial-market-woes-53651386f987353b8d4044fd3e4740ef

[yaesu]

1. I think the pent up post covid buying frenzy is coming to an end & normal earnings seen before covid

restrained by inflation should set the pace. Not sure if housing will cool off anytime soon but it is does look out below.

[Ocelot II]

4. It's not a failing economy. It's really a pretty robust economy, considering

the effects of the pandemic and other crises over which this government has no control.

[at140]

9. Economy did great with those stimulus checks

Just send every American a $5000 deposit to their bank account,
and see how fast the stocks go up, retail sales pick up and economy booms again.

[Polybius]

19. I mostly agree

Just not the "every" American part.

[at140]

20. Reason I always say "every American"

to appear not discriminating against anyone.

But the stimulus should be taxable in your tax bracket.
Thus if you are poor, no tax will be due.

[yaesu]

6. I blame the Fed raising interest rates too fast for any worsening of the economy. The economy

didn't need to be artificially cooled off, the pent up demand would eventually unwind, which its doing now.

[at140]

21. Are you joking?

Inflation is at 8.3%
At its May 2022 meeting, the Federal Reserve announced that it would be increasing its target for the federal funds rate (the benchmark for most interest rates) by 0.50%. The announcement comes after the Fed rose rates at its last FOMC meeting, on March 16, 2022, marking the first increase since 2018.

Who will buy Treasury bills paying 0.5% (taxable interest) when her money is evaporating at 8.3% in purchasing power?

[bucolic_frolic]

3. What are producer prices doing? Retailers raise prices to maintain profit margins

So they're trying to make up the difference by raising food prices. They're lying to us. They won't understand until people leave their stores for good. People will be going local this summer. Farms, roadstands, markets. Retailers are in for a rough ride.

[BumRushDaShow]

5. "fears that surging inflation could cut deeply into corporate profits."

So rather than just wait out what is probably a temporary conflagration of a perfect storm, they would rather have a stock-selling temper tantrum and whine about giving up just some of what are already huge "corporate profits... Basically those same "profits" that they won't use to pay their workers more or use to do a one-time upgrade of their work spaces - say to add better ventilation systems to deal with pandemics like COVID-19.

[bahboo]

12. you said what I was thinking, WAY better...

than I ever could...

[BumRushDaShow]

13. I suppose they get a nod for admitting that it is hurting their "profits"

The amount of "profit" that they insist they must have or they take their ball and go home, has hit the stratosphere.

[SouthernDem4ever]

14. thats what you get when a few companies own everything

[Lovie777]

7. I thought because of the GQP's winners in the primary ...

last night.

[SWBTATTReg]

8. Got to remember that the falling markets have been around for so little over the last few years, so

people are more than likely way-overreacting and the bears are finally trying to score some money after trying for so long to make money in a bull market that has been around for literally forever. I wonder how many 'bears' and the companies that endorse such a 'bearish' investing policy went bankrupt over the last five years or so (and probably longer too, I haven't really looked, but the Markets have seemed to go up and up and up forever it seems like).

[paleotn]

15. Buying opportunity.

I've always figured that if things really went to hell (i.e. a 2008 or 2020 cataclysmic depressions if not for federal backstops) investment losses would be the least of my concerns. This too shall pass.

[SWBTATTReg]

18. True indeed, what you say. I'm surprised that the Bull market has been going on for so long.

And inflation, I have to laugh, being that the Feds were at one time worried about not having enough inflation, they were worried about the lack of inflation that Japan went through, and was afraid that the U.S. would suffer the same sort of stagflation that Japan suffered.

Stagflation in Japan Japan’s economy has remained largely stagnant since 1990, after a national asset price bubble crisis. The nineties became known as Japan’s “lost decade”, which has now stretched out over the better part of three decades, as the country has still not been able to return to sustained economic growth.

To get a feel for what we might be in for in the coming months stateside, I want to see how Japan has dealt with a unique inflation situation for decades. Japan’s Experience:

Japan’s consumer price index came in at 101.5 in August. That wouldn’t be noteworthy except for the fact that the index was sitting at 100.9 in late 1998 and at 94.2 in August of 1991. Prices in Japan are essentially unchanged in 23 years and have moved a whopping 7.3% over the past 30 years. That’s not 7% per year, mind you. It’s 7% … in total.

Big Spender

Japan hasn’t been the model of fiscal or monetary discipline over that stretch. Japan hasn’t had a balanced budget since 1992.

For most of the past 30 years, its budget deficits have been as large or larger than ours in the U.S. Japan ran a budget deficit of 12.3% of gross domestic product (GDP) last year.

Its accumulated national debt is now 266% of GDP, about double the 132% of GDP that the American government has borrowed.

Zero Rates

Japan’s interest rates have been zero or close to zero since 1999. Japan also invented “quantitative easing.” The term was coined to describe Japan’s aggressive bond buying in the late 1990s and early 2000s.

We were all aghast when the Federal Reserve ballooned its balance sheet following the pandemic. But even after gobbling up trillions in U.S. government debt, the Fed’s balance sheet is “only” a little over 40% the size of the U.S economy. The Bank of Japan’s holdings of Japanese government debt is now close to 100% of the size of its economy.

And it’s not just government bonds. The Bank of Japan is now the largest single shareholder of Japanese stocks and owns massive holdings of real estate via real estate investment trusts (REITs) as well.

Takeaway

Japan hasn’t taken Ben Bernanke’s old advice to dump yen out of helicopters yet. But that’s just about the only thing the country hasn’t done. And it still can’t sustain inflation. The country continues to struggle with deflation instead.

The U.S. isn’t Japan, and we shouldn’t assume that we’ll follow the exact same path. In my opinion, this does suggest that maybe — just maybe — today’s inflation is transitory.

[FloridaBlues]

10. People will pull back when prices get too high.

Maybe price gouging will get more under control esp oil and gas companies.

[SouthernDem4ever]

17. We are doing that

Just quit buying. Drive only when necessary. Learn how to have a good time without buying all kinds of junk. Eat just enough to stay healthy. If everyone did that for while, prices would come down. Unfortunately, we are a society controlled by commercialism so it's a long shot getting others to buy into it.

[progree]

16. Ugh. 5:10 AM ET Thursday and Dow futures down 407 points (1.29%). S&P Futures down 1.43%