Our site runs on donations to keep it running for free. Please consider donating if you enjoy your experience here!

A Wild, Wild Afternoon

Yesterday we had a relatively quiet day UNTIL Jay Powell started speaking after the interest rate announcement–then the S&P500 went parabolic-up 80 S&P points where it stayed for 30 minutes before plunging all 80 points (and a few more). I’ll admit that I didn’t watch the presser so am not certain what caused the sharp rise and subsequent plunge other than no doubt algos were moving prices around for some short term profits by the fast folks.

Interestingly while equities were acting irrationally interest rates were falling–down 7-8 basis points, which is the reaction I would have thought would happen in response to a loosening of quantitative tightening. I was not expecting a reduction of the balance sheet asset runoff–but that is what we got – a modest easing. With the 10 year treasury closing at 4.59% we may not get the assault on 4.8% I though might come soon.

This morning interest rates are hanging out around 4.6%– equities are up around 1/2%. Today we have a number of pieces of economic news to be released at 7:30 a.m. (central)–jobless claims, productivity and unit labor costs –seemingly harmless releases, but one never, ever knows–we’ll just have to wait and see.

Yesterday I added to my high risk bucket with the Annaly Capital 6.96% fixed to floating rate preferred purchase. So NOW I go looking and deciding on a low risk bucket addition–it may take a week or more to decide on a target–that is fine as my extremely slow shift back to preferreds and baby bonds from more conservative CDs is a very long term process. With interest rates threatening to go higher why rush into riskier assets? I have been ‘rolling’ the majority of my CD maturities–just carving out a chunk for higher risk, because we all know that NO ONE knows where rates will go. Not even some popular Seeking Alpha writers–some who believe they are economist have quit predicting lower interest rates. It drives me crazy to read some articles in which these writers hung their ‘portfolio hats’ on lower rates–their predictions and performance have been abysmal. Whoops I don’t want to go down the road of rants on some of these charlatans–SA is a business–that is all.

25 thoughts on “A Wild, Wild Afternoon”

  1. hold NLYpF and NLYpG ; both floating now and provide CY 10.4 and 9.8%
    bot when they traded at 24.24 and 24 ; very predictable trading patterns

  2. Which number is the trend for US productivity growth: last quarter at 3% or this quarter at .3%? Productivity growth of 1-2% per quarter would normally assuage nominal wage growth but this quarter’s print won’t. We also got another print of labor costs at 4% +.

    Has anyone else noted that one of the new memes is that immigration is increasing labor supply and moderating wage growth (blue collar wage growth)? When the politicians catch that meme, watch the discussion of immigration get more intense and watch organized labor leaders run for cover (because they support politicians that advocate unrestricted migration.)

  3. Recently added AGM-E at around 6.4% yield, maybe consideration for low risk bucket? Not rated but I consider it A+ type. Kind of surprised it’s hanging around this high of a yield. Another III’er mentioned it also in one of the other threads last few days.

    1. AGM-E callable or floats 7/18/24. If it floats looks like around 8.5%.
      Any thoughts on call vs float?

        1. Yes my mistake. Should have been AMG-C floating not AMG-E. I own some C a little under 25 so I’ll just wait and see what happens.

    2. I was looking at AGM-x yesterday and I was so on the fence I did not pull the trigger. AGM-C looks like it should be called and the price kind of shows the market thinks that will be the case. AGM-E, I think, was the most promising out of the remainder. I was looking at what might be called in the future versus its current price plus current yield. I felt I did not have enough info to make a move. 6.3-6.4% was not enough to persuade me.

  4. Too late, Tim, you opened up that can of worms and I jumping in. Dont bother asking their returns as they wont answer or give you a fake news number anyways with their unlimited printing press of “buying hand over fist”. I have beat on Rita Moron enough, so Jussi Numbnuts “The Reit expert” is next. Chance of decade to buy reits. Except he has been saying that for over 2 years while getting clobbered. Maybe its because he said reits will perform great in high inflation times, they will perform great in high interest rate eras, and low ones too…Ooops! Oh well the marketer, I mean stock expert still has those monthly sub fees to band aide over the bad pick losses.

    1. Can we all make a gentlefolks agreement to put away all political talk on the site in return for free and open access to bash HDO? It is way more entertaining.

      1. Legend, I want to share something I heard yesterday. PLEASE no Red or Blue comments. Our substitute Fedex Driver who I take his comments with a large measure of skepticism. Told us that Fedex has lost 7 or more major accounts from businesses moving out of state or transferring production out of the country like to Mexico. He said they have slowed down so much they are asking drivers to rotate days off with no pay. Now this might only be local, but he mentioned Fedex would not be renewing their contract with USPS to fly mail as it would cost less to keep their planes grounded instead of losing money. If true, and you think snail mail is slow now, just wait. He heard it may be similar for UPS.
        As for comments, people live in states because they like it there or they can’t move for one or more reasons. Like most, I like the state I am in, but I don’t like the politics. So please observations on the economy as it relates to investing. Wishing everyone a good day

        1. having worked in the transportation industry, I can tell you that what the Fedex driver was saying about unpaid days off has been common in non union companies for years. Throughout the year there are ups and downs in the freight volumes and to keep your employment level without layoffs, this is the best answer. I also believe UPS just recently signed a 5 year contract with USPS, so have no fear the mail will still arrive rain or shine.

        2. Hi Charles,
          I read somewhere (can’t recall) late last year that USPS is cutting air transport significantly across the board and going back to more ground transport. Supposed to be more “climate friendly”, but I suspect it is just a cost move.

          USPS takes quite a beating from having to take all shippers, no matter what. In some rural areas, UPS, FEDEX, Amazon (etc.) hand off essentially all deliveries to USPS and they lose money on every item – but those shippers do their own deliveries in areas with higher delivery density. Maybe we need to empower USPS to surcharge those big companies (or make them take a “bundle” of expensive and cheap shipments, or something) when they cherry-pick the deliveries that they dump on USPS that cost USPS ratepayers so much.

          Postal service is the lifeblood of rural communities, but we let these huge companies abuse the system.

          1. Private, add E-bay to that list. I find a lot of sellers on there and Etsy and Amazon are shipping from China using USPS and the shipping charges are way too cheap.

          2. Biggest abusers of USPS are Chinese drop ship companies. Due to legislation passed by Congress to level the playing field of 3rd world companies to compete in America.

            The imbalance was solved at the expense of tax payer. So cheap Amazon items are not so cheap when accounting for true cost.

    2. It’s funny Grid–for a while these folks were publishing articles with titles like ’10 Stock to Buy and Hold Forever’—when they did that I added the list to a spreadsheet so I know exactly how they performed. No doubt just shysters looking to grab attention (and subscription fees) – no doubt just a business to them, but the less seasoned folks take it seriously.

    3. well Griddy you know Trapping Value is one of the better ones being in his service and he does publish his returns at 46% since he started the service of course smartly partnering w Preferred Stock Trader along the way. Not pumping or defending anyone of course but some are helpful. I agree they need to update their results and publicize them at least monthly. Also their credentials, real verifiable ones. I don’t follow many people over there tbh I follow tickers that drive my feed. Tim is right as always of course it is marketing nothing more. But we little squirrels grab our nuts if we can. Being conservative I think we here in III do win in this volatile environment. They lost me when they started calling the writers ‘analysts’. The commenters have helped me 100x more than anything the writers ever did that’s for sure!! oh well..best to all us squirrels! Bea

      1. Bea, I agree I get more from the commentators a lot of the times there on SA than I do from the writers. Tim, his site and the people here have helped me a lot over the years. I probably would have reached one of my goals a lot sooner if I had been more conservative or less risk taking. I cannot remember all the bad decisions I have made, But the short conversation going on about RIG yesterday was a reminder.
        It took 12 years from when I started, but I reached a goal this Monday I hadn’t thought I could do. I have one account I set a goal of reaching and I was going to do it using just the money I started out with and not adding anything.
        The goal meant I had to do a 300% return however long it took. Because of this goal I opened other accounts I could add to and all those seeds I planted are also growing nicely.

          1. Alpha you and others have helped me along the way and to learn to rein in some of my risk taking. You can’t be a expert in all the different sectors of the market. Also giving everyone credit that learning risks change and you have to be willing to change. Example, investing in most REIT’s was profitable for years and a conservative investor would have in their account. Then in 2020 the tide went out and today we find out you have to choose with care which REIT’s to hold.

      2. Trapping Value is no Steve Druckenmiller who returned 30% annually for 25 years.

        True math you can easily knock the 4 off the front and stick with the 6%.

        No guru. Only cycles.

Leave a Reply

Your email address will not be published. Required fields are marked *