Author: Tim McPartland

We have seen some wild swings in markets this week–yesterday when a stronger than anticipated GDP was released equities moved fairly sharply higher before giving up the entire gain.

Today we have maybe the most watched number of July being released in 15 minutes – the personal consumption expenditures (PCE) and with it a read on the latest inflation data. Yesterday the GDP number at 2.8% was not friendly toward a Fed funds rate cut in September, but we have lots of different data points being being released in the next 60 days–inflation, employment and GDP so one can’t reliably predict what will happen.

Right now equities are up sharply–in particular NASDAQ which is up over 1%–Party On. Actually this can change in an instant so we don’t take this move to mean we are going to melt higher. The 10 year treasury is at 4.24% right now–not much movement all week–I guess waiting for this PCE number.

I have done little this week investment wise although I added some CDs yesterday, although rates were down on the 3 month issue to the 5.15% to 5.20% area. The portfolios have held up decently this week as term preferreds and short dated maturity baby bonds held up very well–of course perpetual preferreds took a little bit of a hit.

While I haven’t done much this week–I am on the hunt and will buy something soon and am targeting 70% in the preferred/baby bond portion of holdings eventually–over time.

Well let’s get on to the BIG numbers!!

Wow yesterday was a pretty red day–I was out of the office all day long and was unable to watch the tumble, which of course would make no difference as I wouldn’t buy nor sell on a day like yesterday. Will these beatings in the tech sector continue? I have no earthly idea–nor does anyone else. Does it matter to an income investor? To some degree I don’t want to be buy into anything if markets are diving hard–simply because folks hit the exits without using their brain and the baby goes out with the bath water.

Since I was out of the office yesterday I will look around and see if there are any bargains in income issue land–something I already own that is down 2-3%–if a term preferred is a good buy at $25 it is likely a great buy at $24.xx. We will see–no hurry to buy.

The 10 year treasury is at 4.21% right now and we have 2nd quarter GDP being released in 15 minutes–we need to see a soft number. The Atlanta Fed GDPNow is forecasting 2.6% for Q2 while other forecasts are for 2.1%–I would love to see 1.8%–something (anything) under 2%. With a Fed rate cut forecast now for September this is a critical number.

Well let’s Go!!

Each night I post ‘headlines’ and within those headline are quite a few for earnings of various company’s with preferred stock and/or baby bonds outstanding. Usually I take the opportunity to skim over some of the reports–in particular if I have exposure to their securities.

Insurance company WR Berkley (WRB) reported earnings on Monday evening and to say this company is well managed would be one hell of an understatement. Just blow out earnings quarter after quarter. They have numerous baby bonds outstanding of which I own the 5.70% subordinated notes (WRB-E) held in my sock drawer.

Both Texas Capital Bancshares and Triumph Financial, both Texas banks, reported earnings recently and they came in very soft. On the other hand Bank OZK (OZK) reported record earnings and announced a $200 million stock buyback. Many other community and regional banks have reported or will be in the next week or two–I am watching so I can decide if I want to have more involvement with some preferred shares. We own nothing relative to these these 3 issues.

I see that both the S&P500 and NASDAQ are off in the 1% area this morning. Earnings are rolling in and shares of companies like Tesla are off sharply on misses on revenues and/or earnings. The tech stocks have some pretty lofty expectations built into the share prices–any miss and the stock is taken to the wood shed. No real surprise, but it is likely it will be looked at as ‘buying opportunities’ by folks – the dry powder has to flow somewhere and we know there are trillions of dollars available.

The 10 year treasury is trading around 4.23% – it has been kind of flattish on the week as we haven’t had much economic news and folks are awaiting GDP tomorrow and PCE inflation numbers on Friday. The end of the week should be ‘fun’.