Author: Innovative Income Investor

The Conference Board announced consumer confidence is skidding–and equities are not taking kindly to the news with the S&P500 off about 1% right now. The index was at 98.3 in February versus forecast of 102.4 and 105.3 last month.

On the other hand the 10 year treasury yield has dropped by 8 basis points giving income investors a portfolio lift–all those perpetual holders out there should have some respectable gains in the last week.

Yesterday I did double up my position on the GAMCO Global Gold and Natural Resources (GGN-B) 5% perpetual. With hindsight I should have gone ‘all in’–but since that will never happen I have to be satisfied with more modest gains. All of our portfolios are at record highs right now (we are not drawing any funds from out IRAs), although it is a slow push higher with the limited perpetuals we hold.

So as I see it now investors are anticipating a slower economy (how slow?) and have now accepted the premise that DOGE will actually reduce spending. We are seeing the effects of these beliefs. This would seem to be the time to buy quality perpetuals at bargain prices. They have moved 1-2% higher in many cases but my work shows that if rates (10 year treasury) would move to 3.75% we would see a 4% gain in perpetuals so plenty of time for a little repositioning yet.

Interest rates are pretty calm today–off a basis point, but equities are acting a little confused—will it go up or down? Really not a giant surprise all things considered–markets start off optimistic and then pessimism sets in and down we go from a strong start.

As each day passes I am more convinced that the economy is going to slow substantially this quarter. Consumers don’t know what to think of the government activity–and just like investors consumers hate uncertainty. Should workers buy that new car when there employment is unstable (at least for government workers)? Should they take that vacation? The PCE to be released on Friday may show inflation–but I believe that worries on an economic slowdown may be held more important.

So what did I do today? I bought a little more of the GAMCO Global Gold Natural Resources 5% perpetual preferred (GGN-B). I had to pay a little more than the nibble last week, but if things work out as I think they may I will be looking for a 9% total gain in the next year–dividends and capital gain. This remains a very underweight position at this time.