Author: Innovative Income Investor

It only takes a singular giant sized stock to torpedo any potential stock rally–and as everyone knows UnitedHealth is the culprit today. But we also have economic news that is pointing a bit toward a softening economy. Global purchasing managers index is softening (as it has been for a year or so) further–but this includes the services component which had been holding up–til now.

On top of this we had weakening existing home sales and consumer sentiment. On top of this inflation expectations pushed a bit higher—as someone mentioned in comments yesterday–stagflation?

The 10 year treasury continues to drift lower–now off by 4 basis points at 4.46%. I am going to watch today–I have cash available to buy, but I am feeling lazy so will make it a low stress Friday and not buy anything at all.

I had mentioned that I might take a modest position in a Gabelli CEF preferred and I have done so this morning. My buy was very modest in size.

I nibbled on the GAMCO Global Gold Natural Resource 5% perpetual (GGN-B) with a current yield of 6.05% and trading around $20.67–which is the price I paid as well.

Here are my thoughts on this issue. It is rated A2 by Moodys and has a asset coverage ratio of 917% (as of 1/31/2025)–so we have safety covered in spades. The current yield of 6.05% is over my hurdle of 6%—but on top of this IF we get interest rates down somewhat (whatever that means to each of you) this issue has potential for 4% capital gain (or more) in the next year.

I am now leaning toward rates moving lower. Walmart earnings seem to indicate the economy is softening a bit. Employment remains relatively strong, but I am starting to believe we are going to have issues ahead as I am thinking the administration will lower headcounts on the government payrolls and while this in itself may not be a massive number (although there may be cuts in the private sector as well) in combination with some level of savings through spending cuts the economy will slow. For the time being this will be viewed positively by bond investors and will outweigh my never ending concern on the deficit spending (for now).

Now if we get rates moving higher based on the Personal consumption expenditures number which is released next week it will mean I am too early–but this position is small and little damage will be done.