Author: Innovative Income Investor

For no particular reason the market is grinding higher today–buy the dip I guess.

Interest rates are pretty steady in the 4.40%, but when we get a nice equity rally it lifts all boats so our accounts are a little green right now (not much).

Did you see the earnings from WR Berkley (WRB) last night? Not a record this last quarter but pretty darned good. This is an insurance company that is extremely well run and their ratios of losses remain at very nice level, although up a little from recent numbers. I hold a small position in the WRB-E 5.7% baby bond—and just may add a little bit to be as time goes by—average in to a larger position–currently trading at $21.50. Decent capital gains potential or even a ‘call’ if we could get rates under 4%–maybe.

Well let’s see how the next 4.5 hours go–maybe we can get through the day without market disruptions caused by various politicians.

Nothing pre market today indicated that the S&P500 would be lower by 2.70% (right now), but markets are taking the administration seriously about getting rid of Fed Chairman Powell.

At about 9:40 a.m. (central) DJT tweeted–

“Preemptive Cuts” in Interest Rates are being called for by many. With Energy Costs way down, food prices (including Biden’s egg disaster!) substantially lower, and most other “things” trending down, there is virtually No Inflation. With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW. Europe has already “lowered” seven times. Powell has always been “To Late,” except when it came to the Election period when he lowered in order to help Sleepy Joe Biden, later Kamala, get elected. How did that work out?

And down equities go–more.

We can debate Powell all day long–good or bad–but these tweets could be ended, although that is not going to happen. In the end the uncertainty is what drives the markets and we have plenty of that to go around.

Interest rates are really not moving on DJT tweets–but right now the 10 year yield is up about 4-5 basis points. Preferreds and baby bonds are ever so slightly red–but really hardly moving. Let’s see what the afternoon brings.

The S&P600 fell last week in a holiday shortened trading week last week–by about 1.5%.. Honestly not a hugely wild week, but the level of volatility in the marketplace is far from over as we still have tariff issues to deal with, then we have lots of budget issues to deal with. Then we have potential fireworks being caused by the administrations differences with the Federal Reserve over interest rates–and the independence of the Fed.

The 10 year Treasury closed the week at 4.33% which was 16 basis points lower than the closing treasury yield the previous week. The economic news last week was not of major importance and for the coming week we don’t have news that has historically been given a lot of importance, but in the current environment each piece of data is being scrutinized very closely and one can’t predict when news of a minor nature previously is assigned a high level of significance. Leading economic indicators is released today with the purchasing managers index (PMI) and durable goods orders later in the week have not been important in the past to markets–but now? We do have consumer sentiment being released on Friday–and personally I think this is an important indicator given that the consumer drives the economy. We’ll see.

The Fed balance sheet was basically flat last week. You can certainly see that the run-off has slowed and in theory this should be slightly supportive of somewhat reduced pressure on interest rates.

For a change we had the average $25/share preferred stock and baby bond move higher in price last week by 34 cents. Investment grade issues were up 17 cents, banking issues higher by 36 cents, CEF issues 8 cents higher, mREIT issues higher by 43 cents and shippers were 23 cents higher.