Author: Tim McPartland

This morning we had a number of economic releases–and once again they remain a mixed bag of good and bad.

1st time unemployment claims remain muted at 222,000 versus 226,000 (revised) last week. This number must INCREASE to have some certainly that we will have a reduced 50 basis point rate hike by the Fed–employment is a key number for them. Continuing claims continue to creep slightly higher week by week.

On the other hand the Philly Fed Manufacturing index cratered badly at a -19 versus a forecast of -6 and versus last month at -8.7.

Housing starts continue to weaken–although they are not ‘plunging’–more of a slow drift lower. Single family starts are at the lowest since May, 2020.

None of the seemingly modestly soft economic news is feeding into employment as of yet–but there is a likely lag there. Or with the 10.7 million jobs openings folks are just moving elsewhere quickly (honestly I doubt this).

Markets are very quiet – very quiet. Guess markets are looking for moving stimulus. 10 year treasury yield down 3 basis points with equity markets essentially flat.

Yesterday consumer debt numbers were released and they are a bit scary. Consumer debt numbers cut both ways – stimulus initially and then later if we enter a true recession of magnitude ‘bad debt’ appears causing severe write offs. With credit card balances taking there biggest jump in over 20 years last quarter – up 15% year on year, we will be watching for write-offs as a ‘signal’ to economic stress.

Tomorrow the new jobless claims will be released with 225,000 expected versus the same number last week. If this economy is slowing we need to see this number higher (not to wish bad luck on employed folks)–with all the high profile layoffs in tech you would think we would see this number increasing–we’ll see.

Thursday and Friday we have building permits and housing starts being released as well as existing home sales being released. In Minnesota I believe building permits were off 50% or so in October—this will eventually ‘feed into’ employment (or lack there of).

Today I will not be in the office in the morning so likely will do nothing as far as buying/selling, although I still have the Spire 5.90% perpetual (SR-A) on my buy list. I will need to see a little lower price after the jump of 59 cents yesterday–outrunning a limit order I had in place.

The S&P500 held up well by the market close today after falling to ‘flat’ midday. The 10 year treasury yield which fell to as low as 3.77% early today closed out at around 3.80%. I though we might see some give back, but the soft PPI hammered that thought.

Preferreds and baby bonds were green once again – maybe around 1/2%. My portfolio mirrored the markets.

I tried to ‘nibble’ on 2 issues early today. The MGR 5.875% baby bond from Affiliated Manager (AMG) order was executed. but the order for the Spire 5.9% perpetual preferred (SR-A) did not execute–the hazard of not spending a few extra cents on a limit order–I see the shares ran up 59 cents. I hold current positions in both of these issues.

I see Preferred Stock Trader has a new Seeking Alpha article on B Riley baby bonds for those with access.