Author: Innovative Income Investor

Well Trump has announced his extensive list of tariffs to be imposed on all of our global trading partners. The tariffs are plenty big–and range from 10% up toward 50-75%–I watched the ‘show’ on TV and don’t really have much to say about it except likely no good will come of it as far as equity and interest rates markets are concerned.

Right at this moment (8:30 PM central) all markets are down sharply. DJIA off 2%, S&P500 off 3% and NASDAQ almost 4%. Even Bitcoin is off by 4 1/2%.

The 10 year Treasury is trading at an incredible 4.07%–down 13 basis points.

We all know this is the futures market–where markets open and trade tomorrow remain an unknown. We will just have to tune in 10 hours from now to find out what happens. As always there is not one thing you can do about this movement and it is way too late to try exiting the markets–hang on.

Investors were initially disappointed with the ADP employment numbers–markets seemed to want numbers showing us heading toward a recession. The numbers came in at 155,000 new jobs, exceeding the forecast of 120,000. So good news was bad news and equities (futures) dropped by over 1/2%. Folks apparently want softer jobs numbers to entice the Fed to lower rates.

But 2 minutes after the markets opened there was a change of heart and the 1/2% loss has turned into a 1/2% gain. Who knows where things will head this afternoon–and tomorrow.

Interest rates ticked a little higher (5 basis points) on the stronger jobs numbers, but still at 4.21%.

Honestly, I am going to do nothing — I like more clarity, but whether we see that anytime soon is anyone’s guess. I ended March right on target again (3 months in a row) with gains of 1/2%–nothing to write home about, but until I can reposition in some perpetuals (when the time is right–at least in my mind) I am going to have to be satisfied with the 6% annualized run rate.

We got some economic news this morning which is likely being mostly ignored by investors. The JOLTs (job openings and labor turnover) report softened a tiny bit from last month–7.568 million jobs open compared to 7.762 million last month. I would have thought this would have softened more with all the tariff uncertainty. ISM Manufacturing softened, but didn’t fall off a cliff–49 versus 50.3 last month, although the price component of the report came in fairly hot.

Regardless of the economic numbers the 10 year treasury yield has tumbled by 10 basis points all the way down to 4.14%. Is it a flight to safety or is it a recession being sniffed out? Maybe both.

Preferreds and baby bonds are not acting typical–where big falls in interest rates shove prices higher—looks to me like the green/red ratio is about 50%. Folks are exiting many preferreds in spite of lower interest rates. This tells me maybe I need to buy more high quality low coupon shares today with a potential capital gain coming at some point in time. No use hurrying–with the sour mood out there nothing is going to shoot straight up–unless it is caused by a surprise redemption.

Well now is the time that we start to wait for more tariff news—is the big ‘package’ of tariffs going to hit tomorrow? I suspect some will hit and some will be delayed as negotiating is taking place. Guess we just have to wait and see what happens.