Author: Innovative Income Investor

I haven’t done any buying the last few days, but with quite a bunch of CDs maturing in the last couple days my hand will be forced soon. With the geopolitical situation in the Middle East I don’t feel particularly motivated, but if anything can get me motivated it would be falling monthly income. I’m not really motivated by money, but I am motivated to garner the best return possible within my risk tolerance.

Right at this moment I am awaiting the jobs numbers for July–150,000 new jobs are forecast to have been created in July and the unemployment rate is forecast to remain steady at 4.2%. The ADP jobs report on Wednesday came in hotter than forecast and the JOLTs (job openings and labor turnover) seemed to indicated that there are plenty of available jobs–what we see in 15 minutes is anyone’s guess.

I do have concerns with interest rates as the 10 year treasury is now trading at 3.87% which is about 20 basis points higher than prior to the Fed Funds rate cut. I had originally guessed that short term treasuries would fall into this month and that the 10 year would rise–this was based on the never ending supply of new debt from the government. Certainly this supply continues–and looks to continue for as far as the eye can see which would seem to indicate to me that rates on long term debt will remain elevated. I know 1 thing for sure and that is I don’t want to see interest rates head above 4%–we will begin to see capital gains erode at this level.

So now I am waiting for the numbers–254,000 new jobs–what hotter than expected and the 10 year treasury has shot way up to 3.96%. The unemployment rate falls to 4.1%. Too hot or Goldilocks?

Equity markets are kind of treading water today–moving in a pretty tight range. There seems to be a lot of tension building as we await further economic news–in particular the official government news on employment on Friday. Early today we had ADP announce their employment numbers and they came in somewhat stronger than the expectation at 143,000 new jobs against the forecast of 120,000 and last months 103,000 actual. Now of course with the dock workers strike we have the potential to see muddy numbers in the weeks ahead–not just from the striking workers but from those in the supply chain that will be laid off if this strike lasts very long.

Also, of course, we are awaiting news out of the Mideast on the war front. Historically these wars do not cause stocks to fall–many times quite the opposite happens. Whether that holds true this time is anyone’s guess. Well we just have to wait and see as none of us has a perfect crystal ball.

Not buying anything today or likely tomorrow–maybe the rest of the week. I took a look at CD rates a bit ago and the best rate on a 3 month issue was 4.55% on eTrade–that is down almost 1/2% from where it was a month ago. I took a look at the money market I use (Gabelli US Treasury–GABXX) and it remains at 5.06%-slowly drifting lower, but not a bad cash alternative for the moment.

Preferreds and baby bonds are like everything else today and pretty flat–some up a bit and some down a bit. The 10 year treasury remains locked in a range of 3.7 to 3.8%–almost surely to be pushed one way or another with employment numbers.

As I do everyday–I look for ‘deals’ and right now true deals are tough to find at least those that I am comfortable. Maybe we will see some deals in the ocean shippers with the dock strike–but not today–just a nickel or dime movement–we’ll see.