Author: Tim McPartland

Equities are quiet this morning as we await the next piece of economic news which is the consumer price index which is released tomorrow. Forecasts are for a CPI up .2%. Year over year forecast is 3.3% which would be up from last month—core is forecast for up 4.7% year over year. Certainly we could see a number that is a few 1/10ths higher or lower–and either one would likely drive markets substantially. We are now in the ‘data’ gathering period in the run-up to the next FOMC meeting which 5 weeks or so out (September 19-20).

Interest rates seem to be awaiting the CPI as well as the 10 year yield is trading at 4.03% which is virtually unchanged from yesterday–we’ll see what the end of the week brings as we get these inflation gauges.

Earnings season is coming to an end and there weren’t many massive downside surprises that I saw – in particular in the banking sector. Most banks reported softer quarterly numbers but generally I didn’t see massive provisions for losses related to commercial real estate. I think that folks have been looking for these provisions BUT these things take years to play out–not months. The worrys as I understand it is for refinancings that will occur between 2023-2028. I have no idea whatsoever why 2027-2028 matters–I have not seen 1 single ‘forecaster’ who can reliably forecast interest rates for next month let alone 4-5 years out. Most certainly we will see some issues in the next year or two, but to forecast beyond the short term is simply foolhardy.

Almost nightly (Monday through Thursday) I post some interesting ‘news’ for investors in preferreds and baby bonds in the ‘Headlines of Interest’. This is a summary laundry list from a quick scan of the news release services–I try to catch most everything related to companys which have exchange traded income securities outstanding. If you aren’t taking a minute to scan these headlines you may be missing some important news items that could lead to great ideas for investing.

Early yesterday I sold 2 of my bank holdings–locking down respectable capital gains (although only 50% of what they would have been last week). I will write a little blurb this morning yet on my logic.

Moody’s has downgraded a number of banks–once again on the worries about commercial real estate. Obviously this is not a new worry, but it continues to help put a lid on banking preferred stock price increases. I had very healthy capital gains in most all of my banking issues, but some of that gain has melted away–it it probably a good time to cut back some of these issues preserving decent, although reduced, gains. If you want to see the huge number of downgrades by Moody’s you can scroll through them here.

Equity futures are showing losses this morning with the S&P500 off about 3/4%–at the same time interest rates (the 10 year treasury) are back down to the 4% area – are they headed back to under 4%? We have big treasury auctions yet this week which may pressure rates-but honestly no one knows for sure so we just play the hand we are dealt.

I continue to watch CD rates and we have seen no ‘bump’ higher in rates since the last Fed Funds rate hike last week. I was hoping, based on history, that we would get up to 5.6 or 5.7% which would have made decisions easier as my CDs and Treasuries mature–I would take plenty at 5.7% for sure.

It looks like we have seen a short term peak in oil prices (west texas) around $80–I sure hope so since the last few trips to the gas station have been getting progressively more painful. I am paying $3.89 for unleaded in Minnesota –that high enough.

Well let’s get this show rolling and see if stocks can bounce up from a lower opening–there is a lot of FOMO out there and each time we have a small setback in prices buyers come in and drive prices higher.