Author: Innovative Income Investor

If you read the FOMC minutes from the July meeting you know that they are backing themselves further into a corner relative to a interest rate cut. A rate cut will happen in September UNLESS we get hot inflation news and/or huge employment gains in the data to be released in the next 3 weeks or so. It is getting harder and harder for the Fed to renege on this action. Can you imagine equity market reactions if they do not cut?

This morning we have the 10 year treasury at 3.83% which is up from the close yesterday at 3.78%–really just noise, but obviously we are trending lower. Tomorrow with Jay Powell speaking this could get pushed down further, although with the ‘promise’ of a rate cut already known and memorialized in FOMC minutes there isn’t much that can be added to that conversation.

Equity futures are up mildly this morning–awaiting jobless claims numbers in a few minutes–each piece of data is critical importance. We get the purchasing managers index at 8:45 a.m. (central time) and existing home sales at 9 a.m.–typically not important numbers, but EVERY piece is now important.

Last night the Carlyle Credit Income Fund (CCIF) announced earnings and generally as expected. This holder of CLOs has a asset coverage ratio of almost 300% which generally matches that of other CLO owner (i.e. Eagle Point Credit, Oxford Lane Credit Company)–all of them are up near 300%. Excellent performance out of these company’s for holders of senior securities (preferreds and/or baby bonds). CCIF is just a $152 million CLO company and is much smaller than ECC or OXLC, but you can be certain they will grow assets over time with sales of common shares–and then eventually more term preferreds. The company has a term preferred outstanding with a 8.75% coupon (CCIA)–disclosure that we hold a full position in this issue.

Well let us get the day underway and see if the economic numbers confirm rate cuts or if it gives one pause. As I do everyday I am looking for something to buy. I see potential targets out there–but am having trouble pulling the trigger–must be my age OR maybe it is simply complacency with were I am currently positioned. We’ll see.

For those interested the FOMC meeting minutes from the July meeting are out and can be read here.

Equities are quiet this morning and interest rates are just hanging around 3.81%. Markets are waiting on economic news. This afternoon we have minutes from the July FOMC meeting being released. While we know the outcome of the meeting we don’t know all the thoughts from the various members of the committee–but we will know at 1 p.m. (central time) today. Right now, at this point of time, markets are hanging on every piece of data–will the Fed cut 1/4% or 1/2% in September? Will they cut at all?

Of course markets will still be awaiting the Powell speech at Jackson Hole – always waiting for an excuse to rally or tank and as we know markets are pretty much in the ‘all news is good news’ phase. The only thing that can really tank this market is a black swan or NO interest rate cut.

Yesterday was another do nothing day for me, which honestly is kind of the norm. I have been studying a couple holdings for possible sale—yes sale. The 2 issues I may sell today are really portfolio ‘derisking’ moves. Sometimes facts change–or often times facts arise that were missed or just ignored when I purchased the position. More to come on this-hopefully later today.

Well let’s see if quiet markets continue – one would think they would remain quiet, but we all know we can’t predict movements–nor can anyone.