Author: Tim McPartland

Investing is a mental game–and mentally everyone is worried this week. Of course not much has really changed since last week–but all the folks who were deniers of higher interest rates last week have now done an about face to say ‘higher for longer’. Certainly we can see they are much higher today with the 10 year treasury yield ramping up to 3.93%–up 10 basis points. Finally all the Fed yakkers are getting to folks.

Right now the average $25 share is off almost a 1/2%–surprisingly it isn’t worse.

I’m doing what I always do – watching for potential buys – but not very motivated to pull the trigger since we are being paid to be in cash and there are no real ‘bargains’ out there at this moment.

I am watching the Affiliated Managers (AMG) baby bonds and the Federal Agricultural Mortgage (AGM) preferreds. I had decent positions in these issues up until a couple weeks ago when I trimmed off a bunch to capture some nice 10-12% capital gains–now I am looking to re-enter when they set back some more.

The MGR 5.875% Affiliated Managers baby bond has set back 6% in the last 2 weeks from up above $25 not sure at what point I buy more of it–no rush–maybe a dollar lower would be a decent place to enter a Good Til Cancelled buy order.

I see that the 10 year treasury yield is now at 3.89% after closing yesterday at 3.84%. The Producer Price Index came in a bit hot yesterday, but it wasn’t until later in the day that equities reacted negatively to comments from Fed yakkers Bullard and Mester that they were in favor of 50 basis point rate hikes (they are not voting members of the FOMC committee this year).

Today we only have the Leading Economic Indicators (LEI) to deal with at 9 a.m. (central). Of course now every piece of news is scrutinized very closely and markets can react to news that in the past was ignored. Any news that shows the economy is stronger than anticipated is going to keep nudging interest rates higher.

Yesterday once again I did nothing at all–just watched. While income markets have been red I noticed that I had quite a few dividend and interest payments hit on the 15th (at least at Fido–eTrade is a day later) which helped brighten the month.

Did you see the Scorpio Tankers (STNG) earnings report yesterday? All I can say is WOW. Incredibly strong earnings–$12.66/share earnings for last year! I don’t invest is shippers, but certainly they are money good (for now at least)

Monday we have no stock or bond trading for Presidents day.

Every week we have at least 2 days with significant economic news and of course today is one of the days.

In days and years of the past the weekly initial jobless claims was just a number no one paid much attention to–now we are searching for signs of weakness in the economy and the Federal Reserve has targeted employment as one of their key data points. Given the number of job openings (11 million) it doesn’t seem like we are going to see weakness anytime soon. Claims are estimated to be at 200,000 last week versus 196,000 last week.

Also we have the producer price index (PPI) being released – with the forecast at .4% versus -.5% last month. On top of this we have building permits and housing starts being released. Tomorrow we have leading economic indicators (LEI) with the forecast at -.3% versus -1% last month.

This morning I see interest rates are flattish at around 3.8% versus yesterdays close at 3.81%–I’m hoping that the PPI is at forecast–upside surprises could kick rates up a few more basis points. Equity futures–which are near meaningless prior to economic news are essentially flat.

Did you see the earnings report from lodging REIT Hersha Hospitality (HT)? Pretty darned good–you can see them here. I have little allocated to the lodging REITs–but certainly there are plenty to chose from out there.

Yesterday I did nothing – which is the norm in recent weeks – I looked at some CDs and some agency bonds, short term of course. I am not too motivated to pull the trigger on more of these given the 4.5% or so I get on some money markets

Well just an hour to go and we have another round of economic news (the CPI) that will more than likely send markets straight up or straight down–or if we are super lucky markets will do nothing at all–low odds of that happening.

Markets are expecting .4% and .3% on the core (ex food and energy) month over month. Year over year is expected at 6.2% versus 6.5% last month with core expected at 5.4% versus 5.7% last month. NOTE the the bureau of labor statistics (BLS) is making a couple changes in how the CPI is calculated for January–you can read about it here. They had made some changes in late 2022 also–so who really knows if we have apple to apple numbers.

Monday we saw the 10 year treasury yield move a couple basis points lower to 3.72% –really just drifting a bit. Equities moved solidly higher–over 1%. Guess investors are pretty confident in a favorable CPI report.

My accounts were green by .2% on Monday–nice after a few red days–but really meaningless –plus and minus a bit – I am hoping to just hold the line and collect dividends and interest.

Once again I trimmed a little today – very little. I had a Good Til Canceled sell order in on OFS Credit 6.125% term preferred (OCCIO) that triggered. No buying again and I have a decent stash of dry powder now-guessing maybe 13% . It seems to me that there is no rush to redeploy $$ when I can get over 4% in money markets right now.

Ok–let’s get it going!!