Yesterday once again the S&P500 moved higher–certainly at a modest pace, but higher just the same. On one hand we have a slowing economic picture–at least to a minor degree which markets want to see, but on the other hand a slowing economy indicates reduced corporate earnings. Interest rates which are off the high are still very elevated and marginal companys with lots of debt are being crushed–2024 will be an epic year in some areas as debt continues to be refinanced at higher rates. No doubt the equity markets are priced for perfection–a soft landing is priced in no doubt.
Interest rates are off a little this morning with the 10 year treasury at 4.19%–down about 5 basis points from the close yesterday. We have the consumer price index being released in 45 minutes–and expectations are for the headline number to fall to 3.1% from 3.2% a year ago. The core rate is expected to remain at 4% which is flat to the last reading. No doubt deviations from expectations have the potential to move markets substantially.
Yesterday brought a little pain to my portfolios–nothing drastic, but red just the same. No real reason for the move, but folks are probably weeding out some of their losers for end of year tax reasons.
I have been adding lots of issues to the Master List which is here. Right now I am adding the ‘illiquids’ – mainly $50 and $100 issues (they are on a separate sheet right now). In fact as I was adding the Connecticut Power & Light issues (all $50/share issues) I decided to test the liquidity and entered an order for a few shares. Spreads (bid/ask) are pretty wide and with minimal trading my order did not execute–maybe I’ll try again today. With the exception of the Tri-Continental 5% preferred I have little experience with the illiquids and now with current yields over 6% they are interesting–in a modest sort of way.
Well let’s buckle our seat belts–and hope we don’t need them for the consumer price index (CPI) number.