Category: General Commentary

A big spike in the 10 year treasury yield was not really on my mind before today. I was most concerned about a potential ‘black Monday’. Fortunately common shares traded in a pretty wide range today with tremendous volume and closed with only a very minor loss on the S&P500. Unfortunately folks all of a sudden quit worrying about a recession and sold off the bond market sending the 10 year treasury yield up to close at 4.15% – up 17 basis points.

Now as income investors we are in a bit of a bind–just a bit. My ‘plan’ was to see rates go down in the 3.75% area and stick in that area, which would shove preferreds and baby bonds up by maybe 5%. So much for my plan–oh well we simply have to wait and see what investors decide to do next. I don’t believe that the tariff situation is even close to over and honestly I have to believe that consumer confidence has been swatted lower by the last 3-4 days of trading–and chaos.

I mentioned I made a couple small purchases today, but I would be surprised if I do anything at all tomorrow. Accounts were red today, but the total damage wasn’t highly significant and I feel fairly fortunate to have gotten to this point with less than a 1% portfolio loss–BUT we have a long way to go with the tariffs and we have CPI and PPI released later in the week.

I hope folks are accomplishing their investing goals–for those looking for a nice income stream that means finding bargains in strong securities and averaging in. For those looking for some capital gains (like me) we will simply have to see if this economy is going to soften enough to send interest rates lower–not sure we are going to see much help from the Fed at this time.

It’s an interesting day in markets—lots of ups and downs, but no real change in the news relative to tariffs. Markets went parabolic for about 30 minutes on rumors of pauses in tariffs–but that rally went away pretty quick.

I made two small purchases this morning. I added to my position of the RiverNorth Opportunities Fund 6% term preferred (OPP-C) at $10.10. This was kind of an accident as I had a good til cancelled order in from a couple weeks ago that executed–nothing hurt, but not what I really intended to buy.

Also I initiated a position in the Affiliated Managers 4.75% baby bond (MGRB) at $16.90 as it fell 40 cents or so in early trading.

I won’t make any other buys today because no one is giving me bargains as good as I want–we’ll see what happens the rest of the trading day.

The S&P500 took quite the tumble last week as it fell 9.1% from the previous Friday—obviously a severe fall and costly to most of us. We’ve seen worse falls before and we will likely see worse again. Hopefully we won’t see a repeat anytime soon.

The 10 year Treasury yield tumbled hard as well–hitting a low of 3.89% on Friday before bouncing to close at 4% for the week. This close was 26 basis points lower than the previous week as fear of recession and possibly a ‘flight to safety’ from equities hammered yields lower.

Last week we had monthly employment numbers which were pretty respectable, but reflect ‘old’ data before we had some employment turmoil in particular in the government sector. For the coming week we have a number of big economic news items. We have the release of the FOMC meeting last month and then on Thursday we have the consumer price index (CPI) and on Friday we have the producer price index (PPI).

The Fed balance sheet fell by $17 billion last week–pretty much on target (on a weekly average basis).

The average $25 preferred and baby bond got hit last week in spite of the big drop in interest rates. The average share was off 56 cents, investment grade issues off 33 cents, banks off 44 cents, mREIT preferreds off by a huge 84 cents and shippers were off 69 cents.

So at 5 pm central the futures markets open and the index went to minus 4-5% instantly. Honestly a drop that is less than it could have been.

Given that only a limited number of tariffs have kicked in the entire fall is not justified (in my mind). I think negotiating will start in earnest tomorrow and with the exception of China many deals will be made in the next few days. Will all be OK–no of course not, but calmer heads will prevail.

Under no circumstances will I sell anything—but if bargains appear (bigger bargains) I will do some buying. I only have about 10% cash–almost all in money markets at this moment.

Last week was a trying week for pretty much all investors—only if you were in all cash did you escape the severe losses of Thursday and Friday. I know my losses were pretty minimal on a relative basis much less than 1%–BUT what lies ahead is a total unknown. So I needed to put together of spots I might ‘shop’ depending what occurs in the coming week.

Below are all investment grade issues which have been somewhat beaten down. They are not yielding huge amounts–yet. If markets go into a tailspin and these get beaten down further I may buy–I can’t even define what that means on Sunday afternoon until we see markets open up and trade.

The purpose of this is to identify high quality issues that could have lots of capital gains potential if they get beaten down dramatically in the weeks ahead. This means if there IS panic selling these quality issues may bounce back nicely when the selling is over.

The spreadsheet below IS NOT LIVE—but go to this page for the live chart.