Category: General Commentary

Nothing pre market today indicated that the S&P500 would be lower by 2.70% (right now), but markets are taking the administration seriously about getting rid of Fed Chairman Powell.

At about 9:40 a.m. (central) DJT tweeted–

“Preemptive Cuts” in Interest Rates are being called for by many. With Energy Costs way down, food prices (including Biden’s egg disaster!) substantially lower, and most other “things” trending down, there is virtually No Inflation. With these costs trending so nicely downward, just what I predicted they would do, there can almost be no inflation, but there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW. Europe has already “lowered” seven times. Powell has always been “To Late,” except when it came to the Election period when he lowered in order to help Sleepy Joe Biden, later Kamala, get elected. How did that work out?

And down equities go–more.

We can debate Powell all day long–good or bad–but these tweets could be ended, although that is not going to happen. In the end the uncertainty is what drives the markets and we have plenty of that to go around.

Interest rates are really not moving on DJT tweets–but right now the 10 year yield is up about 4-5 basis points. Preferreds and baby bonds are ever so slightly red–but really hardly moving. Let’s see what the afternoon brings.

The S&P600 fell last week in a holiday shortened trading week last week–by about 1.5%.. Honestly not a hugely wild week, but the level of volatility in the marketplace is far from over as we still have tariff issues to deal with, then we have lots of budget issues to deal with. Then we have potential fireworks being caused by the administrations differences with the Federal Reserve over interest rates–and the independence of the Fed.

The 10 year Treasury closed the week at 4.33% which was 16 basis points lower than the closing treasury yield the previous week. The economic news last week was not of major importance and for the coming week we don’t have news that has historically been given a lot of importance, but in the current environment each piece of data is being scrutinized very closely and one can’t predict when news of a minor nature previously is assigned a high level of significance. Leading economic indicators is released today with the purchasing managers index (PMI) and durable goods orders later in the week have not been important in the past to markets–but now? We do have consumer sentiment being released on Friday–and personally I think this is an important indicator given that the consumer drives the economy. We’ll see.

The Fed balance sheet was basically flat last week. You can certainly see that the run-off has slowed and in theory this should be slightly supportive of somewhat reduced pressure on interest rates.

For a change we had the average $25/share preferred stock and baby bond move higher in price last week by 34 cents. Investment grade issues were up 17 cents, banking issues higher by 36 cents, CEF issues 8 cents higher, mREIT issues higher by 43 cents and shippers were 23 cents higher.

That is exactly what I have been doing this morning–without any real success. Yes I am fussy about any buys right in here–we have no clue what is going to happen in the month ahead (or even the week ahead) so how can one go crazy with buying. To be the hero you go all in–but you darned well better be right or you will be the zero–and so will your accounts.

I reviewed all of my holdings because that is where I most likely would add at this time–if I was going to add and I certainly could if a dump happened with my holdings. Part of the problem I have is that I have at least 3 issues where I am overweight–and I feel good about them, BUT it only takes 1 bit of fraud or some other unlikely event to torpedo any position so I really am avoiding making more buys in these 3 issues. The issues are–

XFLT-A XAI Octagon 6.50% term Preferred

GGN-B GAMCO (Gabelli) Global Gold and Natural Resources Gold 5% perpetual

HNNZA Hennessy Advisors 4.875% baby bond

If we had a inkling that interest rates would be stable or heading lower the baby bonds from Affiliated Managers and WR Berkley would look mighty tasty for capital gains potential. But not yet in my mind, although a slow leg in to a position might be reasonable.

There will be no trading on stock and bond markets tomorrow – gives everyone a rest from wild movements. Today with the exception of United Health (UNH) markets are kind of quiet of course I said this yesterday before markets imploded so we will see what the next few hours brings.

I’m thinking I brought a bit of a hoax on the market for the afternoon–only an hour after saying markets were relatively quiet the S&P500 took a nosedive which took it down over 2% in the afternoon–fortuantely bouncing 1% in the last 30 minuters. Jay Powell gave a speech and said what he has been saying–and honestly everyone should know–it will be tough to lower rates if tariffs create some inflation. No shix!!

The stock fall took interest rates with it and the 10 year closed at 4.28% – down 4 basis points which helped to keep income issues slightly green on the day.

Tomorrow is another day—and my shopping list remains the ‘hiding spot list’–total chicken investing.

While equity markets are kind of soft today the movements have been relatively orderly–no massive ‘tweet moves’–yet. I don’t mind down movements nearly as much when they take place in an orderly fashion–it is those ‘baby out with the bath water’ moves that I hate so much.

Today’s social media posts by DJT (as of 11 am central time) are all border patrol notes and that is the one area that doesn’t move the markets much. Let’s keep it that way–yea sure.

Our accounts are green again today for the 3rd day in a row which is nice to see, but really not too meaningful because we all know there is lots more tariff news to come. These days—relatively calm for preferreds and baby bonds — are good times to make sure you are ‘positioned’ the way you want to be. Do you have some ‘dogs’ that have bounced that maybe you want to unload and deploy the cash elsewhere?

We had retail sales news today with data coming in decent–not moving the 10 year treasury as it is dead flat at this moment at 4.32%. I am not taking this retail sales number too seriously–I know some folks were trying to get ahead of tariff price increases. For me most of the tariffs are easy to deal with–I have no intention of buying a car or any other giant ticket item. For groceries, we will buy whatever we want–2 old folks don’t consume too much food. I realize that folks with 3-4 kids will take a hit and in some cases they will have to choose between video games or food, but we have all lived through tough times and folks will have to make choices.

I have done nothing in the way of buy or sell today, but I did put a good til cancelled order in for some Hennessy Advisors 4.875% baby bonds (HNNAZ) at $24.30—we’ll see if someone wants to give me some shares. This one trades with a big spread–when I placed the order the bid was $24.22 and the ask was $24.75. WHOOPS I just looked and it executed and shares are at $24.22 right now. This issue matures on 12/31/2026 so the yield to maturity is somewhere north of 6.7%–not the greatest, but over 2% more than CDs.