Category: Mid Day Ramble

So much for treading water until Thursday and Fridays economic reports–equities are ripping with the S&P500 up 1.27% right now.

Along with equities ripping interest rates are tumbling pretty good as the consumer confidence numbers came in soft this morning and the Case Shiller home price index remains on the negative side of pricing–but slightly better than forecast. Right now the 10 year treasury is at 4.11% – down 10 basis poits on the day.

The job openings and labor turnover report (JOLTS) showed just 8.8 million jobs open right now – which while plenty high is a fair drop from 9.2 million last month and a forecast of 9.5 million.

Any report on employment is likely to get the FEDs attention – they absolutely want to see soft employment numbers – I am convinced it is 1 of just a handful of numbers that the FOMC committee wants to see soft as they are convinced inflation can’t be tamed without employment softening.

The 10 year treasury yield is trading at 4.19% right now and close to the highest level in about 15 years–up 11 basis points today.

Income securities are taking a bit of a knock, although not severe–nickels and dimes. Unfortunately those nickels and dimes turn into real money after a few days – of course I am talking my book – I don’t like ‘red’ which is what I am seeing all week.

As mentioned on Monday (I think) I had 2 GTC sell orders in on a couple of my banking preferreds – but with a greedy sell price they have not executed and don’t think they will anytime soon given interest rates, but with these thinly traded issues one never knows when they will sell – maybe someone puts a market order in and takes them off your hands.

I did enter a GTC BUY order for the SiriusPoint 8% Resettable preferred (SPNT-A). It is trading firmly at $24.92 so of course my buy order is below that price – once again I am waiting for someone to dump a few shares and fill my order 15-20 cents below current levels–probably penny wise and pound foolish, but this one isn’t going anywhere soon–if ever.

I see that JPMorgan is hanging a 5.60% 5 year CD out there – unfortunately it is callable in 1 year – but just the same not a bad coupon.

Here is what I am showing on eTrade right now.

So we got the news out of the way with the Fed rate hike yesterday – and then plenty of news this morning – almost all of it bullish for the economy.

Jobless claims came in less than expected–and ongoing claims continue to move lower as well. Durable goods orders were strong–although taking out transportation they were flattish. The 1st read on GDP was stronger than expected. On and on – there is nothing here to make one think the Fed is wrong by lifting interest rates.

Checking CD rates just now I see that banks are not lifting their rates to match the FED – maybe they have plenty of deposits? Don’t know – will have to keep watching them.

I am back on the hunt right now for so preferreds or baby bonds to buy – not a lot as my cash stash is modest and will stay that way until 8/15 and 8/31 when I have some bonds and CDs maturing. I am very tempted to buy some more of the Affiliated Managers Group (AMG) baby bonds–a current yield of 6.5% for a very solid Baa1 issue (MGR) is fairly tasty. The company just released earnings yesterday and they are a very solid company. Also everyday I look at the CHS issues and at the 7% area should one just add more of these issues (CHSCM and CHSCN) – both are fixed to floating with a decent ‘spread’ but the upside is capped at 8%. We’ll see.

Crude oil prices continue to elevate with west Texas crude up more than 10% in the last month—up about $8 barrel. On a year over year basis prices of crude are still down almost 20%.

Personally I have noted gasoline prices at the pump are ticking higher by nickels and dimes – which of course is only 1 part of the story.

On an immediately basis the higher crude prices will translate into higher PPI (producer prices) which of course are not consumer prices–BUT they will translate into higher CPI prices eventually.

I am not too worried at this price level, but if we get continual moves higher it could well factor into future interest rate hikes by the Fed and I don’t want to see them getting more ‘ammo’ to help them drive the economy into the ditch.

The super strong employment numbers today with 339,000 new jobs versus a forecast of 190,000 are certainly being well received by equities–the S&P500 is up 1.25%. The unemployment rate shot up to 3.7% versus 3.4% last month.

Interest rates have bounced a bit to the 3.67% area–just fine all things considered.

The economic reports overall continue to be mixed and as we look at the FOMC meeting on June 13-14 it seems like we have a ‘coin toss’ situation–the talking heads seem to be fairly certain of a pause–I thought a pause, but this employment number is not helpful so I guess we will see what further data bring us–CPI will be released on June 13–the 1st day of the FOMC meeting.

How about those smaller banking issues? I was reviewing my holdings and most issues are up $1 to $3 since my purchases. Of course I wish I had full positions–but I will take the gains regardless. There remains plenty of high yielding issues out there to buy–but I am not going ‘all in’ I am too conservative to go crazy–but will continue to nibble, nibble, nibble.