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At the Least An Interesting Day

So we have got nice bounces in some of the banking preferreds off their lows–i.e. First Republic (FRC) and Customers Bank (CUBI). As I mentioned earlier the ‘brave’ step in and buy and reap the benefits. From the comments section I see we had some ‘brave’ folks–no surprise. I hope folks didn’t panic out at the lows–I know it has been painful for many and one is always tempted to sell out at the bottom, but it seldom is the correct move (although if the FDIC seizes the bank that is a different story).

In a simple point of view one would guess that with the Fed stepping in with liquidity that all would be fine–NOT. This will take weeks if not months to finally all play out–hardly ever do they play out in a day or two.

If you have been hunting CDs today the offerings from the big banks no longer exist (at least on FIDO)–I suspect they have sold enough of them for now and we will see lower rates when we see them again. There are quite a few offerings from banks I have never heard of–I guess they are probably alright to own, but for now I will just collect money market interest.

Don’t unbuckle your seat belts just yet–we have CPI and PPI yet this week so there can be plenty of ‘excitement’.

To peruse the bank preferred carnage go here.

Tension Comes Off the Tape

I was amazed looking at the futures prior to market open how ‘quiet’ all markets were–stocks and bonds. Of course we all know futures are not really meaningful.

Then minutes before Powell begins to testify before congress the s&p500 takes a good sized tumble–down 1%. Fortunately interest rates at 3.98% are hanging in there.

I made my 1st stock trade 52 years ago and have been a student of the market since–and through all these years I have never figured out many of the movements markets make through short time frames–what Powell said in his testimony should have been totally expected–hawkish.

So as we look ahead to Fed speakers and employment numbers on Friday I sit on my hands—I am watching CD rates–that is about it. Bargains in preferreds and baby bonds may appear, but I think they will be better bargains in 3,4 or 6 months. I did pick up another $10,000 2 year CD yesterday at 5%. I had a 6 month CD mature and will have $10,000 in 6 month treasuries maturing next week so really just recycling money at higher rates–and liking it very much thus far.

Plenty Quiet–Waiting for the ‘Big Show’

While today is pretty darned quiet–equities are up the tiniest of amounts right now (1/5%) and interest rates are up 2 basis points to 3.98% you can be certain starting at 9 a.m. (central tomorrow) that we will see much more action and movement. There is no way that Jay Powell can testify to congress for 2 days without some fireworks going off. Honestly if markets were flat for Tuesday and Wednesday I would be perfectly happy.

Overall preferreds and baby bonds are a tiny bit green–just like the equity markets–the tiniest of green. I think that Powell will have to put on a hawkish tone for congress–so I think that interest rates will head back over 4% tomorrow, but if you made any bets on what I ‘feel’ you would be a loser–typically prices move in the opposite direction to what I ‘feel’.

We had the new Jackson Financial (JXN) issue announced this morning and as usual we have some good comments on the issue–and thought on fixed-rate resets in the comments–it is great to see since we have so many really smart folks here–the comments make one think a bit deeper about the new issues. Thanks to all that comment and help make me and all readers smarter. Well let’s see where it prices–earlybird ponders 8.125% or so on the initial rate and 1 notch below investment grade.

Kind of a Quiet Day

All around it is kind of quiet today–equities off a little bit and the 10 year treasury off 2 basis points to 3.90%–looks to me like everyone is waiting on the personal consumption expenditures (PCE) tomorrow–we could have some real fireworks.

A quick glance at my accounts show they are just about as flat as the rest of the market–barely moving. Well at least I will see a modest level of dividends and interest early next week as the month ends. Of course I am doing nothing at all with buying or selling.

I see we had 2 Fed yakkers today with 1 still speaking–guess they didn’t have anything bombastic to say as markets are not moving herky/jerky. As has been the case for weeks and weeks the 1st time unemployment claims numbers came in lower than expectations–employment continues. 4th quarter GDP numbers were adjusted a bit–but not market moving.

Looks like I spoke too soon on the Fed speakers as Mary Daly from San Francisco is speaking and the S&P500 just took a decent jump (at 1:15 central) and the 10 year treasury yield dropped 2 more basis points.–she must have a dovish tone to her speech.

Up and Down Markets Vacillating Over Inflation

The S&P500 has taken a pretty fair ride today but in the end can’t decide which way it wants to go. Right now the index is up about 20 basis points.

The bond market is more guarded about inflation–the 10 year treasury yield is up 5 basis points at 3.75%—I tend to watch the bond market for direction–maybe I’m biased but bond traders seem to be more ‘level headed’.

Of course most of the inflation numbers (as measured by the CPI) were either on or very close to forecast this morning—and the talking heads are in plenty of disagreement as it relates to Fed policy. I think we have 50% of them that think the Fed needs to watch employment as the main driver of policy–while the other 50% believes that the slow 25 basis point hikes will bring economic activity down regardless of employment.

We see lots of layoff notices going out but the numbers in total are not huge–and the latest JOLTS (Job Openings and Labor Turnover) report for December shows a huge demand out there for workers. It’s hard to imagine the economy taking a huge hit with this many job openings (see below).

Income issues kind of look flattish today (just by eyeballing the spreadsheets)-my accounts are very slightly green—very slightly.

I did sell a chunk of my Liberty Broadband 7% cumulative redeemable preferred (LBRDP). I had been overweight this issue for quite some time so I had hung a Good til Cancelled order out there for some of it and I see that it executed.