Category: Monday Morning Kickoff

Here we go!! Another week of excitement and fear and greed.

Last week the S&P500 fell off the tiniest of amounts as it opened the week at 2854 with a weekly low of 2852 and a weekly high of 2954–closing the week at 2831 which is a loss of 6 S&P points from the Friday before.

The 10 year treasury traded in a range of .58% to .66% closing the week at .64%.

The Fed Balance Sheet grew last week by $82 billion – a meager rise (on a relative basis). The Fed Balance Sheet now stands at $6.656 trillion – likely on the way to $8-$10 billion before the year is out and higher in subsequent years.

The average $25/share preferred stock and baby bond was up last week by about 2%–a healthy gain. Investment grade issues were up by 1%, while banks were up 1.5% and even Lodging REITs up almost 2%. For the time being bargains have become relatively more difficult to nail down.

We enter the week with the equity futures off 1%. Last week equities were off a very minor amount and the previous week was off about 1.3%. I suspect we may be off another percent this week—a near perfect move lower–no panic. Off course the moves lower have not been helpful to preferreds and baby bonds as they have been much stronger than common shares.

We will have a number of employment numbers this week–given that terrible numbers are expected I don’t see the confirmation of bad unemployment being meaningful to markets. The more important numbers will be in a couple months–how fast employment improves from the bottom which may be April employment. We’ll see!

The S&P500 traded in a range of 2727 to 2842 last week before closing the week at 2837–which was about 1.3% lower than the close the previous Friday.

The 10 year treasury closed last week at .60% which was below the close of .65% the previous week.

The Fed balance sheet grew by $210 billion last week–with the balance sheet now holding $6.573 trillion is assets–and amount which will never lowered significantly–not in my lifetime anyway.

Last week–believe it or not–we had very little in average $25/share baby bonds and preferred stocks.

The average $25 issue was 3 cents lower last week, bank preferreds were 8 cents lower, investment grade issues were 1 cent lower–the only group that we track which had a gain was the closed end fund preferreds which were 26 cents higher. mREIT preferreds are at $17.77 amd Lodging REIT preferreds are at $11.71–no doubt that some time in the future there will still be large gains in these sectors–wish we knew which companies ended up being ‘winners’ and which ‘losers’.

So we enter the week with the DJIA futures up a couple of hundred points–whether it holds or not is anyone’s guess.

I see General Motors suspended their dividend this morning as well as any stock buy backs–this is a sign of things to come and no one will be too surprised by these moves.

Last week the S&P500 opened up the week at 2782, hit a low at 2721 and a high of 2879 and finally closed the week at 2874–a gain of over 3%.

The 10 year treasury traded in a range of .58% to .76% before closing the week at .65%

The Fed Balance Sheet grew by almost a hefty $300 billion–to $6.4 trillion–a crazy number, but one which is heading higher–much higher.

The average $25 preferred stock and baby bonds moved higher by a measly 8 cents last week. Investment grade issues were 9 cents higher while utility issues we down 34 cents.

So this week we have the DJIA looking a bit weak to start off–down 400-500 points, but we have learned that the early pricing on stocks doesn’t mean very much as any minute the FED can step in and manipulate stock prices.

I believe I am around 63-64% invested (haven’t calculated exactly). As boring as it seems I will be watching–still watching for some bargains, but I still hold out belief that better bargains are likely coming.

As you all know by now crude oil (west Texas intermediate) is trading around $11-12/barrel–incredible. With little demand and an oversupply of about 20 million barrels/day how will energy move higher? I see that in the comments Fabrib posted that Oaktree Capital has given a $750 million unsecured loan to NuStar Energy (NS). The press release is here.

Last week was a phenomenal week in equities as the S&P500 as the index it opened the week at 2578 and closed the week at 2789–a gain that was highly ‘juiced‘ by the Fed’s printing presses.

The 10 year treasury traded in a range of .64% to a high of .78% before closing at .73%.

The Fed balance sheet grew by $172 billion to a new all time high of $6.08 trillion–on its way to at least the $10-12 trillion area this year (my guess).

The average $25 preferred and baby bond closed last week at $21.84 after huge bounces in many areas–in particular mREITs. As expected CEF and UTE issues continued strong trading with CEF preferreds closing the week at $25.11 and all utility issues closing at $24.12.

So we are starting the week off with only small losses on equity indexes, but earnings season is about to begin. Whether investors pay too much attention is anyone’s guess , but does it matter anyway as the FED has taken the risk out of the risk/reward equation.

I am in the area of 62% invested and don’t really have a plan for the week. If there were bargains in CEF and UTE issues I would probably be a buyer–BUT I don’t expect any as they are already trading in the $25 area–and I want to buy lower.

Will the markets trade lower this week as the fundamental long term economic damage is finally admitted to? No one knows–but we always prefer to error on the side of being conservative.

Last week opened with the SP500 at 2558 and hit a high of 2641 before closing the week at 2488–around a 3% loss on the week.

The 10 year treasury traded in a range of .57% to .72% before closing the week at .59%.

The Fed Balance sheet grew by $600 billion last week–a 3 week total of $1.5 trillion to a new highest balance ever of $5.8 trillion. The printing presses are running as fast as they can run.

The average $25 issue of preferred stock and baby bonds fell by about $1.50/share last week to $18.90.

Banking issues were exactly flat last week at $22.89. mREIT issues were hammered much lower–by $5.50 per share and this remains a very dangerous sector. CEF, Utility and investment grade issues were all lower, but only by 1-2%.

So we are kicking off the week with strong futures markets–in my opinion too strong (but maybe I’m wrong) and I know that I won’t be buying today–as shown by last weeks action in preferreds and baby bonds it remains ‘early in the game’. While it is so tempting to start to pick up shares investors have to be very careful to not get carried away and instead to ‘leg in’ to positions.

I am about 55% invested so I remain with high levels of dry powder–most of my holdings are utility and CEF preferreds and baby bonds bought at lower levels–this is where I prefer to be now–but I am chomping at the bit to buy some lodging and housing REIT issues, but it is too early for these segments. I am trying to be patient.