Recent trading in equities (of all sorts) has been about as rock solid as we have seen in recent years. The movements in equity prices have been in spite of movements higher in interest rates. The 10 year treasury is trading at 4.13%—up from 3.79% about a month ago and during that same time frame the average $25/share preferred and/or baby bond is up 1/2%. Historically the 10 year treasury is very correlated with preferreds and baby bonds—so I guess we can expect movements to bring this correlation back into historical norms–or can we?
Yesterday we had the leading economic indicators released and as has become ‘norm’ in the last number of months the number came in better than anticipated at -.1% the expectations was for -.3%.
Today we have no important economic news–but tomorrow we have PMI (purchasing managers index). Then on Thursday we have the 1st look at GDP for the 4th quarter–very important–forecast are for growth of 2% which would be quite a slow down from the previous quarter–let’s see if the economy has slowed that much or if once again an economic number comes in ‘hotter’. We then wrap the week up with the PCE (personal consumption expenditure)–once again very important–at this time next week we could have a 10 year treasury at 4.3%–or at 3.7%–we’ll have to wait and see.
Yesterday I made a sale–I sold my entire position in Enterprise Financial 5% Perpetual Preferred (EFSCP) at $17.68. With a couple dividends my return was around 15%. Interestingly EFSC released very earnings after the market close yesterday and they were solid–no major bad loans announced etc. As is normal they did pay a relatively large FDIC special assessment as all banks have to replenish the FDIC insurance fund. I will try to write today on my thoughts on this sale (why did I sell it?).
Markets are looking kind of quiet this morning with the S&P500 up a tiny amount. Earnings are driving these indexes this week–this morning 3M and P&G reported. No reason to think we will see anything of significance in markets today–Goldilocks reigns!!