Last night I wrote a short note at 8:30 pm on indexes dropping in reaction to the administration announcing tariffs yesterday afternoon.
Not much can be said at this point as there has been no bounce in indexes overnight and at this moment all indexes are off fairly sharply with the DJIA off 1200 points.
Interest rates (the 10 year Treasury) are trading at 4.08%–near where they have traded all night long.
How will preferreds and baby bonds react to this turmoil? Of course no one knows for sure, but I think all prices will fall in the early going today–and the baby will go out with the bath water in spite of interest rates falling. How much is anyone’s guess.
The only thing I know for a fact is I WON’T be selling anything. Selling at this point in time is pretty fruitless. If one wants to ‘rearrange the deck chairs’ don’t do it today–just give markets a little time to play out–decisions made on days like today are likely bad decisions.
Let’s see if markets bounce today or at least stabilize. There are a few days before many of these tariffs kick in–maybe some will be delayed further. We just don’t know.
I’m looking for potential buys today–where? Everywhere. Won’t be buying today, but tomorrow is another day and I may be buying—I can’t predict at this moment.
Of Deep Import: You know the song, “Black Magic Woman?” Santana probably had the best known version but it was written and first done by Peter Green as a member of the original Fleetwood Mac group before the girls arrived. What I’ve always wondered is if this is a song about a woman of African heritage who practices prestidigitation or a female practitioner of Voo Doo….
https://www.youtube.com/watch?v=9wT1s96JIb0&ab_channel=SantanaVEVO
https://www.youtube.com/watch?v=kpg4K8qet10&ab_channel=RHINO
Of course today, my priorities are different…. Now I’m wondering if either one of these woman can do something magical or cast a spell to make all these goings on go away…
2WR – of absolutely zero import … every time I see it, I get a real hoot out of the hilarious cover of the album where that song was first released in the US, English Rose …
https://en.wikipedia.org/wiki/English_Rose_(album)#/media/File:Fleetwood_Mac_-_English_Rose.jpg
It kind of matches today’s market mood, eh?
Worth 5 minutes of everyone’s time: Nancy Pelosi on Chinese tariffs
https://www.youtube.com/watch?v=LayOiPkvKBw
Wooo pig pig pig.. dropping political landmines today. Who dares comment on that video? Are you trying to get us into trouble here with the natives?
fc, Time has a way of making strange bedfellows eh? lol
wedbush’s take on the tariffs
In the Rose Garden at the White House President Trump laid out a jaw dropping reciprocal tariff chart that will be showed in classrooms and be written about for years to come by economists…..because they are so illogical and absurd. Let’s start there. First off, the tariff numbers showed are factually incorrect what other countries charge the US. They are a convoluted set of numbers/calculations that appear to be taking each nation’s trade surplus by their total imports with the
US. To be clear these are not the actual tariff rates. If a 9th grader in high school presented this tariff chart to a teacher in a basic economics class the teacher would laugh and say sit down and work on the assignment.
https://wedbush.bluematrix.com/sellside/EmailDocViewer?encrypt=89298caf-d9e5-4463-9f71-44ecea3f23d1&mime=pdf&co=wedbush&id=replaceme@bluematrix.com&source=mail
Anyone who remembers how business was done before the era of ultra cheap money might recognize the tactic being employed here. Sounds much better than becoming a Chinese debt serf.
Cry me a river for all the big box stores, Temu and other foreign manufacturing outlets and all the cheap garbage they have been stuffing us with over the past three decades.
Major governmental policy changes, especially when they affect so many people in such a drastic way, should be based on (1) facts, not fabrications; (2) careful analysis; and (3) a conservative and cautious mindset. Affected interest groups should be given an opportunity to weigh in. Congress should be consulted. These tariffs haven’t survived the crucible of detailed public scrutiny and debate. They seem to reflect only the prejudices, misconceptions and impulses of a single person. And the way they were determined and announced was rushed and chaotic.
Congress? The same fraudsters who got us into this mess in the first place? They had 30+ years to do careful analysis but were too busy taking kickbacks and selling us out. The only thing drastic is the action needed.
Dan,
I think what Nimzo is saying is that he (and I) don’t like being told the country must take an action because “XX” has been occurring when “XX” is not correct, and in fact appears to be a diversion (I’m referring to “reciprocal tariffs”)
We live in an economy that is consumer driven. I don’t think anyone has forced me to buy anything, and Congressmen only reflect the will of the voters. We got ourselves into the debt/deficit predicament.
While we could debate the various reasons a majority of voters chose the current president (my bus driver friend voted entirely on the trans in bathroom issue though it’s never actually come up in his life), one thing I am certain nobody voted for was to engage a politician’s whims.
I like being told the truth. It’s a bit of a stretch for a small group to claim it knows better than the wisdom of the market what action should be taken. I think that’s the predicament now.
Let’s see how this plays out. We each have our opinions and only time will tell.
After the great financial crisis in 2008, does anyone know if there are any new companies where the preferred and/or junior bonds interests had been suspended as long as the company (US only) is not in default but still obligated to pay interest on their senior bonds? I assume that suspending dividend/interest on preferred stocks and junior bonds do not constitute default?
In terms or payment priorities, dividends on stocks will be the first to go and then preferred stocks and junior subordinated bonds, except CreditSuisse debacle (non US where I think the junior got wiped out completely but not the stocks). Most I believe can suspend dividends/interest for up to 40 consecutive quarters for the last two groups of bonds.
Or in most cases those companies that suspend dividend/interest on preferred stocks and junior bonds are likely to default eventually?
Thanks!
Retired, I can”t help you. Not a field I play in myself. I think it was XXI I got wiped out on and learned my lesson. What I can tell you is that there are usually enough warnings ahead of time to get out.
I think Rocky mentioned today a preferred and Baby bond ETF I looked at it and passed. To goose their return they are holding some investments that are questionable quality at least to me. But holding 116 different issues if one blows up it’s not going to ruin you. The advantage of a preferred ETF I suppose is you don’t have to keep watching it and get in an entry point at a possible low.
We have not seen anything yet with our new re-industrialization policies. Our once allies are looking at this trading arrangement and looking to divest their investments from USA and make there own free market trading pacts.. Isolationism in the 21st century is a economic losing option for the USA..Financial markets will follow. Case point the Denice industry will lose substantial trading partners as our once allies understand they can not feel safe aligned with the USA..I.e. very recent F-35 sales cancellations…just the beginning.
Hey, whatever you think about Trump, you gotta admit he has some big balls.
but no brains
Yea he just managed to stumble into this position
Please guys, No more Politics .
It doesn’t add to the conversation about income stocks. We all know what is happening and who is doing it and how it is affecting the market.
How about after it’s over we do an investigation of all members of Congress who placed bets on what they knew and got rich off of that.
Just grab the popcorn sit back and watch the show.
Nothing so far about the new PRIF-M, taking their time. Tomorrow would be nice.
Where is the FED!!! lol
Is today the “clearing event” and or climax of this correction? Who knows.
Time to pull bottom fishing tackle out though. I’ll still wait to cast.
Overvalued Nasdaq and S&P nearly limit down
Where is the FED/Trump put? Main street elected Trump not Wall Street… in fact Wall Street is not a friend of the administration by any means.
The moves in my portfolio, don’t seem consistent and feel maybe more to do with low liquidity and wide bid asks. Some of the riskier stuff I would expect to be off more, and some safer stuff surprised to see taking a hit. I sold off all exposure to bank loans, BDC’s and CLOs months ago but I’ll keep a close eye on MREITS (although if rates drop it should help them out).
Dan–I was wondering the same, but volume, while high, isn’t crazy high. I would like to see folks scream ‘let me out’.
Dan,
I can usually tell that it’s not the bottom when I’m scared to sell into a big decline because I fear I may be selling the bottom. That happened at least 20 times today.
I can’t predict the future, and I’ve proven it by losing money trading SPY or QQQ in 24 out of 25 years… I was a winner in 2008, but just barely.
My best friend , who has been a highly successful full-time trader since he graduated college, shares what are apparently your views of presidential action. He referred me to a 2003 Warren Buffet op-ed on reducing the trade deficit. You may find it interesting as i think you seem to hold the same views.
My friend NEVER lets his political opinions influence his trading. For example, while a proponent of BTC, he opined after Trump’s press conference that reducing the trade and budget deficit were terrible for BTC.
https://faculty.washington.edu/ss1110/IF/Buffett%20Fortune%202003%20(6).pdf
Here are what I deem as pretty decent values if you act today while they throw the baby out with the bath water. Here goes: ATHS $24.99; MS+P $25.13; RF+F $25.02; RZC $25.18; AGM+E $21.74. I OWN ALL OF THEM IN SIZE.
I’m on a similar wave length Chuck but just a little lower on the yield (min 6%) and below par. Stuff I picked up or added to existing:
BAC.PRB
BAC.PRN
MET.PRF
MS.PRK
MS.PRL
MS.PRO
WBS,PRF (already have .PRG which has better yield but was thinking this is less likely to be called)
Just more ideas for consideration
Had a GTC order fills fill on RZC and BK-K today. I’ll put them on again lower, and make some popcorn tomorrow.
The reason why I am keeping my powder dry is not just the market reaction for the next few days. Today is April 3rd, we will be entering quarterly earnings shortly. That includes companies giving their earnings guidance.
I do not see many companies that are going to express anything but uncertainty for the upcoming quarter or cutting their earnings guidance. Of course, the market is trying to bake that in before earnings season starts.
To the extent that tariffs will be lessened in the future, it may not be possible before companies go on record with lower earnings guidance starting very shortly. This is no window for tariff adjustments before companies need to go on the record.
Bought some DX-C @ 25.30 for both my IRA and my wife’s. Hoping they don’t call it soon, but if they do “no harm / no foul”. Picked up a few shares of wild bucket ETF’s just for giggles (QDTE / AMZY).
Well my TY/P is doing great today… lol
Dan I sold some at 46 last week. I have more if you want it
I am a conservative investor – am happy to have landed some JPM/C (6% coupon) at $24.99 today.
Not exciting I know but I will enjoy my 6% for awhile.
Porky11; Nothing wrong with that, beats the heck out of the MM. I have been holding similar issue MS-F 6.875% for several years, hopefully more years to come.
As of this moment: 0950 3APR
S&P off roughly 11% from its high (Feb 19).
10 yr at 4.03%
This is a good time for the Feds to lower rates!
TLT looking to break out above its 200 day moving average.
Telecom holding up
Not everything is deep red.
Don’t be so negative Tim. Opportunity is coming.
Good day to sell long dated puts.
Or, possibly, to buy them.
I keep a certain amount of cash in money market (SWVXX) and like to sell way out of the money puts to juice the income of my cash position. On a day like today everyone is panicking and buying protection.
As a hedge, I bought long dated index puts in early February. I’ve rolled them down several times since, locking in gains.
Selling short puts is great for accumulating stock at a lower price but in a market like this, I prefer risk defined strategies (typically verticals). There are some strategies where you can get 10-20% of downside protection and have some upside – similar to what the insurance companies do but with better numbers… probably nothing of interest for this board.
As a hedge, I bought long dated index puts in early February. I’ve rolled them down several times since, locking in gains.
Selling short puts is great for accumulating stock at a lower price but in a market like this, I prefer risk defined strategies (typically verticals). There are some strategies where you can get 10-20% of downside protection and have some upside – similar to what the insurance companies do but with better numbers… probably nothing of interest for this board.