The last few days the 10 year treasury has crept higher and higher–on Wednesday the yield hit 4.18%–up from the low of 4.07% on Tuesday. Economic news continue to be slightly favorable–and this morning we have important news with the 1st read on 4th quarter GDP which is forecast at 2%. If GDP comes in hotter than forecast and is coupled with favorable initial jobless claims and favorable durable goods orders–all scheduled to be released at 7:30 a.m. (central) we have a recipe to see the 10 year yield climb into the 4.20’s–maybe higher. Right now the 10 year is at 4.16%.
Equity markets are overall very quiet this morning–the tiniest amount green. Of course most of the major indexes have been driven higher and higher by tech stocks–one has to wonder when this will end. AI hype can only take things so high, but we all know that if one wants to short equities based on thinking ‘it can’t go higher’ you will soon be broke. Seems to me something will ‘break’ and we will see a setback–and then we will move higher–who knows, we’ll have to wait and see.
Watching the small banker earnings coming in I see no one booking big losses or reserves. I post numerous earnings reports each night in the “Headlines of Interest” and I try to skim many of them–and I am not seeing anything frightening–maybe I am all wet and we will get through the year without banking issues. On the other hand most the time I have a good handle on these things–but my ‘timing’ is almost always early. These things take years to play out–companys can hide issues for a year or two, but at some point things come home to roost.
1 earnings report that I always read is from insurer WR Berkley (WRB)–mainly because their 5.7% baby bonds (WRB-E) are on of my largest sock drawer holdings. Incredibly well managed company with record earnings quarter after quarter. Shares are now trading at $25.02/share–I see on my laundry list of holdings I added shares on 10/10/2023 at $21.95–and bought the initial tranche a year or two ago–so large gains. Shares are in the sock drawer–not to be sold.
So today is another day of sitting on my hands–nothing to sell, nothing to buy–yet. I have been very pleased with my portfolio performance through January. Even though interest rates have moved higher our portfolios have gone up a little dab most days. Mostly through luck, our portfolio allocations have been just right, but February and March will test my ability to keep allocations right—so many CDs maturing–we’ll see I guess.
Well 45 minutes until ‘data’—I wouldn’t ride without your seat belt on this morning–better safe than sorry!!