Is the Double Dip Coming?

While we are still in a recession so this isn’t really a potential ‘double dip’ are going to see the second downward push in the economy soon?

For years I have watched employment and consumer confidence for clues as to where we were heading in the economy–I quit watching these closely during the last 6 months as the Fed and the treasury overwhelmed fundamentals with never ending money drops–but maybe it is time to watch again.

The Conference Board released their take on Consumer Confidence today and it wasn’t good. The Consumer Confidence Index fell to 84.8 from 91.7 last month–this is a damned big drop. ‘Analysts’ (who ever that is) were expecting an increase in the reading–so much for the smart folks. Seems to me with the $600/week extra cash from the federal government going away confidence both by the employed and the unemployed would head south–we are talking maybe $6 billion a week going away–real money (or is it just fake paper fresh off the printing press?).

The Conference Board press release can be read here.

Last week we had a 1.1 million first time unemployment claims number–up from 910,000 the week before–are small businesses simply running out of cash and having to lay off folks? I didn’t dig into this one, but anecdotally I had 2 nephews get laid off last week–1 in Colorado and 1 in Kansas. Both worked in hospitality related businesses–the businesses simply continue to suffer and eventually lay offs have to happen. In this case both nephews are around 50 and this will be a tough time for them.

Black Knight released the latest mortgage data report last Thursday and there was a bit of improvement overall–but with the $600 weekly going away is this going to worsen again? Their report is here.

While overall mortgage delinquencies improved a bit FHA borrowers are not paying their mortgages–a full 16% of all of them are delinquent!! Yikes!! This is up from 9.7% the month before. While I am for everyone that wants a house to have one–the facts are, time and time again, that when you have little ‘skin in the game’ and you lose your job defaulting is always an option. The feds have a forbearance program and payments can be deferred for up to a year–any wagers on how many of these folks will walk away from their property at some point in the future? A short article on the recent number can be read here.

So the time is here to again watch numbers closely. The wild card being how much money congress will throw at the problem in the weeks ahead–not that money will help in the long term–we are creating zombie businesses, zombie homeowners, zombie employees–when will the ‘piper be paid’?

89 thoughts on “Is the Double Dip Coming?”

  1. Powell’s speech was amazing. It sounded like he just got back from a remedial course in social justice for bankers? The Phillips Curve is dead. Inflation of more than 2 percent for interim periods will be tolerated to keep the average up. He clearly rejects anything close to negative rates because negative and low rates reduce or weaken the Fed’s tools. I didn’t hear him say that he would try to keep 10 year or thirty year rates down.

    It sure sounds like Modern Portfolio Theory: it’s better to do everything to maximize employment and risk inflation than to suffer unnecessary unemployment.

    If there is a double dip, it won’t be due to any of the Fed’s actions.

  2. Fed announces that inflation really doesn’t matter, rates will be held low for a VERY long time. Savers will be punished and risk takers will be rewarded. Expect continued refinancing/calls and new issues at record lows.

  3. S and P 500 up over 1% today …equal weight S&P (RSP) actually down today.

    QQQ up over 2% today…Russel 2000 down today.

    I’ve never seen a market quite like this one.

  4. new home sales are off the charts.
    these are not housing ‘starts’ by spec builders,
    but actual contracts with cash down.
    the ‘nyc pajama’ phenomenon is happening in many spots.
    both coasts are full of overpriced cities with social issues now.
    the wfhomers many of whom rent, can afford the move, and the suburban and rural sellers finally free up capital/reduce debt.
    i would imagine big cmre firms are holding the bag on city dwellings and towers and are trying to wait out the storms.
    perhaps this a virtuous cycle of wall street to main street benefits.
    NY SF MIA SEA et al.

    1. The ones who are going to be in the eye of the storm are Class A office building owners like SL Green realty. I would expect their tenants to renew at less than 50% of the old amount, since they need some space, but not what they needed before.
      I wouldn’t cry for the residential landlords, at least people want to live in the city, and while rents may fall, the vacant housing shouldn’t get too high, since most people live in cities to be near friends and the amenities of living in a city.

    2. Is a double dip coming? Jerome Powell will make the double dip occur if he wants to cut off stock speculation or he will do what is necessary to avoid the double dip. Powell created a huge comeback in the stock market despite an awful pandemic and a split House of Reps. Powell created low interest rates to energize the housing market. Powell is not closing down the home loan market with strict policies with lenders. Powell views reports on consumers who earn above 100K per year ( who make a huge impact on the consumer economy of the USA) that are not spending as needed to improve Main Street. Would an increase in their stock portfolios, 401k accounts, and home prices increase their spending? Powell is making that occur to energize spending among those households. Once he gets spending back, he can tighten the money supply and knock the market speculators on their rear ends. Powell, as a loyal banker to those who pushed him into power, can help his banking friends increase their investment returns via a stock sell off. Powell then can increase the money supply again.

      FYI: If the main street consumer with no wage growth for most in forty years, higher debt levels, loss of stable company pensions, higher housing costs, higher medical costs, etc, the stock market would be substantially less than it is today. Wall Street is about the small population of people that have a net worth that they will not use up before their death.

      1. Consumers aren’t spending because of the pandemic. Much of it has nothing to do with the size of their accounts. More money would lead to more hoarding until some resolution happens.

    1. I would like to give her a link to this site, but I’m too old dog and I don’t know how to get into Tik-Tok, ha

  5. I started trimming some high flyers to raise cash. But I am still “buying” indirectly via selling puts on stocks I might like to own at levels 10-20% lower. Historically, it seems that March and October have been the months where big moves like to occur. So, at the risk of trying to “time” it, I am preparing for a possible downdraft in October (and that aligns with any pre-election market jitters). I have realigned my preferreds portfolio to mainly solid outfits and very little high yield non-investment grade stuff. My stocks are shifting to staples and food and utes (JNJ, WMT, MMM, EXC).

    I do have some high-flyers I bought very low in March/April – AVGO (avg 236, now 341), MSFT, LOW (avg 69, now 168), SBUX (54, 82), etc. (even SPY) I want to trim some of these but I think they run a bit more. My target (read, guess) is SPX 3600-4000 before we see a 10-20% pullback (I think 15% but that and $3 will buy you a cup of joe at SBUX). If it occurs at 3700, say, then maybe back to 3000-3200…who knows?

    Whatever, I am now sitting on about 17% cash with a plan to get to ~30% by October and positioned more defensively with my equity holdings.

  6. Not sure if this link will still work, but here is a article I read on Yahoo from Bloomberg, I think even with the consensus I read here, that we seem to be having two economies of the employed and not employed how this will affect us all someday.
    https://www.yahoo.com/news/real-danger-26-5-trillion-100012448.html
    I don’t need to mention this, but lets everyone put aside our political differences and just wonder where this all will be going to in the future.

    1. Aren’t there three different equity markets? Tech stocks that trade above their 12 month range before the virus; stocks that trade between 50 and 100 percent of that range and stocks that trade below 50 of that range, mainly financials and energy. Is it reasonable to expect them to perform the same? Is it reasonable to expect the market to avoid the suction of falling tech stocks when they fall?

  7. I think the more important issue to consider is NOT whether we are going to have dip shortly. Yeah, it is fine if you can time an in/out enough to capitalize on it. IMO the bigger issue is longer term. We have essentially started MMT(Modern Monetary Theory) by creating literally trillions $’s out of thin air. And so far, nothing bad has happened. This reinforces those that call for MMT all of the time, not just in Covid crisis times. Their contention is that the US government can spend without regard to the cumulative deficit, aka debt. The anti MMT crowd claims this will eventually lead to runaway inflation, ala Venezuala, Weimar etc as the US dollar gets devalued.

    Rightly or wrongly, the US has to be closer to officially adopting MMT after the Covid spending spree.

    And to preclude any political comments, BOTH Democrats and Republicans have supported the spending spree so it does not seem to be a partisan issue.

    Over the longer term, each investor will have to decide where they stand on the MMT spending/inflation debate. How you decide might have a significant impact on how you invest.

      1. Yep, This article is very important to understand. Just long enough for another generation to have forgotten and just watch TV instead of being educated.
        The question not answered is why and who control the Fed actions?
        I hope young people like Lyn Schwartzer are brave enough to use their gifts in public policy and broader public service.

  8. I am expecting that there will be a market correction tied to the election and likely legal aftermath. Seems like it will be the 2000 Recount (hanging chads) on steroids.

    I live in area with a lot of folks who now work from home and we see the negative economic impacts when we get carry-out (we’re too anxious to have a meal outside our home). Small business owners are very anxious.

    The portfolio is very diverse (with significant cash) and I am hoping for the best.

  9. Investor sentiment moves in waves (I do not follow Elliott theory) and the recovery phase still needs to bring in the worrisome investor who has now turned greedy. Give it a couple more weeks before the rug gets pulled out. 2016 saw a market slowly fall from mid-August to the day of the election. I think this will be much more volatile. VIX should still fall into September then ramp up fast.

  10. I live in a resort area with a lot of second homes and a lot of people employed in the service sector.

    Two of my daughters friends will not be attending their second year of college because their parents lost their job in hospitality.

    At the same time my next door neighbor the physician just refinanced his primary home at 2.75%.

    Two economies.

    1. “two economies” A small piece in today’s WSJ takes on just this point. It speaks of “the pajama people” who can work from home at full salaries vs most everyone else. I suspect the housing boom surrounding the New York City area is the pajama people escaping confinement and able to take advantage of the low interest rates. The prospect of 2 diverging economies makes planning that much more difficult.

  11. Since March, I have read numerous comments about people going substantially in cash. Well how did that work out for them? They missed the massive recovery.

    I have also read numerous comments here about the next dip, the next “event”. History has proven no one can time the market perfectly. I know I sure can’t, so I don’t try.

    As Keynes said in the 1930s: “Markets can stay irrational longer than you can stay solvent.”

    And Jesse Livermore – “Markets are never wrong – opinions often are.”

    My point being, if you think you can time the market, have it at. But far better men than you and I have failed trying to do so

    1. I agree with your comments for the most part, however, I’d offer a slight adjustment to your point on market timing. It’s not that I can time the next downturn, I can’t, but I can prepare for the next downturn.

      I try to look at asymmetry and use that as a guide. The good news is that investing need not be an all-in game and I can adjust as I see things develop. Here’s a few things I think (IMO) that are asymmetric to the downside… election, valuations, interest rates, virus. For example, with a ~60% chance of clean sweep by Dems (predicit, not my estimate, no judgment) that’s potentially worse for equities than the 40% is potentially good. With all of these things together, I’ve done well this year and I’m starting to take profits and raise cash. It’s not binary… it’s raising some cash and identifying my next purchases and the prices. In the meantime, while I wait, I sleep a bit better knowing i’m prepared.

      1. Totally agree mrinprophet. I read a great book recently recommended by Howard Marks called “Thinking in Bets” written by poker champ that highlights your thought process. Trying to use unbiased odds to make bets (investments). If you had no cash going into March 2020 you couldn’t make a bet on the market and just because someone didn’t sell into the slide they now think they were “smart”. The reality is the odds were not 100% we would be where were are now so making a 100% all in bet was not a good bet than, but more “Lucky” and a 100% all in bet now is probably less wise looking at future probable outcomes.

        1. Annie Duke is my secret crush! Yes, it’s a lot like thinking in bets. I’ve listened to Annie on a number of podcasts. I’ve read Howard’s letters for as long as I can remember.

          50% equities, 20% HF, 15% Growth Fixed, 10% real assets/infrastructure, 5% cash (which is rising).

        2. SD, speaking of bets, you forgot a third scenario on “Bets”. As I am living it this weekend… All my MLB and NHL season win total bets were cancelled from incomplete seasons, and now I am flying to Vegas in a couple days to get my collective $10,000 back from “no action” bets, ha.
          Luck is certainly involved in any investment unless we can control the levers. I dont have that ability. But I can use current trending historic yield spreads versus IG type investments in relation to pricing, and liquidity to enhance my odds. But an overall reason, I can afford to stay mostly 100% invested and narrowly segmented in one sector with tweaking, is the fact I do not live off my investments. My pension more than covers all my needs and then some. Without the pension, I would most likely have a different mindset. Along with most likely still working! 🙂

      2. Thanks. Yes, and I think we are on the same page. Let me clarify, when I talk about not trying to time markets, that does not mean depending on one’s timeframe, needs, etc. that one can not become a little more conservative or a bit more aggressive. I am just not a believer in larger moves to cash. But I may add on some downside protection with options or inverse ETFs. Or raise my cash level a bit. But my main focus is on income (and my portfolio is split with a mix of common and preferred stock) – and as long as I think those income streams will continue, then I am not that worried if the market fluctuates up or down

        1. I’ve become very interested in the concept of portfolio fecundity as I’ve gotten older (47). My focus has migrated from market value to income generation. My day job is focusing on non-profits so it’s a bit of a different mindset.

    2. I don’t know much about the market timing, so I just look at the fear index and buy when it’s below 30. Sell when it’s above 60. But I’m not a trader, I’m an investor. I don’t feel the need for regular bidding just to get the “drive”. For me, it is more important, albeit a slower, but stable growth of capital. Because I understand that if I lose it, I can’t restore it again. So I can’t afford to risk it.

      1. Yuriy, I’ve been trading for 20+ years. I will share a secret with you. If you ever see a Vix above 60 again, back up the truck and buy hand over fist with leverage as you will be greatly rewarded. It’s not easy to do and you need an iron stomach. ATB.

          1. The Greed Index is 74% right now. Are you going to cash? What % ? Thanks.

            P. S. The monthly S&P is above its Bollinger Band. That also is a worrisome signal.

            1. Just now sold my AGO-E at 27.30, it was about 1,2% of my portfolio.
              Well, I have very few potential candidates for sale. I will definitely sell EBAYL, but for now I’m waiting for a better price.

    3. I put more cash on the sidelines in May. I’ve made money since then but not as much as I could’ve made. Do I regret it? No, not at all. It’s part of risk management. In the long run avoiding major losses is more important than swinging for the fences.

      1. Today has been no different than any other recent day. I tend to stay fully invested. But this month was a big one for income, so assuming I had spare change, I’d first look for IG-rated utility preferreds yielding at least 4% and under their redemption (call) price. I’d buy what I found.

        Then if I had any funds left, I’d look at EPD. If it were trading close to a 10% yield, I’d buy more of it, even though I’m already very overloaded on it.

        Then I’d look for a good Napa cab to decant in the afternoon so I could enjoy it in the evening.

        All of the above is what I actually did. Works for me.

        GLTA

        1. Took a (very) small position in EPD last week or 10 days – think it’s about the third time this year. Hang on for a while and take a profit when opportunity affords.

        2. Camroc – You have any ideas on “IG-rated utility preferreds yielding at least 4% and under their redemption (call) price” I’m all ears!

            1. Yuriy, as you well know Im sure Fortis has the Series F (4.9% $25 CAD par) that trades FORFF at about $23.80 CAD (around $18 USD). I have a relative ass load of this in terms of my ute preferreds. CU or FTS either way their fixed preferreds will pretty much trade in tandem together.

                1. Yes, I should have mentioned that. But I from my own personal research see no difference between the two preferred wise. Probably a good split the difference type with Fortis and either the CU 4.5% fixed or the 5.25% issue.
                  Personally I think Fortis is a rock star ute, and got a better long term strategy and has some incredibly great US assets which I am biased towards to follow better. They both have 45 plus year annual common divi increase streaks. One can certainly say the commons will provide longer term better returns, but that isnt personally how I roll. Canadian Utilities is a great ute also despite Its goofy ownership structure.

                  1. Personally, I also believe that companies rated Pfd-3h are IG ones. At least for myself I classify my ENB and FTS (both Pfd-3h by DBRS) holdings in the IG category, as at least one of them (ENB) is IG rated by the two main agencies (S&P and Fitch).

            1. Hi camroc, you may have mentioned it before, but what has your experience been with EPD’s K-1 and UBTI amounts? Have you found much difference in holding it in a taxable vs tax deferred account? Thanks!

              1. EPD has a simple, straight-forward K-1 that takes me 3-4 minutes to enter into TurboTax, which handles everything great. So the K-1 is a total nonissue for me.

                EPD also throws off considerable negative UBTI for me so holding it in an IRA has never been a problem. But I don’t sell or trade any MLP in my IRAs. The ordinary gain for recapturing all that depreciation they pass to you becomes UBTI. The IRS & the brokers have cracked down on compliance for that. The K-1s now include it on the front page.

                So instead of selling MLPs in IRAs, I just move enough units out to satisfy my RMD.

                I hope this helps. I bought more EPD today in my IRA. It’s been the ultimate SWAN holding for me.

                JMO

          1. Bill, there are a bunch of these that are 4% and under redemption price. Several of the CLP issues can be had at that. Several uncallables such as WELPM can be also. But this doesnt mean you just bite at the ask. Look at the spreads and have a bit of patience.
            UEPEM has standing ask of $100 and its a 4% $100 par with a $105 plus redemption price. I wouldnt pay ask. $95 would be tops if I was a player and sit. My basis is price and yield, not quality. If UEPEM was at $70, I would sink every penny I own and sleep like a baby. Its my local utility. I have a decent slug of a sister issue from UE (Ameren MO), but I in totality cant just live in the low 4% zone. But yes, I do have some of them though as part of the overall stash though.

              1. Bill, Maybe I should clarify CLP. I mean Connecticul Light and Power which is owned by Eversource.
                You can see present bid ask spreads on this link from OTC markets.
                https://www.otcmarkets.com/stock/CNLTL/quote
                I teed up CNLTL for you. Over on right hand side of link you can then check every bid ask from all the CLP issues.
                Then you can go to Quantum under ES (Eversource) and look at their par yield and redemption prices which all vary and above $50. BTW, FWIW, An SA writer called ES IR dept and asked if any of the CLP issues would ever be redeemed. They said there was no plans and since they are all over 50 years old already doubted there would ever be a reason to do so.

                1. Yep I figured it out. i.e. CNLPM is trading around $47 with a 4.1% coupon. As you said, there is probably a place for something like this in my portfolio as a core holding but there are certainly higher returns out there.

                  Thanks for your help on this – its on the watch list now and this or something similar will probably replace a retiring CD.

                  1. Bill, I got a wide range myself. My yields range from a sub 4% perpetual to a 12% plus baby bond. I treat them all as pieces to a puzzle. Though if just looking at the list without context, it would appear to be a miss mash of random dart throwing purchases, ha.

        3. Cam, in the future I would be a wary of the last year’s and this year’s vintages of Napa Cab. Too much smoke taint. But in the future, there maybe some great bargains in Napa Cabs.

            1. If our preferreds keep going up I might break out one of my Caymus Special Select Cabs from the 80’s . . . .

              1. Do it. I’m at the point where I save nothing for later. Haven’t even bought a green banana for a while now. 😉

                JMO

        4. FWIW – with hurricane Laura gaining strength (cat 4) and heading for the gulf coast, many midstream issues were down today (EPD-2.2%, MMP -3.3%) and they will likely be down more for Thursday open – so if I are thinking of buying…

          1. Yes. I’m at the point of just buying in little chunks. Never sold even one.

            Last I heard, they weren’t gonna shut in Mont Belvieu. Of course that could change with the storm.

            And an insider bought 10K units @ 17.50 today. They (insiders) have been buying all week and own over 30% of the outstanding units. I’m with them. Hope it goes lower. It’s been a money machine, although, in my case, with golden handcuffs attached. 😉

            JMO

  12. At least for me, to see that 16% of FHA borrowers were delinquent on their loans was pretty shocking. That is quite a high number and the article stated it was the highest in records dating back to 1979. In my small town in Pennsylvania, houses are selling very quickly right now and many at full price – so looks like there are going to be a lot of winners and losers once this whole COVID mess is over with. I just have to wonder how many of those houses will actually be foreclosed on – and right now there is really no way to tell because of the forbearance program.

  13. Atlas Financial AFHBL jumping 41%, which is kinda funny that I’m still down 61%. One of those, “might as well just ride it out”, choices. Anyone have any news?

    1. Looks like someone (maybe an insider) placed a large market order for AFHBL this afternoon and got their last 1000 shares filled at a premium price. Altas just received another delinquency notice from NASDAQ yesterday regarding a failure to file their quarterly 10-Q…not exactly news that would spark a rally in their notes. It will be interesting to see if there is some follow through in trading tomorrow.

  14. The non SWANS are actually doing quite well in the last few days. My daughter foolishly put her IRA into autopilot for 2 years. I encouraged her to buy HFRO-A following one of the VERY BEST himself, Mr. Tim McPartland. Rida Morwa coincidentally wrote a stupid wealth destruction article urging his followers to buy HFRO common presumably with proforma dividend yield of 10%. I did not waste my time reading his nonsense this time. A few days ago, she managed got her WCC-A filled at high but still decent price. She foolishly rejected my urging to buy EPR-G. Apparently the movie theaters are opened some 92% if I recall correctly. So EPR, previously a decent eREIT, with decent balance sheet, gapped up yesterday with 8% gain. EPR-G followed. As of now, another 0.74% gain. This seems me a no brainer in this yield hungry world. Ally bank has promptly reduced all savings at 0.8% APY, Another great buy is CODI-C. A decent article with zero comment except yours truly, nicely summarized its latest quarter.
    https://seekingalpha.com/article/4370565-compass-diversified-strong-foundation-behind-this-8_5-dividend-yield
    Traders seem to be unaware of the existence of CODI-C, same coupon with shorter call date around 1/30/2025. 7.875% coupon last trade $23.821. My daughter refuse to LISTEN. LOL.

    1. Partial Fill on my BEP-A at $26.78. Thanks to Tim for introducing me to Brookfield. Its renewables common + the old Terraform renewable WIND and SUN, acquired are fantastic. Its eREITS are stretched by Amazon. Then despite SA negative articles, BPYU (Form 1040) or BPY (K-1) seems to sustain almost as well as the SGP (Simon Properties Inc.). Its preferreds could be decent if bought at the “correct” timing. I am agnostic still holding onto EPD (way too many IMHO) and MMP. I TRULY believe nenewables are better bets. My best BET (one of the few goodies from Rida) is EVA. A MLP, but with fantastic treatment of its K1. No guaranteed income. On bad years, income offset dollar to dollar by a field called “required expense”, resulting in a juicy K1 paying substantially less tax than all the other K1’s, including Brookfield Renewable. Down just a little today. Stretched but with mid 7% proforma yield. I do believe that we need renewable to compete against China, Saudis and Putin. My guess, lower CapEx to maintain. Oh, I forgot to thank Gridbird for his WCC-A with some blessing from Tim.

      1. John, I needed “group hand holding” also on WCC-A myself to buy, ha. Bought in $26.20 range a while back. Only own 500 shares but it is my biggest “high risk” bucket purchase I have. I dont have a lot of high risk bucket material now, but that isnt anything unusual for me though.

        1. Grid, Good to hear from you. Your PW-K is now solidly above $26. Perhaps I should exchange it with CODI-C or LMRKO. While I love my Safe Bulkers Preferreds C and D and some CPA Marel just wrote an article on same, too much is never a good thing to do (Marel called PEI, MAC all the Mall and CTL common) and Marel is also calling buy on all the shippers (certainly I do not want to add more shippers except a tiny amount for Safe Bulkers). SB did not have great quarter, the owners spent money to fly their crew home when hit by COVID-18 and determined to fit all its expensive Japan made large scale ships with US Coast Guard approved environmental control contemplated by the Europeans. When quizzed by one analyst, the owner yelled and remind him that “ethics is more important than making money!” Their quarter has some small GAAP loss but still enought EBITDA since they pay zero dividend to the commons. EPA-G should be safe, but I have tons of EPR commons plus EPR-G. Except for IRM, most of the eREIT commons have not been trading well with the COVID 19. I love EVA, an unique MLP with fantastic K1 but then it will also be too much allocation. All these non SWANS came back alive thanks to Mr. Jerome Powell. Then long time, I have to agree that trashing USD to incite inflation is never a good thing. Too bad that we cannot get the politicians to reach a balanced strategy to recover from the mess. Thanks and all my best to you. John BTW, Silicon.com is down when I tried to post. It will not let me get in. I wrote to the administrator but the email was returned. LOL.

          1. Hey John. Silicone is up and running for me. Maybe clear cache out and try again? I already sent a nasty mean spirited message to Camroc this morning on it (kidding about the nasty part). Personally I am out now again on the PW preferred now. CEO mentioned capital money saving options they had planned. He didnt address directly but a 7.75% preferred would be one. Plus the filing fees of a $3 million preferred on NYSE is enormous for that little company. Heck that is the reason why all those Ameren preferreds were delisted was to save on filing costs and they are a $20 billion market cap.
            I got my fishing pole in a few holes, but the worm is still on the hook unmolested so far.

    2. Just FYI – I emailed the investor relations of CODI this morning and they confirmed all CODI preferred holders will receive a K-1. I’m done with K-1s, the MLPs I have trigger them and I’m slowly getting rid of them. It’s too much work. Not to mention they have been horrible investments the last few years!

  15. The Fed chairman is making a speech this week regarding future Fed actions. It would appear that easy money is here for a long, long time. Even if the Fed had thoughts of tightening slightly, it would not do so until after the election. Consequently, my question for all of you is what would cause prices on preferred stocks to decline (yields go higher) for the next few months? I’m sitting on a lot of cash but am very hesitant to invest in preferred stocks under 5.5%. Kinda between a rock and a hard place.

      1. IMO , too many many political ,economical, tax and possibly other major changes coming up this november-march to be complacent . Holding 40% in the diversified dividend market positions, 50% cash, 10% silver eagles & silver bags

      1. Justin have you received info they were being sold from the fund yet? I ask because they held onto the old LTS-A over 3 months after delisting before dumping.

  16. The Conference Board Leading Economic Index (LEI) increased 1.4% in July vs increases of 3.0% in May and June. This is a significant drop. Also, the data covers the month of July and as such, does not fully reflect the loss of the $600/week unemployment kicker or the recent increase in weekly applicants for unemployment. The data is showing a definite slowing of the economy.

    The stock market is one of the smaller contributors to the LEI, and as we know, is not a true indicator of the state of the economy. Even if congress throws a ton of money at the problem, it will be short lived. Until the general public has confidence that the virus is contained and that there is a cure/vaccine, I do not believe that the economy will be on a sustainable road to recovery.

    I continue to sit on a significant amount of cash, waiting for an inevitable buying opportunity later this year.

  17. IMO, currently the “right side of the market” is long.

    Short and Intermediate-term trends in the major indexes are up, money flows into equities are positive, the S&P is outperforming TLT (treasuries), junk bonds are trending up, VIX is trending down, market breadth is positive. All indicate a bullish sentiment among market participants.

    Regardless, the market is historically over-extended, on several measures, and a move down could be 10%+.

    Until the market signals a top, I will stay 50% long, albeit quick to scale out.

    Cheers! Windy

    BTW: Different than many here, my portfolio is split between equities and preferred. Equities are the core, focused on growth, with capital protection.

    I look to preferreds for balanced growth and income. This site provides immense value for preferreds selection, thanks all!

  18. Economically and financially I agree that the market seems toppy and the foundation of the economy seems very unstable but I suspect that the immediate prospects are within the control of covid 19. If either a reliable treatment or vaccine appear before November and/or the national case numbers continue to subside, we should get by. I don’t think the economy can take another major flare up like what killed the early June rally.

  19. the top 10% (Net Worth) own 87% of the stock market. We have a
    K- recovery, with folks on the low end getting hit very hard and those
    on the high end doing quite well. unfortunately, there is also a zombie
    residing at 1600 PA Ave.

    1. Can you please keep your political opinions to yourself. Whether anyone agrees or not, this type of comment turns an intelligent, informative and worthwhile thread into garbage.

      1. My Apologies, Vinny, This is a terrific, intelligent site; and I certainly have
        no interest in negatively affecting it. I slipped up. Cheers.

  20. Tim, keep up the great work, love the site.
    I too believe we may be nearing another tipping point, here in Pittsburgh we are seeing more and more businesses throw in the towel, they’ve tried running but just can’t make it work at 50%. Not just restaurants either. Eventually it will catchup to S&P 500 earnings, not sure when but eventually. Unfortunately politics is paralyzing Washington and I wouldn’t be surprised to see zero relief between now and November, unless the market drops 20%. The sharp increase in riots and verbal assaults certainly aren’t helping with consumer confidence either. Safety and patience are our friends.

  21. I agree with you Tim, but don’t confuse the economy with the market. I learned a long time ago that the market can rise with a lousy economy and fall with a great economy. Thank you again Tim for you great work here on your website.

    1. TimH–yes if you totally confuse the economy with the market you would get the cash and bury it is in the backyard right now–like you after 49 years of investing I have learned they can remain out of sync for a long, long time.

  22. One counter fact is that new home sales are booming, so I have difficulty understanding the disconnect with people behind on their mortgages. Something does not add up here–are there two economies, one doing well and one doing poorly?

    1. furcal–there definitely the haves and have nots. My question is how many of the haves today turn into have nots next month.

    2. it seems like a Wile E Coyote over the edge of the cliff.
      Inventory is really low, but payments in arrears are off the charts, so even people that are behind are not listing their homes for sale.

    3. Cheap money is heroin for the housing market, especially new builds. When the incentives for keeping the stock market charging ahead fall away and the special measures pushing mass real estate delinquencies down the road to the next administration change we’ll be in for quite a bit of a correction, I expect. My nephew just bought a house and got a 2.8% mortgage – such an opportunity is unlikely to come again in his borrowing lifetime, I’m thinking.
      I’m increasing my cash position by a fair amount, as in 4Q19, but doubt I’ll be reinvesting it again as quickly next time.

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