Looking at the important economic news today I am thinking it is kind of ‘goldilocks’ in nature.–the 1st read on GDP coming in at 2.3% was a couple basis points lower than expectations. The economy is still moving forward, but at a modest pace–this is a positive for potential future rate cuts (by the FOMC). On the other hand 1st time unemployment claims were way down at 207,000–way below expectations at 228,000 so plenty of folks are staying employed–don’t know if this will continue at the Federal government as we move forward.
We get the last big news of the week tomorrow when the personal consumption expenditures number (PCE) is released. This is forecast to be up from last month–so balancing the slightly softer GDP today as well as the low unemployment claims. Of course any hot or cool number changes everything.
This morning I nibbled on a issue–adding to holdings already in the portfolio which was a small position. I added a small amount of the RiverNorth Double Line 6% term preferred (OPP-C) which has traded very flattish since issuance in October. I really need to buy something other than CDs and money markets at 4.2% (or whatever low coupon).
I remain of the mind that the 10 year treasury will remain in a range of 4.25% to 4.75% for months to come and holding too many perpetuals with lower coupons remains dangerous. Perpetuals have gotten a bounce as rates moved from 4.80% to 4.50%, but will this continue? Time will tell.
I don’t know about those inflation #’s I feel egg prices are being driven by hoarders as I looked yesterday and prices ranged from about 9.00 to 12.00 as for gas, here it’s still above 4.30 a gallon.
Charles M. I highly doubt there are any “hoarders” regarding eggs. They do have a shelf life. According to the USDA their shelf life is 3 to 5 weeks. And they actually recommend using them within 3 weeks. I see “certain” politicians bitching about the price of eggs. I think there are much bigger problems than eggs in this country.
Chuck, Rome held the gladiator contests to entertain the populace and academicians say it was also to keep the masses happy as conditions in the Empire became worse. I feel like the same is happening now trying to divert peoples attention from more serious things.
Charles M; Fully agree with you like 99.99%. No politics allowed but may I just say this: The last couple of weeks have been just slightly “Shock & Awe” as promised. There’s an old saying that goes like this which you will fully appreciate: “Oh baby you ain’t seen nothing yet”.
There’s a new TARIFF in town. Don’t piss him off.
Here we go again.
No politics sir. How about a life experience? If the readers here have read this before they can move on. As a businessman I think you can appreciate this story as a comparison.
I worked for a hardwood lumber co that was started in 1883 and survived for about 125yrs. it was family owned as a trust and appointed a CEO who oversaw 3 divisions of the company. Pella doors and windows, Golden State flooring and J.E. Higgins hardwood lumber.
His son wanted to make changes including going over to a completely new system similar to UPS where orders were pulled, delivered and billed using hand held scanners. When his father didn’t agree he left for a year then came back to head the Pella distribution and retail sales division. When Pella decided to take back and operate their own West coast warehouses we lost that business. It was decided to close the retail business so the company became 1/3rd smaller. At this time the CEO decided to retire. The choice for replacement was his son, his son in law my boss and the V.P overseeing the flooring division.
The son took over. This was 2008-2009 in the midst of the GFC I saw Pella managers given jobs at the hardwood division. Sales were off 50% customers were going BK. These managers knew nothing about the hardwood business. I had material return from a customer and they showed up in the warehouse for a product knowledge training as to why the customer rejected the material.
Then an automation company was hired to automate the process of pulling orders, shipping and billing. Prior to this, that company had updated an auto parts warehouse and an appliance warehouse. This had been the new CEO’s dream. We held meetings about the progress but were told they didn’t want to hear anything negative when told there were problems. They decided to go live with the system company wide instead of testing at just one location. When I was laid off in Oct 2010 they were still having major problems getting orders right, delivered as promised and billing customers for orders that didn’t get shipped 1-1/2 yrs later. In 2012 the company went BK and I heard the CEO himself was clearing out inventory and getting it ready for auction at the Southern Calif br. At one time this was the largest hardwood lumber and flooring company west of the Mississippi.
As an aside, the competitors Weyerhaeuser, Saroyan, and Macbeath are all still in business and a new company started by a former manager succeeded.
Again, this isn’t political. I am just grabbing a bag of popcorn sitting back and watching. I believe you have to break a couple eggs to make an omelette but it helps if you have people in the kitchen experienced making it.
Very interesting and truly good story. I was self employed and ran my own business for 40 years Charles M. I could tell you probably a thousand stories about customers and suppliers. Some extremely interesting & some not so much. My best lesson that you will appreciate is I would have customers leave me because they could save a buck or 2. A year would go by and my phone would ring and they would ask if they “Could Come Back to Me”. I said of course but I gotta ask you “what happened”. They sheepishly would say I had no idea how shitty some companies are to deal with and what no service looked like. They would go onto to say “I never had any problems with you Chuck & you always returned my phone calls.”. My point being this: “Good Quality Service” is getting to be a thing of the past as now days the customer many times feels “He’s on his own”. The younger generation in particular has NO IDEA what really great service even is. Thought you might appreciate my humble 2 cents worth.
Chuck My office refrigerator just went out. I think it lasted about 4 years. Just now looking and reading reviews made me realize why Whirlpool dropped today, A lot of appliances are made in China and even if they are not a lot of the parts used in them are. Even the sheet metal is made there. Just now I am looking online for a replacement before I run around using gas. The price isn’t the most important thing, it’s the reviews saying how their purchase only lasted from 1 to 6 months before it died. I will gladly pay more for a better product.
Could you repeat that please I fell asleep
Chuck,
I am once again sitting in a waiting room, so I am filling the time by writing.
Eggs are one of natures little marvels. They store wonderfully.
Just bought 4 dozen yesterday for $3.80/dz at Costco in San Jose (making Flan tomorrow). I think Costco must have some long term contracts or something to get eggs so cheaply. We usually keep about 10 dozen in our big pantry fridge (can take up to 3 months or so to rotate through them, although sometimes they go in a week).
Don’t believe everything you read from USDA about eggs.
Eggs have a shelf life, but when they hit that date and are still on the grocer’s shelf, USDA rules allow them to be sent back to the packer, washed, and put right back out with a new date.
Note that the USDA requirement that eggs be washed is why eggs in the US should be refrigerated. Unwashed eggs don’t require refrigeration because the natural “coating” on the eggs (that gets removed during washing) makes them shelf stable. My wife’s friend who has chickens gives us a dozen or so a week. I save those for fried eggs (better tasting).
Eggs (stored cold) will last 6 months or more without a problem, and you will know when they go bad. When we lived out on the res (80 miles from a “town”) and would get snowed in for the winter, we would buy eggs in the fall and use them until spring. Biggest problem was keeping them from freezing.
When we lived in Europe decades ago, they sold/stored eggs without refrigeration (they didn’t wash eggs in Europe) and they would last more than a month on the counter (never tried 6 months there). Not sure if they still do that.
So, bottom line – feel free to hoard yourself some eggs.
The bird flu is devastating poultry flocks. Ad soon as it is detected in the flock the entire flock is slaughtered. A typical contract flock is juge, upwards of of many thousands of birds. That’s the biggest driver of egg prices right now.
Over the past few days I made some major changes to my portfolio. I had accumulated quite a big position in “undervalued” dividend stocks over the past few months. I had a tiny position in Whirlpool which took a 18% hit today. 18% in one day for a 6% yield? No thank you. I promptly sold them all, many which were up nicely since Dec. Can’t trust today’s managements to do the right thing with your ownership interests number 1. and number 2. the market itself is overvalued by any metric. Fart coin worth $1B? What seems like relative undervalued issues in this market will be the ones that don’t survive the next recession. I would rather be a lender right now while the current crop of DEI managers get shown the door once liquidity drys up. Thanks to Tim for this site, agree with his approach more and more as I get older. I don’t need the worry in my life — a nice 7% return is fine.
You’re most welcome Dan. The older I get the more I just want that nice 6-7% return (assume modest inflation). I don’t want/need to lay awake nights.
Dan, If you want to hold WHR bonds for 18 yrs you can make 6.6% make whole but for the difference you can sell the common a lot easier if needed.
At a 6% return, I am still investing a maximum of 1% of my net worth in issues of investment-grade utilities. The pullback allowed me to begin positions in low coupon items NRUC, NEE/PRN, DTW, DUKB, and SOJC. Swapped SOJC (net $0) for SOJF. I have 16 such companies now (including $100 issues).
The limit of 1% in any single holding company is because utilities almost always have the right to defer for up to 5 or 10 years.
Steve
Check out UTG Reaves Utility Fund
Doing well for me so far
thanks
I am overweight in UTG and it is a core holding for me. It has been good to me for many, many years.