Let’s Wrap Up This Tough Week

Well it is Friday and from an interest rate perspective it has been a tough week–the 10 year treasury is now trading at 4.54% after hitting a high of 4.58% yesterday–20 basis points higher than the close last week. Of course we lost some money this week, but it has been a long time since we have had a losing week and with the high allocation to CDs these losses are very manageable–but I hope we don’t see these losses on a regular basis. I haven’t calculated the average $25/share preferred and baby bond loss on the week, but I would be surprised with anything less than 25 cents/share–I am guessing more like 50 cents. On the other hand we all know that if you had some shorter duration term preferreds and/or baby bonds your loss might have been just a dime or so—portfolio construction makes a huge difference.

Yesterday we saw a producer price index (PPI) number that was better than expectations. 1st time unemployment claims were at 211,000 versus a forecast of 217,000. Employment is not showing any signs of stress–certainly not any that is adequate to make the Fed think they are too tight–as you might remember I think the Fed is looking at employment as a key indicator.

You likely saw that short seller Fuzzy Panda (yes really Fuzzy Panda) has come out with a hit piece on Globe Life (GL) which has a baby bond outstanding (GL-D). The baby bonds fell to $14.94 late yesterday. I read through the accusations and all I can say is WOW. Either this is a company out of control OR someone has a vivid imagination. Whether this is balony or not I don’t get involved in this stuff–I have plenty to worry about without involvement.

So I close the week sitting on my hands–no buys or sells. For those believing interest rates have peaked there certainly were bargains available this week—even I am tempted–maybe next week.