Yesterday we had consumer prices (CPI) released and they were pretty much right on forecast. After the release interest rates fell–moving from the 4.42% area down to 4.36%–a somewhat normal reaction to good news (if hitting the forecast is good news). But that was it as interest rates reversed and continued to climb throughout the day all the way back to 4.46% before ending the day at 4.5%. Yesterday I heard someone (don’t remember who it was) taking the position that the Fed is going right down the same road as they previously took–lowering short rates even though the economy would appear to be decently strong with employment numbers that are also strong. Why is the Fed so intent to be lowering rates? I will have to say from a selfish perspective I like rates around where they are now–getting 4.6% or 4.7% is a fair rate for idle cash. We (income investors) went through years and years getting ‘hosed’ by the Feds insistence at have zero interest rates–let’s get back to normal and have rates above 4% for the long term.
This morning we have producer prices being released as well as the weekly employment claims numbers–how will interest rates react? It will be interesting to watch.
On Tuesday I bought a relatively small position in the new Sound Point Meridian Capital 8% term preferred (SPMA). I paid $24.86 and I see it is trading at $24.77 so at any lower price I may add a bit more. I reviewed all information available in historical documents from the company – it is limited given that the company was formed in 2022 and went public in 2024, but in the end I didn’t see a discernible different between this company and the other CLO owners (I.e. Eagle Point Credit)–the only missing part is a ‘history’. The company added more data with a earnings release yesterday.
November was a tough month for our portfolios–we ending up with the smallest gains in a year. Interest and dividend payments outweighed capital losses by a bit–a small bit. Gains were just .3%. Honestly we can’t depend on capital gains from this point forward which is why I am concentrating on the high yield sector for new buys. As we move forward and get a better read on interest rates it is likely that I will move back into some higher quality issues–when that time comes I have no earthly idea-but it will come.
Almost time for economic numbers so I will get my 30 minutes of CNBC–after which time I shut off the boob tube until I get some news late in the day.
Today- J Powell:
“The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said in remarks for a speech to business leaders in Dallas. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.”
Major indexes down…
Powell talks too much…
As Tim pointed out, not much is coming in on income this month. EPD showed up as a return of capital. Capitol loss for the last 30 days is at about 3/4% after hitting a high, but the future income is still there.
Funny thing about MLPs like EPD – once you have held it for a while, it’s very painful to sell because of the big tax hit for recapture.
Once you are riding the tiger you can’t jump off.
Private, 250 shares gives me $525.00 a year. I don’t think I will get in much trouble with that, but I am not adding.
Apparently CS does not list SPMA? Fidelity does?
Yes Fidelity does.
CS shows it as tradable- no prob, but my accts are closed there.
Use SPMA
Vanguard would not trade this 11/14 @10:38. 18 min wait for “live person”
bill o….. That’s interesting! I just bought 500 shares about 30 minutes ago via Vanguard. No problem at all entering a limit order online. I saw Tim’s post, checked it out, it fit my current investment philosophy, and had the funds available to pick up some.
sir
what symbol did you use i tried spm pa
billo,
Unlike many preferred tickers that have a dash preceding the “class” (e.g., JPM-A, JPM-B …), this symbol is 4 letters, “SPMA”. I bet all brokers use this symbol.
u r a miracle worker!!
for my next trick …
And, “I’ll be here all week”
SPMA. …. Figuring out the ticket symbol in Vanguard is part of the fun investing through Vanguard! I’ve used Vanguard since 1984…….
Late last night I was reading MSN which has links to their EU feed. Was a note on Chase lowering their savings rate for customers who do banking with them because BOE had lowered their rates again.
I expect banks will be doing the same here on regular savings accounts as the Fed lowers rates. Be forcing savers to move to CD’s or accept the lower rates.
With people looking at how the cost of everything has gone up and I have a feeling we may see more inflation in the future it’s going to mean a lot of frustrated people. A lot more money will be spent on everyday living than what will be going into savings.
Somewhat agree with you but not about Regular savings rates. Rates have remained near zero. IMHO, someone who had a bank account paying 0.5 to 1.5% while rates were at 5.0% is not now going to move to CDs. They are there for other reasons, maybe a payroll account, convenience or because they are nervous and Chase is TBTF. Or inertia. There are some astonishing studies that show that a large number of people tend not to move accounts when rates move.
On the other hand, I think CD buyers are more rate-sensitive and CD rates are rapidly dropping. With a variety of alternatives our there, that may push some individuals to shop elsewhere to preserve life style.
The next round of inflation is a wait and see depending on the policies of the next administration. Lower Inflation does not mean a lower cost of living. It means a lower rate of change. Targeting a 6% return for an expected 4% retirement draw may not be enough in a world where 50% pay increases, 45% insurance premium hikes, 15% short-weight cereal boxes and 25% electric rate hike are now the norm.
It looked like a short easy hike to reach the summit of the mountain but now you have to climb up a much longer, near vertical, ice wall to get there. You’ll need all your technical climbing skills and a better rope. JMO. DYODD.
Bear, my wife just finished taking to an insurance rep and was shocked on the plan she has for vision, dental and hearing going up from about 38.00 to 54.00 doesn’t sound like much, but the home insurance went nuts.
We can all say the deficit is too high. But the reality is the deficit is too high when the market decides it is too high.
Seems like we may have hit this point.
But who knows? We will know when we get there.