Looks like everyone is trying to position themselves for tomorrow. Ups and downs and in the end not much movement. This is true of stocks and bonds. Guess everyone is going to end up flattish.
I just looked at my accounts sreadsheets and the lack of movement overall is crazy–$144. I just looked at my google spreadsheet today–didn’t open any of my actual accounts (except my uhaul Investors Club accounts).
This morning we had a few economic numbers and all of them came in stronger than expected. The JOLTS (jobs opening) came in at 10.7 million jobs available–compared to 10.3 million last month and a forecast of 9.8 million–if that is close to a real number the economy remains strong. I think Powell just put another hawkish arrow in his quiver.
Tomorrow will be another do nothing day for my accounts–there isn’t one damned thing an investor can do. I expect a huge kneejerk move in markets–but I don’t have a clue whether that will be up or down.
CTA-B down almost $7. I’ve owned this thing for 15 years and now I hate it.
It goes down in big chunks. Don’t know why it’s been acting this bad,
Anyone else own this beast?
Z, Its a BBB earning 5.17%. I can buy BBB ute senior unsecured debt over a 100 bps higher. Im surprised it hasnt dropped more. In fact I have own A2 ute debt 100 bps higher too. One would think the forecast calls for more pain here, but who knows.
Grid – We’ve both been in the ENB preferreds before but don’t know if you’re in them now, but I know you’re into other Canadians at least right now so have you looked at EBBNF? In a way, it’s now a “tweener because although it’s a USD reset issue, it just reset to 5.8579% Sept 1, so another reset is a long way off.. Moody’s claims to rate ENB preference shares Baa3 but a search by Cusip doesn’t bring this one up there. It’s BBB- at S&P. I suppose some could call ENB a quasi-ute, but doesn’t EBBNF seem cheap either way when the last trade @ 19.64 gives you a 7.46% current yield???? I don’t own it but comparisons to EBBGF and EBGEF with nearer in resets seem to make this one stand out…….
Its just boils down to the bird in the hand thing and where you wanna place your bets. Nothing against it at all. My angle is at my cost and present yield, I will reset to a higher yield than that. Plus the propensity for these goofy trading issues to rise higher into the reset than post reset. Additionally I want to play the CAD to USD currency game too. I do have BBB- piper in TC Energy that is floating off 3 month CAD “TBill” plus 1.92% and its heading way over 9% soon for me.
MZ,
Not a beast really…CTA-B carries a low coupon, is somewhat illiquid, has no maturity date, and the company has no reason to call the issue. This makes CTA-B highly rate sensitive – and of course we are in a rising rate environment.
CTA-B’s price decline keeps its effective yield somewhat current with the rising rate environment. Given it’s current effective yield at a tad over 5%, there is still downward price pressure.
The good news is the underlying company has been growing quickly, is profiable and if we believe the analysts – will continue strong growth into the forseeable future.
There appear to be two strategic options:
1) Buy more. Depending on your original buy price, you might materially average-down your acquistion cost.
2) Put CTA-B into a figurative sock-drawer and let it pay you ad-infinitum. In the event we re-enter a low interest environment, you may have the option to sell at a profit, made all the more possible if you execute on #1 above.
Some might suggest you sell and reinvest the proceeds into a higher-yielding issue. That might make sense on some level, though for me as a rule I never, ever sell at a loss.
A more practical reason not to sell: CTA-B is highly rate sensitive. It occupies a place in your diversified holdings. If you replace it with something less rate-sensitive and rates drop, you’ll have missed out on the sharp price rise you might have otherwise enjoyed.
Best wishes.
Great info from you. Not selling but very upset with those wild swings,
Used to be DD now CTVA. I’ve owned it forever so I have the right to hate it
Right now. Still have a profit so far. Doubt they will ever call it. It’s older than
I am. Thanks again.
I would like to share an alternative view of the JOLTS report. I hesitate, because this comes from Paul Krugman, who is left of center, and I don’t mean to turn this into a political discussion. So please just take this as another viewpoint from a guy who happens to have a Nobel Prize in economics, which you can ignore if you prefer. Krugman cites a paper by Justin Bloesch, who argues that number of workers quitting and changes in wages are a better indicator of tightness in the labor market than job openings. Krugman says
“ As the economic situation has normalized, however, the unusually high number of quits has declined, and so has the pace of wage increases — although that pace is still too high to be consistent with the Federal Reserve target of 2 percent inflation.
Overall, the JOLTS data was consistent with the view that the labor market is continuing to cool even though unemployment hasn’t yet begun to rise, which suggests in turn that we might be able to have a relatively soft landing.”
He does continue “ private sector quits rate was 2.9 percent in September, down from 3.4 percent last November but still up from 2.5 percent before the pandemic. So the labor market still looks overheated, but it does seem to be cooling.”
If you are interested in Bloesch’s analysis: https://rooseveltinstitute.org/2022/10/21/why-unemployment-can-stay-low-while-we-fight-inflation/
I did my undergrad thesis on this in the early 1990’s, about how unemployment can be a really bad indicator when demographic changes overwhelm the measurements. (though my change was the localized impact on unemployment by industry and geographic locations due to the military draft in Vietnam, I can imagine baby boomers retiring would show the same pattern, just on a much larger scale and much more widely felt, as there were exemptions to the draft and it only hit one gender)
I have a question for Krugman. With the current high rate of inflation, huge recent losses in 401K and IRA plans and the possibility of direct war with Russia, many older workers who had planned to retire soon will not and even some who did retire are returning to work of some kind. My question for Krugman is, would an older worker now forced to keep working and subsequently dying on the job be the same as a “quit”?
(asking for a friend)
Bill S.
I guess you are talking about investors outside of our mainstays here? They are losing if selling and taking a realized loss. But, if holding onto, or buying interest & div payers- not so much.
Made several purchases today and for the last two wks- a lot more to go.
Gary: Yes, I was talking about people mainly with 401K plans provided by their employer that have the usual assortment of boring mutual funds or IRA accounts managed for them by a financial advisor who constantly churns it for commissions, which is probably is 75% of what most retirees have. Some folks just don’t have the time or the interest to do what we do. I think it is great myself, get to roll your own dice 🙂
Bill, my wife still looks at the COST forum and I had an employee at my company come to me last week. Lot of unhappy people. Main complaint, they keep putting money into the co. 401K and it keeps going down so they are losing money.
In times like these people tend to suspend their contributions.
Roger—I read Krugman’s columns all the time. However, he is the first to admit that he’s been wrong on inflation from the get go. He considered it transitory until at the very end he acknowledged he had been wrong. It really doesn’t matter how brilliant someone is, there are just too many variables and unknowns that affect/determine the future of the economy. You take a poll of 10 brilliant economists and five could easily be on one side and five on the other.
The future of our economy is really unknown. The Fed doesn’t know. Each of us has to play our cards as best we can. A lot of our decisions are frequently based on our psychological make-up regarding risk vs. reward. JM2C
Thanks for the comment Randy. I did not mean to suggest that we should blindly listen to Krugman’s conclusions because he is brilliant. He is brilliant, but as you point out, he is often wrong. I remember watching him debate Larry Summers on inflation in the Bendheim Center for Finance series in February 2021. In my opinion, then and now, Summers destroyed him with quantitative arguments that Krugman was not able to refute. (All of their events are open to the public, even if you did not go to Princeton, which I did not.) That debate is still up on their website, and is still worth watching.
At the same time, when someone that qualified looks at the evidence and comes to a different conclusion than a journalist who may have little or no training in economics, it is worth listening to why he sees something beyond the headline number. This is particularly true on employment statistics, which most believe are lagging indicators. Take a look at the evidence supporting his rationale, and reach your own conclusion. I don’t look to any one individual as a “guru” to be followed. And I have elsewhere brought attention to Goodhart’s book on demographic reversal, arguing that we will face labor shortages for the next 20 years. My father used to say that the only thing we know for sure about the future of the economy is that the experts will all be wrong. But that’s not a reason to simply throw our hands up. I think its worth trying to parse through the evidence, understand what we can, and hopefully learn something from our mistakes.
Tim crazy is right!
Multiple times today phone alerted on over-sized orders up to 4500-share blocks swamping both the sell and buy side – plowing straight through bid/ask stand-offs.
Volatility is creating opportunity and not wanting be be rude we did our best to oblige a few of the sellers. Tomorrow could be interesting.