Monday Morning Kickoff

Time to get another week underway. I am expecting markets to move higher in the coming week. This is a safe prediction because equity markets move higher almost every week and if prices move lower we can expect the ‘buy the dip’ crowd to come in and send prices back up.

Last week we had new unemployment claims move a bit higher, but we had strong job creation. Interest rates moved lower on the claims number only to turn around after job creation was announced on Friday and move back into the 1.70% area.

The S&P500 moved higher last week by around 1% to close at 4019.87–a record close of course.

Fed Balance Sheet assets fell by $31 billion last week–continuation of the stair step move higher–always higher.

The 10 year treasury closed trading at 1.68% last week, although trading on the futures market on Friday was just over 1.70% (as markets were closed and employment numbers were released Friday).

The average $25/share preferred stock and baby bond moved higher by 19 cents last week. Investment grade moved higher by 34 cents, banks by 11 cents, mREIT preferreds by 10 and the lowly shippers higher by 19 cents.

Last week was a slow week for new income issues as there were no new issues announced.

8 thoughts on “Monday Morning Kickoff”

  1. Dow theory/ the move in the Industrials has been validated by the move to new highs in the Transports/ is flashing green. Add in that taxes don’t matter and the fed can pick winners better then the private sector and (snarc)…what more could you ask for?

    So it’s a very confused market. Cash is clearly trash right now and the worry is that it’s probably going to continue to be a drain on accounts as fed stokes inflation. Also i was running reviews on that big fund family in the Quakerstate and was alarmed to see they have run cash allocation down to around 1%. Lowest I’ve ever seen from them.

  2. Chris Davis in Barrons>>>>>>>>>>>

    Here’s how I think about it: At the end of 2020, for about $1 trillion you could buy 100% of Shopify [SHOP], Spotify Technology [SPOT], Zoom Video Communications [ZM], Tesla [TSLA], and Square [SQ]. For that same money, you could buy eight durable companies, including Applied Materials [AMAT], Bank of New York Mellon [BK], Carrier Global [CARR], Capital One, Chubb [CB], Raytheon Technologies [RTX], JPMorgan Chase [JPM], and Wells Fargo.

    At the time, the second bucket had nearly seven times more revenue and 20 times more profit. Even if the first bucket grows revenue fivefold, while growing after-tax profit margins from 5% to a stellar 20%, those companies would still be earning less than group two is earning today. I don’t deny that the first bucket of companies has potential, but I’d rather own the companies that have already proved to be durable and profitable, especially now.

    1. If you Prefer–guess that is one way to look at it. Markets get a bit more worrisome by the day.

      1. I second that (several times). This market is a lot more worrisome. Once the music stops and a “correction” starts, I wonder what will stop a run for safety? I fear another December 2018 flash crash could be just around the corner.

        1. A market decline over three months is not the same thing as a flash crash.

          Market prices go up and down. Don’t sweat it.

          1. From early 2000 to 2013, the S&P500 basically gave you a ZERO return and one hell of a bumpy ride. Buy and hold of an index fund may be a reasonable strategy if you’re under 40 years old and you don’t have the time, interest or knowledge to research individual companies.

            1. TEF, did I say that you should just buy the S&P 500 at any price? I said don’t worry about volatility. Buy securities at a good value, sell them when expensive.

              1. Karma,
                I agree – don’t sweat it. Interesting cherry picked timeframe of 2000-2013 and yet, no mention of the ~56% rise in the S&P over the past 7 years (including an ongoing global pandemic) since that timeframe ended. I found the ‘index fund’ comment a bit condescending and offensive. I guess diversification via ETF’s is for suckers? Take a look at a 1, 5, 10 year or whatever view at the VOO chart and tell me how any reasonable minded investor would turn their nose up at it? Guess I better get on the ball and sell my triple digit gainers and get with the program.

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