Monday Morning Kickoff

It is looking like we are going to have a wild week again as the equity futures markets which were up 1/2% last night are now down 1/2%.

Last week the S&P500 fell by a whopping 5.6% which was capped off by a tumble of almost 2% on Friday.

Interest rates fell last week in sympathy with equities. The 10 year treasury closed the week at 1.74%–with a high on the week of 1.87%. I fully expect that we will see yields rise once equities stabilize.

The Fed balance sheet grew by $89 billion last week. The upward trajectory is not slowing as I thought it would have been doing based on the ‘tapering’ of asset purchases. Something is going on here that is highly suspect. Well there is a FOMC meeting this week so no doubt there will be more news on this topic.

In spite of falling interest rates they were not helpful to $25/share preferred stocks and baby bonds. These are not typical times and these shares are moving based upon the severe losses in the equity markets–the baby is getting tossed out with the bath water to some degree–‘fear’ has crept into most markets.

The average $25/share issue fell by 13 cents last week–about 1/2%. Investment grade issues fell by 14 cents, mREIT preferreds fell by 16 cents. CEF preferreds fell by just 6 cents–maybe a tiny bit of a ‘safety’ play for investors.

With hard tumbling markets we have not seen new issues priced. This is not unusual as the pricing of new issues in this environment is difficult and the risk of making an error in pricing incorrectly is elevated.

9 thoughts on “Monday Morning Kickoff”

  1. I felt this morning, today was a day to enter the fray, I pulled the trigger on 200 shares of jpm-m @ 24.13 out of boredom. Thought it looked intersting LAST SUMMER, but never traded below 25.00 shouldn’t get hurt to bad, plus caught the dividend?

    1. JPM-M 4.2% is at a slight discount in the current time frame.. But… with 4 projected raises that may or may not happen this year… It is anyone’s guess what might happen. But for me? I stay away from anything 4% unless it is an illiquid. But that is just me. With the out of control inflation, I am concerned. I am spending crazy prices for retail products. Until this is curbed, everything will continue to go up, feeding the frenzy.

      The only thing I am cheering right now is I bonds.

  2. When this kind of thing happens I find it along the same line as entertainment. Granted, since 2008 it’s been one hell of a drama that is hard to take your eyes off. That’s the way the untalented keep focus on their Huckster Show.
    – I can never avoid the influences of my society, not anymore, no where to run and hide from nothin’.
    – I’ve already made all my decision and implemented a plan rational to me.
    – If I fall, I fall alone…
    – Turmoil is not a good time to make course corrections.
    – I am not in control of very much and nobody, else so I err on the side of skepticism or admitted ignorance.
    – Run from trouble, walk toward opportunity.

    I have found that my personal philosophy HAS been a good companion. There are others who add to that viewpoint too and I am glad to be challenged here too!

    1. meeting this Wednesday…so we will take our lumps today and then maybe some calm until then.

  3. It’s never fun buying fear, but it’s usually the best time to be layering into your favorite picks. I raised cash at 4800, now I’m nibbling. VIX stays below 40 – 97% of the time. ATB

  4. Good opportunities in bottom-fishing some high quality CEFs such as FFC and FLC as they get sold for 3-5% lower after being at the lower end of the discount. Many Muni CEFs also being sold hard.

    Did add some of FFC near lows for today and hope this does not turn out to be knife catching !

  5. The fed is still reinvesting what they get paid from their purchases. Tapering barely stops the buying until some more weeks pass and it actually makes a real dent into the buying.

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