The week ahead most likely will be dominated by news on tariffs with China. Most of the tariffs to be put on U.S. good will take affect in about 2 weeks and the closer we get to July the more pressure will be exerted on various marketplaces–in particular in the ag sector. We’ll see if there is any progress made solving the trade issue.
Right now the equity futures are off 175 points and the 10 year treasury is trading flattish in the 2.9% area. Last week the DJIA traded in a range or around 24,450 to 24,960—I think this is a fairly mild range in reactions to news and we continue to believe that we could see plunging stock prices as we get closer to tariffs being fully enacted. POTUS needs to get off of twitter on this topic and get down to business negotiating a solution–we are not aware of serious discussion with China at this time.
For this week we have 4 Fed folks speaking–right now these speeches have been less disruptive than in the past. I guess when there are other worries overhanging the market little importance is assigned to these folks spouting off–up until this week we had concerns with Fed speeches, but now they are held as not important.
Monday and Tuesday this week we have no market moving economic news being released. On Monday we have the New Home Sales and on Tuesday we have the Home Price Index and Consumer Confidence being released. We would be shocked if these items were held to be important. On Wednesday we have Durable Goods and Pending Home Sales being released. On Thursday we have the latest revision of the 1st quarter GDP–unlikely to be held important as we have had a number of 1st quarter GDP reports and this one will be within .1 or .2 of earlier reports. Friday we have reports on Personal Income and Consumer Spending, the Chicago Purchasing Managers Index and the Michigan Consumer Sentiment report. Just like the Fed speeches the day to day economic news is totally overshadowed by the Presidential tweets and the “unknowns”–i.e. tariffs and immigration items—-don’t think these items are going away anytime soon.
The Fed Balance Sheet assets fell by $9 billion last week which would be “normal”.
We had 2 new income issues announced last week. Insurance company Enstar Group (NASDAQ:ESGR) announced a new 7% fixed to floating rate preferred which opened for trading quite strongly around $25.20 and closing the week at $25.28. The issue is trading Grey Market under ENSTF. Some info on the company and issue can be found here. Disclosure–we bought this issue at $25.25–whether we hold it or flip it is yet to be determined.
Tsakos Energy Navigation (NYSE:TNP) sold a new fixed to floating rate preferred with an initial coupon of 9.5%. These preferred issues are getting kind of expensive for TNP and obviously this is an issue that the marketplace has deemed pretty dicey. Shares are trading around $24.61 under the Grey Market ticker of TSSKF.
We had 6.25% baby bonds from insurer Unum begin to trade last week under the ticker of UNMA–they are trading at $25.10.
The average preferred stock moved higher by 2 cents last week and there were 163 issues trading below $25/share. Both of these were close to flat last week indicating we didn’t have much excitement in these markets–but we all know that this can change almost instantly.