Monday Morning Kickoff

Last week the S&P500 moved higher by about 2% which was a holiday shortened week of trading.

Friday saw the release of stronger than expected employment numbers with 372,000 new jobs created in June versus an expectation of 250,000. The unemployment rate remained at 3.6% meeting expectations.

The 10 year treasury which started the week around 2.87% shot higher as the week went by and with the employment numbers moved as high as 3.10% which is where it closed.

The coming week will give us the consumer price index (CPI) on Wednesday–you can be certain that there will be fireworks – which direction no one knows, but certainly we could get a sharp move higher in interest rates if we see numbers showing inflation higher than expectations.

The Fed balance sheet fell by $43 billion over the last 2 weeks–the largest reduction in assets that we have seen in about 2 years.

Last week we had only minor movement in $25/share preferreds and baby bonds. The average share price moved higher by 8 cents. Investment grade issues moved up 13 cents, banking issues moved up a dime, mREIT issues moved 2 cents higher, while CEF preferreds were flat.

As has been typical there were no exchange traded income issues priced last week.

4 thoughts on “Monday Morning Kickoff”

  1. From Yahoo Finance article yesterday:

    Year/Days to Bottom/Bottom (as % from prior high)
    2020/33d/33.9%
    2007/517d/56.8%
    2000/929d/49.1%
    1987/101d/33.5%
    1980/622d/27.1%
    1973/630d/48.2%

    We can roughly date the recent peak at Nov 30; thus we are ~220 days in.
    If we take out Mar 2020 as an outlier, the average days among the bottom five bears is ~560d.

    1. Fredson–I suspect that the average may happen again–it appears that earnings (and certainly earnings estimates are falling). Until we can get a handle on inflation (and in particular energy) I don’t think we will be able to see the bottom. On the other hand when inflation actually peaks stocks will probably be moving higher quickly–in spite of falling earnings.

  2. While I bought some things on sale 30-60 days ago I am not sure if prices will go below what we saw in the recent past. Like I bought 200 shares of BC-B at 25.50 and now it sits above 27. I did not expect such a bounce back already. Weak hands were shaken out ?early? I think PSA-G will get called some day down the road so I bought some shares at 23.58. It now sits at 24.40. Once again I thought it would not rebound so fast.

    So with this in mind I think I might have to prep some reserve cash in case something shocks the market into going below those recent previous lows. I have a feeling quality BBs and high IG preferred just won’t give us fire sale prices this time around for any length of time. You have to set your personal goals and be ready for that few days of possible turmoil.

    1. fc–you might be right. This week (and last) my accounts had tasty gains. The early over reaction is typical and then a bounceback should happen–but then more downside. We will just have to wait and see—as tex the 2nd has pointed out a number of times preferred stock share prices haven’t moved in a typical fashion.

      I have nibbled and nibbled and nibbled–but still have 25% cash (dry powder) and I will be nibblingmore soon.

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