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Monday Morning Kickoff

The S&P500 was hammered hard last week as Fed Chair Powell rained on the parade with his short, but hawkish speech, from Wyoming last Friday. The index fell 3.4% on Friday which brought the index loss to 4% on the week.

The 10 year treasury yield was up about 4 basis points on the week to close around 3.04%, although it had been as high as 3.13% earlier in the week.

The Federal reserve balance sheet rose about $2 billion last week. The balance sheet is about $115 billion smaller than the peak in April, 2022.

$25/share preferred’s and baby bonds took a lose last week with the average share price off by 24 cents. As might be expected investment grade issues were setback greater than the average share and they took a loss of 40 cents. Banks were off 32 cents, with CEF preferred’s off 12 cents, mREITs preferred’s off 9 cents with ocean shippers up by 4 cents.

Last week we had no income issues priced.

10 thoughts on “Monday Morning Kickoff”

    1. Great read, I truly thank you for posting ⭐️ I pay $115K just for tuition at my sons Dental School. I didn’t want him to graduate with any loans (to hurt his future), I am now being penalized for my financial assiduously and diligence. The US is certainly going down the wrong road financially and we are running out of time to make better fiscal decisions http://www.usdebtclock.org
      I am Azure

      1. I don’t want my kids to have any debt as well. I dropped over $700,000 the last 6 years for my kids. They are all graduated and have great jobs and no debt. But…. makes you think differently if this is implemented in full. What if you send your kids to the top 1% of the most expensive colleges and have a cap and then ultimate forgiveness of the loan. Crazy times we are in. Seems taxes keep going up and up and more social welfare programs. Not sure anyone has to try any more. So many safety blankets out there.

        1. Indeed – this policy if not challenged by a lawsuit is insane. I too paid for all of my child’s college tuition. But as the article outlines, you would be a fool to do this going forward. Let them borrow the full amount, pay back 5% of their income per year and get the loan forgiven after 20 years. You just take the money you would have spent and given them the annual yearly payments before the government pays it all off for you

          We are not a serious country anymore with no sense of fiscal discipline or personal financial responsibility. This is going to make inflation and the national debt even worse

        2. Anyone who, like you and me, saved, sacrificed, and paid thru the teeth….. will now have to pay for those who did not.

          1. Let me take a different view of the student loan forgiveness. I think IT IS GREAT! For the record, we have NOT used any loans, so we have no financial interest other than as taxpayers.
            The reason this is GREAT is that I think it foretells the future. This is just the tip of the iceberg IMO. Grossly simplified, we will put everyone into one of two buckets: savers or spenders. Most III’ers would appear to be in the savers bucket. The challenge is that there are a lot more folks in the spenders bucket than in the savers bucket. Last I saw, the median American was retiring without a pension and about $60k in savings. So they will get Social Security plus the Bengen 4% of $60k a year. That is a whopping $2,400 in addition to SS. They will probably not be eating a lot of steak dinners, maybe Alpo.
            And they will see all of the “Rich” III’er savers eating streak at will. And maybe the savers can play golf or take vacations or do other things that cost money. Spenders will NOT be happy with this and they will protest loudly. And maybe the spenders are 60% or 80% of the retirees. They will have the political clout to Robin Hood funds from all of the rich savers for their benefit. We cannot say exactly how this will be accomplished. Maybe it is a wealth tax. Maybe it is just higher income taxes. Maybe they directly tax say ROTH IRA withdrawals. Sure does NOT seem fair that rich people have $1 million IRA/401k/SEP accounts when I only have $50k. And it makes ZERO difference how people end up in one bucket or the other. So your neighbor that always had new cars, the latest widescreen TV, the trips to Cabo, may have spent his family into the spender bucket, but NOBODY cares how they got there. And nobody cares that your family did NOT do those things to achieve your $1 million+ retirement funds to reside in the saver bucket.
            I am not sure any of us will be around to see Robin Hood in action, but longer term for our kids and grandkids it HAS to be part of the plan IMO. The student loan issue just opens our eyes a little further. The question is how to orient assets considering this probable outcome.

            1. Tex, basically do what a lot of people do on this website. I learn so much here. But six months ago I quit visiting because I was reading a lot about flipping this stock and that one and I was more interested in learning about sock drawer investing. Yet, during the years following people here I have seen one unexpected event after another.
              Except for what AB is doing, it feels like there is no passive method. Seems like to protect your nest egg you have to have some active involvement.

  1. The Fed has 3 more meetings this year. Even if they only hike 50 basis points each, the rate will be 3.75-4%. I don’t see how bonds and preferred’s are not going to take some hit. It’s also doubtful to me those hikes will sufficiently tame inflation the way the government keeps dreaming up ways to spend spend spend.
    The dilemma is where to put money other than short term instruments (Fidelity lists see some 3mo Treasuries today at 3%, minimum 1000 bonds or $1M investment). I hate to lose income, but maybe it’s a better bet than losing 10-20% of one’s principal.

    1. When rates spike and the future seems terrible that is when you should be buying. I realize it is difficult but that is how people lock in great yields for many years after things calm down. Getting above 6% safely is so much easier then it was a year ago. Maybe a safe 7 and 8 percent will become available in bulk. Be ready.

  2. So since April and the 3-4 interest rates hikes, only $115B has come off the top of the $8 T fed balance. And now we are going to pour more fiscal $stimulus$ onto the economy. Good luck getting the debt down!

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