Monday Morning Kickoff

We expect that the monetary crisis in Turkey will be the main item that will provide excitement in the markets this week – it doesn’t seem like any other fundamental piece of news can move this market much at all.

Last the DJIA traded in a range of 25,222 to 25,692 and closed the week almost 1% lower as the market focused on Turkey.  The 10 year treasury also focused on the same issue and this sent the current yield down into the 2.80’s.  The 10 year treasury opened the week at 2.96% and ended the week at 2.86%.

Last weeks economic news contained no major surprises with the most interesting item being real wages being flat month on month and down year over year.  Obviously with wages falling on an inflation adjusted basis it signals issues for consumption down the road–we best hope that this doesn’t continue.

For this week we have a bunch of economic reports and we don’t see a single one that is likely to be market moving.  Monday and Tuesday have nothing to speak of report wise, but Wednesday is loaded–with, Retail Sales the Empire State Index, Q2 Productivity, Industrial Production, Home Builders Index and Business Inventories.  Thursday we have Housing Starts and Building Permits and Friday we have Consumer Sentiment and Leading Economic Indicators.  This is quite a list but given the recent history of the marketplace nobody cares–until they do.  I think that we will see little reaction, but just the same we will review the data, because while no single data point is important taken as a whole they may have meaning.

The Fed balance sheet grew by $3 billion last week which is not a surprise given the $22 billion in run off the week before.

Last week we had 4 new income issues announced.  US Bancorp (NYSE:USB) announced a new perpetual preferred with a coupon of 5.50%.  Container owner CAI International (NYSE:CAI) priced a fixed-to-floating rate preferred issue at 8.50%, Prudential Financial (NYSE:PRU) sold a baby bond issue with a 5.625% coupon and lastly Ladenburg Thalmann (AMEX:LTS) sold baby bonds with a coupon of 7.25%.

In spite of lower interest rates last week we had the average $25 preferred fall in price by 5 cents and we had 164 issues trading at $25 or less compared to 157 the week before.