Well last week can be described as exciting–holders of a basket of common stocks would likely describe it in more colorful terms. For us and for other holders of lots of preferreds and baby bonds it was much less exciting as long term interest rates trended lower-although in the end we lost a little bit of money.
The DJIA traded in a range of 24,242 to 25,980 closing the week at 24.388. While common stocks tried find to some upward energy a number of times, in the end, the bears won out. The 10 year treasury opened the week at 3.04% and drifted down, down, down to close the week at 2.85%, the lowest close since mid August.
Last week we had vehicle sales released on Monday at a higher than expected sales rate of 17.5 million units against a estimate of 17.3 million units. On Wednesday the Fed Beige Book was released and it showed that the consumer stayed relatively strong during November, but the housing market continued to face headwinds-neither of these are surprises-they confirm all data from previous releases. Thursday the ADP employment report was released at 179,000 new jobs created which was a somewhat soft number and this was followed up on Friday with the ‘official’ government employment situation report which showed 155,000 new jobs created against an estimate of 190,000, but more importantly it showed wage pressures have moderated a bit rising .2% in November against a .3% expectation. Consumer sentiment released on Friday showed a reading of 97.5 against expectations of 97.3.
For the coming week we have producer prices released on Tuesday followed up by consumer prices being released Wednesday. Neither of these numbers are expected to show substantial inflation–the CPI is projected at +.2%. These are the only bits of economic news being released next week that are likely meaningful, although on Friday we have retail sales, industrial production and business inventories being released.
The Fed Balance Sheet had a runoff of $11 billion last week–of course with falling interest rates obviously the runoff is not exerting much upward pressure on long term interest rates.
Last week we had only 1 new issue announced and that issue has apparently not yet been priced. BDC Great Elm Capital (NASDAQ:GECC) announced a new baby bond early in the week, but has not, as yet, released the pricing details of the issue. Guess we will have to simply wait.
The average $25/share preferred stock fell last week to $23.31 which leave the average share down 41 cents in the last 2 weeks and about 60 cents in the last 3 weeks–not a good November. We have 285 issues trading at or below $25/share which is by far the largest number we have seen in the last year.