Monday Morning Kickoff

Maybe the holiday last week helped to diffuse some of the downward pressure in the various markets–or maybe the sellers have simply exhausted their need to sell to lock down losses for the year, but regardless the week ended on a calm note for common stocks.  Preferred and baby bond holders got a bit of cheer on Friday with sizable gains for the 1st time in weeks.

The DJIA traded in a range of 21,792 to 23,382 before ending the week at 22,062.  The 10 year treasury traded in a range of 2.73% to a high of 2.80% before closing the week at 2.74%–we still watch the 10 year treasury, but it has disconnected from its historical relationship with income issues-for now.

Last weeks economic calendar was very light with the holiday on Tuesday.  On Wednesday we had Case-Shiller home price index for October being released as forecast up 5.5% year over year, which shows a slowing of price gains-this should be of no surprise to anyone with higher interest rates and very high house prices.  Consumer confidence for December fell below last month and below expectations-this fall should have been expected since the equity markets getting pounded day after day was leading the news constantly.  Our expectation would be for confidence to fall again in January as individual investors take a look at their 401K statements etc.

For this week we have no economic news on Monday or Tuesday (New Years day), but we have the Purchasing Manager index on Wednesday.  Thursday we have ISM Manufacturing, Construction Spending and new vehicle sales.  Friday we have Employment Situation numbers which includes wage data.  It is expected that 185,000 new jobs were created in December after a surprising very soft number in November of 155,000 which was way short of expectations.  Most economic numbers have been ignored in recent months except those that are very obviously important such as the employment report–I think that this changes a bit with investors beginning to parse all of the data a bit closer.

The Fed Balance sheet fell by $9 billion last week after falling $4 billion the week before.

For the 3rd week in a row there were no new income issues announced–for good reason.  Can you imagine trying to price a new issue and then being unable to sell the shares or having to price at a very high coupon because of market volatility.

Last week the average preferred stock closed the week at $22.50.  There are 318 $25 issues trading at $25 or below–a light improvement from last week because of the bounce last Friday.

 

11 thoughts on “Monday Morning Kickoff”

  1. Best wishes for a great and prosperous New Year to all! And a special Thank You, Tim, for your tireless efforts on this site.

  2. Tim
    want to thank you for all of your efforts and for maintaining the website and wish you and yours all the best for the New Year. Naturally, hope all the other members of the board have a happy and productive years as well. This is a unique site which if used correctly can meaningfully improve one’s productivity as an investor. Thank you again. SC

    1. Hi sc4–hope for a great New Year for you and all site readers and participants. Have nothing but fun with this website.

  3. Tim
    As a longtime follower/lurker and conservative, IG investor who has been adding to positions recently, thanks for all you do.

    Best wishes to you and your family for a healthy and happy new year.

    BobM

  4. Bought last week at close to lows. All Monday except QTS Thursday. Shown trading flat.
    A AGO-B 6.875% traded to 6.9%
    BBB- PBC 6.875% traded to 8.6%
    BB SRC-A 6% traded to 7.7%
    NF QTS-A 7.125% traded to 7.9%
    NF BPRAP 6.375% traded to 8.3%
    Flipped PBC. Not seeing the deals since Mon. Done for now unless that changes.

  5. I for one still believe that for all practical purposes the Fed has inverted the yield curve. We don’t see that in the numbers because the Fed asset sales are hiding that inversion by having that extra amount of bonds volume in the marketplace. You should look at actual numbers not somebody’s view of those numbers. I share that as food for thought.

    CNBC reported this weekend that Goldman Sachs lowered their GDP forecast for 2019 to 2%. Growth to slow below 2% in 2nd half of the year. Seemed upbeat that we are not talking about a recession.

    In the end, if the treasury bill rates finally stabilize, I tend to think the preferred stock market will do very well.

  6. Why the markets are open a full day is beyond me.

    Happy New Year to one and all.

    1. Tim, Happy and profitable new year to
      Your family and this website community.

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