Monday Morning Kickoff

Last night I thought I would need to title this blurp as “Monday Morning Beatdown”, but we have seen a 500 point swing in the DJIA overnight so “all is good”.

Last week common stocks traded in a wide range with the SP500 trading at a low of 2834 to a high of 2939 before closing the week near the low at 2847. The 10 year treasury moved in a range of 1.50% to 1.62% and closed the week at 1.53%. The 10 year treasury closed at 1.54% the week before so all in all there was virtually no change over the week.

The average $25 preferred stock/baby bond moved 1 penny lower last week–us income investors have to be damned happy about that lack of movement. There are now 147 issues trading at $25 or below (out of 664 issues) which is 5 issues fewer than the week before.

The Fed balance sheet, which is now supposed to be in a neutral position, dropped by $12 billion last week. This seems like a pretty big runoff for being in a neutral stance (on the balance sheet). It will be interesting to see the weeks ahead. Given the low interest rates now would be a good time to let the runoff continue, but they have stated the runoff is over–guess we will have to watch and see.

Last week we saw just 1 new income issues announced.

JMP Group (NASDAQ:JMP) announced that they would be issuing a new $25 baby bond. No pricing has yet been announced for the issue. I suspect the unsettled markets have lent a bit of uncertainty to pricing–I would think we would see something in the next day or 2.

10 thoughts on “Monday Morning Kickoff”

  1. Investing is fun even if you are not very smart. Last week I tried to learn about TIPs because there was a auction on Thursday. Very complicated for me to try to understand if I should buy those TIPs. Some expert on the internet said it was a gruesome offering and was priced for disaster. Only for central banks and pensions to buy and that little people should not buy them. On Thursday I went to the auction site anyway. I didn’t know there was a time deadline and surprised me that auction said only 3 minutes remaining. Very complicated looking form for me but I found the spot to enter dollar amount and the place to click to submit bid and so that’s what I did. Probably clicked with about a minute left but I wasn’t sure exactly what just happened. Sure enough a little while later Thursday my alert bell tells me I bought them. So now this morning it says I am up 3.7% so I’m pretty happy about this so far.

  2. Unfortunately, significant market reaction to any tweet by anybody totally destroys the myth that the Street is objective and cares only about financial results.

    It going to be a long 14 months if this is what drives markets.

    1. SteveA–day to day they are obviously moving markets–long term probably not.

      1. For the stock market, I agree. I am much less sure with the bond market – it seems more sticky and impactful with interest rates.

    2. Steve, that myth was destroyed a long time ago by HFT…the true villain in this story.

      1. High-frequency trading. Let’s see, is that information available to the marketplace? No. So it is inside information only. Is the data material? Yes.

        So trading on material inside information that the public has no access to is just fine.

        it is digusting and illegal – no matter what the HFT try to claim. But it is what it is. But HFT is not the culprit of market moves on tweets. The bond market is moving and as I said in prior post, those moves seem more sticky.

  3. In Chinese political symbolism, powerful people are passive and those wanting something must take the first step. As such it seems odd that China would contact the U.S. about resuming trade negotiations. The domestic reaction to such a move in China would not be one of power and control. While the need to reduce tension is real, it would have been much wiser for our side to merely announce that conversations would resume. Symbolism is important.

  4. Not a political comment. But it’s obvious that that President Trump cares about the market performance a lot. Last night he was tweeting about it when the futures were down 300+ and suddenly we found out about China calling. I’m skeptical but we shall see. Nice to see rates move up slightly, and holding a good amount of cash looking for opportunities that may present themselves this week!

    1. Tdubz—yes I know it is hard to separate the tweeting which is no doubt moving markets.

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