Maybe we see the big ‘flush’ today. The DJIA is off 1,200 points and the S&P500 is off 165 points at 6 a.m. Friday. Interest rates are plunging–the 10 year Treasury yield is now trading at 3.89% which is down about 15 basis points.
China has just announced 34% tariffs which should have been expected but obviously it wasn’t given the market reaction. We should expect that the agricultural sector will get slammed with this announcement. CHS which had announced a rare loss on Wednesday which I had posted in ‘headlines’ earlier is going to take a hit in earnings going forward–for how long we don’t know.
I may be looking to buy today–just would be a nibble to start and would likely be one of the Gabelli CEF preferreds. I was working on my potential buy list last night, but didn’t get it completed, but I had at least 2 Gabelli issues on it. I need to see the share price move lower by 25 or 50 cents to get ‘my’ price.
On top of the trade news we have employment numbers being released in an hour or so–so lots of news there.
So lets see how this day shakes out.
There is still more China can do. They made the rules that a company could only sell in China if they built a factory there. My understanding is Tesla and Apple have done that. I don’t know how many others have done so, but if China was to force them to sell their companies like Russia has done or what we did to Tik Tok I would assume a lot of companies would have to take write downs on investment and book losses.
So the pain for the economy and the market can get worse.
So there is talk that as soon as the tax deal is done the Regime will back off on the tariffs as we the people have payed approximately $6-7T to fund the tax cuts for the corporations and ultra rich donors …Maybe that is why the elite donors were sitting in he front seats at the Mar Largo inauguration? If so it would be the biggest bottom up distribution of wealth since the movie”The Sting”….Just my 2cents!
Tim… Buying Festival…..all orders filled …all over 7 %.. all AA rated.. Georges
What are you buying at 7% that’s AA rated?
Georges–you need to list them as we don’t know which you are referring to.
I have been holding my nose and buying today. Picked up some MORT, XCCC, PFF and SPY in some accounts I can only buy ETFs.
MLP’s are taking a bath. I guess we are not getting the customary deals on income issues because unlike the last few sell offs that have been driven by rate fears this one feels very deflationary. You can’t bring prices down and mortgage rates without letting some of the gas out of this giant asset bubble. Let’s hope it can be a controlled release. We are at the point when “policy makers start to panic” and which is generally a good time to buy.
Guess we are going to find the Trump/Fed put real soon…
Dan,
I think a lot of the reason for the MLP sell-off is that there will be less energy exported. When China hit our products with a tariff in response, our oil and gas exports just became more expensive than those from other countries.
Anecdotally, I’m still seeing sentiment out there that this could turn into a generational buying opportunity and that lower rates and prices are good things. We probably won’t achieve a lasting panic bottom until that sentiment shifts.
I will freely admit that crossed my mind as well. The easy covid profits are still too fresh in many people’s minds. That you just wait for a big drop, BUY, and in a matter of a few months it all starts to recover.
That is why I have not bought much yet of anything. In a lot of cases current prices are still above my cost basis. PSA preferred are not even that close to 6.5%. I see a few tiny sales on fixed income but many common stocks are still pricey unless you want to dabble in broken toys.
I have not even had time yet to think what a reasonable target for the S&P500 would be once you factor in future earnings and what may happen to them. I am just a normal person. Pros must still be scrambling making guesses and predictions when to buy. So how could any “normal” person even have an inkling what is going to happen and assume buying is the right move anytime soon.
SP may find support 490-510 area, so there is a way to go. 50 day SMA getting ready to cross the 200 SMA and then from a technical basis we are in a Bear Market….Not a good place to be trying to figure bottoms?
The regime will try to talk the market up. Wonder if Fed Chairperson Powell will do what Bernarke did with the “puts” . He fooled a lot of technicians…
Landlord Hard to tell what is going to happen. I thought last night with the effort to drive down interest rates and devalue the dollar that it would drive up the cost of gold as it would be considered a safer haven than the dollar and people would be exchanging dollars for something else that would still have universal demand and hold its value. But even today gold is falling.
I think because like the market it got ahead of itself and ran the price up in anticipation. My thesis may still hold long term as even the price of other commodities is falling like oil.
Gold went parabolic ahead of this. I think it’s a sell the news reaction and profit taking. But longer term, 3500 is easily in the cards this year.
Eladio – With about 7 trillion in national debt needing refinancing this year, the drop in rates is a wonderful side effect of the tariff situation.
Might be somewhat intentional as well.
This move in markets feels very deflationary. You can’t have your cake and eat it too. We are going to need to take some lumps to get prices under control. Anyone see oil today? Was down 7% last I looked.
Too many years of living the good life on borrowed money.
Eladio, my worry meter went off this morning about banks again. Especially the ones that do consumer loans and credit card debt. Think it was Bear who mentioned the same article I saw that now you can order food delivery on Uber buy now pay later with Zip, Sezzle, or Klarna
Remind you of something? the 2020 dot com bubble where internet startups were trying to outdo each other at losing money.
As of now: 1015
– S&P 500 off ~15.5% from its high on Feb 19
– 10 Yr 3.93%
I calculare 4,917 as the 20% correction level.
The “tariffs” being imposed on other countries have nothing to do with the tariff rates they charge to the US. This is not an opinion, it is the formula the administration used. The formula is based on the trade surplus or the imbalance of trade between the 2 countries.
My opinion is that resolving a trade surplus imbalance, even if you negotiate, will not be easy to resolve.
I also have an opinion that the timing of the announcement just before earnings season will force companies to lower earnings estimates without being given adequate time to assess. Plus, other countries like the EU may well respond.
So, I will not buy today; too much potential bad news in the short term is possible.
If an engineer was deriving the tariff rate formula, it would likely need to be normalized by the respective population difference and/or GDP difference. Not as hard as deriving Maxwell equations. But I don’t know anything and may be completely wrong – so just another opinion. I will ride the downturn by buying a little (same amount) of an SP500 mutual fund and FFNOX each day to cost average my way (aka bandpass filtering).
These are not tariffs. Trump has complained about trade imbalances since the 1980s. Either he does not understand the difference or has poorly described what his policies are. Or he will switch back from trade surplus to trade tariffs.
Pick your choice.
Looking at the positives:
With about 7 trillion in national debt needing refinancing this year, the drop in rates is a wonderful side effect of the tariff situation.
If credit stays solid, those of us long preferreds and baby bonds should see cap gains as well as income.
If we do get a recession, it will finally give the younger generations a chance to “buy in” to their slice of the American dream and create some ownership in this country.
Europe is gonna get flooded with cheap China products soon since the US is gonna be a much tighter market. That will not bode well for the Euro or European economies.
I wonder how quickly the EU will put up additional barriers to prevent the flood of Chinese goods from landing there. The Global Trade War is on…… Another thing. Don’t forget that China is a very autocratic dictatorship…. and can absorbed a tremendous amount of economic pain. The howling has already begun in the US.
Been reading a lot lately
Tidbits that all lead to one conclusion…..
– Traders are flumoxxed by Trump’s unpredictability. They were hurt badly when the announced tariffs were worse than expected. Many/most are saying “Gotta sit back for a while and see how things sort out.”
– The US stock market has been the wonder of the investing world for the past three years. Foreign exchanges have paled compared to the US performance. More and more foreign big money has flowed to the US, attracted by the better yields.
Until 2025.
Now every other market – currency, equities, risk – is outperforming the US. Foreign money is flowing back out. Strongly.
– Leverage and risk spreads – under pressure.
– Buy the dip from retail buyers. Now SELL.
Powell may announce a rate cut.
If he does, perhaps a strong upbound.
Westie’s perfect storm.
Too much focus here on the short term and too little on longer term objectives. I outlined three baby bonds I was buying to hold to maturity recently and yesterday all three (RCC, ATLCL, and SWRHL) were essentially flat. This is how I want my income portfolio to operate, and if the market decides to increase the discount on these 2026/2027 maturities, I’ll buy more.
CW–Would that be SWKHL? Thanks!
Yes…the SWK Holdings unsecured 9% notes maturing in January 2027. They invest mainly in healthcare, biopharma, medical devices, diagnostics, life science tools and healthcare service companies. First call is Sept 2025, so there’s a good chance they get redeemed a year early. As always, caveat emptor!