Markets are fairly muted this morning on the passage of the debt ceiling deal approved last night in the house of representatives. Passage certainly brought together plenty of strange ‘bedfellows’ as both sides of the aisle came together for the deal.
Equity market s are slightly higher – no real reaction, obviously everyone thought the debt deal would get done–but the deal isn’t done as it has to get through the senate–of course the deal will get done–and I am essentially moving this off my ‘list of worries’. Now I can focus more on the ‘recession’ that never seems to arrive and the stability of the banking system.
I mentioned yesterday I nibbled on 2 banking issues preferreds. My diversity is fairly wide in these issues (7-8 issues now), but the depth is fairly shallow. I am thinking that diversity into a pretty good sized basket of the community/regional banking preferreds is better than buying ‘full positions’. The 1 issue I found I wouldn’t buy at this time is the 6.75% perpetual from Louisiana banker First Guarantee Bancshares (FGBIP). This small ($3.2 billion in assets) had marginal earnings last quarter (down 60% or so) and has a pretty poor efficiency ratio. Now the company claims their issues are coming under control–loan interest income is coming into line with interest expense. We shall see–I don’t want to own a poorly performing bank when I have so much to choose from–maybe later, but not now.
I just took a glance at the CD offerings on eTrade–very nice at 5.3-5.4% for terms of 3 month all the way out to 5 years. Of course many different terms are in place–a 5 year CD that is callable is probably a bit dicey–but for a year not so much. Not looking to buy more here but they do look quite tasty.
Yesterday we had the JOLTs report released with over 10 million jobs claimed to be available–I say claimed because I have little faith in this number. Regardless this number had been falling and now is moving higher again–this is not helpful as we move toward the June FOMC meeting.