The Atlanta Fed GDPNow model is currently showing Q3 estimate of GDP at 3.4%–certainly higher than most economist are forecasting. Of course the forecasting is just ‘guestimating’ a number and we can all do that with about as good of accuracy as most of these folks.
Regardless of the forecast the question I have is how much are income investors on a global basis going to punish debtors (the government) for having too much debt now–and more importantly into the future.
There is little in the way of poor economic news in all the stats we see everyday–employment remains decent while inflation is kind of stuck at current levels. Of course the world is a dangerous place and circumstances could change at any time with the various wars going on, but generally the need for interest rate cuts doesn’t seem dire. Are the equity markets reacting poorly to the potential ‘push back’ Fed Funds rate cuts or are they sensing much higher longer term rates based on the inability of the government to get spending (thus debt) under control?
It seems to me the answer to my question is yes.
Regardless of why markets are acting the way they are currently I believe that it is a good time to rearrange some of my preferreds and baby bond holdings. Given that I held capital gains in virtually everything I held and my own personal view that longer term rates are going higher over the course of the next 6-9 months I see no reason to incur large potential capital losses.
Yesterday I trimmed back many holdings (I will give more detail when I have time to compile my data)–either in baby bonds with low coupons or low coupon perpetual preferreds. I did not touch my holdings in floating rate or high yield issues (i.e. BDC bonds) or term preferreds. This has driven my cash position up quite a bit in 1 of my accounts–where the money will ‘wait’ drawing 4.5-4.7% which should hold until at least the next FOMC meeting in November.
I will await opportunities–preferably high yield at better pricing. We’ll see where we go from here.
Share with everyone a little detail on the employment market and how the stats may not be telling the whole story.
I am still working 2 days a week because I like what I do.
We just had a person who quit that was our delivery driver. 2 years ago we were trying to hire a employee for the shop. We had trouble even getting anyone to apply. Fast forward 2 yr and now we have gotten as many as 25 applications in a day and as many as 65 in a couple days.
People who answered the ad and never have had a driving or delivery job. A architect applied, a software engineer and others. The white collar workers seem to be more affected now than the blue collar. Just saying, the reports we are reading don’t tell you the full story. Employment market might be steady but I bet there’s a lot of people doing jobs they are over qualified for.
I’d say it’s wise to avoid anything that gets you too riled up—like drinks, gummies, or even those replacement window TV ads., or maybe it is the ED pill that takes forever to come down from?
There’s a lot of hotheadedness these days, with people immediately typing out whatever pops into their heads. This whole entitlement, I’m the smartest person in the room, me too moment, etc. thing…
Where did the inner peace we learned from Kung Fu Panda go?
I thought you were monitoring the comments for just this kind of BS, Tim. I read every day and do contribute so as not to have to see the stupid, angry, useless s… from those like the proud, unvaccinated one from TX (and others). I read this for investment ideas not for politics or opinions other than related to investments. He threw down the gauntlet, Tim! What ya gonna do?
Hey RandyK – I’m such a supporter of the 1st amendment that I even support your right to call me stupid/angry/useless on here.
Maybe my feelings might’ve gotten hurt if I knew who you were LOL
oh so we are doing politics again here! which is specifically banned by Tim for good reason. Dont get me started.
Bea, please overlook it. Your comments are too valuable.
Why is anyone so sensitive that they can’t read something they disagree with and just move on?
I don’t think I can trust the economic data coming from the government. Heck, Jay Powell even questioned the accuracy of the jobs data recently. Are you thinking Powell’s comment should disqualify him from posting here?
I see a lot of dumb things posted here and I mostly don’t respond to it. I guess I just really value the 1st amendment…I love it almost as much as the 2nd amendment. People should be able to say whatever they want. People who are constantly offended should grow up and accept not everyone is going to agree with them all the time.
That reminds me…remember when we were told by the government and mainstream media that if you got the Covid vaccine, you wouldn’t catch the virus? Those people who questioned the narrative have looked pretty smart over the last several years.
Love,
Your friendly neighborhood unvaccinated Texan
P.S. If this post is problematic, just left me know. My favorite posters are no longer here anyways.
Dick, I don’t think I read anything you posted as political compared to other comments. I agree I’m not sure any anal yst is 100% accurate and neither is government reporting. As far as being proud you’re unvaccinated that is your right. As long as it’s not a immuno compromised cancer treatment patient sitting next to you on a enclosed environment like a plane and you happen to be sick. Not much difference with the whooping cough going around right now that young kids and older people have a higher risk of dying. My 1st Cousin who was a cancer patient died from Covid.
1st amendment rights I will agree give all of us the right in a public forum to say what we want, but this forum isn’t run by the government which is for everyone. This is Tim’s site.
Both you and me have had discussions and disagreement about investing styles. I hope I haven’t upset you. Let’s agree to disagree on investing and leave personal beliefs whatever they may be out of the investing discussions.
Second it Pickler. I like having Bea around.
Tim, FWIW Paul Tudor Jones joined Stanley Druckenmiller today on CNBC stating that he wouldn’t own any bonds and is actually shorting fixed income. Both expect Trump to win, and both expect deficits to continue rising along with inflation. Buying commodities, gold, and stocks.
I’ve eliminated all perpetual preferreds, and current duration is under 4 years.
This is a politics-free forum.
ditto for Gabe & rk160
Hey Gary – I’m not sure what your pronouns are but that post seemed incredibly mild. Life must be very hard for someone like you and your set of challenges.
ChrisW didn’t even really express an opinion of any sort.
Against my better judgement–
I was trying to remind folks that it’s TIM’s site, his rule. I guess you are against it.
It took me a while to figure out what the ‘pronoun’ comment was about.
Means nothing to me, but I see where you stand– keep Tx pure.
See how well we all get along when a little politics rears its head?
I think Tim is on to something– must be on a trip.
–back to investments….
All the numbers are massaged by team Biden. Last attempt to get some vote by showing healthy economy and stocks at all-time highs.
Now probably all hope is gone for Kamala so the Fed is letting interest rates go up so as to put in trouble Trump from day 1.
Fake news and lies everywhere. Terrible this political manoeuvering.
Gabe, are you serious?? Do you have proof? What do you mean massaged? You just sound like more unfounded conspiracy theory crap.
Tim – not sure of where long term rates are going but I did take this as yet another reason to take some profits off the table for some of my low coupon perpetuals (BHFAM) which I had an outsized cap gain.