I wouldn’t be one bit surprised if common stocks end up sharply lower this week–‘sell the news’. Is the cut 25 or 50 basis points (CME Fedwatch now says 50 basis points)? Do investors read the cut as economic weakness ahead or just a move to try to maneuver a soft landing? Who knows for sure but I would be really surprised to see little movement in markets–in particular equity markets. We could see some movement in treasuries–but I would think it would be in the shorter maturity issues–the 10 year treasury maybe just a little movement. Who knows really – no one, but I am ready now for whatever happens. How am I getting ready–by doing NOTHING–what does one do to get ‘ready’?
If one wants to lock in some of the safe yields in CDs and treasuries you should probably begin to do it today. Yesterday I received a call notice on a JPMorgan 5.4% callable CD–oh well I had it for 9 months, but you can be certain that callable issues will be called in short order in particular if we get a 50 basis point rate cut.
Yesterday once again we saw preferreds and baby bonds move quickly higher in price–the best of the bargains have been gobbled up and the number of issues in which I have 3-10% gains (some more and some less) has grown. I have 1 issue I am watching in the sock drawer which may need to be sold as it has been moving above $25 and if rates fall too much it will be called–and if it moves to $25.50 I will sell some or all the position (WR Berkley 5.7% debentures WRB-E).
I added a few more shares yesterday to my 8.75% Carlyle Credit Income Fund (CCIA) term preferred position. No capital gains is expected–just adding a little bit of the tasty 8.5% yield.
Probably no buying of preferreds and baby bonds for the next couple days–just going to sit back and watch.
If 50 bp then sell the rally. If 25 bp then buy the drop. Rinse. Repeat;
The latest official inflation data has us at about 2.5%. Based on this number I think the Fed will feel comfortable cutting by .5%.
I don’t know how inflation can possibly be only 2.5%, though. I’m seeing double digit y/y increases on a lot of the bills that the corporation I work for pays.
Because its not 2.5%. Just as bad as the jobs data.
We have quietly become a banana republic.
One thing I have noticed is a lot of vendors of goods and services get very complacent with their existing clients. They slowly raise prices and figure that most people do not have time to shop around, can’t be bothered, or ignorant to other options out there.
I am literally on the phone right now canceling two services that I cut the cost by 60% per month by going with a different service provider. Now I am just a small biz owner. I can only imagine what large biz can do if they have time to study each individual purchase.
Another example is goods we buy to do our services. Not only did we find cheaper prices from vendors over the last 12-24 months who slimmed down their biz model to save costs they now even deliver to us for free if the order is done in a bulkier size. Same stuff we bought before but no longer from the location which has warehouse AND customer facing wholesale store fronts in the city which obviously cost more for them to operate versus a warehouse alone.
Inflation is real but getting closer and closer to the source of what you are buying is key AND shopping around for what you are able to. Just takes more work to figure it out but once implemented you have cut your COGS (cost of goods sold) nicely.
I feel this can be implemented from the household level all the way up as a way to fight inflation. So many people just keep paying increased prices and seem to not change their behavior. So yea.. why would prices go down if they (sellers) can do it when your customers keep paying it.
newth trading on fidelity
How about a combination of increasing the throttle and riding the brake? Cut 50 but modestly increase and affirm QT? Relieve rates but accelerate shrinking the Fed’s balance sheet to increase its capacity to ease when necessary?