We look back 2 years ago and what do we see? Cash in brokerage accounts earning .01%–or some crazy number. We all lamented the lack of decent coupons on new preferreds and baby bonds being sold with lousy coupons–i.e. REIT Hudson Pacific (HPP) selling a perpetual preferred with a 4.75% (HPP-C), Bank OZK selling a non cumulative perpetual preferred with a 4.625% (OZKAP)—you can see new issues back to late 2021 here.
Now we can get over 5% on a CD–not something that is massively attractive in a high yield world–but certainly an option on a relatively short term basis. Money market rates of over 5% are also available. Yet with the options available I know we still have some folks that are sitting on too much ‘cash’–I mean true cash. This isn’t necessarily cash in brokerage accounts, but may simply be cash in your checking account that is paying you little or nothing (although there are certainly checking accounts paying decent interest-but not at my little local bank)–and the banks love you!! Thank you Mr/Ms customer–we love you for giving us money for free that we can lend for 8%!!.
Relative to the above I plead GUILTY. Both my wife and I keep way too much money in our personal checking accounts. Why? In the age of electronic transfers it only takes a half dozen clicks to move the money to a brokerage account where I can earn a minimum of 5% with safety. Little details like this costs investors very substantial income — are we all so wealthy we like to just ‘give money away’? My goal for today is to move money from my checking account (just mine–my wife is a different story) to my cash brokerage account–I’ll take that extra $100/month income! Time invested–maximum of 5 minutes.
The point is that we all spend lots of time researching preferreds and baby bonds–but sometimes we have ‘free money’ right under our nose.
Well today in 30 minutes we have the weekly 1st time unemployment claims being released–plus the ongoing claims number. To me this is a most important number-partially because we get it every week, but also to my way of thinking nothing identifies economic health better than employment. I think the Fed people think the same thing–previously they have pretty much said that is the case–but now they have backed off that point of view. Just the same give me the numbers and let my simple mind scrutinize them and make my relatively short term predictions–i.e. 3 months.
Equity futures are flattish (again) this morning with the 10 year treasury at 3.81%–no reason to think that we aren’t looking at another quiet trading day–that is fine–we collect dividends and interest payments tomorrow or Tuesday–always a good day.