Yesterday saw a giant dump in equities when the combination of war talk in the middle east and big mouthed Fed yakkers took the S&P500 from a gain of 1% to a loss of over 1% in about an hour.
I am tired of Fed folks talking–if I was king these folks would be gagged. Investors (or at least traders) just can’t seem to help themselves in reacting to the drivel these folks spew. Yesterday Kashkari spewed the most hawkish crap and when rates were at zero he was the most dovish–the most wrong of anyone–why pay attention to this clown?
Regardless of the Fed yakkers yesterday did not bring losses to income issues although today once again we have numerous talkers so who knows what kind of silliness will prevail.
Of course the big news of the day is the jobs numbers for March which will be released in 45 minutes. The forecast is for 200,000 new jobs and an unemployment rate of 3.8%–and we will also see revisions to numbers from February which showed gains of 275,000 jobs. This is a key number (at least in my opinion).
The other big news we have out there–or at least will have out there is a spread in the middle east war–there is no doubt in my mind that we will see Iran attack Israel–the only question is when and how? As some noted yesterday this will likely send interest rates lower as global investors move to the safe haven of U.S. debt—but this doesn’t mean equities will react in the same manner. We’ll see.
I continue to execute my plan. I have lots of CDs maturing most months and I am rolling dollars over as long as I can attain 5.2 or 5.3% on a 3 month issue. BUT I am holding some cash back to be available for purchases of preferreds or baby bond bargains. Portfolios remain almost evenly split between CDs (and money market) and preferreds and baby bonds. I remain targeting 7% overall–likely a little shy of this target, but will get there as I add higher yielding income issues in the next number of months.
If total jobs represents all part time jobs and all the new jobs are Uber drivers, that doesn’t generate tax revenue and going from 1 full time to 3 or 4 part time or just accepting less isn’t a good trend.
Brent ~ up, $91.20/barrel
WTI ~ up, $87.02/barrel
AAA GAS avg ~ up, $3.58/ga
The FRB does not have a clue; they are driving from the rear view mirror.
They did not see the big spike in inflation (when it happened they called it transitory) , they did not see strong economic growth (they forcasted a recession). They got lucky and are now hoping for a soft landing.
What is next that they don’t see? Spike in inflation?
Cheers!
300,000 new jobs. Will be a bloodbath in the bond market today. Personally kinda looking forward to this. Might be jumping on some TIPS with some juicy real rates.
The only thing I’m getting tired of is the constant drone on about rates all over the financial media. Shut up and Invest!!!!
pig, what I find interesting is this.
https://finance.yahoo.com/news/canada-unexpectedly-sheds-jobs-unemployment-125548603.html
Their unemployment is up to 6.1%
Charles, thanks for posting that. Good find.
That is interesting. What’s also interesting is many have blamed recent surges in immigration with recent gains in job growth in the US (not saying that is bad, but more along the lines of why economy just hums along while the financial press perseverates on expected rate cuts). But in Canada, they also have record numbers of immigrants and it appears that just the opposite is happening.
Is Canada the canary in the coal mine? Is the reason they are first because they were closer to getting the bubble popped when this whole interest rate mess started? Wish I knew for sure. My educated .01 cent wild ass guess would be yes, Canada is a sign of what’s to come. When?
Canada has legal immigration that requires a benefit to their economy and one cannot bring family over. In the US legal immigration is know as chain as one can bring family. And as we all know the US has huge illegal immigrants. I think everyone agrees immigration is good for the USA and I think everyone agrees the system needs changing. Canada even with their controlled immigration has a housing affordability issue. One never reads that a portion of housing affordability issue is immigrants. Again, we all agree immigration is good but there are unintended consequences (even for legal).
Trying to keep this out of the political realm but who exactly is the “ALL” in your statement “Again, we all agree immigration is good”
That is not an accurate statement. Especially when one looks at the untold amount of US Taxpayer dollars having to be spent on people who illegally entered the country.
Hi Mav
I think her point was that everyone agrees that the US needs immigration because our population would shrink otherwise (a mess many other countries are wrestling with), and we all agree that they system needs to change (or be fixed, depending on your point of view).
[Rant]
Personally, I think we need to put a guest worker program back in place for farm workers (we had one for decades up into the 1960s). Today, tens of thousands of farm workers come illegally and get terribly exploited. We should put in a program to protect them while enabling our ag sector to get the workers they need.
We also need to stop the crazy policy of making foreign students leave as soon as they graduate from college. To me, it is insane that we graduate tens of thousands of foreign students every year (who generally have to pay their own way), then kick them all out. It is precisely these kinds of skilled workers we need, yet we train them then send them back to their own countries to compete against us. To me, that is just nuts.
[end rant]
good point Private
Especially graduates with Ph.Ds and other advanced degrees. This is exactly how China is catching up with the US in technology (of course, this is in addition to trade secret theft).
Another dubious jobs report, nothing to see here.
This is just my opinion, so that and $13 will get you a cup of coffee ..
however,
Every time someone gets a job it is a great thing.
This job number report shows lots of gains in healthcare and government jobs. Labor participation rate still around 62%.
This report may be great news on the surface but people still can’t get ahead for a variety of reasons. I see stagflation with GDP reflecting all the money being pumped into the system.
The last time we saw inflation being the bee in our bonnet was in the late 70’s, after we ditched the gold standard and increased the money supply.
There is pain in increasing the money supply and will be more pain in limiting the money supply, so I think we are stuck in this finger trap for a while.
In conclusion, based on the past 12 months record with 100% accuracy this 300,000 jobs number will eventually be revised down.
What is the over under here ?
Cheers
Be safe everyone
My money is on under.
No politics here but…..
Red Team = Voodoo Economics = Supply Side = Encourage spending & investment
https://corporatefinanceinstitute.com/resources/economics/voodoo-economics/
Blue Team = Modern Monetary Theory = Print as much currency as Uncle Sugar needs = Transitory Inflation?
https://www.investopedia.com/modern-monetary-theory-mmt-4588060#toc-core-principles-of-modern-monetary-theory-mmt
IMHO both of these aren’t my idea of capitalism. Some might even say one is Fascist and one is Socialist.
Economics is a very old discipline, but it seems to be a bit of quackery to me. I usually ignore the talking about red vs blue and pay more attention on what they are actually doing. In particular I try to stay out of the way of the elephants in the room (which also includes institutional investors) in order not to get trampled.
YMMV
For what it’s worth: in the old days of Adam Smith, the discipline was referred to as political economy. Sadly, the deficit and the debt are non-partisan issues. Neither party is willing to reduce the deficit. The only adults left are the insurance companies and maybe the rating agencies? When can we hope for a downgrade or default? (Isn’t it better to default at $35-40T than $60T?)
In practice – since I came of age and started following politics – Red Team does exactly the same as Blue Team.
See – Bush, Trump.
Red/Blue Team = Modern Monetary Theory = Print as much currency as Uncle Sugar needs
The only difference is where they spend the money!
Blue Team spends it on – infrastructure and people + MIC.
Red Team spends it on – giving tax break to people who already have money + MIC. (if one were behaving like Red Team – I’d say – “bribing their donors”)
I thought this was a politics free board
Making disparaging one sided comments like you made does not help anyone here
Mav, You nailed it.
Not being political these are the stats released by the U.S. Treasury.
Top 1% pay 45.8% of all income taxes.
Top 1-5% pay 19.9%.
Top5-10% pay 10.2%.
Top10-25% pay 13.4%.
Top 20-50% pay 8.4%.
Bottom 50% pay 2.3%.
Yeah, not being political is key.
But looking at your chart, that bottom rung seems to really be skating. There’s got to be a way to get those deadbeats to pay their fair share.
Whadaya think, OGD?
For the sake of discussion, can you define “fair share” in terms of percentages of income? Putting it in numerical terms eliminates the notions that someone’s fair share is arbitrarily “more” or “less” than what they are paying now. It puts a number to it that can be discussed intelligently.
For example…
If you earn X, you should pay Y%
If you earn A, you should pay B%
I think this site needs a sarcasm font.
The answer is simple New, we need higher taxes. And I have the plan…Don’t tax you, don’t tax me. Tax that fellow hiding behind the tree!
I do find this recent development a little funny. Politics has been driving good posters off the board, and Tim asked us to stop, but instead people just post their politics with a “this isn’t politics” before it.
Fellas, if you think it needs the disclaimer, you’re posting politics!
This isn’t drinking advice, but cold beer tends to be a lot better than hot beer.
Personal thoughts are the bottom 50% are really struggling.
If you don’t have money why would you need a tax break?
Is it the fed yakkers or the bond buyers/sellers? Around 10-19-2023 the 10-year was near 4.93%. Two months later (12-27-2023), the 10-year rates dropped to 3.78%. A drop of more than 20%. Nobody could adequately explain why other than excessive enthusiasm that rate cuts would be happening very quickly. That was not driven by the Fed in my opinion.
Now, the 10-year bond has returned to 4.33%. Almost the midpoint between 4.93% and 3.78%. To me, the bond market overreacted in Oct-Dec and has now realized that the rates will be higher for longer.
Now we need the fixed perpetuals to start trading in that manner as to this point they have clearly under reacted. Or at least a fear dump from that worry. Then more longer term palatable options will present themselves.
The safe haven of the world (US treasuries) should not be bouncing around like this. It should be much more stable and move much more deliberately. Until then, I am not sure the fixed preferreds will start trading where they should in relation to US treasuries.
If your assumption is treasuries are bouncing uncharacteristically, then perps should be even more unstable. Which is exactly the opposite of what is occuring. Both appear to still be underpriced in relation to current economic numbers.
Underpriced in terms of yield, not pricing, I’m referring too.
If they’re under-yielding, they’re over-priced. 🙂
O. I started out writing it bass ackwards, so I had to continue it out until the end.
My personal opinion (worth less than 0.01 cents) is that the bond market refuses to accept that the era of very low-interest rates has or is ending. The US, other governments, and companies have too much debt. I am mostly buying CDs, treasuries, agency bonds, floating rate investment grade preferreds (or baby bonds), and some fixed investment grade preferreds (or baby bonds) with coupons and yields above 6.5%.
Yeah, those ute illiquid rascals seem to just sit there. Day after day. And I hate to have cash (MM) lying around. So I impatiently dumped a bunch into CHSCM @ <25.10. I guess it won't hurt too much unless they go TU. We'll see.
JMO