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This Economy Remains Strong

There are plenty of problems in our economy, but there is little showing up in the economic releases.

Today we had 1st time unemployment claims under 200,000 again and continuing claims are at 1.69 million–pretty steady over the last number of months. Sure we have seen layoff notices from a plethora of tech companies announcing sizable layoffs, but in the big picture these have not been substantial.

The final read on 4th quarter GDP was revised down to 2.6% from 2.7% so no major weakness showing. The Atlanta Fed is showing a 3.2% number for the current quarter on their GDP Now model—where is the weakness?

Normally I would look at the bond market for direction–but with the banking fiasco this is probably pretty meaningless in term of economic growth forecasting. Equities remain kind of strong–are equities right this time? Equities are not forecasting much economic weakness–so we continue to just guess on what is ahead – everyone has an opinion.

Yesterday I bought an add-on position in the RiverNorth Opportunities Fund 6% perpetual preferred (RIV-A). Someone did a good sized dump on these shares and it fell to my GTC buy order–hit a low around 22.39 on multiples of normal volume. 6.61% current yield on a CEF A1 rated issue–I’ll take it and will take some more if it falls.

I have no plans for today–but I have a GTC order in on the Gamco (Gabelli) Natural Resources 5.2% perpetual (GNT-A)--now trading at $22.71 for a 5.72% current yield. Low odds this will execute because my order is at $21.50–but I’m ready if someone want to dump some shares.

18 thoughts on “This Economy Remains Strong”

  1. BOOM! Daniel Oliver has written the best explanation of the banking collapse I have seen. If you want to grasp the short-sightedness, arrogance, hubris, and downright stupidity in the financial and monetary system, read this. Go someplace quiet to read it. Dan Oliver is one of the most elegant and prices writers I read and his thinking is merciless and impeccable.

    1. If that’s your view of what’s going on you might be missing 95% of the story

      1. IYP, please elaborate on the 95% that you think Daniel Oliver missed in his piece . . .

        1. Tex, Daniel Oliver is one of the most brilliant, accomplished and well written financial analysts in the country. I’m sure If You Prefer’s perusal and scrutiny of Myrmikan Research will of great interest to to their management team of professionals. Please, If You Prefer enlighten us as I’m certain you are well meaning and cannot be bromidic, imperious and palaverous with your ideas, Thank you in advance for your essential reply.

  2. I too own a some RIV-A. Currently about 1% of my total portfolio or a 1/3 position for me. I really feel like it has good value in this range, but I could also see it’s A1 rating being in danger. NAV is down $3 from just one year ago and the common has cut it’s dividend at the start of this year. I don’t see it going into junk grade anytime soon, but I’m worried about further downside.

    All that to say I added a few more shares today a little above what you paid.

  3. I’ve spent the morning scanning 1-3 mo. CDs at TDA & Fido. They’re available @ 4.9-5.05%. With the FDIC having my back, why would I look for something less safe with longer duration and within 1% of CD yields?

    Maybe I’ll just top off (lol, there is no top) my best MLPs, with tax-deferred yields hundreds of basis points higher. But, of course, they’re up today, too. Decisions, decisions…


  4. And the absolute cratering of labor market participation has completely upended the calculations for unemployment, so the unemployment metrics being used to determine a recession will probably not work this time, as more people retire and overwhelm the number of new entrants to the labor force.

  5. Right now wealthier people are keeping things afloat but lower earners, who are the sheer majority of Americans, cannot possibly be having a very good time. Eventually they will simply run out of cash/credit/etc… We are probably very close to that stage. Govt benefits cannot keep increasing to offset the shortfall. Most people who post here are probably higher earners or have substantial savings so we have to think back to days long past when we were near broke or broke to relate to the majority of how things feel.

    Eventually things will snap. Savings by younger folks by living with their parents and other creative solutions are being “used up”. Buy now/pay later schemes are actively being used for such things as groceries.

    I am not attempting to scare monger but the reality for many Americans cannot be ignored. This is why we see luxury type purchases like cell phones are actually declining right now. People are starting to cut in places that don’t really modify their lives in a dramatic way. Hell, I consider my wife and I to be pretty well off and even I am blinking when I open our electricity bill or how much supplies cost for the business.

    All of this takes time to be seen clearly. Like how long it takes for a large ship to slow down and come to a stop. Not very noticeable until it is almost dead in the water.

    1. This is just an anecdote so don’t put too much faith into it, but I think the middle-wage and lower-wage folks are doing a LOT better than you’d think. Where I am, in the mid-Atlantic, the trades are crushing it (slight hiccup in construction, but HVAC/electric/plumbing/energy still very lucrative).

      Even outside that, there’s a lot of opportunity for unskilled labor. I know a very decent guy who unfortunately never made it past high school; a few months ago he was able to more than double his wage by moving from retail to a meatpacking facility.

      I think the media is out to worry us but the people I actually see on the ground are doing very well right now.

      1. O.C., You’re spot on. The trades in mid-atlantic region are absolutely crushing it.

        Our most recent example: Had a young fellow stop by the other day to provide an estimate on some basic dry wall and molding work. He seemed confused, so explained the job to him and suggested we go hourly for no surprises – at which point he informs me he likes to make $1,000/day. Not a typo. The problem is, some will pay this not regonizing the absurdity of it, therefore he doesn’t even blink asking for it. He later that day sent me a $2,500 estimate for the day and 1/2 job, materials not included. He sure as heck will not be doing the work.

        Seeing a hard recession as having a silver-lining so that we might re-align some of these outliers with the known universe.

        1. I am helping a buddy wind down his construction company in Silicon Valley because his most senior guys retired and he just can’t find people to replace them (he is even willing to train new guys). I have even gone on a few jobs to help out recently. If you knew how many decades it has been since I worked construction, you would see the great humor there…

          On a similar note, I had lunches with a couple VPs at Silicon valley software companies this week. Despite all the talk of tech layoffs and talk of unemployment, they are both desperately searching for people and have dozens of open personnel req’s. there is some unemployment here (retail, hospitality) but tech seems to be booming along (at least for the moment).

            1. Absolutely, Charles. Bring your tool belt and icy hot!

              Funny thing – I am online this late because I am waiting up for my buddy’s son to arrive at my house so he can stay the night (what is left of it). He is bringing the beams we have to install at o-dark-thirty before I head off to Oakland for a morning meeting with one of my clients.

              Silly me. I believed my father when he told me to get an education so I wouldn’t have to do manual labor at my age.

              1. My nephew is a Carnegie grad and just let go with the Uber eats IT department in SF.
                I want to retire soon. Maybe compete with those day labor guys and get some use out of Mikita chop saw, the Senco nailers etc

        2. Alpha had a guy working for us and he quit for an installation job doing solar. That company went under so he collected government and is working under the table. He stopped by and I asked him if he could pound some fence posts and string fencing. He said his going rate was 25.00 an hour . Found out so many labor jobs that is what everyone is getting. As an employer it’s tough when you add taxes and benefits they have to pay and you still don’t know if they can do a job without supervision

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