Tuesday Morning Kickoff

Now with the fall season at hand it is likely that we are going to get lots of excitement in the months ahead after a summer that has been pretty darned quiet.  For September we have a FED rate hike to deal with and we have elections just 5-6 weeks after which could very well change the political landscape of the country.  Additionally we have the Chinese trade situation to deal with and that singular item has the ability to disrupt the economy in a significant manner.  Oh well, our crystal ball has never been that great, so we aren’t going to try to predict the future–just deal with it.

The DJIA traded in a range of 25,882 to 26,167 before closing at 25,965–another quiet week.  The 10 year treasury traded in a range of 2.83% to 2.89% before closing the week at 2.85%.  The super strong consumer confidence number on Tuesday juiced the 10 year, but of course in this day and age once again investors forgot the news once it was 48 hours old and thus rates dropped back from the highs by weeks end.

Last week we had the Case Shiller home price index released on Tuesday and it showed a weaker than expected price increase–this dovetails with our personal observation that housing prices are peaking.  As mentioned above the consumer confidence index was way above expectations–this pretty much tells us we probably won’t have to worry about a recession anytime this year.  On Wednesday we had the 2nd revision of 2nd quarter GDP and it came in a tenth higher than the original reading.  We also had pending home sales which came in weaker than expected–again no surprise to us.   On Thursday we had personal income and personal spending both came right in on consensus at .3% and .4% respectively.  Core inflation came in slightly above expectations at .2%.

For the coming week we have the normal number of data being reported, but all eyes will be focused on the employment report which is coming on Friday and with this report the average hourly earnings will be reported.  Of course ADP will report their employment numbers of Thursday–which no one considers “official”.  Even these important numbers will likely be ignored as long as they are in the “zone”.

The Fed balance sheet fell by $10 billion last week and this run off continues to have no affect on interest rates.

In a confirmation of how quiet market have been we had no new income issues announced last week.  We did have the new 6.25% Saratoga Investment baby bond begin train (ticker:SAF) and it moved nicely higher to close the week at $25.34.  We purchased this issue in both personal accounts and model portfolios.

The average $25/share preferred stock gained all of 1 penny last week and there are now 147 issues trading at $25 or below. Just like the interest rate markets these number are holding really steady.


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