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Very Orderly Sell Off in Stocks

It’s an orderly day as equities have been falling since 1/2 hour after the market opened. Interest rates have moved 6 basis points lower to the 3.92% area.

All eyes are on the jobs report tomorrow at 7:30 a.m. (central). Today we had jobless claims that came in at 211,000 versus expectations for 195,000–while I wish no ill will on anyone (employed folks) we need this number to trend higher–Jay Powell wants it higher (or at least he believes that is an important sign the economy is weakening). Continuing unemployment claims rose to 1.72 million. With JOLTs (job openings and labor turnover) showing 10.5 million available jobs it is hard to believe that anyone is unable to find work–but if you are a software engineer, working at the local Holiday Inn Express is not really a workable solution.

Today I went ahead and bought a bit of a 1 year JPMorgan 5.40% CD–just $5,000. This issue is callable in June so I am betting that rates will be higher in the later part of the year than they are now. Most of the CD’s I have bought are not callable–they pay 20 basis points less, but at least one can count on the rate for 2 years. I have not bought anything further out than 2 years simply because I think we will be able to do better maybe in August.

Reviewing the preferreds and baby bonds today it is kind of ugly considering that the 10 year is lower in yield by 6 basis points. I have no focus on these issues now – risk/reward isn’t adequate for now. I think the average share price may be 4% lower in a couple months–we are going back to where we started the year so thus far lightening up on preferreds and baby bonds after the January rally and moving to more CD’s and bonds has been a stellar play–we may be able to do a ‘rinse and repeat’ later this year.

11 thoughts on “Very Orderly Sell Off in Stocks”

  1. Tim, in this case scared minds think alike! The last 3 months I’ve bought a 1 year CD to created a short term ladder and today I bought the JP Morgan Chase 5.45% CUSIP 46593LV55. So much uncertainty in these markets, just best to get some decent insured safe income and fight another day. I’m sure that Peter Thiel telling his close associates to get out of Silicon Valley Bank (SIVB) spooked the financial markets. I’ve had dinner with Peter twice and both times he reminds me that I know very little compared to many that are closer to the fire 🔥 Please don’t get burned, fasten your seatbelts https://www.youtube.com/watch?v=3vEEh0GF_C8

  2. Good or bad I bought some LTSH and up about 75 cents wish I had bought more.
    Now don’t ask about the rest of my preferred.

  3. Funny thing today.

    I still have a few shares of NYMT in a tiny inherited account that were purchased (for peanuts) in early 2009 at a price so low they are still above water. I missed that nymt had a reverse stock split today, and I got an alert that it was up something like 400% (apparently broker didn’t record the split in all of its tools).
    turned out the not to be true – but it sounded good for a few minutes.

  4. I went below you Tim. I bought 10k more of that UBS 5% uncallable monthly paying 3 year CD today. The few preferreds I have left actually held up well today. Somebody buying a few of someones CNTHP at $53.50 papered over most of the other small losses for today anyways, ha.
    Im acting like you Tim and maybe worse becoming “Granny Gridbird” as the majority of my funds are in either CDs, IBonds, or TBills.

    1. Grid: Silicon Valley Bank stated that it intends to sell preferred stock to obtain capital. Is there a rate of interest that you would feel comfortable buying preferred stock from this bank? I am concerned that many of these banks have made loans to wealthy individuals based on their stock portfolios which have in some cases substantially fallen especially in Silicon Valley. Other banks have a lot of commercial office mortgages in their portfolio which the high vacancy rates are leading to defaults. Your thoughts are much appreciated.

      1. Follow, Sorry I am no help. I try to make a buck on buy/sell imbalances not so much on stressed situations. Im not really a bank preferred guy by nature anyways. I remember getting to converse online with a bank executive who told me about the 08-09 crisis. He said there were about 10 executives huddled up and they all had different opinions on what the hell was going on and what financial shape they were in.
        Here is what SIVB CEO said today…
        Meanwhile, SVB (SIVB) CEO Greg Becker held a conference call with clients, advising them to “stay calm” as concerns over the bank’s financial condition pile up.
        He said the bank has “ample liquidity to support our clients with one exception: If everyone is telling each other SVB (SIVB) is in trouble that would be a challenge.”
        I take that as PR code for “we are screwed” if we dont stop the bank run.
        Peter Thiel doesnt want to hang around it seems.
        Panic spread across the startup world after a warning from Silicon Valley Bank, a major lender to fledgling companies, prompted Peter Thiel’s Founders Fund and other prominent venture capitalists to advise portfolio businesses to withdraw their money, even as the bank’s top executive urged calm.
        ….This stuff is out of my league. If I got involved I guarantee I would buy high and sell lower…So I just stay away!

  5. Tim… Bonds and Preferred are the most stable…like a mortgages. Still buying
    investment grade.. to good to let pass. what do you think. ?? Georges

    1. Feeling the same: ” I have no focus on these issues now – risk/reward isn’t adequate for now.”
      Moving slowly, reducing Preferred and buying Treasuries in the 3 to 6 month range paying 5%. Might be some bargains as they mature unless inflation continues. I still remember mortgages at 16% and CD’s at 12% in the early eighties.

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