Yesterday we had jobless claims come in higher than anticipated, yet on Wednesday we had the ADP employment number come in much hotter than forecast. Today we need to see employment come in soft–the Fed wants to see employment soften and we need to start the accumulation of softening data NOW. The next FOMC meeting is June 13-14 and while I have a strong opinion that the rates hikes should be ‘paused’ I have little trust in the Fed and given the chance they will screw it up, by hiking rates again in June.
Today’s economic calendar–
This morning I see banking common shares bouncing nicely, but we all know this can change in a nano second. Yesterday was extremely painful across the banking AND insurance preferred stock sector–we seem to have some contagion going on and even though all my insurance and banking holdings are very modest there was some pain–I ponder selling, but I vacillate since I feel strongly that these 8% (and sometimes 9%) current yields are going to be golden in most community bankers, but I don’t want to try to be a hero.
I see there is talk of restricting short selling in the bankers – on one hand the idea that a bunch of very wealthy folks can get much wealthier through rumor strikes me as wrong, but on the other hand when either the Federal government or the SEC does something to stymie a ‘problem’ you can almost be certain that they will create other issues. The entire issue is one giant mess and there is plenty of blame to go around including managements–and honestly shareholders. In a bid to create more income folks do things that are stupid–they are forced to do it by shareholders who always want more income (i.e. Dividends and higher share prices )every quarter and every year instead of taking a long term approach. Obviously this is just one person’s opinion (me).
Well 30 minutes until economic data – let’s see what happens.
Track and field news for today: One month Treasury bill rate taking the pole vault to ~5.5% today (from ~4.7% yesterday) and clearing the height on the first attempt. Market Watch says its the jobs report…. I don’t follow this one but it seems like quite a leap. DYODD.
https://www.cnbc.com/quotes/US1M
i know it has been mentioned by others but it sure is odd to see some of these preferreds massacred while their commons are just taking a couple black eyes. welp, dipping in my toes a bit more to average down on my october lows, and I’m hoping this isn’t just a f’around and find out, but I’ll see in the next few months.
Can you explain why you’d ponder selling the banking and insurance holdings? You only lose when you sell and the dividends are continuing to be paid.
Default risk. The price factors in the odds of a default. Or the price could drop more on further stress then you can buy back cheaper. But I agree with you I’m always reluctant to sell at a loss. So I sometimes hold on to losers too long. Ideally sell decisions should be based on todays value not the value when you bought it. It’s a psychological barrier.
Agree totally Martin. And also things pay….until they dont. Like you implied, I dont subscribe to “its not a loss until I sell”. The brokerage account values nullify that faulty thinking. It just isnt a realized taxable loss, that is it. Of course panic selling rarely is good either but that is a separate topic.
I use “It’s not a loss unless you sell” for interest rate risk, If it fell because rates went up yet likely to continue paying then holding is a gain just not a maximum gain. The rule doesn’t apply when the dividend is at risk
MitchellH–because I don’t want to go to zero. The saying you only lose when is sell is not something I subscribe to–I mark to market everyday.
Jobs report wasn’t exactly what I was expecting. Added pressure on wages, I received a raise this week.
What I don’t like and no one seems to be talking about is the late and slow pays seem to be going up quickly. I don’t like it when I hear a customer saying they are waiting to get paid so they can pay us.
I tried to tell a customer to get lost over a disagreement over pre-pay but they had already committed to a job and we agreed to take check at time of pickup. They wanted to issue a P/O on their terms of 45 day payment
Just be aware things are building up to take a dump.