We have $58 billion in 3 year treasuries being sold in 30 minutes (noon Central time) –this needs to be watched. There is talk of foreign buying evaporating–we’ll see soon.
This could move all markets–whether there is strong demand or weak demand–either way matters.
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I sold a TON of things this morning when I saw the markets up nearly 5% and cleared the cash for bargains – to me that looked like a classic V-shaped dead cat of magnificent proportions.
I had a bit of buyer’s remorse (actually, seller’s remorse?) till after lunch – went from +5% on the markets to down 3% and closed down 2%. I almost started buying again but I had a hunch we might see markets ‘limit down’ at least once tomorrow, Who knows?
But, as I sit here, the NDX is down 2% at 745pm EDT…5% more for a limit down. A bit gallows humor chuckling going on here but I have a ton of $$$ to redeploy.
Chinese turned US LNG ships away . Maybe we should freeze everything made by Chinese companies in ports ?
Taking into consideration that all the talking heads on TV are talking about the real possibility of Powell Lowering rates yet this year I have a question. Iam seeing what most would deem pretty solid financially strong companies with their preferreds selling at really very decent prices with most having decent call protection. My question is am I missing something. I will give you a few examples are really very attractively priced preferreds right now: MS+Q, ATHS, CHSCL, RF+F, RZC, MS+P, & many others. I must be missing something as to why they are somewhat giving these away as it wasn’t long ago they were all trading at very hefty premiums. Yes, Iam fully aware of the “Tariff Story” but not really sure if some of these companies are even affected by them. The one in particular that Iam very tempted to buy is the MS+Q which is now at $25.10. Almost seems too good to be true.
Chuck, one thing you may not be taking into account is the widening of credit and maturity spreads. I am told that junk bond spreads have widened more than 100 basis points in the last week. Tim probably has some data or good guesses about the spread between the ten year and preferreds.
Chuck, couple things I can think of. If you were going to have 3 piles. One for reject, maybe and for sure.
Then the possible scenarios.
1 This all is short term and things settle out
2 We head into a recession and depending it can be mild or worse.
3 Or it turns bad and the unexpected happens and you have the great depression or great financial crisis.
You can see by people’s posts there are 3 camps people are in.
So let’s arrange investments into our 3 piles.
We know what the government learned in the past. They will shore up the TBF banks. They lowered interest rates. This save the ship was extended to mortgage companies and major businesses like loans to car manufacturers. All this caused them to flood the economy with dollars they printed.
So what is safe?
Banks? Yes but they can suspend dividends and not back pay.
Mortgage companies? Yes but they wiped out investors and again not cumulative.
The farmers? Well yes and no the government is talking a bailout but if you don’t have a market to sell to it doesn’t matter. The biggest support and that goes back to the depression was the government buying what the farmers grew. But what do you do with all that food? They gave it away. But the government just did away with USAID and now are in the process of cutting back on giving food to food banks in the US.
When you look at the overall picture the government became the biggest supporter of the economy and it just kept getting bigger. What happens when the person spending all that money cuts back on spending?
They are expecting the private sector to take over supporting the economy.
Yet, a lot of companies have grown so big they can’t rely on sales domestically to support the company, they have to export to support the company.
A lot of companies plans are on hold right now.
Right now I’m reading about how much feedback Americans tourists are getting from vacationing overseas.
Right now in a bad situation I think companies that have low debt, rely on domestic sales and can get by even if sales are reduced or a business that will be back stopped by the government because they are essential would be the safest bet.
Whatever happens things are going to be different we are already seeing that.
Just to clarify this:
Banks? Yes but they can suspend dividends and not back pay.
No, they actually can’t because suspension would be at the direction of regulators and the bank is toast at that point. Suspended dividends are the LEAST of the investor’s problems.
ChuckP–I like your list. In a taxable account, also consider ATH-E as an alternative to ATHS. The dividend is QDI eligible and well covered. After 3/29, ATHS converts to 5yT + 2.986%, while ATH-E converts 12/27 to 5yT + 3.962%. Some more risk, but also more reward.
I want to give a Big Shout Out and THANK YOU to Potter, Charles M & Roger. I don’t know whats going on out there as I’ve never (atleast that I can remember) seen a market that has “SCHIZOPHRENIA” before. UP like over 1,400 early & then closing down 320 points giving back everything from early this morning. I usually don’t get overly concerned but this market has me somewhat “concerned”. Lots of sellers just throwing in the towel. Maybe I just read way TOO MUCH which can drive a man crazy or atleast to have several PBR’s. Many of you are probably too young to know what that is—LOL. I did buy some more to my existing bond holdings today of a 6.75% Goldman Sachs & a 6.5% J M Smucker. Yes, I did have to pay a small premium but I’m ok with that.
Right on Chuck. Bonds of a safe company is a good place to hide out!
Another reason I have trouble with Fidelity. They filled up on junkyard bonds. Way too many BDC’s, Panama, Mexican and oil drillers.
They need to shake up the buyers.
Looks like only 1/3 of the tendered were accepted…
3 year:
https://www.treasurydirect.gov/instit/annceresult/press/preanre/2025/R_20250408_2.pdf
6 week:
https://www.treasurydirect.gov/instit/annceresult/press/preanre/2025/R_20250408_1.pdf
Whatever happened to “flight to safety”….
At this rate, the US Treasuries will be part of the Illiquid section of the site……/s
Last time we got into a trade spat with China we got COVID. I wonder what happens this time around but it’s probably not going to be very supportive of equity prices.
From ZH:
China has three options:
1. Concede defeat to whatever terms Trump demands
2. Devalue the yuan by 20-40%
3. Unleash biggest fiscal stimulus in its history (talking $2-3 trillion) which will push its debt off the chart
— “1. Concede defeat to whatever terms Trump demands”
Don’t think so. ZH ignores the prior history: The Century of Humiliation (1839-1949)
— People have noticed Trump does not personally insult Xi the way he insults “Governor” Trudeau or leaders like Zelensky. Trump respects power and wants TikTok. I think this gets worked out. JMO. DYODD.
Trump insults everyone. If deals don’t get gone a lot of it is personal
He’s a mean angry bully. Not political he’s just the way he is.
Mostly in cash. 4.16% is better than losing 10% in one day.
What if they weaponize their UST holdings? That could be their nuclear option.
Yazzer, in addition to that I am sure they hold a bunch of U.S. stock in absolutely huge sovereign wealth funds. Heavier than expected Tarriff’s on China also might have something to do with indirectly pressuring Putin to stop dragging his feet and end the war in Ukraine (no one talking about that possibility).
In any war kinetic or otherwise there is going to be lots of collateral damage and destruction. Let’s all take a moment and pray that the Lord guides Mr. Trump, Mr. Vladimir and Mr. Jinpeg.
I also pray that the good Lord can ALSO allow the left and the right, the communists and the capitalists, to live together on this earth in peace. I find myself praying more and more as I get older, just about all one can do now. Pray and hold onto your hat!
Along with using critical metals, etc to put the screws to our tech and all the required imports- including, “sorry- no sales to the US”. Imagine that.
(umm…Greenland, Canada?)
Yazzer,
China’s holdings are not that big. Down about half over the last 10 years. Only about 2.5% of total. They could sell (and take a bath by dumping) and it would probably cause some short term pain while the volume got absorbed, but they don’t own enough to cause a disaster (IMHO).
Bigger problem would be that China can’t afford the loss on a big sale. they are in a tight financial bind already -falling exports, property bubble, failing belt and road projects, skyrocketing “shadow” debt in cities and provinces, staggering unemployment (esp. among people under 30), the list goes on and on.
Their own bond market has almost locked up to the point that the gov. had to announce that they would no longer buy their own bonds. They are not the strong player they want the world to think they are.
They are putting on a tough public face vs. Trump, but they probably don’t have the financial strength to make it stick.
Just my personal opinion as I sit in a waiting room. As always, I could be wrong.
Hopefully you get good news after sitting around the waiting room private.
The rest of the world will take care of itself.
Dan’s first post – that’s a terrible post!
I think it should be removed.
Maybe because there is too much uncomfortable truth to it.
China can’t respond tit-for- tat on trade but they can asymmetrically.
Crisper technology has come a long way and is very scary stuff.
Good post Dan – removing post is a communist move.
We don’t normally talk politics but things are getting far from normal.
We can talk unbiased investment discussion what to do about geopoliltics, or we can promote our emotional bias. Keep this a great investment site, too many recent posts crossing over to the dark side.
??? – what is wrong with it?