The equity indexes are screaming higher—looks like yesterday and NOBODY knows where they will go from here—another plunge this afternoon? Who knows?
Today the 1st time unemployment claims came in lower than expected–so the ‘knee jerk nellies’ claim that the employment situation is just fine. Who knows–again this singular data point is fairly worthless as a stand alone data point.
The 10 year treasury has barely breeched the 4% level this morning–hoping it doesn’t go much higher.
Regardless I still just keep counting my dividends and interest and look for decent buys (without getting carried away). I did start a position in the Eagle Point Income 8% term preferred (EICC) this morning. I already held the 7.75% term preferred (EICB), but shifted to the 8% issue for this buy–to garner an added 30 basis points in yield.
So now to sit back and watch the ‘show’–it could be interesting.
Big chunk of $$$ maturing tomorrow. I did get a modest 0.75% treasury maturing 11/15/24 for 5.088% YTM this morning. Not sure how I’ll deploy that cash coming in tomorrow yet though.
This data was mentioned on Bloomberg TV this morning. The BLS Household survey shows that there has been no gain in the number of jobs in the last 12 months. The Establishment Survey disagrees.
The distinction continues but it has been noted elsewhere that the BLS is going to cut back in its budget for the Household Survey because of budget constraints. Is it the one budget constraint in DC or just an attempt to reduce bad news?
https://www.bls.gov/news.release/empsit.a.htm
The price of smoke and mirrors must have gone up.
Government employees get cost of living raises indexed to inflation whereas private workers do not. So higher costs. Surprised with government spending, they have fixed budgets on anything.
Too many $500 rolls of toilet paper or $5000 golden hammers at BLS?
I got my cost of living and I do no work in government…?
payday, “I do no work in government”
so, you must be a government employee?
Just teasing.
Waiting for that almost certain “downward revision” next month (or the month after).
CUBI common taking a big hit (down ~15%) on FED enforcement action. I have a pretty big stake in the preferred.
WASHINGTON, Aug 8 (Reuters) – The U.S. Federal Reserve announced Thursday it had imposed an enforcement action against Customers Bancorp for “significant deficiencies” around the bank’s risk management and anti money-laundering practices.
The bank’s stock fell sharply after the Fed announced the action, falling over 20% in midday trading.
The enforcement action against the Pennsylvania-based bank, which provides digital asset services and a tokenized instant payments platform, stemmed from a recent examination by the Fed, the central bank said.
A spokesperson for the bank did not immediately respond to a request for comment.
The enforcement action does not come with a fine, but directs the bank to overhaul its policies to address identified shortcomings, and regularly report back to regulators on its progress.
The order specifically directs the bank to overhaul its risk management around its digital assets business, including ensuring staff have the necessary expertise and sufficient resources, and taking steps to quickly address risk exposures that emerge from that business.
The Fed also directed the bank to bolster its customer due-diligence and suspicious activity reporting.
Preferreds not hurting too bad though. I dumped my CUBI-F quite a while back, however.
Thanks Dan–enforcement actions are never a good sign. I have a very small bby bond position and may just exit it–I never stick around these types of situations–probably isn’t a big deal, but my ultra conservative nature drives the decison.
I just read the entire enforcement agreement, and it sounds like a nothing burger. No fine, or findings just beef up your compliance department.
Below is a link to an article that contains a link to the actual agreement:
https://www.coindesk.com/policy/2024/08/08/crypto-friendly-bank-ordered-by-fed-to-limit-risks-from-digital-asset-clients/.
Charles, I’ll bring the drinks! Should be a good show.
Now am with ya. Predicting short term equity market direction is futile.
Researching preferreds with a decent yield, inclusive of yield to worst, and careful analysis of safety and if a perpetual preferred risk of being called is worthwhile endeavor in itself for an investor seeking additional fixed income. ( If a floater or resetter, then unfortunately difficult predictions of future interest rates and yield to worst again important. For me it is a variable tend to avoid) .
The equity markets will gyrate based on emotions in the short term. Long term however equity markets will and always have followed earnings, e.g. Random Walk, etc. Just my two cents as a recent casual reader.
I’ll bring the popcorn
I would like to know if, for example, in the 1950s, before we had algorithmic trading, whether the market had the same number of “high” percentage moves as we have today. Does anyone know?
Good question—I think we didn’t know much as individuals. In the 70’s and 80’s I waiting for the daily paper to even know what prices were on shares I owned. Then mid 80’s would log onto Dow Jones each night to get the prices–I think I had to pay $1/minute just to get prices.
yes in the 70’s baby Bea used to jostle w the oldsters to get to the terminal at Merrill Lynch in Gateway Center in the Burgh. Now she’s an oldster! grabbing the paper ea night after dinner and scanning for ideas to write into my 12 column accounting tracking paper in my teens, begging mom to open a Merrill Lynch Sharebuilder UGMA account! good memories. Reading Barron’s and Value Line in the library, taking those Value Line ‘trial offers’.. Dow Theory Forecast trial offers! ..now so much info, Information is great too but sometimes I think we get too much, guess it is up to us to filter. When we stick to our methods seems like we do ok.
So what got the Bea Baby so interested in investing at such an early age? I sure didn’t have it… Heck I didn’t even know what a bond was no less a muni bond when I got my first job on Wall St on an American Express bond company trading desk a year after graduating from college in 1967. I’d love to know the formula to apply to the granddaughters today.
2WR,
I worked for EF Hutton on Wall street in 1969.
My job was to reconcile OTC trades from the day before.
My first trade was in 1969, Lily Ann stock on the American exchange.
I had an acct. at H J Hentz
Bea—yes I had to have mom do the UGMA thing for me as I was just 17–thought I knew something about stocks (NOT). I used to get those little cards out of the fortune and forbes magazine where you could check the boxes and get an annual report—I had stacks of them.
yes! me too Tim, I’d send those WSJ things in and get tons of annual reports and reports on mutual funds etc. My poor broker at MLPFS, a very patient young man former Marine i guess got a job w ML after Vietnam. I’d send him lists of annual reports I wanted. I think IBM was my first, MMM, maybe Colonial Penn Life. United Illuminating post Oil Embargo (they were heavily dependent on oil for CT electricity, got whacked, I thought it was a great value w a ‘high dividend’ ! lol. I knew nothing, still learning of course.
2WR, I think it was a strong math bias got me interested in the finance section and all those ‘numbers’.. I remember I was so upset that pfd stocks were only available to institutions I think?? there was a little ‘z’ next to the volume, or maybe they were only round lots! I’d run from Finance class to the U library which had more of those really expensive publications and devour them. Bache( now part of Jeffries) interviewed me, told me to go sell sweepers what did I think being a ‘stockbroker’ was, it was sales, come back in a few years.. lol. Funny now not so then, unlike Suzie Orman I was ‘defeated’ but life worked out, investing became more of a passionate hobby and it all worked out. We were poorish lower middle class too and I think it was a ‘money’ thing too. Oh well enough of me, sorry to go on. B fun to remember things. Lots of great ideas here which are appreciated so much.
Stephen, I do not have factual data at my fingertips but can tell you where to get it. The Center for Research In Security Prices (CRSP) is the go to source for databases of historical stock prices. All serious academic research that I know about uses them as their data source. Academics generally have free access to the data AFAIK. I think their daily data goes back to 1925.
My pure guess is NO, stocks were less volatile in the 1950’s for a very simple reason having to do with market structure. Back then, nearly all issues were traded on the floor of the NYSE or the ASE (America Stock Exchange.) All trades had to physically go through a “specialist” that was assigned to that stock. And he, it was always a he, could decide whether to let the stock trade at price XYZ. If he did not like it, it would not go through. In the cases where something really bad happened to the company, the specialist would halt all trading and negotiate a new price amongst all of the buyers/sellers on the floor. It made for orderly trades, compared to what we see today.
Does not mean that a stock could not have a major move, say due to an unexpected bankruptcy. Just that the “noise” gyrations you see today were filtered out and did NOT occur back then. Today a US stock trade can occur at roughly 50 different places, exchanges, electronic networks etc. Nearly every day I see trades go through and say to myself “never would have happened with a specialist.” Specialists are extinct and you now have “Designated Market Makers” on the floor of the NYSE. The NYSE you see is a just a photo op, and not where most of the actual trading is done. The trades are mostly controlled through a Linux server farm in Mahwah, New Jersey. The specialist function is an algorithmic “matching engine” program that runs on the servers without human intervention.
Dorothy ain’t in Kansas no more. . .
Many thanks for your detailed reply.
When I started trading as a profession in 1998, I was amazed that it wasn’t already completely automated, but I did not start seeing algos jump my orders until 2004 or 2005.
The downside to those algos is difficulty competing in normal markets. Upside is many firms turn those off when markets crash because the risk manager requires it. During the GFR there were many $50k profit days manually trading preferreds of an issuer . I recall throwing around 20,000 share lots of $1 -$3 AIG preferreds and ending with millions of shares traded for the day.
I recall when prop trading desks were shutting down, there were many opportunities I missed merely because I was not automated. For example a 500,000 share sell imbalance at the close in Travelers would barely budge the stock today by a few cents. It might even rally. Back then Travelers fell $9 on the final print and if I had a bid in I’d have made a killing merely by owning it and hedging with SPY
Sorry, I’m reminiscing. I’m here for the preferreds but arbitraging them against each other no longer works in a normal market because they suddenly become hard to borrow and cost a fortune to locate. However, my biggest profit this year was arbitraging the NYCB preferreds against each other and the OTC debt. When NYCB was halted on downticks at 1.75 ish, and preferreds were halted, I was able to short the debt at 89 and cover at 65. That turned out to be a lucky cover. There was a point where the preferreds were out of line with each other.
Doesn’t seem like a ‘losing trader’ to me!
LT, great stories from the GFC! All made possible by the markets dependence on algo traders and algo matching engines. None of that would have been possible if all trades had to go through the specialist. Most investors probably do not understand that the algo programs typically have automatic circuit breakers. The program is simultaneously monitoring many different things. If A or B or C or . . D happens, then either “go flat” which means to close out your position or halt all trades. Then a human has to step in and decide when to restart the algo again. I think the internalizers (Citadel, Virtu, Susquehanna) do it the best. That is why they win about 999 out of 1,000 days. But there are a lot of algo traders out there. I know they are involved in some preferreds/babys with dark orders.
BTW, anybody can play in the sandbox. You can rent a “co-locate” server and run your own algo program on a linux server. Give it a try!