You all know already that the December jobs number came in way hot–I was fearful of that occurring. With an expectation of 155,000 new jobs markets are not taking kindly to 256,000 new jobs. Of course on one hand it is good news–lots of folks should be employed which is always a good thing, but on the other hand interest rates are soaring with the 10 year treasury at 4.77% after trading as high as 4.79% just a bit ago.
For holders of income securities we will see some pain today–but looking at the bright side of things we may be able to maintain short term interest rates at current levels–or even a bit higher, which should bring us continued ‘decent’ rates on money market funds–and maybe CDs.
It is getting closer to a time to do some bargain hunting in perpetual preferreds–I don’t think the time is here–but it is closer. The strong economy and government debt demands are going to keep moving interest rates somewhat higher, but where that exact peak is isn’t known of course. One is going to have to ‘leg in’ to buy some bargains.
Damn Labor!!
Here’ my best tip, if the market moves based on this nonsense then play the opposite side for the correction.
One item of perhaps interest to some (or not) is that the Cleveland Fed did not change( I don’t believe) their inflation forecasts. Maybe they will Monday or maybe those hot employment numbers not affecting their forecasts. Though give little credence overall to forecasts, (and do not invest based on them,) the Cleveland Fed maybe the one exception in terms of accuracy for often seems within the ballpark on numbers and direction.
https://www.clevelandfed.org/indicators-and-data/inflation-nowcasting
The title made me listen to the David Johansen/Buster Poindexter song.
Having lived on the island of Montserrat for 12 years, I respectfully object to labeling “Hot Hot Hot” as a David Johansen/Buster Poindexter song… LOL. It was originally written and recorded in Montserrat in 1982 by Montserrat’s favorite son, the late Alphonsus Cassell aka ARROW. Johansen didn’t even add anything to the song, just essentially copied it, although I suspect our old neighbor, Arrow, didn’t mind all that much as the royalties started pouring in… BTW, rumors were that the song was actually written by Arrow’s brother, Justin, aka “Hero.” https://www.youtube.com/watch?v=ituu4OXUWkA&ab_channel=Arrow%3AKingofSoca-Official
2WR, one of my best friends played bass for Black Sabbath (is an attorney here in South Florida now) and has told me many stories about his party life and how beautiful Montserrat is. They recorded there for almost 2 month in the early 1980’s when the recording studio was one of the best on the planet 🌎. I know you can hike to where it is and the wildlife and Mother Nature have taken this once opulent recording studio over after an earthquake destroyed it. Have you been there?
You mean have I been to Air Studios Montserrat? Sure…. It’s sad that it’s been allowed to deteriorate completely when if nothing else it could be a wonderful tourist attraction… however it’s technically still in the Exclusion Zone, so I supposed understandable, even though nothing’s happened volcano wise for over 15 years now……… We left Montserrat in 2007 after having lived thru the worst of the volcanic times. Despite it all, it was our happy place… I put this tribute together when we left, mostly focused on the beauty as opposed to the volcano…. Thanks be to Arrow for allowing me to use his song, “Montserrat Nice.” https://www.youtube.com/watch?v=lUM-R33fqXY&ab_channel=2whiteroses
https://www.youtube.com/watch?v=v-gvbqAnYXU&ab_channel=2whiteroses might give you a better glimpse of volcano living on Montserrat
https://www.youtube.com/watch?v=77BhKRaJpBA&ab_channel=uthlidian
George Martin talking about his Air Studios Montserrat
Couldn’t help myself, AB, I had to track down more info…. From the sounds of it, Black Sabbath’s time in Montserrat was not a good time for the band. Even who actually played bass on The Eternal Idol lp they recorded was apparently in question… Was it Dave or some guy named Daisley? Obviously you confirm Dave was there and enjoyed the uniqueness of Montserrat, but it sounds like there was a whole lot of negative vibes going on internally while they were there.
https://en.wikipedia.org/wiki/The_Eternal_Idol
“The album sleeve erroneously credits Dave Spitz as bass player: the bass was actually played by Bob Daisley. Eric Singer played the drums, with the percussion credit for Bev Bevan being for a few cymbal overdubs on “Scarlet Pimpernel”.[5]
“The album was originally to be recorded with Spitz and vocalist Ray Gillen. The former was replaced by bassist/lyricist Bob Daisley during initial sessions on Montserrat with producer Jeff Glixman. According to Daisley, Gillen had struggled with the lyrics, and management was not paying him[6] or the rest of the band. Gillen quit shortly after their return to England.[7] Daisley worked on the album as a session player, turning down an offer to join the band as he was already committed to working with Gary Moore….After Daisley’s and Singer’s departure, bassist Dave Spitz returned and drummer Bev Bevan, who had previously been a member of Black Sabbath during mid 1983–early 1984, was hired for a 1987 tour in support of the album; however, soon Bevan backed out on learning that Sabbath had booked dates in South Africa during the apartheid crisis.”
You have the story exactly right; Dave “The Beast” Spitz is my good friend as well as an incredibly talented and humble guy. When I’m in town I go to his band practice sessions and after we are out breaking bread together. Jeff Glixman (also a good guy) brought Dave into Black Sabbath and Dave has been in a host of great bands https://dbpedia.org/page/Dave_Spitz Dave always has amazing stories and since we both went to law school (Dave is a practicing attorney in South Florida), we always have deep conversations. I’ve told him he needs to go back to Montserrat as it was such a meaningful part of his journey. Anyway, excellent sleuthing my friend and I hope you are well ⭐️
It’s amazing to know how many high powered rock musicians whom Sir George induced to record in Montserrat were touched by the experience. What made and makes it different from other places is that NOBODY receives star treatment by Montserratians. They’re treated like regular people no matter who they are. Most loved the opportunity to be normal again for their time there but there were some who were put off by the lack of unearned adoration like they were so used to receiving everywhere else
2WR, because of my professional life I am fortunate to have forged close relationships with so many professional athletes, incredibly wealthy individuals and people that are covered by the media. MOST are just so kind, easy going and very different from their public persona and certainly are not pretentious or self important. When I had my investment radio show, I would invite many of these people to be guests and they were all so generous with their time and energy. I have been skiing in Vail/Breckenridge the last week when I ran into one of my old clients and we talked for almost 2 hours about the world and the markets; at least most know how much I still care about them and think of them. I am thankfully leaving in one piece for home in Florida tomorrow and my dance card will be full again.
The accumulation of debts is a most fearful evil.”
– Thomas Jefferson, 1787
I am Azure
Totally cool. Thanks for the inside baseball share !
LOL 2WR this is what came to mind after hanging around with the grandkids.
https://www.youtube.com/watch?v=5vq704UcEPE&t=66s
ay, que rico!
This is just utter nonsense. Even if the newly added 256k jobs is accurate (no comment), then compared to total population you’re talking about 0.000775757575758 or seven tenths of one percent. Just an incredibly small number. Yet markets react like it was 2MM jobs created or something. Sorry, just a rant at how the day-to-day reactions sometimes make no sense. Yeh, sure, no more rate cuts, but why they heck were they cutting in the first place???
*** I’m sorry, should be seven one-hundreths of one percent.
Bought a bit more of HBANL @ 25.02 and MS-F @25.11. Both paying around 6.8%. I was looking for a CD or IG bond, but the best I could find without going out to infinity was a new issue BA bond at 5% although it does pay quarterly it can be called in 6 months, too low for me anyway.
I have actually been investing with a 4.50-5.00% 10Y in mind. It’s funny how we forget the old days of 5% Passbook Savings accounts! Things can be just fine with a 4-5% 10Y I think – pain happens if it goes too much higher than that. My only move today was taking some cash and buying the new ARCC 5.8% coupon 2032 bond (S&P BBB). Got it for 98.01 some something akin to 6.13% YTM.
I used to like the long bond at 5% too, but lately I’ve decided it’s just too risky. The Fed started buying the long end heavily in 2008 “articifically” suppressing the rate. Even now, while claiming QT they are still buying the long end (albeit in smaller doses.) Should the FED decide to sell those rates will rise rapidly.
I am skeptical about the employment numbers. I am waiting to see how much it gets revised down next month.
Not to get political, but we have seen jobs data come out time after time from the current administration that are later revised way down. It wouldn’t surprise me if this is the “last hurrah” to give the outgoing party the ability to claim as we go into the next election cycle that they had “big job numbers at the end of our administration”.
That doesn’t mean the stock market won’t react to these numbers, but it doesn’t make them reliable…
Those numbers don’t mean much to me, Often manipulated for show, and if they are real they tell you what happened in the past the insiders already know and frontrun the retail investors who overreact to daily news blurbs. That’s my admittedly cynical view.
Absolutely correct. These numbers create news/noise but then are significantly revised sometimes massively. I have given up trying to predict interest rate movements, absent the Fed indicating significant moves themselves. As aside, wonder how many will lose jobs alone due to the fires in CA? But will look as some bonds, make whole call, today. Usually there too, intent is to buy until matures, so absent default I know my return.
Predicting future interest rates or short to mid term broad equity moves imo foolish endeavors and harmful to the prudent investor. Just my 2 cents. Am a Boglehead who likes individual bonds and preferreds, some BDCs. Boring is a good thing.
Martin, if you’re cynical you have a lot of company. I feel the same way when I see movement of a stock before market open the next day.
Private,
It’s not political. Just the Government making the same mistakes. Always in the same direction.
Agree. Do we really think this is a “double top” in 10Y yields or is more pain ahead Our politically driven FED threw gas on the fire by cutting rates before the election. What is really driving long term yields up is lack of confidence we can manage our way out of this mess. A new high in 10Y yields, maybe a scary one, is the only thing that’s going to get this government to do the right thing. That is when we will find bargains in fixed income.
There are 2 yr 4.75% JP Morgan Chase CDs listed at E-Trade. Don’t have to think too much about those.
I bet that this CD is callable….better check
It is, but its not really a concern as I don’t mind flipping every 6 months. No real risk we are seeing lower rates anytime soon.
Unless inflation spikes to 8% again…
Well then my money that I use to buy 30 day securities will buy those 8%ers then 🙂
Laddering, calendar, and timeframes are always important with income investing. Never all in.
For almost nearly coming back to where we were in 2023, I haven’t seen the screaming hot deals yet.
5Yr Tsy flashback … Oct / Nov 2023 = 4.85% + –
……………………….. Apr / May 2024 = 4.70% + –
Jan 10 2025 ( 10am EST ) ….. = 4.55%
legend.vs—many (most) of the perpetuals I was selling a few months ago are down at least 4% and some 10%—before today. Maybe not the best bargains we are going to see, but certainly much better. My ‘relative’ values show preferreds and baby bonds to still be overvalued compared to late 2023.