November 2022 Commentary is now available Thanks for the kind words. I think the guys did some exceptional work. Devesh's story struck me as timely, well-researched and important.
I've received two or three requests to write about particular funds in the month ahead, including Frank Value and Schwartz Value. I'm spend some time seeing what the guys are up to.
CNBC asked me about the success of a particular fund in 2022. I think the best answer might have been to send them the
Visual Capitalist moving graphic on S&P500 sector performance. The same chart answers the question, "why has my ESG lagged so badly?"
Uhhh ... "Exxon." The lifting price of oil in the US (the out-of-the-ground price) is in
the neighborhood of $30/barrel. If the price of oil at auction is $40, they make $10/barrel. If it's $100 (around the current price), they make $70/barrel without any additional cost or effort to them. That's reflected in the $7 billion/month profit in Q# 2022.
The Saudis pay something in the $2-
5/barrel range.
My answer to them was "own oil, make huge gains this year ... which tells you precisely nothing about next year." Exxon's 10-year returns exactly match RiverPark Short-Term High Yield's: 2.6%.
Bloomberg Real Yield Nov. 4 edition
here. Participants agree on
5% Fed rate peak; no HY default spike in sight; looking for another bump up in HY spreads but disagreement on the level; IG debt is interesting at this level; soft landing still possible, but policy lag creates unknowns.
Sound's dead from ~ 3m-
5m. Not fatal for the show.
P.S. The week ahead: mucho Fedspeak, latest inflation figure Thursday, U Mich consumer sentiment Friday. Oh yeah, the end of the election too.
Wealthtrack - Weekly Investment Show Nov. 4, 2022.
PSTL shareholders diluted. stinky poopy. Noted on the TRP website today, after log-in:Postal Realty Trust - Entered Into Open Market Sale Agreements Providing For Offer, Sale Of Class A Common Shares Of Up To $
50 Million From Time To Time
Nov 4 (Reuters) - Postal Realty Trust Inc:
* POSTAL REALTY TRUST - ENTERED INTO OPEN MARKET SALE AGREEMENTS PROVIDING FOR OFFER, SALE OF CLASS A COMMON SHARES OF UP TO $
50 MILLION FROM TIME TO TIME Source text for Eikon: [ID:
https://bit.ly/3DtzNmg] Further company coverage:
Steady rising yields in CDs and treasuries Sven: "Pimco bond funds have a considerable outflow, billions !"
Yes, and I was one of the sellers; got rid of my last shares of a Pimco bond fund on January 25. That move didn't mean I'd never buy into one again, under different circumstances. Lately my FI focus has been on a T-bill ladder and a couple of inverse etf's.
Steady rising yields in CDs and treasuries @JD_co, if the Fed stays the course as they planned, the terminal rate will be
5.2
5 -
5.
50% ! And that is just one scenario. The other scenario is recession hits in 2023, unemployment rises, price falls and labor cost eases, the Fed may pause and cut rate to help the economy. At that point, bonds will likely to do well. This happened during the GFC and tech bubble.
The other question on individual agency and corporate bonds is beyond my competence. However, I would stay away from
callable long term bonds. They can easily call back these bonds when the rate drops. I only buy bonds with call protection.
@Old_Joe’s and
@yogibb’s posts above are really great advices.
Steady rising yields in CDs and treasuries "
Fido is offering a 5.50% 15 year (Callable) CD - Jonesboro State Bank"@JD_co -
In my opinion this is a sucker play. Jonesboro is simply betting that sometime in the next 1
5 years the going rates will be lower than they are now, at which time they will call, leaving the buyer of the CD out in the cold at that point. Stay away from long-term
callable CDs or bonds.
Steady rising yields in CDs and treasuries If one sat on a bunch of cash through the current hot mess and is looking for a great yield, the very much reduced bond fund share prices offer a good entry point, these days. I bought-into junk bonds TUHYX too soon. But as time goes by, the profit rises from month to month as dividends serve to buy new shares at a lower cost.
Step back and look at the Big Picture, and you must admit that OJ is 100% correct. And re: Treasuries? After some of the nightmare difficulties and snafus I've read about right here at MFO about people trying to buy through the gov't website leaves me deciding not to do it on my own. Let uncle David Giroux buy my Treasuries for me.
2022 is a unique year, with QT and rising rates. But remember that the QE and depressed interest rates were a very unusual period of time. We are having a snap-back reaction at the moment, eh? My credit union just emailed an offer for a 30-month CD at 3.25% with a $5k minimum. No thanks. The dividends alone on my junk bond fund is getting me better results than MOST of my stock funds these days.
Inflation will be sticky. Seems to me we are living through a ratcheted-up New Normal. Raising interest rates is like pushing on a string to move it where you want it to go. The old metaphor.
(Meanwhile, my single-stocks are treating me very well. Maybe I didn't screw-up, this time, with my selections. I'm approaching a level where I will have made up for last year's loss.)
I'm still 25 bonds and 9 foreign stocks and 62 domestic stocks. And 2 cash. Adding small bits to a small stable of single-stocks as I'm able, lately.
Steady rising yields in CDs and treasuries Additionally, the Fed is planning to raise rate until mid 2023.
If the Fed raises at their next 4 meetings...say
50 bp (Dec 14),
50 bp (Feb 1), 2
5 bp (Mar 16), 2
5 bp (May 4).... and are finished at the beginning of May, that is 6 months from now.
But as those increases diminish, could bonds rally in 2Q?
Steady rising yields in CDs and treasuries New agency bond issues at Fido - Federal Home Loans Bank Bonds with maturities of 10 (6.41%) and 12 years (6.61%).
Federal Farm CR Bank Bond will have a coupon rate at 6.98% for a longer dated 15 year.
Would anybody consider these good investments? None are call protected.
Moodys (AAA) and S&P (AA+) have them rated highly, but if we go through another housing bust/hard landing recession, do you still want these? Their yields are attractive, but is it worth dabbling?
Steady rising yields in CDs and treasuries Majority of bond funds are down 15%, and the Fed is far from done with raising rate. This also spills over into traditional balanced funds and they sustained double digit loss.
Bank loan funds have the least amount of loss, -3% YTD. That is helping PRWCX, but Giroux now invest 10% in treasury. I considered that is a defensive move. During March 2020 pandemic, bank loan funds fell too until Powell cut rate to near zero. They bounced back ok. During stress time, things can fall at the same time. CDs and short term treasuries held up ok but they paid little at that time.
Right now, buying CD and treasury ladders is unlikely to loss like typical bond funds today, while you can get a respectable return with 4-5% yield.
Steady rising yields in CDs and treasuries Fido is offering a 5.50% 15 year (Callable) CD - Jonesboro State Bank.
The highest Non-callable CD Fido offers at the moment is 5.0% from Capital One. Its a 5 yr CD.
Note: These are New issue only, not secondary market CD offerings.
