Markets Gyrate Trying to Figure Out the U.S. Economy

Both stock and bond markets are gyrating up and down today as they try to decifer the meaning of the very strong employment number that was released today.  While we haven’t had time to pick through all the details of the report at first blush it looks like a lot of lousy jobs were created, while the higher paying jobs went south–we will look at the details of the report over the weekend.  

There is nothing that a jobs report will do with our investment strategy at this point in time—shorten durations on fixed income securities, harvest some profits when it seems appropriate, watch for occasional bargains and for the moment avoid REITs (the current weak sector). We do believe that there are some bargains being created out there in REITdom, but we are holding out for a little better deal (as if we can really call bottoms and tops in a sector). The fact remains that a sustainable dividend paying 5.5% is better than one at 5%, so whether we can really pick a bottom in REITs it is better to garner a little higher dividend.

Notice that while interest rates have spiked up quite a bunch preferred stocks and exchange traded debt issues have just drifted a bit lower. This is a reasonable response, but not one we expected.  We anticipated a sharper reaction to the down side–let’s hope reasonable responses continue.