Waiting for GDP and the FOMC
By: Tim McPartland,
With stocks trading right at all time highs we are waiting for the next bit of news that will smack stocks down or drive them higher. Certainly we are in a week which has the potential to set a new tone–for better or worse.
Tomorrow the FOMC meeting starts and wraps up midday Wednesday. Of course the only thing to watch is what the statement is that is released Wednesday afternoon—as if it really mattered. At the last meeting the statement came out and was perceived as a bit harsh–so of course Yellen turns around and ‘softens’ the tone (God forbid she let her own words stand for a full day) the next day. We now believe that short of a severely bearish economic stretch in the next few months rates are going up this year–the FED has kind of backed themselves into a corner and come hell or high water rates are moving higher.
On Wednesday we have the release of the first read on 1st quarter GDP. The smart people are looking for a soft number of around 1/2%, which is certainly very soft. The same smart people are saying GDP will bounce back in the 2nd quarter–well we shall see. We don’t have too much faith in predictions by clowns and thieves each of who has some sort of vested interest in whatever their forecasts are–or at least a need to feed their egos on CNBC.
Regardless of what happens with the FOMC and with GDP for the 1st quarter we are situated in such a way as to have a small level of defensiveness in the portfolio. Keeping maturities short on debt issues (or Term preferreds) and balancing the holdings in what we believe is a manner that limits downside and yet gives exposure to potential upside is all one can do–without some level of risk there is simply no possible reward.
Currently our 2015 Blended Income Portfolio is up nicely by 4.04% at todays close (against our annual 7% goal). Recent highlights were some sharp upward movements in our Canadian issues as the dollar weakened and last week a nice bump in B&G Foods (ticker:BGS) as they reported higher than expected earnings. Our common shares in general have been strong in the last week and further validate a diversified sector portfolio, although our common shares remain underwater.
At this moment we are not contemplating purchases or sales this week, although we sold REIT Store Capital (ticker:STOR) a few weeks back simply to ‘harvest’ profits and we mentioned we would be looking to buy it back at a lower price and it closed at $21.79 today (we harvested profits at $23.25). Another dollar lower and we would buy shares.