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Please Watch My New YouTube Video: You Can Get 5% in a CD
This week’s Trend of the Week is: You Can Get 5% in a CD. Thank you, Jerome Powell and the Federal Reserve. Recently we’ve seen a huge rally in short-term yields. Right now, you can get a 5% CD from Capital One with a $0 minimum. As far as money market accounts go, you can get one from CFG Community Bank at 4.45% with a $1,000 minimum. For a fund, PIMCO Enhanced Short Maturity Active Exchange (NYSEARCA: MINT) is an actively managed fund that shifts among Treasury and corporate bonds and some other income assets, and currently, you could get more than 4.5%. One thing to think about in this environment is whether or not you want to hold a fund or buy bonds from TreasuryDirect, knowing that the debt ceiling crisis could cause Treasury prices to go down. If the Treasury prices do go down, bond funds will get hurt. You’ll be better off holding a Treasury bond to maturity. My suggestion is to buy the Treasury, if it rallies, you can sell, otherwise, keep it and get a guaranteed yield. For more on this, go to JubakPicks.com or JubakAM.com to find a complete, in-depth look at all these options.
The best way to get a 5% yield–my choices and their pluses and minuses
Remember the good ol’ days when Treasuries paid 0% or so and you had to give a bank your toaster to open an account, paying 0.01%? Right now you can find a CD paying 5%–and it doesn’t require locking up your money until the sun goes super-nova either.
Today, the 12-month Treasury closed with a yield of 4.99%. And the 6-month bill paid an even higher 5.02? You can find a bond ETF with an SEC yield of 4.63%. And even a money market fund paying 4.45%. What’s the case for stashing some of your cash in something “safe” as the stock market looks like it’s about to go into one of its periods of volatility? And what’s the best choice when you’ve suddenly got so many vehicles offering to pay you 5% or so? In today’s post, I’ll sketch out the pluses and minuses of these alternatives.
Just as Wall Street starts to get comfortable with more 25 basis-point interest rate increases, some on the Fed start talking about a return to 50
The comments come from two of the Federal Reserve’s most hawkish members on the need for higher interest rates to combat inflation, so the remarks aren’t exactly a surprise. Nonetheless, the language does push the envelope on thinking about where the Fed’s interest rate peak for this cycle of interest rate increases might be.
More on Wall Street see a Federal Reserve interest rate increase in June
Economists at Bank of America and Goldman Sachs now see the Federal Reserve extending its interest-rate increases through the June Fed meeting.
Is soaring credit card debt and rising defaults a threat to the consumer economy?
In the fourth quarter of 2022 credit card balances rose to a record high of $986 billion. The $61 billion increase from the third quarter was the biggest in data going back to 1999. The increase pushed Americans’ total credit card debt past the previous high of $927 billion, which was set in the fourth quarter of 2019, according to the New York Fed’s Household Debt and Credit Report. And it’s not just rising balances. Borrowers are missing payments too and delinquency rates have passed pre-pandemic norms.
Special Report: 7 AI Stocks to Own Now will go up on Monday
Sorry for the delay on my Special Report: “7 AI stocks to Own Now.” The Special Report will be posted Monday
Please Watch My New YouTube Video: Sell! Time to Take Some Rally Profits
Today’s topic is: Sell! Time to Take Some Rally Profits. Wednesday’s rally had all the earmarks of a blow-out-the-top rally. Though it wasn’t a huge jump, the markets went up on a goldilocks reaction to stronger-than-expected retail sales for January. The S&P was up 0.28% and the NASDAQ Composite was up 0.92%. The interesting part of this jump is the stocks that saw the big action – not Microsoft, Amazon, or some of the big stocks, but some more speculative things. One of them was Quantumscape Corporation (NYSE: QS), a tech company that is in the process of creating a solid-state lithium battery- though it’s not expected until 2025. They reported losing less money than they expected, and their stock shot up 32% in one day. Wayfair (NYSE: W) is up in the last month by about 58% and was up 10.4% yesterday. These are both examples of a big jump in 2023 and an even bigger jump on a blow-out day. These kinds of numbers are not sustainable, especially with more interest rate hikes from the Fed on the way and an impending debt ceiling crisis. This really is not likely to last too long. If you want to learn more about what I’m selling now, you can go to my latest post on JubakPicks.com and JubakAM.com for a detailed breakdown of what I’m selling and why.
Wednesday’s rally in the market’s most speculative stocks is the last straw for me: I said I’d be a seller into any post-Fed rally–but what specifically would I be selling? Here are the 12 stocks I’d sell now
The rally on February 15 sure looked like a speculative blowout of the kind that often signals a market top. For me, it was the last straw and I’m selling into the rally. This post tells you what I’m selling and how I arrived at these decisions. But first, a few words on Wednesday’s move.
CBO says federal government could default as early as July
The nonpartisan Congressional Budget Office warned, today, that the federal government would be at risk of a default as soon as July if lawmakers fail to raise the debt limit. The Treasury Department is currently using accounting gimmicks to keep paying federal obligations, after hitting the statutory debt ceiling last month. Treasury Secretary Janet Yellen signaled last month that those measures would enable Treasury to keep paying the government’s bills at least until early June. Today’s CBO estimate is, thus, an updated timeline.
More evidence of a strong economy in latest retail sales report–I’m sure the Fed is paying attention
U.S. retail sales in January jumped by 3% in January from December, the Commerce Department reported today, February 15. Economists surveyed by Bloomberg had expected a 2% increase. Retail sales had dropped in December and November. Together with the strong job gains in January, this data point reduces the likelihood of a recession in 2023 and increases the odds that the Federal Reserve will continue to raise interest rates after its May 2 meeting.
Higher and longer creeps further into Wall Street thinking
Stocks didn’t move much today after the Consumer Price Index for January showed enough inflation strength to bring Federal Reserve officials out in force to talk about a potential need to raise interest rates above current financial market expectations. But other indicators–the CME FedWatch Tool, most obviously–showed that investors and traders continue to reposition for more interest rate increases beyond the Fed’s May 3 meeting.
Fed quick out of the blocks after today’s CPI inflation report: Higher interest rates may be needed
The pixels weren’t even dry on this morning’s CPI inflation report–6.4% year over year, a 10 basis point drop from December, but a 0.5% month-to-month increase from December–before Federal Reserve officials were out talking up the idea that the Fed will have to raise interest rates more to bring inflation down to its 2% target.
Year-over-year inflation rate drops again, but month-to-month rate shows increase
On a year-over-year basis headline CPI inflation fell in January. Data released by the Bureau of Labor Statistics this morning, February 14, showed all-in prices rose 6.4% in January 2023 from January 2022. That was a slight drop from the 6.5% year-over-year rate measured in December. (Remember the inflation rate peaked at 9.1% in the summer of 2022.) But on a month-to-month basis, January prices rose 0.5% from December.
Please Watch My New YouTube Video: 6% Is Coming
Today I posted my two-hundred-and-thirty-sixth YouTube video: 6% Is Coming This week’s Trend of the Week is: 6% is Coming. This song lyric keeps playing in my head: “They laughed at Christopher Columbus when he said the world was round.” I’ve maintained that peak interest rates from the Fed will be 6% and I’ve gotten blowback from people saying, “No way! We’ll barely get to 5%.” I’m sticking with 6% and I also think we’ll get more rate increases than the market was expecting. Keeping this in mind, I’m looking at the best time to buy Treasuries and setting some parameters. The yield on the 10-year treasury on February 7 was 3.63%. I won’t wait until 6% from the Fed, but I will wait until the yield reaches 4.25% for the 10-year Treasury. I’m looking for that yield sometime in late 2023. Buy at Treasuries at that 4.25% for the 10-year Treasury and watch that 6% peak rate from the Fed. The world is round.
Here’s the latest Wall Street consensus on tomorrow’s CPI inflation report
The consensus is that the headline all-in year-over-year inflation rate will come in at 6.2% for January when the Bureau of Labor Statistics reports the numbers before the New York market open tomorrow February 14. That would be down from an annual 6.5% rate in DecemberGood news for investors and traders hoping that the Fed will end its current cycle of interest rate increase soon (June or July) and with a peak rate of 5.2% or less. The worry remains the month-to-month move in inflation with the consensus looking for a 0.4% increase in the CPI inflation rate in January from December.
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