What's in the News:
The last few days have prompted many questions for investors. What happened to solid economic expansion? What happened to improved corporate earnings? What will be the effects of the Fed’s balance sheet reduction? Will the government avoid another shut down?
Inflationary fears are causing a bit of panic in the capital markets, so that could be the short answer; however, it doesn’t fully explain why equities were on such a free fall.
After Friday’s jobs report, many were left wondering whether the labor market is healthy enough to sustain increased wages throughout 2018, and whether that could be a catalyst for an increased pace in interest rate hikes.
Given all the market news over the last few days, the odds of a Fed hike in March did decline slightly. However, the probability of an interest rate hike in March remains high, at 83.5%. All in all, Jerome Powell’s first day as Federal Reserve Chairman was a not a dull one.
What are we thinking?
Income investors have waited a very long time to see yields rise, and have been forced to remain patient throughout this low yielding environment. We continue to see yield opportunities across the investment grade corporate and preferred securities spaces, especially within the hybrid fixed-to-floating rate structures. While the last few days were nail biters for market participants, investment decisions should be led by long term plans and risk tolerance levels. As active managers, we seek to provide value by filtering out the noise, making reasonable and informed decisions, and diversifying in preparation for interest rates to trend higher.
This information is intended solely to report on investment strategies and opportunities identified by Roosevelt. Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument. References to specific securities and their issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations to purchase or sell such securities. Please contact us at 646-452-6700 if there is any change in your financial situation, needs, goals or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions, or if you would like to request a copy of our Code of Ethics. Our current disclosure statement is set forth on our Form ADV Part II, available for your review upon request, and on our website, www.rooseveltinvestments.com.