- Citi indicated that the amount of cash state and local government bondholders would receive from principal and interest payments in May will exceed the volume of new debt sales by about $9.50B next month. With demand being lackluster over the last few months, some think this will turn around for next month; we shall see. Fund outflows continue to be on the decline, $4.8B, $3.8B, and now $2.9B this week; we will need this to "slow down" to have order in our markets.
- The U.S. has become the world's "safe haven" after Russia invaded Ukraine and the continuing war. The U.S. dollar (USD) has appreciated substantially since then, and its appreciation has accelerated even more rapidly over the past couple of weeks.
- Economic data and surveys released this week showed an expanding U.S. economy in general, but perhaps with somewhat slowing growth. The negative Q1 U.S. actual GDP headline obscures the strong U.S. demand for goods and services. Future outlooks were often uncertain and even sometimes pessimistic.
- There were many positive and negative surprises in this week's earnings releases. As expected, management's guidance of future results and discussions of profit margins proved to be determinative and the stock trading reactions were somewhat unpredictable.
- In my opinion, many investors have become "comfortably numb" based on the likelihood of a recession coming, supply chain issues, and high inflation numbers. This week, the FED meeting will be an indicator, not so much "how much" the rates will move, but the language in which the FED will speak based on this move and future moves. Powell's overall thoughts are 2%. This target will be nearly impossible to reach without a big recession which I do not believe will happen. However, as we see a 200 to 250 bps move this year in Fed Funds, I think you will see the CPI come down to around 5%.
605-B Park Grove
Katy, TX 77450
This report has no regard to the specific investment objectives, financial situation, or particular needs of any specific recipient. This report is based on information obtained from sources believed to be reliable, but no independent verification has been made, nor is its accuracy or completeness guaranteed. This report is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Opinions expressed herein are subject to change without notice. The division, group, subsidiary, or affiliate of NewEdge Securities, Inc., is under no obligation to update or keep the information current. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. NewEdge Securities, Inc. accepts no liability for any loss or damage of any kind arising out of the use of this report. Please contact your tax advisor regarding the suitability of tax-exempt investments in your portfolio. Income from municipals may be subject to state and local taxes and the Alternative Minimum Tax. Corporate and Municipal securities are subject to gains/losses based on the level of interest rates, market conditions, and credit quality of the issuer. As with any security, there is an inherent market risk possibility as to principal if the security is not held to maturity. The non-rated bonds (NR) should be considered for investment by knowledgeable and sophisticated investors. Additional information will be made available upon request.
Securities are offered through NewEdge Securities, Inc., a registered Broker-Dealer, Member FINRA/SIPC.
The DRL Group is not a registered entity or a subsidiary or control affiliate of NewEdge Securities, Inc.
Bonds are subject to market and interest rate risk if sold prior to maturity. Prices and availability may change at any time without notice. Insured bonds are subject to the claims-paying ability of the insurance company.
Reminder: E-mail sent through the Internet is not secure. Do not use e-mail to send us confidential information such as credit card numbers, change of address, PIN numbers, passwords, or other important information. Do not e-mail orders to buy or sell securities, transfer funds, or send time-sensitive instructions. We will not accept such orders or instructions. This e-mail is not an official trade confirmation for transactions executed for your account. Your e-mail message is not private in that it is subject to review by the firm, its officers, agents, and employees. Unless expressly stated in this e-mail, nothing in this message should be construed as a digital or electronic signature.