Most economic indicators are bearish in early 2023: manufacturing and corporate profits are declining and technology companies are laying off workers, observes Mark Skousen, editor of Forecasts & Strategies.
Gross output is still positive, but declining, portending a drop in real gross domestic product (GDP). The interest rate yield curve is negative, with short-term rates climbing to 4.7%.
While the 10-year Treasury rate declined to 3.4% after the government announced that December inflation rose a more modest 6.5% on an annualized basis. In most cases, whenever there’s a negative yield curve, a recession lurks not far behind.
Despite evidence that price inflation is cooling, the Fed is famous for overdoing it, both when fighting recession by adopting easy money for too long, and then fighting inflation by sending rates too high. According to Chairman Jay Powell, the Fed plans to continue raising interest rates for a while, further weakening the economy.
We continue to recommend a conservative and well-diversified portfolio of solid stocks and funds, most of which pay high, dependable dividends. Investors are finally catching on to Main Street Capital (MAIN), the Houston-based private investment firm.
Zack Research raised MAIN to a #1 buy in late December. Last month, CEO Dwayne Hyzak announced record profits in the fourth quarter and another bonus dividend this spring.
He stated that MAIN recorded “another quarterly and annual record for distributable net investment income per share. Our quarterly distributable net investment income exceeded $1 per share for the first time and exceeded the monthly dividends paid to our shareholders by over 56% for the quarter and over 33% for the year.”
He also announced that their performance was so good that MAIN — yielding 6.8% — will pay another supplemental distribution in the first quarter in addition to the company’s regular monthly dividends. MAIN has already paid out its first dividend. This marked an increase in its monthly dividend to 22.5 cents per share.