A Few Random Thoughts

Yikes–Fed Ex is getting crushed today after missing their revenue and earnings mark yesterday by a mile. Fed Ex is one of those ‘canary in a coal mine’ companies and this is not good news for the economy in general–not that I really need further data on the current (or future) recession. While economic data has held up I suspect we will see some really poor data soon with mortgage rates over 6%–the refi piggy bank has dried up mostly (home equity loans are alive and well though) and higher interest rates and inflation are crushing the middle and low class.

I see folks with too much time on their hands are lining up to purchase the new Apple phones and watches–certainly I won’t be one of them. I love Apple products–I wear a Apple watch and use an iPhone. I am always many models behind the latest and greatest phones. My wife is more willing to pay up for the newest phone (we always pay cash for them–no buy now pay later crap for us) and I will admit the cameras are very high quality on the newer phones, but to pay over $1000–not me.

Time fly’s when you are having fun and already we are at the time for the FOMC meeting starting on Tuesday with the Powell news conference Wednesday. A 75 basis point hike is in the cards with a 100 basis point hike possible, although I don’t think likely. Interestingly we have numerous housing numbers being released Monday, Tuesday and Wednesday. The home builders index, existing home sales, buildings permits and housing starts all to be released before the interest rate hikes–will be interesting to see what these stats are telegraphing.

Well the S&P500 futures are off by almost 1% right now as the sour mood of the equities markets continues. The 10 year treasury is hanging in there at around 3.46%, although with QT starting in earnest this month there will be upward pressure.

37 thoughts on “A Few Random Thoughts”

  1. I took a 30 year refi out on my house at 80% of equity last year at 3.00% – lots of cash-out. It’s my only “debt” now though I could pay it off at any time, I like the use of the cheap money. My mortgage is less than $1200/month on a 3000 sq ft house…way cheaper than rent, even. With mortgage rates in the low 6s now, I feel good about it.

  2. Yeah – I was lucky – I put a stink bid to sell the 9/16 FDX $150 put for $1.71 and it hit at the open – covered it later in the day at $0.05. I also bought UPS at $175 as it was down on sympathy but I view it as much stronger than FDX.

  3. Any Dish subscribers here?

    Dish recently took over Republic Wireless, a service I’ve happily used for years. If you are a Dish user or legacy RW user, they are offering massive discounts on IOS and Android phones and a variety of 5.0 service. If you’re eligible, you might want to check them out. Huge savings compared to elsewhere.

    JMO

    1. Camroc, what is the coverage? I think I heard more and more cable operators are getting into cell service.
      In Northern cal Comcast is the major provider. Sill like ATT I can stand right next to my boss who has VZ in a metal building filled with Lead and get a signal and he has to walk outside.

  4. Tim..Just one thought about paying cash, no more buy now pay later. I try to use a 2% cash back credit card when possible. Fidelity has one with no annual fee. I keep a month or two’s cash in the cash part of what is mostly a brokerage account, and use auto withdrawl, although with money rates up some now, I suppose you could max your returns by moving your cash in to cover the card on a more “just in time” basis. While hardly life changing, a 2% discount on most purchases helps a bit.

    1. I have the Citi card and charge EVERYTHING I can on it, pay it off every month, wash, rinse, repeat. I get enough cash back every year to pay my electric bill! And my interest charges over the past 10 years on them? $0.00. Some other poor slob is paying it I guess.

  5. At $300-$400 the entire line of Samsung Galaxy Cell Phones are good enough for me. And though I use an iPad, iPod and Macbook Air I have to say that the Google Play Store is every bit as comprehensive in terms of apps as the Apple app store. I sure wish you could buy Samsung bonds and stock in the US.
    Back to Fedex….and I speak from experience. They have absolutely the worst international Customs Clearance process and people in every country I’ve ever tried them. I use DHL for everything now.
    Back to yield verses risk. Just bought some 4.25% State Bank of India 5 year non-callable FDIC insured CDs. I never thought I’d live long enough to see a 5% CD again. But if inflation is as persistent and as I hope. That too might come to pass.
    And KEY-PL with their 6.2% coupon has been trading at $24.86 randomly during the day before bumping back up to par

    1. Yes, much better rates in short time period. I bought more government agency FHLB 4.5% 8/16/27 bonds in my Schwab IRA. They are however callable with 5 days notice, fat chance of that anytime soon. The CD rates are a lot better, but I am keeping back some dry powder to see where things are after next weeks rate hike, 5% for 3 years out in an American bank is what I am hoping for.

      1. Hi Bill….I’ve recently picked up a few Federal Farm Credit Bonds all of which are callable. I’m really trying to avoid anything that is callable between now and 2027 which I believe could be another disastrous period of zero percent interest rates. Though I agree that nothing right now in the 4-5% range will probably be called through 2024.
        I’ve asked around for opinions on whether FHLB and FFCBs are less likely to be called then CDs or Corporate Bonds. Nobody has a definitive answer. Do you have any history or thoughts on that?

  6. Thanks to a couple recent posts by Tim, I picked up CUBI-F and NI-B both a squeak over par – CUBI for the reset rate and NI for increased exposure into utilities (I’ve found it challenging to get quality utilities this far over 6% yield; others might have better insight here).

    Many of us have probably traded CUBI over and over during the past years – since the market drop I wanted to hold off to get some assurance their BTC endeavors didn’t substantially impact their bottom line.

    Despite the persuasive market pessimism I’m feeling more comfortable picking up a few non-IG issues. Also picked up SI @ 8.15% which is my only BTC exposure outside occasional OTM puts on COIN.

    Re: Apple, read an article today that it has surpassed TSLA as the most shorted stock (total short value; not as a percent of outstanding if I remember correctly).

    1. NI-B has a nice feature the reset rate goes up 1% every time. So it’s more like a term bond yet remains QDI.
      i have Si-A sitting on a loss. Crypto panic may be overdone. And when banks die they often get acquired by other banks. I’ll keep the risk for 8%.
      Overloaded in CUBI-F I just don’t see much downside risk, easy to get out of when I want something else.

      1. The trouble with the NI-B step up is it doesnt start until 2044. There is a serious statistical chance I will be dead before then. If one has the cajoles they can call in to bond desk the Series A $1000 preferred. It resets next year for first time. Unfortunately with about a 2.8% spread plus 5 year. Its trading around $93. Its step up date is 2043 so not much better there either.

  7. Well I got off my rear and starting nibbling high IG “reasonable” deals. Bought some PRH and NRUC. This time around I am not looking to get every single bit of rate I can squeeze out of a baby bond. I want BBB+ and up right now with a decent yield compared to the recent past. I want some quality in the portfolio. I do not want, to one day, scan my list of securities in an account and ask myself what was I thinking buying so much junk if one or more stop paying.

    With that said I am also trying to diversify. No more banks, CEFs, mreits, etc.. for now. I get the feeling the time to buy will be over the next 6 months.

    1. fc, I decided to start building cash, maybe a little late. I have a confession to make, I bailed out of III lifeboat I was in here with other investors on AGNCL I made pennies not nickles.
      The more I thought about it after reading CWM article and my prior experiences with the building trades I think we are in for some more pain in the share price and the economy. As CWM said, the folks who run AGNC must be pretty smart. They floated a new preferred and raked in millions in cash, took the book makers to the cleaners and I wouldn’t be surprised if they sit on that cash and don’t do a partial recall of AGNCN like people expect thereby causing support for it to crash along with the other preferred. As for the bookmakers I suspect its the young inexperienced running the show as all the old bankers retired here to III

  8. To BNJ’s point, there are, and have been, other things at play with Fedex for a long time. I feel like I have seen an annual headline about them for the past 5 – 6 years now…

  9. Worth noting the utility of a smart phone given average daily usage makes almost any eye-popping capital cost negligible…just sayin’

    1. True comfessions.I’ve never owned an iphone. Haven’t missed anything until recently, now people and businesses just assume everybody has one.

      1. This is true of all cellphones that every institution assumes that everyone has one and everyone wants their life to be on their cellphone attached to their hip. Yes I have a cellphone but it’s primarily for emergency use and I purposely do not want personal financial info etc on it… And how in the world is it logical for anyone to want to voluntarily watch a movie or any video on a phone? And how do you use one in broad daylight anyway? Sure I get its necessary these days if you’re a working man but for me, I’m not important enough to have to be reached while I’m outside pulling weeds… My cell is essentially a pay as you go burner phone by Tracfone and it’s got to be 3 years old now or more…. and we still use a landline in the house. Haul me off to the antiquity graveyard.

      2. I had the opportunity to use both apple and android at the same time for several years.
        A company I worked with insisted that I carry their corporate Iphone. I also had my personal Android phone (I didn’t want my personal data on their phone). I really disliked the apple and won’t own another. I know people who love them, but not me.

        That said, I don’t do any financial business on my phone (no banking or brokerage, no venmo or paypal). I do not to trust them. Unfortunately, I have worked with enough security operations….

        I upgrade my android phone about every 3-4 years. I just moved to a Pixel 6a for about $250 – most I have ever paid for a phone.

        I found an interesting opportunity to donate my old phone. My daughter works with a group for families with kids who use smart meters/pump devices for type 1 diabetes. They can use certain models of android and apple phones to link their devices so parents can monitor the devices remotely through an app on the phone (like when kids are at school) and the devices can “call home” if they detect a problem. Gives the kids a lot of independence.

        1. That’s probably another interesting discussion, Private, though maybe not for here – Apple vs Android and Apple IOS vs MSFT Windows….. A friend of mine gave me my choice of Apple computers to buy so I could help him learn his Mac desktop….. I chose a MacBook I think… I hated it…. Sure, it’s got that aura around it that’s supposed to suck everyone in like lemmings just because it’s Apple, but for me, since it doesn’t seem to come with any written manual and you’re supposed to learn how to use it by using your magical social media skills to interact with other Applers, I found myself using my Windows machine to google how to do on an Apple what I already knew how to do on Windows. It seemed so pointless I ended donating the Mac to charity with the giver’s permission.

          1. After ~40+ years on Windows, I’d finally had enough of their crap and switched to a mini Mac M1 a year or so ago. Yes, there was a learning curve. And I’m still learning. But I’ve bookmarked helpful sites and answers as I’ve gone along.

            Wish I’d switched over a lot sooner. The only snag is Quicken, which is not nearly as flexible as the Windows version. So be it. I’ve worked around that problem.

            Happy as a hog in a tater field. To each his own.

            JMO

          2. 2WR I went with a Chrome book last 2 laptops I have bought. Maybe a mis-placed trust in the automatic security upgrades and I like Google search. But I also bought a Windows laptop for my wife just so I can use Excel and Word. Couple computer people set up our prior laptop and convinced us to use a free program called Libra ? what is the point if you have to convert the doc. or the other person has to convert it ? Last couple phones I purchased Moto direct from the manufacturer and have more bells and whistles than I know what to do with. Large screen for old eyes. No banking on the phone. My wife actually uses the land line Ha!.
            Apps I have tried to stay away from downloading on the phones. One restaurant we went to wanted us to read the menu from a sticker on the table, we ended up getting a printed menu.

      3. I have a DORA flip phone. I am a distance runner and it fits in a nice leather case that clips on to my running shorts. I make phone calls, it receives phone calls, it receives text, I grudgingly occasionally send a text back and it even has a camera, all I need.

  10. The talking heads on TV seem to ignore the covid stimulus, and massive online ordering during that time. Quite obvious that it would take a miracle for the logistic/service/gadget-based companies etc. to grow earnings over those times.

    1. Right. There is a base number issue now after a temp boom for them. Even if they revert to mean growth, it looks like negative growth yoy

  11. Being cheap, I usually stay a couple generations back on the phones. But the new galaxy flip has me reconsidering. And my wife gave me the thumbs up to spend the money when she saw the commercial of the cat taking its own picture.

  12. — While there are always the usual suspects for Fed Ex (higher fuel costs, higher driver salaries, marginally reduced delivery demand in a post-pandemic world, recession fears), there is some speculation that Amazon is really the problem. Amazon has excess delivery capacity and wants to expand fulfillment by Amazon among smaller sellers, who are being offered discounts. FWIW, its been a long time since I’ve had any deliveries by FedEx.

    — Its hard to get excited about preferreds when 1&2 year Treasuries are scraping 4%.

    Just my opinion.

  13. Not only is FedX getting destroyed but so is International Paper after reporting a huge inventory build up. IP may be another of those canaries. I suppose Amazon doesn’t need as many cardboard boxes as before?

  14. I traded in my old Google Pixel phone for a new one. It works just fine with a great camera. Cost me $150. Went the cheap route!

  15. Tim get an iPhone SE unless the screen size is critical. Has almost all of the latest core circuitry but $500

    1. LVS–don’t even know which one I have now–it is 2 years old and I hope to hang on to it for a while

      1. I usually keep them 3ish years, but T-Mobile is giving phones away as well as the other carriers. Well Apple phones require a trade-in, but we can get a free Samsung S22 for the same monthly service cost…

        1. Tropical–just a bit ago I got a text on a new iPhone from Tmobile. Maybe I should read what they are offering instead of deleting.

Leave a Reply

Your email address will not be published.