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A Nice Opening Bounce as Fed Dissention Becomes Apparent

Stocks are popping–but interest rates remain firm as it is becoming somewhat more apparent that not all Fed officials agree with the continual fast rate of interest rate hikes.

Charles Evan (Chicago Fed), for one, believes that a ‘pause and observe’ period should be considered before too long–he is concerned with too far, too fast.

The question is–where is the data? While anecdotally the economy is weakening and the number of ‘smart people’ crying out for a pause is deafening I am not seeing the super weak stats that all imply are out there. Durable goods were released today and were off .2%–hardly a crashing economic stat–this followed minus .1% last month.

We’ll see – no one knows for sure what will happen.

19 thoughts on “A Nice Opening Bounce as Fed Dissention Becomes Apparent”

  1. An honest/sincere question–Why would folks very interested in & investing in Preferred stocks or Baby Bonds deal with a brokerage house that makes one go through ‘hell & high water’ to buy that type of issue? Furthermore, as the delay in order execution trails on, the more likely the beneficial snapping up of the issue at par or even a bit below par vanishes, sometimes dramatically!
    Fortunately, that has not been the case with the new Merchant’s Bank issue & I believe that may be due to the frothiness & general uncertainty in the current markets. I deal with Schwab and am usually able to get in as early as possible. Many times in the past, when Schwab had not yet posted the issue but it was actively trading elsewhere, I alerted them and told them to alert the ‘Security Master’; the problem was quickly resolved. I realize that, for many reasons, it is not always easy or practical to change ‘houses’ but for those involved in these issues?? PS>>Please do not think that I have a motive for any reason other than above in praising Schwab re the above. When I first started with them in 1995, the fixed income department was quite lacking; it has continued to improve—-and yes, I have had my serious issues including being in touch with the ‘Chairman’s Forum’, the highest complaint level available years ago. That no longer exists and has been replaced with special Pinnacle Group managers tagged with this type of involvement. Anyway, good luck to all; I have learned quite a bit from many members on this excellent site!

    1. Technically a broker should not be allowing normal clients to buy shares on the grey market. Since Merchants started on the grey with no info that threw a monkey wrench into things. Unlike AGNC’s new preferred which started out as pink with info which many could buy early.

      Schwab most likely realizes Merchants preferred does not truly belong on the grey and bends the rules for clients. Others just set the rule and follow it.

      In the end, correct me if I am wrong, Schwab still does not allow your average client to buy grey issues that are on the grey and “ain’t” getting off anytime soon. Thus in that aspect they are following the “rules” as brokers implemented them per the industry standard.

      But to really answer your question.. sheer laziness to move to attempt to save some cents per share. If I was buying 2000 shares a whack maybe I would consider it more closely. It has also saved my bacon a few times by not rushing in in some cases. So the flip side of the coin can also be true.

      1. @fc—you most certainly have a good point concerning your comments on Merchant’s Bank and the ‘gray market’ and Schwab’s possible thinking on this matter. However, I have read time and time again that folks cannot get their preferred stock order executed when (as in most cases) it is NOT on the gray market. Yes, if one were attempting to buy one or two hundred shares, it may not matter that much to that person. However, as I stated, this comes up so frequently that I suspect those who post would like to grab larger amounts.
        I had a very close friend call me about 15 minutes prior to this posting. I often advise him on upcoming preferred stock that I have already purchased or am about to purchase—he could not buy it at Fidelity. Here is my analogy re this issue>>>> if one had 5 hot dog stands within walking distance and really enjoyed mustard on the hot dog, would that person walk to and purchase his hot dog from the stand that serves mustard or go to one of the other vendors who will not be able to oblige him? Perhaps rough but I think it serves to make my point. Remember, each firm has Security Masters who are charged with the responsibility of listing a new stock when it comes to market. I outlined this in my previous post. If you avail yourself of this, call the fixed income department for preferred stock or baby bonds. They are the ones who will alert the proper Security Master. If the regular stock broker is called, he has to route your inquiry to that dept. himself to get any action and, as we all know, many brokers are woefully ignorant when it comes to these types of issues—hope this info is of help to anyone–good investing to all!

        1. Well your analogy is missing something. You said

          ” if one had 5 hot dog stands within walking distance and really enjoyed mustard on the hot dog, would that person walk to and purchase his hot dog from the stand that serves mustard or go to one of the other vendors who will not be able to oblige him”

          But you left out that none of the 5 hot dog stands can meet your needs 100% of the time. No matter what, sometimes they will be out of something. So you go to the one that has the tastiest dog that best fits your needs overall

          Until this new MBINM issue I have not had any issues buying new preferreds at Fidelity in quite a long time. So if I have to call in to get them to add it or wait a day to buy it if it still is on the gray market, no big deal. Not like it is going anywhere in this market. One rare misfire doesn’t offset all the good things I like at Fidelity

          But to each their own – everyone has different needs and tastes in hot dogs 🙂

    2. Yes CS needs help delivering fixed income services. Hard to even speak with a rep.

  2. I believe tomorrow is “Dividend Determination Date” for some “live” floaters like VLYPO.

    With 3-month LIBOR hitting 3.64% yesterday, VLYPO (with its 3MO Libor + 3.578% terms) should see its dividend boosted to 7.22% (from 5.5%) with the December dividend payment.

    Calling VLYPO will cost VLY $100 million + accrued dividends. Paying the new dividend rate will be an extra $430K in quarterly dividend expense, and that number looks to only be going higher over the next year.

    1. Thanks for the reminder that this goes floating at around 7.2% in a few days. Didn’t really need yet another bank preferred but I started a small position in VLYPO under $23 today (which works out to 7.8% plus based on cost)

  3. Someone didn’t throw the switch apparently at Fidelity – you need to call them and tell them its no longer on the grey market as it is now trading with its permanent ticker. That has worked in the past when they were slow on one other issue

    1. Can’t buy it yet at Vanguard or Merrill Edge 🤬 if you mean MBIPL/MBINM Merchants Bancorp 8.25%

  4. Oops! What goes up will go down in this bear market. Nearly a 400 point DOW gain is now a 190 point decline. Should be an interesting afternoon. Will the 10 year hit 4% today? Sitting in bonds and preferred offerings and that’s where I’m staying.

  5. Just purchased a bit more of the new Merchant’s bank 8.25% @ 22.88.
    In 2 different places, Schwab shows MBINM and also MBIPL (as does Quantum now show)–I think that it has left the gray mkt. because I paid no $6.25 commission on today’s purchases—Thus, it may now be available at some of the ‘lazy’ brok. houses—bid 24.80/ask24.90–very large volume yet bid-ask guite steady—1st call @ 10-1-27 makes this a sweet lock-in for 5yrs plus–
    –The bank is well regarded.

      1. Call them. I just bought on Ally which is the most clueless broker around. It is no longer on the grey and I can see bid/ask.

  6. Yazzer

    Cubi-F is currently yielding 8.05%. It will adjust again in December
    Cubi-E is the one yielding 8.43% currently

  7. Bought some CUBI-F at just below par. Either they call it and I collect accrued divvy or it gets adjusted and I start collecting 8.4% in December, no?

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