Below are press releases from companys with preferred stock and/or baby bonds outstanding–or just news of general interest. Earnings season is pretty much over so we will have slow news days for a month or two.
Today giant Ag Cooperative confirmed that the ag economy is extremely soft and that the threat of tariffs is bringing more uncertainty to their business. More than once in the last month or two I stated that we would likely see this market softness hit CHS earnings in the next couple of quarters. Of course we know that CHS is as much a oil refiner as they are a grain merchant–so earnings can still remains respectable.
An article in the local newspaper today outlines some of their challenges. This article is timely as I am going to start to add some more shares of the CHS preferreds to the portfolio. I currently own two issues (the CHSCM 6.75% issue and the CHSCN 7.10% issue) and will continue to add more shares at favorable prices starting tomorrow. If I am to own more perpetuals at this moment–these are pretty much the most stable issues that can be found. That earnings will likely be down in the next few quarters is only a minor consideration as it has been shown time and again that CHS can go these cycles and while they can be a bit painful the coop will survive just fine.
Tomorrow I will add some of the CHSCM 6.75% to current holdings around $25.17/share. Recall that this issue was originally a reset issue, which has now been fixed at 6.75% because of the change from libor to sofr. If share prices fall I will consider further purchases. The CHSCN 7.10% issues currently trades at $25.55 which is not a price which I am willing to pay at this time–but 25 cents lower it becomes a consideration.
Last week was a fairly quiet week in the equity markets. The S&P500 moved in a range of 6033 to 6100–closing at 6090, which was a gain of right about 1% from the close the previous Friday. Even the all important employment reports couldn’t move markets very much, but green of any magnitude is good, although the ‘feeling’ that markets are due for a setback is pretty strong. But there remains plenty of money available to drive markets much higher whether they go higher is anyone’s guess—but the ‘smart people’ continue to forecast markets moving higher in 2025.
The 10 year Treasury moved in a range of 4.15% to 4.27% last week, closing the week at the low which was a close 3 basis points below the close the previous Friday. It remains to be seen whether these yields continue to trend lower (now off 28 basis points since the elections. Even with the Fed FOMC likely to cut interest rates in December in the end the marketplace will determine longer term interest rates and now it appears there is a great confidence that the Congress will cut spending. We shall see in a few months. This week we have the consumer price index (CPI) being released on Wednesday with the PPI coming Thursday.
The Federal Reserve balance sheet assets fell by $10 billion last week–now at $6.895 trillion. With interest rates most recently starting to fall again it seems wise to continue the runoff–but it is just a ‘tool’ that can be used to affect interest rates. The runoff can be lowered or raised as conditions dictate. We may see a lowering of the runoff during the first half of 2025 instead of Fed Funds interest rates cuts as
Last week–simply spite of interest rates falling slightly the average $25 preferred and/or baby bond price fell by 10 cents. Investment grade issues fell by 13 cents, banking issues fell 17 cents with CEF preferreds off 5 cents and mREIT preferred fell by 8 cents. The ocean shipping company’s preferreds did what they have done for months and moved just a little at up 4 cents.
Last week we had a couple of new income issues priced. Ready Capital (RC) priced to a new baby bond with a coupon of 9% while Eagle Point Credit (ECC) priced a new bond at 7.75%.
