Innovative Income Investor | Innovative Income Investor

Monday Morning Kickoff

Last week the S&P500 closed at 4105 which was just barely off from the previous Friday close of 4109–off course the week was a short week with the Good Friday holiday.

The 10 year treasury closed the week at 3.29% which was a full 20 basis points lower than the previous week, The employment report which was one of the important economic data points on the week was a mixed bag–softer than forecast new jobs created, but a lower unemployment rate.

This week we have a number of important economic report–in particular the consumer price index (CPI) release on Wednesday. In addition to the actual data releases we have Fed Presidents talking almost daily–I think they will begin setting the path for a 1/4 point rate hike in May after the FOMC meeting.

After a giant $400 billion move higher in response to the banking crisis the Fed’s balance sheet fell for the second week in a row – down $74 billion on the week. The balance sheet is off $100 billion in 2 weeks.

Last week surprisingly the average $25/share preferred and baby bond was virtually flat – plus 3 cents. Investment grade issues were up 16 cents, banks down 12 cents, mREITS dead flat and shipping issues down 2 cents.

Last week we had no new issues priced.

Headlines of Interest

From later last week there were a couple of headlines of interest.

1st off First Republic Bank announced the suspension of dividends on their preferred. The announcement is here.

2ndly CHS (Cenex Harvest States), the giant agricultural cooperative, announced earning for the quarter ending February 28, 2023. The earnings overall were stellar –although energy drove the earnings, with ag looking a bit softer. The earnings release is here.

Laundry List of Current Preferreds and Baby Bond Holdings

This is a laundry list of issues I currently own. No recommendations here–just what I own now.

As I have noted I will be mostly adding to current positions–versus starting new positions–but there are areas that intrigue me such as lodging REITs and as such I may start new positions (but not many).

Utilities

Entergy Texas Preferred (ETI-) 5.375% Cumulative Preferred

NiSource 6.50% Fixed Rate Reset Preferred (NI-B)

Spire Inc. 5.90% Cumulative Preferred (SR-A)

CMS Energy 5.875% Baby Bond (CMSD)

CMS Energy 4.20% Cumulative Preferred (CMS-C)

Closed End Fund Preferred

RiverNorth Capital and Income 5.875% Cumulative Preferred (RMPL-)

RiverNorth Opportunity Fund 6.00% Cumulative Preferred (RIV-A)

Tri-Continental 5.00% Cumulative Preferred (TY-P)

XAI Octagon Floating Rate Term Trust 6.5% Term Preferred

RiverNorth DoubleLine 4.75% Cumulative Preferred

GAMCO Natural Resources 5.20% Cumulative Preferred (GNT-A)

Insurance

SiriusPoint LTD 8% Resettable Preferred (SPNT-B)

American International Group 5.85% Preferred

Jackson Financial 8.00% Fixed Rate Reset Preferred (JXN-A)

Lincoln Financial 9% Preferred (LNC-D)

Enstar Group 7% Preferred (ESGRO)

Athene Holdings 4.875% Preferred (ATH-D)

WR Berkley 5.70% Baby Bonds (WRB-E)

Banking

Customers Bancorp 6% Fixed to Floating (CUBI-F)

Customers Bancorp 5.375% Baby Bond (CUBB)

Heartland Financial 7% Fixed Rate Reset Preferred (HTLFP)

Bridgewater Bank 5.875% Preferred (BWBBP)

Merchants Bancorp 6% Fixed-to-Floating Preferred (MBINO)

Miscellaneous

Affiliated Managers 5.875% Baby Bonds (MGR)

CHS 6.75% Fixed to Floating Cumulative Preferred (CHSCM)

Liberty Broadband 7% Cumulative Preferred

Apollo Asset Management 6.375% Preferred (AAM-A)

UMH Properties 6.375% Cumulative Preferred (UMH-D)

Hennessy Advisors 4.875% Baby Bonds (HNNAZ)

Federal Agricultural Mortgage 5.70% Preferred (AGM-E)

Cruising to the Weekend on Kind of Goldilocks Employment Numbers

Well not much market action today being Good Friday and for the most part markets are closed.

Employment numbers were released for March and I guess I view them as somewhat Goldilocks. 236,000 new jobs were created versus a 238,000 forecast and much slower than the previous month of 326,000. At the same time the unemployment rate fell to 3.5% down 1/10%. Wages were up .3% from a month ago, while up 4.2% year over year. It seems to me whether the Fed raises at the next meeting, which is May 2nd and 3rd, will be determined, in large part based on will be determined by 3 things–of which employment is one, consumer prices (CPI) is the second and personal consumption expenditures (PCE) is the 3rd.

As of this minute I think it is a coin toss as to whether they raise rates—too much data yet to be seen before a decision is made. Beyond ‘data’ we still have the banking event to deal with – and how much is this going to factor into decisions–and we will never know the answer to this because the Fed will want to show economic confidence–don’t think they are going to say ‘we need to pause because of the weak banking situation’. Well that decision is near a month away yet so lots of data to come before that time so we will have to take it one day at a time.

Well I am going to spend some time this weekend working on my portfolio – lay out what I own and what I want to own. I’ll post the info here – I hope tomorrow.