Innovative Income Investor | Innovative Income Investor

A Second Up Day On Deck

The futures markets are up over 1% at 6 a.m. central after a strong showing on Monday.

Each time equities bounce strongly the discussion by all the ‘smart folks’ is about the ‘bottom is in’. Of course this discussion has been happening for a month and each time the smart folks are wrong. Whether the bottom is in is of only minor consequence to me–although I like to see common equities move higher because they sometimes ‘drag’ preferreds and baby bonds higher–it soothes the ‘nervous nellies”

I see the 10 year treasury right at 4%–so fairly stable from yesterdays close (4.02%)–hoping this will remain in a 5 basis point range to help income issues –again it would sooth the ‘nervous nellies’.

Yesterday I nibbled the CHSCM 7.10% reset rate perpetual preferred issue with a current yield of 7.56% as well as the 6.50% Ready Capital perpetual (RC-E) with a current yield of 8.92%. I have no plans to buy today–but one never knows what opportunities will present during the day. My cash position remains very small, but yet adequate to continue nibbling.

Headlines of Interest

Below are some press releases from company’s that have preferred stock or baby bonds outstanding.

Valley National Bancorp to Announce Third Quarter 2022 Earnings

Harbor Custom Development, Inc., CEO Shares Construction Video Update on Six Multifamily Projects

Prospect Capital Corporation Announces Launch of Cash Tender Offer For Any and All of its Outstanding 5.875% Senior Notes due 2023

CTO Realty Growth Announces Acquisition of Mixed-Use, Grocery-Anchored Lifestyle Property in Richmond, Virginia for $93.9 Million

New York Mortgage Trust Provides Preliminary Estimates of Third Quarter 2022 Financial Results and Announces Date of Third Quarter 2022 Conference Call

AG Mortgage Investment Trust, Inc. Provides Update to Shareholders

Schwab Reports Strongest Quarterly Performance in Company History

BrightSphere to Report Financial and Operating Results for the Third Quarter Ended September 30, 2022

Global Partners Announces Cash Distributions on Series A and B Preferred Units

Will This Rally Hold? A Decent Green Day

All rally’s now are looked at suspiciously as nothing has really changed for a few days–the UK has rearranged the deck chairs a bit and we had the Empire State manufacturing index come in pretty soft–maybe that is all we need for a relief rally.

My accounts are green–about time. I nibbled more CHS preferreds and have a low ball order in for a little Ready Capital (RC-E) which has not executed, but that is fine as it will come to my price eventually (I think).

The 10 year treasury yield is off just 3 basis points today–but maybe we will see some drifting in yields this week–giving us a little relief for a few days. Will still need rates to move slowly–up or down–we won’t see so much daily/weekly damage if we can just move slowly.

Monday Morning Kickoff

The S&P500 fell by 1.6% last week.–but trading was in a very wide range of 3492 to 3712. Futures are up strongly this morning as the UK markets are tame and major U.S. banks are reporting solid numbes.

The 10 year treasury also moved in a fairly wide range moving between 3.84% and 4.08% before closing the week at 4.01%. Inflation numbers remained higher than expectations and there is no sign that the FED will let up on interest rate hikes. 75 basis point Fed funds rate hike is expected on 11/2 with some talking a potential for a 100 basis point hike. Interest rates are backing off to the 3.94% area this morning and with a lighter economic release week maybe we will see a calmer week.

The Fed balance sheet was essentially flat last week–moving lower by about $200 million dollars standing at $8.758 trillion.

Last week $25/share preferreds and baby bonds were trashed as the average share lost about 2.1% down 46 cents. Investment grade issues lost 54 cents, banking issues lost 48 cents and mREITs lost 43 cents. The average share price at $20.90 is at the lowest level since the week ending 4/3/2020.

We had no new income issues priced last week.

Will Today Be Wild and Crazy?

Wow–I sure picked some doozy days to be out of the office. Unfortunately preferred stocks and baby bonds didn’t mirror common equities yesterday–my accounts hit a low for the year.

Today we have many of the big banks reporting earnings and this will set the tone for today, but I suspect there will be plenty of movement – up and down.

While doing a little reading last night I noted a number of the ‘smart folks’ saying ‘the bottom is in’. I have no clue and after 51 years of investing I know better than to think I know whether the bottom is in or not. But in preferred stocks and baby bonds I do know that there are genuine great buys available. I will be doing a little more buying on Monday (I will be out of the office again today and don’t trade on my phone)–not sure which issues I will be buying but it is a target rich environment.

As I noted to someone we really have to keep our eyes on the prize–it is really tough to get beaten up day after day with losses–but in the end we have opportunities to garner huge capital gains while collecting really nice yields on costs. It’s scary sometimes–buying when you likely will take some level of loss of the course of the next week or month–but issues will turn higher–we just don’t know when that will occur.