Innovative Income Investor | Innovative Income Investor

Headlines of Interest

Below are some press releases from company’s which have preferred stock or baby bonds outstanding–also of just general interest.

GasLog Partners LP Announces that Unitholders Remain Unaffected by U.S. Internal Revenue Service Regulations Effective January 1, 2023

OceanFirst Financial Corp. Schedules Earnings Conference Call

Franchise Group, Inc. Announces Approval of Quarterly Preferred Dividend

Two Harbors Investment Corp. Announces Fourth Quarter 2022 Common and Preferred Stock Dividends

Northern Trust 2023 Outlook: Markets and Economy Pivot from Inflation and Monetary Policy Fears to a Weak Global Economy

Franklin BSP Realty Trust, Inc. Announces Fourth Quarter 2022 Common Stock Dividend of $0.355 Per Share and Series E Cumulative Redeemable Preferred Stock Dividend of $0.46875 Per Share

iStar Announces Filing of Form 10 Registration Statement for Planned Spin-Off of Star Holdings

Homebuilders Not Feeling The Holiday Love

Homebuilder sentiment took a tumble on the most recent reading – a reading of 31 against an expectation of 34 and a previous reading of 33. This is the lowest confidence level since 2012.

My personal observation is we are not seeing much employment effect at this time as builders had quite a level of ‘under construction’ properties ongoing thus employment remains decent. My guess is we will see more effects come February/March–and we will see what the spring season brings us in terms of buyer interest—everything will be interest rate and inflation (and thus pricing) dependent.

The homebuilder press release is here.

Monday Morning Kickoff

Well it is that time again – time for up and down and down and up. My question is have investors and traders finally accepted that there is more upside to the Fed Funds Rate or not?

Last week the S&P500 moved lower by just over 2% last week from the close the previous Friday, although the index moved in a range of around 7% during the course of a wild week caused by the CPI report as well as the FOMC meeting and interest rate hike. Of course Jay Powell slapped markets to reality making sure it was understood that more interest rates were yet to come.

The 10 year treasury moved in a range of 3.42% to 3.63% before closing the week at 3.48%. Honestly with important economic news I would have thought interest rates would have moved more violently and at higher levels. This week we have bunches and bunches of economic news–most of which are not likely newsworthy, but the personal consumption index (PCE) on Friday is most important and it will come on a day of low volume. The Fed claims that this inflation indicator is important to them.

The Federal Reserve balance sheet moved higher by less than $1 billion – looking for a plunge in assets in the next week or so as the rate of runoff has slowed in the last few weeks and we will see catch-up to the $95 billion monthly rate.

Last week the average $25/share preferred and baby bond fell by 16 cents. Investment grade issues were off 6 cents, banking issues off 4 cents, mREIT issues off 21 cents and BDC baby bonds were flat.

We had 1 new income issue price last week with Harrow Health (HROW) pricing a new baby bond at a huge 11.875%. The other issue that HROW has outstanding is a 8.625% issue trading at $23.12 -theoretically this issue should trade much lower today. This issue will trade in the next week or so under ticker HROWM–no OTC grey market trading.

Let’s Wrap Up This Week

Time to wrap this week up. It looks like the indexes are likely heading lower again today with the S&P500 futures down about 1% right now.

Yesterdays S&P tumble of 2.5% was quite brutal and it appears maybe for the 1st time investors are accepting that we are not at the end of the tightening cycle–or if we are we don’t really know it. At the same time interest rates are telling us a very, very soft economy is just ahead–the 10 year treasury is at 3.46% right now.

Well I continue to sit on my hands, although yesterday I started back on my due diligence of regional and community banks. I continue to hold fixed-to-floating shares (CUBI-F) in Customers Bancorp (CUBI) and some of their baby bonds (CUBB). This is a target rich environment for 7% yields. My hesitation is because I need to trim some other holdings to buy some of these issues—and each time I review the holdings I don’t find shares to sell.

Well I am off to drive over 50 miles of snow and ice here in Minnesota–as a youth this was no big deal–as a old codger I would rather stay in my office, but duty calls so I have to go.