Author: Tim McPartland

Well it is another kind of quiet day–common shares are off, but just by .37%–essentially unchanged. The 10 year treasury is up 9 basis points–trading at 4.61%. All in all I like watching paint dry–just collect dividends and interest and not have to worry about capital movement.

As I mentioned earlier today I planned to buy some of the SiriusPoint 8% reset preferred—I think this is a ‘sock drawer’ holding now with good financials reported yesterday and a current yield and yield to 1st call of around 8% hopefully the share price behaves itself (trades flattish). With the reset spread at over 7% in 2/26 which is added to the 5 year treasury one would have to believe the company will call the issue at the 1st available time (2/26)–of course a lot can happen in 2 years. I had to pay $25.19 to snag some shares.

It’s been a few days since we had economic news of any real meaning to me – I want employment data and of course we get a little taste each week on Thursday at 7:30 a.m. in the way of initial jobless claims. Last week we saw 217,000 claims-and the forecast is for 220,000 this week and I would be happy with 230,000-a little softening, but not disastrous. Remember last month we had a softening jobs picture with only 150,000 new jobs created in October and the unemployment rate up to 3.9%–and while I hate to see folks without jobs I am convinced Powell is focused on this number as one of his main interest rate determinants. Next week we have CPI and PPI being released so we will have some meaningful data.

I see interest rates are kind of flattish this morning with the 10 year treasury at 4.54% up 2 basis point. Equity futures are up a tiny amount–could it be that we have a 3rd day that is kind of quiet? I’d love it.

Oil prices are now down around $75/barrel for west Texas intermediate. It was only 6 weeks ago that we hit $94/barrel. An indicator of a softening economy? It is nice to pay $3.00/gallon at the pump versus $4.00. My wife’s Infiniti QX50 requires premium fuel and at the higher prices paying $60-$70 for a fill hurts–I never get my credit card out when I am with her at the gas station–she is on her own.

Did you see the SiriusPoint (SPNT) earnings last night in the “headlines of interest“? Very nice and improving sharply for this insurance company. I have a small position in their 8% reset rate preferred (SPNT-B). Today I am adding to that position. This issue has a reset in 2/2026 which should make this an issue that will be called on this date-of course no one knows for sure. The reset is 7.298% plus the 5 year treasury rate–yikes. The issue is 1 notch under investment grade (BB+ from S&P and Fitch) and is qualified and cumulative (unusual for an insurance company). At current pricing this has a current yield of 7.98% and a yield to first call of about the same–perfect for me.

I also note that U-Haul reported yesterday–earnings were down mainly based on reductions in folks moving–no housing supply, plus high interest rates equals reduced revenue. Regardless of the reduction in earnings they still ‘coin money’—6 month net earnings of over $500 million plus non cash charges of near $400 million. I note this because of the U-Haul Investors Club in which we have 2 smallish IRA’s (total of about $45,000) so I like to keep an eye on the company.

So it is 30 minutes until news (1st time unemployment claims) so let’s get the show on the road.

Yesterday turned out to be pretty calm–the S&P500 moved up again, but just by 1/4%. Interest rates moved nicely lower – down about 8 basis points. There has been little economic news released this week. We did have plenty of Fed yakkers yesterday and will have again today–seems like they are in lock step for a change – none have tossed any bombs.

I did not buy any think yesterday – it helped that I had to be out of the office all afternoon, BUT I did enter a good until canceled order down at $24.25 for RiverNorth Capital and Income 5.875% Term Preferred (RMPL-P). Yes this is the issue I just sold at $24.98–but it went ex-dividend–trading as low as $24.60. If someone wants to give me a gift, I would take it. The issue has a mandatory redemption in less than a year – I want 8% YTM on a buy.

Also I reviewed many other potential buys – including shipping issues. The shippers have been ‘star’ performers in the last few years with their high yields. I have not bought a tanker or bulker company for many years–my question is have they seen their glory days and with a potential slowing economy are they headed for lower revenue and profits? One needs to scrutinize the balance sheets closely and understand the new build commitments of a company. Historically debt has been the bane of these companys – I don’t know – could take a nibble somewhere.

Lots and lots of earnings news last night – if you are skipping the couple minutes it takes to skim the headlines 4 nights a week (none of Friday) you are missing some good info – it’s nice to read a bit on earnings of company’s that are not generally something you would consider owning – stimulates consideration.

Well the futures markets are fairly calm – in both equities and bonds. The 10 year treasury is at 4.57%–calm. With only the yakkers on tap for today(except wholesale inventories) maybe we will simply have a market that flat lines – wouldn’t break my heart.

I feel a strong urge to buy something today–I have no clue what issue I want to nibble. Very likely I will add to a current position–just a nibble.

I feel like a ‘addict’ this morning–just that urge to buy. This urge is in conflict with my view that while interest rates are going to remain flat or move lower in the next 3-6 months they will be driven higher by huge treasury issuance by the government. Of course no one can predict the direction of interest rates with any degree of success – so maybe I am totally wrong (which would be normal) and we have seen the high in interest rates in which case I want more preferred shares and baby bonds. Don’t know–we’ll see.

Yesterday the 10 year treasury yield bounced up a strong 10 basis points to close at 4.65%–and this morning it is at 4.63%. Again today we have little true economic releases—just a few Fed yakkers, so we’ll see where interest rates want to go.

Business development company New Mountain Finance (NMFC) sold a new baby bond yesterday–a coupon of 8.25%. NMFC had a 5.75% baby bond which was redeemed in 2021 so they are not new to the exchange traded debt market. What caught my eye was the investment grade rating–most recent baby bonds from BDCs have been rated by Egan-Jones, but not by the big ratings agencies (S&P, Moodys or Fitch). This means that this is more interesting to me, but I know little about NMFC so will have to do some reading and understand a bit more about their business.

I see the hated AmTrust Financial declared their dividends on their preferred shares yesterday. With current yields of 13.4% to 14.2% these shares are tempting. Just wish I had a decent idea of company financials–will have to dig around.

Well equity futures are soft this morning–means very little–anything less than 1/2% moves are just normal ‘wiggles’. Let’s get to going and see where interest rates move today.

After the moves we had last week it is only natural for equities to pause and for interest rates to move back higher–the 10 year treasury is back up to 4.65% – up 9 basis points.

At the same time portfolios are moving a little lower as well – not much, just a little damage done. Some of the bankers are moving pretty good to the upside-in fact the US Bancorp (USB) issues are all 2-3% higher on good volume.

Looks like a good day to just watch–let the market try to figure out which was interest rates are going to move. Without too much news this week maybe we will drift–maybe.

I see CD rates are hanging in there–5.70% 1 year/callable still available from JPM on eTrade. Not going to buy any CDs for now – I have a little dry powder and after the current rate gyrations I might add to a current position (don’t know what that would be).