Innovative Income Investor | Innovative Income Investor

Weekly Kickoff of No Doubt Another Exciting Week

Well we almost certainly have another exciting week to look forward to –up or down who knows, but likely in both directions. Last week the S&P500 moved up just 1/2%, but moved in about a 2% range. This week we have the consumer price index (CPI) and the producer price index (PPI) being released on Wednesday and Thursday respectively and additionally we have Powell testifying before the senate and house on Tuesday and Wednesday. Lots of excitement will be created.

The 10 year Treasury yield closed the week 4.49% which was down 8 basis points on the week. The yield moved in a range of 4.41% to 4.60% for the week. Economic data continues to push rates around–most data has been a bit mixed–some better than expected with some worse than expected.

The Fed balance sheet fell by$8 billion last week as the balance sheet runoff continues.

Last week in spite of interest rates falling 8 basis points for preferreds and baby bonds didn’t respond as the average share price fell by 2 cents. Investment grade issues rose 3 cents, banks rose 1 cents, CEF issues rose 2 cents, mREIT issues rose 3 cents.

We had one new income issue launched last week as mREIT PennyMac Mortgage Investment sold a baby bond with a coupon of a tasty 9%.

Rolling Into the Weekend with Freaky Friday

Well not really Freaky Friday—we should all know after a few weeks of a new administration that pretty much anything can happen.

We got employment numbers that were slightly better (overall) than forecast. New Jobs were a tiny bit light for January, but December was revised upward by quite a bit. Wages were a bit hot and the unemployment rate fell. All in all pretty neutral–but NOT supportive of any Fed Funds rate cuts anytime soon–of course subject to change any minute.

Stock markets reacted well to the news–until we started to get Fed yakkers and then word that there are more tariffs coming soon. This tanked stocks and we are now down 2/3%. The 10 year treasury has moved 5 basis points higher to 4.49%.

Yesterday I nibbled a bit as I mentioned I would likely be doing. I stuck to my short duration theme. I bought a little Eagle Point Institutional 8.125% Term Preferred (EIIA) @ $24.96. I already had a position in this one, but not a large position so I topped it off a bit.

I continue to look for opportunities. I will get my laundry list of holdings updated soon.

Headlines of Interest for Holders of Preferreds and Baby Bonds

Below are press releases from companies with preferred stock and baby bonds outstanding. Additionally, news of a more macro economic importance may be posted.

Regency Centers Reports Fourth Quarter and Full Year 2024 Results

Vornado Declares Quarterly Dividends On Preferred Shares

Mortgage Rates Decrease

AMG Reports Financial and Operating Results for the Fourth Quarter and Full Year 2024

AMG Announces Partnership with NorthBridge Partners

Reinsurance Group of America Reports Fourth Quarter and Full Year Results

Eagle Point Credit Company Inc. Schedules Release of Fourth Quarter 2024 and Year-End 2024 Financial Results on Thursday, February 20, 2025

Rithm Capital Corp. Announces Fourth Quarter and Full Year 2024 Results

Lincoln Financial Reports 2024 Fourth Quarter and Full Year Results

Heartland Financial Now UMB Financial

Banker Heartland Financial (HTLF) has completed its merger with UMB Financial (UMBF).

Heartland had a 7% fixed rate reset preferred outstanding (HTLFP) which has now become UMBFP with the same terms and condition.

This preferred converts to floating rate on 7/15/2025 at the 5 year treasury (now 4.26%) plus a spread of 6.675% meaning at todays rate the coupon would move to almost 11%.

UMB is a $50 billion asset banker and Heartland was about $18 billion—so now we have almost a $70 billion banker.

I am in the process of converting spreadsheets etc to reflect UMB.

This might be a good hiding spot at around 7% for a couple quarters–now trading at $25.25. In fact I just took a small position in the issue.

Kind of Looks Like a Quiet Day

Without economic news and without any new major announcements from the new administration it is starting off as a quiet day in all markets.

Jobless claims came in at the area of the forecast so nothing new there. Everyone is waiting for the ‘official’ government employment numbers tomorrow.

Today, I am looking to buy something. I think my best bet is to review current positions and add a bit to one or two of them. Already having positions gives me a bit more comfort, although I don’t want to get too overweight anywhere—Ican’t just hang out tweedling my thumbs.