Author: Tim McPartland

Well Bank of America (BAC) is out with earnings this morning and as expected their numbers were very good–of course I am most interested in the small banks instead of the mega banks.The community/regional banks will pay me 2% more on their preferred issues and I think the risk/reward proposition is pretty good in the 7.5% to 8% current yields.  I am adding a  bit to some of my current regional/community bank holdings this morning–my current holdings are small and my adds very modest. My laundry list of holdings is here. All the banks are listed here.

Yesterday was a quiet, but positive day in equities–perfect for me. My portfolios were green, but flat is ok with me – nice interest and dividend payments coming in multiple times a month.  I really construct holdings for the best yield consistent with my risk tolerance level – capital gains are just ‘gravy’.

While it hasn’t gotten huge amounts of press in the last week interest rates have moved sharply higher–the 10 year at 3.59% is 30 basis points above 10 days ago.  The 2 year treasury note has really zoomed higher–now at 4.18% almost 40 basis points higher.  Of course these rates pale compared to a couple months ago so everything is relative–it has only been 7 weeks since the 2 year was at 5%.

Yesterday we had little important economic news.  Empire State Manufacturing came in very strong relative to expectations, while home builder confidence came in as expected and slightly up from last month.  Today we had housing starts and building permit data being released–housing starts about on target and permits somewhat soft. Likely these numbers are not market movers.

Markets are somewhat green this morning, let’s see if they hold their gains.

Well we had the big banks reporting earnings this morning and JPMorgan (JPM) and Wells Fargo (WFC) both beat forecast as was expected.  I am more curious how the smaller banks are doing–the regional banks etc.  I want to see how the commercial loans are holding up–some of the community and regional banks specialize in multi-family lending–how is that holding up?

Yesterday ended up being a very solid day in the markets–stable prices in equities with interest rates mostly flat.  My portfolios move only minor amounts on days like yesterday- little up or little down–that’s fine since I am not really expecting upward moves in the portfolio, just hope to dodge any major losses.

I am sure most of you that have bought CDs and treasuries (like I have) in the last 6-9 months are very pleased with your interest payments when you look at your brokerage statement.  Seeing a monthly 4 digit interest total is very sweet  after seeing zip the last many years.  Balance these receipts with some solid 6-8% preferreds and baby bonds makes for a great risk/reward balance.  I actually bought a few 5 year CDs in the 5% area – not many, but who knows what the future holds so get a little when you can.  IF we see inflation in the 2% area in a year or two 5% CDs will probably go away, but we shall see.

Well let’s get this day rolling–with futures and interest rates fairly flat we will likely see a quiet day without fireworks–fine with me.

Well today started off right with the producer price index showing a month over month reduction in prices of 1/2%–of course it is just 1 months worth of data so to some degree not ultra meaningful, but just the same it feeds into the interest rate decision in 3 weeks. 1st time jobless claims were up from last week and above forecast a bit which is also an important ‘sign’ for the Fed.

Tomorrow we have what is normally a batch of less important economic news – but in recent history everything can be important.

Interest rates are pretty much holding flat at 3.42%–doing nothing at all.

Preferreds and baby bonds are mostly holding their own – with a green tilt up. I keep checking my good-til-canceled buy orders and nothing happening there which is fine–I have plenty of dry powder, but as long as it is collecting 4-5% I am happy being very patient.

I see the Triton (TRTN) preferreds are mostly up 2-3% today–I suspect they will climb back over the course of the next week or two, but folks are pretty risk adverse so I doubt we see all the losses from yesterday recouped–but who really knows. I pretty much don’t play in these situations anymore – just not motivated to take the risk.

Well let’s see if equities hold their gains without puking today–unlike yesterday.

Yesterday was a simply a ‘silly’ day in the markets.

We start with the consumer price index (CPI) which was reasonably close to forecast–year over  year at 5% versus forecast of 5.1% with the core rate at 5.6% which was right on forecast.  Equities opened higher fell back and started a gradual climb.  Then at 1 pm (central) FOMC meeting minutes–which is old news–and equities just fall off a cliff.

Then, of course, we have Triton International (TRTN) announcing they would be bought by Brookfield Infrastructure (BIP) and the preferred shares tank–Ready, Fire, Aim.  It is likely that the dividend is safe and will continue to be paid as long as Triton is performing well financially–historically the various Brookfield companies expect the company being bought to ‘pay their own way’–what I mean by this is that Brookfield isn’t there to provide deep pockets and if Triton doesn’t earn the dividend it will not be paid.  Previously Brookfield Business Partners (BBU) bought Altera Infrastructure and when Altera  hit financial hardships the preferred dividends were suspended and subsequently Altera was taken into Chapter 11 and preferred holders were wiped out.  Many know of the DTLA properties that Brookfield Properties bought – financially troubled from the get-go dividends were suspended for many years before a bankruptcy filing occurred in recent history.

Then we have the SiriusPoint preferred (SPNT-B) shares getting hammered down $2/share because they have received interest in a possible acquisition–talk about nervous nellies.  

I have no Triton shares and only a very modest position in the SiriusPoint preferreds. 

So this morning we will have the producer price index (PPI) released at 7:30 a.m. (central) – don’t know if we will get much market reaction, but we also have initial jobless claims which is an important number.  

I didn’t do a thing yesterday – in fact I didn’t even look at my accounts until after market close–but with a gaggle of CDs and treasuries my portfolio don’t reflect craziness.

Well let’s see how markets trade today.