Bonds Not Buying Into This Stock Rally

Stocks took off for a good early gain–but those are now rapidly being given back.

The 10 year treasury popped a couple basis points–but now has settled back to yesterdays close.

I personally have reviewed all of my holdings a few times today–I haven’t bought or sold, although there were gains in the Golar LNG Partners (GMLPP) 8.75% I bought yesterday–which would have bought a steak dinner or two–I’m holding.

Today some of the mall REIT preferreds are taking it in the shorts. Pennsylvania Real Estate Investment (PEI) issues are off 10%–of course this company has plenty of problems.

The CAI preferreds are off 2% (more or less), and many bank preferreds are off 2%.

Here is the big loser list.

Just as I have been writing this note some equity indexes have gone RED. For now I will sit back and watch–we could be living with the corona virus for a while.

While I am watching I am watching some favorites that folks are talking about–some of the utility preferreds and baby bonds–they still aren’t cheap, but they are quite a bit cheaper than they were last week. Nisource 6.50% perpetual fixed rate reset (NI-B) which just went ex-div is around $27.15–$1.50 lower than last week. National Rural Utilities Coop 5.50% baby bonds (NRUC) which is off around $1.40/share. Also the DTE issues and Entergy issues have lost ground in the last week.

21 thoughts on “Bonds Not Buying Into This Stock Rally”

  1. I noticed now the Hotel Preferreds are getting taken out behind the woodshed and being shot. I think we now officially have entered into the zone where no one really knows where the bottom will be found on these things. Down the road a ways I suppose there will be those what I call “Weak Sisters” that suspend their payments. Did you know that in China they have an annual “DOG FESTIVAL” where they actually eat dogs. Its true. Thank You you crazy Chinese for starting this worldwide shit.

    1. If they stuck to eating dogs, it might not be too bad but this virus came from eating bats…I live in Asia and have great respect for what China has accomplished, but their culinary choices leave a great deal to be desired.

      1. Richard; I noticed that you live in Asia. I have a question for you. When Alibaba spins off Ant Financial and does an IPO whats your unbiased opinion of Ant Financial??? Iam thinking about buying some but its really hard to get any decent information on the company.

  2. Now that the rates are going down ..and the fed’s will may lower the rates ..will the banks call the expiring preferred?

    1. Danny,

      You can go here to track the odds of rate cuts at each of the Fed meetings this year.

      https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

      Look, the only thing I count on when it comes to the Fed is that they WILL generally do (or say) the wrong thing at the wrong time. They need to stay out of this unless they yield curve inverts and stays that way for a while. But, count on them to add to the volatility and uncertainty and you’ll come up a winner most every time.

      If the banks are able to call and it makes sense to call, they are doing it. Odd exceptions from the weaker ‘bankers’ like WFC and COF are the exceptions. Staring down a call bet with JPM or BAC or those guys is just not playing the game very smart.

      The world was supposed to end with the unstoppable ebola outbreak, the zika outbreak, SARS, etc. Guess what… We’re like 8% away from all time highs in the US markets.

      I’m continuing to take my chill pills. This too, shall pass.

      1. Thanks for the reply..will you buy then JPM or BAC preferred? or just stay away from the banks?

        1. I own plenty of both, but I bought them at their IPO’s. Personally, I won’t usually touch them after they’ve run up over a dollar in price, but then again, each situation is different. Lots of factors to take into consideration.

          I own JPM-C and JPM-D, but won’t buy them again as high as they are. I own BAC-B but same situation there. I’m staring down a call in CBKLP for a 6% yield. I bot WFC-Z at a crappy yield only for a flip after it runs up 50 cents or so. I also own trashier financial preferreds like MBNKP and MBINP.
          SNV-E is also a lesser quality financial, but I got it at IPO.
          TSCAP has been a great one.

          I think banks are in for a bit of pain. Refinancing is cutting into profits. Elimination of fees to entice customers is cutting profits. Yield spreads, continued move to online banking is disrupting the little guys, etc. The Fed is also weighing heavily on them as are certain regulations.

          Unless I’m gaming a flip for quick cash, I’m playing in other sandboxes. The new issues just don’t meet my yield criteria for long term holds. I miss my 6% yielding IPO’s!

            1. Affinity4investing,
              Thank you again for the info and advice, very useful ..how do I find new IPO’S info, price ,etc about the new preferred ..what do I have to do to get them at the IPO price? I am new here and I need a lot of help to learn about it..
              Thank you again and I appreciate all the help that I can get !!

              1. Just stick around Danny. We will have new issues announced very quickly–within an hour of filing and then all the details around the issues. Folks will then discuss the merits of the issue.

              2. Danny,
                One of the best places is right here, on the Reader Initiated Alerts page. You can also monitor new issues here:

                https://otce.finra.org/otce/dailyList?viewType=Additions

                Make sure to change the dates on that page to cover the timespan you want to look at. You can also monitor the Edgar filings for FWP postings – but frankly, if you just hang out here – it’s much easier.

                Once you get the temporary ticker symbol or CUSIP number from the ‘IPO’ announcement, you can then get in touch with your broker and see when they will have it available to buy. Different brokers will have access at different times. That’s one reason that many here have multiple brokerages. Sometimes you can get in below par pricing and sometimes, if you have to wait for your broker, the price will run up a little bit and sometimes it will run away from you altogether.

                One of the most helpful things you can do here is to load a RSS feed reader into your browser so that you can see every comment posted to the site here. Otherwise, you’re going to miss a lot of comments due to the volume now coming into the site.

                I use “Feedbro” and also have the RSS feed setup in my Outlook email client to capture all of the comments coming into the site.

                1. Thank you Tim and Affinity4investing for your help!! what brokers do you recommend, if you have to pick 2-3 of them, base on your expertise guys?
                  Thank you !!

                  1. Danny–I like eTrade. I also have Fido, but they restrict many purchases such as floating rate issues. Now that eTrade is being bought by Morgan Stanley–I hope they don’t change their retail platform.

                  2. Merrill Edge, Schwab, or TDAmeritrade

                    The first 2 I use, the 3rd is very popular here.

  3. GMLPP is just up fractionally. Unless you bough $1M I think you can wait a bit. Unfortunately, the hate for the sector seems at the zenith. Not only vs shipping but limited partnership in general (see CEQP). That’s the eye of the hurricane in market already nervous.

    1. Thanks for your keen mind and sharp eyes. Apparently great quarter and blessed by Brad Thomas, picked up some (partial fill) of CDR-C. In contrast to EPR, which I thought was a great quarter, share prices popped and then continue to see drawdown. I assume that its tenants, theaters and cinemas would be expected to suffer at least one quarter from the Coronavirus problems. Also picked up some CODI-C in retirement account. Best to keep; CODI Pfd in IRA not to exceed 1 K. All these silly Partnerships K-1 is good for general partnership who issued “K1 as guaranteed income” taxable as ordinary income, with the except of EVA (they cleverly wrote off some expense as “deductible”). We need to limit income from Partnerhip per IRA account to $1,000 per year or face the punitive UBIC.

  4. Just sitting on my hands with my preferreds here. May buy some AATRL sub-47 other than that, I have paid no more than $25.25 for anything I had. A lot had risen to $26-27 but I am in them for the divvy so the eventual floor on these at call should be $25.00 unless the underlying company runs into real trouble. Hopefully, I have been wise enough to pick around those! Either way, I have no single company that is more than 2% of my portfolio.

    As far as common stocks, I have been picking off some techs very gingerly – AVGO at 290 and 280. MMM at 150 and looking at CSCO…I think we have another 5-10% downside though so holding a big bag of cash here too.

  5. On banks I can understand, if the feds are forced to lower rates it will affect them, but also bleeds over into their preferred. I watch HTBK, an UMPQ common they started out in the green. I have a small bid on RILY-Z and still waiting for IPLD to fill

    1. Thanks. I picked up some 200 shares after unloading all my CHS Inc. SWAN QDI preferreds.
      Bought too many shares of BKFRF paid way too much. Did pick up BEP common with decent price, ex div date tomorrow.

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