Buckle Up!

Today we are seeing market react to Russia invading Ukraine–European markets are off 4% (more or less) while I see that the S&P500 futures are off by just over 2%. At the same time as equities are tumbling there is a flight to safety play in the treasury market and the 10 year treasury yield is down to the 1.87% from 1.97% yesterday.

It is likely that we will be seeing some level of ‘tossing the baby out with the bath water’ in preferreds and baby bonds. While there is never a guarantee that prices will pop back up I personally will be watching and seeing what kind of bargains appear. For sure I won’t be a seller.

When investors ‘panic sell’ my observation is either they sell at low prices or they exit the market with fear and losses and never come back–thereby forgoing income which is needed.

29 thoughts on “Buckle Up!”

  1. This is the 1st page on this website that is not slow. Is there tooooooo many comments or something? I can type easily right now. Sandbox and Reader alerts takes many many minutes to type a single character. It is like trying to spell check every character i type or something. I have a 500GB line to my house and that does not even help at all.

    1. I have a 500Mb line. Sorry. But this page is really fast. Reader alerts and sandbox are really really sloooooooooooooooooooooooooooooooow. I am not going to edit my statement in the other pages, as i dont want to spend 10 minutes doing so.

      1. What I’d give for a 500mb line…… Out here in the TN sticks I’m stuck with Hughesnet and its 25MB promised (emphasis on promised not delivered) line and we’re praying for the day when Charter will extend its Spectrum service the mere 4 miles away from where they already are to reach our development. When it does, we’ll still only get 200mb but I’ll take it! 50 miles away in Chattanooga they’ve got the fastest service in the US I believe – with upload and download speeds up to 10GB. https://epb.com/ Ah dream on, dream on.

        1. 2wr, have you asked Charter how much they’ll charge for those last 4 miles? 😉

          Up on San Juan Island here in Washington, the local provider (rockisland.com) finally got tired of waiting on CenturyLink (Link? Ha!) to address the Last Mile (or several miles, depending) and did a deal with T-Mobile to deploy an LTE Wireless solution. Not as fast as fiber of course, but still. It relies on the customer having more-or-less unimpeded line of sight to a cell tower, however.

          1. Bur – It’s a long boring story but originally they were estimating something like 500k…. but now there’s Federal funding available and approved but not for everything and there are so many other rural areas in their sphere that they have to prioritize what gets done when… All we can do is continue to be the squeaky wheel.

            We also have an AT&T option they call “fixed wireless” which again is dependent on cell tower location but we’re pretty OK with that.. Problem is their fixed internet doesn’t promise faster speed so it’s a lateral move not worth pursuing imho.

  2. Shorted the Nasdaq this afternoon with PSQ. Not normally a good play but when nomal isn’t happening you improvise.

    1. OUCH! +3.34% turn around- tricky tool. Up 5 days, then down fast. But, the Ukraine story isn’t over.
      good luck- if still in it.

    1. Joel:

      All property and mortgage REIT preferred dividends are cumulative. I believe the same holds true for utility preferreds.

      Only the banks can get away with “non-cumulative” dividends; but a preferred payment from these entities are rarely skipped.

      I have been buying some VNO+O below $20…some to keep, some to flip if the price moves higher quickly.

      1. It’s not really “getting away with” non-cum for bank preferreds, is it? Non-cum has to do more with what’s required of banks by regs in order to issue preferreds as qualifying for something like Tier 1 inclusion or some similar preferential treatment that makes it beneficial for banks to issue…. sorry to be vague on details but bottom line is they do not issue non-cum because they can get away with it I don’t think.

        1. Yep, more capital will qualify for Tier 1, etc. More leverage, less accountability. The judge said, “I just read the contract”, the attys smiled at the Board and got a bonus.” Just like a frat party!
          Ins usually non-cum too.

  3. I’m wondering if PBI-B is getting beaten up a little too badly right now, current yield at 7.75%.

    1. Morbaine

      One of the ratings agencies lowered their view of PBI last week. I have a position in PBI-B and am also thinking of adding to it. Given the market turbulence we might see a yield of 7.95% soon.

      1. Greg:

        Have been slowly adding to PBI+B. Seems like value at a near 8% yield.

        Their 10K came out yesterday and they did $117 Million of free cash flow in 2021, down from $197 Million in 2020, but the company spent $80 million more in cap-ex, so it was essentially flat. They are really trying to grow their industrial warehouse internet returns/e-commerce business.

        They had $732 million of cash on the balance sheet as of 12/30/21.

        Also announced this today:

        Pitney Bowes Calls for Redemption of Outstanding 4.700 Percent Notes Due 2023

        STAMFORD, Conn.–(BUSINESS WIRE)– Pitney Bowes Inc. (PBI), a global shipping and mailing company that provides technology, logistics, and financial services, today announced its call for redemption of all of its outstanding 4.700 percent Notes due 2023 (CUSIP No. 724479 AN0). The Notes were issued under an Indenture dated February 14, 2005, between the Company, as issuer, and The Bank of New York Mellon (BK), successor to Citibank, N.A., as trustee, as supplemented and amended.

        The Notes will be redeemed on March 7, 2022 (the “Redemption Date”), at a redemption price equal to the sum of 100 percent of the aggregate principal amount of the Notes being redeemed, accrued but unpaid interest on those Notes to such Redemption Date, and any make-whole amount. On and after the Redemption Date, interest will cease to accrue on the Notes.

        1. Rob

          Thanks for sharing.

          E-commerce is their growth story and I think they will be successful over time.

          It’s weird that they’d redeemed the notes early (w/ a yield of 4.7%) when PBI-B is callable at a yield of 6.7%. I wonder if the notes have a nasty covenant.

          1. Perhaps it’s a matter of managing duration: bills due tomorrow (2023) take precedent over those due in 2043…

    2. With the Pitney Bowls dividend payout at 742% the company has been a roller costal of value up and down since 2018. Still a solid cash flow to support dividend payment.

  4. VIX – The VIX trades below 40 – 97% of the time. Below 50 – 98% of the time. I’m looking at fib retracement levels on SPX to put some money to work. ATB

  5. Last year I heard a manager advocate for always buying some when markets cross down 15%. Looks like today is that day.

    1. Ifyouprefer,
      Some buying for me today, like: TGH-A @ close to par. Been waiting for it to come down since last July when I sold @ >$27. Resets on 2026 and pays 7% until then. I also bot a few shares in a handful of other entries yielding close to 7% in my wish list, ready to buy more if they continue to drop. This includes ARR-C@$23, which is in Tim’s recent wish list.

      Been in so much cash for so long, waiting exactly for this. In the coming days we’ll see if these buys were too early.

      1. dd:

        I desperately tried to buy some 7% TGH-A this morning below $25, but got shut out.

        Somebody sold 1,000 shares of it at $22.81 near the open. Must have been one of those dumb “price-insensitive” preferred ETFs. Already back to $25.30 bid.

        Sad I missed it. Damn it.

        1. Rob,
          Mine was an gtc open order (which I forgot about) to buy @$25.26, and only executed @ 9:45am. It seems to me that only “privileged” traders could have caught it <$25, let alone $22.81, even though my order was alive at the time of that trade. Nevertheless, 25.26 or 25.thirtysomething for tgh-a looks good to me!

          1. DD, your 100 share buy order @ 25.26 was the highest bid price aka “inside” when it was filled. It got filled as the price collapsed down to 22.81. The bid price had also collapsed to to 22.81 after your order was filled, so presumably any open orders that were NOT hidden would have been filled down to that price. You can’t say for sure because let’s say you had an open order for 22.82, some other trader might have seen that and had a standing buy at 22.82+.

            BTW, there were ~ 22 other $25 par issues that traded >$1.00 lower around the open.

            1. It looks like only 1000 traded of a total of around 4k at 22.81 at 9:45 AM, right? and the next lowest price was 23.65 with the exception of 1 share. That’s what Fidelity seems to show…..

      2. I was really referring to equities. I’ve been trapped by technical reason no two swap like for like in pfd land. But that is the move and I will probably make some big moves here before month over

  6. how can treasury bonds be a safe haven with 7% inflation $100 oil and a war in Ukraine? Been nibbling since Jan, in diversified assets ex Tech, preferred’s, included . Still got lots of dry powder. watching for those babies.

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