Category: General Commentary

It appears to me that markets are ‘settling in’ a bit to the Washington chaos—focusing a bit more on actual economic data instead of moving on each bit of commentary from the administration. Maybe it is just me–but market movements are not dovetailing with what I read. Regardless of the market movements Friday and today I’m not feeling a high level of comfort—always waiting for another shoe to drop.

Today is a nicely green day for us–partially caused by the CHS preferreds going ex-dividend and then bouncing right back up after the exchanges marked them down by the dividend amount. Folks still want to own these issues, although I am expecting a weak quarter (or maybe year) for them. The ag and energy markets are so-so at best and they could be negatively affected by tariffs. CHS will survive just fine as they have for years—they have bad years—when you are in the commodity markets like they are you can’t win all the time. All in all the income markets are green today–the 10 year treasury yield is drifting a bit lower–now around 3 basis points lower at 4.28%–maybe just hanging out waiting on the FOMC meeting.

Last week as mentioned I did a little buying. I added to the MidCap Financial Investment 8% baby bond (MFICL) and the Priority Income Fund 6.625% term preferred (PRIF-F). I did sell 1 issue and that was the Priority Income Fund 6% term preferred which ran up on a redemption notice–I sold to be able to move into the ‘F’ issue.

I have identified 2 additional issues in the current portfolio that are of such a size that I can nibble a few more shares so I will be looking for an opportunity to do a little buying–but just a little for now.

Another week is about to start and like almost every week there could be fireworks in the marketplaces. If it isn’t current economic data being released it is speculation on the future based on tariff policies etc. It is always something.

Last week we saw the S&P500 move lower by just over 2.2%–although without the nice 2% bounce in the index on Friday it would have been a much more negative week. It is not hard to imagine that this coming week will be relative wild as well with the FOMC meeting stating on Tuesday and then making an interest rate decision announcement on Wednesday.

The 10 year treasury yield ended last week about flat on the week–although on Monday it did trade down to the 4.20% area. Economic news during the week–in particular the consumer price index (CPI) should have been friendly to interest rates–but not so as bond investors wanted to be paid more for the risk they were taking. Lots and lots of talk everywhere about the government debt levels and it is making investors pretty nervous. Moods could improve it the Trump administration could show some actual savings from all of DOGE chaos.

Important data this week includes retail sales on Monday–is the consumer still buying and if not how sharply are they pulling back? Then of course the FROMC meeting on Tuesday/Wednesday–where no action is expected, but one never knows for sure.

The Fed balance sheet assets rose by $3 billion last week—expected. The balance sheet has fallen by around $60 billion in the last month–pretty near on target. If the Fed decided to help out interest rates they could readily chop the balance sheet runoff in 1/2 to $30 billion per month or so. I believe that if the economy continues to show softness they may well trim the run off prior to making the next interest rate cut–but who knows.

The average $25 preferred and baby bonds was down a measly 1 penny. The past 6 weeks we have seen prices trade in about a 20 cent range (on average). Investment grade issues traded off 3 cents, banking preferreds were off 2 cents, CEF preferreds moved 4 cents higher, while mREITs were down 6 cents. All in all a quiet week. The way I am looking at prices they should be 25 cents/share higher—but investors leaving the market are keeping prices under pressure.

Investors seem to think there are good bargains in the equity market today–whether there are ‘bargains’ or not we’ll know in a week or two. For myself it is always good to see up moves in equities as it keeps folks from tossing our preferreds and baby bonds out with the ‘baby’ as they head for the sidelines.

Economic news today was not very positive. Consumer inflation expectations came in hot, while consumer sentiment came in as most of us would expect–much lower than last month and lower than expectations. A little better (calmer) news out of Washington would go a long way toward repairing folks beliefs.

Interest rates are a bit higher-up 3 basis points at 4.31%. Regardless I put a small order in for some of the MidCap Financial 8% baby bond (MFICL) with a maturity in 2028. I own this issue now and it went ex dividend a couple days ago so it is trading around $25.26—but the ‘spread’ is wide so not certain I can get it with a limit order at $25.30–we’ll see. This BDC is managed by Apollo—and was previously named Apollo Investment. Earnings can be lumpy–here is there latest press release from February. Note that they hold mostly 1st lien loans–92% of assets–I always want to see 1st lien debt–versus 2nd lien.

Ok–enough for now–sit back and see if I can get a few baby bonds of MidCap. It will no doubt be an interesting afternoon in the markets.

While we are only a few hours into the trading day even a super producer price index (PPI) report can’t move equities higher. The S&P500 moved up toward breakeven at 9:30 (central) sellers came in and said ‘let me out’ and down we go to now being off 3/4%. I mentioned days ago I was looking for some sort of ‘flush’ with massive volume to put in the short term low–don’t think we have had it yet.

Even with super PPI numbers the 10 year treasury yield is a bit higher–a couple basis points to be at 4.33%. For sure there is a lot more going on there than inflation–the bond vigilantes are keeping the treasuries feet to the fire. Initially I thought this would happen, but then I kind of backed off of that thought as rates were down in the 4.10% area. The bond market, like myself originally thought the Trump administration would actually be able to lower government costs–now folks are not so sure.

I’m doing nothing but watching the charts today–not that it matters to someone holding a portfolio like mine, but I still find it very interesting.

I looked at our portfolios—1 account was up 6 cents–the other 2 slightly green. Not much action to look at in our accounts.

Well let’s see if the markets can break out of this funk and move a little higher–not looking like good odds now.

Well we got the lower inflation number this morning as the consumer price index (CPI) came in cooler than expected. Did that help equities skyrocket higher? Yes for about an hour and then folks said get me out! The S&P500 is now around even on the day–after being up 1%–of course with this market we will have wait and see if there are dip buyers out there.

You would think the 10 year treasury yield would have fallen a little bit with the good news–nope. The 10 year treasury is dead flat at 4.30%. I don’t think that bond buyers are thinking the ‘fiscal house’ is in order yet–certainly investors are NOT going to be heavily swayed by a singular inflation number. Government spending isn’t contained–and maybe never will be so why would investors get real excited about 1 number. Maybe all congress will understand is a lack of buyers for all their debt.

Over on Yahoo Finance I got sucked into clicking on a link to this ‘story’ (below). It caught my eye because of ‘worst slumps in history’ verbaige. Yes it has been painful. Yes if you are 25 years old you think this is really bad–and no doubt it has been painful for many folks. So I checked the author–maybe 30 years old and writes novels. No blame for the author as he is just trying to make a living–but really TipRanks is not where I ever go for my economic news–just clickbait. Well if this pullback is one of the worst slumps in history I wonder what all the bear markets we have lived through would be called?

S&P 500 Faces One of Its Worst Slumps in History – Is Trump’s Trade Policy to Blame?

Yesterday I did manage to buy some of the Priority Income Fund 6.625% term preferred (PRIF-F). It wasn’t easy and overall I had to pay more than I wanted at $24.60 and $24.66, but regardless it still fits in my wheelhouse with a potential redemption in the next year and a relatively short time frame even if it is not redeemed early. Just looking at the issue it has jumped and now is trading at $24.98.