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Category: Uncategorized

Monday Morning Kickoff

Opening the week at 3142 the S&P500 moved lower to 3126 on Tuesday before moving higher to close the week at around 3169–short of a 52 week high in the 3183 area.

The 10 year treasury opened the week around 1.83% and drifted plus and minus a few basis points before taking a run all the way to 1.92% on Wednesday based on never ending Chinese trade rumors. Rates then drifted lower as the trade ‘deal’ turned in to not much at all–closing the week at 1.82%. We shall see the veracity of Chinese ‘deal ‘ claims this coming week – I would not be surprised to see rates drift through the week.

The FED balance sheet grew again last week–this time by $30 billion for a 3 week total of $65 billion–this non-QE, quantative easing is really quite the joke as FED explanations make little sense and as some on the site have posited–Who is in trouble? Is it the German derivative king Deutsch Bank (DB)? Or is the FED simply monetizing the massive debt of the U.S. Government? Sooner or later we will find out what the hell is up–but for now ‘party on’ -ignorance is bliss.

Last week we had a number of new issues priced.

Insurer WR Berkley (WRB) priced a new baby bond. The issue is not trading as of yet.

Closed End Fund Gabelli Equity Fund (GAB) priced a new 5.00% perpetual preferred which is now trading under OTC ticker GBLQP and last traded at $25.26

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Self storage giant Public Storage (PSA) priced a new perpetual preferred issue with a coupon of 4.75% which is trading under temporary OTC ticker of PBSGZ. The issue last traded at $25.10.

Monday Morning Kickoff

The stock market continues to party as the S&P500 hit new record highs last week trading in a range of 3075 to 3120 before closing on Friday at the high of 3120.

As the stock market trades at record highs interest rates have begun to drift lower with the 10 year treasury closing last week at 1.83% after trading in a range of 1.81% to 1.94%. We have seen this pattern occur many times over the last number of years–mostly certainly the bond markets isn’t in agreement about with the stock market party.

The Federal Reserve balance sheet grew by $8 billion last week. The non-QE, QE continues and I suppose we should all learn to accept that the global economy will need to be ‘juiced’ for the many years to come. Exactly what measures the central banks will use when we hit recessionary times isn’t known, but certainly they are shooting most of their ammo during times that are relatively decent (economically).

Last week 4 new income issues were announced and sold.

Annuity/insurance company American Equity Investment Holding Life (AEL) sold a new issue of non-cumulative Fixed-Rate Reset preferred. The issue will have a fixed rate until 12/1/2024 of 5.95%. At this time the coupon will be ‘reset’ at the sum of the 5 year treasury and a spread of 4.322%. This BB rated issue (junk) was greeted with very strong trading with a closing price on opening day of $25.50. The issue is trading on the OTC Grey market under temporary ticker AQYVL. Details of the issue can be found here.

Container ship owner Global Ship Lease (GSL) sold a new issue of junky baby bonds with a coupon of 8%. The issue will trade under the ticker of GLSD when it begins trading. Further details can be found here.

Regional bank BancorpSouth (BXS) sold a new issue of non cumulative preferred stock with a 5.50%. The issue is trading under the OTC Grey market temporary ticker of BCSBP. This junky issue is trading around $24.90/share. You can find further information here.

Lastly diversified manufacturer and distributor Compass Diversified Holdings (CODI) sold a new issue of fixed rate preferred with a juicy coupon of 7.87%. The issue is trading under the OTC temporary ticker symbol of CMPSP. Even a juicy coupon can’t lure buyers as the issue closed the week at $24.64. Almost without doubt the fact that CODI is a MLP which will mean a K-1 at tax time is not helpful to the market rebuke. Further info is here.