Hope This Finds All Well

I would call this the ‘pause that refreshes’–refreshes a lot!!

Likely you all have good gains today, but have a long way to go to recoup losses from the last week or so. I was very happy to see some nice gains–and right after the market opened today I was able to nibble the utility issues as well as the CEF preferreds. Not big buys – just small adds. No sales at all as I have been out of the office most of the day.

Certainly trading today seems a bit more normalized–no one knows if it will last.

BUT you know there will be plenty of turmoil–we will still be sorting out the companies that survive and those that are ‘dead ducks‘–and there are going to be plenty of dead ducks. Maybe though we will get to those 1-2% movements in the market instead of 4-8% moves–speed kills.

Who knows–maybe we will start to see new issues in a couple weeks–maybe I am overly optimistic–one day at a time.

25 thoughts on “Hope This Finds All Well”

  1. Didn’t have the courage to buy anything today. Fully expecting more severe downdrafts especially now that the entire state of California is under shelter in place and other states will likely follow. This is looking like this will be painful for months not weeks. Stay well.

  2. Back from my trip to Portland.
    Couple observations on the road. Truckers can’t just pull over to the nearest fuel stop like a regular driver can. Truck stops are few and far between. So truckers plan for their stops. If possible, at a casino 🙂 All along I 5 from Portland to I80 West of Sacramento Long lines at the fuel stops at Seven feathers Umpqua Casino and Rolling hills in Red Bluff to mention a few. If there is a disruption in fuel deliveries it can cause problems.
    I passed long convoys of trucks all along the I 5 corridor from Washington to I80. If the government decides to declare a emergency and test all drivers at truck stops, weigh stations, or border crossings it could slow getting products to stores. I would watch or listen for such a event.
    If you think this is not possible, see the report of a Amazon warehouse worker getting sick. Warehouse operations are part of the logistics of shipping products.
    I am not trying to scare anyone, just use this as another tool when reading news to judge how the market may move.

    1. TechGuy,
      I have been 20% in munis CEFs for the last year. Out of all my fixed income investments, munis CEFs fared the least worst (besides gold/treasuries) meaning I have some that are price wise down less than 10% when they had been up 10-20% at the high. Out of the lot, non taxable BBN fared the best- I was up 25% total return and now the price is down 4% meaning a non negative total return.

      The initial sell off was liquidity/market based. However
      given the tax base will shrink severely this year and tax muni services and difficulty to raise more bonds currently, I am starting to question fundamentals.

  3. “plop-plop, fizz-fizz, oh what a relief it is” – Alka Seltzer Thursday. Temporary relief I’m sure, but I did some nibbling too and glad I did. Probably need more Alka Seltzer in the morning.

  4. AATRL has some nasty tax consequences if held in a taxable account. I hope you bought it in a retirement account.

  5. After failing to sell excess Rilym at par, traded it even for Rilyz today, booking a (hopefully not subject to wash sale) tax loss, and the chance for them to call it at par, with a higher coupon if not. Traded a years’ old tax loss in C for some C-K at 21.50 too.

    1. That would definitely meet the tax law definition of a wash sale loss, and some brokers have cost basis systems that would definitely catch two different bonds from the same issuer in order to apply the disallow loss to the purchase. (though the Treasury regulations applied to brokers don’t go this far, they only require the same security)
      So next year on your 1099, you will know how sophisticated your broker’s cost basis system is…

      1. Makes sense but I’ve read that it’s not a wash sale because of the different terms. I haven’t done it in a taxable account until this week. I’ll know in April when I see if my brokers year-to-date list flags it.
        Sell in one account and buy in an account at a different broker. Won’t be flagged though I don’t know if IRS software might catch it.

  6. Picked some more NLY-D this morning before it took off. Would be encouraging to see the market hold onto it’s gains during the day and not fade toward the close.

  7. Bought 100 shrs more NNNPRF today at $15.31. Quality buying opportunities everywhere.

    1. Ron,
      Do some of their top tenants that are shutdown, worry you about the $ NNN can collect in rent/taxes/maintenance? I’m in the same boat with some I own – like VER-F.

      Some of the top tenants of NNN are movie theatres (all closed), restaurants (closed for the most part if not entirely), gyms (closed for the most part if not entirely), Chuck E. Cheese’s (closed), Camping World – ?, etc.
      The convenience stores should not be closing, at least I’ve not heard of any.

      1. Affinity,

        Well, NNN, like O, own standalone retail stores like BJ’s, Sam’s, etc., who sell groceries and sundries, and could be considered essential businesses. They aren’t closing down, but are curtailing hours.

        No doubt they will be affected financially, but with a price of nearly $10 under issue, I just couldn’t resist. And I thought I had aced the last batch I bought a couple of years ago at ~$20!

  8. as they say in sports…….we’ve been rolled hard an put away wet over the past two weeks

    time to unplug and spend time with the family

  9. WFC and ilk senior A rated 1-5 yr went over 5% today. They could sell preferred lower a month ago. Everything corp & fed acting wonky. I don’t think we are nearly out of the woods yet but I don’t know much. I know pretty hard to turn down 20%-30% profits in 24 hours on ute notes in this market. Gave some up. More cash.

  10. One huge lesson “among many” that us investors should learn from this experience is that when Saudi Arabia and Russia want to get your attention you damn well better listen up. Those 2 countries have destroyed many fine american oil/oil service/ and MLP companies in quite “short order”. Yes some of them will be fine but comb thru these companies and look at the 52 week range. Quite Shocking to say the very least.

  11. One crazy thing…. investment grade bonds (LQD) have sold off more than the S&P 500 and High Yield (HYG) over the last 10 days. I read some about how thin the IG bond market was given moves in the banking sector…looks like it showed up.

    Just saw the chart… the drawdown (-22%) has now matched post-Lehman crisis.

  12. Tim, We only need for one new issue to IPO and re-direct attention the reality of our rate-starved environment. Various defaults and downgrades notwithstanding, appears the narrative could shift markedly in the next few weeks.

    And Tim: Secondary mortgage markets are still crushed. The current appraisals are no doubt for the droves that locked early last week. At par, 30-year conforming went from 3.25% to 4.375% from last Monday through Friday. At this moment, par, 30-year fixed conforming is at 4.375% while high-balance over $510.4K and jumbo markets are de facto not functioning.

  13. What a relief from yesterday, which was shockingly painful!
    Today got a little AATRL at $31, but I need to sit on the sidelines more until the storm appears over.
    In future months/years, I’m afraid anytime the word “virus” hits the news, the market will over-react, at least briefly.
    I appreciate Tim and others sharing their knowledge!

    1. Dave and Alpha I get to post the master of obvious statement for today…Today sure beat the hell out of yesterday!

      1. Gird, A lot of folks suffered through this. Some sorting out still will occur but wishing the best to all and hope everyone was able to pick up a few gems, average-down or increase portfolio quality in the process.

        1. On that note, added AQNB, CMSC, T-C, PPX. Increased ENBA and NLY-I today, took a loss on PRIF-A and VER-F to do it, plus a couple of more over the past week. Trimmed AATRL, TDA, MNR-C, and CHSCL to free up cash over the past couple of weeks. Still down 20% overall, but happy to upgrade quality. Also started buying RQI and UTF in dribs and drabs over past week. Too early as always but I think it will work out.

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