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Let’s Replay Yesterday

Actually there is little to no chance that we will replay yesterday, but we do have the producer price index (PPI) being released in 2 hours. After yesterdays near 2% gain in the S&P500 today is looking tamer – the futures are up about 1/3-1/2%.

The producer price index will be released at 7:30 a.m. Last month the core (which is PPI less food and energy) PPI was up 2.8% year over year–with the PPI up 2.2% year over year. So markets will partially drive off of this number–but maybe just as important will be the retail sales number which is forecast at a -.2%. A strong retail sales number will indicate the consumer is strong–and generally folks want to see this number below zero–don’t give the Fed reasons to ponder interest rate increases.

Interest rates fell sharply yesterday–around 17 basis points on the soft CPI data. This morning rates are maintaining near yesterdays closing levels around 4.46% on the 10 year. I see that almost everyone is now on the ‘Fed is finished’ bandwagon – all I can say is the Fed may be done, but I would be much less certain that the marketplace is finished. We need to ferret out buyers for trillions of dollars of new debt to be issued by the treasury–there is no way I am buying 3% 10 year debt–I need to be paid!!

Yesterday pushed my accounts near all time highs–it has been a long time coming–the all time high was in late 2021 before the Fed rate hikes started. With a little luck and some dividend and interest payments new highs should be reached before year end. I am hoping to get to the more average return of 7% or so next year. Certainly lots will change in a year so who really knows–we’ll see.

B Riley (RILY) common, preferred and baby bonds jumped yesterday. I don’t believe there is new news, but I am certain there will be within a week or two. Whether there are illegalities taking place in conjunction with Franchise Group and Brian Kahn is unknown–maybe it is just all the lousy deals Riley has participated in that makes the company a short seller target–I know I have an opinion of them and it isn’t good. My standard comment – everyone is innocent until proven otherwise.

Well now it is an hour from news–so will watch CNBC until the news hits then off goes the TV for the day.

22 thoughts on “Let’s Replay Yesterday”

  1. Speaking of all time highs, we need someone who owns shares of SLMNP at Fidelity to sell a share or two so we can get that last print at $825 to go away. I know that’ll help on my journey to all time highs – lol …. I know a few of us own this one and have no clue how those last few trades on Nov 3 and Nov 9 could have happened at “825 when we’re willing bidders much higher… Those 2 trades totaling 14 shares are acting like a heavy thumb on printed portfolio valuation. I’m guessing Fido only allows trading in SLMNP when they can cross trades internally between Fido buyers and Fido sellers and those $825 trades happened outside of Fido, but I don’t know that for sure…. What I do know is I sure am willing to pay more than $825.

    1. 2WR, my daughter has a single share of it she bought as her first investment from her part time job savings. If you take up a collection to pay her $1000 for it then we can all put in new highs in our accounts… ;o)

      Surely it is worth an extra $150 or so to you for us to all feel rich and well pleased with ourselves for a day. Ha!

      Fidelity gave her $50 to open the account, she has already received her first divendend from SLMNP, and with the $150 on top she would be giving Warren Buffet a run for his money so I imagine she would be feeling pretty good too!

    2. You can sell SLMNP shares anywhere, but you can only buy them back at Fidelity.

      Re: cross trades, I thought the whole point of the “expert market” was to have a market for these stocks.

      1. Hmmmmmmmm, let me see now, I have a standing bid out there on SLMNP at Fidelity at least 15 points higher than where those 2 trades happened at 825. Now those 2 had to have sold to somebody, right? By your theory the buyers had to be at Fidelity because that’s the only place you can buy. Are you saying you think somebody else at Fidelity was favored over my substantially, almost 2% higher bid? I don’t think so. I think the expert market is fractured and if a seller goes to sell thru a broker other than Fido, Fido does not see it, by their own design… Should I call Fido to complain?

        1. The buyers did not have to be at Fidelity. As far as I know, Fidelity is the only place where “non-experts” can buy. However, I don’t know where the “experts” are trading, or if their trades are reported.

          The fact that the reported trades were round lots makes me think they were probably not retail though.

          Was your bid also for a round lot? If so, I do think you should complain to Fidelity (and of course let us know what you find out).

          1. Neither trade was for a round lot… One was for 5 shares and the other was for 9. And no, my bid is not for a round lot…

            1. Whoops, I had looked at Yahoo which shows volume of 100 shares each day. I see that Fidelity shows the 5 and 9 share trades.

              Anyway, I think the rules are pretty lax for execution of odd lot OTC orders.

      2. Have a block of SLMNP shares up for sale right now. No takers but its good till Feb 12.

  2. Sorta mixed:
    On an annual basis, PPI rose 1.3% for the 12 months ended in October, down from a 2.2% yearly increase in September.

    Economists expected PPI to inch up 0.1% from September and rise 1.9% from last year, according to Refinitiv estimates.

    When stripping out the volatile food and energy categories, core PPI was unchanged for the month, bringing the yearly increase to 2.4%.

  3. There’s a new issue on Quantum:
    Carlyle Secured Lending, Inc. 8.20% Notes due 12/1/2028
    Ticker Symbol: CGBDL
    CUSIP: 872280201

    1. the latest on CGBDL via a company News Release ; it will IPO on November 20 ,$85 million issue; I want to know what the interim trading symbol will be (for the first 30 days) this is a 8.20% baby bond and the best chance of getting it under $25 is right after issuance under the temporary symbol. anyone know what that symbol is going to be ?

  4. I dunno, folks, but I have this nagging feeling that the run-up here in November is just a bear market rally/bull trap. We shall see and time will tell but I am not convinced of its validity just yet. I am still well invested in treasuries, high-grade corporates and IG preferreds with avg overall yield right around 6% (current yield – YOC is closer to 7%).

    In my trading account, I play NVDA options every week – selling calls on bumps up and selling puts on dips down. This has been like an ATM for me since June. Only once did my strike get violated (I was put the stock) and I quickly sold a deep ITM covered call on it the following week and still made $$$. I sold next week’s NVDA $620 call for next week for $67. Given the run from 393 to 500, I highly doubt we see 620 next week even if there are great earnings. We shall see. GLTA

  5. Tim, too early to call this a Santa Claus rally? As for the consumer we still have the Black Friday sales report coming up and of course sales will be extended by sellers into a Black Monday if they need to hit their sales goals. Retailers are doing good as most plan to be closed and give the employees the Thanksgiving day off. I have been planning to spend some money, Not because I was wanting too but because the darn airline lost a suitcase and all the new clothes we had bought for the trip and essentials that were in it. 🙁
    As for manufacturing and construction from my viewpoint it’s a mixed bag. We hit sales last month and even beat Corp, But with less work days and employees taking vacations its not looking like sales will be met. LTL shipments are way down but several of my customers in roofing distribution say they are busy.
    So maybe we call it a Goldilocks rally unless something goes hiccup?

  6. Good deals still exist. Some names were stagnant yesterday. Here is a safe play and a risky one.

    NCZ/A, NCV/A: These both yield close to 6.9% when accounting for accrued div. Simply put, I put these in the super safe category. These are issues by cusip based CEFS, so they can easily liquidate if they ever come close to the 40 act leverage limits.

    CIM/C- 7.75%: fixed to float. Floats Sep 2025 at LIBOR +474 (SOFR +500). Its priced at $17.80, well below $25 par. Company has already confirmed it will float. Common has rebounded lately, yet this name trades near its YTD lows. Only buy if you are familiar with the inner workings of a credit mortgage shop.

    1. I like cefs and cefs preferreds. can anyone point to an example of what happened to the preferred if the asset limit was breached. is there a mlp cef or other case study to refer to? thanks in advance.

      1. jbosch, NCZ breached its ratio limits a couple of times in 2022. They had to delay the common share dividends until the leverage was reduced and they were back in compliance. I don’t think the preferreds were affected in any meaningful way by the breach. However, it doesn’t inspire confidence in management that would let this happen twice. As Maine points out above, these are still very safe preferred shares. Just my 2 cents.

        1. great example, thanks. some of the guys on SA think the oxford preferred are safer than they might otherwise appear. funny to see that ncz uses the wfcl broken convertible in their portfolio ( I bought some of the wfcl for laughs and to learn about spreads)

          1. Oddly enough, as I write this WFC-L has the same yield as NCV-A, and I would much rather own WFC-L. I know many people hate WFC for good reason, but I think it’s solidly TBTF.

            1. I like both names, but from a default/safety perspective, it’s a no-brainer; NCV-A all day long. In a worst case scenario (think 2008 without a FED put), both entities will be forced to de-lever and sell, but only NCV holds 100% public listed investments to sell. Plus, NCV has a lot less leverage than WFC.

              Fitch has the NCV preferred rated A compared to BBB for Wells Fargo prefs. Snippet below:

              The Long-Term ratings are supported by:

              –Sufficient asset coverage provided to the rated securities as calculated per each funds’ asset coverage tests (please see Rating Sensitivities below for additional information).

              –The structural protections afforded by mandatory collateral maintenance and deleveraging provisions in the event of asset coverage declines.

              –The legal and regulatory parameters that govern the funds’ operations.

              –The capabilities of Virtus Investment Advisers as primary investment adviser and Voya Investment Management as subadviser.


              1. I can see your point, but in a serious crash, I don’t trust in Virtus’s ability to sell assets fast enough to raise $100M or $109M to redeem the preferreds.

                I also don’t have much confidence in Fitch ratings, especially for something other than a vanilla bond or preferred.

                And finally we know these funds are going to run out of NAV before too long, and I’m not sure what the end game will be.

                1. Regarding the selling required…

                  It’s a slow bleed, they won’t need to sell it all at once unless the stock market is down 50% in a day, generally speaking.

                  And these funds never run out of $, they simply merge with another fund, issue a rights offering for new shares, or liquidate and give $ back to shareholders.

                  Please give an example if you disagree. Look, if NCV held private assets, then it’s a completely diff story…

                  And in regards to the ratings, I agree don’t rely on them. But fitch ain’t no Egan jones. Heck, NCV started out at AAA. You simply can’t break these things.

    2. Maine –
      Isn’t the ‘safety’ in the CEF issues the high coverage they must have?
      Getting near leverage limits doesn’t seem unusual for CEFs- or expected.

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