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Let’s Wrap Up This Tough Week

Well it is Friday and from an interest rate perspective it has been a tough week–the 10 year treasury is now trading at 4.54% after hitting a high of 4.58% yesterday–20 basis points higher than the close last week. Of course we lost some money this week, but it has been a long time since we have had a losing week and with the high allocation to CDs these losses are very manageable–but I hope we don’t see these losses on a regular basis. I haven’t calculated the average $25/share preferred and baby bond loss on the week, but I would be surprised with anything less than 25 cents/share–I am guessing more like 50 cents. On the other hand we all know that if you had some shorter duration term preferreds and/or baby bonds your loss might have been just a dime or so—portfolio construction makes a huge difference.

Yesterday we saw a producer price index (PPI) number that was better than expectations. 1st time unemployment claims were at 211,000 versus a forecast of 217,000. Employment is not showing any signs of stress–certainly not any that is adequate to make the Fed think they are too tight–as you might remember I think the Fed is looking at employment as a key indicator.

You likely saw that short seller Fuzzy Panda (yes really Fuzzy Panda) has come out with a hit piece on Globe Life (GL) which has a baby bond outstanding (GL-D). The baby bonds fell to $14.94 late yesterday. I read through the accusations and all I can say is WOW. Either this is a company out of control OR someone has a vivid imagination. Whether this is balony or not I don’t get involved in this stuff–I have plenty to worry about without involvement.

So I close the week sitting on my hands–no buys or sells. For those believing interest rates have peaked there certainly were bargains available this week—even I am tempted–maybe next week.

5 thoughts on “Let’s Wrap Up This Tough Week”

  1. Where possible I’ve sold off holdings going into earnings. All the small to midsized regionals reporting is an unknown risk window

  2. “Junior Subordinated Debentures Due 2061”

    Holy Molly, that is so far down the debt structure risk/reward ladder, just looking at that security makes my head spin!

    1. Payday, with those types of issues, one generally views it as a preferred stock where the company is pocketing the tax break and not giving it to the buyer.

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