The big banks are reporting earnings this morning and are turning the equity indexes ‘red’–earnings are decent–above expectations, but forward guidance is more dicey.
I guess we won’t get an 8th day of gains in income issues–while interest rates are at 3.48% which is up 3 basis points from yesterday sharply red equities will likely drag preferreds and baby bonds lower—I guess on the bright side we are halfway through the month and thus closer to an end of month ‘payday’ in the form of dividends and interest–although January is not a huge month of payments.
As I mentioned I nibbled a CHS fixed to floating rate preferred yesterday. After their earnings report on Wednesday I felt emboldened to add to a current position–CHSCM 6.75% perpetual. I hold this issue because of the yield to worst and because it is trading just under $25. Investors should be very, very careful owning the CHSCP 8% issue with a -17% yield to call (annualized). I know from my research many, many years ago that this issue was owned heavily by cooperative members and thus got preferential treatment by management–BUT management was changed after their misguided nitrogen investments and with a potential call date in July (remember this issue was originally redeemable in 2008, but was amended to move the call date 15 years). This is a small issue of 3 million shares and could well get called–this should trade at $25.50 not $28.13.
Today we have no economic new of any magnitude—so markets should trade without these influences