Monday Morning Kickoff

Last week the S&P500 opened up the week at 2782, hit a low at 2721 and a high of 2879 and finally closed the week at 2874–a gain of over 3%.

The 10 year treasury traded in a range of .58% to .76% before closing the week at .65%

The Fed Balance Sheet grew by almost a hefty $300 billion–to $6.4 trillion–a crazy number, but one which is heading higher–much higher.

The average $25 preferred stock and baby bonds moved higher by a measly 8 cents last week. Investment grade issues were 9 cents higher while utility issues we down 34 cents.

So this week we have the DJIA looking a bit weak to start off–down 400-500 points, but we have learned that the early pricing on stocks doesn’t mean very much as any minute the FED can step in and manipulate stock prices.

I believe I am around 63-64% invested (haven’t calculated exactly). As boring as it seems I will be watching–still watching for some bargains, but I still hold out belief that better bargains are likely coming.

As you all know by now crude oil (west Texas intermediate) is trading around $11-12/barrel–incredible. With little demand and an oversupply of about 20 million barrels/day how will energy move higher? I see that in the comments Fabrib posted that Oaktree Capital has given a $750 million unsecured loan to NuStar Energy (NS). The press release is here.

27 thoughts on “Monday Morning Kickoff”

  1. No new pref. or baby bond offerings since 3/4/20! To not have any new issues coming to market for approx. one and a half months is very unusual and only highlights the seriousness & confusion within which the markets find themselves. (INHO). I have taken the liberty of listing some Pref & baby bonds that are still selling below par; I have all of these issues in my accounts and I have only listed those with a fair amount of time to first call. Hopefully this will be of interest/assistance to a few on this forum…I appreciate all the info/help that I have received….needless to say, do your own due diligence and ascertain whether any of the below listings fit in with your own personal goals & long term plans.

    1. danny–Fidelity has some rules to protect us from our own ignorance (so they think).

      1. From Wiki – “Nanny state is a term of British origin that conveys a view that a government or its policies are overprotective or interfering unduly with personal choice. The term “nanny state” likens government to the role that a nanny has in child rearing.”

    2. @danny
      “What is a “nanny state”?”
      Refers to an entity (usually the U.S. govt.) that wants to look after every aspect of one’s life-in essence, cradle to grave care. Implies unwanted intrusion in many cases, depending on your political outlook.

  2. I rolled the dice and took a nibble NS-C. I didn’t think I would be able to place an order through Fidelity because of the FF. But it went through. I wonder if they have changed their nanny state position?

        1. Martin G, thanks. I didn’t realize that the floating rate was the issue. I assumed they thought MREIT preferreds are just too risky for me. I didn’t try to buy the D and E because I want the lowest price preferreds.

  3. Tim…Hi..GM… is BANC.d being called in June, 2020 , they had a buy back, 3-6 months ago

  4. I looked at Fabrib’s post and pulled up the link I wonder what the covenants are in regards to payment of dividends? I can’t imagine a private lender giving someone money to pay dividend. They say they found where they can cut another 20 to 30 million in costs.

    1. Charles…do you have a position in Nustar and if so is it an equity or credit position?

    2. nustar isn’t a corporation. they are a partnership. So it is likely their distribution is toast on both their common and preferreds after that credit card/loan shark interest rate loan.

      1. That $750 moved on top of preferreds and NSS, sure doesnt give me the warm fuzzies to invest in either. For newbees this is a perfect example of why a credit agency like Fitch stated a year ago NSS would have a recovery rate of 0-10% if they went into receivership. It wasnt a year ago they were threatened in any manner (or maybe even now too), its just they know when trouble happens debt gets piled on top of NSS and lowers its probability of recovery should that ever happen.

        1. Grid, the new term loan will be used to pay down existing short term debt, effectively pushing the 2020 debt maturity out by three years. That will add just $50M onto the debt stack, with the option to add more later if needed. Not ideal at 11% interest, but not the end of the world by a long stretch.

          1. Let me sum it up. That sound that you hear? Yup, that’s the can being kicked down the road. 🙂

            Lots of that going on nowadays!

    1. Will B–long term they will likely be fine,short term things are going to be dicey—refining volumes are tumbling for them. Of course ag continues in terrible condition. I am watching–but at lower prices.

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