Monday Morning Kickoff

The S&P500 moved higher again last week as bad news is good news and good news is great news. The index moved in a range of 3285 to 3353 closing right near the high of 3351—the index gained around 2.5%–another week like this and we will have a new record high. With the liquidity in the system and the Fed at the ready to make sure asset prices move higher there is no doubt in my mind we will see record highs soon.

The 10 year treasury traded in a range of .51% (a record low) and .57% and closed at .56%.

The 5 year treasury (the base rate for the newer Fixed-Rate Reset issues) closed last week at .23%.

The Federal Reserve Balance Sheet fell by $4 billion last week–the second time in a row assets have fallen–assets fell by $15 billion last week.

Finally the average $25/share preferred and baby bond slowed their weekly increase in pricing. The average share rose 9 cents last week, with just lodging (plus 43 cents) and mREIT preferreds (plus 26 cents) contributing much to the small gain. Investment grade rose a penny, banks were off 5 cents and utilities showed a little softness being off 2 cents.

Last week we had just 1 new income issue announced as West Virginia banker WesBanco (WSBC) announced a new fixed rate issue.

The issue is trading under OTC temporary ticker WSBKL right now and opened strong when trading commenced last week with the low around $25.40 with a high on the week at $26.17, before closing at $25.98. Disclosure–I bought a 1/2 position at $25.50.

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19 thoughts on “Monday Morning Kickoff”

  1. NEW YORK, August 10, 2020 – AmTrust Financial Services, Inc. (“AmTrust” or the “Company”) today announced that its Board of Directors has approved a cash dividend per share on the following series of non-cumulative preferred stock: Series Rate Dividend A 6.750% $0.421875 B 7.250% $0.453125 C 7.625% $0.476563 D 7.500% $0.468750 E 7.750% $0.484375 F 6.950% $0.434375 The preferred dividends will be payable September 15, 2020 to stockholders of record on September 1, 2020

  2. I kept away from wesbanco because of small deal size. But Tim was right on this one.

  3. It is amazing to see how low the rate on the 10 year Treasury has gotten. Clearly, it’s not even possible to invest in a money market account or CDs right now. Quite painful for some of the savers out there. My sister asked me for advice recently on where to put some funds from savings and I recommended she look at the CD rates at the local credit union. Looked there last week and the rates were horrible. Last year I helped a non-profit lock in a rate of 2.50% on a 5-year CD. The rates on the 5-year CD are now 1.05%.

    1. It is unlikely that I can get the WSBKL at anywhere close to $25.50 because I first needed to sell some asset to buy this one. After listening to the pre market ignoring loud mouth Jim Cramer, Dr. Mohamed El-Erian, now working for the German insurance Allianz which did own the PIMCO many years ago, it seems that his view of a Square Root sign, recovery and then tapering off FLAT seem to make sense. He suggests GOLD. Guy Adami, leader of FAST MONEY CNBC was not as enthusiastic on the tech stock market. He has periodically called for NEM (Newmont Mining). Hence, for a non gold believer, 5K on NEM and 5 K on GLD. SPEK (fake Electric utility) announced latest earnings. Better margin, revenue decline. I will not go back after taking some net loss. The concluding statement “the dividends will be reviewed” seem to suggest that this one could go south. I remember Just Energy well and bailed out once I heard the news without waiting for Richard Lejeune. I have extremely low position in gold. Time to start perhaps, still holding lots of Gaslog perferreds, GLOB A, B and C.

    2. JohnK
      MGF & MIN are still doing very well, & keeping their NAVs up. Pretty much gov’t issues- especially MGF.

      1. Gary, thanks. I am scared to death on Closed End ETF. Actually BDC’s e.g. ARCC, TSLX and even SLRC are doing well. EVA reaches more than $40 incredible. Market looks like the good old days have returned. RLJ/A almost reaches par with 5+% gain on RLJ. GLD and GDX do not shine today for sure. 72+% of stocks in NYSE up at this time. Perhaps best to leave more cash just in case.

      2. @Gary
        I also hold MGF and MIN
        They are my largest positions and have been anchoring my portfolio for many years. They fared well even in the 2008 financial crisis…

        1. Thanks Gary and Malka, MGF does look attractive, duration on the Feds. Once upon a time, UTG was considered “safe” and then it turned south. Now pushed up a little with Rida Morwa’s subscription machine. No use, utility ETF is unloved by this overheated market. I still have substantial unrealized loss on AWP, another classic CLF raved by Rida. Bought more and maxed out on Gridbird’s FPI-B. Leverage debt to equity about a little over 4. Common stock of FPI going down. Then FPI-B is bond, so it probably still okay with huge CY.

            1. And to add, John, I have been long out of this preferred. Doesnt mean I wont own it again, but presently am out. Havent delved into it very much past few months other than price watch.

              1. Sorry to mislead. Cumulative preferred not baby bond. Not SWAN for sure. However, unlikely to become AHT or CLNY. It does have real biz, with farm products and fuel out of favor (then farm products should recover with hidden food inflation). Huge CY.

  4. The round robin tournament to determine seeds for the Stanley Cup Playoffs concluded this weekend and it was a great success. The RR games were exciting to watch and perhaps more importantly the NHL demonstrated that professional hockey can be played in this covid-19 environment. The league is also expanding, with a new team named the Krackens set to begin play this winter in Seattle. If there were a way to go long NHL futures, I’d do it.

      1. Maybe- until a free-for-all on the diamond– as over the weekend. I don’t follow sports, but it made for a Covid moment- looks like the main combatants will be suspended. Maybe cut back on the ‘roids, boys.

      2. Whats interesting about the NHL playoff bubble is it eliminates home field advantage. The teams are ensconced in one of the hotels nearby the arenas so no cross country travel. Its tough on the team equipment managers though, because that have to unpack and repack for every game. I have no idea how much gate revenue is lost, but I’m guessing television makes up the difference. Looks sustainable provided there’s no outbreaks.

        1. sort of — both home teams (ie. Toronto and Edmonton) playing in their own arenas which you’d think would be an advantage got knocked out in first round. sigh as a CDN ………………

          1. My adopted team in Las Vegas will extract revenge for the Oilers Buck….pucks dropping shortly.

  5. As a “buy and hold” fixed income investor I’m finding the preferred market starting to get a wee bit lofty for my purposes. At the same time selling commons which have also run up to levels which I think are not sustainable.

    This means sitting on cash for the near term.

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