Monday Morning Kickoff

The S&P500 traded in a range of 3326 to 3379 before closing the week at 3373–there was a gain of a bit less than 1% on the week.

The 10 year treasury yield traded in a range of .55% to .72% before closing at .71%–the highest weekly close since June 5.

The Fed Balance Sheet grew by $12 billion last week–the 1st increase in 3 weeks. With interest rates popping last week because of relatively massive supply from the treasury we may well see the balance sheet grow at a faster clip ahead–we will see if there is enough liquidity sloshing around to soak up the issuance.

After pausing 2 weeks from relentlessly upward movement the average $25/share preferred stock and baby bond moved higher again last week. The average issue moved 1% higher with lodging issues moving 3% higher, mREIT issues moving 3% higher while utilities moved just 1/2% higher. Investment grade issue just barely moved higher by less than 1/2%. Obviously the theme is junkier issues drove the week higher.

We had 3 new income issues sold last week.

US Cellular (USM) priced a new issue of baby bonds at 6.25%. The ticker will be UZD when the issue begins to trade (no OTC trading)–I note that eTrade has the ticker ‘set up’.

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Self storage giant Public Storage (PSA) priced a new issue at the rock bottom coupon of 4.125%. In spite of the coupon the issue closed trading last week at $25.48–trading on the OTC market–ticker PSAGL (note the OTC ticker below is not correct–changed after publication.

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Lastly Federal Agricultural Mortgage Corp (AGM) priced a new issue at 5.25%. The issue is trading on the OTC market under ticker AGMFP—closed trading last Friday at $25.02.

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2 thoughts on “Monday Morning Kickoff”

  1. Tim, I think it’s time for caution and I’m about 70% cash. I’m seeing similar indicators that I saw in February. A lot of negative divergences with markets still rising. If anyone has a position in QQQ, it’s trading 22% above its 200 dma. and VXN is rising. That precedes sell offs. The risk is greater than the reward at this point. ATB.

    1. Tim–I agree things are way over valued, but as you know things can stay this way for months and months – if not years. I am 30-35 in cash and even that level is painful–i.e. income being foregone. It is a tough call right now.

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