Monday Morning Kickoff

Once again we will have markets dominated by news of vaccines for Covid 19–we are getting very close to approval and the start of vaccinations. Once again there is no reason to believe markets will turn lower as virtually ‘all news is good news’.

The S&P500 traded as high as 3644 last week before closing the week at 3638. The index was up over 2% on the holiday shortened week.

The 10 year treasury traded in a range of .846% to .89% before closing near the low for the week.

The Fed Reserve balance sheet has not been updated with the Thanksgiving holiday interrupting the normal schedule–I would expect that the balance will be updated at noon today.

Last week the average $25/share baby bond and preferred stock moved higher by 16 cents. We continue to see investment grade issues lag junk issues–investment grade issues were down by 4 cents/share while mREIT preferreds moved higher 33 cents/share. We have seen the junk move higher for a few weeks as investors shy away from those issues with prices dramatically above $25 with low (or negative) yields to worst.

As one might expect there was absolutely no action in the new issue marketplace as the Thanksgiving holiday interrupted any potential new issue.

11 thoughts on “Monday Morning Kickoff”

  1. “Once again there is no reason to believe markets will turn lower as virtually ‘all news is good news’.”

    There could easily be a BIG drop when they are marketed, if it turns out that they are not nearly as effective as people hoped. (Just a possibility.)

    1. Any indication of what the proceeds will be used for?

      I own some GJH, just wondering if there is any increased of call on it.

      1. Inspy, nope…Fear the call warrant holders not US cellular for that issue. Its backed by a “make whole” clause so US Cellular is more likely to buy ATT for $5 dollars cash, than pay excessively to redeem their 2033 senior note that is lower yielding than the actual baby bonds on the market now.

        1. Good points you make there, guess I overlooked the fact that any call would be from the warrant holders, not the company itself.
          That is highly reassuring, Grid.

          Wonder if it would make sense to buy more GJH. It’s been pretty stable in price for a while now.

          1. Almost 32 cents will be directly in your account in about 2 weeks, being its 6 month exD is fast approaching. So it becomes simple math based on any purchase price before then you are leaving exposed. I have a full position in it. As you stated it doesnt really having much pricing volatility so I dont really try to trade this one much. Its just good relative value to me holding long term.

            1. Re: GJH. The underlying bonds are trading at about 130 and are reasonably liquid, so the risk of the warrants being called is definitely on the table. If you want to build a position, probably should do it slowly. You never know when the call warrants might be exercised, so buying a few shares here and there over time reduces your risk of loss on a call out of the blue.

              1. Decided to add more GJH, taking my investment up to a full position.
                Average cost is now $10.38, and after XD on 12/11, call risk is effectively eliminated ( accrued interest for the usual 30 day notice is 5 cents )

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