Monday Morning Kickoff

Here we go again–another week to see if stocks continue their almost never ending levitation.

Last week the S&P500 rose by 32 points–about 3/4%–no surprise as every slight dip is bought.

Interest rates (as represented by the 10 year treasury) climbed over the close the previous Friday by 1 basis point. Rates were 8 basis points higher until Friday and then yields tumbled by 7 basis points. For most of the last 10 days inflation expectations had been climbing, but drastically lower consumer sentiment (lowest reading since 2011) seemed to have put a halt to higher rates–for now. Of course no one knows for certain what caused the rates to move lower Friday–but we all have to speculate.

The Federal Reserve balance sheet grew by a modest $22 billion last week to a new record high–we will be able to say ‘to a new record high’ for at least the next 2-3 years. With congress spending like crazy there is no chance that the Fed will be able to back completely out of being active in the treasury market anytime soon–and maybe no time in the next decade.

Last week we had a little ‘give back’ in the average $25/share preferred and baby bond with an average loss of 22 cents. Investment grade issue fell by 20 cents, CEF preferreds by 2 cents and banks by 4 cents/share. Obviously we are getting a lot of noise in ‘averages’ as we have numerous redemptions each week and almost as many new issues being announced.

Telephone and Data Systems (TDS) sold a new, giant sized, issue of perpetual preferred stock with a 6.00% coupon. This was destined to be a winner from the beginning based upon the strong trading of the TDS-U 6.625% perpetual which had been sold in February and has traded as high as about $29.25.

The issue is trading under OTC temporary ticker TDSLL (changed from the ticker shown in the chart below). The issue closed on Friday at $25.50. Disclosure–I bought a position in this issue

Oxford Lane Capital (OXLC) sold a new issue of ‘term preferred’ with a coupon of 6.00%.

The issue is trading now under the OTC grey market ticker OXLNP and closed on Friday at $24.90. This is a monthly payer for those attracted to such securities.

Giant self storage REIT Public Storage (PSA) sold another low coupon perpetual with a coupon of 3.95%.

As low as this coupon it is not the lowest coupon issue PSA has sold in the last year as they sold a 3.90% issue (PSA-O) last November that is trading at $25.87 and a 3.875% issue (PSA-N) which is trading at $25.83.

The issue is trading on the OTC grey market under temporary ticker PASQL and closed last Friday at $25.07.

Container lessor Triton International Holdings (TRTN) sold a new issue of perpetual preferred stock with a coupon of 5.75%.

The issue is now trading on the OTC grey market under temporary ticker TTRNV and closed on Friday at $25.36.

Tiny Minnesota bank Bridgewater Bancshares (BWB) sold a new issue of perpetual preferred stock with a coupon of 5.875%.

No OTC trading has been announced as of yet–we will watch to see if one is announced on Monday.

Lastly ConnectOne Bancorp (CNOB) announced a new issue perpetual reset rate preferred. The coupon is initially set at 5.25%, but will ‘reset’ to the 5 year treasury plus a spread of 4.42% every 5 years.

The shares are trading on the OTC grey market under temporary ticker CNBOV and closed on Friday at $25.30. Look for the ticker to change soon.