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Monday Morning Kickoff

Here we go–off to another exciting week no doubt. Last week was exciting in a good sort of way in that it was very profitable for income investors (and common stock folks as well).

The S&P500 moved in a range of 3794 to 3906 and closed at 3895 which was a relatively good gain from the close the previous Friday of 1.4%–all the gains coming on Friday as markets ‘read’ the employment report as favorable–not too strong–not too weak–with slowing wage gains–goldilocks if you please

Interest rates moved lower to close the week at 3.57%–down 30 basis points from the close the previous Friday—WOW no wonder income issues shot higher. The drop on Friday was a full 15 basis points on the employment report.

This week we have plenty of economic data—but in particular we have the consumer price index (CPI) on Thursday. Obviously this can derail the current treasury rally and the stock market euphoria.

We got a pretty large drop in Fed Balance Sheet assets last week–down $44 billion. The last 4 weeks saw a drop of about $75 billion in assets which is a decent drop but below the max reduction of $95 billion that the Fed has stated is the plan.

The average $25/share preferred and baby bond moved up sharply last week by 79 cents. Investment grade issues up giant sized $1.14, mREITS up 71 cents, CEF preferreds up just 24 cents with shippers up 37 cents.

Last week, again, we had no income issues priced.

At this moment we have interest rates near flat around 3.59% with the S&P50d0 futures up a bit–about 1/3%. I will be looking for some nibbling this week, although I think we need to be a bit of a setback in prices after last weeks strong rally–either way I am looking for nibbles with the little bit of cash that I have available.

3 thoughts on “Monday Morning Kickoff”

  1. PFF up almost 5% in 2023 already? This despite the fund having another $23M in outflows last week.

    I hope some used this big rally to bank some early 2023 capital gains. I certainly did. There really shouldn’t be too many perpetual preferrerds (like PSAs) selling with 5 handles but here we are again.

    If the prices keep rising, so be it – as the rest of our income portfolios should obviously benefit tremendously.

    1. Things like PSA I bought with 6 handles are the keepers in my book. If they go below my cost basis I will just buy more. I don’t want to let the rock solid preferred go. I would rather weed out weak stuff if it goes way up. “A” grade stuff was an easy buy recently and an even easier forget it and hold.

  2. My accounts have shot up the past few days – nice to see green for a change. Feeling pretty smart! Did we see the bottom of 7.5%+ QDI prefs from good companies – mainly regional banks and CHSC – even those 7% MS prefs? Remember the gold old days of getting LNC5503201 at $105.

    I never got that OZKAP we talked about, and I’m dissing myself right now. The last week of 2022 sure felt like a market dump on low volume – usually a mistake to take advantage of. Now, I’m feeling schizophrenic dumb about not moving in more. The dopamine comes and goes.

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