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Monday Morning Kickoff

Well here we go – a wild week is upon with lots and lots of banking news.

The S&P500 fell by a healthy 4.5% with most of the losses coming on Thursday and Friday. Volume on Friday was relatively huge, which will likely be seen again tomorrow.

Interest rates imploded last week as the 10 year treasury yield closed at 3.70% which was 27 basis points below the previous Friday close and 32 basis points below the high yield of 4.02% on Thursday.

The employment report came in hot last Friday with 311,000 new jobs in February – BUT the unemployment rate came in at 3.6% compared to a forecast of 3.4%–markets took this as dovish toward interest rates, but then the banking news began to overshadow all other news and rates imploded in a likely ‘flight to safety’.

This week we will have plenty of economic news–including the CPI and the PPI. The news is important, but whether the Fed reaction is normal will remain to be seen as banking will weigh heavy on Fed rate decisions come the end of the month.

The Federal Reserve balance sheet rose by about $3 billion last week after falling by $43 billion the week before.

Last week we had a large move lower in $25/share preferred shares and baby bonds. The average share dropped by 79 cents, investment grade issues fell by 81 cents, banking issues fell by $1.20 and mREIT issues fell by 85 cents.

Last week we had 1 new income issue sold from FTAI Aviation (FTAI). This was a fixed-rate reset with an initial coupon of 9.50%. This issue is now trading on the OTC exchange.

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5 thoughts on “Monday Morning Kickoff”

  1. Well I think we know who is overbought in financials as I watch one account trickle down every second… nvm the large haircut since Thursday haha oh how the money rolled in and then left.

    I mean surely all the banks can go belly up can they or can they? Guess I’ll find out this week.

  2. First Republic (FRC) investors are not believing the bailout will work. The common is down from ~ 82 to 29, a nice 65% haircut. All 7 of the preferreds are down ~ 25% to ~ 10 to 13 in pre-market trading. . . .

    PacWest (PACW) is down ~ 43% to ~ 7.10, preferred PACWP is down ~ 48% to ~ 7.36.

    UGLY start for these two

    Don’t own them and ain’t buying them. . .

  3. Wow! 1 year Treasuries yielding 4.33%. I just added my final tranche into laddering 6-, 9- and 12-month treasuries early last week. with my average on all just about 5.1% My final volley was the 1-year at 5.35% – it’s off a humbling 1% in less than a week – and some FHLB bonds at 5.7%. I am happy to have over 50% or my portfolios in treasuries now. I do have exposure to some banking preferreds but I think mine are “safe” but the uncertainty exists. And I have some of the topline BDCs who seem to be hurting along with the banks. It’s a wild, wild, wild world out there!

    1. well. pacw halted . now 10:33 est. at $5.+ = 30% reward. so, as buffet says buy when others sell….or buy low sell high….so ordered 200 shares. I am either crazy or brilliant.

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