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Monday Morning Kickoff

Well there should be no doubt this will be a wild week—a barrel of oil is at $124/barrel as I write this and further increases in oil may very well send the global economy into a recession–these are scary times.

The S&P500 fell by about 1.3% last week, but traded off by about 3% at one point in time. This leaves the index right about 10% off of all time highs.

The 10 year treasury is now trading based on ‘flight to safety’ and global turmoil and closed last week at 1.72%. As we have seen in past weeks rates can bounce back higher in an instant, but now the Ukraine situation has become serious enough to bring doubt as to any Federal Reserve plans for the months ahead. Needless to say we are now on a day to day global ‘wait and see’ – no one knows what may occur in the weeks ahead.

The Federal Reserve balance sheet fell by $24 billion last week

$25/share preferred stocks and baby bonds took another hit last week with the average shares falling by 14 cents. Investment grade issues fell by 12 cents, banking issues by 3 cents and mREIT preferreds by 12 cents. Shipping issues fell an average of 62 cents/share which was primarily heavy losses in the Dynagas LNG preferreds based upon Russia related business.

Last week we had 2 new income issues.

Insurance company Kemper Corporation sold a new issue of 5.875 fixed-rate reset baby bonds with a 2062 maturity. The shares are not yet trading.

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Hard money lender Sachem Capital (SACH) sold a 6.00% note issue. This issue is not yet trading.

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10 thoughts on “Monday Morning Kickoff”

  1. Tim.. Very hard, to invest in these new offers, B-C rated , there is so much A -rated, preferred stock…below $25..par..what do you suggest .buy new or buy good old reliable A-rated…preferred stock..Georges

    1. Georges—I am doing a blend—I have been nibbling at all the old perpetuals I own–Arber Realty issues, Ready Capital etc. I plan to do some investment grade, just don’t know if this is the time yet.

  2. Does anyone have knowledge about UGIC? I noticed the parent company (UGI Gas & Electric) is not searchable on the site. I’ve had common shares for many years.

    1. Why don’t you consider hedging your personal fill-up risk with a smaller domestic energy company that pays a variable dividend?

      I’ve been “hedging” my Wrangler’s thirst for a several months. (My melting preferreds were not working.) I even occasionally smile when I pull up to the regular pump at Delta Discount station. (When prices drop at the pump, I still smile on that leg of the trade.)

      I bought one for the divvy, which got increased. The unexpected recent stock price appreciation was the prize in the Cracker Jack box.

      Investment case – It was either quick or dead for the smaller producers during the last oil patch trouble. Some became more efficient and now have lower breakeven points. (If your BE is 35, even 70 means making good money.) As their 2021 hedges roll off, things are looking even better.

      The smaller companies are domestic, so no need to worry about geopolitics. Also, with these stocks still under priced, there may be more M&A activity.

      IMHO, there are quite a few “panic” dollars baked in current oil prices, but the increased cash flow case is still there even with the inevitable drop to the 90’s. Caveat: The smaller operators are riskier and often not widely followed so DYODD.

      Next project: thinking about wheat.

      Just my opinion.

      1. Bear: Here’s a wheat play I used up, during the pandemic “ADM” held one year and one day with a 55% gain. still viable. Also got out of half my Fertilizer play in “NTR” with a 124% gain last week ‘”commodities’ ? a bird in hand is sometimes worth two in the bush. All my “oil” exposures is in pipelines. still looking for something new.

      1. Please get the gas at Costco. Last time, it was still $4.5 or so. in Huntington Beach, CA The gas line is not so bad when it is close to closing time. Perhaps a tad more in LA county. Costco got the best deal in food as well. Most hated organic chicken drumsticks at $1.99 per lb. Not recent available. Chicken wings (not organic) $3.39 per lb. Flash frozen Sockeye Salmon, Pacific Alaskan Cod, still reasonably priced, just perhaps 5 – 10% before the inflation. Their common stock is also good with dividends (tiny) reinvested IMHO. They got very shrewd buyers. No shortage in paper products or detergents etc.

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