Today we get the release on producer prices (PPI). Yesterday we got the consumer prices index release and it was essentially right on forecast. So the hope (mine) is producer prices continue on forecast or even softer—to balance the scale on the strong employment report from last week.
I see PacWest (PACW) common shares are dropping sharply this morning–they lost more deposits last week, but said they have enough liquidity for the next year. Of course other regional/community banks are tumbling as well in sympathy. Exactly why I am not buying more shares in these bankers YET. We had gotten this topic off the front page for a few days–but it is back and nervous nellies react.
The merger document is out for the Franchise Group (FRG) and it looks like the preferred holders will be getting taken out and getting their $25/share. The merger document says shares will be converted or redeemed –each resulting in $25/share plus accrued dividends. I am surprised that the company couldn’t find a way to wiggle out of having to pay over $100 million—obviously I have no trust in management. So we will see if this deal closes and all live happily ever after.
The 10 year treasury is at 3.40% this morning as we await economic news – looks like a soft PPI will send rates into the 3.30’s%–yet we still have CDs over 5%–right now (6 a.m. central) I see 5.15% to 5.35% on eTrade. Of course lots of different terms and many are callable, but at least decent options are available and at these rates I will peruse some of these today. My CD ladder maturities kick in every month for the rest of the year and with plenty of money market funds (my dry powder) there is no reason to not go ahead and lock in some tasty CDs. I am guessing that we are nearing a peak in CD rates–although one never knows.
Equity prices are off a bit this morning – nothing severe and we have no idea where prices will go–we’ll see if the small banks drag us down.
3 thoughts on “Now Awaiting PPI”
Tim – “obviously I have no trust in management” ’nuff said…. I’ve passed on this one… Although they did nothing wrong legally when they did this, RILY issued one of their notes in the past (I don’t remember which one) and within Use Of Proceeds said they intended to redeem one of their others with proceeds but they never did. That’s enough past history for me to not walk into this ambiguously written issue in hopes Rily will do what they say… and yes, they are not the only entity involved here and may not even have the majority say, but their influence will unquestionably be there.
FRGAP is around $23.85, so I am assuming the market does not have confidence in the $25 redemption by this management.
Is there anyone who thinks this is a good buy like the Travel Centers Baby bonds (which is backed by BP)?
Western Alliance Bancorporation Issues Deposit Update