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Quiet Markets – For Now

Markets are very quiet – very quiet. Guess markets are looking for moving stimulus. 10 year treasury yield down 3 basis points with equity markets essentially flat.

Yesterday consumer debt numbers were released and they are a bit scary. Consumer debt numbers cut both ways – stimulus initially and then later if we enter a true recession of magnitude ‘bad debt’ appears causing severe write offs. With credit card balances taking there biggest jump in over 20 years last quarter – up 15% year on year, we will be watching for write-offs as a ‘signal’ to economic stress.

Tomorrow the new jobless claims will be released with 225,000 expected versus the same number last week. If this economy is slowing we need to see this number higher (not to wish bad luck on employed folks)–with all the high profile layoffs in tech you would think we would see this number increasing–we’ll see.

Thursday and Friday we have building permits and housing starts being released as well as existing home sales being released. In Minnesota I believe building permits were off 50% or so in October—this will eventually ‘feed into’ employment (or lack there of).

Today I will not be in the office in the morning so likely will do nothing as far as buying/selling, although I still have the Spire 5.90% perpetual (SR-A) on my buy list. I will need to see a little lower price after the jump of 59 cents yesterday–outrunning a limit order I had in place.

13 thoughts on “Quiet Markets – For Now”

  1. I increased my position in investment grade ONBPP at 24.91 this AM. It is currently 25.09 and has a 7% coupon which I think is still a decent price. It didn’t move way up in price last week like other preferreds. Their latest earnings beat expectations.

    Old National Bancorp (Nasdaq: ONB), the holding company of Old National Bank, is the sixth largest commercial bank headquartered in the Midwest. With approximately $46 billion of assets and $27 billion of assets under management, Old National ranks among the top 35 banking companies based in the U.S. and has been recognized as a World’s Most Ethical Company by the Ethisphere Institute for eleven consecutive years. Since its founding in 1834, Old National Bank has focused on community banking by building long-term, highly valued partnerships with clients and in the communities it serves. In addition to providing extensive services in retail and commercial banking, Old National offers comprehensive wealth management, investment, and capital market services. For more information and financial data, please visit Investor Relations at oldnational.com.

    1. I have full positions in ONBPP and ONBPO in the $25.5 range.
      I bought a little too late after Grid mentioned it when they traded around par

      I am puzzled they do not trade higher for the IG rating and yield.

      I will sit and collect the 7% – ish qualified IG for the next two years – most likely sell in January of 2025 to preserve a little capital at the cost of the last dividend in the event of a call.

      I missed the dip to almost par of FRMEP this past September
      That would have been a nice one to own for a few years as well.

    2. I’ve owned both preferreds for a while at an average price of $25.19 and hope they never get called. Who knows where interest rates will be in 8/25.

  2. I feel employment numbers are unreliable during the holidays due to so much temporary employment. The same applies to credit card balances.

    1. I have no data to back it up, but I wonder whether some of the credit card run up is at least in part tied to the end of rent/mortgage forbearance that started in 2020.

      Last winter, we were asked to talk about basic financial literacy at a community/charity event. I talked to some of the attendees afterward who were living very happily not paying rent, etc. because of the government moratoria. I asked what they were going to do when things changed and they had to start paying again and the answer from almost every person was some variation of “I don’t know – maybe it won’t happen”.

      Now that those programs are ending, I wonder whether folks started borrowing because they had to start paying rent again.

  3. Some(no idea how many) of the tech layoffs are not in the USofA.
    Thanks for efforts. Much appreciated.

    1. Here in Silicon Valley, layoffs from valley companies are not viewed as that terrible or frightening, at least for the young.

      Most of the young engineers/programmers I talk to are just not worried about them. I had dinner with groups of them from various valley companies the last three nights and this was a topic of discussion.

      The consensus was that there is still a strong demand for talent, and job turnover is an everyday thing in tech (startups fail, people decide to leave for a better position, etc.). Most of the folks had changed jobs every few years anyway. Admittedly, the valley is a strange place, but so long as there is still a demand for talent, tech people don’t think they will stay unemployed very long.

      A couple of guys I talked to run big organizations. They said they had lots of open job req’s and had told their recruiters to focus their efforts on people being laid off from specific companies.

      1. this may be a good sign for HPP and HPP-PC, good background info thanx..long both w low basis. Bea

  4. Tim,
    Fly to the spider, what return do you hope to capture SR-A in your web at?
    6%? Or are you just looking to add to balance some higher return/ risk preferred you have.

    1. Charles – I was hoping around 6.3 or 6.4%–probably being pennywise and pound foolish because it doesn’t matter long term. Think I will go ahead and put in a gtc order at around 23.4 or so.

      1. Is the SR-A dividend qualified ? This site and QOL says it is but Schwab says it is NOT (usually you are more often right than Schwab)

        In general, where do you check to see if a specific preferred dividend is qualified (subject to holding periods of +- 60 days)?

        1. Last year the SRpA dividends were 100% QD, like most utility preferreds.

          Usually the best you can do is go to the company website and look for a document showing the tax character of last year’s distributions.

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