Rate Hike as Expected

As expected the Fed has announced a 1/4% hike in the Fed Funds rate which was totally baked into all stock and bond markets.

While we don’t fixate on the Fed Funds rate we certainly make note of it—and actually we are happier with higher rates.  With our money market likely to toss off a current yield of near 2.2% we are at least earning a measurable return in our brokerage accounts which always seem to have too much cash.

The most important item will be the press conference to be held shortly with Fed Chair Powell.  Do they think wages are going to shoot higher?  Do they thing tariffs are going to stoke up prices?  Is the outlook still for another rate hike in December and 3 next year?

We have to leave the office so won’t be able to watch the press conference–but in the end it probably won’t matter much at all–and even if markets react it would be rare for us to do one darned thing based on this 2 hour window.

15 thoughts on “Rate Hike as Expected”

  1. Prospect Capital Corporation Announces Pricing of $100 Million of Notes due 2024. The Notes will bear interest at a rate of 6.375% per year payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2019.

    1. Decent issue. It’s going to trade on the bond desk with CUSIP 74348TAS1. No exchange listing. Certainly better than HCXY at par.

      Vanguard shows the issue but no bid-ask as yet. FINRA shows no trades.

      A few quirky terms so you may want to look at prospectus.

  2. While the Fed continues to raise rates, I looked at QuantumOnline today and Mississippi Power continues to call several preferreds that are under 5% and one of them dates back to the 1940’s – although they are very small issues.

    In the past, I have written about the U-Haul Investors Club and like their new offering in Champaign, IL at 7.75% fixed for 30 years. However, investors must be prepared to hold that “debt security” until maturity – which is a long time for many investors.

    1. I just bought 200 shares of CNTHO at $49.80 today. Wont get rich here, but I always seek balance as I like some safe oldies to go with my more higher yield ones too.

  3. HCXY is now trading at 23.88. I have no recollection of an issue trading this far below par on its first day of trading. The issue was priced only a week ago and the Fed rate hike was surely baked in, so i can only see this as a repudiation of the issue. I agree with the market’s reaction, given the quality of the issuer and the terms of the issue.

    I hope the underwriters are embarrassed by this result and that we don’t see more issues like this. That said, when it hits 23.50 I’m in.

    1. Everything is investable at the right price. I also see QVCD as an overall repudiation of the issue. I brought a small amount at $23.80. Why? The common stock is a tracking stock from Liberty Media which a few analysts have as way undervalued. To my surprise, the common stock is owned by many of the notable mutual fund owners that I held for years including Dodge & Cox Balanced, Weitz Partners, Oakmark Select, and IVA worldwide. So, at 6.6% and under $24, I’ll nibble. At under $23, I’ll bite

      1. The bond appears to be equity in disguise. The collateral of these “senior secured” bonds is equity only and specifically excludes any underlying assets.

        “The Collateral (as defined below) as of the Issue Date will be limited to a pledge by the Issuer’s direct parent, Liberty QVC Holding, LLC (the “Parent Pledgor”), of all of the shares of our capital stock (the “Issuer Stock Collateral”), and will not include a lien on any of the Issuer’s assets or assets of any of its subsidiaries. The Parent Pledgor will not be subject to the Indenture or to any of the restrictive covenants in the Indenture. After the Issue Date, if any of the Credit Agreement, the Existing Notes or any Permitted Parity Indebtedness were to benefit from a lien on any assets of the Issuer or any of its Restricted Subsidiaries then, subject to the provisions in “—Certain Covenants—Limitations on liens,” the Notes would also be secured, subject, as to priority and otherwise, to certain exceptions and subject to Permitted Liens, by a lien on any such assets (together with the Issuer Stock Collateral, the “Collateral “). The Credit Agreement does not provide for any circumstances in which a security interest in any assets of the Issuer or any of its subsidiaries must be pledged for the benefit of the lenders under the Credit Agreement. The Existing Notes also do not require any present or future security interest in any assets of the Issuer or any of its subsidiaries. It is unlikely that the holders of the Notes will ever have the benefit of a lien on any Collateral consisting of assets of the Issuer or any of its subsidiaries.”

  4. Centerpoint Energy convertible CNPLL (above issuing price of $50) and HCXY (below par of $25/share at about $24.05/share) are now trading for those interested – apologies if this information has already been posted somewhere.

  5. Fiscal and monetary policy are on a collision course. Too many turds in the punch bowl for this to end without some blood.

  6. Grid,
    I have heard you talk of ailll before? Is there a reason you like it so much, thank you in advance

    1. Sparky, I like having some issues where they are just gonna be paid with zero worries. The Ameren Illinois series of preferreds are covered by 100 times their annual earnings. I also has some backside price support as it being 20 years past call wont crater like the 5% ute preferreds with its nice yield. Look at its sister issues all same priority but 100 bps lower in yield. One has to be mindful of the above par price though. It hasnt scared me off in over 5 years holding though. Regulated T&D ute with monopoly and no power generation. Cant beat that.
      Got me a “collectible” I have been hunting for 4 years. AWRY…The Allegehny and Western Railroad. It hadnt traded 500 shares in 4 years and a couple hundred came open this week so I snagged 100 at $108. Its actually a defunct rail way, assumed and “guaranteed dividend” payments were assumed by CSX long ago. Hasnt missed a payment ($3 dividend twice a year, or 6% $100 par stock) since originated in 1890s. I just had to have it! Has a 32,000 share float with CSX owning 16,100 so they “control it”. The other 15900 were left just floating around the universe getting paid continously with no company or SEC filings for many a decade now.

  7. Push them rates up 1% so I can roll everything I got into AILLL near par, and I can throw away my brokerage password accounts and not be bothered anymore, lol.

  8. Listening to Powell’s remarks at press conference, What I honestly do not understand, is for the entire period through 2020, unemployment is forecasted at 3.5%-4% and the inflation rate is forecasted at 2%. I don’t understand the economic theory behind having short term rate 1% to 1.5% above the inflation rate.

    That is why I have labeled them as “interest rate” targeting

  9. The US 10 year rates verses the rest of the industrial nations:
    Fasten your seatbelts, it’s going to be a bumpy night.”…
    United States
    United Kingdom
    Japan »
    Australia »
    New Zealand
    Hong Kong
    South Korea
    Wishing you profitable investing, Nomad

  10. Fed projects 1 more rate hike in 2019 (12 out of 16 Fed members). 3 more rate hikes in 2019. 0 rate hikes in 2020. Dropped accommodative from statement.

    That will takes rates to about 3.25-3.5%. However, they project longer term rate of 3%

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