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Sandbox Page

I will be adding a new link titled “Sandbox” in the right hand menu.

That link will get you to this page.

I had originally set up the “Reader Initiated Alert” page for ‘alerts’. I was thinking this, for instance, might be when a preferred stock is undergoing a temporary selloff and someone wants to let the population know about it quickly. Of course we all (including me) use the ‘alert’ page for general messaging.

I am requesting that we start using the Sandbox page for all general talk, and try to preserve the ‘alerts’ page for ‘alerts’.

I have had a screen up on one of my monitors all week where I see all comments – no matter where they are posted–it is a great page and I wish everyone had a page like that–believe me we all benefit from all the knowledge being shared. I don’t want to stifle any of the exchange of knowledge, but hope to get things a bit better organized by adding the Sandbox page.

2,722 thoughts on “Sandbox Page”

  1. MSBI, the common stock of the bank with preferred MSBIP, continues to trend lower after a bad earnings report in Jan.

    Other commons taking a dive include OXLC, ECC, EIC, CCIF, XFLT.

  2. PPWLM replacement (?). May only be trading via Cusip (TBD)

    Pacificorp. Callable 06/30@100 – Fixed to Float (reset issue) – 7.375% FIXED until 09/15/2030 then 5YR CMT + 3.319%
    However, the interest rate during any Reset Period will not reset below 7.375% per annum (which is the same interest rate as in effect from and including the original issue date to, but excluding, the First Reset Date).
    Junior Subordinated Debt
    Credit Ratings BAA2/BBB-
    Part of Berkshire Hathaway Energy
    Cusip 695114DF2

    https://www.sec.gov/Archives/edgar/data/75594/000110465925025105/tm258625d6_fwp.htm

    https://www.sec.gov/Archives/edgar/data/75594/000110465925024793/tm258625-1_424b5.htm

    DYODD PacificCorp has litigation risk

    https://www.pacificorp.com/about/information-wildfire-litigation.html

    1. Wildfire risks are detailed in the 424b5 prospectus.

      Plus the Moody’s bond report is available on Schwab and Etrade when you search by Cusip and they provide their independent commentary on the wildfire risks.

      1. I am certainly not very happy that Moody’s and SP do not seem to be factoring these risks into their credit ratings of BAA2/BBB-

        Clearly, the company has priced this in because the coupon is very high, the reset kicker is higher, and it has a floor of 7.375%. To me, this is priced as a below-investment-grade issue. Poorly rated by the major credit rating agencies. Just one man’s opinion.

        I recently purchased Nevada Power, also a Berkshire Hathaway Energy company. BAA2 rated. 6.25% with a below 2% CMT kicker and no floor. Same holding company and, same Moody’s credit rating priced dramatically different.

    2. They tender for their 6% and 7% preferreds at premiums that equate to below a 4% yield and issue new debt at over 7%??? A capital play of some sort? Get rid of subordinated non-debt capital for senior debt?

      1. Wow, I will def try to get some… I was excited about the Northwest issue, but this looks even better!

        OldmanRB – My guess is there was restrictive wording in the pref docs… Pacificorp has been eying a de-consolidation.. wouldn’t be surprised if related.. I was able to speak w Pacificorp treasury person (or maybe it was IR), and she said the tender was related to “cleaning up some old securities on balance sheet,” or something along those lines.. but obvi she wouldn’t tell me of corp changes.

        https://wyofile.com/pacificorp-mulls-breakup-that-could-align-wyoming-with-other-pro-coal-states/

    3. Steve-
      Interesting coupon, esp. with the floor.

      The last sale on FINRA is 102.75. My spreadsheet calculator says YTC is 6.7%. I’m not going to verify, and I would pay more than par anyway.

      The recent batch of sub bonds look like they all used the same template. If markets go screwy between now and 2030, all of these 2030 resets are going to be at risk one way or another. I own enough of them already. I really need to stop buying more.

    4. Offered at 101 right now.. looking at IBKR which is connected to other FI trading platforms.

  3. Wed. Pre-Mkt CME Fed Watch re FF Probltys …..
    Current…. Mtg announc today …4.25%
    CME Probs …
    May … Still at 4.25% …85%
    Jun … Cut to 4.00% … 53%
    Jly … No Chg =49%
    Sep … Cut to 3.75% @ 38% …. Unchg @ 4.00% 36%

  4. Muni bond prices continue to fall, indicating to at least one watcher–me– a greater likliehood the exemption will be axed.
    new issue yields are running .2-.4 higher on AA/AAA bonds while treasuries have fallen.
    The marks on all my bonds have fallen too.. I have over 80 diff issues.

    Bond buyer has a piece from several days ago merely containing the Tax Policy Center addressing what happens to cities and states if this is axed.

    1. — Maybe munis are falling because of a perception of potential increased expenses and therefore falling credit quality — cuts at the US Government level may get shifted to state and local governments. Local governments are already expressing concerns about this. There’s also the small matter of the 20% electric increases coming to about 13 states, likely unanticipated in local budgets.
      — Munis are already federally taxable in a number of subtle ways. IMHO, it’s a lot easier to tinker with arcane rules than to attempt an potentially unpopular outright abolition.
      — I think you have correctly identified the risk as a change in relative spreads. On the theory that if something does exist or could exist, there is an ETF for it, there should be a solution. JMO. DYODD,

      1. BearNJ,
        Stuff I hold is either housing bonds (containing insured MBS), or Texas school bonds backed by the $40 bill Texas PSF, a firm AAA.
        I think I need more taxable stuff

        1. Must be a Muni Pro knowing about the MBS & Tex PSF markets.
          Solid credits, been tested thru some tough mkts.
          Hat’s Off.

          1. . I know very little about bonds other than what I have run across in 25 years of buying them.
            I may just be really worried. Take a look at MUB and TLT and they seem to have both dropped a few points in the past month, but I really don’t recall long housing bonds being in the 4.80-4.90 range for quite awhile. There’s a NV Las Vegas Convention & Visitors Bureau bond trading at the lowest price I’ve seen since I started watching it last year.

            Still, the muni exemption news has been in the wild for awhile.
            I know that individuals hold roughly 70% of munis and I am just making a guess the possibility of losing the exemption is not on their radar. Most people who own munis don’t look at prices or news on them every day.
            I’ve said before I’m not buying any until the tax bill is decided , and I’m trimming the portfolio. After making some sales at not so good prices to dealers, I noted the lower tax on qualified dividends and cap gains is the 2nd biggest “pay for” that could be cut. I posted a list in order of size of possible pay-fors the other day
            I ditched a few small bonds yesterday , nearer term stuff .
            My thoughts are my own and likely reflect a degree of fear

            1. It, appreciate muni backgrnd….. Due to the Exemption topic, back in 4th Qtr 2024, I started a wkly track of 10yr Tsys yld vs a Bloomberg 10yr Muni yld.
              For the Oct ~ Dec 2024 weekly’s I see a High % of Muni / Tsy at 71.8% (10/25)
              …………………………………………. a Low % of Muni / Tsy at 66.5% ( 12/8)

              First Qtr 2025 …. see a High % of 71.9% ( 3/14/2025 )
              ……………………………….. a Low % of Muni / Tsy at 66.4% ( 2/14/2025)

              Also, feel that the voter backdrop of exemption would be tough.

              1. Jim,
                I think the administration does care more abt blue collar voters than the smaller population of muni holders. It would not surprise me that we pay for no taxes on tips and OT by eliminating, among other things, the muni exemption and qualified dividends.
                The President has at least $175 million in a taxable money fund at Schwab, so the self-centered skeptic in me thinks tax rates will not go up.

                I’ve been saying for a long time this President usually does or tries to do what he said he’d do when campaigning. That’s quite a difference from others who have held the office. That’s not intended as a show of support for either side just an observation

                1. Eliminating Qualified dividends would be a killer. That’s where most of my taxable money is I got it down to 0% tax on Q div.

    2. The 103 exemption would not be axed because the owners of those tax exempt bonds also form an almost perfect Venn Diagram with people who donate to political campaigns.
      Repealing 26 3101 is more likely (though no tax legislation has been introduced)

  5. MSTR redux:
    Fidelity is offering the 10% MSTR perpetual preferred, and it’s SENIOR to the 8% it just issued.
    Funny: It’s PERPETUAL STRIFE PREFERRED….you read that correctly. Does STRIFE describe your life when owning it, or the relationship you’ll have with the STRK holders?

    1. lol @lt

      Good move putting this over here. By the way I finally got around to replying to your post in that other thread page but it’s buried at the bottom now, so I will paste it here as I’m sure you are furiously trimming and making allocation changes so you can load the boat on these latest MSTR perpetuals. You should also consider HELOC and credit card balance cash transfers to your checking account while you are at it!

      “I do not understand this statement.”

      lt – what I’m driving at here is, because the perpetual preferreds are being placed on the equity side of their balance sheet and it’s technically not something he has to ever pay back, the cash proceeds from those preferreds relative to bitcoin is lowering his average cost, hence creating more equity. I’ll give you a scenario…

      Say I go out and buy a kilo bar of spot Gold for $100K cash; this is my cost basis. Now pretend, you have a magic monopoly game and gave me $100K of which I was able to go out and buy another kilo bar of spot Gold with.

      In essence you have cut my cost basis in half in that scenario. Similar phenom is happening here. The cash proceeds raised from the preferreds is buying more spot BTC hence it is fully accretive. Now if BTC price tanks to $5,000, obviously this becomes a different conversation…..

      1. Theta,
        I might also compare MSTR’s B/S to a magic game, but I think the game Saylor is playing is pretty clear… and I think it’s more about keeping BTC from falling below his average price ($66k at last check, but likely to rise) and attempting to corner the market in BTC.
        I did read about the CAMT and I saw a comparison to Berkshire’s (and every other corp’s ) holdings of corporate stock. Those are always reported on a balance sheet ,and on an income statement with a line item : Gain/loss on unrealized marketable equity securities (and that’s different for tax reporting) and the argument is BTC should be treated similarly. We will see what happens! I too think for fairness it should be handled MSTR’s way
        I do get what you’ve said .

        1. Between watching the common shares issued like toilet paper and watching cash on hand in the quarterly reports and the average BTC price, you should have a good idea on what is going to happen with MSTR.

          There will be one or more warning bells to keep you from being suprised.

          As long as BTC holds the low $70s from a TA perspective, its projected to continue moving higher over time. If it breaks, you pivot and definitely shouldn’t be holding onto any MSTR related :).

  6. Future expanding Euro economy has been in financial press for mos.
    Current Germany spending bill to be this week. Seems to be broadspread with other countries.
    Besides using large, U.S. based international-focused cos. any comments on U.S. listed Euro focused items.
    Thanks

  7. Looking at Northwest Nat Hldg Co Stock symbol NWN
    Not crazy about 10 years fixed but it’s 7%.
    SP credit ratings BBB. Not rated by Moodys
    Junior Subordinated debt
    Cusip 66765NAA3
    Callable 06/35@100 – Fixed to Float – 7% FIXED until 09/15/2035 then 5YR CMT + 270.1BP
    In business since 1859

    Is anybody familiar with them?

    https://www.sec.gov/Archives/edgar/data/1733998/000119312525054581/d876762d424b5.htm

    https://www.sec.gov/Archives/edgar/data/1733998/000119312525052953/d876762dfwp.htm

    1. Primarily natural gas and water business. The industry classification is Gas Utilities

      NiSource (it was called), which many owned on the site, has a market cap of 18.5B. Spire (SR/A), also owned by many, is much smaller than NiSource and has a market cap of 4.4B.

      The market cap of NWN is 1.7B. So this is a very small company with a very strong credit rating (BBB). A better credit rating than NI and SR. I am familiar with Suburban Propane in the Northeast since I use them for propane. That has a market cap of 1.35B.

      I would call this a tiny investment-grade company and this offering is in my view likely to be illiguid.

      DYODD

    2. good comment.. check S/A for Northwest Natural:High Yield Utility Stock for Volatile Times 1/29/2005 Gen Alpha

      1. Thanks seems like a stable well run small utility company. It fits in my portfolio but with less of an investment than I normally make.

        1. Steve –

          I own NWN common. Started buying it at $35.50 when one of my small cap managers mentioned it in his quarterly commentary back in 1Q 2024. Been a solid performer. Here is what he wrote…but of course DYODD:

          “During the quarter, we purchased Northwest Natural Holding Company (ticker: NWN). Founded in 1859, NW Natural is a natural gas utility operating in Oregon and Washington. While the company targets long-term earnings growth of 4%-6%, earnings per share in 2024 are expected to decline by 7% to 15%. Earnings are being pressured by above average investments in the utility’s infrastructure and higher than expected inflation. In response, management filed for a rate increase with regulators in December 2023, which would provide the utility with a 10.1% return on equity. If approved, new rates are expected to go into effect in November and should move earnings in 2025 closer to our normalized estimate of $2.80/share.

          NW Natural is currently trading at 13x our normalized EPS estimate and 1.2x tangible book value—both near historical lows. The firm has increased its dividend for 68 years in a row, and the stock offers a 5.3% yield. While there remains uncertainty related to regulatory decisions and interest rates, at its current price, we believe we’re being adequately compensated for risk assumed.”

    3. If my memory serves me, sometime in 2024 Bea may have mentioned she was buying or holding NWN. It was then near its 52 week low. Now about 20% higher. I want my utes common stocks to have a better dividend increase history.

  8. I don’t think it belongs in either.. how about the corner coffee shop? ..just my thoughts

    1. What in the world……..? 29% contingent dividend? What could go wrong? Ponzi is probably not the right term, but SCHEME seems to fit. I can’t even wrap my head around this. Is this type of offering common?

      Since it doesn’t seem like it will be publicly traded, I wonder if there will be a way to follow its performance.

      Out of curiosity, is anyone here interested in something like this?

      And if so, can someone explain it? I can’t even figure out what they are using the proceeds for. Buying derivatives? In what? Can they really be able and adept enough to make a 30% + return?

      1. When it comes to MSTR, nothing completely surprises me. The M Saylor interviews are extremely entertaining. The message honing that occurs from 2020 or so until present day is wild. The company had some issues with the SEC around the .com bubble and it’s an interesting history if you want to go down the rabbit hole. Lots of people making money selling option premium (many are convertible bond holders). I foresee a spectacular disaster in the future but the entirety of this comment is just an opinion and not statement of fact.

        https://www.sec.gov/news/press/2000-186.txt

      2. Reverse barrier convertibles welcome back!! These are very popular in Europe but in the US they disappeared after the 08 crisis with a lot of retail complaints. Usually (but not always ) the derivatives embedded are way overpriced.
        If there is a secondary market it can be interesting.

        1. I looked at valuing those MSTR converts as long term call options and fully agree. Each prospectus feels like it is packed with varied conditions on when equity can be used to repay debt and it is quite involved.

          After MSTR had early success there were heaps more CBs being issued esp in that crypto space but to lesser degrees of success by my estimation. The MSTR share dilution strategy also seems to have been replicated a lot by the quantum computing sector and the common shareholders don’t seem to mind. I try to wrap my head around that regularly but should probably stop. Must disengage reasoning, see the wave and ride it before it closes out. Easier said than done.

      3. This type of offering is VERY common. Literally dozens a day. They are essentially securities that are tailor made for either one or a very small number of investors.
        But note that the coupon is “contingent”.
        That means some periods it could be 0 and there is no middle ground. it either pays in full or pays nothing for that period, and then the next observation date, rinse and repeat…
        So it is a feast or famine situation based on what happens to the reference security.

        1. I have a suspicion that the board will find itself unable/ill-positioned to pay these dividends with the propensity of Strategy to purchase BTC and perpetually issue shares and new debt instruments. Just my opinion tho.

  9. Not sure if this belongs here or over on the Litter box. Compass (COMP) is in advanced talks to buy Berkshire Hathaway’s residential brokerage business.
    BK continues to raise cash. This doesn’t reflect confidence in the housing market or any other investments related to housing, just my thoughts.

    1. Charles
      My daughter works for BH Realty
      Sent me an inter- company e-mail strongly denying the Compass buy
      For whatever it’s worth

  10. good morning. I own 3 different SCN preferreds. J,M, and N. I was paid out by all three today. Good. Then later, SCNPRJ had a ‘Corp interest adjustment’ and took it all back. I have not had this happen before, and wonder what is going on.
    The price is up a tiny bit, which doesn’t make sense if they are not paying, or paying and then taking it back. Ugh. Thanks for any insight.

      1. Dan, I have the same notation in Fidelity but the symbol is SCE-PJ this is what is posted

        CORP INT ADJUSTMENT as of Mar-15-2025 SCE TRUST IV PFD SER J 5.37500% (SCEPRJ) (Cash)

        1. I think it is because they called it INTEREST when in fact it is a dividend. I believe it should be re-credited as a dividend payment later today or tomorrow. This is one thing Fidelity is good at – giving us our money in a timely manner. I’m still waiting for Schwab to give me the redemption for AIC. Chatting with them now about their nasty practice of withholding the funds until 5 minutes after market close.

          1. Mark, that is who I had my ESGR with that I sold today. They get to hold 100k overnite.
            Like the community dime banks in the 1800’s, all those dimes add up.

          2. Someone needs to talk to an arbitration attorney about this. There could be a big punitive given they do it across all accounts. I’m betting they think they can get away with it because you’re required to arbitrate and if you filed an arbitration claim they’d give you some interest at the last minute b4the claim is heard.
            The more sophisticated you are, the harder to win in arbitration. Doctors almost always lose, but that’s perhaps (from my experience with arbitration) their claims are usually including an element of “I’m terribly unsophsticated…”

      2. Thanks to all. I needed more coffee. It is SCEPRJ. Sorry. And thanks to all for explaining. Much appreciated, as is this site. Thanks.

  11. FWIW-Caveat on moving to Etrade- began 1/15, ended 3/15 ! Yes 2 months, and about 3 wks of that in getting 6 stocks transferred that should not have been a prob- such as SEAL-B, CUBI-F, FLG-U, etc- none is OTC ( they won’t take those).
    Their online system recognized all 6 when doing the transfer, but at the bottom when you select preview- they all have red alerts and refuse them. Then they said- do the paper form and fax it- I did and they could not find it (errkk!!) so they got approval to do a Docu-sign- which they later would not use, but said they had the fax — 2 wks later, they moved them.The only upside is, that for now, I need not be concerned about their weird trading rules at Fido. Still have a few there tho.
    I wondered if, since 1/21, just before Fido began transferring how I am doing– I ck’d, and am positive 1.74% with all the mkt ruckus- putting me 8.41% ahead of the S&P500, and 7.5% ahead of the DOW.
    I’ll call this a very small win– and have a beer– I’ve earned it.I think they figured out how to screw me out of most of the higher bonus on transfers that became effective 2/3.

    1. hahaha. You decided you earned a beer!
      I’m flying to Dublin 4/10 and earned myself multiple beers. I’m sure after I tour the Jameson factory I’ll have earned multiple whiskies.
      (I’m only going to Dublin because they now fly nonstop to Vegas and I finally was able to use my BA points for something!)

      1. Lt I think it was you that mentioned to me that about 30% of the time plays on mergers fail. I had planned on sitting out my merger play on ESGR until June but your comment reminded me I have better play it safe. Sold all my shares today for $10.00 profit probably would have earned a $1.00 more today if I just watched the market, but I like putting GTC orders out there so I don’t fall asleep at the wheel.
        The market is getting unpredictable to be doing these kinds of trades on M & A

        1. Charles, that had to be somewhere else you heard 30%. The fail rate on deals after the merger agreement is signed is much lower in my experience. I don’t know the number but my experience is it’s much lower but I’ve only traded liquid deals.
          Where you run into problems is the fail rate goes way up in a bear market, so the MAC clause (material adverse change) becomes extremely important.
          A well-written MAC excludes changes in the economy and requiurwes completion unless there’s something specific to the target (and not the industry they are in)

          1. Well Lt, 8% profit for 5 months isn’t as much as I would normally get. The M & A space was slim pickin’s the last 6 months and most of the ones I saw listed closed quickly or small obscure companies or private ones and ones I knew nothing about.
            Normally I like to play the market in under $50 dollar stocks then flip on 25 or 50 cent run-ups while the merger plays out. Rinse, Wash, Repeat. I can make that 8% or more in a month. Harder to do with a $300 plus stock with the funds I have.

            1. If you want to see all the deals out there, ask for a trial to arbjournal.com. I used to subscribe. Clients are typically hedge funds.
              Ray Murphy, who I think bought it back after selling it, is probably charging north of $20,000 for an annual subscription but I think he gives a trial still.
              Maybe I’m wrong on the trial. Arbjournal has M&A attorneys who follow every step of every transaction

      2. Definitely a winner when you get to Dublin- last there in’96. Thanks for the Vegas info- a quick ck with BA shows a minimum of 1 stop – London.

        1. Gary, you’re correct but I’m flying Aer Lingus nonstop, after transferring my points from BA to AL. Both use Avios, as does Qatar now plus a few other airlines.
          AL made space available in biz class when they first announced the route.
          Returning from London on BA nonstop and paid their absurd luxury tax for biz class, but at my age I probably would die in economy and smell up the joint.

          BTW you now need an e-visa in advance to enter the UK. Mine was granted apparently automatically, but you cannot get on a light to the UK unless you’ve been approved for the visa.
          I think it’s required to transit also. I guess they no longer like us so much

  12. How can you worry about things you have no control over? Here in wine country wineries have been dealing with declining sales, mainly due to demographics and changing tastes. This has also affected beer makers. Anchor beer after 127yrs shuts down as well as other craft brewers. Wineries are closing and vineyards are being ripped out.
    Yesterday the local KCBS news out of San Francisco sent a crew up here to interview liquor store owners and winery owners like Kendal Jackson a international company. A lot of alcohol import companies have located here as compared to San Francisco because we have large warehouses and cheaper labor.
    Some of the reactions they got was business owners are hoping they don’t face in other countries what happened in Canada with American alcohol being pulled off store shelves. It’s taken decades to build up sales they rely on. Importers are saying they will sell what they have and are not making overseas purchases to have product on the water. A 20.00 bottle under 200% tariff’s would mean they need to sell the same bottle to the public for 60.00
    Both sides lose it was pointed out. Other countries lose buyers for their product and here sellers lose sales. Both sides will have to lay off workers.
    After seeing New Zealand Sauvignon Blanc increase by a $1.00 a bottle (again) at both Trader Joe’s and my local store I went out and bought a case to last us for the next 5 to 6 months.
    Exactly what the rest of the economy is doing. Moving purchases up of commodities and stocking up (hording) in fear of price increases and shortages. This boosts sales now showing up on these government reports. Just watch out later. Doesn’t matter if prices increase or go back to normal I will be stocked up on eggs, toilet paper and wine with no reason to buy more.

    1. Charles. The wine industry is getting killed from within, not some tariffs per the threat of said tariffs. Take a look at production costs which began to blow past even the sky high inflation rate of the last several yrs. Tariffs would be an easy scapegoat but that isn’t the real story for the wine industry. They make expensive wine, and inflation of the last several yrs has wiped out the demographics. That is an unsustainable death spiral. I personally stopped ordering glasses of wine at any restaurant because they wanted triple (and more) the previous price. Ironically you may see the opposite of what you think though because given the choice wine drinkers will go with domestically produced. If I were a leader of a country with a market the size of the U.S., and I had a once proud wine producing industry undergoing hard times, I’d……well……try to save it by…..you guessed it, imposing stiff tariffs on foreign produced wine. Many don’t know that Canada has 200+% tariffs on dairy they sell to the U.S. (that is before the horrible Orange Man generated hysteria) Why is that I wonder?

      1. Pig-
        Unfortunately, that’s less than half the facts on the dairy stuff – the old agreement was/is reciprocal, and neither side met the limits that would trigger the big tariffs. Research it.

        1. Gary, Yes, I didn’t attempt to explain the whole thing, there is enough out there for people to digest themselves and whether or not the limits were set is immaterial to the point I was trying to make. Probably could have used a different example to make it though.

    2. I agree about buying now to avoid higher prices later. In early 2018 I submitted a set of building plans to the county of Kauai, and I started getting bids on materials. I planned to build a hurricane-proof concrete house, and I needed cold-formed steel studs and track, galvanized metal decking, and about 5 miles of rebar (#4 and #5). I also needed a lot of lumber to build concrete forms.
      Before I got my permit, each of the material supply companies told me that I needed to buy before tariffs raised prices by over 20%, which would have raised the prices by about $12k to $15k. I bought early and covered the materials with black plastic to protect them from the rain.
      About 1 year later, I had to order small quantities of lumber and rebar to finish construction of the structure, and all the prices had gone up significantly.
      After moving to Cali, I planned to build another house, and had completed most of the design drawings before nixing the idea. I’m very glad I won’t be battling tariffs again to build a house. The crews and companies that I would have hired probably don’t share that sentiment.

    3. Eggs prices have supposedly gone down from 8.25 on March 5 to 4.15 on March 16. I have to field test this. My most reliable source is a small local indy grocer, a farmers market. He has been fully stocked with eggs from a variety of sources throughout the avian flu crisis. I noticed his retail prices almost exactly match spot.

      According to the Government, there was a collapse in egg demand and the avian flu may be over, both possible. Leaving the question – where did the new laying hens come from? It takes months (3-9-12) to rebuild flocks and prices turned on a dime in March and collapsed. The stats I use are based on Government numbers – USDA, I have changed the punctuation marks on all Government stats from “Accurate.” to “Accurate?”

      Now that eggs are over and easy, coffee is center stage. No interest in adding food manufacturers right now. JMO. DYODD.

  13. I have a question.

    I think it is time to cap my preferred stocks and junior subordinated debt at about 40%-45% of my total assets. So now if I see an attractive issue, the question becomes is it more compelling than what I own? If it is, time to swap and not increase my preferred stock holdings. Why not increase my preferred stock or junior subordinated debt? I believe that too much of one asset class is not diversified enough.

    I have only about 2% of my net assets in the stock market. That is a boutique mutual fund that I have held since 2004 (Bruce Fund). I need to increase my exposure to the stock market. Like some on this site, I find JEPI to be attractive. A covered call ETF. Paid a yield of 7.14% over the last 12 months. Last month 7.19% according to my Schwab stock quote.

    I plan to sell covered call options against the covered call ETF. In other words, if I buy JEPI at $55, I would see covered call options at say $54. What am I trying to do? Increase my income above the 7.14% that the fund is paying.

    Has anybody tried a similar approach and how has it worked for you?

    1. If there is anybody else doing this, a related question. Are you using an option probability calculator? I am planning on using Etrade’s option probability calculator unless somebody has a better one.

      Correction to my post above in caps

      “I plan to sell covered call options against the covered call ETF. In other words, if I buy JEPI at $55, I would SELL covered call options at say $54. What am I trying to do? Increase my income above the 7.14% that the fund is paying.”

      1. Steve, In plain terms? You are trying to get exposure to common stocks ( equity) Then add insurance with covered sell calls in case JEPI drops in value?

        1. One additional item Charles, trying to add the option income to juice the income. So yes insurance on the stock investment plus extra income above the approx 7.2% dividend yield.

      2. Steve – I haven’t run thorough analysis, but your thought had me intrigued. just taking a quick look, the call premiums on JEPI are not great.. I’d run scenarios comparing writing covered calls on JEPI vs SPY using various price. my hunch is that the additional call premium on SPY would be more advantageous if structured the right way, even when factoring in the lower income from SPY. SPY options are also much more liquid, hence less slippage when selling them.

        1. From just an option premium, then likely SPY would be better. But, JEPI has the added income of 7.2% with some insurance protection built in. So, I would expect the call option premiums to be less. Or said differently, the volatility on JEPI is lower than SPY. This would result in a lower option premium.

          1. Sorry, I was trying to say that the risk/reward may be more advantageous even when factoring in the addtl income from JEPI. This is all based on the quick glance I did comparing premiums for both.. and my options knowledge is medium.. so take this w a grain of salt.. just something I would analyze before using the JEPI covered calls strategy.

            1. No need to apologize, just further explaining my strategy and lower expectations for the option income. I want to get more stock holdings but a reduced volatility level with the highest income possible.

              1. Steve, Not sure if you have looked into CEFs at all. There are several that specialize in covered call options. That is the extent to which I’m willing to play that part of the market. Not sure if you have considered it but might be worth it.

                1. Yes, I have. I have no found CEF”s where I can actually SELL my own covered call on the CEF itself.

  14. I was thinking about unemployment when I read Torsten Slok’s March 15 Daily Spark:
    https://www.apolloacademy.com/the-daily-spark/
    “The bottom line is that the soft data points to weakness coming in the hard data. In addition, this past week was the survey week for the March employment report, and with uncertainty elevated, the downside risks to March nonfarm payrolls—when it is released on Friday, April 4—are significant.”

    Markets get very concerned when unemployment trends higher. So far, no alarm bells. Even though it’s a lagging indicator, unemployment–not inflation or earnings expectations or something else–is the metric I will pay the most attention to in assessing the likelihood of a severe downturn and credit crisis.

  15. Does anyone know if Oxford Lane Capital is required to maintain a certain asset coverage ratio for its preferred issues? How would I find out what the coverage ratio is? Thanks.

    1. Joel,

      Yes, OXLC is required, and the minimum asset coverage ratio is 200%.
      I found it on QOL and the prospectuses.

      For each of the three pfds (OXLCN, OXLCO, and OXLCP), QOL has the following in their QUANTUMONLINE.COM SECURITY DESCRIPTION box:

      In the event that the issuer fails to maintain asset coverage of at least 200% as of the close of business on the last business day of a calendar quarter, the shares may become subject to mandatory redemption of at least a portion of the shares (see prospectus for further information)

      This is on page 8 in the OXLCN prospectus:

      Leverage by the Company
      We may use leverage as and to the extent permitted by the 1940 Act. We are permitted to obtain leverage using any form of financial leverage instruments, including funds borrowed from banks or other financial institutions, margin facilities, notes or preferred stock and leverage attributable to reverse repurchase agreements or similar transactions. Instruments that create leverage are generally considered to be senior securities under the 1940 Act. Under the 1940 Act, we are only permitted to incur additional indebtedness to the extent our asset coverage, as defined under the 1940 Act, is at least 300% immediately after each such borrowing. With respect to our outstanding preferred stock, we will generally be required to meet an asset coverage ratio, as defined under the 1940 Act, of at least 200% immediately after each issuance of such preferred stock. In addition, our Articles Supplementary for the Term Preferred Shares prohibit us from declaring a common stock distribution if, at the time of declaration, our asset coverage ratio is not at least 200% after deducting the amount of such distribution.”

  16. Regarding the municipal bond tax exemption, I’m posting a history of this because it has been argued in this space that the federal government is constitutionally prohibited from taxing muni bond interest . One poster gave a long history of the exemption from his days in law school, arguing feds cannot tax muni interest.
    I’m betting he attended law school prior to 1998
    In 1988, Scotus ruled just the opposite in S Carolina v Baker. Feds can absolutely tax muni interest.

    If you know my posts, you know I am very concerned about the loss of the muni exemption.
    Here is the Tax Foundation’s history of the exemption for anyone who cares:
    https://taxfoundation.org/research/all/federal/reexamining-tax-exemption-municipal-bond-interest/

    1. If I am not getting a muni exemption, I would like a fatter coupon. Have you noticed a closing of relative spreads on the yields of munis vs comparable Treasuries over time? Or changes in relative prices?

      Any changes should be readily quantifiable and chart-able, though I don’t know if its been done. There are plenty of smart people in finance with fast computers, AI and databases. Relative changes over time may operate as a kind of Fear Index of the market’s view of the muni exemption abolition risk. JMO. DYODD.

      1. BearNJ,
        Yes. I have noticed it in new issue housing bonds . The long term rates are now .2-.3 greater than they were just a few weeks ago and treasury rates have fallen.
        Ofc, I haven’t looked at all new issue bonds or secondary market bonds, and housing bond rates are related to mortgage rates which purportedly price off the 10 year bond

    2. Ditching the muni bond interest exemption would be a rug pull of epic proportions for investors and issuers of all sizes. I expect epic pushback and no action. BWDIK?

      1. Rock2,
        in my book you know some cool abbreviations I have never seen b4, but can easily figure out. At least I’m not left having to look up IIRC !
        losing the muni exemption might be epic, but there are lot of epic things happening . I think raising the capital gains tax rate is less likely .

        Now, the reduced tax on dividends, I don’t believe is safe as a pay for.
        Everyone needs to accept the party in power is nothing like the party of any previous R President. I have no idea if this is good or bad…it just IS

  17. “The Interest Expense on US National Debt rose to a record $1.178 trillion in the last 12 months, an increase of 142% over the past 4 years. The US Government now spends more money on interest than it does on National Defense.”
    https://x.com/charliebilello/status/1899911794363109642

    If the rate on refinancing the 35% of the debt coming due this year dropped to zero, the interest expense would come way down. Probably, more effective than firings at reducing deficit spending. But what would cause the rate to drop dramatically?

    1. R2S—perhaps the Fed will buy all new U.S. debt at a nominal interest rate and jack up their balance sheet. If push comes to shove, that could happen. Can you imagine what the credit spread would be for non-federal debt? I know it sounds bizarre, but the times they are a changing. Or, perhaps the Treasury will pay interest in IOU’s!!!

  18. Paying for the tax cut:
    I’m attaching this article because it contains a list of the cost of present tax reductions. You can decide for yourself which tax reductions are likely to go away, but the reduced tax rate on cap gains and dividends is the #2 item.
    Muni exemption is #15.
    QBI i’m guessing is unlikely to go away because I’m sure the pres uses that one!
    https://www.parametricportfolio.com/blog/is-eliminating-the-tax-exemption-on-municipal-bonds-worth-the-cost

    I can easily see the loss of the reduced rate on dividends before the loss of the muni exemption. It’s less toxic.

    1. #1 is “Defined contribution retirement plans and IRA’s”

      Wouldn’t that just be a deferred cost? And offset by taxes on RMD’s and other withdrawals by other individuals?

      Or is there that much of a gap in deductions vs. revenue?

      As a self employed individual, I worry more about #10, the 20% QBI (qualified business income deduction) being eliminated.

  19. From the tweet of a reliable source:
    From Dollar General conf call yesterday: “Our customers continue to report that their financial situation has worsened over the last year as they have been negatively impacted by ongoing inflation. Many of our customers report that they only have enough money for basic essentials with some noting that they have had to sacrifice even on the necessities. As we enter 2025, we are not anticipating improvement in the macro environment, particularly for our core customer.”

    Another indication of the bifurcated economy.

  20. Rising muni bond rates on housing issues:
    I notice 4.875% and 4.90% offers this week on long term AAA /AA+ housing bonds. (Utah was one offering)
    This was 4.60-.4.65 just a few weeks ago.
    I’m wondering if this is due to perception of the muni exemption going away, as taxable housing bond issues of the same length are in the 5.65 to 5.8 range.
    Thoughts?

    1. Muni market is also subject to seasonality as you may know. March/April is supposedly a weak time for munis because issuance is heavy while investors are pulling money out of muni funds to pay their taxes. So it is hard to disentangle that from any concerns about tax exemption going away. Right now muni to treasury yield ratios are indeed on the cheap side but no more so than we have seen several times in the last couple of years, so is unclear there is any signal.

  21. This SPX 10% correction has been fast and smooth compared to the usual lumpy, longer versions. Has there been an SPX correction of similar size and speed in recent times? I’m looking at ES (SPX futures) and the answer is yes.

    Between Jan 4, 2022 and Jan 24, 2022, ES fell 12.4% intraday in the face of the Fed policy shift from QE to QT and no hikes to rate hikes. Eventually ES bottomed in Oct 2022 down 27.2%.

    The current correction also appears to have been triggered by changes in government policy. I’m hoping Charles gets his crystal ball soon, so we’ll know what’s coming next.

    1. R2S I think it will go lower. I am thinking the market has been over priced for a long time. Days like today are just a head fake. Yes. There has been times with sharp declines in the market over a couple days or weeks that have been part of a broader pull back.
      Back in 2001? I remember thinking the market was done retreating when at the on line Internet companies failed. But then solid tech companies that were actually making money but had ran up to ridiculous PE ratios finally fell and then other companies followed and the market continued it’s decline. The same happened with the GFC as I watched the continued decline after June 2007
      This time I think we are seeing the beginnings of a fall.

  22. CCLDO regulatory halt. I see it zoomed from 13.5 to 21 b4 halting the other day.
    Does anyone know the reason for the halt?

    1. It,
      CCLDP is being delisted. It went from under 13 to over 19. I don’t see anything unusual with CCLDO.

      1. So, expert market?
        Why would there be a rush to buy a stock being delisted unless it’s broker-forced short covering? That’s my wild guess

  23. FWIW-
    Atlanticus Holdings GAAP EPS of $1.42 beats by $0.25, revenue of $353.2M misses by $1.07M

    Up 9.95% now

  24. Does anyone have the temporary symbol for the Bank of New York Mellon preferred K ?

    NYDSV was showing up on FIDO and no longer does. Neither does BKPRK.

    Thanks. If so how did you find it?

      1. 6.1% dividend until 2030 reset doesn’t seem like much, especially as it’s trading over $25.00 already.

        1. Charles,

          That was my reaction. They strike me as the type of bank that wants that puppy to reset lower and just let it stick around paying under market rates. If the reset comes in too high it is immediately called. I just see 2030 being all downside and no upside.

          Plenty of other choices that pay approx 6% right now.

  25. STRK : the 8% MSTR convertible preferred trading 87.50/100 par
    I skimmed the prospectus and looked at the options on the stock.

    This is convertible into .1 MSTR at $1000, apparently any time in the future (I might be wrong but didn’t see as deadline).
    I took a look at an arbitrage opportunity, and the “plan” would be to buy the convert at 87.5, sell the furthest 1000 or higher call, and hope MSTR doesn’t default.
    The Jan 2027 is the furthest 1000 call , without asking GS to create a longer OTC option.
    So, the plan would be to buy STRK, sell the Jan 2027, for a net of approx $43, then collect the $8 per year. In 2027 , sell the next 1000 leaps call
    There’s no guaranteed profit available.

    Here are problems from reading the prospectus:
    MSTR can pay dividends in stock at 5% below VWAP, but only if MSTR is above 119ish and then they have to pay cash.
    MSTR states they plan to fund the dividend by issuing more stock!!

    If MSTR is really able to issue 21 billion of this as planned, it sure seems like a Ponzi and an effort to corner the market in BTC. I do not know if running a corner on BTC is illegal. It sure seems crypto bros want US taxpayers to be the patsy allowing them to cash out.

    Saylor has a history of what was termed at the time by the press as “accounting fraud”

    1. LT,

      I was looking at almost this exact idea a few weeks ago. Never pulled the trigger because the pay-in-stock possibility throws off the calculations plus I just don’t trust management.

    1. I find that first paragraph rather confused – he sees inflation shoots, says it will take inflation to bring those numbers down, then- ‘It ain’t gonna happen’ Huh? Not that it really matters in Bizarro World

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