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.
Question for the group. I’ve only been involved in fixed income for a bit less than a year so I haven’t had the opportunity to see how different issues behave in different environments. Take the fixed to floating preferred stocks. It seems to me that the currently floating rate issues have a zero duration and are callable right now so wouldn’t that help to mitigate any upward or downward price movement? The floating dividend rate of course will change. In essence, dry powder in any rate environment. Appreciate everyone’s comments. Thanks!
Pink wrote “It seems to me that the currently floating rate issues have a zero duration and are callable right now so wouldn’t that help to mitigate any upward or downward price movement?”
It depends. If dividend is suspended it can cause price to drop. Also depends on interest rates and how good the float is.
I myself have a perference for fixed issues that reset off the 5 year treasury. You get the benefit of fixed rate for the 1st 5 years but then RESET (they do not float) for another 5 years at a “competitive’ fixed rate. Many of these are trading by bond cusip.
Enstar 7.5% fixed reset new issue. Does anyone know the terms of the reset?
Speaking of round numbers, the NDX high print was 22,222.61. Was that a sell signal?
Who remembers the 666.79 SPX low in 2009? There was a famous trader crowing about that number.
“They” do these things on purpose.
“Gold certificate account: The gold certificate account reflects the receipts issued to the Reserve Banks by the Treasury against its gold holdings. In return, the Reserve Banks issue an equal value of credits to the general account of the Treasury, computed at the statutory price of $42.22 per troy ounce. Because nearly all of the gold held by the Treasury has been monetized in this fashion, the Federal Reserve Banks’ gold certificate account of $11 billion represents the nation’s entire official gold stock.”
https://www.federalreserve.gov/monetarypolicy/bst_table11popup.htm
All the gold has been monetized at $42.22. There’s a narrative that Treasury/Bessent will revalue the gold at market price, giving Treasury a $770B account boost by my calculation.
Imagine you find great grampa’s gold certificates hidden in the wall. Your bank allows you to deposit them. Now what?
https://moneymetalsexchange.medium.com/how-the-u-s-treasury-can-cash-in-big-using-its-gold-revaluation-account-f580f58d6cbc
“Doing so [revaluing the gold] would allow the Treasury to spend hundreds of billions of dollars without increasing the national debt.”
Throw that in on top of everything else and…? Huge bump to the money supply would…? Devalue the dollar? Raise the price of gold?
Here’s a Bloomberg podcast on the Mar-A-Lago Accord which is an academic paper not an international agreement. The MALA paper sees the US trade imbalance as a big problem because it makes the US a debtor nation and a job exporter. (We buy trinkets from overseas. They buy Treasury bonds with US dollars. They build more factories.) The solutions can be controversial.
Although MALA’s author is the head of the Council of Economic Advisers, MALA is not official policy. IMHO, it does explain some of “why” they are doing “what” they are doing in Washington. A roadmap with points of interest, from gold to tariffs to pay-for military security to dollar devaluation. It did get me interested in gold.
Jim Bianco Explains the ‘Mar-a-Lago Accord’ | Odd Lots
https://www.youtube.com/watch?v=HI0I7zFcfZo
JMO. DYODD.
ES (SPX futures) rallied overnight, peaking at 8:25am ET. The 8:30am CPI release (better than expected) turned into a sell-the-news event. So much for “short-term happy.”
It tanked off the Canada retaliatory tariff news that broke off Bloomberg/Reuters just after 10AM. I rode NDX down for nearly 100 points. It was absolutely astonishing.
ANG-B – American National Group Inc. 6.625% Ser B Dep Shr Reset Rate Pref Stk [resets 9/1/25]
Can anyone explain the bear case for this one? For those looking for YTC alternatives to MM rates returns, this one seems like a slamdunk… It’s been hovering at 25.02 for a long time. ANG-A got called on 2/24 to avoid its first reset at 5 yr + 4.332. ANG-B, if it were to reset, will reset at 5 yr + 6.297! So it seems very very likely that ANG will elect to call no matter how low the 5 year goes….. At 25.02 YTC = 6.929%. Looks awfully attractive to me and obviously, I’ve been adding all along… B pays out on 3, 6, 9 and 12/1…. I know there’s some unfounded concern for delisting, but still, the likelihood of call would remain high. Also, unlike many resets, it will remain callable at any time instead of only on any reset date, after 9/1, but then again, so was ANG-A. It’s also non-cum as was A.
2wr-
Agree. I have a little ANG-B below par, way too little, and faint hope for a dip. It looks good as a 6.625% hangout until the Sep 1 call date.
Looking for any publicly traded equities that has mostly ROC distributions. One I found recently was NXG. I like the fact that the price hasn’t flinched during this panic sell-off. It’s a monthly payer too but the only thing that stuck out was the distribution has doubled vs. 2 years ago and it’s currently trading at a pretty big NAV premium of 14%.
If you have any thoughts/experience on NXG or any other candidates/holdings of your own, please advise. Much appreciated. Cheers.
There are plenty of choices. I prefer funds that deliver CG or ROC, so partially OT – my shopping list –
— CEFs: older funds, funds with option overwrites or managed distributions, funds under activist pressure, funds advertised as tax-managed like Eaton Vance CEFs.
— Covered Call ETFs that are structured to generate ROC or CGs. Read the product materials and the disty notices.
— UTG is popular on the message boards. I am happy with QQQX.
— Fidelity has a Stock Research tool with a 2-year bar chart and a table break down – “Distributions Type by Calendar Quarter” and “Dividends and Capital Gains Distributions” YMMV on ROC from year to year.
“To research distribution details for a specific CEF, go to our Stock Research Center, enter the symbol, then click on the Distribution & Expenses tab.”
— Understanding the option strategies and performance under different market conditions of CC ETFs is more important than what kind of distributions the funds pay. A ETF designed for stable or gently up markets may not perform well in a market crash.
— IMHO the best Return of Capital is non destructive.
JMO. DYODD,
Bear. I’m a little bi-polar. I worry about being safe then I will take a risk. Bought some ADX the other day at 18.37
Since they switched from monthly distribution to a quarterly the next ex dividend date is not until April
This would be a long term hold if I thought the economy was going to grow. Since the dividend is based off the Nav at 8%. I should be ok
I’ve owned ADX for a long, long time. (So long that I forgot which decade.) It’s not one that I worry about. I get overly concentrated in sectors when I yield hog. ADX balances that out. Their old divvy policy was 3-small quarterlies plus 1-variable. This confused the yield function on the stock websites. ADX switched to 4 more equal quarterlies. This is an older fund, so divvies tend to be LTCG. Not why I bought them but in line with my current needs. ADX tracks SPY reasonably well so there was an on-going SPY vs ADX debate. With ADX now paying a higher divvy, the difference is shatper. JMO. DYODD.
I think I got the idea from you posting about it Bear.
Actually the first ETF I have ever bought.
Thanks
ADX always seems to be mentioned in the same breath along with TY and CET. All oldies but goodies……. I own CET but sure wish I owned it for a far longer time period than my actual timeframe….. Fascinating story behind it with 25% of the portfolio comprised of a single private insurance company, The Plymouth Rock Company, that they’ve owned since 1982. Performance rivals BRK over the timeframe mainly due to Plymouth Rock…… CET trades at a 17% discount to its NAV and beside that, CET discounts the calculated worth of its Plymouth Rock holding by an additional 20-25% below the Rock’s and their mutually calculated value of the Rock’s NAV due to the size of their holding…. talk about conservative…. I keep wondering if there’s eventually going to be a value catalyst to occur some day soon with Plymouth Rock as its founder is getting up there in age and really ought to be considering estate planning moves as he personally along with his family still control the company’s shares I believe.. Then again, I’ve been wondering this now for at least the past 3 years…
For the record, CET’s cost on Plymouth Rock is now carried at $700k. It’s valued on CET’s books as of 12/31/24@ $392 million – https://www.centralsecurities.com/wp-content/uploads/Central-Securities_AR_web-2024.pdf
2WR, if you really want to read a thing of beauty, go read CET’s annual reports. I’m not even sure old school is the way to put it. You will know what I mean, it’s just a great way to do it. Every other annual report I’ve ever read from any other company is a huge disappointment compared to CET’s.
Thanks for pointing me to CET’s annual report. Thing of beauty indeed. Loved it! Not least the cavalcade of news quotes from the past year.
Anybody seen or heard anything about the AIC delisted Ellington Financial call due Mach 15, 2025?
I’ve emailed them twice but been ignored.
Joel – I wouldn’t worry about it. EFC is doing great. I’ve had zero success getting callbacks from their IR group.
I too have this and have no worries. EFC has timely paid quarterly distributions since delisting and has more than ample resources to redeem AIC. This issue is just under 3% of my port and I trust that by early next I’ll be very happy with over a 9% return on my sub $24.00 cost.
To go along with the down day for bonds, the MOVE index continued upward, indicating rising volatility in treasuries.
https://www.schwab.com/learn/story/whats-move-index-and-why-it-might-matter
SPX hit the 10% correction level and sprang back up like popcorn dropped in hot oil.
Elsewhere, treasuries, DXY, LQD and JNK are down.
What I texted to a friend yesterday:
“Scenario: Tuesday morning dive and bounce. Wed. CPI moves lower. Mkt gets short-term happy.”
Are we having fun yet?
R2S I like your crystal ball! Can I borrow it?
LOL, Charles. I ordered mine from the back of a comic book.
Luvin’ me some technicals. It’s something to note. MOVE is based on OTC options?
Bloomberg headline:
“Trump Allies Want Faster Tax Cuts to Balance Growing Tariff Fear”
Farce, a comic dramatic piece that uses highly improbable situations, stereotyped characters, extravagant exaggeration, and violent horseplay. The term also refers to the class or form of drama made up of such compositions. Farce is generally regarded as intellectually and aesthetically inferior to comedy in its crude characterizations and implausible plots, but it has been sustained by its popularity in performance and has persisted throughout the Western world to the present.
This is an investement site not facebook give us unbiased analysis not talking your emotional bias, Easy to spot the difference you’re not fooling anybody here.
Goodness, Martin, where did you get the idea I was making a political comment?
My comment was regarding the way Bloomberg chose to write the headline. I don’t know anything about the underlying facts, but I thought it was funny that BBG interpreted the facts that way. The press can be quite hyperbolic and misleading.
Martin,
Please, as much as you worry about what you perceive as political statements (and I don’t think R2S’ was), please refrain from attacking individuals in our community.
If we don’t want to look like facebook, avoiding personal attacks is right up there with moderating political rants.
Back in December 2021, shortly after SEC Rule 15c2-11 went into effect, OTCMarkets.com published a very insulting cartoon depicting Santa on his sleigh screwing over retail preferred shareholders via the SEC rule. Does anyone have a copy of that cartoon? I need it for legal reasons that could potentially benefit all preferred stockholders impacted by that rule.
Nevermind, I found it. Here it is for those interested
https://otcmarketsgroup.cmail20.com/t/ViewEmail/i/1B0CE6C4AA0BE5912540EF23F30FEDED/5FDC7CCDEB261C8B981D23A7722F2DCD?alternativeLink=False
Good luck, LI – I hope you can make something out of your efforts.
That drawing sledded right past me without meaning.
Legal reasons?
Do tell.
It was subtle for me at first but clear now. Are there any discussions you could point us to that aren’t necessarily your position or created by you where we might see current/upcoming activity related to our preferreds and 15c2-11?
LQD has started a small downtrend. I’m going to be watching for further deterioration.
Tweet from someone I pay attention to.
https://x.com/brandonjcarl/status/1899267986566836402
“We’re in the early innings of this. The chip glut will be historic.”
A chip glut is the last thing I’d be expecting. Now keeping an open mind.
I’m not a native speaker. What is a chip glut?
Jos, memory chips. Glut is over abundance. Suggesting over production or demand has dropped.
So, cookie prices aren’t falling….. 🙁
The semiconductor industry tends to go through glut and shortage cycles for various types of products. Memory, processors of various types, MEMs, the whole gamut.
Lots of drivers (new plants coming online, equipment/process changeovers, changes in demand, disruptions (earthquakes, etc.), issues aligning supply chain (wafer, dice, packaging, etc.) – very complicated.
My experience is that a lot of the “analysts” who have no real experience in silicon manufacturing really don’t understand how it works, but its always safe to say “glut” or “shortage” because both will usually be right in some part of the industry.
RILY – https://brileyfin.com/press-release?release_id=122659
I have no ax to grind in this, but how can this not be interpreted any other way other than RILY giving away 11% of BRS to BRS management for free? Since BRS is going to be debt free, doesn’t this just weaken the “security” (term used loosely) behind the existing notes??????
This company takes too much time to figure out. There are so many better things to look at. I’m With you on your assessment
Yesterday, Steven Bavaria on SA, posted a long article suggesting folks think about doing something similar to Buffett’s recent slimming of winners, along with other suggestions for hunkering-down for what could be a fairly long stretch. Something to think about– I have become reluctant to sell since it has seldom worked well for me. I am set to buy- having plenty of cash equivalents.
Gary, I still think we are in the early innings of a new ball game. I have a few sell orders out there but at prices I want.
I’m looking to buy, but I don’t see any panic selling in the stuff I want to buy. Which tells me this sell down isn’t what the talking heads are making it out to be.
Ford 6.50% issue ( FpD ) currntly @ $23.43 … 6.95% area ….
Any holders / thoughts. Automotive , yet seems good credit.
Hi Jim
I cobbled together about 1K F-D shares back in late 2023 (?) when it was below $21, so over 7.75%. I am just letting it sit for now as a diversifier. i don’t think Ford is going to BK anytime soon and this is debt so higher in the cap stack.
I try to find a few issues like this to get some diversity outside the industries commonly discussed here – banks, CLOs, reits, BDCs, etc.
Another one I picked up in 2023 for diversity was SLMBP (Sallie Mae preferred) . It was paying over 11%, when Biden’ kept fooling around with student loans. Its down to about 8.6% now because the price has increased substantially.
esgr 5.75 of 2040 tender at 100 by Friday. I’m holding.
Nothing to buy…offered at 100, but if holing might want to tender
7-10yr IEF & 20+yr TLT up some today, yld 3.61 & 3.66% respectively — not a lot of diff for going out 10+yrs more. Surprising the prior 3 days have been down. Interesting that their lows were 1/14 – same day that oil was at recent high.
I was eyeballing the 10 year chart myself this evening. Trying to recall time periods when people were unsure of things, the govt might have to reduce spending, layoffs in both private/public sectors, the stock market was over priced/due for a pull back over the short/medium term, the average person thinks everything is expensive now days, and etc.. I think we might very well have reached a point in time sub 4% will be with us for a while when it finally happens which at this rate might be next week.
Even today you could sell a lot of stock and lock in 100% plus gains from just 4-5 years ago in quite a lot of names. Then simply buy a 10 year and just hold on tight for a while especially as you get older. 3.75% will sound a lot better then possibly down 20%.
I am expecting IG preferred will start creeping up in price and most likely drag everything else with it if a reasonably decent name in fixed income. I don’t follow corp bonds very closely but I can only imagine good deals have dried up completely. Muni bonds for my state have zero good deals compared to just 3 months ago when I was getting 4.6-4.7% tax free buying new issues. Now you are lucky to get 4.0-4.1% in a new issue of reasonable quality and longer duration.
I still think there is time to get a reasonable deal instead of a great deal. Not too late to buy. But if we see the 10 yr below 3.75% for any length of time those IG rated QDI preferred paying 6-6.2% will turn into 5.60-5.80% right quick.
Using PSA and Gabelli preferred as the canaries in the coal mine almost every one is under 6% already. Historically both of these names are still yielding a lot more then many people in the past who bought got.
I’m thinking the opposite. Friend who is 37, very smart (perfect SAT score smart), wants to bet me, with him taking lower rates and me taking higher. This is the guy I mentioned who invented a nonsense stable coin and sold his % for $63 million after getting Coinbase and Peter Thiel to buy, among others.
I’m actually betting WITH him given all my long term munis and perp preferreds but I don’t think slowdown necessitates lower long term rates. Indeed, term premium is virtually nonexistent now.
It sure seems TLT rallies when the market falls quickly then falls right back down.
FC, I assume you are not looking at muni housing bonds as they have similar yields regardless of the state, but are callable at any time.
My experience is these don’t get called easily. Nothing like FHLB and FHLMC debt. I’ve had exactly 5k out of 1.8 million called since 2014. Granted, rates have not been dropping sharply during that period.
Lt and Fc, I don’t know what to think and how to play it.
The closest to what is starting to happen is when I remember living when the Vietnam war ended. We already had a lot of things costing more. Groceries, gas, home heating. My dad bought a new home and SCE convinced him to go all electric then the utility bill shot up. The government cut spending and hiring just as vets got out of the military only to find it hard to get a job. The state cut spending and all these hiway projects got cancelled. The widening of the 405, the overpass in San Fernando valley going from the 405 to Palmdale just left hanging in the air.
It seems like now could become similar just not as bad. Nothing is ever exactly the same
So tell me how to play it?
TSLA off another 14% today- 53% off of 17 Dec closing high. Going down in flames like a Starship– something off-putting going on?
Maybe he is no longer the richest person?
This Bloomberg headline caught my eye:
“US Credit Risk Rises as Tariffs, Job Cuts Stoke Recession Fears”
That’s the first time recently I remember seeing “credit risk” in a story title on BBG. I look at BBG headlines to get an idea what narratives are current.
I think credit problems are what separate ordinary stock market corrections from recessionary corrections.
Here’s the FRED ICE BofA US High Yield Index Option-Adjusted Spread.
https://fred.stlouisfed.org/series/BAMLH0A0HYM2
What credit spreads are considered bellwethers?
Pennymac Libor Case
We won the 1st round.
PennyMac Decision and Order
file:///C:/Users/Peter/Downloads/PennyMac%20Decision%20and%20Order.pdf
tks for update..cannot open link ..could you recap it
John,
that link is on your computer!
No it is NOT!..its NOT a link Its a copy of file address on his hard drive (i.e. C)
I do that sometimes too
If you copy and paste it into your subject bar it will open up
Call me stupid but what is a subject bar?
perhaps this is why I’m losingtrader?
I understand the case without looking and it looks like it’s based on Calif Law when there’s a federal pre-emption..but I would contend federal law is on your side.
In any case if this works, isn’t there a State Street preferred subject to this same situation?
Any others?
I had asked CPFB to review the matter with ..if I am recalling accurately, State Street, but my car manufacturer decided to fire CPFB’s employees!
John Horn.
The link you provided is a local file path on your computer, which means it points to a file stored on your device. This means that no one on the internet (including all of us) can access your computer, and therefore, we cannot access the file.
Why? Security. If it were possible for us to access your local files, anyone could connect to anyone else’s PC in the world and steal interesting or sensitive files—whether it’s passwords, financial spreadsheets, or any other personal data you can imagine.
To share the file with others, you need to provide the internet source from where you got the file. The file you have is called “PennyMac Decision and Order.pdf.” If you didn’t create the PDF yourself, then the source must be from somewhere else.
Hopefully, this explains why no one in the world can access the file on your computer. There might be one person who could, like your mom, but she would need to be physically at your computer. She would need access to your computer, a login to your user account, and permission to access your directory, which is unlikely (but possible) since the file is stored in your personal directory.
If the article is lengthy and spans several pages, consider using an AI chatbot or a custom large language model like Llama, GPT, or DeepSeek. You can prompt it to summarize the article into a single paragraph with five or fewer sentences, including a concise title or headline.
I dont have any dog in this hunt. I personally wouldnt invest in pennymac.
As a follow-up on PMT case – https://drive.google.com/file/d/1JSdPZSUaLJ9dcTsJ8-djKZ0pBEpFm_CI/view
Thanks 2wr. I was asked to render an opinion in this case–which I declined to do since I can’t afford to spend my time on items for which I have no dog in the fight. There are other cases being pondered relative to the LIBOR Act–no thank you I don’t want to render an opinion in these cases either–although the lawyers involved have been chasing me around. Just because one publishes a website doesn’t mean he knows anything more than the next guy.
I used llama 3.2. Summary:
It appears that the court transcript is primarily discussing the defendants’ motions to dismiss. Here’s a revised summary:
The Plaintiff had filed a lawsuit against PennyMac Mortgage Investment Trust and others, alleging some form of violation or claim against them.
The defendants have filed two motions: (1) a motion for judgment on the pleadings, and (2) a motion to dismiss under Rule 12(b)(6). They are requesting that the court grant their motion to dismiss, which would mean that the lawsuit should be dismissed without further consideration of the merits.
In response, the court has denied both motions. The transcript indicates that the court is denying these motions because they do not meet the required standard for dismissal under Rule 12(b)(6), and also notes that it cannot consider material beyond the pleadings when ruling on a motion to dismiss.
Overall, it seems that the defendants are trying to have their lawsuit dismissed, but the court has denied their request and they will need to respond to the complaint.
Thank you for finding and posting this. I bought some PMT-B a short while ago on the theory that this lawsuit (and the potential for a switch to a higher floating rate) didn’t seem to be priced in. This ruling makes me think that was a reasonable decision.
While it’s just a decision not to dismiss, and not anything final, the court hints very strongly that it thinks the plaintiffs have a good argument, and that this is exactly the outcome the LIBOR Act sought to prevent. I am not a lawyer and not a securities expert, but at this point a plain reading makes it sound like PennyMac is likely to lose.
It’s not clear what the remedy would be, though. It’s a California specific suit, so it’s possible that it would apply only to California residents. It also specifies the class as those “who own or owned” shares, so it’s possible those who buy now might not get the full benefit of a win. And PennyMac has made it clear that they will do whatever they can to avoid paying. Still, I think this is about as good a decision as holders can hope for at this point.
Anyone else took a look at your portfolio today? I usually don’t on bloodbath days, but I did today as I wanted to see where RITM-A is. Amazingly my portfolio is showing a modest amount of green overall on a day the S&P just hit 2.2% down! Makes me feel good I somehow managed to invest for some stability…… Let’s just hope investing in debt continues to hold up as that is mostly what we do for income investing except for the few common stocks held such as the utilities. Maybe I’m just lucky!!!!
I’ve also been surprised to see nice green on down days- today across all accounts am down ~$250 Pretty stable to rising the last couple weeks.
Gary, I agree but it’s early in the day and the accounts reports are delayed during the day. The end of day is more important. S & P down about 2% currently. Sit back and pass the popcorn.
Right on- down amt has doubled. Lately, at end of day, all indexes seem to recover some.
How important is foreign investment to US asset prices? And what would happen if foreign investment fell. I’ve listened to only the first few minutes of this podcast.
https://podcasts.apple.com/us/podcast/monetary-matters-with-jack-farley/id1769093906
Is it odd that US stock indexes are correcting while at the same time German and Chinese (priced in dollars) are rising?
I’m getting very uncomfortable with the new administration’s efforts to change so many things at the same time. It’s hard to estimate the effects of even one major change.
I am okay with changing lots of things at once. I am not okay with the constant shifting and reversals of announcements. As of this morning, the tariffs on Mexico & Canada, now slated for April, MAY be more than 25%. Which, of course, means they may not be.
There is no excuse for this constant shifting.
Steve, Now you see part of my reasoning to wonder about investing somewhere else. The new Prime minister was just installed in Canada and he is taking a tough stand.
Reading on line I get the impression a few Canadians are feeling upset at the way they are being treated and are looking for new sources for products like produce for example and said they wouldn’t return to buying from America.
The nonsense of Canada becoming a 51st state does seem to have upset many Canadians.
I have invested in other places specifically Canada. Currency fluctuations need to be taken into account. I did not do a good job with that.
Do we have anyone here on III that is good with currency hedging that could share some strategy to manage exchange rate fluctuation?
I’ve got a friend who does a lot of international investing and his best strategy is not to hedge. He’s got a lot of stocks in HKG, where the exchange rate is banded between 7.75 and 7.85 for decades, but in other markets he’s always talking about PPP , Purchasing power parity
Charles, Canada is and will be in a rough spot unless they can immediately make moves to ensure access to their own energy cheaply. They have been reluctant lately to take advantage of their own good fortune of having the geology and infrastructure to support it but by and large have been governed by the climate gods to make it hard to grow, thus dependancy on another country for so much of their prosperity. If the US were to permanently impose tariffs then access to that cheap energy essential to growth. Trump hates Trudeau. He will hate the new guy more is my prediction. So as a result, I’m going to make a wager that US-Canada relations rough at least next 4 yrs, unless at some point the Canadians capitulate. Yes, not their nature to do so, but they are vulnerable to aggressive US action.
I do not agree at all with your analogy of Germany. The German tough times are due to self inflicted wounds of which they have been warned about multiple times over the last couple decades. Much of Europe also afflicted by the same insane energy policies that forced them to abdicate to their Russian masters to ensure they don’t freeze to death. As we can see this play out now under multiple fronts; war, energy, and geopolitics. Recent moves by France (military build up and a more aggressive push for nuclear power) indicate their leader understood when Trump told him the old model won’t be happening from now on. The US, by contrast, is much more capable of a more self reliant economic model if that is in fact what ends up happening. My thought is there is simply not enough time for this to all play out and running out the clock might be an effective strategy for combatants in an ongoing trade war. Have no idea, of course, what comes after Trump. Are these countries going to rely on a US election to change their paradigm?
Pig, I agree with a lot of what you say. When I was living in Pennsylvania I noticed during the winter produce was very expensive and the selection wasn’t as good as I was used to here in Calif. During the winter out here a lot of what we get is cheap and from Mexico. I’m sure Mexico would be happy to ship produce to Canada for more money. I would say 3 days at the most from Mexico by ship to Vancouver. Right now we are getting cheap grapes from Chile.
I don’t know let’s just see how this will play out.
Mark Carney the new Liberal Party leader is also the former Vice Chairman of Brookfield Asset Management among other things. 🧐
Well Citadel you know where the government retirement funds are going. 😉 😔
More to the point and far more concerning: 12 months from now when the present dislocations and those to come have had a chance to ferment and all the illegals have been chucked out, what group comes next.
People who spell “Steven ” with “Stephen”
hahahaha
I live a few miles from Canadian border. Cross frequently for arts, food and views. Check a few of their newspapers for restaurant deals, tix for plays and duty free booze. etc.
Currency fx is very favorable for us.
U.S. press is not reporting they are really really really PO’d. I have tix for a play. debating about not going. today ontario put 25% “tariff” on elec they sell to 3 states. took american booze out of their gov’t stores, (largest non u.s. volume market). Goods in stores are labeled “made in canada”
The states most affected by Canadian electricity tariffs are NY and MN…Michigan not so much due to regional sharing. My guess is the situation will be resolved after Canada holds elections but not before.
The talk about Canada being the 51st state and their prime minister being referred to as Governor is creating a hardening of positions. It makes it hard to predict because emotions are getting in the way
TRUMP: HAVE INSTRUCTED SECRETARY OF COMMERCE TO ADD ADDITIONAL 25% TARIFF, TO 50%, ON ALL STEEL AND ALUMINUM COMING INTO THE UNITED STATES FROM CANADA.
TRUMP: WILL SUBSTANTIALLY INCREASE TARIFFS ON CARS COMING INTO U.S. ON APRIL 2ND IF OTHER TARIFFS NOT DROPPED BY CANADA.
TRUMP: THIS WILL GO INTO EFFECT TOMORROW MORNING.
TRUMP: WILL SHORTLY BE DECLARING A NATIONAL EMERGENCY ON ELECTRICITY.
The punishment will continue until morale improves! 😉
This excerpt from yesterday’s Daily Spark https://www.apolloacademy.com/the-daily-spark/ by Torsten Slok in which he discusses the ideas tied to a Mar-a Lago Accord:
“1) The changes that are required to existing US manufacturing production, including eliminating Canada and Mexico from all auto supply chains, will take many years. Can the US achieve the long-term gain without too much short-term pain?
2) Globalization has for decades put downward pressure on US inflation. Will a more segmented global economy with a much bigger manufacturing sector in the US put too much upward pressure on US inflation, given the higher wage costs in the US than in many other countries?
3) With tariffs being implemented, the rest of the world may over time begin to decrease its reliance on US markets and also increase their own defense spending. Under such a scenario, what are the incentives for the rest of the world to sign a Mar-a-Lago Accord?”
Over my head to make a comment on, except I’d guess that any path aimed at bringing all auto production to the US means more expensive cars.
Rocks, He stole my thoughts!
On today’s litter box I replied to Westie that these moves with tariff’s to leverage our trading partners was probably going to make them re-think their dependence on trade with the U.S.
A by product of this would also be less dependence on the American dollar.
Unfortunately, This is going to work out exactly like in Germany. They tried to keep a higher standard of living and continue to manufacture and sell to other countries. But as with anything cheaper wins out. They lost the battle and to be competitive and still be able to sell products They first moved production to lower cost European countries like Spain then finally out sourcing to China.
Even if production for a lot of products is moved back to the US, the market to sell to will be smaller than the world market and cost will not be competitive.
All of the Sunday comments are well focused on the fast paced chgs of economics & country ties we are living thru. They are great reads.
Quick, & recent, overview of the Dollar ( DXY ) . . .
December 31, 2024 = $108.15
Janurary 13,2025 = $109.99
February 14, = $107.00
Feb 28, = $107.38
March 07, = $103.82
I’m looking for relatively safe 7.5 to 8.0%
PMT issues may apply;
Relatively safe 7.5% to 8%
Isn’t that an oxymoron?
No, it is really not…. I will throw a couple out there….
ARGD
BEPI
FGBIP
You’re welcome….
FGBI’s last quarterly report from Feb 16th time frame.. they are going in the wrong direction while other banks have stabilized or improved. Not saying it won’t pay but things have gotten worse, not better over the last 12 months.
I am not shy about buying bank preferred but even I need to see improvement over the last 6-12 months…. So I did not purchase any.
SGOV – 75%
XDTE – 25%
Income, est – about 10.1%
Performance, dividends reinvested, 4/24 to 2/25 – Up 7.4%
Max draw down – 0.6%
SPY/TLT 60/40
Income, est – about 2.4%
Performance, dividends reinvested, 4/24 to 2/25 – Up 9.4%
Max draw down – 5%
JMO. DYODD.
Bear-
XDTE is down >14% in 3 mo- not exactly ‘relatively’ safe.
I received my FICO today from one of the banks where I do business.
Only mentioning this because it’s funny: 849/850.
The reason it wasn’t higher, according to the report, is that I don’t have any installment debt.
I do recall seeing 850 once in my life when I was using 0% financing on a car loan.
Perhaps funnier is that Progressive refused to provide a home insurance quote due to my Transunion report. The letter I received by mail from progressive indicated I had 35 credit lines and said “OPTIMAL: 1”
Does Progressive wants customers who can’t get written by others?
As an aside, I went with PURE. They only have 1650 policies written in Nevada, but the terms of the policy and their claims settlement procedures are far and away the best in the industry for high value homes.
Having a dad who has been in insurance for 70 years, policy terms are super important. They have a “home systems” coverage that is pennies compared to a homeowners warranty company and isn’t limited in $ value….the HO warranty companies would likely pay about 20% of the value of my refrigerator or AC unit
At my advanced/lengthy credit history and a mortgage (no other debt), my scores vary between 850 and a few pointa lower– changing every month, depending on whether I charge a few hundred or a couple thousand on one of my few cards– all of which is paid off before their end of month report- crazy & almost meaningless.
My friend Jonathan Clements is the owner and editor of Humble Dollar; he sadly is dying of cancer and sat down for an interview. I wish I had gotten the opportunity to interview him on my old investment radio show and believe many can learn from his story: https://humbledollar.com/2025/03/asking-the-editor/?utm_source=mailpoet&utm_medium=email&utm_source_platform=mailpoet&utm_campaign=another-ses-test_7
Be well my friends, Azure
Curious why Citi has not called C-N floater– Qonline has it over 10% and $30.17 Seems risky to be buying it- almost 9.5 yrs past call, but they don’t seem interested in doing so.
Gary,
I recently investigated this. The reason is pretty interesting. This should get you started…. all oddities seem to trace back to Gridbird…
https://innovativeincomeinvestor.com/esports-entertainment-suspends-preferred-dividend/#comment-105491
Does anyone not see the illogic in the Citi disclosure about why C-N isn’t called?
I’d think the market would be capable of understanding the $700 million hit to earnings on extinguishment of the debt. In any case it would be a one or two day affect on the price of the stock as people read the cause.
Or, is this an example of Citi understanding the inefficiency of markets?
LT,
I thought the same… I wondered why they did not do some partial calls year by year? The differential between the preferred price and the par value scared me away.
voner
Citi pref N
Put your thinking cap on.
Cost of capital.
Citi is grandfathered on this issue which it got through purchasing the original issuer and was allowed by the regulatory approval at that time to count it as regulatory capital.
Unless/until the regulation changes, there is no cheaper cost of regulatory capital to Citi than this issue.
Thanks to all- makes sense, in a way.
Prob won’t see a ‘low’ price again. 3/19/20 was the time to grab it.
About 1 year ago, I began to pay more attention to the institutional preferred and baby bond marketplace. Why? The large money center banks. Over the last year, I have purchased STT-I (State Street 6.7%), C-CC (Citibank 7.125%), JPM-OO(JP Morgan 6.5%) and now BK-J (Bank of NY 6.3%). Do not bother to look up the stock symbols (STT-I, C-CC, JPM-OO or BK-J).
None of these institutional issues trade via stock symbol. They trade by CUSIP. These are preferred stocks and like almost all preferreds they are perpetual. However, they are all also 5-year fixed rate reset off the 5-year treasury rate. I prefer not to take a lot of interest rate risk. I have no idea why the major banks seem to be abandoning the retail preferred marketplace. Anybody have any thoughts why this is happening?
In terms of the baby bond market, my strategy was to own 20 different investment grade utility companies each at about 1% of my net worth. That is because utility companies can generally defer interest payments for 10 years. My risk mitigation to that happening. I consider companies like Eversource, National Grid, Ameren, and Entergy to be 1 company and my total holding, I am still self-limiting to 1%.
Again, in the institutional market I am finding companies that are not issuing retail baby bonds. Like most baby bonds, they have long durations, so again I only buy fixed rate off the 5-year T-Bill. This allowed me to add American Electric Power, Replace NISource, whose retail issue was called, and add Nevada Power (a Berkshire Hathaway Energy company).
Again, I am not sure why these companies are avoiding the retail baby bond space.
Steve, I don’t think anything has changed since the dawn of man trading with fellow man. The tides just ebb and flow. The big banks in the New York money centers catered to the wealthy, then you had the everyday banks for the working man. The Dime banks grew because they realized pennies and dimes add up to dollars just took longer. The big banks grew but they went after larger depositors. I just don’t think the mega banks want to deal with collecting money $25.00 at a time anymore.
As I understand it, The banks do not sell their preferreds shares. They hire underwriters to sell them.
Steve,
I agree the $25 wrapper is only relevant to broaden the base of debt holders.
It seems these issues always have a yield lower than the $1000 issues, but may be more liquid.
I believe this was just one reason for Corts, with a secondary reason being it allowed registered reps and bd’s another bite at the apple by creating a new security .
tax preference seems like a reasonable answer.
The preferreds are part of the banks regulatory capital whether retail or instititional. Both are qualified dividends. I do not know of any tax preferences here.
In general, are the size of the issues you’ve been looking at large? The consensus would be that the retail baby bond market is limited in size as opposed to what can be issued in the institutional market… Also, frequently there is a price differential between the two, most frequently favoring issuance in the institutional market from the issuer’s point of view..
2whiteroses. I think you hit the nail on the head. These issues have been fairly large.
Thanks
Steve—I did the same thing. I own State Street 6.7%, Citicorp 7.625%, Citicorp 7% and Cobank 6.45%. The Citicorp 7% is a 10 year T reset and the others are 5 year. In finra, I can see the current trading history of all issues so I’m not trading blind when I call the Schwab bond desk. I have, at last what I consider, large investments in all of them at yields that range from 6.46% to 7.61%.
I lost COBANK January 2nd 2025 when it was called. The new issue had a minimum of 250K, which is too large a single position for me. I also monitor FINRA when I call the Schwab bond desk. I have found that the pricing from Schwab is generally a tad more than I expect. However, it is almost always below some trades taking place on FINRA. So, to me it’s okay. But I sure would prefer just being able to issue a bid and see if I could get the pricing that I really would like. This is the one thing about all of these issues. They are not as easily tradeable as retail issues. Right now, my institutional fixed rate resets are 17% of my net worth. I am not sure if I will add more to this block of money because they are less liguld than retail preferreds. But, I am very happy with my blended return on these issues.
Steve-
You mentioned institutional baby bonds. I think you meant to say bonds, being that they are $1000 issues, generally of the subordinated variety. Here are some junior resets and floaters that I watch or own:
CRBG 21871XAP4 6.875% first reset 12/15/27
ET 29273VAX8 8.0% first reset 11/15/29
ET 29273VBC3 7.125% first reset 10/1/29
EPD 29379VBM4 7.55% floating
EPD 29379VBN2 5.25% floats 11/16/27
ALL 020002BB6 7.5% floating
PPL 69352PAC7 7.2% floating
NRUC 637432MT9 7.5% floating
TRP 89352HBG3 7.0% first reset 6/1/30
There must be many more like these with some great yields. Please share. Juniors have more risk than seniors to go along with the better yields. The credit risk of the issuer might be more important.
r2s—I have a large position in the NRUC issue (currently floating with a 7.45% coupon). 3month sofr + 26bp + 291bp. Changes and pays every 3 months. A3/BBB Currently trading at $100.5. I definitely agree that the credit of the issuer is most important.
Two other issues I own are by Enstar Finance. 5.75% and 5.5% coupons that will reset off the 5 year T—the former this year and the latter in ’27. I assume the 5.75% will be called in September, but who knows with the 5.5%? It floats to the 5 year T plus 4% Both are BBB-
NRUC floating ?
please check this ; it’s a Note
ted-
Some junior $1000 notes float or reset. The same is true of junior baby bonds.
Ted the NRUC doesn’t float or reset. If you are talking about the Co-op’s $1000.00 bonds you will have to post a Cusip so we can look it up.
r2s—do you know the float terms of the PPL issue? Thanks.
Whidbey Islander,
69352PAC7 – PPL – floats off the 3 month plus 2.66%
https://www.sec.gov/Archives/edgar/data/922224/000089322007000779/e31666fwfwp.htm
Good info, thanks. Do any of these pay qualified dividends?
The bonds won’t pay qualified as they are interest but many of the institutional preferreds may be qualified and worth checking out.
Here is an older list that somebody posted on this site within the last year of utility issues that float. A starting point for others to investigate if they are interested. With the CUSIP number, this should be enough to start researching any company that you are interested in.
Southern California Edison Co 842400FU2 9.767 9.74 SOFR
National Rural Utilities Cooperative Corp 637432MT9 8.489 8.49 SOFR
PPL Capital Funding Inc 69352PAC7 8.236 8.25 SOFR
Edison International 281020AZ0 8.225 8.03 UST5
NextEra Energy Capital Holdings Inc 302570AW6 7.631 7.97 3ML
Edison International 281020AX5 8.125 7.87 UST5
WEC Energy Group Inc 976657AH9 7.681 7.84 SOFR
Sempra 816851BS7 7.5243 7.54 ??
National Rural Utilities Cooperative Finance Corp 637432PB5 7.125 6.9 UST5
Emera Inc 290876AD3 6.75 6.8 3ML
NextEra Energy Capital Holdings Inc 65339KCW8 6.7 6.71 ??
National Rural Utilities Cooperative Finance Corp 63743HFQ0 6.2179 6.17 SOFR
Georgia Power Co 373334KU4 6.0992 6.07 SOFR
National Rural Utilities Cooperative Finance Corp 63743HFL1 6.0482 6.03 SOFR
NextEra Energy Capital Holdings Inc 65339KCR9 6.0397 6 SOFR
CenterPoint Energy Inc 15189TAZ0 5.9996 6 SOFR
NextEra Energy Capital Holdings Inc 65339KBK5 5.65 5.87 3ML
Laclede Gas Co 84859DAB3 5.8534 5.84 SOFR
Dominion Energy Inc 25746UBY4 5.75 5.75 3ML
National Rural Utilities Cooperative Corp 63743HFA5 5.6851 5.68 SOFR
Mississippi Power Co 605417CC6 5.6563 5.66 SOFR
Edison International 281020AS6 5.375 5.57 UST5
Consumers Energy Co 210518DG8 5.4085 5.41 SOFR
Algonquin Power & Utilities Corp 015857AH8 4.75 5.4 Reset
Florida Power & Light Co 341081GC5 5.3029 5.39 SOFR
National Rural Utilities Cooperative Finance Corp 637432NK7 5.25 5.37 3ML
Florida Power & Light Co 341081GJ0 5.2205 5.27 SOFR
Edison International 281020AT4 5 5.27 Reset
CMS Energy Corp 125896BU3 4.75 5.23 ??
NextEra Energy Capital Holdings Inc 65339KAV2 4.8 5.21 3ML
Florida Power & Light Co 341081GS0 4.998 5.03 SOFR
Sempra 816851BK4 4.875 4.98 ??
Duke Energy Corp 26441CBG9 4.875 4.91 UST5
Dominion Energy Inc 25746UDD8 4.65 4.76 UST5
Dominion Energy Inc 25746UDM8 4.35 4.66 UST5
CMS Energy Corp 125896BV1 3.75 4.56 ??
Sempra 816851BM0 4.125 4.47 UST5
American Electric Power Co Inc 025537AU5 3.875 4.29 Reset
Southern Co/The 842587DF1 4 4.17 ??
NextEra Energy Capital Holdings Inc 65339KCB4 3.8 4.16 ??
Southern Co/The 842587DJ3 3.75 4.06 ??
Duke Energy Corp 26441CBP9 3.25 3.66 Reset
I prefer senior debt for $1000 issues, although I own some preferred and juniors. To me, senior debt from credit-worthy issuers is what distinguishes bonds from preferreds and junior BBs. However, the temptation has been the ability to lock in a great coupon for several years.
Hey Steve,
Not sure on the retail preferreds not being issued as much but maybe it’s cyclical demand. There seems to be a small return of accredited investor convertible bonds.
I have the Citi 7.125 issue, would you be up for sharing the CUSIPs of any of the others that are trading a reasonable yield still?
I have lots of utility preferreds as well spread out over some of the same companies and like that as part of the strategy as we journey into the unknown. It was bittersweet to give up the PacifiCorp shares to the tender offer but too good of a deal.
Thanks for the posts.
Here is what I own.
172967PK1 CITIGROUP INC. 7.125% Reset 5Yr+2.693%
025537AU5 AMERICAN ELECTR 3.875% Yield to 1st call 6.2% Reset 5Yr+2.675%
65473PAR6 NISOURCE INC. 6.95% Reset 5Yr+2.451%
89352HBG3 TRANSCANADA PIPELINE 7% Reset 5YR+2.614%
48128AAJ2 JPMORGAN CHASE 6.5% Reset 5YR+2.152%
641423CH9 NEVADA POWER CO 6.25% Reset 5YR+1.936%
857477CH4 STATE STREET CORP 6.7% Reset 5YR+2.613%
064058AN0 THE BANK OF NY 6.3% Reset 5YR+2.291%
If you do not mind the lower coupon payments until AEP resets 2 years from now in early 2027, I believe the current pricing will still get you a 6.2% yield to 1st call. AEP is not in the $25 retail preferred market. Pacificorp was a Berkshire Hathaway Energy company as is Nevada Power.
I can confirm that Schwab marked State Street and Citibank as qualified dividends. JPM and Bank of NY are new issues that have not yet paid dividends but I expect them to be qualified dividends (DYODD).
NiSource and AEP are bond interest (not qualified dividends). I expect the new issues of Nevada Power and Trans Canada Pipeline to also be bond interest (not qualified DYODD).
SteveA, Great list, thanks for posting all that info. Looks like some good stuff in there.
Great list. Did anyone able to buy this online? Seems like no bond inventory for trade other than calling the bond trader specialist. Last year I’m only able to buy citigroup 7.125 but took a while.
No, I had to call the bond desk for every trade. Schwab had none of them but put out ask requests and called me when they got a response. Took several hours on average. For Bank of NY Mellon this took 3 days. The Schwab ask request is good for only 1 day, so I had to call back every single day.
Thanks. Do you have to pay a fee to the bond desk even if there is not trade executed including GTC trade? I never used bond desk since the fees are relatively high and I don’t buy large number of bonds.
Steve, You don’t mind my asking Did Schwab have a minimum?
No minimums other than the issue minimums themselves. For example, I saw the new NRUC issue in the secondary market. I tried to buy it. It had a 250,000 minimum and they enforced it. I saw some posters say that Fidelity required a 50,000 minimum to do an ask request. That has not been an issue with Schwab – no minimums
Thanks Steve, I have been told the 50k minimum. I think they are very busy over at Fidelity.
Charles, can confirm on no minimums for Schwab.
Not commenting for Steve but for RP and CM and my previous orders a Schwab:
-if a customer is unable to process order via the site, they will not charge the phone fee but there is another smallish fee that they pass along. These are all in increments of 1,000 as far as I know.
The Schwab site does allow you to look up most CUSIPs and you can see what stuff has been trading for recently sometimes (time and sales) because a lot of these issues they have to call a broker and get a price so you can see if their current broker is being ridiculous or not.
Fidelity has a similar policy if I remember correctly.
You’re a legend. TY for sharing. I have to say that I liked having Buffett pay a premium for my dividend shares because he doesn’t like to pay them. Good note on AEP, was looking at them earlier but not this issue.
Just to give one back (only institutional that hasn’t been called) I have:
Citi 7.200% Series BB Fix to 5/15/29|5yr treas+2.905% 172967PJ4
There does seem to be a little extra kicker for the issues that aren’t on the retail market.
I’ll be digging through these.
I’ve been lucky to buy Citi 7.2 and Citi 7.15 bonds last year. I guess people are holding these bonds when interest rate is trending downwards. I’ve to regularly checked these illiquid bonds every day. Bought these two online via InteractiveBrokers but almost zero availability online when I last checked a few weeks ago.