After 2 days of inflation data and sharply falling interest rates it would appear that we will have some quiet markets for Thursday and Friday–we do have tons of Fed yakkers and they will probably speak the ‘party line’–‘while inflation is improving it remains above our target and we stand ready to raise rates’. There will not be any hints of reducing the Fed Funds rate from the yakkers.
Equity futures and interest rates are nearly dead flat at 5 a.m. central–like watching paint dry–yawn–I love quiet days.
So I continue with minimum cash ‘dry powder’ – I really want to be nearly fully invested in preferreds and baby bonds as CDs mature. My personal thoughts, as I have laid out, is for interest rates to fall through a portion of 2024 and then flatten and finally rise late in the year. This view is based upon massive issuance of debt by the U.S. Treasury. My thoughts are 50% wrong–no better than a coin toss, but that is the premise I am running with now. So with this I invest my cash in preferreds or baby bonds when it is available–I haven’t bought a CD in weeks and weeks although the coupon offered is still decent at up to 5.6%. Really want 6.5% on the low end and 8% on the high end with the 6.5% being relatively high quality and 8% being mid level quality.
Have you looked at the fixed to floating issues that are now paying 9% to 12%? Would it pay to build a ‘basket’ of these issues–say 5 issues with modest exposure to each. Some of these issues are fairly solid – like a Global Partners (GLP), Energy Transfer (ET), Customers Bancorp (CUBI), Aspen Insurance (APO–Apollo). I know some of you own these–but my conservative nature has kept me away except for a modest CUBI position. I might do it–don’t know. The good part is most of these are ‘pinned to par’ (not really par–most preferreds are not $25 par–but $25 liquidation value)–so share price movement is minimal.
Rates have peaked? With JPOW in charge I don’t believe it.
He’s on a power trip and doesn’t care about the stock market,
I don’t trust Old Hickory
Tim-
I don’t see F2F- DLNG-B on your list- call 11/22/23
Gary–will check and get it in. Thanks for the heads up.
During the summer and fall, I started building positions in (not in any particular order):
NI-B (can’t resist the 5-year reset in 4 months)
GLP-A
DLNG-B
CUBI-F
ET-C
ET-D
ET-E
FITBI
AGM-C
RF-B
MBINO
MBNKB (still a while to float, but decent price)
I’m also building positions in beaten down perpetuals at 8+%:
DLNG-A
WAFDP
BWBBP
MNSBP
CMRE-E
GSL-B
BHFAM
MBINN
The term SPLP-A is my biggest position. Not recommending any of them – some have several risks that I monitor. I’m way too heavy in banks and shippers, and I’ll drop them if needed.
I have a HUGE chunk of cash coming due on 11/30 due to maturing treasuries – what to buy??? I had a small tranche mature yesterday and got some SPNT-B at $24.90 to add to my current position plus some other smaller adds to MGR and a few others.
Looking at my LNC-D at 26.70s and contemplating reducing exposure. Bought it back in April at $25.60 and have/will collected/collect 3 divvies. Problem is the yield is over 8.4% so what to replace it with?
yazzer—I have considered the same with LNC – they are not getting the ship turned very quickly and their lousy financials concern me (although my concern is probably overblown).
Feels to me like interest rates may have peaked….that might look good for preferreds and bonds….I bought some BGH….counting on a soft landing and no world war…
Thanks Craig–you might be right-we all have to have a belief of where things are heading in the next year.
A few names of interest. 2 or 3 are high fixed rates….and/or 2 or 3 float next year and can be had at 23 something now so there’s a pop if the start trading like Aspen C did.
AHL C
ATH E
C J
CFG D
JXN A
FITBI
NLY G B
RF B
SNV D E
STT D
VLYPO
Thanks If you Prefer
200 SBNCM 12.75
200 CNTHO 38.85
250 BFS PRD 19.45
30 RWAYZ 24.60