Well we had a week which saw the S&P500 hardly move–really one of the quietest weeks in years. The range was about 1% with a low of 6029 to a high of 6093–and ending on Friday with a loss of about 1/2% for the week. The economic news on the week was mainly on forecast, although producer prices were a bit hot, but prices remained tame.
Interest rates were a bit out of control on the week with rates on the 10 year Treasury shooting higher by 25 basis points. The yield closed the week at 4.40%–one has to wonder if equities can continue to remain level or move higher with threats of higher interest rates. It certainly seems like the ‘sugar high’ of the elections has disappeared and now we have to deal with the here and now and the specter of massive government deficits.
This week we have the FOMC meeting on Tuesday and Wednesday and then the presser and rate cut announcement mid day on Wednesday. I am fairly confident in the 1/4% rate cut–also I am relatively confident that Jay Powell will attempt to tamp down future expectations for more rate cuts –whether he succeeds is questionable in my mind. On Friday we get the PCE–personal consumption expenditures–report for another read on inflation.
Last week, we had some ugly numbers in the average $25/share preferred and baby bond pricing. The average price fell by 25 cents, with investment grade off a whopping 37 cents, bankers off 23 cents, CEF preferreds off 8 cents, and mREIT issues off 9 cents. Even the shippers fell by 13 cents. Part of this fall was ‘real,’ while late-week ex-dividend dates contributed to the fall.
The Federal Reserve balance sheet grew by $2 billion – the 1st pause we have seen in runoff of the balance sheet assets since early October.
Last week we had 2 new income issues price with BDC Gladstone Investment (GAIN) pricing a new baby bond with a coupon of 7.875% and CLO CEF Pearl Diver Credit (PDCC) pricing a term preferred at 8%.
Re the new GAIN 7.875% baby bond:
1. the FWP says “GAINI” and
2. QOL says “GAINT”.
https://www.quantumonline.com/ParentCoSearch.cfm?tickersymbol=GAIN
Could be an error by QOL.
Chuck, My wife had a cousin who recently died. He lived and farmed several thousand acres over by Correctionville Iowa. Farmers are hard workers.
Wishing you the best in life and this holiday season too.
Even with all the shenanigans going on in Washington DC, the trade deficit is larger than ever. The strength or weakness in the $DOLLAR$ impacts the deficit too….more variables other that taffies at play….When will the bond vigilantes awake from their slumber?
Inflation has been flat for the last 3 months but notch up to 2.7% from 2,6% last month..Fed should have waited before dropping down (25 basis points)…
I am in the process of thinning the herd and going to cash…Not going to put my head in the sand…
For those of you that are struggling to find a decent company with a “decent yield” take a look this morning at AGM+E. I own a very large position in it. Do your own DD.
Chuck, The AGM preferred’s are a safe decent yield. I read what the new poster George Washington said when he commented in the flipping and dividend space on AGNC preferred saying they were not returning enough yield for him. Each person has his own risk level.
I am more in risk off mode right now along with you and Westie. While these are safe and right on cusp of paying 2% more than a MM Ultra short T fund we seem to be at a peak in the market and it wouldn’t take much for these to drop either with a drop in the market or long term rates rising.
I used to tell Grid I could see out in my crystal ball 30 to 60 days after that…
Right now a minor issue people are missing is the passage of the stop gap spending bill that has to be done before the end of the year and before Congress goes on vacation.
I’m in a wait and see mode until the first part of next year maybe as far as April.
Because of the uncertainty I think I am holding a decent amount of 6% return preferred right now and not looking to add. Was it Tex who pointed out the gains preferred enjoyed in the first 3 qtrs. of the year are disappearing even with the rate cuts we have seen? It definitely is showing in my accounts.
I’m still looking at buys but looking for those hidden nuggets that seem safe while paying a higher yield. I am still looking over the border even with the threats of tariff’s
It’s hard to win a 3 legged race if you kick your partner’s leg out from under him when you are tied together.
Charles M; THANK YOU for your very nice reply. I posted that because I spoke to their I R MGR a couple weeks ago and she said they are doing fine. She mentioned that the last thing on earth a farmer will do is give up his farm. Growing up on the farm for the first 18 years of my life I know that is a true statement. Its their Life Blood. I wish it were possible to exchange emails or phone numbers as you would be the first I would call. Merry Christmas to You and Your Family.
Chuck
Absolutely agree AGM is rock solid safe.
AGM-F used to be my largest position accumulated all through 2023.
I loved it.
BUT
Market price began dropping in Feb.
Starting in June, I began selling in small lots (50-100) starting at $22.67
After summer bounce up, I resumed selling.
Sold 600 Ex-Div in Sep at $22.85
Sold a total of 500 in again small lots in November from $22.00 down to last sale at $21.11
Today it is trading at $20.66 yielding 6.34%.
Not sure the reason why price keeps falling.
My best guess is concern about ag but I’ve given up fighting the Market.
Overall, I am a Value investor.
Like to buy things on the cheap.
I am getting royally punished (instructed) that is not a winning strategy in today’s market.
AGM can bounce back up
Or keep falling.
Westie, you, of course can take it or leave it, my opinion anyway….but this particular market not ripe for buying or selling at right time. Just buy good stuff and buy again in the downtrends. Much harder to withstand selling in some questionable security, but trust me, pretty easy to jump into the good stuff when market isn’t cooperating. I’d put AGM in that category personally, others may differ.
Pig, so true. Hard to resist buying something. I did buy more FRHUF today. Another tranche as I average down on my cost. Only own this in a Roth or IRA so you don’t get hit with the Ca. 15% withholding.
Charles, what’s going on with that one? Have noticed quite the decline here lately, is that just general malaise with the oil trade or something with the company?
Thank you for the discussion. Based on a quick glance AGM-F seems to be the best choice for current yield at the price I just paid. Bought a small bit to track it more closely. I can live with 6.3% from a strong company. I am hoping it goes lower to fill out the position.
Westie, I am still up $470.00 on the D and $1,360.00 on the E and the income is good so no reason for me to sell. Actually if it drops more it would be an incentive to add more.
BHFAM is getting close to the $15.00 range and it may be worth it to buy more. Also the BHFAN is approaching its 52 week low. Until then I am just watching.