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Will PCE Toss Cold Water on the Fire?

Well we are just 30 minutes from the release of the biggest economic number of the week (at least in some minds) – the personal consumption expenditure (PCE) report. Will this number–if showing inflation at an elevated level toss cold water on the pretty hot equity indexes? The obvious answer is who knows–no one. The 10 year treasury is trading at a yield of 4.12% right now – this after we saw mixed economic numbers released yesterday. GDP is running a bit hot, but inflation indicators continue to indicate moderating numbers.

Each morning when I tune the news in on CNBC (to be turned off at 8 a.m. central) I see news of layoffs from tech company’s – today it is 700 to be laid off at Salesforce. Also I see Levi Strauss is cutting 15% of their HQ staff and Norfolk Southern is cutting 7% of non unionized folks. In spite of this we don’t have major indications in employment stats that are cause for alarm. Are folks able to find employment quickly after a lay off? I still maintain that the Fed is watching employment closely when it comes to interest rate decisions.

Today I am entering 2 good til cancelled nibble orders (nibble because I don’t have much cash). I will add to 2 of my insurance positions–assuming my GTC orders execute. Remember that I am targeting 7%—I will add more Sirius Point 8% resettable (SPNT-B) preferred and Brighthouse 6.60% preferred (BHFAP). These will meet my target without undo risk.

I see that Atlanticus Holdings (ATLC) has finally priced their new baby bond at 9.25%–slightly better than I would have guessed considering this is a company that makes marginal loans to consumers. No thanks to holding any of this issue.

ok–time to wait on the PCE news–see if it is a yawner or fire works.

6 thoughts on “Will PCE Toss Cold Water on the Fire?”

  1. Instead of BHFAP why not BHFAM with higher current yield (so better chance of appreciation if rates go lower)?

    1. m2 – if I remember correctly, the appeal with -P instead of -M is the higher coupon rate and the more likelihood of getting called at par. -P does give marginally better yield but it will probably exhibit much more volatility.

  2. Thanks for BHFAP call a while back. I just so happened to have had some $$$ come free then and did some DD on it and purchased 500 shares at $21.849 avg on 1/5/24. It has performed very well since!

  3. Can you elaborate on why SPNT-B and BHFAP? They’ve gone up quite a lot since their 2023 lows.

    1. The low doesn’t really matter. That was when there was a possibility of them being bought out and people bailed thinking the buyer might de-list them and they would go dark with no way to see financial reports or the ability to trade them. Great example of peoples emotions affecting their decision making.
      Study the company’s financial report, and read the original prospectus or go to quntumonline for a condensed version.

      1. SPNT-B has been trading at about $25.2x (about 10 cents less earlier this week). It pays $0.50 per quarter and we are about 2/3 through the quarter (last ex was 11/14 for a 11/30 pay). So, it is trading just below net redemption value.

        I bought in on an III post in late 2021 (thank you Tim). I flipped it a few times in ’22 and ’23, but i am trying to just let it sit now. I need some of these good payers to be my “base holdings”.

        I own a bunch of this one. not too worried about it going dark – but I have missed things like that before.

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