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Wrapping Up the Week

Well it has been a somewhat decent week–for common stocks and for income issues. Of course we had important economic news with the FOMC meeting and Jay Powell presser which markets decided was somewhat dovish–all news was good news I guess.

Interest rates as represented by the 10 year treasury have fallen a bit through the week—but the reduction was minimal given the rise in the S&P500. The 10 year treasury is at 4.27%–down a measly 3 basis point from last Friday–with the dovish Fed news one could have expected a 10 basis point reduction in yields.

The S&P500 is up almost 2% on the week and equity futures are up a bit this morning. One has to feel like equities are overvalued–but honestly compared to valuations we have seen in the past–huge price/earnings ratios–40, 50 and 60 times this market is just a bit overvalued and those traders who go short the ‘market’ may see bunches of pain ahead. Of course something could ‘break’ at any time, but as always one who invests in preferreds and baby bonds doesn’t want to see a huge equity tumble–it is not helpful to anyone. When one looks at the amount of ‘dry powder’ available that could move into the equity markets I think there is a higher odds of a ‘melt up’ than a ‘melt down’.

I see Brookfield BRP priced a new issue of perpetual subordinated notes last night–7.25%. The pricing term sheet is here. These are investment grade, but being a Canadian company interest payments are subject to 15% withholding in some acccounts.

Also last night JPMorgan put out a redemption notice on a bunch of $1,000/share fixed to floating preferreds–the press release is here.

I am back in the office after 6 days out and will do a little buying today–not sure which issue–we will see–lots of near cash on hand (money market). Accounts continue to hit almost daily new highs as giant sized CD maturities hit–most of which pay interest only at maturity

3 thoughts on “Wrapping Up the Week”

  1. Tim, On the “$50 and $100 Preferred Stock Listing” tab, there is a volume column. What does the volume column represent (todays volume, average daily volume, other), and what is the feed for this volume data.

    I have recently started to buy illiquids. Given that there are limited buying opportunities, I am looking for any method to identify when these buy opportunities are available.

    1. Larry–the volume is supposed to be just that–volume. It comes off this ‘feed’–=googlefinance (F17,”volume”)

      I suspect it is correct, but probably lags in timing.

  2. If CD rates are still good and the difference in rate spreads between the treasuries and preferred or ETD isn’t that good, then why buy into these 30 year notes being offered right now?
    I think you’re right that the market can go higher for longer but how enthusiastic are you about this market?
    You sold out of bank preferred and yet they still went higher. A lot of people here have talked about selling most of the different CHS to lock in capital profits.
    The only thing I bought was the ET PE yesterday at 25.26 why? Just something to do i guess to tie up funds I know are going to be called and not be tempted to take a risk.

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