Thursday, March 26, 2009

Phoenix Senior Bond: Too Wild for LB/

There has been recently a good rally in the Phoenix Insurance senior bond, PFX, that gained steam just by the company declaring the regular quarterly interest payment. When I last mentioned it, it was trading at around 3 bucks and yielding about 50% at that price. Buy of HNZ at 31.67/Tax Advantages of Equity Preferred Dividends/Foreclosure Acceleration/Disney Downgrade by Pali/Cap & Trade/NADX That was on 3/11/09. It goes ex on Monday and I still own 100 shares of this speculative bond. The common shares just passed a buck, having doubled from an even less soothing 20 cents. The Phoenix bond closed today at $8.46. RB likes that kind of movement, but LB is just unnerved by it. The sheer velocity and magnitude of that kind of movement is symptomatic of extreme risk and an inability to price risk with any degree of confidence. Having disposed of the shares in my retirement account, LB will keep the remaining position in PFX to humor RB, keep it distracted and occupied-like giving a toy to a tot so that serious adult business can be transacted by LB.

The 30 year mortgage rate has hit an average of 4.85%.
It would be reasonable that many will take advantage of this rate to buy and refinance. It is not often that a tremendous drop in price happens at the same time as historically low financing. This is the lowest 30 year rate since the survey was started in 1971.

Ed Yardeni says this rally has the feel of a bull market beginning.
Other pundits say it will end it a couple days as institutional investors finish their window dressing for the end of the quarter. Stock Market Insider: Bulls Could Rule for A Couple More Days - What we are seeing does have some characteristics of a bull market start including a major break from the downtrend, noted in a prior postAdded to UL/Sysco & Dupont Mentioned in Barron's Online, plus several strong follow though days, and intra-day reversals of downtrends to finish strong toward the close. It is still too early to know however. In any event, cash will not be committed to stocks from the 30% cash allocation raised in 2007 until the VIX signal is given, and the three month period for the all clear signal has not even started to run yet, not even close.

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