tag:blogger.com,1999:blog-2986124651030959736.post5860929002454173433..comments2024-03-28T09:42:38.695-05:00Comments on Stocks, Bonds & Politics: Bought 50 HBAPRF at $18.53/ Roth IRA: Bought 50 PJA at $25.18, Bought 50 CBLPRD at $24.6, Added 50 SANPRB at $18.24 & Sold 100 PGX at $13.65/Bought 50 CBLPRE at $22.7TENNINDEPENDENThttp://www.blogger.com/profile/17444227958539559639noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-2986124651030959736.post-64345558023698854672013-09-19T20:24:35.236-05:002013-09-19T20:24:35.236-05:00We will both receiving that .01% for at least the ...We will both receiving that .01% for at least the next two years. With a million in a money market now, an investor could fill up their empty SUV tank once a year with the earnings. TENNINDEPENDENThttps://www.blogger.com/profile/17444227958539559639noreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-6602542058093409662013-09-19T19:28:23.351-05:002013-09-19T19:28:23.351-05:00Check out http://wsj.com/mdc/public/page/2_3020-ke...Check out http://wsj.com/mdc/public/page/2_3020-keyinrates.html for weekly summary or http://wsj.com/mdc/public/page/2_3020-moneyrate.html for the current rates. In both cases under Swaps or Libor swaps which per their notes (bottom of the page) are defined as "International Swaps and Derivatives Association (ISDA(R)) mid-market par rates for a fixed-rate payer, who in return receives three-month Libor" which as far as I can tell is what replaced Telerate Page 19901 reference in the SAN-F prospectus, p.47. <br /><br />The rate is cross-posted on the ICAP site (UK provider) see: http://www.icap.com - dynamic chart on the right side.<br />---<br />I will have no problem if they call it, 10.5% to park some cash for a year safely suits me fine. Beats 0.01% I would otherwise get from Fidelity.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-44493006368687935072013-09-19T18:33:22.389-05:002013-09-19T18:33:22.389-05:00I would be curious where I could find that 5 year ...I would be curious where I could find that 5 year Mid-Swap rate at the WSJ site. Please provide a link. <br /><br />Irrespective of whether the floating rate will be 8% or 9% on the optional call date next September, it would be in Santander's interest to call the security before it starts to float. This is a security that the bank would want to redeem whenever it has a legal right to do so. <br /><br />SANPRE is a fixed 10.5% coupon that is callable at its $25 par value on or after 9/29/14. That one closed today at $26.37. I would anticipate that it will be called also. It is being price based on the value of four quarterly dividends ($2.625 per share) for a one year junk rated security or a net return before the purchase commission of about $1.25 per share for 12 months. By buying SANPRF at below par value, you received a better deal than the buyers of SANPRE. <br /><br />I seriously doubt that the owners of SANPRE or SANPRF will see a single payment after 9/29/14. The redemption price will be paid then plus accrued dividends to that date. <br /><br />Santander does not have to pay now 8% or 9% for a non-cumulative equity preferred. It has a 6.5% fixed rate preferred that traded as high as $24.69 today, with a 52 week high of $26.39. <br /><br />http://www.marketwatch.com/investing/stock/SAN.PC<br /><br />A 6.8% non-cumulative equity preferred closed at $24.73 today and has traded as high as $25.92. <br /><br />http://www.marketwatch.com/investing/Stock/SAN.PA<br /><br />Santander could sell senior bonds to refinance the high cost SANPRF and SANPRE at a significantly lower rate than those equity preferred stocks. A senior note due in 2016, with a 4.25% coupon last traded at 103. <br /><br />http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=FSAN3688323&symbol=SAN3688323<br /> TENNINDEPENDENThttps://www.blogger.com/profile/17444227958539559639noreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-50819392295211507112013-09-19T15:08:25.624-05:002013-09-19T15:08:25.624-05:00MID-SWAPS rates (5yr and others) are available on ...MID-SWAPS rates (5yr and others) are available on WSJ site for example. No special terminal needed. <br /><br />SANPRF is a somewhat weird security being "fixed to float" as opposed to being one or another. My bet is this: Interest rates will stay low for a while. 10.5% will be nice to have for a while. And when inflation takes over I'm partially protected, LIBOR is built directly into future rates see the formula:<br /><br />10.5% + 3m LIBOR (US) - MID-SWAPS RATE (5yr)<br /><br />The biggest unknown here is of course the latter, the MID-SWAPS RATE (5yr), but this should fluctuate like hell just by its nature: "the expectation of what the average LIBOR will be over the next 5 years" with little correlation to the actual LIBOR. Hope is I should be able to exit at one point or another principal intact. Will see.<br /><br />BTW if this were to float today, the interest would be around 9%, going back three years the worst it would have had been was around 8% though I realize this signifies little given the relative stability of the interest space in the last 3 years. <br /><br />The relevant charts:<br /><br />http://www.thefinancials.com/syndicated/Free/EX_LIBOR_Majors_3m.html#<br />http://www.thefinancials.com/free/EX_Interest_Swaps.html<br /><br />Overall my sense/hope is I don't risk too much here long term, and should they call it next year I'll be ahead 10.5%. Redeployment will be an issue of course, hopefully not too much, a correction of some kind is around the corner. One year from now feels more or less right.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-32289910878465984262013-09-19T11:25:07.350-05:002013-09-19T11:25:07.350-05:00I would anticipate that SANPRF will be called on 9...I would anticipate that SANPRF will be called on 9/29/14. Since it recently went ex dividend, that would leave two more semi-annual payments at the 10.5% fixed coupon rate. That would be fine but then you will probably need to re-deploy in one year. <br /><br />If the security is not called, it transforms into a floater with a spread calculation that none of us without a Bloomberg terminal could calculate on our own. <br /><br />SANPRB will probably pay the minimum coupon for at least 3 more years. As we move closer to the FED's tightening cycle, I would anticipate that investors will give more attention to the equity preferred floaters that pay the greater of a minimum coupon or a spread to Libor. Their prices may not be as favorable at that time as they are now. <br /><br />The long term benefit of those securities, assuming no material change in credit risk, comes from buying them at a deep discount to their $25 par values which will juice the benefits of the Libor float when conditions return to normal and particularly when the 3 month Libor rises above it long term average. <br /><br />While it is hard to imagine now, I expect to see a 10%+ 3 month LIBOR at some point within the next 10 to 20 years, more likely sooner than 10 years than later than 20, as the world enters into another long term problematic inflation cycle. TENNINDEPENDENThttps://www.blogger.com/profile/17444227958539559639noreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-76078924777338021602013-09-19T11:02:43.953-05:002013-09-19T11:02:43.953-05:00Agree, Santander looks relatively solid for now (B...Agree, Santander looks relatively solid for now (BB). However given recent FED pronouncements re their interest rate policy (close to zero for many many years to come) I opted out for SANPRF, fixed 10.5%, payed biannually, and somehow Fidelity managed to get me ten of them today below par, infinitesimally so but still below. <br /><br />http://www.quantumonline.com/search.cfm?tickersymbol=SAN-F&sopt=symbolAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-1091808483082890922013-09-15T19:06:28.659-05:002013-09-15T19:06:28.659-05:00Thanks for the links. He is definitely quite pess...Thanks for the links. He is definitely quite pessimistic. He does tend to bear, so I hope it's overkill.<br /><br />While I agree that QE is harmful to stocks at this point... it's also a question of whether the rest of investors will think so.<br /><br />It seems to be more retail going in at this point from articles I'm reading, with professionals getting out. I've gotten the impression that too is part of the move as it gets more bearish, with corrections in the making.<br /><br />I'll see after Tues what to do next.<br /><br />Hope your car check light is feeling better, even if it had little to do with car's ability to run.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-15007422457119107442013-09-15T12:01:07.627-05:002013-09-15T12:01:07.627-05:00Links to some other interviews:
Druckenmiller: Ev...Links to some other interviews:<br /><br />Druckenmiller: Everything Cheap Relative to Bonds<br /><br />http://www.bloomberg.com/video/druckenmiller-everything-cheap-relative-to-bonds-8HITUOmxSQ~y4ahNAqpqUA.html<br /><br /> Druckenmiller Sees Crisis Worse Than 2008<br />http://www.bloomberg.com/video/druckenmiller-sees-crisis-worse-than-2008-i5nOz3r~Q~WoJYznJm41IQ.htmlTENNINDEPENDENThttps://www.blogger.com/profile/17444227958539559639noreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-57196052511694890922013-09-15T11:53:31.078-05:002013-09-15T11:53:31.078-05:00Curls: Druckenmiller is a smart guy. He has made a...Curls: Druckenmiller is a smart guy. He has made a great deal of money for himself. His Duquesne Capital Management reported something like a 30% annual return with no down years. Over the years, his style has been to place large bets where he has a high level of confidence which he lacks now. <br /><br />The fact that I am older does not make me wiser. <br /><br />I would also note that he admits to being unduly pessimistic at times. <br /><br /> The 2%/20% reference is a typical hedge fund compensation arrangement. The 2% is a management fee applied to assets under management. The hedge fund would then take 20% of the profits. I view that as just ridiculous. Few managers would be worth that kind of money. Druckenmiller would be one but he recently retired. <br /><br />The bond market has not yet fully priced the end of QE. The ten year treasury has another 1% increase in the cards in my opinion. <br /><br />Stocks have behaved well as intermediate and long term rates spiked in yield. The ten year has gone from 1.66% (5/1/13) to almost 3%. The S & P 500 closed at 1,582.7 on 5/1 and at 1,687.99 last Friday. That is a 6.65% gain in the S & P Index while intermediate and long rates were spiking up in yield. <br /><br />In a word, I do not agree with Druckenmiller that all markets are being propped up by QE. The bond market is certainly being propped up by QE. Stocks in my opinion no longer need that abnormal monetary policy. I actually believe that QE is doing more harm to the economy than good now. <br /><br />Still, I know that the elevator will go down a lot faster than it went up. I am concerned about the rise in the S & P 500 since October 1, 2011 without a healthy correction and consolidation period. <br /><br />Another one of his interviews can be found here, where he is expressing long term pessimism about the U.S. fiscal situation:<br /><br /><br />http://www.bloomberg.com/video/stan-druckenmiller-on-entitlements-fed-strategy-APL5~64SR1Ks2zqP6s6g7w.html<br /> <br />That is a 30 minute interview. TENNINDEPENDENThttps://www.blogger.com/profile/17444227958539559639noreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-17395158093004147182013-09-15T11:15:49.740-05:002013-09-15T11:15:49.740-05:00Last post was from curls :)Last post was from curls :)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-29794996020105993012013-09-15T11:15:07.696-05:002013-09-15T11:15:07.696-05:00That Druckenmiller video was very good, (not the u...That Druckenmiller video was very good, (not the usual fluff.) How much do you agree or disagree?<br /><br />What is "2&20"? I'm assuming by "all assets classes" that means stocks, bonds, metals, commodities, international and national.<br /><br />He makes the point that QE is prompting up, and that June shows how reactive the market will be when tapering is removed (he's not talking about when it's started if it is in Sept, but when the idea is stated that QE will be ended by mid next year.) <br /><br />I'm thinking, it's POSSIBLE that start of QE removable has been priced in. That with each next announcement will be more reaction to the idea, but in between plenty of upswing to counter it. So that Druckenmiller's thought that June shows how badly the market's will react to QE removable may be overkill. (His thinking validates my original thinking, but I've started wondering...)<br /><br />Druckenmiller doesn't seem to be basing his expectation on a valuation of fundamentals vs. stock prices. (Not in the video.) He seems to be basing it on the uncertainity level, and that it's not worth betting until you have more certain times. ...it'd be fun, if he could be followed for when he does find good times and buys to be long on!<br /><br />Anonymousnoreply@blogger.com