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Morning Commentary: Preferreds slip as jobless claims rise; JPMorgan’s profit beats; GSEs drop
By Stephanie N. Rotondo
Seattle, Jan. 14 – The preferred stock market was weaker in early midweek trading.
The Wells Fargo Hybrid and Preferred Securities index was off 35 basis points at mid-morning.
The declines came as U.S. jobless claims ticked up a bit to 284,000 for the week ended Jan. 9.
Also notable for Thursday’s session was JPMorgan Chase & Co.’s earnings release, which showed a better-than-expected profit at year’s end. The New York-based bank attributed its performance to its cost-cutting efforts and fewer legal fees.
Fourth-quarter net income was $5.43 billion, or $1.32 per share. That compared to income of $4.93 billion the year before.
Analysts had forecast earnings per share of $1.25.
Meanwhile, Fannie Mae and Freddie Mac preferreds continued their downward spiral, trading under $3.
Fannie’s 8.25% series S fixed-to-floating rate noncumulative preferreds (OTCBB: FNMAS) dropped 14 cents, or 4.53%, to $2.95 in heavy trading. Freddie’s 8.375% fixed-to-floating rate noncumulative preferreds (OTCBB: FMCKJ) weren’t as active but declined 11 cents, or 3.55%, to $2.99.
There was no fresh news to cause the weakness, but the GSE preferreds have been on the slide of late. Late Wednesday, The Wall Street Journal published a snippet on Fannie, noting that the agency’s common equity had dropped considerably as well, falling under $1.50.
The Journal noted that there was no news to push that paper down either, but said that the last time the common was trading so low, it was October 2014 and a federal judge had just dismissed an investor lawsuit against the government’s conscription of the agencies’ profits.
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