10 Year TIP Auction/Sold Pepsico/ Sold General Mills/SOLD 1/2 OF PIS POSITION/Sold Almost 1/2 of GRTPRG Position

1. Quick Reference to Bond Charts:  This is a link to the Bloomberg site that provides information about government bond yields.    

2. Mark Zandi: I read a story that Mark Zandi, Moody's Chief Economist, does not expect a resumption of job growth until the second half of 2010. The jobless rate will continue to increase after the end of a recession.  It continued for 19 months after the end of the last recession. 

3. SOLD PEP AT $56.79/Sold General Mills at $60.47:  I am in my trading mode for a long term secular bear market and a cyclical Unstable Vix Pattern.  The simple truth is that no one knows how long this downturn will last. In this kind of uncertainty with a downward bias, I will frequently sell some individual securities after significant pops in price when the pop occurs within a short period after purchase.

Pepsico was bought at less than $50 in early May 2009. Pepsico Buy Those shares were sold early this morning at $56.79.  

PEP 50 Shares +$339.92

The General Mills shares bought at $48.52 in March was sold today at $60.47. Freedom from Regulations and Irresponsibility/ Sold KXI and Bought GIS

GIS 30 SHARES +$342.45 

I also sold 200 GIS shares in 2007 as part of my stock allocation reduction:

2007 GIS 200 Shares +$182.23

I think that I have just declared victory on the consumer staple stocks that I bought starting in early March, having now sold all of my shares in Nestle, Pepsico, Kroger, and General Mills and completed partial sells of Coca Cola, CPB, and UL.  Of the consumer staples bought starting in March, I still own KO, KFT, SYY, HNZ, CPB, PG, and UL.  

4. 10 Year TIP Action: Bloomberg reported that the yield on the 10 year TIP auctioned today was 1.92%, a little better than I expected: Treasury Auction of the Ten Year TIP on Monday

This is a link to the treasury release on the auction results: www.treasurydirect.gov pdf

Of the total bids, $258,911,500 were non-competitive. 

ADDED 8:42 P.M 6/6/09: 

I bought this issue at auction in my Roth IRA today. The coupon for this 10 year TIP  as shown in my account this afternoon was 1.875%. The price was 99.5923 and my total cost was $1,991.85 for 2 bonds with a principal amount today of $2,000. The difference between the current par value and my cost is what I believe accountants call Original Issue Discount, which is a form of taxable interest  if bought in a taxable account. 

Publication 550 (2008), Investment Income and Expenses

As I mentioned in earlier posts, the government will pay me at maturity the greater of the $1,000 per bond or the value as increased by the CPI adjustments.  The principal will hereafter, until maturity, be both increased by inflation and decreased by deflation, in the manner described in this treasury release. Institutional - Treasury Inflation-Protected Securities (TIPS)

The coupon is constant but applied to the principal as adjusted by the CPI. The non-inflation protected 10 year treasury closed today at 3.51%.  If I use 1.92% as the TIPs yield to me, factoring in both the coupon and the OID, then the breakeven is 1.59%. I also intend to buy a 20 year TIP in the Roth IRA later this month. 

Will Start Buying Some TIP in Roth Next Month at the Treasury Auctions/Philly Fed and Conference Board Reports/ SLG, MSFT

5. Fed Purchases of Securities Today:  The NY Fed reported that it bought 7 billion in principal amount of treasuries maturing in the 2014 to 2016 range. Federal Reserve Bank of New York - Permanent Open Market Operations  That page also contains a link to the last 10 operations in this ongoing program.

6. SOLD 50 PIS AT $16.5/ Sold 50 shares of  GRTPRG at $10.26:  I reduced my position some in Liberty Media senior bonds by selling my entire position in the Trust Certificate PIS in my Roth at $16.5.  This one was included in a Roth conversion completed on 11/21/08 at $9.85.  I still own 50 PIS and 200 PKK in my taxable account.  There was a negative article about  LIBERTY MEDIA bonds in the WSJ over the weekend, highlighting how John Malone has been spinning out valuable assets out of Liberty which puts the senior bondholders in a less secure position.  Both PIS and PKK go ex interest  this month I believe with PKK ex interest on 7/10 and PIS later in the month. Malone runs Liberty without much- if any- concern for the bondholders, an opinion previously expressed in this blog. 

In another risk reduction move, I sold 50 shares of GRTPRG at $10.26.  I still own 60 shares of that highly speculative cumulative preferred issue, some shares of GRTPRF and 100 common shares. 

DISCLAIMER

  I am not a financial advisor but an individual investor trying to navigate my way through a difficult market. I have never worked for a financial institution and never will.  In these posts, I am acting as an unpaid financial journalist and an occasional political commentator.   I am also aggregating financial news stories that I view as important and providing readers of these posts with links to those articles, sort of a filtered, somewhat intelligent, free search engine.  Any discussion made by me of particular securities  is not a recommendation to buy or to sell.  Trade at your own risk.  Consult with your financial advisor prior to making any purchase or sale. I will try to identify my sales too but it may take a few minutes after I implement them to create a post explaining my reasons.  The sale may before or after the post.  Before buying or selling any stock, even one recommended by a trusted financial advisor,  please research it and make up your own mind which is what I always try to do.  Research would include reading reports, reviewing financial records, earnings estimates, sec filings and prior earnings releases and news.  In this post, and all others by me, I am merely describing my reasons for purchasing  or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale.  The securities mentioned in this and all posts written by me may not be suitable for others based on their unique financial position and risk profile.  By way of example, it is unlikely that I will ever need the funds contained in my retirement accounts. Always read the prospectus before buying a Trust Certificate, bond, preferred stock or other bond or bond like investments.  Information contained in my posts has been obtained from sources believed to be reliable but cannot be guaranteed.  It is always important to follow the investment process. the investment process/links to further information on canadian energy or royalty trustsInvestment Process Part II: Bonds and Bond Like Investments   NOT A RESEARCH SERVICE/Add of PWE Last Week   These posts by me do not constitute investment advice, nor shall they be construed as a guarantee of future results, or as an offer of any transaction in securities.   All content in these posts is provided for informational and entertainment purposes only, and it is a form of entertainment for me.   Opinions are subject to change and they certainly evolve over time as information is assessed and analyzed for compatibility with prior opinions, the only process for a serious investor, and a topic of frequent discussion in this post.  Everyone is responsible for their own investment decisions, and no one should ever make any decision unless they are willing to accept full personal responsibility for it.