Wednesday, August 16, 2017

Observations and Sample of Recent Trades: MAPTX

U.S. Default? Unlikely, But Bond Traders Are Taking No Chances - Bloomberg

I have started to reduce somewhat my weighted average bond duration by selling longer duration securities and buying short term bond and CD ladder. The short term ladder has several maturing securities each month. I will consequently have a constant flow of redemption proceeds over the next three years that can be redeployed into whatever appears reasonable at the time. I view current stock prices and long duration bond yields to have considerable downside risk.

Cramer breaks down your bond exposure by age — how to protect yourself from market volatility: CNBC

Retirement Portfolio Allocation | Charles Schwab

Flaws With the 100 Minus Age Allocation Rule

The most important problems going forward in making asset allocations is that bonds are in the 35th year of a long term secular bull market with historically low yields and stocks are richly valued based on future predictions that may turn out to be way off.

B. Stocks:

‘Just say no’ to the S&P 500 and buy these stocks instead, say GMO’s strategists - MarketWatch; GMO White Paper link: the-s-p-500-just-say-no.pdf (buy emerging market and international high quality stocks and own as little as you can of U.S. equities)

I would not agree with that assessment. Most U.S. based investors need to concentrate on what they know best and gain international exposure through U.S. based multinationals. The currency risks associated with foreign securities can be profound and did in fact contribute to poor performance of foreign stock ETFs over the past few years.

Annual Average Five Year Returns Through 8/16/17:

SPDR® S&P 500 ETF (SPY) Total Returns = 14.15%
Vanguard FTSE Europe Index Fund ETF Shares (VGK) Total Returns = 8.76% (2.14% over 10 yrs)
Vanguard FTSE All-World ex-US Index Fund ETF Shares (VEU) Total Returns = 7.31% (2.15% over 10 years)
Vanguard FTSE Emerging Markets Index Fund ETF Shares (VWO) Total Returns = 3.65% (2.88% over ten years)

Performance of foreign stock funds priced in USDs has been much better this year as the USD started to decline in value against most major foreign currencies and prices rose in local currencies.

Investors waiting for the promised land in those funds over the past ten years have instead experienced total returns barely above the inflation rate. There is certainly a possibility of mean reversion where  U.S. stocks stagnant for several years while international stocks go up meaningfully.

I do own several foreign quality stocks including Nestle and Novartis.

C. Foreign Economies

Japan’s Economy Grows Again, in Longest Streak in 11 Years - The New York Times ("Japanese gross domestic product increased by 4 percent in annualized terms in the three months through June. . The economy has now expanded for six consecutive quarters, the first time it has gone that long without a contraction since the 2005-6 period.")

China's Economic Growth Dials Back - Bloomberg (some slowing from higher growth numbers-nothing to worry about yet IMO)

Eurostat reported today that its GDP flash estimate for the second quarter showed .6% growth in both the euro area and the EU28 and +2.2% and +2.3 % respectively Y-O-Y. Eurostat  However, industrial production did decline -.6% in June compared to May in the Euro area and -.5% in the EU28. Eurostat


Economic Reports

Retail Sales

The government reported on  that retail sales rose last month at a greater than expected .6% on a seasonally adjusted basis. Retail Sales July 2017.pdf

However, I would note that Amazon's Prime Day promotion occurred last Month. Nonstore retailers experienced a 1.3% gain in sales. 

It is also important to note that the savings rate fell to 3.8% last quarter from 6.2% during the 2015 second quarter while wage growth is relatively stagnant at 2.5% or slightly highly than the inflation rate.  

Strong U.S. retail sales bolster third quarter growth outlook: Reuters 

I would also note that the unadjusted number for July 2017 showed a decline from June 2017 (see Table 1). 

The better than expected number caused the Bond Ghouls to increase the odds of a .25% rate increase on or before the FED's December meeting. The probability assigned for a .25% hike has  jumped to 54.7%  from 37.4% last Friday.  CME FedWatch Tool

B. Household Debt:

The NY FED reported that household debt hit a record in the 2017 second quarter. Total Household Debt Increases, Driven by Mortgage, Auto and Credit Card Debt - FEDERAL RESERVE BANK of NEW YORK ("Of note, credit card balance flows into both early and serious delinquencies increased from a year ago – a persistent upward movement not seen since 2009. Meanwhile, delinquency flows for other non-housing debt increased modestly, and in particular, the upward trend for auto loans in recent years continued.")HHDC_2017Q2.pdf


Trump Finally Manages To Criticize White Supremacists And Then Walks it Back:

Trump has repeatedly failed to even criticize White Nationalists.

It took a murder in Charlottesville committed by one, and widespread public criticism for his refusal to condemn these belligerent racists by name, for him to publicly rebuke them last Monday (8/14/17).  
Trump calls KKK, white supremacists 'repugnant' (8/14/17)- CNN

Reagan never had that trouble: 

Letter to the Chairman of the Commission on Civil Rights Concerning the President's Views on the Ku Klux Klan

The White Nationalists are after all a critical part of the GOP's base now. I am using the term "White Nationalists" to include more than just the Nazis, KKK and other organized white supremacist groups.

On the same day day (8/14/17), however, Trump blasted Merck's CEO, Kenneth Frazier, who criticized racists and praised what use to be fundamental and traditional American values:

Trump's Reply:

It took Donald about 1 hour to respond to Frazier's tweet. Kenneth Frazier quits Trump manufacturing council; Trump lashes out - Aug. 14, 2017 

Is he  primarily engaged during the workday in  reading and writing tweets and watching TV? 

Infowars' Alex Jones falsely says George Soros, Hillary Clinton instigated Charlottesville violence | PunditFact 

Alex Jones: A lot of KKK protesters are “Jewish actors” who look like the “cast of Seinfeld” with their hoods off

How the Liberal Media Created Charlottesville - Townhall (Townhall and its owner  Salem Media Group refer to themselves as conservative. Using the warped definition of conservatism that has gained dominance in the GOP, that publication and its owner are conservative.)

A Guide To Donald Trump’s Relationship With Alex Jones (Trump has praised Alex Jones)

All the Charlottesville conspiracy theories from Trump's Friends in the lunatic fringe: Slate

Stephen Colbert Attempts To List Everything Trump Has Attacked Harder Than Nazis

Controversial Trump Aide Katharine Gorka Helped End Funding For Group That Fights White SupremacyThe husband-and-wife team Sebastian and Katharine Gorka driving Trump's national security policy-POLITICO

Trump did not really believe in his criticism of White Nationalism that he read from a teleprompter on Monday. 

Trump waited just one day after his Monday remarks to reveal what he really believes.  

The following statements made by Trump are of course welcomed by the White Nationalists, particularly the part about comparing Robert E. Lee and other confederate generals to George Washington and Thomas Jefferson. Statues of confederate generals and politicians are merely symbols of White Nationalism now. And, unless we forget, the confederates were traitors to the United States (all of my ancestors that participated in the Civil War did so on the Confederate side, primarily in the Army of Tennessee)  

Trump is unable to see a difference between a George Washington statue and one of a confederate general: 

You had people in that group who were protesting the taking down of what to them is a very, very important statue. Many of those people were there to protest the taking down of the statue of Robert E. Lee. This week, it is Robert E. Lee and this week, Stonewall Jackson. Is it George Washington next? You have to ask yourself, where does it stop? You're changing history and culture ”  

He also concluded without evidence that not "all of those people were neo-Nazis, believe me. Not all of those people were white supremacists by any stretch.” 

Perhaps he needed to listen to their chants during their night Tiki Torch march.  

GOP lawmakers react to Trump: “very fine people” don’t participate in rallies with racist chants 

This was the chant:  “Blood and soil!” “You will not replace us!” “Jews will not replace us!”

Trump probably knows and should know what those chants mean. 

Blood and Soil is of course a Nazi slogan. What does "blood and soil" mean? White nationalists in Charlottesville chanted a Nazi slogan — Quartz'Blood and soil': Protesters chant Nazi slogan in Charlottesville - CNN The chant "Jews will not replace us" is self-explanatory.  

White House Watch: Trump and the 'Very Fine People' Who March with Neo-Nazis | The Weekly Standard

Another favorite technique used by Trump is to constantly refer to the Lying Press, a phrase which gained prominence during the Hitler's regime. The Nazi term for the Fake News Media, meaning anyone who did not support the Nazis, was L├╝genpresse'. He demonizes the press constantly and did so during this news conference calling them bad people. Full transcript: Donald Trump’s press conference defending the Charlottesville rally - Vox

The President's comments last Tuesday were what the KKK wanted to hear from the President: 

Trump also blamed the "Alt-Left" for the violence in their counter-protests to the KKK and Nazis. He claimed they were "very, very violent". 

This is what actually happened according to the police:  

"Charlottesville Police Chief Al S. Thomas Jr. said the rallygoers went back on a plan that would have kept them separated from the counterprotesters. Instead of coming in at one entrance, he said, they came in from all sides. Headlong into the counterprotesters. A few minutes before 11 a.m., a swelling group of white nationalists carrying large shields and long wooden clubs approached the park on Market Street. About two dozen counterprotesters formed a line across the street, blocking their path. With a roar, the marchers charged through the line, swinging sticks, punching and spraying chemicals. Counterprotesters fought back, also swinging sticks, punching and spraying chemicals. . ." Charlottesville timeline - How white supremacist protests turned deadly over 24 hours - Washington Post


Trump says he is only interested in making decisions after acquiring all of the facts. Here are some comments on that point made during the news conference: 

"When I make a statement, I like to be correct. I want the facts. This event just happened. A lot of the event didn't happen yet as we were speaking. This event just happened. Before I make a statement, I need the facts. I don't want to rush into a statement. So making the statement when I made it was excellent."

"Honestly, if the press were not fake and if it was honest, the press would have said what I said was very nice. Unlike you (referring to a reporter) and unlike the media, before I make a statement, I like to know the facts."

"I would do it the same way, because I want to make sure when I make a statement that the statement is correct. There was no way of making a correct statement that early. I had to see the facts, unlike a lot of reporters."

"What about the alt left that came charging at, as you say, at the alt right? Do they have any assemblage of guilt? What about the fact that they came charging with clubs in their hands swinging clubs?Wait a minute. I'm not finished. I'm not finished, fake news" 

Trump seemed earnest when claiming repeatedly that he wants to know the facts. If that is the case, it is profoundly delusional. He rarely makes accurate factual statements.  

It may have been better for the protesters to allow those Trump supporters to beat them with clubs and spray chemicals at them without any response. 

That Martin Luther King approach is hard to do when you are being attacked by those filled with rage and hate armed with clubs and chemical spray. Sure, I believe that some of those counter-protesters knew that they would be attacked by the Trump followers, probably have been in the past, and were ready and more than willing to defend themselves once attacked.  

Trump puts a fine point on it: He sides with the alt-right in Charlottesville - The Washington Post The Alt-Right, which now dominates the GOP, elected him.  

Trump Gives White Supremacists an Unequivocal Boost - The New York Times

He 'Went Rogue': President Trump's Staff Stunned After Latest Charlottesville Remarks - NBC News (really just showing his soul which should surprise no one)

"Of at least 372 murders that were committed by domestic extremists between 2007 and 2016, according to a study by the Anti-Defamation League, 74 percent were committed by right-wing extremists. Muslim extremists were responsible for 24 percent of those killings, and the small remainder were committed by left-wing extremists, the study concluded." One Theory Over Meaning of Trump’s ‘Many Sides’ Remark - The New York Times


CBO: Trump threat to scrap cost-sharing payments would increase federal deficits, premiums - MarketWatch
Premiums and deficit would rise if Trump ends Obamacare payments, CBO says - CBS News (Trump never mentions the consequences from withholding those cost sharing payments)

Trump retweets cartoon appearing to show train hitting CNN reporter (just more juvenile behavior from the U.S. President).


1. Short Term Bond/CD Ladder Basket Strategy:  

A. Bought 3 Northpointe 1.2% CDs (monthly interest payments) Maturing on 12/18/17 (4 month CDs)

This bank has a five star rating from Bankrate: NORTHPOINTE BANK Review 

B. Bought 2 Bank of the West 1.35% CDs Maturing on 2/13/18: 

This bank has a 4 star rating from Bankrate: BANK OF THE WEST Review

C. Bought 2 People's United Bank 1.2% CDs Maturing on 11/16/2017 (3 month CDs)

Bank Holding Company: People's United Financial Inc. (PBCT)

PBCT Analyst Estimates

This operating subsidiary, People's United Bank, has a 4 star rating from Bankrate:  PEOPLE'S UNITED BANK, NATIONAL ASSOCIATION Review

D. Bought 3 Bank of India 1% CDs Maturing on 9/27/17 (one month):

E. Bought 2 Bank of the West 1.45% CDs Maturing on 5/14/18 (9 month CDs):

This bank has a four star rating from Bankrate: BANK OF THE WEST Review

Inflow Short Term Bond/CD Ladder Basket

2. Intermediate Bond/CD Ladder Basket Strategy

A. Bought 2 Voya 3.15% SU Bonds Maturing on 7/15/24: This is a new bond that was offered in late June 2017

FINRA Page: Bond Detail (Prospectus is not linked)
Credit Ratings: 
Moody's at Baa2
S & P at BBB

YTM at Total Cost (99.5) = 3.206%
Current Yield at 3.141%

2016 Annual Report 

B. SOLD 1 Public Service of Colorado 2.25% First Mortgage Bond Maturing on 9/15/22

Profit Snapshot: $12.15

Finra Page: Bond Detail (prospectus linked)

Credit Ratings: 
Moody's at A1
S & P at A

Sold at 99.818

YTM Then at 2.288%
Current Yield at 2.25%

Bought at a Total Cost of 98.503

Stocks, Bonds & Politics: Item # 2.A. 
YTM Then at 2.537%
Current Yield at 2.28%

C. Bought 2 Sovran Acquisition Partner 3.5% SU Note Maturing on 7/1/26

Issuer: Operating Subsidiary of Life Storage Inc. (LSI)- A Self-Storage REIT (fully and unconditionally guaranteed by Sovran Self Storage, now known as Life Storage

Sovran rebranded as Life Storage after acquiring Life Storage in 2016: Sovran Self Storage, Inc. Acquires LifeStorageSovran Self Storage, Inc. to Rebrand as Life Storage

FINRA Page: Bond Detail (prospectus is linked)

Credit Ratings:

Moody's at Baa2
S & P at BBB

YTM at Total Cost (96.985) = 3.917%

Current Yield at 3.61%

$3K Inflow into Intermediate Term Bond/CD Ladder Basket

3. Long Term Bond Basket: Trimming Exposure to Potentially Long Duration Exchange Traded Corporate Bonds After Building a Significant Allocation to Tennessee Municipal Bonds (mostly rated AA to AAA):

I built up earlier this year a material allocation to long term Tennessee municipal bonds, with maturities ranging from 2027 to 2045.

As a consequence of that allocation, I am trimming my long term corporate bond exposure. My potentially longest duration corporate bonds are exchange traded baby bonds.

For First Mortgage Bonds issued by Entergy subsidiaries, I am selling the long duration exchange traded bonds and buying $1K par value intermediate term maturities that have make whole protections unlike the exchange traded bonds.

I have been trading first mortgage bonds issued by Entergy subsidiaries since October 2008.

Since the issuers reserve the right to call on or after a call date, generally five years after the IPO or thereabouts, all of the ones that I bought between 2008 through 2015 have been called at par value, as the issuers were able to refinance at lower coupons and to extend the maturities further into the future.

A. Sold 50 EAI at $24.84-ROTH IRA ACCOUNT:

Profit Snapshot: +$34.57

Quote: Entergy Arkansas 1st Mortgage Bonds 4.875% due 2066 (EAI)


Stocks, Bonds & Politics: Exchange Traded Baby Bonds

I will consider buying back at a lower price than my last entry point which was $23.85: Stocks, Bonds & Politics: Item # 2.B.

EAI is a Baby Bond that is traded like a stock on the stock exchange rather than in the bond market, which explains why this security is called an Exchange Traded Bond. Par value is $25 rather than the $1K par value for bonds traded in the bond market which is why these $25 par value bonds are called baby bonds. 

This Entergy Arkansas first mortgage bond was sold to the public at $25 last August. The shares declined to $20.85 shortly after issuance, bottoming around 12/12/2016: EAI Stock Charts 

Interest payments are made quarterly. The issuer has the option to redeem at par on or after 9/1/21. If the issuer does not exercise its optional redemption right, the bond matures on 9/1/66.

I currently one a $1K par value Entergy Arkansas First Mortgage bond maturing in 2023: Item # 1.E. Bought 2 Entergy Arkansas 3.05% First Mortgage Bonds Maturing on 6/1/23: 

B. Sold 50 ELC at $24.77 (used commission free trades round-trip):

Profit Snapshot: +$94.54

Quote: Entergy Louisiana LLC First Mortgage Bonds 4.875% due 2066 (ELC)


Stocks, Bonds & Politics: Item # 2.B. Bought 50 ELC at $22.88 (4/13/17 Trade) 

South Gent's Comment Blog # 6: Bought 30 ELC at $21.12 (11/26/16 Comment) 

ELC was sold to the public at $25 per share in mid-August 2016. So the price had declined about 15% when I bought that 30 share lot at $21.12 last December.  I still own that 30 share lot bought in my IB account.  

I own 3 Entergy Louisiana 2.6% First Mortgage Bonds maturing in 2026:  Stocks, Bonds & Politics: Item # 1.B.

4. CONTINUED to Pare Stock Allocation:

A. Sold 218+ Shares of MAPTX at $28.29:

Eliminated Position in my Fidelity Account

Trade Snapshot:

Profit Snapshot: +$2,573.82

This position originated from a small purchase made in 2004. I pared the position in 2007 as I substantially downsized my stock fund portfolio. Stocks, Bonds & Politics: 2007 STOCK FUND DISPOSITIONS 

All of the distributions were taken in cash.

E.G. 2015

Dividends are paid annually:

It is not unusual to see large capital gain distributions that are connected with abnormally large shareholder redemptions which will occur in major market downdrafts. 

I still own 234+ shares in my Schwab account that were bought starting in October 2013. I have been reinvesting the dividends in that account. It is not unusable for me to own the same stock fund in two or more accounts, where I reinvest the dividends in one account while taking cash payments in another. 

Currently, this fund is rated four stars by Morningstar.

Through 8/11/17, the YTD total return was 21.2% which was worth harvesting by paring some shares given my prime directive of capital preservation objective. 

I many add to the shares currently held in my Schwab account after a meaningful decline in price.  

DISCLAIMER: I am not a financial advisor but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sell of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep". Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals and situational risks. I can only make that kind of assessment for myself and family members. 

Sunday, August 13, 2017

Observations and Sample of Recent Trades: NWH.UN:CA, PFE, STWD

Market Commentary:

Dalio urges investors to buy gold to hedge against possible war with North Korea - MarketWatch

"Savita Subramanian, Bank of America Merrill Lynch’s equity and quantitative strategist, ... noted that shares haven’t been reacting positively when earnings beat expectations during the current reporting season—something that hasn’t happened since 2000." The Curse of 2017: Stocks May Be Headed for a Fall - Barron's

Pimco warns of ‘rich’ valuations in risky assets, joining chorus of caution - MarketWatch

Market cracking with 200 S&P 500 stocks already in correction: CNBC 


Trump and North Korea:

Trump on North Korea Feud: 'Fire and Fury' not Tough Enough - NBC NewsPresident Trump: My 'FIRE, FURY' Statement 'WAS NOT TOUGH ENOUGH' for North Korea, 'WE'LL SEE' - YouTube  

Trump later linked an aggressive U.S. response to any N.K threat directed at the U.S. which N.K. routinely does:  

"If he utters one threat in the form of an overt threat — which by the way he's been uttering for years, and his family has been uttering for years — or if he does anything with respect to Guam, or American territory or an American ally, he will truly regret it and he will regret it fast." Trump Warns North Korea Leader 'Will Not Get Away With What He's Doing' - NBC News I doubt that NK will launch missiles in the direction of Guam and it never had any intention of doing so. NK has made similar threats about attacking Guam in the past.  

North Korea's reply issued last Friday:  “We consider the U.S. no more than a lump which we can beat to a jelly any time.”

62.984+M voters gave Trump the nuclear trigger. Now that is scary since Trump is so obviously unfit to be President. (A former GOP senator called Trump "sick of mind, impetuous, belligerent and dangerous")

If Trump wants a nuclear attack against North Korea, his military advisers have few other options - The Washington Post (President can initiate a nuclear strike without authorization or approval. A failure to carry out the order would lead to a court martial. The only option for military personnel tasked with carrying out the order to fire would be to resign until one carries out the order issued by the Commander-In-Chief; Former Trump adviser who called for Clinton to be shot attends White House bill signing | TheHill)


Trump and China Trade with North Korea:  

Trump's China trade crackdown coming Monday - POLITICO;

Trump to ramp up trade pressure on China with call for probe on Monday: Reuters

Trump Cautious on China Inquiry Over Intellectual Property Theft - The New York Times

The end result of a trade investigation could be the imposition of stiff trade tariffs on China's exports to the U.S. and that would of course start a trade war. These are all potential and serious risks for the world's stock markets and economies. The Stock Jocks will probably pretend that the risks do not exist until they can no longer be ignored.   

Trump is basically threatening to disrupt China's trade relationship with the U.S. unless China does more to stop North Korea's nuclear program. Trump May Roll Out Probe Into China and Intellectual Property Theft, Sources Say - NBC News

Trump Quote: "Look, we have trade with China. We lose hundreds of billions of dollars a year on trade with China. They know how I feel. It's not going to continue like that. But if China helps us, I feel a lot differently toward trade, a lot differently toward trade."    

China was probably given some assurances on trade issues in exchange for its recent Yes vote on U.N. sanctions. 

Summary Excerpt:  

FACT SHEET: Resolution 2371 (2017) Strengthening Sanctions on North Korea |

If that did in fact occur, China would feel that Donald has already double crossed them within a week after that vote. 

Since China has undoubtedly examined Donald's entire business career, that nation would have concluded or should have concluded by now that Donald is completely untrustworthy and that is an understatement. The Many Scandals of Donald Trump: A Cheat Sheet - The Atlantic

One example is how Donald tried to double crossed NYC in a hotel deal. This is interesting episode in Donald's sordid business history. 

Inside a Donald Trump audit: Missing books and unusual accounting - CBS News

‘Extraordinary flim-flammery’;  

A Trump Empire Built on Inside Connections and $885 Million in Tax Breaks - The New York Times (the tax abatements ended up being $359.3M with 4 years to go on the abatement after 2016). 

In exchange for what was claimed to be a $160M cut in property taxes for a NYC hotel at the time, which is highly questionable as to how that happened, Donald gave the city a percentage of the profits. When the profit number plummeted, and the city received far less than expected, NYC tried to conduct an audit. "What followed was a two-year-long saga in which city auditors said they were met with stonewalling, disorganization and obfuscation at every turn". Inside a Donald Trump audit: Missing books and unusual accounting - CBS News

What the auditors discovered after herculean efforts was that Donald had ordered the creation of two sets of books. Auditors "discovered that the hotel maintained “two capitalization policies in the same year,” allowing its accountants -- a soon-to-be bankrupt firm named Laventhol and Horwath -- to produce an in-house estimate of profits that was drastically different than what the city was given." CBS NewsBurstein to Koch Memo Nov 14 1989 Re Grand Hyatt Audit Koch Box 7 Folder 8

One set showed the actual profits and the other set was intended to deprive NYC of its fair profit share.  

As one would expect, a large number of records disappeared when NYC started its audit.  

The NYC auditor completed the audit in 1989, piecing together records and finding some of the "lost records". The audit concluded that Donald had cheated the city. NYC demanded payment and then the hotel partners then sued the city in 1990. 

No progress was made in that lawsuit until after Donald sold the property in 1996. 

Part of the delay was due to the bankruptcy of the hotel's accounting firm, which resulted in a stay of the lawsuit since the accounting firm was named as a defendant in its counterclaim against the hotel. 

After the bankruptcy was finished, the city allegedly forgot about the case and it went dormant for about a decade when the city allegedly discovered that nothing was being done. The suit was then settled 4 years later in 2004 for a reported $850K. 

In 1996, Trump sold his interest in the hotel for $140M.  

The financial success that Donald has managed to achieve, other than creating a brand called Trump and then licensing his name, would not have occurred in a city with more or less honest government. Donald oozes sleaze from every pore. 


Trump vs. Domestic Enemies (just about everybody who is not a Trump supporter):

With Bank Subpoenas, Mueller Turns Up the Heat on Manafort - Bloomberg

Mueller Is Said to Seek Interviews With West Wing in Russia Case - The New York Times

Trump Escalates Attacks on McConnell With Suggestion His Job Is at Risk - NBC News 

Trump-backed immigration bill would eliminate more than 1 million jobs, study finds - MarketWatch
The RAISE Act: Effect on Economic Growth and Jobs — Penn Wharton Budget Model (Reactionary White Nationalists like Trump, Bannon and Stephen Miller want to restrict legal immigration even though population growth in the U.S. is  so low that it already retards GDP growth) 

Future immigration will change the face of America by 2065 | Pew Research Center ("new immigrants and their descendants will drive most U.S. population growth in the coming 50 years, as they have for the past half-century.") 

This is what immigration means to the U.S. economy in two charts: CNBC

Even after a White Nationalist murdered one person last Saturday with his vehicle and injured many others, some severely, Trump could not bring himself to condemn them by name. Trump needed the White Nationalists to be elected and will need them again in 2020. And, he has several working as key advisors in the WH.

Alleged driver of car that plowed into Charlottesville crowd was a Nazi sympathizer, former teacher says

Trump Takes Heat for Blaming Charlottesville Violence on 'Many Sides' - NBC News

Trump -- once again -- fails to condemn the alt-right - CNN 


Republicans and the Constitution:

Analysis | In a new poll, half of Republicans say they would support postponing the 2020 election if Trump proposed it


Trump vs. Venezuela:

Trump quote:

"We have many options for Venezuela. And by the way, I am not going to rule out a military option," Trump said. "We have many options for Venezuela. This is our neighbor. You know, we are all over the world and we have troops all over the world in places that are very, very far away. Venezuela is not very far away and the people are suffering, and they are dying. We have many options for Venezuela, including a possible military option if necessary."

Maybe Canada will be next. I have heard that Canada may have some weapons of mass destruction that will reign down on D.C. unless Donald gives the Canucks what they want on Nafta.   

Venezuelan government uses Trump’s threat to boost anti-American sentiment - The Washington Post


Economic Reports

The government reported that seasonally adjusted CPI increased .1% in July. For the 12 months ending in July, both CPI and core CPI increased 1.7% without seasonal adjustments. Consumer Price Index Summary

The Cleveland Fed's median CPI number for July rose .2% and 2% on an annual basis. Median CPI: Latest News Release

The Atlanta Fed's stick CPI index rose at an annualized rate of 2.1%.Sticky-Price CPI - Federal Reserve Bank of Atlanta That index has been trending down since August 2016 when it was reported at 2.7%.


1. Short Term Bond/CD Ladder Basket Strategy

A. Bought 2 Merrick Bank 1.6% CDs (monthly interest) Maturing on 2/11/19 (18 month CDs)

This bank has a five star rating from Bankrate: MERRICK BANK CORPORATION Review 

B.  Bought 2 American Express Centurion Bank 1.55% CDs (semi-annual interest) Maturing on 11/8/18 (15 month CDs):

This bank has a five star rating from Bankrate: AMERICAN EXPRESS CENTURION BANK Review

C. Bought 2 Capital One Bank 1.7% CDs (semi-annual interest) Maturing on 8/9/19 (two year CDs):

This bank has a five star rating from Bankrate: CAPITAL ONE BANK (USA), NATIONAL ASSOCIATION Review

D. Bought 2 MB Financial Financial 1.65% CDs (monthly interest) Maturing on 8/9/19 (two year CDs):

This bank has a 4 star rating from Bankrate: MB FINANCIAL BANK, NATIONAL ASSOCIATION Review

MB Financial Inc. (MBFI) (holding company)
MBFI Analyst Estimates
2017 Second Quarter Earnings

E. Bought 2 Morgan Stanley Bank 1.2% CDs Maturing on 11/10/17 (3 month CD):

$10K inflow into Short Term Bond/CD Basket

2. Intermediate Bond/CD Ladder Basket Strategy:

I am jettisoning a few low yielding bonds maturing in 2019-2021, realizing small gains. The general idea is to plow the proceeds into shorter term CDs. I am anticipating that the total return for the CDs , with anywhere from 1 to 4 rollovers, will exceed the YTMs of the bonds that I am selling which will not be hard to do with a slight uptrend in short term rates given the bond YTMs as noted below in Items 1.B through 1.E.  

A. Bought 2 Valero 3.4% SU Bonds Maturing on 9/15/26:

Finra Page: Bond Detail (prospectus not linked)

Credit Ratings: 
Moody's at Baa2
S & P at BBB

YTM at Total Cost (99.981)= 3.402%

2016 Annual Report (debt discussed starting at page 87)

B. Sold 2 Bank of Montreal 1.9% SU Bonds Maturing on 8/27/2021:

Profit Snapshot: +$25.3

FINRA Page: Bond Detail

Issuer: Bank of Montreal (BMO)
BMO Analyst Estimates

Sold at 99.4

YTM Then at 2.055%
Current Yield at 1.91%
Net at 99.3 ($2 commission)

Bought at a Total Cost of 98.035

Stocks, Bonds & Politics: ITEM # 1.A.
YTM Then at 2.374%
Current Yield at 1.94%

C. Sold 1 Royal Bank of Canada 1.5% SU Bonds Maturing on 7/29/19:

Profit Snapshot: +$5.1

Issuer: Royal Bank of Canada (RY)

RY Analyst Estimates

FINRA Page: Bond Detail

Sold at 99.516

YTM Then at 1.751%
Current Yield at 1.51%
Net at 99.416 ($1 Commission)

Bought at a Total Cost of 98.906

Stocks, Bonds & Politics: Item # 1.B.
YTM Then at 1.977%

The next two low coupon bonds were sold at a premium to par value. 

D. Sold 2 Amgen 2.125% SU Bonds Maturing on 5/1/20:

Profit Snapshot: +$18.26

Issuer: Amgen Inc.  (AMGN)

AMGN Analyst Estimates
2017 Second Quarter Earnings

FINRA Page: Bond Detail

Sold at 100.568

YTM Then at 1.904%
Current Yield at 2.11%
Net at 100.468 ($2 Commission)

Bought at a Total Cost of 99.555

Stocks, Bonds & Politics: Item # 1.C.
YTM Then at 2.273%

E. Sold 1 Morgan Stanley 2.5% SU Bond Maturing on 4/21/2021:

Profit Snapshot: +$10.68

ISSUER: Morgan Stanley (MS)
MS Analyst Estimates

FINRA Page:  Bond Detail

Sold at 100.489

YTM Then at 2.361%
Current Yield at 2.49%
Net at 100.389 ($1 Commission)

Bought at a Total Cost of 99.321

Stocks, Bonds & Politics: Item # 1.C.
YTM Then At 2.671%

I will keep the MS 2.625% SU bond maturing in 2021: Stocks, Bonds & Politics: Item # 1.B. 

$4K Outflow from Intermediate Term Basket

3. Income Replacement for Low Yield Bonds Strategy: Small Purchases of Risky and Higher Yielding Securities:

A. Bought 50 STWD at $21.93:

Quote: Starwood Property Trust Inc (STWD)-A REIT
Business – Starwood Property Trust

Credit Ratings: Moody's at Ba3 for Senior Unsecured.

The current quarterly dividend is $.48 per share. At that rate, the dividend yield is about 8.76%.  

With this investment, the goal is simple. Try to harvest a 10% annual return in whatever way that is possible. 

Brad Thomas published an article about this company in June: Are The Stars Lining Up For Starwood Property Trust? - Starwood Property Trust, Inc.-Seeking Alpha

Starwood's "core business focuses on originating, acquiring, financing and managing commercial mortgage loans and other commercial real estate debt and equity investments. Through its subsidiary LNR Property, LLC, Starwood Property Trust also operates as the largest commercial mortgage special servicer in the United States."  

The company has three different business segments: 

Sourced Page 4 of the 2016 10-K

Subsequent to my purchase, STWD reported second quarter earnings. GAAP net income was reported at $117.4M or $.44 per share with core earnings at $.52 per share. 

Starwood Property Trust Reports Results for the Quarter Ended June 30, 2017

4. Continued to Pare Stock Allocation:

A. Sold Remaining Pfizer Shares at $33.84 after Reviewing Second Quarter Report:

The shares went ex dividend for the quarterly dividend a few days before I sold this remaining lot using a commission free trade.

Profit Snapshot: +$90.67 (33+ shares)

I sold 100 shares held in this account a few weeks ago at $34.03:  Stocks, Bonds & Politics: Item # 3.A. Earlier this year, I sold a 100 share lot at $34.65, realizing a $235.86 gain. Stocks, Bonds & Politics: Item # 3.A.

2017 PFE Trading Profits: $469.95 plus dividends

When looking at the earnings report, I always spend a few minutes looking at the following tables that break down revenues by product: 

Sourced: SEC Filed Earnings Release for the Q/E 6/30/17 

What is concerning is the prevalence of Y-O-Y declines in worldwide revenues.  For major products, the drugs showing growth are Ibrance, Lyrica, Xeljanz, Chantix, and  Eliquis.

Pfizer shares downgraded because Viagra patent is expiring: CNBC (Viagra and Lyrica over the next 18 months according to the Credit Suisse analyst) Lyrica is Pfizer's largest seller at the present time. Lyrica to Lose Patent Protection in the US in 2018 - Market Realist

I also believe that two minor drugs, Relpax and Somavert, will suffer patent expiration this year. Drug patent expiration list for 2017-LowestMed (Somavert expired in March and Relpax's patent expires this month)

Recent and expensive acquisitions have not helped matters. I am referring to both the Medivation and Anacor acquisitions (totalling almost $20B)  

I do not like PFE as an investment and have had that opinion for the past 15 years or so. I have seen nothing yet to change my unfavorable opinion about this company. To compensate for its own poor internal drug discovery, Pfizer has compensated by overpaying for acquisitions in order to acquire drugs invented elsewhere. The total amounts paid for those acquisitions since 1999 significantly exceed PFE's current market capitalization. That is the smell of failure.  

A more positive take can be found in this DoctoRX article: Pfizer: Why The Stock May Get Interesting Again-Seeking Alpha I would agree more with this article that argues that PFE is a bond substitute in a low yield world. Pfizer Likely To Remain A Bond Surrogate Until 2020-Seeking Alpha

There was one recent positive news item: FDA Advisory Committee Votes in Favor of XELJANZ® (tofacitinib citrate) for the Treatment of Active Psoriatic Arthritis

I would have to say that Pfizer has been slow IMO in securing additional indications for Xeljanz which is hard to understand. In November 2012, the FDA approved Xeljanz "to treat adults with moderately to severely active rheumatoid arthritis who have had an inadequate response to, or who are intolerant of, methotrexate." FDA Approval Letter.pdf

I will certainly consider buying back up to 150 shares, probably in small increments, at lower prices. My preference is wait for a break below $30. I view that as far more likely than a break above $40.

5. Platinum ETF Trades: Sold 20 Shares:

These shares were sold prior to the latest flare up involving NK.  

Profit Snapshots (commission free trades, Schwab, and $1 IB Commission trades: +$77.84

6. Northwest Healthcare Properties

NWH.UN Stock Price - Northwest Healthcare Properties Real Estate Investment Trust Stock Quote (Canada: Toronto) 

I recently sold 1000 shares in my Fidelity account and converted the CAD proceeds into USDs. I waited for a rally in the CAD/USD to initiate that transaction. Stocks, Bonds & Politics: Observations and Sample of Recent Trades: APLE, HTPRD, NWH.UN:CA, XRE:CA

Subsequent to that disposition, Northwest released second quarter earnings: NorthWest Healthcare Properties Real Estate Investment Trust Releases Second Quarter 2017 Results

Subsequent to 6/30/17, Northwest completed its acquisition of Generation Healthcare, based in Australia, and now owns that REIT's 16 properties. There was an equity offering in April.  

I added 100 shares bought in Toronto using CADs at C$10.62, paying Interactive Brokers a C$1 commission. This REIT makes monthly distributions at C$.06667 per unit or C$.8 per year.  Assuming a continuation at that penny rate, the yield is about 7.53% at a total cost of C$10.62.  

Disclaimer: I am not a financial advisor but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sell of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep". Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals and situational risks. I can only make that kind of assessment for myself and family members.