Tuesday, March 17, 2009

10 Year Treasury over 3%/Dividend Declarations/Excise Tax Just on AIG Bonuses: Constitutional?

The ten year treasury note fell in price and rose in yield to over 3% today.   I am maintaining a double short position in the 7 to 10 year treasuries (PST) and the long treasury (TBT) as a hedge for my long corporate bond portfolio. 

My secretarial skills have improved so much that my typing speed nows far exceeds my thinking speed endemic to us old folks. This creates some errors that I try to correct in prior blogs.  I noticed in the last one I typed "cash" when I meant to write "stock" in the first paragraph and I just went back and corrected it.   

I still own 100 of FCZ, a Ford Motor Credit senior bond, and I am not exactly sure why. But, whatever, I saw that it declared its monthly interest payment with a 3/27 ex date.  A first mortgage bond that I own from Entergy Louisiana, EHL, also declared its quarterly interest payment with the same ex date.   I have classified EHL as a long term hold in my bond portfolio along with its cousin EMO from Entergy Mississippi, but I have not decided what I am going to do yet with FCZ. 
As those linked posts indicate, I have admitted that FCZ was an off my rocker buy from the start.    

Another TC containing a senior bond, PJS, also had its semi-annual interest payment declared,  with a 3/27 ex interest date.  This is most likely a long term hold for me, at least looking at it now, primarily due to the favorable price at which I acquired it.  I believe the buy was somewhere in the $7 and change area.  The underlying senior bond in PJS is a security issued by the title insurance company First American.   

I did notice at the WSJ dividend page that one of the ING preferred stocks that I do not own, IDG, which has an out of kilter dividend schedule from the others, had a dividend declaration.  So I view that as a slight positive. 

One of the stocks that I own which took a hit from Obama's budget proposal is a bond issued by Sallie Mae, OSM, that is a floater tied to CPI.  I did say in my discussion of it that the monthly interest rate would decline since it was tied to a percentage above CPI which had started to fall. The monthly interest payment has fallen several times since my discussion and the latest declaration found at the WSJ dividend page is $.0444.  If I knew about Obama's plan for Sallie Mae before I made the purchase, I would not have bought it.  Now, I am just waiting to see how bad Congress is going to hurt Sallie before making a decision.  The maturity of this bond is in 2017.    Shares of student lenders fall on Obama proposal: Financial News - Yahoo! Finance

The buy of Proctor and Gamble today was another violation of my trading rules by Mr. Right Brain. The decision making process followed by Mr. Right Brain defies explanation, based on feelings and hunches, but whatever process is being followed is working now so some latitude is being given by Mr. Left Brain. 

Congress has apparently realized, after releasing an enormous amount of gas and hot air, that it does not have the power to abrogate a private employment contract, though Mitch McConnell  apparently has not yet read the Constitution based on his comments today, or his desire to make political hay has just overwhelmed the constitutional scholar in him.  Apparently, Congress figured out that it could tax the heck out of those AIG bonuses, and maybe that may past muster or maybe not.  The proposal being floated now is to level an excise tax of 70% on the bonuses, with 35% to be paid by the Masters of Disaster and another 35% by AIG.   Yahoo! Finance   The remaining Masters in the Financial Products unit are probably on the phone now looking for a new job.   A retention bonus is basically a bribe to keep one of the Masters of Disaster from jumping ship for another firm and then starting to use their knowledge of AIG's book to trade against it.   I do not know any of them, but then again I do not need to know them individually to know them.msnbc.com

Gannett has postponed the closing of Tucson's newspaper, The Citizen, Arizona's oldest newspaper for a brief period to see if a sale can be arranged.   Yahoo! Finance

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