Tuesday, May 23, 2017

Observations and Sample of Recent Trades (AGNC, CYSPRB, GMRE, NLYPRD, RNRPRC)

More Improper and Potentially Criminal Conduct

Trump asked intelligence chiefs to push back against FBI collusion probe after Comey revealed its existence
Trump asked intelligence chiefs to push back against FBI collusion probe after Comey revealed its existence - The Washington Post

One of those officials that Trump tried to influence directly, the former Indiana republican senator Dan Coats, would not answer a question today whether Trump asked him to deny the existence of any collusion between Trump's campaign and the Russians. Coats not commenting on Trump report- CNN He then said that the disclosure of that kind of information could put lives at risk. How would answering a question about a call from Donald on that issue impact anyone's life? It could impact Donald's presidential term and that is all.  

The WP report also contained this very serious statement about other White House officials: 

"In addition to the requests to Coats and Rogers, senior White House officials sounded out top intelligence officials about the possibility of intervening directly with Comey to encourage the FBI to drop its probe of Michael Flynn, Trump’s former national security adviser, according to people familiar with the matter. The officials said the White House appeared uncertain about its power to influence the FBI."

If true, that would be evidence of a conspiracy to obstruct justice. 

Nixon was impeached in part for trying to use the CIA to squash the FBI's investigation of Watergate. He would have been convicted of that crime if his successor, Gerald Ford, had not given him a pardon. Gerald R. Ford: Proclamation 4311—Granting Pardon to Richard Nixon That obstruction of justice effort was on tape. The Smoking Gun That Took Down Nixon: One From the History Books - Bloomberg The press reports of Trump's obstruction efforts are far wider in scope.  

The former CIA Director, John Brennan, testified today that he was concerned about contacts between the Trump campaign and Russian officials. The Russians were trying to influence persons involved in the Trump campaign, and Brennan called his counterpart in Russia prior to the election to tell the Russians to quit interfering in the U.S. election. He had questions about whether collusion existed between the Trump campaign and Russia, but does not know whether the known Russian efforts to subvert and suborn those individuals were successful. Former CIA Director John Brennan testifies on Russia -- live updates - CBS News

The market does not care. Trump will be shielded from any justified consequences that would otherwise naturally flow from his conduct. 


Trump the Mass Generator of Straw Man Replies

A reporter shouted a question at Netanyahu asking whether he had concerns about intelligence sharing with the U.S. 

Trump wanted to answer that question as well and made the following statement: 

“Just so you understand, I never mentioned the word or the name Israel. Never mentioned it during that conversation. They're all saying I did, so you have another story wrong. Never mentioned the word Israel.”

Trump says "I never mentioned the word or name Israel" to Russians - CBS News

No one said that Trump used the name Israel when he disclosed classified information to the Russians without any vetting by the intelligence agencies. Instead, the WP and other news organizations stated that Trump disclosed highly classified information and identified where the information originated in Syria.  

I seriously doubt that anyone in the Trump Administration ever tells Donald that he is wrong about anything.  


Trump The Hypocrite

Michelle Obama did not wear the traditional Saudi headscarf when visiting that country in January 2015. 

Trump was aghast: 

"Many people are saying it was wonderful that Mrs. Obama refused to wear a scarf in Saudi Arabia, but they were insulted.We have enuf enemies"  10:40 A.M. 1/29/15

Neither his wife nor daughter wore those scarfs on their recent visit. I have not yet seen a tweet from Donald criticizing them. 

Melania, Ivanka Trump Forgo Headscarves in Saudi Arabia — Despite Past Trump Criticism - NBC News

Last year, when a Clinton aide invoked the Fifth Amendment in the email investigation, Trump made the following statements during the campaign last year:

"If you are not guilty of a crime, what do you need immunity for."  And, "The mob takes the Fifth Amendment. If you're innocent, why are you taking the Fifth Amendment".  

Spicer stated in a tweet "why do u take the 5th if you have done nothing wrong and have nothing to hide?  

Trump's former National Security Advisor Flynn invoked the Fifth Amendment and has refused to testify and to produce documents. Does anyone expect Trump and Spicer to make similar statements about Flynn"

Obama reportedly told friends that Trump was nothing but a bullshitter .Report: Obama told friends Trump is a ‘bulls----er’ | TheHill Well, of course, he is.  Isn't it obvious?  


National Security Advisor H.R. McMaster:

This guy sounds like a political shill.

In the Sunday talk shows, he was asked whether Trump called Comey a "nut job" during the meeting with Russia's Foreign Minister and its U.S. Ambassador a few days ago.

McMaster was at the meeting.

Is that something that anyone would forget?

No honest person would forget.

An honest person would respond Yes or No.

A dishonest one would say I don't remember.

Well, I don’t remember exactly what the president said,” McMaster  statement 

McMaster won't say if President Trump confronted Russian officials about election interference - ABC News

And whatever Trump said, he was merely reassuring the Russians that he wanted better relations or some piece of crap that the Spin Doctors cooked up since the White House memo describing something much different was summarized in the press. 

White House Prepared Document of Meeting: 

“I just fired the head of the F.B.I. He was crazy, a real nut job. I faced great pressure because of Russia.  That’s taken off.”

Trump has frequently referred to other people as nut jobs so that is normal for him. Here's who Donald Trump has called a 'nut job' - CNN


Trump Draining the Swamp?

White House Moves to Block Ethics Inquiry Into Ex-Lobbyists on Payroll - The New York Times (so much for draining the swamp); The 'Swamp' Donald Trump Promised to 'Drain' Is Growing Again: NewsweekTrump’s nominations for U.S. ambassador are hardly draining the swamp - The Washington Post


Trump and the Free Press:

Trump Suggested Imprisoning Journalists Over Leaks, Comey Memo Alleges

The greatest danger to our Democracy comes from within and that threat is growing exponentially.


Trump's Budget Attack on Trump Voters

Trump's $3.6 Trillion Budget Cuts Hit His Own Supporters Hard - Bloomberg

The rural areas that voted overwhelmingly for Trump will be the most adversely impacted areas by Trump's policies and proposed budget cuts. 

Older Americans might be on their own if Trump’s budget proposal goes through - MarketWatch

The GOP depends on the white, high school educated voters in those areas remaining uninformed about issues that have a direct impact on them. 

The conservative columnist Ross Douthart, who would be viewed as an extreme liberal by many Trump voters,  noted correctly the wide divergence between Trump's populist rhetoric and his policies: Donald Trump, Establishment Sellout - The New York Times

Can anyone identify an example where a GOP politician admitted that a policy would harm a substantial number of constituents? I can not recall an example. The opposite occurs with some frequency.  

A case in point is the reply given by Representative James Comer (R-KY) who was asked a recent town meeting whether health insurance premiums for seniors would rise under Trumpcare. A GOP congressman from Kentucky wonders: Is ‘this Trump thing’ sustainable? - The Washington Post 

The answer is, without question, yes. Obamacare prohibited insurance companies from charging seniors more than 3 times what they charge healthy young adults. Trumpcare would raise that cap to five times which would of course significantly increase the premium costs for seniors.  

Trumpcare could send seniors' insurance rates skyrocketing: USA Today ("AARP's Public Policy Institute commissioned a study to assess the impact of changing the 3:1 limit to the 5:1 limit that the AHCA mandates. . . The average premium increase would be $3,200. This would bring average annual premiums up to $17,900 for someone aged 60 or older who purchases health insurance on the individual market.") 

Many Trump voters to pay a lot more for health insurance under Trumpcare: CNBC;  If you're older and lower income prepare to pay more under GOP health bill - Mar. 13, 2017Republican plans could raise insurance premiums by 750 percent for some.

Mr. Comer started to answer the question, according to the WP reporter, by saying that was not the case. He stopped and then bailed by saying he did not know. Of course he knows but prefers not to be candid. 

The I have not clue answer allowed him to avoid answering the main question, which was why did he vote to drastically increase the premiums for older Americans who were not yet eligible for Medicare. 

He could have truthfully replied by saying that premiums would skyrocket for seniors and then try to explain his justification for supporting that result. That would have been the honest response. The justification offered by republicans is that this cap in effect results in younger people subsidizing the premiums of older folks which is in fact the case.   

So when confronted by a somewhat knowledgeable constituent, Comer in effect misled this rare person by not answering in the affirmative, nor providing any details as to why the questioner was right about premiums skyrocketing,  and then explaining why he supported that part of TrumpCare. All of the this is related to keeping people as ignorant as possible about the issues that directly impact them.  

A large number of Mr. Comer's constituents are on Medicaid. I seriously doubt that he will ever admit to them the consequences of voting for the Trump budget plan. The result, if passed, will be most unfortunate for a substantial number of Trump voters in Comer's 1st congressional district in Kentucky. In a cosmic sense, voters who make decisions without becoming informed deserve what happens to them. 

The CBO score of the last TrumpCare bill, which narrowly passed the House in early May, is scheduled for release tomorrow. 

Since the first vote occurred before a CBO score, the House may have to vote again after receiving that score. House May Need to Vote Again on GOP Obamacare Repeal Bill - Bloomberg

The drastic budget cuts in social programs contemplated by Trump will have significant adverse economic consequences since those cuts are primarily aimed at the poor and the middle class who are already operating on a shoe string at best. 

Government benefits that flow to them are either spent right away or allow them to spend more money on consumer purchases, whereas benefits that benefit primarily the wealthy, such as tax cuts, are mostly saved or invested in financial assets that do not directly benefit the real economy. Consumer spending is critical to the U.S. economy. Chart: Shares of gross domestic product: Personal consumption expenditures-St. Louis Fed

How Trump’s budget helps the rich at the expense of the poor - The Washington Post

Trump Budget Would Cut Safety Net Programs, Boost Defense Spending - NBC News

Trump to Pitch Deep Cuts to Anti-Poverty Programs, Medicaid - Bloomberg

Huge cuts to food stamps part of Trump’s budget proposal - The Washington Post

Trump budget seeks huge cuts to disease prevention and medical research departments - The Washington Post

Trump budget will slash Medicaid, food stamps programs: reports | TheHill

Trump's budget plan continues his deceitful attack on the disabled — and violates a campaign pledge - LA Times

Trump’s new budget proposal slashes safety-net programs

Having said all of this, I do support some surgical changes in social programs, such as social security disability benefits, that would weed out more fraudulent claims. 

There is a factory system in the real world, consisting of lawyers and other professionals, that specialize in securing benefits for those making claims about disabilities that do not really exist and where there is no physical evidence of a disability. 

Where there is no physical evidence of a disability, a disability award is based ultimately on what a claimant tells a doctor or chiropractor after being coached by an attorney how to answer questions. This kind of activity is also prevalent from my work experience in the workman's compensation claim area. The Democrats need to recognize that people are gaming the system in order to be paid not to work. The republicans will slash far more broadly than necessary to prevent fraud while cutting taxes for their wealthy donors who in my opinion still control the GOP's agenda in spite of Trump's populist rhetoric. .   

 +++ ++++++++

1. Stocks, Bonds & Politics: Intermediate Term Bond/CD Ladder Basket Strategy

A. Bought 2 SVB Financial 3.5% Senior Unsecured Bonds Maturing on 1/29/2025

Finra Page: Bond Detail (prospectus not linked)
SIVB SVB Financial Group Page at Morningstar
Credit Ratings: 
Moody's at A3
S & P at BBB

YTM at Total Cost (99.941) = 3.553%
SVB 2016 Annual Report (bond listed at page 142)

B. Added 1 Entergy Louisiana 2.4%  First Mortgage Bond Maturing on 10/1/26

I now own three of these bonds.
Finra Page: Bond Detail
Credit Ratings:
Moody's at A2
S & P at A

YTM at Total Cost (94.05) = 3.133% 

C. Bought 1 HCP 3.4% Senior Unsecured Bond Maturing on 2/1/25

Issuer: HCP Stock Price - HCP Inc.-A REIT 

Finra Page: Bond Detail (prospectus linked)
HCP Page at Morningstar
Credit Ratings:
Moody's at Baa2
Moody's downgrades HCP's ratings to Baa2; outlook stable
S & P at BBB

YTM at Total Cost (98.453) = 3.63%%

HCP Analyst Estimates

HCP SEC Filings
HCP 2016 Annual Report

D. Bought 2 Northeast Utilities 2.8% Senior Unsecured Bonds Maturing on 5/1/23-A Roth IRA Account:

Issuer: Northeast Utilities is now known as Eversource Energy (ES)

FINRA Page: Bond Detail (prospectus linked)
ES Eversource Energy Page at Morningstar
Credit Ratings:
Moody's at Baa1
Moody's upgrades NU and five subsidiaries, outlooks stable
S & P at A-
Fitch at BBB+
Fitch Rates Eversource's Senior Unsecured Notes 'BBB+'
Fitch Upgrades CL&P, PSNH, and WMECO; Eversource Outlook to Positive
ES Credit Ratings.pdf

YTM at Total Cost (99.852) = 2.808%

Eversource 2017 1st Quarter Report

10-Q for the Q/E 3/31/17
2016 Eversource Annual Report (long term debt discussed starting at page 114)
ES Analyst Estimates

E. Bought 2 Intel 2.6% Senior Unsecured Bonds Maturing on 5/19/2026:

Issuer:  Intel Corp. (INTC)

Finra Page: Bond Detail (prospectus linked)
INTC Intel Corp Page at Morningstar
Credit Ratings:
Moody's at A1
Moody's assigns an A1 rating to Intel's proposed senior unsecured debt; outlook stable
S & P at A+
Intel: Fitch Gives Lackluster Thumbs Up to Mobileye Deal - Tech Trader Daily - Barrons.com

YTM at Total Cost (97.396) = 2.929%

Intel's 2017 First Quarter Report

2016 Annual Report (long term debt discussed starting at page 85)
INTC Analyst Estimates

I have bought and sold the common over the years. I made a series of purchases with cash flow starting in October 2008 and have sold most of those shares: Item # 5 Snapshot of  Intel Purchases with Cash Flow (4/25/11 Post) I currently own 110+ shares at an average cost per share of $15.2. I am not reinvesting the dividend.  

2. Continued to Pare Canadian Reset Equity Preferred Allocation

A. Sold 100 TRPPRE at C$22.26

TRP.PR.E Stock Price - TransCanada Corp. Cumulative Preferred Series 9 (Canada: Toronto) 

Profit Snapshot: +C$476.5

Item # 4 . Bought 50 TRPPRE at C$17.68 and 50 at C$17.25Update For Exchange Traded Bond And Preferred Stock Basket As Of 7/7/17 - South Gent | Seeking Alpha

The TransCanada Corp. Cumulative Preferred Series 9 Stock (TRP.PR.E:TOR) is an equity preferred stock issued by TransCanada Corp. Stock Price Today (TRP:TOR). The annual dividend, paid in quarterly installments, will be C$1.0625 per share to but excluding 10/30/19. That equates to a 4.25% coupon on a C$25 par value. 

Starting on 10/30/19, this cumulative preferred stock will reset at a 2.35% spread to the five year Canadian treasury bond. TRP has the option to redeem on that reset data and on every fifth year thereafter. There is an option to convert to the Series 10 preferred shares that reset quarterly at a 2.35% spread to the three month Canadian treasury bill.

I include the Canadian reset equity preferred stocks in my floating rate equity preferred stock category which is a niche category within my bond and bond like allocation. 

Stocks, Bonds & Politics: Advantages and Disadvantages of Equity Preferred Floating Rate Securities (Total Realized Gain 2009 to Date= $20,799.29)

3. Continued to Pare Stock Allocations

A. Sold 54+ AGNC at $20.71-A Roth IRA Account:

AGNC Stock Price - AGNC Investment Corp. Stock Quote

Profit Snapshot:   +$102.54  (from 4/24/17)

On March 28, 2017, I sold 50 AGNC at $19.94 and another 50 at $20.01: 

Items 5.B. and 5C.: Stocks, Bonds & Politics: Observations and Sample of Recent Trades- 4/14/17 (SGYP, TANNZ, TANNL, AGNC, VEA): Tax Cuts and Trumpcare

B. Sold 53+ AGNC at $20.71-Used Commission Free Trade Taxable Account

Profit Snapshot: +$107.07 (from  4/24/17)

I will look for an opportunity to buy AGNC back at significantly lower price. 

A one year interactive stock shows a recent spike up, topping out near $21.35, and a spike down last December bottoming near $17.5. AGNC Interactive Stock Chart A price below $19 would cause me to consider buying back some shares.  

Mortgage REITs are viewed as a disfavored asset class. Before buying the first share, I would recommend that an investor take the following actions: 

(1) read the risk summary found in the last annual report. The last AGNC risk summary can be found starting at page 8 of its 2016 Annual Report;

(2) take a look at the Mortgage REIT's dividend history (AGNC Investment was paying a $1.4 per share quarterly dividend and is currently paying a monthly dividend of $.18 per share or $.54 quarterly);

(3) take a look at a five year chart and check out the total return history which can be found at several websites including Morningstar and at DRIP Returns Calculator (AGNC has a five year total annualized average return of slightly less than 3%: AGNC Total and Trailing Returns)

C. SOLD 50 GMRE AT $10.01-Used Commission Free Trade

GMRE Stock Price - Global Medical REIT Inc.

Website: Global Medical REIT

Profit Snapshot:  +$82.54

I discussed that purchase in Item # 3.A.: Stocks, Bonds & Politics: Observations and Sample of Recent Trades (VGSTX, GMRE, AMU, EBAY, MS): 2/15//2017

I am not able predict when this new REIT will cover its dividend with funds from operation. I could only say that is unlikely to happen soon.

2017 First Quarter Report

The quarterly dividend is currently $.2 per share but that is all ROC.

Trading Profits to Date: $204.29

Snapshots at Stocks, Bonds & Politics: Gateway Post: Equity REIT Common and Preferred Stock Basket Strategy

4. Short Term Bond/CD Ladder Basket Strategy:

A. Added 2 USTs .75% Maturing on 10/31/17:

 This is what a Schwab confirmation for a UST purchase looks like: 

Note that Schwab sold these bonds to me. No commission is charged but arguably a commission of some sort is built into the price.  

YTM at Total Cost = .954%

I now own 4. 

B. Added 1 UST .5% Maturing on 7/31/17 (Fidelity Taxable Account)

YTM at Total Cost (99.922) = .79%

I now own 4. 

Both of these securities are simply alternatives to cash sitting in a Fidelity Government MM fund that has a lower yield. 

I do not pay commissions on my UST purchases. 

5. Continued to Pare U.S. Equity Preferred Stock Allocation

A. Sold 50 NLYPRD at $25.63: A Roth IRA Account:

This sell eliminated my position-again. 

Profit Snapshot: $47.48 

Quote: NLY.PD Stock Price - Annaly Capital Management Inc. Cumulative Preferred Series D Stock 

NLYPRD is an equity preferred stock issued by the Mortgage REIT Annaly Capital Management (NYSE:NLY) that pays cumulative and non-qualified dividends at the fixed coupon rate of 7.5% on a $25 par value. NLY has the option to redeem this security on or after 9/13/17. Prospectus There is a possibility that Annaly will be able to redeem and refinance cost effectively at a lower coupon. 

My last transaction was to sell 50 shares at $24.81 (3/24/17): Stocks, Bonds & Politics: Observations and Sample of Recent Trades: 4/11/17 (CYSPRA, NKTR, NLYPRD )

A five year chart reflects reasons for a trading strategy: Annaly Capital Management, Inc.: NYSE:NLY-D

B. Sold 50 RNRPRC at $25.75:

Profit Snapshot: $20.47

I still own 50 shares in that account bought at $24.72, and that purchase was  discussed here. I discuss in that comment my prior history with RNR securities.  

This security was partially redeemed by the issuer in 2013 and may be redeemed at anytime at the $25 par value plus accrued dividends.


RNR equity preferred stocks are rated Baa2 by Moody's and BBB+ by S & P.

Moody's affirms RenaissanceRe and changes outlook to stable from negative

C. Sold 50 CYSPRB at 23.81-Used Commission Free Trade

Quote:  CYS Investments Inc. 7.5% Cumulative Preferred Series B (CYSPRB)

CYSPRB pays cumulative and non-qualified dividends at a fixed coupon rate of 7.5%. Par value is $25. The issuer has the option to redeem on or after 8/3/17. Prospectus Supplement

Position Before Pare: Average Cost Per Share= $23.33 

Position After Pare: Average Cost Per Share =$22.99

Profit Snapshot: 

I discussed buying this lot here: Item # 4. Added 50 CYSPRB at $23.7-Update For Exchange Traded Bond And Preferred Stock Basket Strategy As Of 8/25/16 - South Gent | Seeking Alpha

My last sell was to sell 50 CYSPRB at $24.6 and to buy 50 CYSPRA at $24.55 which has a higher coupon at 7.75% (discussed here) The securities are functionally equivalent except for their coupons and optional call dates.

CYSPRA Prospectus (7.75% coupon paid on a $25 par value, optional call date on or after 8/3/2017)

There is no material difference in the optional call dates. Both pay cumulative dividends and are in pari passu with one another. Yet, for a brief time, the higher yielding CYS preferred was priced below the lower yielding one.  

I will consider buying back the 50 CYSPRB shares at less than $22.5.   

Shortly after CYSPRB was sold to the public in 2013, intermediate term interest rates started to spike. CYSPRB plummeted in price, sinking as low as $19.5 by year end. The precipitating cause was a rise in the ten year treasury yield to 3.04% by 12/31/13 from 1.66% in early May 2013. The share price also sunk below $22 in late 2015 and early 2016. Within the past year, the price touched $22.5. CYS.PB Stock Chart 

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