Observations and Sample of Recent Trades- 2-22-17 (BSCL, DCPRD,FFHPRG, BBC, SCHC, PGNX)/Trump as Alex Jones' Fake News Parrot/The GOP and The Coal Industry

Alex Jones and His Fake News Parrot:

Mr. Jones believes that 9/11 was an inside job and the massacre of children at Sandy Hook did not occur and was staged by the government.  In Trump’s Volleys, Echoes of Alex Jones’s Conspiracy Theories - The New York Times

FLASHBACK: Alex Jones said 9/11 inside job on the day it happened » Alex Jones' Infowars: There's a war on for your mind!

Alex Jones "Sandy Hook is a SYNTHETIC, COMPLETELY FAKE with ACTORS!!" 01-13-2014 - YouTube

One of his legions of fans took him up on his recommendation that Hillary Clinton's child sex operation known as Pizzagate needed to be investigated further. Alex Jones Pulls Video Urging Fans To Investigate ‘Pizzagate’ After Fan ‘Investigated’ It With A Gun

He also claimed that the government was involved in the Oklahoma City Bombing.

Jones was apparently the first nationally known person to label the press as the enemy of the people.

When California was suffering drought a few years go, Jones suggested that the draught was fake news manufactured to protect a fish, and Trump later repeated that claim.

The Secret Agenda Of The California Water Drought Exposed - YouTube; Trump's 'fishy' statements about the California drought

Another fake news stories promulgated by Infowars and given credence by the parrot was that the press was covering up acts of terror committed by Muslims InfoWars is behind President Trump’s idea that the media is covering up terrorist attacks - The Washington Post

I mentioned Alex Jone's in my last blog. Trump has repeatedly refused to distance himself from Mr. Jones: Why Won’t Donald Trump Denounce Sandy Hook Deniers? - The New Yorker; Donald Trump and the “Amazing” Alex Jones - The New Yorker;

Other examples can be found here: Have Conspiracy Theories Gone Mainstream? How Alex Jones and Steve Bannon Pushed Them Into the Spotlight - The Atlantic

In fact, Trump praised Jones in a radio interview:  "Your reputation is amazing. I will not let you down" Donald Trump praises Alex Jones' 'amazing' reputation - CNN

Trump is certainly not letting Jones down.

Many of the "fake news" stories given credence by Mr. Trump originate from Mr. Jones' radio show that is enjoyed by Trump voters nationwide.

A frequent Trump tactic is to accuse others of doing what he is in fact doing. He is the creator of fake news and consequently attacks the news media as fake news when they contradict him with facts. False is True. True is False.

The GOP is not a conservative party.

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Border Adjustment Tax:

If the border adjustment tax becomes law, I doubt that the GOP will control the Senate after the 2018 election.

This is an easy issue for middle class white voters to understand. Trump and the GOP promised to help those voters and make America Great Again. And, look what they got for voting for them, a major tax increase to pay for a corporate tax cut. Possibly as many as 80% of Trump voters will not believe it since the Lying Press would be pointing out that Fake News. However, with liberal spending on catchy political ads on their favorite TV channels, up to 20% can be peeled off in the next election.

Border tax could wipe out retail earnings by 50% or more, analyst says

There are other facets of the House plans that can cause bad results as well. The Stock Jocks, mostly loyal Trump supporters, only see what they have been told to see-a 20% corporate tax rate with none of the baggage.

The problem for the GOP is that they are now sowing the seeds for their own defeat.

And for long term investors, it is not going to matter much in the scheme of things to have the GOP tax plan dismantled when the Democrats regain power, and they will, except the next time could see a Democrat party swung into the rich folks confiscation business. Neither Clinton nor Obama were part of the liberal wing of the party, contrary to GOP protestations to the contrary.  That would be Bernie Sanders. When and if that wing has power to pass legislation, you will find out the differences.

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Mike Pence-The Reasonable Sounding Donald Trump Clone

I would recommend to the Europeans to ignore Mike Pence and listen to Donald Trump.

Pence said that Trump is a firm supporter of an independent and free press, but both Pence and Trump will continue  "call out the media when they play fast and loose with the facts."  It is just laughable. Was he talking about our Donald? 

The problem is not the media placing fast and loose with the facts, but reporting facts that Pence and Trump do not like. It would be impossible for any truthful person to call Trump's comments as supportive of an independent and free press. 

The Europeans of course see the contradiction between what Pence told them and what has been coming out of Donald's mouth for months. Pence defends Trump media attacks during Brussels trip-CNN; Mike Pence Tries to Reassure Europe on U.S. Support-Time.com Mike Pence Europe Trip-The New York Times.

Pence does not make policy. He is only the reasonable sounding talk version of Donald Trump.

Trump enjoys creating chaos. I suspect that the Europeans and the Stock Jocks will gradually become more aware that chaos and nihilism are the two new sheriffs in town.  

I do agree with Trump that our Nato allies need to honor their defense spending commitments.

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Trump Tackles Regulations To Create More Jobs:

Trump told his enthusiastic supporters at the recent campaign rallies that he had already taken steps to Make America Great Again by eliminating two regulations. This was part of his plan to bring jobs to America. Let's take a look under the hood.

The first elimination was an SEC regulation that required energy and mining companies to disclose payments to foreign governments.

You may be wondering how the elimination of that regulation creates U.S. jobs. If that thought just entered your brain, then you are thinking too much if you are a Trump supporter.

It looks and smells like a craven pay back for the financial support given to republicans by those two industries.

Kevin McCarthy, the GOP House Majority Leader, claimed that the real reason was to relieve an "unreasonable compliance burden on American energy companies that isn’t applied to their foreign competitors”. A big signing: Donald Trump signs a law repealing a disclosure rule for oil companies | The Economist

USA Today: Trump signs legislation to scrap Dodd-Frank rule on oil extraction

Isn't this a coincidence: Yes, ExxonMobil under Tillerson fought oil payment disclosure rule | PolitiFact Global News Service

The other elimination was a pending EPA rule governing the discharge of coal waste into streams and rivers. House to repeal Obama coal rule Wednesday | TheHill; Mountaintop Removal Mining: Digging Into Community Health Concerns

The GOP will say that they are in favor of environmental protection while permitting substantially more pollution. It is part of their True is False and False is True campaign.

One GOP politician claimed that the GOP was "not doing anything negative for the environment" by allowing more toxic substances to contaminate water supply.

At least the GOP was not claiming-yet-that coal slurry in the drinking water provided nourishing minerals.

An independent analysis found that this rule would have protected and improved about 6,000 miles of stream and 50,000 acres of forest between now and 2040.

I doubt that this rule will stop the decline of strip mining in Appalachia. As I have discussed in several posts, electric utility companies are building combined cycle natural gas fired plants to provide both baseload and intermediate generation. That trend is going to continue regardless of whether the stream rule goes into effect.

Combined-Cycle Power Plant – How it Works | GE Power Generation
Power plants with maximum efficiency and state-of-the-art technology - Siemens
Combined Cycle Power Plant Construction - Bechtel
Average utilization for natural gas combined-cycle plants exceeded coal plants in 2015 - Today in Energy - U.S. Energy Information Administration (EIA)

The GOP politicians know all of that since it is widely known except among Trump voters.  I would challenge anyone to find a republican engaging in an honest discussion with their constituents or anyone else about this trend.

The government estimated that this rule would cost 124 coal mining jobs per year.  One of Trump's supporters at his Melbourne Florida campaign stop was gleeful that the rescission of this rule would allow all of the coal miners to keep their jobs.  The Washington Post

The better alternative than permitting more air, water and land pollution would be to devote government resources toward retraining and possibly relocation. That sensible approach is also the losing one for politicians outside of the deep blue states.

There is no question that the coal industry wants to be unshackled from pollution regulations, and the GOP is willing to help.

Murray Energy CEO claims global warming is a hoax

Murray will sue reporters for making claims about his environmental record: Murray Energy vs. WV Gazette; Coal Company, West Virginia Newspaper Reach Settlement in Libel Suit | 89.3 WFPL News Louisville

In this particular example involving the stream regulation, it is a question of whether the nation wants less water and air pollution for possibility 126 more jobs in the coal industry. And, while those jobs may be lost in the coal industry, that is not equivalent to saying that those workers are unemployed or are unable to find other jobs that are safer.

After Advancing Scott Pruitt Confirmation, Senator John Barrasso (R-WYO) Heads Over to Energy Lobbyist Fundraiser

GOP senators will say that they are in favor of protecting the environment while arguing that it is important to emasculate the EPA to create jobs. Talk is cheap.

Find out first how much money is given in campaign contributions by the mining and energy industries.

Sen. John A Barrasso: Campaign Finance/Money - Industries - Senator 2016 | OpenSecrets

Then look at what they do rather than what they say. They are without question going to permit more water, air and land pollution. Global warming is a hoax for them because money talks more to the GOP than science.

The EIA last Coal Report was for 2015 and was published in November 2016. Annual Coal Report - Energy Information Administration As of 12/31/15, there were 65,971 persons employed in coal mines. Of that number, 40,045 were employed to work in underground mines and the remaining 25,814 worked on the surface (i.e. strip mining). The number was at 87,755 at the end of Bush's second term.

I will update this post when the 2016 employment numbers become available in order to measure just how successful the GOP will be in bringing back coal mining jobs in return for substantially more pollution. I do believe that the removal of pollution regulations will make the coal companies more profitable, and that is the name of the game.

The coal industry has never had a President and Congress more willing to do its bidding and follow its orders in lock step.

Trump to roll back Obama’s climate, water rules through executive action - The Washington Post

Trump is an environmentalist just like all republicans. Donald Trump, environmentalist?

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Trump's Well-Oiled and "Fine Tuned Machine":

Trump claims that his administration is a "well-oiled" machine. He frequently complains about the Democrats challenging his cabinet nominees.

Of the 549 key political appointee positions, Trump has not even named a person for 515.

Donald Trump nominations list

Anyone home in Trumpville? - The Washington Post


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Pedophilia appears to be the "red line" conservative Republicans won't cross to side with Trump fan Milo — Quartz; CPAC rescinds Milo Yiannopoulos' invitation after swift backlash - Feb. 20, 2017

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The Trump White House is already cooking the books - The Washington Post

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The appointment of Lt. Gen. H.R. McMaster to replace Flynn is a vast improvement IMO.

McMaster did not have the option to turn down Trump's offer since he is on active duty. Several other retired generals turned down the job. But, in this case, all is well that ends well.


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1. Intermediate Term Bond Ladder Basket Strategy-Underweighted

A. Added 1 Centerpoint 2.25% General Mortgage Bond Maturing on 8/1/22 (IB Account)

I now own two of these bonds. The prior 1 bond purchase was at a 98.328 total cost and a 2.579% YTM. 

FINRA Page: Bond Detail

Moody's Rating	A1 (01/30/2014)
Standard & Poor's Rating	A (02/14/2013)
Fitch Rating	A (03/18/2016)

YTM at Total Cost ( 98.805) = 2.485

Fitch March 2016 Report

Moody's  January 2014 Report

B. Bought 2 Exxon 2.709% Senior Unsecured Bonds Maturing on 3/6/25

FINRA Page: Bond Detail (prospectus is not linked)

Final Prospectus Supplement

Moody's Rating	Aaa (02/25/2016)
Standard & Poor's Rating	AA+ (04/26/2016)

YTM at Total Cost (97.61) = 3.045%

EXXON SEC Filings 

2016 4th Quarter Earnings Report

C. Bought 100 BSCL at $21.14 (commission free ETF for Schwab customers)

The Guggenheim BulletShares 2021 Corporate Bond ETF (BSCL) owns investment grade bonds that mature in 2021. The fund will liquidate on or about 12/31/21. 

As of 12/31/16, the average duration was 3.92 years. The fund then owned 343 investment grade bonds.

Sponsor's Website: BSCL (expense ratio .24%)

Fund Holdings 

Dividends are paid monthly at a variable rate: Fund Details

D. Bought 1 WFC 2.1% Senior Unsecured Maturing on 7/26/21

Moody's Rating	A2 (07/20/2016)
Standard & Poor's Rating	A (07/20/2016)
Fitch Rating	AA- (10/04/2016)

YTM at Total Cost (98.103) = 2.553%

E. Bought 2 Entergy Louisiana First Mortgage Bond Maturing on 10/1/2026

I bought 1 in my IB taxable account ($1 Commission)

I bought 1 in my Vanguard Roth IRA account, which at least turns this first mortgage bond into a tax free one. I have to pay $2 per bond in my Vanguard accounts. 

S & P raised the rating of this issuer's secured bonds to A from A- last August. Moody's apparently stopped rating this issuer's secured debt in 2015. It was last rated by Moody's at A2.   

FINRA Page:  Bond Detail (prospectus is not linked here)

Prospectus (IPO Late September 2016)

YTM at Total Cost (94.715 ) = 3.037%
YTM at Total Cost Roth IRA (94.65 ) = 3.045%

The price had fallen some when I bought this bond in my Vanguard account which resulted in a higher YTM even with the $1 extra commission.

However, when I placed that order, Fidelity had an even lower price for a one bond lot:

The Vanguard order book did not display the 254 bonds available at 94.387 with a 1 bond minimum.


Make Whole Provision: 

The issuer can redeem at par plus accrued interest on or after 7/1/2026. 

2. Long Term Bond Basket Strategy-Substantially Underweighted

A. Bought 1 TIP with a 2.5% coupon maturing on 1/15/29: 

Bond Detail
Adjusted Principal Amount = $1,124.25
Inflation Factor 1.12425
Original Issue Date: 1/15/2009 (20 Year TIP)
Premium Payment Over Adjusted Principal = $259.72
Originally Issued 1/15/2009: TIPS/CPI
Reference CPI Dated Date 1/15/09 = 214.69971
Reference CPI 2/9/16: 241.37557


Stocks, Bonds & Politics: TIP Trading in the Secondary Market

Update On Buying TIPs In The Secondary Market - South Gent | Seeking Alpha

The Mechanics Of Purchasing A TIP In The Secondary Market - South Gent | Seeking Alpha


B. Sold 1 Qwest Capital Senior Unsecured Maturing in 2031: 

Profit Snapshot:

FINRA PAGE:  Bond Detail

QWEST was acquired by CenturyLink Inc.  (CTL).

I discussed this purchase in a 1/4/17 comment that can be found here. As noted in this comment, I owned in the past fixed coupon Trust Certificates that had this bond as their underlying security.

Fitch has a BB+ rating. Fitch Places CenturyLink's BB+ on Negative Credit Watch

3. Continued Profit Taking in Canadian Reset Equity Preferred Stocks:

A. Sold Highest Cost DCPRD Shares at C$13.81

QUOTE: Dundee Corp. Cumulative 1st Pfd. Series 3 (DC.PR.D:TOR) 

Profit: C$50.5

I discussed buying those shares here: 

Item 5. Bought 100 DCPRD: 50 at C$13.45 and 50 at C$13.1-IB Taxable Account: Update For Exchange Traded Bond And Preferred Stock Basket Strategy As Of 8/25/16 - South Gent | Seeking Alpha

I am keeping a 50 share lot bought at C$12.27 (11/22/16).

This Dundee equity preferred stock is viewed as high risk.  

This reset equity preferred stock pays cumulative dividends at a 4.1% spread to the three month Canadian treasury bill. 

B. Sold Remaining 50 shares of FFHPRG at C$18.4:

Profit Snapshot: C$168.5

I include Canadian reset equity preferred stock in my equity preferred floating rate category. Snapshots of round-trip trades can be found here: Stocks, Bonds & Politics: Advantages and Disadvantages of Equity Preferred Floating Rate Securities

Profit = $19,339.54 (all small lots)

4. Continued Paring of Stock Allocation:

A. Eliminated the ETF SCHC:


Profit on 63+ Shares: +$67.93

Quote: Schwab International Small-Cap Equity ETF  (SCHC)

This Schwab ETF can be traded commission free by Schwab customers. When paring my stock allocation, I will toss a number of ETFs that are at my portfolio's fringe, and a 63+ share position in an international small cap stock ETF qualifies as an inconsequential holding and a source for cash.  

B. Eliminated BBC Again: Sold 30 at $21.24: 

Quote BioShares Biotechnology Clinical Trials Fund (BBC)

Profit Snapshot: +$77.18

This ETF is extremely volatile. The stocks owned by this fund do not have approved drugs, but are clinical stage biotech companies. When there is a drug failure, the price generally collapses and soars on positive news about an ongoing trial or an FDA approval. When the company receives an FDA approval, it will be taken out of this ETF during the next semi-annual rebalancing and reconstitution.

BBC Fund Chart

Biotechnology Clinical Trials Fund

Prospectus

I use this fund as part of my Small Cap Biotech Lottery Ticket Basket Strategy: Update on Small Cap Biotech Lottery Ticket Basket Strategy

C. Sold 50 PGNX at $10.42:

Profit Snapshot: +$216.11

2017 PGNX 50 Shares +$216.11

The stock popped on news that it was going to be added to the S & P 600: 

Closing Priced 2/16/17: PGNX $10.54 0.92 9.56% : Progenics Pharmaceuticals Inc.

Progenics Pharmaceuticals and Shutterfly to Join S&P SmallCap 600

I bought this lot at $5.95 last July: Item # 4 Bought 50 PGNX at $5.94-Update For Healthcare Basket Strategy As Of 7/29/16-Growing Lottery Ticket Component - South Gent | Seeking Alpha

PGNX Trading Profits To Date = $330.61

5. Short Term Bond/CD Ladder Basket Strategy

A. Bought 2 Potash 3.25% Senior Unsecured Bonds Maturing on 12/1/17

FINRA Page: Bond Detail

Moody's assigns Baa1 rating to Potash Corp's notes; under review for downgrade

YTM at Total Cost (100.950) = 2.04%

Potash may redeem this bond now but will have to pay a make whole payment.

Pages S-11 and S-12: Prospectus

Any optional redemption prior to the maturity date requires Potash to make that payment. It would be the sum of the principal amount plus all remaining interest due on the note discounted to present value using the comparable treasury rate plus .2%. Since the bond matures in December, the comparable treasury rate would be less than 1 year. The discount rate would be slow since the 1 year treasury bill was trading at .79% when I bought this bond. Any shorter maturity would have a lower yield. As the discount rate moves lower, the make whole payment goes up. I can not calculate the make whole redemption amount but would generally note that it would require a slightly lower payment than the sum of principal amount ($1K per bond) plus the interest payments at 3.25% owed to the maturity date.

Last December, Potash sold $500M in a 4% coupon senior unsecured bond maturing in 2026. In the Use of Proceeds section of that bond's prospectus, POT stated that it may redeem the 3.25% note maturing in December 2017. Prospectus

If Potash does not redeem early, then I will lose some on the bond but the FINRA calculation on the YTM at my total cost would be 2.04%. If Potash redeems early, that number will change based on the variables then existing (time to maturity and the discount rate).

B. Bought 1 TransAmerica Pipeline 1.625% Senior Unsecured Bond Maturing on 11/9/2017

FINRA Page: Bond Detail (prospectus is not linked)

Moody's at A3
S & P at A-

YTM at Total Cost = 1.438%

This security can be called at the greater of par value "or a discount rate of Treasury plus 12.5 basis points". FWP I interpreted it as a make whole provision that would use the sum of the principal amount ($1K) and the remaining interest due until maturity discounted to present value using the comparable treasury yield plus 12.5 basis points. I found the  Prospectus which confirmed that interpretation.

C. Bought 2 Guildford Savings CDs .65% (monthly interest) Maturing on 7/24/17

D. Bought 2 People's National CDs .55% Maturing on 5/17/17:

These low yielding, short term CDs are view only as a better alternative to idle cash sitting in the Fidelity Government MM fund: SPAXX - Fidelity ® Government Money Market Fund | Fidelity Investments The current seven day yield has been stuck at .2% for awhile. Taxable Money Market Funds - F (Alphabetically) - Barron's

E. Bought 2 U.S.T.s at Auction-Treasury Direct Account:

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.