Trump's Time Magazine Interview:
Time interviewed Donald about "truth and falsehoods" that was part of its recent cover story Trump Truth: The President With False Claims Faces Reality | Time.com
Trump Interview on Truth and Falsehoods | Time.com
Trump wanted to know what he said in the past was wrong. He then proceeded to give demonstrably false and misleading information in response to the interviewer's questions. Fact-checking Trump’s TIME interview on truths and falsehoods | PolitiFact; All of the untrue things Trump said in his Time interview about truth - The Washington Post
Maybe I did not understand TrumpCare. Donald stated throughout his campaign and earlier in his presidency that his plan would be “unbelievable,” “beautiful,” “terrific,” “less expensive and much better,” “insurance for everybody.” Garbage just flows out of his mouth as if being pumped directly out of a landfill.
+++++++++++
New Car Sales:
New car sales may have peaked near prior recovery peaks.
New cars are taking longer to sell than they have since 2009 - MarketWatch
Light Weight Vehicle Sales: Autos and Light Trucks-St. Louis Fed
++++++++
Consumer Debt:
There are cracks appearing in the consumer debt market.
Bank Card Default Rate Hits 42 Month High in January.pdf
Just Released: Subprime Auto Debt Grows Despite Rising Delinquencies Liberty Street Economics (NY FED)
Auto loan delinquency numbers from NY Fed - Business Insider; Some 6 million Americans are delinquent with auto loans and it’s going to get worse - MarketWatch
Overall, consumer credit delinquencies remain benign, though the S&P/Experian Consumer Credit Default Composite Index has risen from .81 (May 2016) to .94 last month. The ten year high was at 5.51 in May 2009.
The preceding link also has information on the bank card default which was at 3.22. The low was hit at 2.49 in December 2015 and has been trending up. The high was hit at 9.15 in April 2010.
++++++++
U.S. Debt Ceiling Limit: Out of the Headlines and Apparently Forgotten:
The federal government has to have a new debt limit. The Treasury is once again using extraordinary measures to pay the government's bills. What's the debt limit and why is Congress about to raise it again?
Is there going to be smooth sailing with no government shutdown or government default? That appears to be the current consensus assumption. The problems in securing an increase started with Newt Gingrich and the GOP back in 1994-1995 which resulted in government shutdowns. There were two debt ceiling conflagrations during the Obama Administration. The first was in 2011 and the last one in 2013. The government went into a partial shutdown in October 2013.
The GOP will generally act irresponsibly on debt ceiling increases when there is a Democrat in the White House. Fitch may be right that a crisis may be more unlikely this year since the GOP owns the debt limit increase and may consequently behave in a responsible manner. I doubt that will happen. If I am right, bad vibes will start to appear in the summer. My pessimism about such matters has been exacerbated by reading this book: It's Even Worse Than It Looks: How the American Constitutional System Collided with the New Politics of Extremism - Kindle edition by Thomas E. Mann, Norman J. Ornstein. So far, I am about half way through this book, and my disgust is at an elevated level.
Moody's: U.S. Debt Limit Not Doomsday Scenario...Yet | Fox Business
+++++++++++
Last week, I mentioned that I was done paring my stock allocation. That proved to be a premature statement. I sold into the rally today. My stock allocation remains significant, however. I have continued to purchase every day high quality investment grade bonds. I may take about 4 to 6 weeks before I get around to discussing today's bond buys and stock sells.
I have added small positions to higher yielding REITs that have come down in price.
++++++++
1. Intermediate Term Bond Ladder Basket Strategy:
Time interviewed Donald about "truth and falsehoods" that was part of its recent cover story Trump Truth: The President With False Claims Faces Reality | Time.com
Trump Interview on Truth and Falsehoods | Time.com
Trump wanted to know what he said in the past was wrong. He then proceeded to give demonstrably false and misleading information in response to the interviewer's questions. Fact-checking Trump’s TIME interview on truths and falsehoods | PolitiFact; All of the untrue things Trump said in his Time interview about truth - The Washington Post
Maybe I did not understand TrumpCare. Donald stated throughout his campaign and earlier in his presidency that his plan would be “unbelievable,” “beautiful,” “terrific,” “less expensive and much better,” “insurance for everybody.” Garbage just flows out of his mouth as if being pumped directly out of a landfill.
+++++++++++
New Car Sales:
New car sales may have peaked near prior recovery peaks.
New cars are taking longer to sell than they have since 2009 - MarketWatch
Light Weight Vehicle Sales: Autos and Light Trucks-St. Louis Fed
++++++++
Consumer Debt:
There are cracks appearing in the consumer debt market.
Just Released: Subprime Auto Debt Grows Despite Rising Delinquencies Liberty Street Economics (NY FED)
Auto loan delinquency numbers from NY Fed - Business Insider; Some 6 million Americans are delinquent with auto loans and it’s going to get worse - MarketWatch
Overall, consumer credit delinquencies remain benign, though the S&P/Experian Consumer Credit Default Composite Index has risen from .81 (May 2016) to .94 last month. The ten year high was at 5.51 in May 2009.
The preceding link also has information on the bank card default which was at 3.22. The low was hit at 2.49 in December 2015 and has been trending up. The high was hit at 9.15 in April 2010.
++++++++
U.S. Debt Ceiling Limit: Out of the Headlines and Apparently Forgotten:
The federal government has to have a new debt limit. The Treasury is once again using extraordinary measures to pay the government's bills. What's the debt limit and why is Congress about to raise it again?
Is there going to be smooth sailing with no government shutdown or government default? That appears to be the current consensus assumption. The problems in securing an increase started with Newt Gingrich and the GOP back in 1994-1995 which resulted in government shutdowns. There were two debt ceiling conflagrations during the Obama Administration. The first was in 2011 and the last one in 2013. The government went into a partial shutdown in October 2013.
The GOP will generally act irresponsibly on debt ceiling increases when there is a Democrat in the White House. Fitch may be right that a crisis may be more unlikely this year since the GOP owns the debt limit increase and may consequently behave in a responsible manner. I doubt that will happen. If I am right, bad vibes will start to appear in the summer. My pessimism about such matters has been exacerbated by reading this book: It's Even Worse Than It Looks: How the American Constitutional System Collided with the New Politics of Extremism - Kindle edition by Thomas E. Mann, Norman J. Ornstein. So far, I am about half way through this book, and my disgust is at an elevated level.
Moody's: U.S. Debt Limit Not Doomsday Scenario...Yet | Fox Business
+++++++++++
Last week, I mentioned that I was done paring my stock allocation. That proved to be a premature statement. I sold into the rally today. My stock allocation remains significant, however. I have continued to purchase every day high quality investment grade bonds. I may take about 4 to 6 weeks before I get around to discussing today's bond buys and stock sells.
I have added small positions to higher yielding REITs that have come down in price.
++++++++
1. Intermediate Term Bond Ladder Basket Strategy:
A. Bought 1 Ventas LP 3.5% Senior Unsecured Bond Maturing on 2/1/25:
Issuer: Ventas Limited Partnership, a wholly owned operating partnership of Ventas (VTR)
Fully and Unconditionally Guaranteed by Ventas, Inc.
VTR Ventas Page at Morningstar
Finra Page: Bond Detail (prospectus linked):
Credit Ratings:
Moody's at Baa1
S & P at BBB+
Fitch at BBB+
Moody's affirms Ventas's Baa1 senior debt rating; stable outlook
Credit Ratings | ventasreit
YTM at Total Cost (97.484) = 3.873% ($1 Commission)
Company Website: Welcome | ventasreit
Ventas Reports 2016 Fourth Quarter and Full-Year Results
B. Bought 1 Ventas LP 3.25% Senior Unsecured Bond Maturing on 10/15/26:
Moody's affirms Ventas's Baa1 senior debt rating; stable outlook
Credit Ratings | ventasreit
YTM at Total Cost (97.484) = 3.873% ($1 Commission)
Company Website: Welcome | ventasreit
Ventas Reports 2016 Fourth Quarter and Full-Year Results
B. Bought 1 Ventas LP 3.25% Senior Unsecured Bond Maturing on 10/15/26:
FINRA Page= Bond Detail
YTM at Total Cost (95.074) = 3.871% ($2 commission)
Ventas SEC Filings
2016 Annual Report (senior notes listed on page 114)
YTM at Total Cost (95.074) = 3.871% ($2 commission)
Ventas SEC Filings
2016 Annual Report (senior notes listed on page 114)
C. Bought 2 Baltimore Gas & Electric 2.8% Senior Unsecured Maturing on 8/15/22:
Issuer: BG&E is a wholly owned subsidiary of Exelon Corp. (EXC:NYSE)
Finra Page: Bond Detail (prospectus linked)
Credit Ratings:
Moody's at A3
S & P at A-
Fitch at A-
Fixed Income Investors - Investor Relations
Fitch Rates Baltimore G&Es Senior Notes 'A-'
YTM at Total Cost (99.46) = 2.908%
Sourced From Page 279: 2016 Exelon Annual Report
Exelon has lower credit ratings largely due to its ownership of Exelon Generation Company, LLC.
D. Bought 2 Commonwealth Edison 3.15% First Mortgage Bonds-ROTH IRA:
Issuer: Commonwealth Edison is a wholly owned subsidiary of Exelon (EXC)
FINRA Page: Bond Detail (prospectus linked)
Credit Ratings:
Moody's at A2
S & P at A-
Fitch at A
Fitch Upgrades Commonwealth Edison First Mortgage Bonds to A from A- YTM at Total Cost (99.384) = 3.191%
E. Bought 1 AvalonBay 2.85% Senior Unsecured Bond Maturing on 3/15/23:
Issuer: Avalonbay Communities Inc (AVB:NYSE)-A REIT
AVB AvalonBay Communities Inc Page at Morningstar
Finra Page: Bond Detail (prospectus linked)
Credit Ratings:
Moody's at A3
S & P at A-
Moody's upgrades AvalonBay to A3, outlook stable
YTM at Total Cost (97.712 ) = 3.273%
I previously discussed buying 1 AVP SU maturing in 2026: Item # 1.C.
Issuer: BG&E is a wholly owned subsidiary of Exelon Corp. (EXC:NYSE)
Finra Page: Bond Detail (prospectus linked)
Credit Ratings:
Moody's at A3
S & P at A-
Fitch at A-
Fixed Income Investors - Investor Relations
Fitch Rates Baltimore G&Es Senior Notes 'A-'
YTM at Total Cost (99.46) = 2.908%
Exelon has lower credit ratings largely due to its ownership of Exelon Generation Company, LLC.
D. Bought 2 Commonwealth Edison 3.15% First Mortgage Bonds-ROTH IRA:
Issuer: Commonwealth Edison is a wholly owned subsidiary of Exelon (EXC)
FINRA Page: Bond Detail (prospectus linked)
Credit Ratings:
Moody's at A2
S & P at A-
Fitch at A
Fitch Upgrades Commonwealth Edison First Mortgage Bonds to A from A- YTM at Total Cost (99.384) = 3.191%
E. Bought 1 AvalonBay 2.85% Senior Unsecured Bond Maturing on 3/15/23:
Issuer: Avalonbay Communities Inc (AVB:NYSE)-A REIT
AVB AvalonBay Communities Inc Page at Morningstar
Finra Page: Bond Detail (prospectus linked)
Credit Ratings:
Moody's at A3
S & P at A-
Moody's upgrades AvalonBay to A3, outlook stable
YTM at Total Cost (97.712 ) = 3.273%
I previously discussed buying 1 AVP SU maturing in 2026: Item # 1.C.
F. Bought 2 Boston Properties 3.125% Senior Unsecured Bond Maturing on 9/1/23:
Bought 1 in a Taxable Account ($1 commission)
Issuer: Wholly Owned Operating Partnership of Boston Properties (BXP)-A REIT
Fully and Unconditionally Guaranteed by BXP
BXP Boston Properties Page at Morningstar
Finra Page: Bond Detail (prospectus linked)
Credit Ratings:
Moody's at Baa2
S & P at A-
Fitch at BBB+'
Fitch Rates Boston Properties' Senior Unsecured Notes Due 2026 'BBB+'; Outlook Stable
YTM at Total Cost (99.088) = 3.283%
Bought 1 in a Roth IRA Account ($2 Commission):
Boston Properties Website
2016 Boston Properties Annual Report
Earnings Report Q/E 12/31/16
I previously discussed buying 1 BXP SU maturing in 2026: StockItem # 1.A.
2. Small Cap Biotech Lottery Ticket Basket:
A. Added 50 SPHS at $2.43 (commission free trade):
This brings me up to 150 shares. I recall discussing this stock somewhere, but do not remember where or when.
Success or failure depends on one compound currently called PRX-302 (topsalysin):
Sophiris Bio Reports Successful Results from Completed Phase 2a Study of Topsalysin in Localized ("The one-time administration of topsalysin was well tolerated with no serious adverse events and no new safety signals being reported. Topsalysin demonstrated an ability to ablate tumor cells in 50 percent of patients (9/18 patients) six months after treatment in a patient population with pre-identified, clinically significant prostate cancer. ... Two men experienced complete ablation of their targeted tumor with no evidence of any tumor remaining at 6 months .... Seven men experienced a partial response, defined as either a reduction in the maximum cancer core length or a reduction in Gleason pattern... Nine patients had no response to treatment.")
The drug is injected directly into the prostate.
The company used the price spurt to sell 7.475M shares and related warrants to buy .75 shares per warrant at $4 per share at a combined price of $4. 10-Q at page 14
That offering sent the shares spiraling down.
The next important event is the release of more tumor biopsies, sometime in the second half of this year, in the ongoing Phase IIb trial for prostrate cancer.
"Topsalysin has also successfully completed a Phase 3 clinical study for the treatment of the symptoms of benign prostatic hyperplasia (BPH), and is designed to be as efficacious as pharmaceuticals, less invasive than the surgical interventions, and without the sexual side effects seen with existing treatments."
That was one of two necessary Phase 3 trials for that indication.
The company stated in its 10-Q for the Q/E 9/30/16 that it is "currently not planning on pursuing a second Phase 3 trial in BPH, unless we secure a development partner to fund such new clinical trial or obtain other financing. There can be no assurance that such funding or a development partner will be available on acceptable terms or at all. For that reason, we cannot currently estimate when the clinical development required to seek the regulatory approvals needed to commercialize topsalysin for the treatment of the symptoms of BPH will be completed" (page 19).
Subsequent to my purchase, SPHS reported results for the 2014 4th quarter: Sophiris Bio Reports Fourth Quarter and Full Year 2016 Financial Results and Key Corporate.
3. Continued to Pare Stock Allocation:
A. Sold 50 of 171+BBT:
Position Snapshot Before Pare:
Sold 50 Shares at $47.24-Highest Cost Lot Bought at a total cost of $35.37 on 9/23/15:
Profit Snapshot: +$586.45
Quote: BB&T Corp. (BBT)
I discussed that purchase here:
Item # 3. Bought 50 BBT at $35.23-Satellite Taxable Account: Update For Regional Bank Basket As Of 9/23/15 - South Gent | Seeking Alpha
Some of the remaining lots were acquired in exchange for my National Penn shares. BB&T closes National Penn acquisition
I discussed buying 50 shares, which I still own, here:
Item # 3. Added 50 BBT at $32.35-Satellite Taxable: Update For Regional Bank Basket Strategy As Of 2/20/16 - South Gent | Seeking Alpha
BB&T - Dividends and Stock Splits
BBT Analyst Estimates
When I sold this highest cost lot, the consensus E.P.S. estimate for 2016 was $2.95 and $3.45 next year. The P/E on the 2018 estimate at a $47.24 price is 13.69. While that sounds reasonable and may happen, I have my doubts that this bank can generate that kind of Y-O-Y earnings growth. There are a lot of optimistic assumptions baked into that 2018 E.P.S. estimate including a meaningful net interest margin expansion, less regulations and probably a lower tax rate.
I doubt that GOP will be able to deliver on material changes in Dodd-Frank. Whatever rules are repealed, I suspect that they will involve small community banks. I am not seeing conditions yet favorable NIM expansion. Instead, the yield curve is flattening as the FED raises short term rates and intermediate term rates start to trend back down. As to a meaningful corporate tax cut, I will believe it when I see it.
Subsequent to my purchase, SPHS reported results for the 2014 4th quarter: Sophiris Bio Reports Fourth Quarter and Full Year 2016 Financial Results and Key Corporate.
3. Continued to Pare Stock Allocation:
A. Sold 50 of 171+BBT:
Position Snapshot Before Pare:
Sold 50 Shares at $47.24-Highest Cost Lot Bought at a total cost of $35.37 on 9/23/15:
Profit Snapshot: +$586.45
I discussed that purchase here:
Item # 3. Bought 50 BBT at $35.23-Satellite Taxable Account: Update For Regional Bank Basket As Of 9/23/15 - South Gent | Seeking Alpha
Some of the remaining lots were acquired in exchange for my National Penn shares. BB&T closes National Penn acquisition
I discussed buying 50 shares, which I still own, here:
Item # 3. Added 50 BBT at $32.35-Satellite Taxable: Update For Regional Bank Basket Strategy As Of 2/20/16 - South Gent | Seeking Alpha
BB&T - Dividends and Stock Splits
BBT Analyst Estimates
When I sold this highest cost lot, the consensus E.P.S. estimate for 2016 was $2.95 and $3.45 next year. The P/E on the 2018 estimate at a $47.24 price is 13.69. While that sounds reasonable and may happen, I have my doubts that this bank can generate that kind of Y-O-Y earnings growth. There are a lot of optimistic assumptions baked into that 2018 E.P.S. estimate including a meaningful net interest margin expansion, less regulations and probably a lower tax rate.
I doubt that GOP will be able to deliver on material changes in Dodd-Frank. Whatever rules are repealed, I suspect that they will involve small community banks. I am not seeing conditions yet favorable NIM expansion. Instead, the yield curve is flattening as the FED raises short term rates and intermediate term rates start to trend back down. As to a meaningful corporate tax cut, I will believe it when I see it.
4. Continued to Pare Potentially Long Duration Exchange Traded Bonds:
A. Sold 50 ELJ at $24.93-Roth IRA:
Profit Snapshot: $61.48
I discussed this purchase here.
Par value is $25. The issuer has the option to redeem on or after July 1, 2017. If not redeemed early at the issuer's discretion, the bond matures on 7/1/2052.
Definitive Prospectus Supplement
5. Short Term Bond/CD Ladder Basket Strategy:
A. Bought 2 Merchants Bank .65% CDs Maturing on 5/2/2017:
B. Bought 2 Bank of Baroda .95% CDs Maturing on 6/27/17:
Bank of Baroda - India's International Bank
Bank of Baroda Financials (59.24% owned by the State of India, line 17 (i))
Recently, this bank has been providing the highest short term CD rates among participating banks that offer CDs at Schwab and Fidelity. This CD is issued by Bank of Baroda, USA.
This is what this CD looks like on my account page which identifies the issuer:
C. Bought 2 Bank of Baroda .8% CDs Maturing on 5/30/17:
In the cluster list shown below, there is listed 1 Bank of Baroda .65% CD maturing on the same day, 5/30/17 or .2% less than the one bought on 3/17/17. I had bought the .65% CD on 2/24/17:
The intervening event between those two purchases was the FED hiking the FF range by .25% to .75% to 1%. Banks respond more slowly to increasing their short term deposit rates after a FED rate hike. Many banks have not yet responded in their CD offerings.
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
Omeros Corporation (OMER)
ReplyDelete$14.10+1.43 (+11.29%)
I own 60 shares as part of my small cap biotech basket strategy. I discussed the purchase of 30 of those 60 shares in Item # 1:
https://tennesseeindependent.blogspot.com/2017/01/observations-ruminations-and-sample.html
This is the news:
http://www.businesswire.com/news/home/20170327005389/en/Omeros-Present-Results-Dose-Ranging-Stage-OMS721-Clinical
http://www.businesswire.com/news/home/20170328005644/en/Omeros-Announces-OMS721-Presentation-Annual-Meeting%C2%A0of-European
https://www.fool.com/investing/2017/03/28/heres-why-omeros-corporation-stock-climbed-higher.aspx
"Omeros Reports More Positive Data in OMS721 Phase 2 Trial in Renal Diseases"
Deletehttp://www.businesswire.com/news/home/20170330005487/en/Omeros-Reports-Positive-Data-OMS721-Phase-2
Omeros Corporation (OMER)
$15.70+1.16 (+7.98%)
As of 10:41AM
South Gent,
ReplyDeleteRe. your comments of 3/28 "... do not see much of anything in the U.S. stock market that interests me or presents what I would consider a reasonable risk/reward...." maybe it is time to look at issues in Canada, Australia, Europe, and Nordic countries? Maybe a small allocation to China and EM as well (it is risky, but less riskier than the micro cap biotech sector)?
Y: I have been consolidating my international holdings by selling off smaller stock fund positions. I sold VEA today in a Vanguard account but have added some to my T. Rowe Price international funds where I have a significant position.
ReplyDeleteThe international stock funds have been a headwind in my overall portfolio performance. The strength in the USD has hurt performance of USD priced international funds.
Their overall performance this year is better than the S & P 500 which has started to run in place.
VWO has a five year average annualized total return of just 1.29% but is up 12.52% YTD.
http://performance.morningstar.com/funds/etf/total-returns.action?t=VWO®ion=USA&culture=en_US
VEA has done better over the past five years at a 6.3% average annual TR and is up 8.43% YTD:
http://performance.morningstar.com/funds/etf/total-returns.action?t=VEA
I still own a number of Canadian REITs but have cut back on my Canadian financial stocks, primarily by selling 1500 of the ETF FIE:CA. My ownership in Canadian financial stocks is now limited to over 100 shares of Toronto Dominion (TD).
I maintain an allocation to China and/or Asia-Pacific ex Japan with 4 funds.
The CEF China Fund (CHN)
http://portfolios.morningstar.com/fund/cef?t=CHN
Matthews China Dividend Fund MCDFX
http://portfolios.morningstar.com/fund/summary?t=MCDFX
Matthews Asia Pacific Fund
http://portfolios.morningstar.com/fund/summary?t=MAPTX
T. Rowe Price New Asia PRASX
http://portfolios.morningstar.com/fund/summary?t=PRASX
The allocation is over $30K.
I have at times eliminated one of those funds after a serious move up or pared the position.
I eliminated the Matthews China Fund in 2015 after a big run up in the first half of the year and then bought back shares after it collapsed in price:
"I also sold into parabolic spike in Chinese stocks. I noted in my CEF Update paring my position in the China Fund (NYSE:CHN). I also eliminated the Matthews China Dividend Fund;Investor Fund Price Today (MCDFX)"
Profit Snapshot $821.83
https://seekingalpha.com/instablog/434935-south-gent/4241995-update-on-portfolio-positioning-and-management
If I had held onto those shares a few more months, I would not have had a profit to harvest.
I will trade funds except for T.Rowe Price funds where selling is not allowed.
Sigh ... Can't keep up with your portfolio management! For the most part I will just buy and hold.
DeleteFrom the above comments I guess you are not actively looking outside of the U.S. market either. I know that you have the holding power and this market could potentially continue without a meaningful correction for a long period. So besides nibbling here and there is the high grade bonds your strategy until a correction?
Y: One benefit of my FDIC insured CDs and high quality bond ladder strategy is that there will be several maturing securities each month. The proceeds could be partly redeployed into stocks when there are more favorable opportunities than now.
DeleteI have bought three Australian REITS this year. I discussed the purchase of Generation Healthcare here:
4. Equity REIT Common and Preferred Stock Basket Strategy:
A. Bought 700 GHC:AU at A$1.91:
https://tennesseeindependent.blogspot.com/2017/03/observations-and-sample-of-recent.html
Generation Healthcare REIT
ASX: AU:GHC
A$2.05
Change
+0.03 +1.49%
Volume
21,659
Mar 29, 2017, 1:35 p.m.
http://www.marketwatch.com/investing/Stock/GHC?countrycode=AU
The other two were discussed in comments: Stockland and GPT Group. All are profitable now and the AUD/USD has increased in value since my purchases.
I have also bought Orkla (ORKLY) and added to Svenska Handelsbanken AB ADR (SVNLY).
I also nibbled in Canadian energy companies some, and added to some Canadian REITs including Northwest Healthcare which is my largest Canadian REIT position at 1300 units. That stock hit a 52 week high today:
http://www.marketwatch.com/investing/Stock/NWH.UN?countrycode=CA
100 of the 1300 shares was the USD priced ordinary shares traded on the Grey Market:
5. Equity REIT Common and Preferred Stock Basket Strategy
A. Bought 100 NWHUF at USD $7.72:
https://tennesseeindependent.blogspot.com/2017/01/observations-ruminations-and-sample-of.html
The other 1200 were bought using my CADs in Toronto.
The shares will go down tomorrow:
NorthWest Healthcare Properties Real Estate Investment Trust Announces $85 Million Bought Deal of Trust Units
http://www.marketwired.com/press-release/northwest-healthcare-properties-real-estate-investment-trust-announces-85-million-bought-tsx-nwh.un-2205993.htm
Regional banks are back in vogue today, as interest rates tick up slightly:
ReplyDeleteSPDR S&P Regional Banking ETF (KRE)
$54.91+1.42 (+2.65%)
As of 11:29AM EDT.
The better tone may be due to the government revising 4th quarter real GDP growth to 2.1% from 1.9%. That was the government's third estimate. Personal consumption expenditures increased more than the prior estimate. Current-dollar GDP increased 4.2 percent. The PCE price index was revised up to 2% from 1.9%. Excluding food and energy prices, the PCE price index increased 1.3 percent.
https://www.bea.gov/newsreleases/national/gdp/2017/gdp4q16_3rd.htm
Did my comment from last night never arrive. It looked like it did (gave that "will be posted" message.)
ReplyDeleteI think it was:
UK started pulling out of UK last night.
How does this "feel" compared to with Nixon? I was young enough that I wasn't aware of anything at the time.
As of this morning Brexit obviously isn't impacting the market.
LMH: I publish all of your comments.
ReplyDeleteInvestors knew that the U.K. would send the notification to withdraw from the EU. The British Pound took a beating after the vote and has stabilized versus the USD at around 1.25. (1 British Pound Buys $1.25 U.S.Ds) Prior to the vote, 1 GDP bought about 1.48 USDs.
There was nothing new to consider by the mere formality of providing that required notification.
The ultimate repercussions flowing from Brexit are not fully known until more information about the U.K.'s trade agreements become known.
There are numerous similarities between Nixon and Trump.
While I know that you do not subscribe to the NYT, (removal of NYT cookies may allow you read a few more articles), there was a review of a new book on Nixon that draws the comparisons.
https://www.nytimes.com/2017/03/29/books/richard-nixon-biography-john-a-farrell.html?rref=collection%2Fsectioncollection%2Fbooks&action=click&contentCollection=books®ion=rank&module=package&version=highlights&contentPlacement=1&pgtype=sectionfront&_r=0
I ordered the book:
https://www.amazon.com/Richard-Nixon-Life-John-Farrell/dp/0385537352
I wasn't thinking you hadn't published it. I was griping surprise that google managed to foil me.
DeleteBut the reply I wrote to this yesterday saying that, appears to not have arrived either. I'm noticing I'm getting auto signed out of google all of a sudden too. This time I signed in before writing and refreshed for good measure. I'll see if it arrives. Maybe some browser or other software update upset the apple cart. I am still getting the email of comments.
I was able to see the NYTimes article in full. They appear to give you a few free articles each month. But clearing cookies is a good idea. I have at least 3 browsers downloaded, and use another one when something gets stuck. I could do that for articles...
I can't duplicate the rest of what I took time to write, but basically, the list of parallels just in the article is striking. It's kind of eerie. Thanks for providing it.
This in particular:
"Both men went on to claim that their predecessors had wiretapped these discussions. Nixon said he’d been tipped off by J. Edgar Hoover."
Media keeps saying no ones accused a predecessor of a felony. But the accusation is parallel.
This is the only item I'd debate:
"Farrell’s Nixon is smart and ambitious, a visionary in some ways (China), but also skinless, both driven and utterly undone by self-doubt.
It may be the way he differs most, at least psychologically, from our current president. Trump has shown almost no evidence of self-doubt, ever, about anything. He appears to sail through life unencumbered by introspection. "
Trump has no introspection ability, so he doesn't express self-doubt but he has a completely weak ego. He's starting out so "empty" that he's got a weak ego, and can't introspect either.
I see - brexit isn't enough of a surprise at this point to cause an "uncertainty" pullback, so now it's a matter of what it actually is known to impact when the details are developed.
The thoughts on bonds vs stock jocks below is very interesting.
Now I'll post and see if you get it!
Hello southgent,
ReplyDeleteI see in your recent note from March 30th that the regional banks have responded to better revision the fourth quarter real GDP.
Also personal consumption has increased. It appears that the Federal Reserve will continue to raise rates. You have said recently that NIM has been a worrying statistic.
https://fred.stlouisfed.org/series/USNIM
You referenced a flattening of the yield curve especially in the intermediate timeframe.
My question is since GDP is improving and the Fed is raising short-term rates, why is the market not setting higher intermediate term rates as the economy improves?
Thank you
Sam: NIM would become even more worrisome at current levels when non-performing loans and charge-offs start to increase due to a recession. The last recession ended in June 2009.
Deletehttp://www.nber.org/cycles.html
The three recessions prior to the Near Depression in 2008 lasted an average 95 months or 7.92 years.
http://www.economist.com/news/united-states/21612168-weighing-evidence-how-long-will-expansion-last
The Bond Ghouls and Stock Jocks are predicting different future economic conditions.
The Bond Ghouls see a persistent, though slow, rise in short term rates as increasing the odds of a recession.
It is not unusual for intermediate term rates to come down as the FED raises short term rates. That is what happened when the FED started to raise the FF rate in June 2004.
I would infer that the Bond Ghouls do not see Donald Trump delivering economic nirvana. Their consensus opinion, reflected in bond prices, is that he is more likely to create chaos and negative events for the economy, which would be a positive for high quality bonds when and if those events occur.
The Stock Jocks are mostly Trump supporters and have bought into the robust job and GDP growth thesis that Trump has promised them.
I would not draw any conclusions about the rally in regional banks yesterday. I lightened up again.
I would add that investors generally have a lot of confidence in their future predictions when their knowledge of current and past conditions are sparse and frequently incorrect.
Neither the Bond Ghouls or the Stock Jocks see inflation becoming a problem.
"The three recessions prior to the Near Depression in 2008 lasted an average 95 months or 7.92 years."
ReplyDeleteI think you meant "the three expansions."
So far in the Trump market, I'm enjoying the benefits of a balanced portfolio; both my bond and stock allocations are holding up. Can both the Bond Ghouls and the Stock Jocks be right? Logic tells me "No."
When you say "a positive for high quality bonds," do you mean positive for price or positive for yield?
Thanks, as always, for your perspectives and insights.
Cathie: Yes, I did mean the prior three expansions. I would try to pass that off as a typo rather than a brain malfunction, but that is not likely to be convincing.
ReplyDeleteAs to high quality bonds, I am saying a recession within the next year or two would likely be positive for price since there would probably be a flight to safety with the stock market going into a correction or a bear market.
I say likely because there are conditions that could cause bonds and stocks to decline even in a recession.
One example is when investors fear a financial collapse, which was the case in late 2008, when high quality corporates went down in price along with stocks but nowhere near as much.
Another example would be a recession caused by the FED responding to a persistent rise in inflation into problematic territory. As shown by what happened between 1966-1982, the bond and stock market do not respond well to a persistent and problematic inflation level.
So, there are no 100% rules but a series of context conditions that produce different outcomes.
The spread between junk bond and high quality investment grade yields would likely increase during the recession as junk bond prices decline as default risks increase or are perceived to have increased.
When the Stock Jocks are convinced, as now, that the future is bright, they are not easily dissuaded that there exuberance is irrational. Evidence will have to accumulate that contradicts their forecast before their opinion is changed about the future. When that happens, the market corrects to a more realistic estimate.
One of the key assumptions being made by both stock and bond investors is that inflation will remain low, notwithstanding the current upward trend. If inflation continues to rise sufficiently to undermine or to call into question that consensus opinion, then both markets could correct in a major way.
The government report that PCE inflation rose 2.1% over the past year through February, up from 1.9% in January. Core PCE remained steady at 1.8%.
ReplyDeletehttps://www.bea.gov/newsreleases/national/pi/2017/pi0217.htm
Notwithstanding the upward trend in inflation, bond prices are falling today.
iShares 7-10 Year Treasury Bond ETF
$105.6129 +$0.2329 +0.22%
Marketwatch calculates the yield of that ETF at 1.65% or meaningfully below the current inflation rate.
http://www.marketwatch.com/investing/fund/IEF
What gives?
You can never be sure in real time. It is possible to have good faith and well informed disagreements about the major causes of the last Near Depression when the facts are known and everyone is looking 8+ years into the past.
My guess for today is the Commerce Department's announcement of new tariffs on imported steel which met a stiff German response. Trump's Commerce Secretary responded that "We are in a trade war. We have been for decades."
http://www.cnbc.com/2017/03/31/commerces-wilbur-ross-us-is-already-in-a-trade-war.html
https://www.washingtonpost.com/news/wonk/wp/2017/03/31/we-are-in-a-trade-war-trumps-commerce-secretary-says-after-stern-german-warning/?hpid=hp_hp-more-top-stories_wonkblog-germany-1245pm%3Ahomepage%2Fstory&utm_term=.61dbbd980493
And Trump is signaling a tough stand on trade with CHINA in advance of his meeting with Xi Jinping:
http://www.cnbc.com/2017/03/30/trump-trade-tweet-sets-tone-for-tense-first-meeting-with-china-leader.html
https://www.bloomberg.com/politics/articles/2017-03-31/ross-backs-trump-s-china-criticism-with-most-protectionist-dig
It sounds like Trump admin is treating trade wars as not a concern to avoid, when setting up their policy. Maybe not actively looking to create them purposefully, but with no concern at all to avoid them. (Would fit with the rest of the admin's perception of nearly everything.)
ReplyDeleteIf that's true, then assumptions would be we can *definitely* count on a trade war... Sigh, seems right?
So the better question than the post-election debate of whether we'd have a trade war is... what do they effect and how do they play out?
First question popping into mind is, have we had them before? I've read some, but their happening was before my paying attention to the market.
So far most interesting I've read is:
" But an increase in, for example, subsidies, may be difficult to retaliate against by a foreign country. Many poor countries do not have the ability to raise subsidies. In addition, poor countries are more vulnerable than rich countries in trade wars; in raising protections against dumping of cheap products, a government risks making the product too expensive for its people to afford."
So when investing, US non-imported products will be less expensive, and so are companies that will have better profit margins... unless those same companies have been depending a lot on export sales.
Overall trade wars seem rather pointless where both sides lose and only change is each place consumes more that's more locally created. (On the environmental side, Trump admin may accidentally help reduce transportation footprint.)
The more long term continuation is that transports won't do as well, but it seems wildly premature to consider that now when investing since so many factors can happen before that.
From NYT opinion piece from Dec:
"They will respond in kind, targeting vulnerable U.S. sectors like aircraft and agriculture."
https://www.nytimes.com/2016/12/26/opinion/and-the-trade-war-came.html?_r=0
It seems like the way to do well, is identify the sectors that are "known to be impacted" and then identify the sectors that actually will be impacted, then bet based on the info you've figured that the market hasn't yet.
"What the coming trade war will do, however, is cause a lot of disruption. Today’s world economy is built around “value chains” that spread across borders: your car or your smartphone contain components manufactured in many countries, then assembled or modified in many more. A trade war would force a drastic shortening of those chains, and quite a few U.S. manufacturing operations would end up being big losers, just as happened when global trade surged in the past."
With this in mind, could it cause prices of nearly everything to do up? Is that reflected as true inflation, or is that like stagflation where prices go up but actual value and rates and job incomes don't go up?
Or is anticipation of trade wars and results, way too soon and I'm overstating it?
Lots of questions. I don't have answers developed yet.
LMH: It is too early to predict a trade war.
DeleteI can reasonably predict now that Trump and his Administration are far more willing to start one than any prior administration since Herbert Hoover.
The border tax is still on the table; and it will be viewed by many foreign governments as a tariff with a new name.
So far, the trade wars have been conducted by central bankers adopting extremely abnormal monetary policies to devalue their currencies and to thereby provide a competitive advantage to their exporters while attempting to engineer some domestic inflation as well to combat the deflationary forces flowing naturally from the Near Depression which have largely abated by now.
The Stock Jocks will have to be exposed to a river of cold water to damper their current red hot animal spirits.
There are several possible external events that could cause the herd to stampede in the opposite direction, with trade disruptions being just one of many potential causes.
When the herd gets spooked by one or more events that can not be dismissed, and starts to retrace their path, the movement can be much faster in the panic phase and become frantic when the escape is through a door growing narrower and narrower as buyers pull their bids.
I have no interest at my age and financial condition in being trampled or even risk being trampled when I have participated significantly in the market's rally since early March 2009.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2017/04/observations-and-sample-of-recent.html