Trump's Tax Plan:
The nonpartisan Tax Policy Center estimates that Trump's 15% corporate tax rate will increase the budget deficit by $2.4 trillion over the next ten years. Trump seeks 15 percent corporate tax rate, even if it swells the national debt - The Washington Post The cost would increase to $4 trillion over ten years when pass through entities, like subchapter S corporations, are included in that marginal tax rate reduction. That part of the plan, along with the elimination of the alternative minimum tax, will dramatically slash Trump's tax bill.
This is a link to the Tax Policy Center analysis of Trump's tax plan used in the campaign: An Analysis of Donald Trump's Revised Tax Plan | Full Report | Tax Policy Center That plan would increase the deficit by about $7.2 trillion over the next ten years. The top quintile would receive about 77% of the benefits.
Corporations now pay vastly different tax rates as shown in a 2016 study: Debt Fundamentals
The GOP claims that the tax corporate tax cut will pay for itself. Trump's tax cuts will rely on the magic wand of growth; Could Trump’s Corporate Rate Cut to 15% be Self-Financing? - Tax Foundation
The nonpartisan Committee for a Responsible Federal Budget noted there is "scant evidence" that a major tax cut will pay for itself.
America Needs Tax Reform, Not More Debt | Committee for a Responsible Federal Budget
The new Trump plan announced yesterday, which is nothing more than a one page outline, would reduce the corporate tax rate to 15%. That reduced rate would also be applied to the pass through structures like subchapter S corporations. The 15% rate would be in essence a "business" tax rate.
In the pass through structures, the corporation does not pay taxes but the income is currently passed through to the individual owners and taxed at their respective individual tax rates. Since Trump uses those pass through structure, that aspect of his plan would reduce Trump's highest marginal rate from 39.6% to 15%.
The White House just outlined its tax plan. Here's what's in it: CNBC; Trump’s Tax Plan: Low Rate for Corporations, and for Companies Like His - The New York Times
The Small Business Administration estimated that the median income for individuals employed by their own incorporated businesses was $49,204 in 2014 (page 2 United States Small Business Economic Profile) Most small businesses would not receive any benefit from a reduction in the corporate/business corporate tax rate to 15%. Sometimes, I hear a small business owner say they make $250K, for example, when that number is their gross income before salaries, expenses, cost of goods, etc. (remember Joe the Plumber - Wikipedia: Scroll to Controversies).
Trump also proposes eliminating the alternative minimum tax that has required him in the past to pay taxes.
Trump's new plan would also double the standard deduction while eliminating most deductions, leaving in place deductions for charitable contributions, retirement savings, and mortgage interest. That would simplify the filing process for many taxpayers who now itemize deductions, but would also vastly increase the number of taxpayers who pay no federal income taxes. That number now stands at close to 45%.
Trump proposes to cut the seven individual tax brackets to three: 10%, 25% and 30%.
He also proposes to eliminate the Obamacare care 3.8% Medicare surtax paid by high income taxpayers and the estate tax which is now paid only by the rich given the $5M exemptions per person. The Tax Policy Center estimates that only 11,020 individuals dying this year will have to file a federal estate tax return. Of those only 5190 estates will have to pay a tax. Who pays the estate tax? | Tax Policy Center However, the GOP will sell these kind of tax eliminations and reductions as beneficial to the average Trump voter. The Tax Policy Center and the Tax Foundation will run the numbers on who benefits from this plan other than Donald. I will not be surprised by the results.
Trump's new plan does not currently include a border tax.
I would name this plan the Donald Trump Tax Relief Act.
Trump tax cuts: Lower rates for individuals and businesses - Apr. 26, 2017
Briefing by Secretary of Commerce Steven Mnuchin and Director of the National Economic Council Gary Cohn | whitehouse.gov
Trump claims that his policies will wipe out the national debt in eight years. Trump Promised to Eliminate National Debt in Eight Years. Good Luck With That - Bloomberg; Trump: I will eliminate U.S. debt in 8 years | TheHill
Trump’s tax plan sets the stage for Dow 30,000 - MarketWatch
U.S. Government Debt to the Penny (Daily History Search Application)
Government - Interest Expense on the Debt Outstanding
Amazon.com: Zombie Economics: How Dead Ideas Still Walk among Us eBook
The question is why. The proposition that the GOP's tax cuts will pay for themselves is absurd. No amount of contrary proof can convince the proponents. If Trump's proposals were adopted and kept for ten years, and the budget deficit exploded $10 trillion above current baseline predictions, that would not prove anything since the argument would be that more tax cuts were necessary, or some other cause interfered with Arthur Laffer's prediction made in a crude drawing on a restaurant's napkin. Arthur Laffer’s Theory on Tax Cuts Comes to Life Once More - The New York Times There is a reason why facts do not matter to the GOP. Their money comes from people who will benefit from those tax cuts. One need not look any further. As long as that money flows liberally into their coffers, Laffer's theory is an indisputable scientific fact. The problem is how do you sell that to the vast majority of Trump voters who will not benefit to any meaningful degree. That is when the con job comes into play.
++++++++
Trump's Tariff on Canadian Soft Wood:
The Canadian Dollar started another decline in value against the U.S.D. after the Trump Administration announced a new tariff for Canadian softwood imports. The tariff would average about 20% and is based on the purported below market prices charged by Canadian provinces for harvesting timber on government lands. Trump Slaps Duty on Canadian Lumber, Intensifying Trade Fight - Bloomberg
The Canadian provinces charge an administrative fee to harvest timber which is not set by auction. Consequently, there is a dispute whether the "stumpage fee" is a competitive price or a subsidy.
The Commerce Department valued U.S. imports of Canadian softwood at $5.6B last year.
The main problem IMO is not this fuzzy concept of fair price but the weakness in the CAD/USD that lowers the cost for U.S. purchasers of Canadian lumber.
The tariffs will be applied to Canadian lumber companies differently but on the Commerce Department's measurement of the subsidy. West Frasier Mills softwood imports would be tagged with a 24.2% "tariff" whereas the tariff on J.D. Irving's imports would be 3.02%: Commerce Makes Preliminarily Determination of Countervailable Subsidies on Imports of Softwood Lumber from Canada
Softwood is used in single family home construction and is a major cost component for new homes.
Tariffs are a form of taxes. The tax is paid by the importer. The impact would be to raise lumber costs for U.S. homebuilders and U.S. home buyers. Trump slaps stiff 20% taxes on US homebuilders - expect higher home prices and 1,000s of construction job losses • AEI
Before NAFTA was adopted, a trade war erupted between Canada and the U.S. after the U.S. slapped a 35% tariff on Canadian shakes and shingles in 1986. Canada responded with tariffs on books, computers, semiconductors and Christmas trees. Canada–US Economic Relations - The Canadian Encyclopedia
NAFTA did not address the softwood dispute which has been handled separately under bilateral agreements with Canada. Canada–United States softwood lumber dispute - Wikipedia
White House Is Said to Draft Plan for U.S. Break From Nafta - The New York Times White House readies order on withdrawing from NAFTA - POLITICO
Trump reportedly weighing Nafta withdrawal - MarketWatch
Most Canadians want new tariffs on U.S. goods if Trump pulls out of NAFTA: Nanos survey | CTV News
Canada is the largest importer of U.S. goods. Trade and Investment; Foreign Trade - U.S. Trade with Canada; U.S. Top Trading Partners U.S. exports to Canada totaled $266.8B last year. U.S. exports to China were at $115.8B.
Trump apparently wants to set in motion the time period for termination, which is 6 months, by Executive Order. That is questionable. NAFTA is a treaty approved by Congress. The NAFTA provision dealing with termination, Article 2205, states that a party may terminate after giving 6 months notice. The party is defined in the preamble as the Government of the United States. This could be yet another unconstitutional EO.
++++++++++
After Trump's tax plan was unveiled this afternoon, and I would not call a 1 page outline a plan, stocks retreated and bonds and gold rose.
Closing Prices 4/26/17:
GLD $120.84 $0.59 0.49% : SPDR Gold Trust
S & P 500 2,387.45 -1.16 -0.05% (intra-day high at 2,398.18)
IEF $106.42 +$0.28 0.26% : iShares 7-10 Year Treasury Bond ETF (intra-day low $106.12)
TLT $122.12 +$0.67 0.55% : iShares 20+ Year Treasury Bond ETF
Akebia Therapeutics, discussed in my last post, had a good day today:
AKBA $12.52 +$3.13 +33.4%
Though I am not likely to change my frugal spending habits when and if I cash out my gain on a 30 AKBA share buy.
At the moment, I am more concerned about Kroger eliminating the 5% discount on Senior's day. Why? This was for the senior citizens own good as I understand the pitch. Kroger acquired Harris Teeter that had several stores in Middle Tennessee including one in Brentwood, where I reside. Harris Teeter had started the senior discounts going up to 10% and that pest is now removed. Kroger closed its Brentwood store, remodeled the Harris Teeter location which was closed after the merger, and then moved into the former HT location. So when competition is eliminated in that fashion, Kroger could do away with the senior discounts for the benefit of those customers. That is how I would explain it.
City of Brentwood : Home (AAA bond rating, city property taxes have remained at the same dollar level, less than $300 per year, as when I built my house in 1982. The county property taxes have gone up, but are now slightly over $2K per year)
Brentwood Real Estate - Brentwood TN Homes For Sale | Zillow
++++++++
1. Intermediate Term Bond/CD Ladder Basket Strategy:
The nonpartisan Tax Policy Center estimates that Trump's 15% corporate tax rate will increase the budget deficit by $2.4 trillion over the next ten years. Trump seeks 15 percent corporate tax rate, even if it swells the national debt - The Washington Post The cost would increase to $4 trillion over ten years when pass through entities, like subchapter S corporations, are included in that marginal tax rate reduction. That part of the plan, along with the elimination of the alternative minimum tax, will dramatically slash Trump's tax bill.
This is a link to the Tax Policy Center analysis of Trump's tax plan used in the campaign: An Analysis of Donald Trump's Revised Tax Plan | Full Report | Tax Policy Center That plan would increase the deficit by about $7.2 trillion over the next ten years. The top quintile would receive about 77% of the benefits.
Corporations now pay vastly different tax rates as shown in a 2016 study: Debt Fundamentals
The GOP claims that the tax corporate tax cut will pay for itself. Trump's tax cuts will rely on the magic wand of growth; Could Trump’s Corporate Rate Cut to 15% be Self-Financing? - Tax Foundation
The nonpartisan Committee for a Responsible Federal Budget noted there is "scant evidence" that a major tax cut will pay for itself.
America Needs Tax Reform, Not More Debt | Committee for a Responsible Federal Budget
The new Trump plan announced yesterday, which is nothing more than a one page outline, would reduce the corporate tax rate to 15%. That reduced rate would also be applied to the pass through structures like subchapter S corporations. The 15% rate would be in essence a "business" tax rate.
In the pass through structures, the corporation does not pay taxes but the income is currently passed through to the individual owners and taxed at their respective individual tax rates. Since Trump uses those pass through structure, that aspect of his plan would reduce Trump's highest marginal rate from 39.6% to 15%.
The White House just outlined its tax plan. Here's what's in it: CNBC; Trump’s Tax Plan: Low Rate for Corporations, and for Companies Like His - The New York Times
The Small Business Administration estimated that the median income for individuals employed by their own incorporated businesses was $49,204 in 2014 (page 2 United States Small Business Economic Profile) Most small businesses would not receive any benefit from a reduction in the corporate/business corporate tax rate to 15%. Sometimes, I hear a small business owner say they make $250K, for example, when that number is their gross income before salaries, expenses, cost of goods, etc. (remember Joe the Plumber - Wikipedia: Scroll to Controversies).
Trump also proposes eliminating the alternative minimum tax that has required him in the past to pay taxes.
Trump's new plan would also double the standard deduction while eliminating most deductions, leaving in place deductions for charitable contributions, retirement savings, and mortgage interest. That would simplify the filing process for many taxpayers who now itemize deductions, but would also vastly increase the number of taxpayers who pay no federal income taxes. That number now stands at close to 45%.
Trump proposes to cut the seven individual tax brackets to three: 10%, 25% and 30%.
He also proposes to eliminate the Obamacare care 3.8% Medicare surtax paid by high income taxpayers and the estate tax which is now paid only by the rich given the $5M exemptions per person. The Tax Policy Center estimates that only 11,020 individuals dying this year will have to file a federal estate tax return. Of those only 5190 estates will have to pay a tax. Who pays the estate tax? | Tax Policy Center However, the GOP will sell these kind of tax eliminations and reductions as beneficial to the average Trump voter. The Tax Policy Center and the Tax Foundation will run the numbers on who benefits from this plan other than Donald. I will not be surprised by the results.
Trump's new plan does not currently include a border tax.
I would name this plan the Donald Trump Tax Relief Act.
Trump tax cuts: Lower rates for individuals and businesses - Apr. 26, 2017
Briefing by Secretary of Commerce Steven Mnuchin and Director of the National Economic Council Gary Cohn | whitehouse.gov
Trump claims that his policies will wipe out the national debt in eight years. Trump Promised to Eliminate National Debt in Eight Years. Good Luck With That - Bloomberg; Trump: I will eliminate U.S. debt in 8 years | TheHill
Trump’s tax plan sets the stage for Dow 30,000 - MarketWatch
U.S. Government Debt to the Penny (Daily History Search Application)
Government - Interest Expense on the Debt Outstanding
Amazon.com: Zombie Economics: How Dead Ideas Still Walk among Us eBook
The question is why. The proposition that the GOP's tax cuts will pay for themselves is absurd. No amount of contrary proof can convince the proponents. If Trump's proposals were adopted and kept for ten years, and the budget deficit exploded $10 trillion above current baseline predictions, that would not prove anything since the argument would be that more tax cuts were necessary, or some other cause interfered with Arthur Laffer's prediction made in a crude drawing on a restaurant's napkin. Arthur Laffer’s Theory on Tax Cuts Comes to Life Once More - The New York Times There is a reason why facts do not matter to the GOP. Their money comes from people who will benefit from those tax cuts. One need not look any further. As long as that money flows liberally into their coffers, Laffer's theory is an indisputable scientific fact. The problem is how do you sell that to the vast majority of Trump voters who will not benefit to any meaningful degree. That is when the con job comes into play.
++++++++
Trump's Tariff on Canadian Soft Wood:
The Canadian Dollar started another decline in value against the U.S.D. after the Trump Administration announced a new tariff for Canadian softwood imports. The tariff would average about 20% and is based on the purported below market prices charged by Canadian provinces for harvesting timber on government lands. Trump Slaps Duty on Canadian Lumber, Intensifying Trade Fight - Bloomberg
The Canadian provinces charge an administrative fee to harvest timber which is not set by auction. Consequently, there is a dispute whether the "stumpage fee" is a competitive price or a subsidy.
The Commerce Department valued U.S. imports of Canadian softwood at $5.6B last year.
The main problem IMO is not this fuzzy concept of fair price but the weakness in the CAD/USD that lowers the cost for U.S. purchasers of Canadian lumber.
Softwood is used in single family home construction and is a major cost component for new homes.
Tariffs are a form of taxes. The tax is paid by the importer. The impact would be to raise lumber costs for U.S. homebuilders and U.S. home buyers. Trump slaps stiff 20% taxes on US homebuilders - expect higher home prices and 1,000s of construction job losses • AEI
Before NAFTA was adopted, a trade war erupted between Canada and the U.S. after the U.S. slapped a 35% tariff on Canadian shakes and shingles in 1986. Canada responded with tariffs on books, computers, semiconductors and Christmas trees. Canada–US Economic Relations - The Canadian Encyclopedia
NAFTA did not address the softwood dispute which has been handled separately under bilateral agreements with Canada. Canada–United States softwood lumber dispute - Wikipedia
White House Is Said to Draft Plan for U.S. Break From Nafta - The New York Times White House readies order on withdrawing from NAFTA - POLITICO
Trump reportedly weighing Nafta withdrawal - MarketWatch
Most Canadians want new tariffs on U.S. goods if Trump pulls out of NAFTA: Nanos survey | CTV News
Canada is the largest importer of U.S. goods. Trade and Investment; Foreign Trade - U.S. Trade with Canada; U.S. Top Trading Partners U.S. exports to Canada totaled $266.8B last year. U.S. exports to China were at $115.8B.
Trump apparently wants to set in motion the time period for termination, which is 6 months, by Executive Order. That is questionable. NAFTA is a treaty approved by Congress. The NAFTA provision dealing with termination, Article 2205, states that a party may terminate after giving 6 months notice. The party is defined in the preamble as the Government of the United States. This could be yet another unconstitutional EO.
++++++++++
After Trump's tax plan was unveiled this afternoon, and I would not call a 1 page outline a plan, stocks retreated and bonds and gold rose.
Closing Prices 4/26/17:
GLD $120.84 $0.59 0.49% : SPDR Gold Trust
S & P 500 2,387.45 -1.16 -0.05% (intra-day high at 2,398.18)
IEF $106.42 +$0.28 0.26% : iShares 7-10 Year Treasury Bond ETF (intra-day low $106.12)
TLT $122.12 +$0.67 0.55% : iShares 20+ Year Treasury Bond ETF
Akebia Therapeutics, discussed in my last post, had a good day today:
AKBA $12.52 +$3.13 +33.4%
Though I am not likely to change my frugal spending habits when and if I cash out my gain on a 30 AKBA share buy.
At the moment, I am more concerned about Kroger eliminating the 5% discount on Senior's day. Why? This was for the senior citizens own good as I understand the pitch. Kroger acquired Harris Teeter that had several stores in Middle Tennessee including one in Brentwood, where I reside. Harris Teeter had started the senior discounts going up to 10% and that pest is now removed. Kroger closed its Brentwood store, remodeled the Harris Teeter location which was closed after the merger, and then moved into the former HT location. So when competition is eliminated in that fashion, Kroger could do away with the senior discounts for the benefit of those customers. That is how I would explain it.
City of Brentwood : Home (AAA bond rating, city property taxes have remained at the same dollar level, less than $300 per year, as when I built my house in 1982. The county property taxes have gone up, but are now slightly over $2K per year)
Brentwood Real Estate - Brentwood TN Homes For Sale | Zillow
++++++++
1. Intermediate Term Bond/CD Ladder Basket Strategy:
A. Bought 2 WFC 2.25% CDs (monthly interest) Maturing on 4/12/21:
B. Bought 2 Campbell Soup 2.5% Senior Unsecured Bonds Maturing on 8/2/22:
FINRA Page: Bond Detail (prospectus linked)
Credit Ratings:
Moody's at A3
S & P at BBB+
YTM at Total Cost (98.997 ) = 2.707%
Earnings Report for the Q/E 1/29/17
10-Q for Q/E 1/29/17
C. Added 1 Tampa Electric 2.6% Senior Unsecured Bond Maturing on 9/15/22:
This purchase was in a Vanguard taxable account. Vanguard charges a $2 per bond commission. The other 1 bond purchase was in a Roth IRA account and was discussed in a prior post: Item # 1.B.
Finra Page: Bond Detail (prospectus linked)
Credit Ratings:
Moody's at A3
S & P at BBB+
Fitch at A-
YTM at Total Cost (98.536)= 2.892%
D. Bought 2 Kimberly Clark 2.4% Senior Unsecured Bonds Maturing on 6/1/23:
Issuer: Kimberly-Clark Corp (KMB)
KMB Kimberly-Clark Corp Page at Morningstar
Finra Page: Bond Detail (prospectus linked)
Credit Ratings:
Moody's at A2
Moody's assigns A2 to Kimberly-Clark's proposed notes offering
S & P at A
YTM at Total Cost (98.248) = 2.711%
KMB Analyst Estimates
2016 Annual Report
2016 4th Quarter Earnings Press Release
Kimberly-Clark Announces First Quarter 2017 Results
E. Bought 1 Vodafone 2.5% Senior Unsecured Note Maturing on 9/26/22:
FINRA Page: Bond Detail (prospectus linked)
VOD Vodafone Group PLC ADR Page at Morningstar
Credit Ratings:
Moody's at Baa1
FITCH at BBB+
Fitch Affirms BBB+ (Stable Outlook): August 2016
YTM at Total Cost (98.064 ) = 2.885%
VOD Analyst Estimates
Earnings Release for the Q/E 12/31/16
Investors-VOD Website
2. Synthetic Floaters:
A. PAIRED TRADE: Sold 50 GYC at $23.39 and Bought 50 GJP at $21.35:
These securities are Synthetic Floaters which I started to trade in 2009. Since synthetic floaters are in the Trust Certificate form of legal ownership, I include snapshots of my round trip transaction in my Trust Certificates Gateway Post.
This paired trade increased my GJP position to 200 shares and reduced GYC to 50 shares.
GYC Position Before Pare:
Trade: SOLD LOT BOUGHT AT $21.51 USING FIFO ACCOUNTING.
GYC Profit: +$93.91
For thinly traded securities and GYC is certainly one of those, it is not unusual to receive multiple fill on a 50 share limit order.
I discussed buying the remaining 50 share lot at $20.95, using a commission free trade, here.
GYC Profits to Date: +$904.5 (prior tally at $810.59, all in small lots)
The largest gain originated from a 50 share lot owned in a Roth IRA= +$336.97
I last discussed selling shares at $24.01 in this post:
Item # 3. PARED GYC: Sold 50 at $24.01-Taxable Account: Update For Exchange Traded Bonds And Preferred Stock Basket Strategy As Of 8/16/16 - South Gent | Seeking Alpha
GJP Trade:
In making this paired trade, I viewed GJP, relative to GYC, to be the better value as more fully explained below.
The owners of GYC are entitled to receive quarterly interest payments at the greater of 3.25% or .65% over the 3 month Libor rate, with a 8% per annum cap, on a $25 par value. The underlying bond in the GYC Grantor Trust, which is a 2034 senior AT & T bond, and the trust certificate GYC mature on the same date which is June 15, 2034. If AT & T pays off those bonds then, and there is no mishap with GYC, the owners of GYC would receive their par value as well which is $25 per trust certificate.
Prospectus
The owners of GYC will receive a coupon increase when the 3 month Libor rate exceeds 2.6% during a quarterly computation date.
At a total cost of $23.39 per share, the current yield at the minimum coupon rate would be about 3.47%.
The owners of GJP are entitled to receive monthly interest payments at the greater of 3% or 1.15% over the U.S. 3 month T Bill rate on a $25 par value. This security has a maximum coupon of 8%. Prospectus The underlying security is a senior unsecured bond issued by Dominion Resources that matures in June 2035.
Interest payments are made monthly.
I discussed a GJP purchase in Item # 4 here. That post provides more detail.
The 3% minimum coupon is increased when the three month T. Bill rate exceeds 1.85%.
At a total cost per share of $21.35, and assuming the minimum 3% minimum coupon, the current yield would be about 3.51%.
Here are the Advantage of GJP Compared to GYC:
1. The current yield is similar but favors GJP slightly at $21.35 vs. GYC at $23.39.
2. GJP was bought at a greater discount to par value which provides more upside price potential prior to maturity and a greater YTM when held to maturity.
3. GJP's coupon increase will be triggered sooner than the one for GYB. The 3 month Libor rate will be higher than the 3 month treasury bill rate, but will probably not exceed the .5% spread differential in favor of GJP except for brief periods. And, the GJP has a lower threshold at 3% to trigger an increase in the coupon.
I do not see the credit risk of the underlying bonds to be meaningfully different.
Dominion Resources senior unsecured debt is rated Baa2 by Moody's and BBB by S & P: Bond Detail one notch higher at Baa1 and BBB+: Bond Detail
AT &T's senior unsecured debt is currently rated Baa1 and BBB+.
B. Sold 50 PYT at $20.94 (Used Commission Free Trade):
Profit Snapshot: +$58.15
Quote: Merrill Lynch Depositor Inc. PreferredPLUS Floating Rate Callable TRUCs Series GSC-2 for Goldman Sachs Capital I
I discussed buying this security in Item # 2.A to this post:
Bought Back 50 PYT at $19.78 Using a Commission Free Trade: Stocks, Bonds & Politics: Observations and Sample of Trades ( RVT, PYT, TGHA, IDE): 1/29/2017 /The GOP and First Amendment Conservative Values
PYT is an Exchange Traded Bond in the Trust Certificate legal form of ownership. PYT makes quarterly interest payments at the greater of a 3% coupon or .85% above the 3 month Libor rate applied to a $25 par value. There is a maximum coupon of 8%. Prospectus The underlying bond owned by the Grantor Trust is a Goldman Sachs 6.345% junior bond (a trust preferred) that matures on 2/15/34. That bond has a $1K par value and trades in the bond market. The PYT trustee receives the interest payments from Goldman Sachs and swaps that payment with the swap counterparty, the brokerage company who created the Grantor Trust, for the payment due the owners of PYT.
This Trust Certificate is scheduled to mature on that same date. Assuming GS pays the trustee the principal amount, the trustee will then redeem the trust certificates at their $25 par value.
Total PYT Trading Gains To Date: $1,061.45 (Snapshots in Stocks, Bonds & Politics: Trust Certificates: New Gateway Post.)
3. Continued to Pare Stock Allocation:
A. Sold 50 AXAHY at $25.59:
Profit Snapshot: +$190.55
Item # 1. Bought AXA AT $21.74: Update For Portfolio Positioning And Management As Of 3/3/16 - South Gent | Seeking Alpha
Quote: AXA S.A. ADR (AXAHY:OTC)-USD Priced ADR Traded on the Pink Sheet Exchange
AXA S.A.-Ordinary Shares Priced in Euros
1 ADR = 1 Ordinary Share
EUR/USD Currency Exchange
Axa pays an annual dividend that will generally go ex-dividend sometime in May. I received the annual dividend paid in 2016:
The preceding snapshot shows a gross dividend of $62.49. Out of that amount, I was charged an annual fee of $2.5 which is paid to the ADR custodian and $9.37 to France as a tax. That tax would be at a 15% rate (.15% x. $62.49 = $9.37). U.S. citizens are entitled to a 15% tax rate under the U.S tax treaty with France. If 30% is withheld, then the investor knows that their broker did not make a relief at source filing asserting U.S. citizenship on behalf of the investor. A failure to do so would be to place the investor in the class of persons from countries that have no tax treaty with France, more or less a stateless person.
I was able to take all of my foreign dividend tax payments as a credit off my 2016 U.S. tax obligation.
Life insurance stocks received a post-election lift based on a consensus opinion that yields and yield spreads would increase due to Trump's fiscal stimulus plans that included massive tax cuts and increased spending on defense and infrastructure. Those plans have bogged down and the treasury yield curve as started to flatten as intermediate term rates decline as short term rates rise. This reversal in trend has caused me to lighten up some on my insurance stocks.
I have one prior round trip and that was in 2010. I held the position for 14 days.
Bought 100 AXAHY at $14.69
Closing Price Today: AXAHY $26.94 -0.36 -1.30%
4. Short Term Bond/CD Ladder Basket Strategy:
A. Bought 3 Bank of China .95% CDs Maturing on 7/19/17:
B. Sold 2 Berkshire Hathaway 1.7% Senior Unsecured Bonds Maturing on 3/15/19:
The price shown in the foregoing snapshot is adjusted down by a $2 brokerage commission.
Profit Snapshot: $1.88
I bought 2 Berkshire Hathaway 3.125% senior unsecured bonds maturing in 2026 in anticipation of selling the lower yielding 2019 bonds. The YTM for that bond at my total cost is 3.266%.
The YTM for the 2019 bond at 100.255 is 1.582%. Bond Detail
I am selling some low coupon bonds maturing in the 6/30/18 to 12/31/19 to buy higher yielding ones maturing in the 2023-2026 range. This is a slight nip and tuck where I am assuming more interest rate risk in exchange for more income.
10-Q for Q/E 1/29/17
C. Added 1 Tampa Electric 2.6% Senior Unsecured Bond Maturing on 9/15/22:
This purchase was in a Vanguard taxable account. Vanguard charges a $2 per bond commission. The other 1 bond purchase was in a Roth IRA account and was discussed in a prior post: Item # 1.B.
Finra Page: Bond Detail (prospectus linked)
Credit Ratings:
Moody's at A3
S & P at BBB+
Fitch at A-
YTM at Total Cost (98.536)= 2.892%
D. Bought 2 Kimberly Clark 2.4% Senior Unsecured Bonds Maturing on 6/1/23:
Issuer: Kimberly-Clark Corp (KMB)
KMB Kimberly-Clark Corp Page at Morningstar
Finra Page: Bond Detail (prospectus linked)
Credit Ratings:
Moody's at A2
Moody's assigns A2 to Kimberly-Clark's proposed notes offering
S & P at A
YTM at Total Cost (98.248) = 2.711%
KMB Analyst Estimates
2016 Annual Report
2016 4th Quarter Earnings Press Release
Kimberly-Clark Announces First Quarter 2017 Results
E. Bought 1 Vodafone 2.5% Senior Unsecured Note Maturing on 9/26/22:
FINRA Page: Bond Detail (prospectus linked)
VOD Vodafone Group PLC ADR Page at Morningstar
Credit Ratings:
Moody's at Baa1
FITCH at BBB+
Fitch Affirms BBB+ (Stable Outlook): August 2016
YTM at Total Cost (98.064 ) = 2.885%
VOD Analyst Estimates
Earnings Release for the Q/E 12/31/16
Investors-VOD Website
2. Synthetic Floaters:
A. PAIRED TRADE: Sold 50 GYC at $23.39 and Bought 50 GJP at $21.35:
These securities are Synthetic Floaters which I started to trade in 2009. Since synthetic floaters are in the Trust Certificate form of legal ownership, I include snapshots of my round trip transaction in my Trust Certificates Gateway Post.
This paired trade increased my GJP position to 200 shares and reduced GYC to 50 shares.
GYC Position Before Pare:
Trade: SOLD LOT BOUGHT AT $21.51 USING FIFO ACCOUNTING.
GYC Profit: +$93.91
For thinly traded securities and GYC is certainly one of those, it is not unusual to receive multiple fill on a 50 share limit order.
I discussed buying the remaining 50 share lot at $20.95, using a commission free trade, here.
GYC Profits to Date: +$904.5 (prior tally at $810.59, all in small lots)
The largest gain originated from a 50 share lot owned in a Roth IRA= +$336.97
 |
| 2012 Two Fifty Share Lots |
Item # 3. PARED GYC: Sold 50 at $24.01-Taxable Account: Update For Exchange Traded Bonds And Preferred Stock Basket Strategy As Of 8/16/16 - South Gent | Seeking Alpha
GJP Trade:
In making this paired trade, I viewed GJP, relative to GYC, to be the better value as more fully explained below.
The owners of GYC are entitled to receive quarterly interest payments at the greater of 3.25% or .65% over the 3 month Libor rate, with a 8% per annum cap, on a $25 par value. The underlying bond in the GYC Grantor Trust, which is a 2034 senior AT & T bond, and the trust certificate GYC mature on the same date which is June 15, 2034. If AT & T pays off those bonds then, and there is no mishap with GYC, the owners of GYC would receive their par value as well which is $25 per trust certificate.
The owners of GYC will receive a coupon increase when the 3 month Libor rate exceeds 2.6% during a quarterly computation date.
At a total cost of $23.39 per share, the current yield at the minimum coupon rate would be about 3.47%.
The owners of GJP are entitled to receive monthly interest payments at the greater of 3% or 1.15% over the U.S. 3 month T Bill rate on a $25 par value. This security has a maximum coupon of 8%. Prospectus The underlying security is a senior unsecured bond issued by Dominion Resources that matures in June 2035.
Interest payments are made monthly.
I discussed a GJP purchase in Item # 4 here. That post provides more detail.
The 3% minimum coupon is increased when the three month T. Bill rate exceeds 1.85%.
At a total cost per share of $21.35, and assuming the minimum 3% minimum coupon, the current yield would be about 3.51%.
Here are the Advantage of GJP Compared to GYC:
1. The current yield is similar but favors GJP slightly at $21.35 vs. GYC at $23.39.
2. GJP was bought at a greater discount to par value which provides more upside price potential prior to maturity and a greater YTM when held to maturity.
3. GJP's coupon increase will be triggered sooner than the one for GYB. The 3 month Libor rate will be higher than the 3 month treasury bill rate, but will probably not exceed the .5% spread differential in favor of GJP except for brief periods. And, the GJP has a lower threshold at 3% to trigger an increase in the coupon.
I do not see the credit risk of the underlying bonds to be meaningfully different.
Dominion Resources senior unsecured debt is rated Baa2 by Moody's and BBB by S & P: Bond Detail one notch higher at Baa1 and BBB+: Bond Detail
AT &T's senior unsecured debt is currently rated Baa1 and BBB+.
B. Sold 50 PYT at $20.94 (Used Commission Free Trade):
Profit Snapshot: +$58.15
Quote: Merrill Lynch Depositor Inc. PreferredPLUS Floating Rate Callable TRUCs Series GSC-2 for Goldman Sachs Capital I
I discussed buying this security in Item # 2.A to this post:
Bought Back 50 PYT at $19.78 Using a Commission Free Trade: Stocks, Bonds & Politics: Observations and Sample of Trades ( RVT, PYT, TGHA, IDE): 1/29/2017 /The GOP and First Amendment Conservative Values
PYT is an Exchange Traded Bond in the Trust Certificate legal form of ownership. PYT makes quarterly interest payments at the greater of a 3% coupon or .85% above the 3 month Libor rate applied to a $25 par value. There is a maximum coupon of 8%. Prospectus The underlying bond owned by the Grantor Trust is a Goldman Sachs 6.345% junior bond (a trust preferred) that matures on 2/15/34. That bond has a $1K par value and trades in the bond market. The PYT trustee receives the interest payments from Goldman Sachs and swaps that payment with the swap counterparty, the brokerage company who created the Grantor Trust, for the payment due the owners of PYT.
This Trust Certificate is scheduled to mature on that same date. Assuming GS pays the trustee the principal amount, the trustee will then redeem the trust certificates at their $25 par value.
3. Continued to Pare Stock Allocation:
A. Sold 50 AXAHY at $25.59:
Profit Snapshot: +$190.55
Item # 1. Bought AXA AT $21.74: Update For Portfolio Positioning And Management As Of 3/3/16 - South Gent | Seeking Alpha
Quote: AXA S.A. ADR (AXAHY:OTC)-USD Priced ADR Traded on the Pink Sheet Exchange
AXA S.A.-Ordinary Shares Priced in Euros
1 ADR = 1 Ordinary Share
EUR/USD Currency Exchange
Axa pays an annual dividend that will generally go ex-dividend sometime in May. I received the annual dividend paid in 2016:
The preceding snapshot shows a gross dividend of $62.49. Out of that amount, I was charged an annual fee of $2.5 which is paid to the ADR custodian and $9.37 to France as a tax. That tax would be at a 15% rate (.15% x. $62.49 = $9.37). U.S. citizens are entitled to a 15% tax rate under the U.S tax treaty with France. If 30% is withheld, then the investor knows that their broker did not make a relief at source filing asserting U.S. citizenship on behalf of the investor. A failure to do so would be to place the investor in the class of persons from countries that have no tax treaty with France, more or less a stateless person.
I was able to take all of my foreign dividend tax payments as a credit off my 2016 U.S. tax obligation.
Life insurance stocks received a post-election lift based on a consensus opinion that yields and yield spreads would increase due to Trump's fiscal stimulus plans that included massive tax cuts and increased spending on defense and infrastructure. Those plans have bogged down and the treasury yield curve as started to flatten as intermediate term rates decline as short term rates rise. This reversal in trend has caused me to lighten up some on my insurance stocks.
I have one prior round trip and that was in 2010. I held the position for 14 days.
 |
| 2010 AXAHY 100 Shares +$181.09 |
Closing Price Today: AXAHY $26.94 -0.36 -1.30%
4. Short Term Bond/CD Ladder Basket Strategy:
A. Bought 3 Bank of China .95% CDs Maturing on 7/19/17:
B. Sold 2 Berkshire Hathaway 1.7% Senior Unsecured Bonds Maturing on 3/15/19:
The price shown in the foregoing snapshot is adjusted down by a $2 brokerage commission.
Profit Snapshot: $1.88
I bought 2 Berkshire Hathaway 3.125% senior unsecured bonds maturing in 2026 in anticipation of selling the lower yielding 2019 bonds. The YTM for that bond at my total cost is 3.266%.
The YTM for the 2019 bond at 100.255 is 1.582%. Bond Detail
I am selling some low coupon bonds maturing in the 6/30/18 to 12/31/19 to buy higher yielding ones maturing in the 2023-2026 range. This is a slight nip and tuck where I am assuming more interest rate risk in exchange for more income.
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.
hello SG,
ReplyDeleteI see the market recently has really been flying. It is not clear to me why this is happening. The French election? The so-called tax reduction plan?
I wonder if you could comment on what you think is happening to earnings this quarter. When I have had a chance to listen to the news, I hear that for example companies like Pepsi have had better earnings and revenues.
I wonder if this continued run upward (for which me personally I'm being extremely careful), has anything to do with increased expectations of earnings.
I know you follow the quarterly S&P earnings and not everyone has reported as of yet. but I wondered what you're thinking could be as to how earnings are affecting the rise in the S&P, NASDAQ, etc.
Thank you
https://insight.factset.com/hubfs/Resources/Research%20Desk/Earnings%20Insight/EarningsInsight_041417.pdf
Sam: When I look for the reasons underlying the post-election move, I view the reasons to be primarily related to euphoria about a reduction in corporate taxes and the one time time low tax for repatriation of foreign earnings. Major U.S. corporations will use most of those funds to buy back stock and to increase the dividends. I do not see them using the savings to create jobs, to increase R & D and, and to build new plant on balance.
DeleteThe primary benefit would be to stock prices and stocks are mostly owned by the top quintile.
The earnings season is okay but the expectations are not that high.
Pepsico for example did report "better than expected core earnings" of $.94 versus the expectation of $.92 or $.91 depending on which firm compiled the data.
Core E.P.S., a non-GAAP measure, was up 5.5% Y-O-Y but revenues grew only 1.6% Y-O-Y.
"Organic food/snacks volumes dropped 1.5% at the Frito-Lay segment, softer than 1% growth seen in the last quarter. Organic volumes decreased 1% at Quaker Foods, another American snacks business, against growth of 1% recorded in the previous quarter."
"Pepsi's first-quarter gross margins contracted 45 basis points to 55.97 percent, missing analysts' average estimate of 56.4 percent, according to Thomson Reuters I/B/E/S."
PEP said margins would be under pressure for the rest of the year.
I would caution about using E.P.S. growth when companies are buying back boatloads of stock, sometimes with borrowed money.
What was the core net income change Y-O-Y?
Non-GAAP "core" net income was $1.354B for the Q/E 3/25/17 and at $1.3B for the Q/E 3/19/2016, an increase of 4.15% vs. the 5.5% increase in core E.P.S. I would just take that into consideration when deciding on a multiple to pay for low-to-mid single digit growth.
http://www.prnewswire.com/news-releases/pepsico-reports-first-quarter-2017-results-reaffirms-2017-financial-targets-300446008.html
The forward P/E based on non-GAAP estimate earnings is currently 20.46 using today's closing price. Five year estimate P.E.G. is at 3.47.
https://finance.yahoo.com/quote/PEP/key-statistics?p=PEP
As with many other large U.S. corporations, the dividend payout ratio has been trending up:
http://csimarket.com/stocks/single_dividendpr.php?code=PEP
South Gent,
ReplyDeleteCongrats on your two profitable round trips on AXAHY. What do you think of holding onto your original shares and collecting all its nice dividends? This is kind of important in the sense that with a large cash allocation AXAHY seems to be a good place to park some money for its nice dividend, barring another financial crisis. There are other similar stocks, such as ANZBY, NRBAY, RY, BMO, ...etc. Thoughts?
Y: The AXAHY position was too small to make any difference either way for me. I would have been better off selling today at $27 today.
DeleteAXA does pay a good dividend.
However, the total return for a long term holder over the past ten years is not so good unless the investor bought during one of the periodic price dips.
10 year Chart:
https://www.google.com/finance?q=OTCMKTS%3AAXAHY&ei=LEkBWYmyJuSGjAG9qIjYCg
Part of the problem over the past two years or so has been the weakness in the EUR/USD.
With stocks like AXA and AEG, I will simply move in and out, capture one or more dividends, sell at a profit, and then look for a chance to buy again at an acceptable price.
Hopefully, my next entry would be at a lower price than my last purchase and the Euro/USD will thereafter recover substantially.
The Canadian stocks that you mention, which are priced in USDs, are suffering from the weakness in the CAD/USD which is partly due to news on Trump's approach to trade relations.
Oh, so the budget was cause of that red line at end of day. I hadn't had chance to look yet... But if I'd thought about it, it could be expected based on the 'quality' of his, do we call them plans?
ReplyDeleteLMH: I would call the one page outline a PR piece timed to coincide with the upcoming 100 day line for accomplishments after the inauguration.
DeleteI suspect that something will be passed that is far less ambitious late this year.
This new "plan" will add somewhere in the $7 trillion to $9 trillion to the budget deficit over ten years. I just view as another plan to bring forward the Day of Reckoning for the U.S. Part of the Big Picture Plan to spend ever increasing amounts of borrowed money rather than more sensible deficit spending levels.
I won $800 playing Blackjack last Friday at a casino, and may quit this Stock Jock stuff and become a professional Card Stud. I report my winnings on my 1099.
$800 is nothing to sneeze at. Or something to buy very nice tissues with when sneezing. Well, $800 minus tax that goes with that 1099 :).
DeleteI missed this reply earlier. I was signed out of my google account the other day trying to fix my dad's; must have been when.
It was a one page outline budget? I'm sure you're right that it was about PR for 100 days. My only hesitation is whether they are sharp enough as a team to be thinking about 100 day PR instead of some other irrelevancy (especially since he's already the greatest)... and I'll be punchy here, can that team count to 100? Apparently 3 branches of government is a confusing number over there.
I'm getting antsy that I'm missing out on the market climb. The stocks I have aren't doing stellar. That shift to antsy makes me wonder what sentiment shift in general is happening. You posted recently the business spending summary in 1st quarter was great 22% higher. So maybe the economy will continue along with enough decent expansion, to grow into the PEs, especially since they've been high for many years and it hasn't been an timing indicator for the market. I'm pondering this...
LMH: Business spending is important but consumer spending remains the key and it is not looking so hot. Maybe that will change with the onset of spring. Maybe there are too many consumers who are stressed out including most of the Democrats.
DeleteI just posted a comment in my latest blog about the worsening default trends in Capital One's credit card accounts.
https://tennesseeindependent.blogspot.com/2017/04/observations-and-sample-of-recent_29.html
To see the "notify me" box at the end of the posts, you have to be signed in.
Playing blackjack is a good training ground for stock investing. Money management, the "investment process" and playing the odds are all important:
https://tennesseeindependent.blogspot.com/2009/01/investing-process-with-story.html
Doesn't improved business spending mean money floating around to spend on business, so enough money for wage raises.... which then translates to consumer spending?
DeleteDemocrats may be so busy making calls and writing emails and going to rallies, that they don't have time shop. I know people struggling to fit it into their schedule.
(It's be really interesting to see a comparison of companies that less left-leaning products or companies, like organic food ompanies vs. right leaning like guns and see if earnings show a different pattern, or if spending does.)
I find it odd that google only forwards the emails of blog comment when you are actively signed onto google. I'd put that as a design flaw. Nonetheless, knowing that's how it works, has helped me keep track.
Never knew blackjack is good for investing skills. I'm not particularly good at blackjack, hum. I've got your article loaded already, so I can read it when I'm at my friend's without the wifi.
LMH: Google has to know where to send the email so you have to provide them with that information. As I recall, there are other options for signing in here, but I am logged into the account with my google email account.
DeleteI have never seen the Democrats so depressed as now. I live in a heavily republican area, but Nashville is a Democrat stronghold.
The Democrats are about 1/3 of the population. If they cut their spending by 5%, there could be a recession according to the Alan Blinder:
https://www.nytimes.com/2017/04/08/business/economy/the-picture-of-our-economy-looks-a-lot-like-a-rorschach-test.html?ref=business&_r=0
Good grief, that's actually the most powerful weapon I've heard for 2018. Cut spending by 5%. So much of spending is fixed, it's probably hard to do, but if done, get a recession. That would dramatically impact next election.
DeleteI sign onto the blog with google account and leave it signed on. I was in my browser on an unrelated webpage. Signed out of account generally on that page (little circle on upper right corner) in order to work on something. They still have my sign in and email address. So assuming that's what happened, it's a silly design. Not a big deal to me though. I'm generally getting things, so I'll browse once in a while.
Yay, not surprised on the depressed comment.
"I live in a heavily republican area, but Nashville is a Democrat stronghold. "
DeleteI was wondering how you were managing to hold up in such a red area...
LMH: I am a fiscal conservative and have voted for both Republican Senators, Corker and Alexander, and the current GOP governor Haslam who refused to vote for Trump. I refused to vote for Donald and never will vote for him.
Deletehttp://www.politico.com/story/2016/10/tennessee-gov-haslam-joins-call-for-trump-to-drop-out-229427
One of my cousins successfully beat the former state GOP House Whip Jeremy Durham in the August primary last year, and I would have voted for him except his territory was in nearby Franklin, TN. Both Brentwood and Franklin have AAA ratings. I particularly do not mind Brentwood's property tax assessment which has been below $300 since I built my house in 1982. The taxes are lower here than in Nashville. One of my cousins pays $14K in property taxes, though on a somewhat larger house, in Nashville.
Durham has issues, which required him to be expelled from his state office and segregated in another location due to his "alleged" inappropriate sexual behavior. He has "alleged" problems with his campaign finances as well.
http://www.tennessean.com/story/news/politics/2017/03/08/jeremy-durham-may-face-7-million-state-penalties/98899128/
Mostly, I am surrounded by sensible business republicans in Brentwood, TN. The Trump enthusiasts are mostly in the rural areas that use to vote solidly for Democrats.
Ah, I see. I've voted both sides of the aisle, and noticed I tend to be independent and decide based on candidate.
DeleteSo you've got a surrounding of sensible people (republicans). That's all it takes to have a bastion!
It is a curious thing that there's a group of usually dems that went for Trump. But that's a whole 'nother topic.
CANADIAN BANKS: I noticed yesterday that Canadian Banks were down. The decline in USD priced stocks was somewhat greater due to the CAD/USD decline.
ReplyDeleteI own over 100 shares of TD:
The Toronto-Dominion Bank (TD)
$48.32 -$0.93 (-1.89%)
At close: April 26 4:02PM EDT
C$65.77-C$1.03 (-1.54%)
At close: April 26 3:59PM EDT
Apparently the decline was triggered by a 60% decline in a subprime mortgage lender, Home Capital Group, that has a variety of issue unique to it.
http://business.financialpost.com/news/fp-street/home-capital-shares-plunge-after-mortgage-lender-seeks-2-billion-credit-line-as-deposits-decline
This kind of event brings back memories of the U.S. subprime bubble. Bernanke and many others stated in 2007 that the losses were contained and would not bleed into higher quality mortgage loans. But it was the subprime and Alt-A loans and their poor and frequently fraudulent underwriting that had significantly contributed to the rise in home prices. When those buyers were removed from the market, prices started to collapse nation wide.
South Gent,
ReplyDeletePACB lost over 20% (as of 9:55 am this morning) due to Q1 Loss Wider (by $0.03) than Estimated, Revenues of $24.91 million marginally missed the Consensus Estimate of $25 million but advanced 30.3% on a year-over-year basis.
Situation like this is disappointing, if you have a significant position. However, it is also a potential buying opportunity, if you don't already have a position.
Y: I own 30 shares as a Lottery Ticket. I am allowed under my risk mitigation rules to invest up to $1,000 in a LT which is up from the original $300:
Deletehttps://tennesseeindependent.blogspot.com/2011/10/lottery-ticket-strategy-new-gateway-post.html
I quit publishing snapshots of the trades in 2015, though I have published some snapshots here from the biotech LT basket since then.
I will wait to read the earnings report and the earnings call transcript this weekend before making a decision. I also would like to see the dust settle some which appears to have happened with ALDX based on the huge decrease in volume since the 1.8329M shares traded on 4/20.
Broker Account Values for Bonds:
ReplyDeleteWhen looking at the assigned value for bonds owned in an account, the broker does not use the market value but a third party price. That price is consistently and persistently below the market price.
In my Fidelity taxable account, I found that I could sell corporate bonds at a higher price than the third party price shown in the account just by hitting the best bid for my lot size (either 1 or 2 bonds as the case may be). I did not do a calculation but my guess would be that my bond position in that account is undervalued by $1K to $2K.
This bothers me only to the extent that I really do not know at any point in time my account's true market value.
There are two possible reasons for the persistent under valuation.
One is that the closing market price may be unrepresentative of recent trades which is an issue in the bond market. I have on many occasions been the only buyer or seller of a particular bond during a day. The problem is that a company may have a boatload of different bonds, particularly financial institutions, traded on multiple bond exchanges, but only one common stock with central market pricing.
Still, that does not excuse the persistently low third party prices, usually in the 1% to 2% range (or higher if I could sell at the ask price), used to arrive at account values.
I have published a new blog:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2017/04/observations-and-sample-of-recent_29.html