Loan Demand:
Business demand for bank loans was weaker in the first quarter, Fed survey finds - MarketWatch
The Fed - Senior Loan Officer Opinion Survey on Bank Lending Practices
April 2017 Survey
Net interest margin for banks is not increasing. Net Interest Margin for all U.S. Banks
++++++++
Crude Oil:
EIA raises 2017 U.S. oil production outlook and cuts oil-price forecast - MarketWatch
Weekly U.S. Field Production of Crude Oil (Thousand Barrels per Day)
North America Rig Count | BakerHughes.com
+++++++
China:
Here’s how China’s credit crackdown could derail the U.S. stock market - MarketWatch
+++++++++
Mostly Politics:
Trump is continuing of course his now routine attacks on the free press. After Russia hearing, Trump decries "taxpayer funded charade" - CBS News
Several of those tweets from May 9th repeated his now standard visceral attack on the Russian investigation and the press:
In the first of those tweets, Trump calls the Russian investigation a total hoax and asks when it can be put to an end.
Trump then fired the FBI Director on 5/9/17 allegedly based on the recommendation of Jeff Sessions, who has zero independence from Donald, and the just installed Deputy Attorney General Rod Rosenstein.
Source close to Comey says there were 2 reasons the FBI director was fired - CNN (Comey would not swear allegiance to Trump and he was accelerating the Russian investigation); Russia probe was picking up speed before Comey firing, sources say - CBS News
Comey infuriated Trump with refusal to preview Senate testimony: aides | Reuters
Comey had reportedly just requested additional funding for the Russian investigation:
Comey sought more money for FBI's Russia probe days before he was fired by President Trump, officials say - The Washington Post;
Days Before Firing, Comey Asked for More Resources for Russia Inquiry - The New York Times
James Comey asked DOJ for more resources for Russia investigation - CBS News
The request for additional funding was reportedly made to Mr. Rosenstein, a republican who is now the Deputy Attorney General, and the guy Trump is using now to provide cover for him. (a Justice Department spokesman, Sarah Isgur Flores, denied that Comey had requested more funds, calling the news stories "totally false" according to the NYT)
The Washington Post has reported that Rosenstein was told by Trump to come up with reasons to fire Comey. Inside Trump’s anger and impatience-and his sudden decision to fire Comey - The Washington Post
Bad Optics. Bad JuJu.
Comey reportedly found out about his dismissal from watching a television screen during a meeting with FBI employees in L.A. Washington Post This sends a strong signal to other FBI agents who are willing to pursue the Russian investigation.
FBI Directors are appointed to ten year terms, and Comey had 6 more years left in his term.
The purported reason given by Trump's Justice Department appointees relates solely to old news about Comey's handling of the Clinton email investigation last year.
Kellyanne Conway says that it is "inappropriate" for anyone to question the timing.
Intercepted Russian Communications Part of Inquiry Into Trump Associates - The New York Times
I suspect that Trump simply wanted Comey gone due to his support of the ongoing Russian investigation, and a refusal to grovel.
Sessions and Rosenstein were willing to oblige Trump with a recommendation that Comey be fired, thereby providing the illusion for the weak minded that an independent Justice Department had concluded that Comey had to go rather than Donald making the usual visceral decision with his two political appointees groveling to satisfy his desires and to provide cover for him.
Comey's abrupt dismissal after his unfavorable testimony will look like obstruction of justice to several million voters and is reminiscent of the Saturday Night Massacre during the Nixon administration, which was part of Nixon's efforts to obstruct justice. In Trump’s Firing of James Comey, Echoes of Watergate - The New York Times
I would just say with reasonable certainty that Comey had lost support from republicans and democrats for different reasons.
The Republicans wanted Hillary charged with crimes shortly before the election for political purposes, and most want to put the Russian investigation behind the party as quickly as possible. Mitch McConnell and other republicans will do whatever they can to snuff out any prospect of an independent investigation while paying lip service to finding out the facts.
(If Clinton had won, the GOP dominated House Judiciary Committee would have voted out already Articles of Impeachment, and we would now be inundated with "Lock Her Up" rallies led by Trump.)
The Democrats were upset that Comey broke with long standing FBI practice by publicly disclosing matters relating to Clinton's email investigation, including his opinions about the evidence, and by failing to disclose matters relating to an ongoing investigation of Russia's efforts to elect Trump.
Donald Trump Is Lying Again, Now About James Comey - The New York Times
Trump Went From Praising Comey to Firing Him in Less Than Seven Months - NBC News
At the present time, I do not believe the foregoing will have a non-temporary, measurable impact on stock prices. When and if there is cogent proof presented that shows collusion between Trump's campaign and Russian intelligence, then you could start to see some negative economic repercussions. No such proof has been offered yet and will not be accepted by most republicans when and if uncovered.
Trump is certainly not acting like an innocent man.
Democrats believe a cover up is already in motion orchestrated by Trump, other republican politicians, and the Sessions' led Justice Department. They are in no mood to cooperate with the republicans on anything major.
It is certainly possible that Trump is becoming so radioactive in Washington that his agenda is in serious jeopardy. The Stocks Jocks will need to see that happen before accepting that outcome as a reasonable possibility.
Trump may have only a limited window in time to pass legislation. By this time next year, it may very well be too late. A loss of the Senate or House in the 2018 election would make him a lame duck. At a minimum, he is doing everything possible, other than hanging democrats on the capital steps, to energize the opposition turnout in a mid-term election.
The June 20 special election in the Georgia's 6th congressional district, a reliable GOP district, may provide some indication about the growing dissatisfaction. Tom Price received 61.7% of the vote in the 2016 election, but vacated the seat when he became Trump's Secretary of Health and Human Services. The special election has already become the most expensive in U.S. history. Georgia special election smashes all-time spending record - POLITICO It is possible that the firing of Comey may be just enough to elect the Democrat Jon Ossoff who was doing well in the polls before that event.
+++
Most republicans are avoiding town hall meetings during the current recess. At Town Hall Meeting, Republican Lawmaker Gets An Earful : NPR
One republican congressman from Iowa, the right wing reactionary Rod Blum, pre-screened attendees to make sure that they lived in his district, but that did not keep him away from angry constituents. Iowa congressman walks out of a TV interview and into an angry town hall meeting-The Washington Post Blum receives substantial funding from entities that are domiciled outside of his district. Rep. Rod Blum: Campaign Finance/Money - Top Donors - Representative 2016 | OpenSecrets Those contributors would not be excluded from a meeting.
+++
Kushner Family Stands to Gain From Visa Rules in Trump’s First Major Law
The Trump and Kushner families will certainly be better off by the implementation of Donald's policies. Trump's proposed tax law changes, the Trump-Kushner Tax Relief Act, are designed to substantially lower the Trump/Kushner families tax bill and others similarly situated. The question is whether Trump's middle class supporters will see any meaningful economic benefit. We shall see in the fullness of time.
Yates Fuels Questions About Trump's 18-Day Delay in Firing Flynn-Bloomberg
Muslim ban language wiped from Trump campaign website - CBS News
Here is how the House GOP health care bill would affect employer-based insurance - CBS News
Lie Witness News: Trumpcare Edition-Jimmy Kimmel Live- YouTube
What ever happened to the voter fraud investigation led by the V-P? Trump was going to investigate voter fraud. What happened? - CNN
We are still waiting for Trump to file libel suits against the women who accused him of sexual harassment and battery. Donald Trump Says He Will Sue Sexual Misconduct Accusers | Time.com
Trump: I will sue my accusers after the campaign - YouTube (big time jerk); Donald Trump "HUGE" "YUGE" Compilation - YouTube
Trump Bars U.S. Press, but Not Russia’s, at Meeting With Russian Officials - The New York Times
++++++++++
Warren Buffett:
Buffett recently stated that stocks "stocks are dirt cheap", provided interest rates remain near current levels or increase only modestly over the next ten plus years. Buffett: Bonds ‘Terrible’ In Comparison to Stocks - Barron's; Buffett: Low Rates Make Stocks 'Dirt Cheap'
+++++++++++
1. Intermediate Term Bond/CD Ladder Basket Strategy:
Business demand for bank loans was weaker in the first quarter, Fed survey finds - MarketWatch
The Fed - Senior Loan Officer Opinion Survey on Bank Lending Practices
April 2017 Survey
Net interest margin for banks is not increasing. Net Interest Margin for all U.S. Banks
++++++++
Crude Oil:
EIA raises 2017 U.S. oil production outlook and cuts oil-price forecast - MarketWatch
Weekly U.S. Field Production of Crude Oil (Thousand Barrels per Day)
North America Rig Count | BakerHughes.com
+++++++
China:
Here’s how China’s credit crackdown could derail the U.S. stock market - MarketWatch
+++++++++
Mostly Politics:
Trump is continuing of course his now routine attacks on the free press. After Russia hearing, Trump decries "taxpayer funded charade" - CBS News
Several of those tweets from May 9th repeated his now standard visceral attack on the Russian investigation and the press:
In the first of those tweets, Trump calls the Russian investigation a total hoax and asks when it can be put to an end.
Trump then fired the FBI Director on 5/9/17 allegedly based on the recommendation of Jeff Sessions, who has zero independence from Donald, and the just installed Deputy Attorney General Rod Rosenstein.
Source close to Comey says there were 2 reasons the FBI director was fired - CNN (Comey would not swear allegiance to Trump and he was accelerating the Russian investigation); Russia probe was picking up speed before Comey firing, sources say - CBS News
Comey infuriated Trump with refusal to preview Senate testimony: aides | Reuters
Comey had reportedly just requested additional funding for the Russian investigation:
Comey sought more money for FBI's Russia probe days before he was fired by President Trump, officials say - The Washington Post;
Days Before Firing, Comey Asked for More Resources for Russia Inquiry - The New York Times
James Comey asked DOJ for more resources for Russia investigation - CBS News
The request for additional funding was reportedly made to Mr. Rosenstein, a republican who is now the Deputy Attorney General, and the guy Trump is using now to provide cover for him. (a Justice Department spokesman, Sarah Isgur Flores, denied that Comey had requested more funds, calling the news stories "totally false" according to the NYT)
The Washington Post has reported that Rosenstein was told by Trump to come up with reasons to fire Comey. Inside Trump’s anger and impatience-and his sudden decision to fire Comey - The Washington Post
Bad Optics. Bad JuJu.
Comey reportedly found out about his dismissal from watching a television screen during a meeting with FBI employees in L.A. Washington Post This sends a strong signal to other FBI agents who are willing to pursue the Russian investigation.
FBI Directors are appointed to ten year terms, and Comey had 6 more years left in his term.
The purported reason given by Trump's Justice Department appointees relates solely to old news about Comey's handling of the Clinton email investigation last year.
Kellyanne Conway says that it is "inappropriate" for anyone to question the timing.
Intercepted Russian Communications Part of Inquiry Into Trump Associates - The New York Times
I suspect that Trump simply wanted Comey gone due to his support of the ongoing Russian investigation, and a refusal to grovel.
Sessions and Rosenstein were willing to oblige Trump with a recommendation that Comey be fired, thereby providing the illusion for the weak minded that an independent Justice Department had concluded that Comey had to go rather than Donald making the usual visceral decision with his two political appointees groveling to satisfy his desires and to provide cover for him.
Comey's abrupt dismissal after his unfavorable testimony will look like obstruction of justice to several million voters and is reminiscent of the Saturday Night Massacre during the Nixon administration, which was part of Nixon's efforts to obstruct justice. In Trump’s Firing of James Comey, Echoes of Watergate - The New York Times
I would just say with reasonable certainty that Comey had lost support from republicans and democrats for different reasons.
The Republicans wanted Hillary charged with crimes shortly before the election for political purposes, and most want to put the Russian investigation behind the party as quickly as possible. Mitch McConnell and other republicans will do whatever they can to snuff out any prospect of an independent investigation while paying lip service to finding out the facts.
(If Clinton had won, the GOP dominated House Judiciary Committee would have voted out already Articles of Impeachment, and we would now be inundated with "Lock Her Up" rallies led by Trump.)
The Democrats were upset that Comey broke with long standing FBI practice by publicly disclosing matters relating to Clinton's email investigation, including his opinions about the evidence, and by failing to disclose matters relating to an ongoing investigation of Russia's efforts to elect Trump.
Donald Trump Is Lying Again, Now About James Comey - The New York Times
Trump Went From Praising Comey to Firing Him in Less Than Seven Months - NBC News
At the present time, I do not believe the foregoing will have a non-temporary, measurable impact on stock prices. When and if there is cogent proof presented that shows collusion between Trump's campaign and Russian intelligence, then you could start to see some negative economic repercussions. No such proof has been offered yet and will not be accepted by most republicans when and if uncovered.
Trump is certainly not acting like an innocent man.
Democrats believe a cover up is already in motion orchestrated by Trump, other republican politicians, and the Sessions' led Justice Department. They are in no mood to cooperate with the republicans on anything major.
It is certainly possible that Trump is becoming so radioactive in Washington that his agenda is in serious jeopardy. The Stocks Jocks will need to see that happen before accepting that outcome as a reasonable possibility.
Trump may have only a limited window in time to pass legislation. By this time next year, it may very well be too late. A loss of the Senate or House in the 2018 election would make him a lame duck. At a minimum, he is doing everything possible, other than hanging democrats on the capital steps, to energize the opposition turnout in a mid-term election.
The June 20 special election in the Georgia's 6th congressional district, a reliable GOP district, may provide some indication about the growing dissatisfaction. Tom Price received 61.7% of the vote in the 2016 election, but vacated the seat when he became Trump's Secretary of Health and Human Services. The special election has already become the most expensive in U.S. history. Georgia special election smashes all-time spending record - POLITICO It is possible that the firing of Comey may be just enough to elect the Democrat Jon Ossoff who was doing well in the polls before that event.
+++
One republican congressman from Iowa, the right wing reactionary Rod Blum, pre-screened attendees to make sure that they lived in his district, but that did not keep him away from angry constituents. Iowa congressman walks out of a TV interview and into an angry town hall meeting-The Washington Post Blum receives substantial funding from entities that are domiciled outside of his district. Rep. Rod Blum: Campaign Finance/Money - Top Donors - Representative 2016 | OpenSecrets Those contributors would not be excluded from a meeting.
+++
Kushner Family Stands to Gain From Visa Rules in Trump’s First Major Law
The Trump and Kushner families will certainly be better off by the implementation of Donald's policies. Trump's proposed tax law changes, the Trump-Kushner Tax Relief Act, are designed to substantially lower the Trump/Kushner families tax bill and others similarly situated. The question is whether Trump's middle class supporters will see any meaningful economic benefit. We shall see in the fullness of time.
Yates Fuels Questions About Trump's 18-Day Delay in Firing Flynn-Bloomberg
Muslim ban language wiped from Trump campaign website - CBS News
Here is how the House GOP health care bill would affect employer-based insurance - CBS News
Lie Witness News: Trumpcare Edition-Jimmy Kimmel Live- YouTube
What ever happened to the voter fraud investigation led by the V-P? Trump was going to investigate voter fraud. What happened? - CNN
We are still waiting for Trump to file libel suits against the women who accused him of sexual harassment and battery. Donald Trump Says He Will Sue Sexual Misconduct Accusers | Time.com
Trump: I will sue my accusers after the campaign - YouTube (big time jerk); Donald Trump "HUGE" "YUGE" Compilation - YouTube
Trump Bars U.S. Press, but Not Russia’s, at Meeting With Russian Officials - The New York Times
++++++++++
Warren Buffett:
Buffett recently stated that stocks "stocks are dirt cheap", provided interest rates remain near current levels or increase only modestly over the next ten plus years. Buffett: Bonds ‘Terrible’ In Comparison to Stocks - Barron's; Buffett: Low Rates Make Stocks 'Dirt Cheap'
+++++++++++
1. Intermediate Term Bond/CD Ladder Basket Strategy:
A. Bought 2 Sysco 3.3% Senior Unsecured Bond Maturing on 7/15/26:
SYY Sysco Corp Page at Morningstar
Credit Ratings:
Moody's at A3
S & P at BBB+
YTM at Total Cost (98.388) = 3.505%
B. Bought 2 Thermo Fisher Scientific 3% Senior Unsecured Bonds Maturing on 4/15/23:
FINRA Page: Bond Detail (prospectus not linked)
Credit Ratings:
Moody's at Baa2
S & P at BBB
FITCH at BBB Fitch: Thermo Fisher's Acquisition of FEI Company Within Expectations; No Rating Actions
FITCH at BBB Fitch: Thermo Fisher's Acquisition of FEI Company Within Expectations; No Rating Actions
YTM at Total Cost (99.620) = 3.07%
C. Bought 2 Viacom 3.125% Senior Unsecured Bonds Maturing on 6/15/22:
Finra Page: Bond Detail (prospectus linked)
Credit Ratings:
Moody's at Baa3
This is an atypical lowest tier investment grade bond purchase.
YTM at Total Cost (99.794) = 3.168%
D. Sold 100 BSCK at $21.39 (commission free at Schwab):
Quote: Guggenheim BulletShares 2020 Corporate Bond ETF (a term bond fund)
Profit Snapshot: +$24.38:
Sponsor's Webpage: BSCK - Exchange Traded Funds | Guggenheim Investments
I redeployed the proceeds into higher yielding intermediate term bonds. I still own 150 shares of BSCL, a 2021 investment grade term bond fund. The term bond funds are temporary alternatives to cash. The Guggenheim BulletShares are currently commission free ETFs for Schwab customers. I discussed purchasing 50 BSCL shares in an earlier post and in a comment to that post.
Sponsor's Webpage: BSCK - Exchange Traded Funds | Guggenheim Investments
I redeployed the proceeds into higher yielding intermediate term bonds. I still own 150 shares of BSCL, a 2021 investment grade term bond fund. The term bond funds are temporary alternatives to cash. The Guggenheim BulletShares are currently commission free ETFs for Schwab customers. I discussed purchasing 50 BSCL shares in an earlier post and in a comment to that post.
E. Bought 1 Kellogg 3.25% Senior Unsecured Bond Maturing 4/1/26-A Roth IRA Account:
Issuer: Kellogg Co.
K Kellogg Co Page at Morningstar
Finra Page Bond Detail (prospectus not linked)
Prospectus (sold in February 2016)
Credit Ratings:
Moody's at Baa2
Moody's assigns Baa2 rating to Kellogg USD$600 million notes
S & P at BBB
YTM at Total Cost (98.499) = 3.452%
Kellogg's 2017 First Quarter Results K Analyst Estimates
2016 4th Quarter Earnings
Kellogg SEC Filings
Kellogg 2016 Annual Report (debt is discussed starting at page 79)
In November 2016, Kellogg sold $600M in 2.65% senior unsecured notes maturing in 2023. I own two of that issue. Discussed at Item # 1.A.
2. Continued to Pare Stock Allocation:
Issuer: Kellogg Co.
K Kellogg Co Page at Morningstar
Finra Page Bond Detail (prospectus not linked)
Prospectus (sold in February 2016)
Credit Ratings:
Moody's at Baa2
Moody's assigns Baa2 rating to Kellogg USD$600 million notes
S & P at BBB
YTM at Total Cost (98.499) = 3.452%
Kellogg's 2017 First Quarter Results K Analyst Estimates
2016 4th Quarter Earnings
Kellogg SEC Filings
Kellogg 2016 Annual Report (debt is discussed starting at page 79)
In November 2016, Kellogg sold $600M in 2.65% senior unsecured notes maturing in 2023. I own two of that issue. Discussed at Item # 1.A.
2. Continued to Pare Stock Allocation:
A. Sold Three Recently Purchased Australian REITs:
Quotes:
Generation Healthcare REIT (Australia: Sydney)
Stockland REIT (Australia: Sydney)
GPT Group Australia: Sydney)
Profit Snapshots: +A$257.86
I sold GHC too soon: NorthWest Healthcare Properties REIT announces unconditional cash offer of A$2.24 per unit(1) for Generation Healthcare I sold at A$2.06.
Closing Price 4/24/17: GHC.AX +A$2.27 +A$0.22 10.73%
B. Sold 50 CYTK at $13.11:
Profit Snapshot: $157.03
Quote: Cytokinetics Inc
Form 10-Q for the Q/E 3/31/17
Form 10-K: 2016 Annual Report
I bought this lot last July a $9.81.
The shares popped on 4/18/17 after it was announced that CYTK would be added to the S & P 600 Small Cap Index. Gigamon, CBL & Associates Properties and Cytokinetics Set to Join S&P SmallCap 600
The shares continued to rise after the add date. The company used that price pop to sell 5.26M shares at $14.25. Cytokinetics Announces Pricing of Public Offering of Common Stock The underwriters have the option to buy up to 789K shares. The underwriting discount was $.57 per share, bringing CYTK's proceeds to $13.68 before its internal expenses. Prospectus
I previously discussed selling another 50 share lot at $11.46 here, harvesting a $94.99 gain:
TOTAL CYTK = +$252.02
I am left with a 30 share lot bought at $8.78+ in my IB account.
Pipeline - Cytokinetics
Cytokinetics, Inc. Reports Fourth Quarter 2016 Financial Results
Cytokinetics and Royalty Pharma Announce $100 Million Transaction for Omecamtiv Mecarbil
Cytokinetics Announces Start of GALACTIC-HF, a Phase 3 Clinical Trial of Omecamtiv Mecarbil
3. Short Term Bond/CD Basket Ladder Strategy:
A. Bought 2 Bank of China .9% CDs Maturing on 7/27/17:
I had a .55% Bank of China CD mature in mid-April. Hopefully, short term rates will continue to trend up which will improve my interest cash flow numbers as lower yielding short term instruments mature.
This Bank of China CD is part of my 5/1 to 7/31/17 maturity cluster. This purchase brings the principal amount up to $82K in this cluster: See Item # 3.D in Observations and Sample of Recent Trades: 4/11/17 (CYSPRA, NKTR, NLYPRD )
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.
More problems showing up for the box retailers:
ReplyDelete$25.66
-3.67 -12.51%
Last Updated: May 11, 2017 at 10:16 a.m. EDT
http://www.reuters.com/article/us-department-stores-results-macy-s-idUSKBN1871L6
So stocks are cheap if rates stay low. That's impossible to predict. If the economy gets moving rates go up (that's true isn't it?). If economy stagnates, rates stay the same or go lower as central banks play chicken with each other. If rates decline in a recession, stocks will be lower, so they aren't cheap now.
ReplyDeleteWonder if it's time to buy the VIX? It's been so low. Are any of the vehicles for that better than others?
That makes me wonder if there's additional VIX patterns that the model can work with. Specifically with VIX is under 11 for an extended time, that would be different than it's usual patterns. VIX under 15 during the recovery phase of after the unstable trigger, might be said to indicate a draw down that still has enough positive investor mo-jo behind it to recover before going into a full long term unstable pattern. So what would VIX under 11 mean? Under 10 is a nice round number, but under 11 is still quite unusual. It's usually 11-12 with rare dips under 11. (In my observation - which could be flawed.) So if VIX goes under 11 for a week or frequently dips under for a day or two... does that indicate a very powerful bull is rooted here?
Fear&GreedTrader is sure we're in a bull (maybe a short term dip coming), but buy into it and this was a break out similar to 2013 with the stair climbing SPX chart that indicates a very solid climb. LTTFtrader uses breath and it solidly indicates a rally from here.
I started out to post here on VIX thinking below 11 means it's time to look for a drawdown. Certainly there could be a short term one. -However-, when I write it all out, it looks like VIX may be pointing to strength and a rally from here.
That's still baffling my mind is that everything I read that I fine credible points to a rally here. And Trump is a loose cannon and Comey has said (prior to being fired) is crazy.
I think the closest explanation was FG's a while ago, that the last stage of a bull goes into euphoria and has the most rallying. We are there. We are not at the top, but at the playable pre-top big rally. ... but still it's hard to buy in, when the politics are as mashed up as they are.
I'm being told my post is too long, so I'll post in two parts.
Going back to the politics...
ReplyDeleteVarious media sources have released that Trump was furious at Comey over his hearing. Also that Trump is upset that Russia won't go away and is impeding his rightful presidency.
So stocks are cheap if rates stay low. That's impossible to predict. If the economy gets moving rates go up (that's true isn't it?). If economy stagnates, rates stay the same or go lower as central banks play chicken with each other. If rates decline in a recession, stocks will be lower, so they aren't cheap now.
Wonder if it's time to buy the VIX? It's been so low. Are any of the vehicles for that better than others?
That makes me wonder if there's additional VIX patterns that the model can work with. Specifically with VIX is under 11 for an extended time, that would be different than it's usual patterns. VIX under 15 during the recovery phase of after the unstable trigger, might be said to indicate a draw down that still has enough positive investor mo-jo behind it to recover before going into a full long term unstable pattern. So what would VIX under 11 mean? Under 10 is a nice round number, but under 11 is still quite unusual. It's usually 11-12 with rare dips under 11. (In my observation - which could be flawed.) So if VIX goes under 11 for a week or frequently dips under for a day or two... does that indicate a very powerful bull is rooted here?
Fear&GreedTrader is sure we're in a bull (maybe a short term dip coming), but buy into it and this was a break out similar to 2013 with the stair climbing SPX chart that indicates a very solid climb. LTTFtrader uses breath and it solidly indicates a rally from here.
I started out to post here on VIX thinking below 11 means it's time to look for a drawdown. Certainly there could be a short term one. -However-, when I write it all out, it looks like VIX may be pointing to strength and a rally from here.
LMH:
DeleteF & G may be right. There is nothing in the internal dynamics of the market, including the VIX pattern, that suggests that a significant market downdraft is about to happen. However, I would tend to characterize the market as being in the final blow-off phase of a bull cycle. I still own a lot of stocks. I am merely paring my stock allocation by selling into strength.
Investor sentiment, based on an analysis on what they are actually doing rather than what a few of them are saying in response to survey questions, remains very bullish.
In the VIX Model, low volatility readings are conducive to cyclical bull markets. Investors need to feel comfortable about the markets. Wild swings up and down at elevated levels only generate fear and anxiety, causing investors to sell, relieving their discomfort and fear, or to refrain from buying.
There have been extended periods when the VIX moved in the 10 to 15 range. I personally would not break it down to 10-11 or any other smaller range.
The 10-15 is the most stable range in the SVP.
VIX and S & P Compared 1990 to 1997
https://tennesseeindependent.blogspot.com/2009/05/vix-and-s-p-compared-1990-to-1997.html
In the 2004-2007 bull run, the VIX was frequently moving in a 10-15 range:
Vix Charts from 2004 2005 2006 Stable VIX Patterns Phase 1 and Phase 2
https://tennesseeindependent.blogspot.com/2009/05/vix-charts-from-2004-2005-2006-stable.html
Thank you!
DeleteI tried for a break down because under 10 seemed so unusual. That move below seemed like it should get some attention. But it does feel a bit parsing to try for a lower category.
That's still baffling my mind is that everything I read that I fine credible points to a rally here. And Trump is a loose cannon and Comey has said (prior to being fired) is crazy.
ReplyDeleteI think the closest explanation was FG's a while ago, that the last stage of a bull goes into euphoria and has the most rallying. We are there. We are not at the top, but at the playable pre-top big rally. ... but still it's hard to buy in, when the politics are as mashed up as they are.
--------
Going back to the politics...
Various media sources have released that Trump was furious at Comey over his hearing. Also that Trump is upset that Russia won't go away and is impeding his rightful presidency.
It's all effective at painting an image that Trump didn't fire Comey over him getting too close on the Russian probe. Instead that he fired him in a fit of reactiveness to the hearings that's typical Trump. And that Trump is frustrated because he's innocent.
It's effective because it's so believe-able that Trump is reactive to Comey's comments, and "upset."
It occurs to me that... with Trump so upset about leaks... and Trump being the very smart media player and manipulator... that he very well may be learning here how to use leaks to his own benefit. It wouldn't be the first time. Decades ago he invented a persona and made fake calls to the media from that persona to spread how wonderful he is. This may be a new phase in how Trump handles things - something to keep an eye out for -- very effective leaking from the admin itself.
There are so many questions that would be easy to get answers to and put the US public at least partially out of it's misery watching all this and wondering what is the truth. How long will it take to ask the easy questions?:
Comey - did you ask for more money?
Comey - Did you 3 times tell Trump he wasn't under investigation?
Comey - Did Trump's team demand to preview your testimony? (That would be completely damning though still get spun out to be nothing these days.)
Rosenstein - did Comey ask you for more money? Apparently Rosenstein didn't know his paper would be used to fire Comey by using himself as the excuse. So he's now mad and making his own threats. He somehow thought Trump would not use him?
Spicer - do you know about technu to help remove poison ivy rashes from when you fall into the bushes?
I'm completely baffled at how to reconcile the wacky and downright dangerous political situations, with the heavy rally signals the market is giving. You've resolved that by going into preservation mode. That's not appropriate for my life stage. I need more growth.
Are there any sectors that you would focus on, if you were looking to keep some money in the market. You've talked some and I need to do my homework in various areas (and I have to decide for myself what looks good and what doesn't as I look). But now that I came to the question phrased this way, I'll put it out here this way...
LMH: Comey apparently referred to Trump's claims about being wiretapped by Obama as crazy which is not the same as saying Trump is crazy. I have previously expressed my own lay opinion on Trump's mental condition.
DeleteRosenstein was used by Trump to provide cover.
As to stocks, I am certainly cautious at the present time. Most of buying over the past few days has been in Tennessee Municipal bonds.
I will buy stocks now only as trades.
I mentioned for example buying the ETF TDIV. Large cap technology stocks look strong to me with the notable exception of IBM. I now own 150 TDIV shares.
Holdings: http://www.ftportfolios.com/Retail/Etf/EtfHoldings.aspx?Ticker=TDIV
I will buy individual stocks as a trade when they fall into my buy range.
For example, I generally focus on lower quality and higher yielding REITs when I trade, and several of them are falling back into my consider to nibble range: SNR, LXP, HT.
I am at least considering adding to my WPC position.
REITs are receiving a minor amount of buying now.
Another stock that I trade is Power Corporation of Canada, either by buying the ordinary shares in Toronto or the USD priced shares on the pink sheet exchange.
That one is back into my buy range and I bought 100 shares yesterday.
$21.85- $0.29 (-1.33%)
As of 11:05AM EDT.
Earnings Report Q/E 12/31/16:
https://www.powercorporation.com/en/news/press-releases/2017/power-corporation-reports-fourth-quarter-and-2016-financial-results-122560/
The weakness in the CAD is negatively impacting the USD priced ADR. While that will turn into a positive at some point for the USD price ADR, it is an ongoing risk now due in large part to Trump's potential for igniting a trade war with Canada.
The way that I look at that stock and a few others is that the dividend yield and price/value are favorable now, so I do not mind becoming a long term holder at the current price.
Eventually, all is well that ends well. It is still a trade however.
I sold a 100 share lot at after capturing the first quarter dividend. I now own that lot again before the second quarter ex-dividend date. Small ball.
4. Continued to Pare Stock Allocation:
A. Sold 100 PWCDF at $23.51:
Profit Snapshot: +$237
https://tennesseeindependent.blogspot.com/search/label/POW%3ACA-PWCDF
I looked it up. It appears there was a report to NYTimes that was new and had that crazy comment. I'd heard the comment on media, without more context that it was specific to the Trump wiretapping claims. So I'd missed that bit of info - thanks.
DeleteThat gives me an idea of where you're finding value and what approach. Thanks!
"Power Corporation Reports First Quarter Financial Results and Dividend Increase of 7%"
Deletehttps://www.powercorporation.com/en/news/press-releases/2017/power-corporation-reports-first-quarter-financial-results-and-dividend-increase-of-7-122563/
So that was three postings. I'll see how many you receive!
ReplyDeleteThat was messy -- ignore the first "Going back to politics" post and it all makes more sense.
ReplyDeletePPLT: I am getting myself psyched up for another gambling excursion and consequently bought 10 shares of PPLT at $87.45 this morning, using a commission free trade. The total "investment" is close to what I won playing blackjack during my last casino visit. You never know. $800 or thereabouts may have some special meaning in the universe for me as my lucky number.
ReplyDeleteMoody's downgraded yesterday the credit ratings of 6 Canadian Banks based on the same issues that I discussed in a recent comment and elsewhere:
ReplyDeletehttps://www.moodys.com/research/Moodys-downgrades-Canadian-Banks--PR_366355
South Gent,
DeleteGood call on Canadian banks. Thank you! The loss avoidance there is more than what I can make from the ST CD/Bond ladder.
"Analysis | President Trump just decimated the White House’s entire Comey narrative"
ReplyDeletehttp://www.msn.com/en-us/news/politics/analysis-president-trump-just-decimated-the-white-house%e2%80%99s-entire-comey-narrative/ar-BBB1kge?li=BBnb7Kz
That is a Washington Post article reproduced at MSN.
The Deputy Director of the FBI McCabe was asked whether the White House's statement that Comey had lost confidence of the rank and file was true. He said the White House statement was false.
http://www.cnn.com/2017/05/11/politics/andrew-mccabe-hearing-senate-intelligence-committee/
Trump has a hard time maintaining an unchanged narrative for more than 24 hours.
" White House: Removing Comey will help bring Russia investigation to end"
http://www.cnn.com/2017/05/11/politics/comey-fbi-investigation-russia-sarah-huckabee-sanders/index.html
Yes, that is what Trump said he wanted in a tweet on 5/9/17. Just quit spending taxpayer money on what he called a "hoax" and a "charade".
I consistently can't tell if Trump is a completely naive idiot, or super good at manipulation.
DeleteCurrently there are worries that by letting in Russia without much security scanning - the WH itself may now be bugged.
By now their comments have sealed that this firing was about the Russia investigation.
He certainly is not acting like an innocent person.
The VIX model shows that if one invests now, and then trouble among politicians starts worrying the market, there will be a recovery time in which to get out. It's just hard to believe investors aren't bothered by the instabilities.
LMH: Most stock investors IMO are Trump supporters and believe in his agenda (possibly less so in the man).
DeleteThe problems that he is encountering is, in their view, part of a liberal campaign to undermine his "conservative" agenda. Trump is the victim and not the perp.
In this context, I am defining Liberal to mean anyone to the left of Rush Limbaugh and Ann Colter, a wide swath of people that includes true conservatives, moderates and liberals.
I doubt that anything that Trump says or does will have an impact on stock prices until the Stock Jocks see a non-arguable negative impact on the economy flowing from his actions rather than his words.
Trump is a serious and known potential risk to stability, and that is recognized by objective and rational observers who are fact based investors.
Trump's approval rating in the daily gallup poll has dropped 2% after the Comey firing and now stands at 38%:
http://www.gallup.com/poll/201617/gallup-daily-trump-job-approval.aspx
It is reasonable to forecast that he will become radioactive to such a decree that the GOP legislative agenda will be in danger and nothing will pass before the midterms in 2018. The Stock Jocks assign a zero percent probability to that happening.
For anyone interested, I have finished with my Tennessee municipal bond buying spree. I have allocated $120K to that bond sector over a couple of weeks. It may be weeks before I mention all of those purchases here.
My last purchase was a $5K in principal amount of Maury County Tennessee 2.375% GO bonds, bought today at a total cost of 84.625 (rated Aa2 by Moody's)
https://emma.msrb.org/SecurityDetails/TradeActivity/A9DDAA6A7A2109FD29D051B261FBBDBCA
I should be paying more attention to your bond purchases. I've been reading through to see how it works but not completely thoroughly. Hum. 2.375% for Aa2? What's the end date for that bond? I probably don't want Tennessee bonds being not in Tennessee, but if they are out there, maybe there is something here.
Delete"In this context, I am defining Liberal to mean anyone to the left of Rush Limbaugh and Ann Colter"
lol. How true.
I guess that is it. They think there's an agenda that he's supporting that will make a big difference.
You do seem to have explained it.
It's still surreal.
As for approval rating, I'm waiting. Olmert was PM in Israel for quite a while with approval rating of 2% plus or minus 4% margin of error. ?--Does that mean he was so disliked that he could gain %s by plummeted into negatives?
Municipal bonds generally have an optional redemption date and a maturity date. The Maury County GO, which is secured by property tax revenue, can be called at par value on or after 4/1/24. Unless redeemed early at the issuer's option, the bond matures on 4/1/35.
Deletehttps://emma.msrb.org/ES816777-ES640991-ES1036265.pdf
Par value is $1,000 per bond but that is priced in the market at 1/10th of par value. I bought at a discount to par value which gives me a higher yield to maturity than a current yield.
On maturity or when the issuer redeems at par value, I will receive $5,000 for five bond. I paid $4,247.09 at the all-in cost of 84.645. So, when redeemed, there will be precisely a $752.91 plus the tax free interest received up to the time of redemption. Notwithstanding all of that, the primary purposes of this kind of purchase are preservation of capital and diversification of my bond holdings.
The YTM is 3.541%. The current yield is 2.81% which is free from federal and state income taxes. Tennessee does not have a state income tax on earned income, never has to my knowledge but has had a small tax on dividend and interest income which is now being phased out gradually. Interest paid by Tennessee municipal bonds are not subject to that state tax.
In the corporate bond area, I am buying a number of first mortgage bonds issued by electric utilities that have similar ratings to the Tennessee municipal bonds that I have been buying. However, the maturities of those bonds are mostly in the 2022 to 2026 range and the after tax income would be lower than most of my municipal bond purchases.
Add "profit" after "$752.91"
DeleteAh, I see.
DeleteThat 1935 maturity is far out for my needs, at these rates.
2022 wouldn't be bad.
Below par sure helps.
I'll keep reading along with your ventures and learn what I do :).
Moody's degrades Popular of North America (not just related Puerto Rico bank). I saw an SA article yesterday that I can't find about them. I wanted to read again. But this is the moodys article.
ReplyDeletehttps://www.moodys.com/research/Moodys-concludes-reviews-for-downgrade-of-three-Puerto-Rican-banks--PR_299231
I am marking that account for removing the money. There's no hurry so I can do it through the month. That .15% is enough to give an extra $19 a month interest. Sigh to giving that up --- but ---.
On the Moody's downgrade, it was rating of bonds. So it's still "stable" as a bank overall, but seems like an unnecessary risk. Never know when a black swan will appear in the form of a Trump -- well who knows what.
DeleteToday's tweets from Our Dear Leader:
ReplyDelete"As a very active President with lots of things happening, it is not possible for my surrogates to stand at podium with perfect accuracy!...."
"...Maybe the best thing to do would be to cancel all future "press briefings" and hand out written responses for the sake of accuracy???"
Telling the truth is not so hard Donald. You might want to try it for awhile and see how it works.
Never a dull moment, eh?
DeleteI have published a new blog:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2017/05/observations-and-sample-of-recent_15.html