Observations and Sample of Recent Trades: 6/7/17/ (ORKLY, RHHBY, SZEVY)

There is an investment reason for focusing so much attention on Donald. 

In my opinion, there is a growing abundance of information that Trump is at best incompetent and his administration will be dominated by chaos and a growing resistance movement. 

The Stock Jocks are ignoring the dangers swirling around Trump, which I at least view as obvious. Those potential risks carry potentially major adverse economic and political repercussions. 

Trump's Tweets 'Official Statements,' Spicer Says - NBC News

I would not label the Trump created risks as the most important. Consumer spending may easily turn out to be the big negative surprise this year. 

And, it is clear to me that the Stock Jocks are assigning a zero probability to any of the readily identifiable risks happening. 

+++++++++

Trump and Obstruction of Justice: 

The Washington Post reported Tuesday evening that Trump asked Dan Coats, the Director of U.S. Intelligence and a former GOP senator from Indiana, to "intervene with then-FBI Director James B. Comey to get the bureau to back off its focus on former national security adviser Michael Flynn in its Russia probe, according to officials. ... The interaction with Coats indicates that Trump aimed to enlist top officials to have Comey curtail the bureau’s probe." Top intelligence official told associates Trump asked him if he could intervene with Comey on FBI Russia probe - The Washington Post

This story is consistent with earlier reports that Trump asked Comey to back off the Flynn investigation after asking Sessions and the Vice President to leave the room which is evidence relevant to criminal intent. Trump made Pence and Sessions leave before he talked to Comey. What was he hiding? - The Washington Post

When Coats last appeared before Congress, he refused to answer questions about this conversation with Trump. Coats won't answer Trump-Russia question - CNN Video Coats is scheduled to appear before Congress today. I do not expect him to answer questions about his conversations with the President on this subject. Eventually, he will be compelled to provide testimony, so his refusal will only serve to delay the search for truth. 

This kind of conversation outlined in yesterday's WP article would not be protected by executive privilege since, if true, it is evidence of a crime and criminal actions by the President. Background on Executive Privilege | Brennan Center for Justice

The crime of obstruction of justice can be based solely on the "attempt" to interfere with an investigation.OSBA | What You Should Know about Obstruction of Justice; Did Trump Obstruct Justice? Case for the Prosecution

The attempt does not have to be successful, which was the case with Richard Nixon's effort to use the CIA Director to stop the FBI's investigation into Watergate. Shortly after Nixon was required to produce The Smoking Gun Tape, which was compelled by the Supreme Court's unanimous decision in United States v. Nixon (full text), 418 U.S. 683 (1974), Nixon lost the support of every GOP congressman who had voted against the articles of impeachment in the House Judiciary Committee and was told that no more than 15 republican senators would vote for acquittal in the Senate. He then resigned since he had lost the support of the republicans. 

It is important to realize that republican politicians have not even expressed a willingness to launch an impeachment inquiry, even though there were apparently multiple DIRECT attempts by Trump to stop an investigation rather than just one attempt that Nixon made through an aide. Given the level of support that Trump has among republican voters, which remains firm and the massive changes in the GOP over the past several decades, the current crop of GOP politicians in Congress, unlike their predecessors in the Nixon era, will tolerate just about anything from Trump with at best mild rebukes.       

The republican politicians are doing their best to provide cover for Trump and are in that sense part of a cover-up. To my knowledge, the lone exception is possibly Senator Burr (R-NC), the Chairman of the Senate Intelligence Committee, who received 51.1% of the vote last November in a race against an unknown and liberal ACLU lawyer. If he is seen as providing cover for Trump like other GOP senators, then that could easily turn N.C. into a light blue state like Virginia.   

Their problem now is that the special prosecutor is not under their control.  If Mueller believes there is sufficient evidence, there will be a grand jury impaneled who will issue subpoenas requiring testimony from Coats and others. The only way for Trump to prevent that from happening would be to fire Mueller, following Nixon's example when he fired the Watergate special prosecutor Archibald Cox and the Attorney General and Deputy Attorney General. Saturday Night Massacre Those actions led to one of the impeachment articles against Nixon. 

A refusal to testify before the Grand Jury will be met with a citation for contempt, and the courts will eventually reject any and all claims of executive privilege and compel the withheld testimony.  


+++++++++

Trump as a Client: A Lawyer's Worst Nightmare:

Trump is doing his best through his tweets to undermine the Justice Department's defense of his travel ban.

The lower court's have already extensively relied on Trump's statements as proof of unconstitutional religious discrimination. The U.S. Court of Appeals for the 4th-Circuit repeatedly referenced Trump's statements to justify its decision.

After the most recent bombing in London, Trump launched another Twitter Tantrum, using that event to attack London's mayor for no reason other than he felt like doing it and to lobby the Supreme Court to overrule the lower court decisions which is on its face ridiculous. He also stated that the courts were making political decisions. Trump's attacks on the judiciary are not going to help him either.  

Trump criticized his own Justice Department for the revised "travel ban", calling the revisions a "watered down" and "politically correct" version. Of course, he signed the revised EO and that is the one on appeal.

Trump then went on to say that his EO was a "ban" rather than a temporary restriction of travel from 6 Muslim dominated nations, down from 7 in the first EO.

Trump National Security Team Blindsided by NATO Speech - POLITICO Magazine (Trump failed to reaffirm U.S. commitment to NATO which was in the prepared speech)

Possibly Trump may want to consider adding the GOP Congressman from Louisiana's 3rd congressional district, Clay Higgins, to his Homeland Security team. His approach may appeal to Donald. Higgins recommends that citizens hunt down suspected Islamic radicals and summarily execute them.  

"Every conceivable measure should be engaged to hunt them down. Hunt them, identity them, and kill them. Kill them all. For the sake of all that is good and righteous. Kill them all." Louisiana Rep. Clay Higgins says of radicalized Islam: 'Kill them all'-USA Today

The general election in that district for 2014 and 2016 had two republicans running against each other.

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Trump and Qatar: 

The following tweets are more proof of Trump's incompetence and ignorance, when no additional proof is needed to reach those opinions. 

When reading these tweets, it is important to keep in mind that about 11,000 U.S. troops are stationed in Qatar. The U.S. has a large base in that nation that allows the U.S. to conduct military operations throughout the Middle East including in Syria and Iraq. Qatar hosts largest US military base in Mideast - CNN The U.S. base in Qatar is the home of the United States Central Command and an American intelligence hub for the entire Middle East.Trump Takes Credit for Saudi Move Against Qatar, a U.S. Military Partner - The New York Times 

Trump takes sides in Arab rift, suggests support for isolation of Qatar | Reuters

None of the 9/11 hijackers were from Qatar. Most of those terrorists were from Saudi Arabia, one from Egypt, 1 from Lebanon and 2 from the United Arab Emirates.  President Trump Talk About Arm Deal With The Emir of Qatar - YouTube  The UAB and Egypt joined with Saudi Arabia in severing all ties with Qatar. Their major problem with Qatar is its funding of Al Jazerra rather than the reason given in their announcement. 


Is Saudi Arabia to blame for Islamic State? - BBC News; Analyses - Wahhabism | PBS - Saudi Time Bomb? | FRONTLINE | PBS; 

What is Wahhabism? The reactionary branch of Islam from Saudi Arabia said to be 'the main source of global terrorism': U.K.'s Telegraph;  

ISIS’ Harsh Brand of Islam Is Rooted in Austere Saudi Creed - The New York Times; 

Saudi Arabia funds and exports Islamic extremism: The truth behind the toxic U.S. relationship with the theocratic monarchy - Salon.com

There is a lot of extremist financing originating from several middle eastern nations. The diplomatic approach would be to pressure all nations to cut the cord.   

U.S. suspects Russian hackers planted fake news to provoke Qatar crisis: report - MarketWatch (if true, then Trump is doing Putin a favor in his tweets);

Qatar and Its Neighbors Have Been At Odds Since the Arab Spring - NBC News

When the Emir of Qatar visited Donald in Washington, Trump tried to sell that nations U.S. arms. President Trump Talk About Arm Deal With The Emir of Qatar - YouTube 

U.S. military praises Qatar, despite Trump tweet | Reuters 

The U.S. ambassador to Qatar, Dana S. Smith, basically told the President that he was complicating matters needlessly. US ambassador to Qatar appears to criticize Trump in tweet | TheHill

She also offered this statement:  

If Donald decides to replace that Ambassador, and he has probably launched a tirade against her already, then there will not be a U.S. ambassador to that country for a very long time. 

Why? 

Donald blames the Democrats for going slow on his nominees. 

The problem is that Trump is not even submitting nominees for the Senate's consideration. 

"Of the 559 positions that require such confirmation, Trump has announced 117 people to fill the positions, fewer than other recent presidents." Trump is blaming Democrats for his own failure on nominations - The Washington Post 

How Trump is stalling his own nominees - POLITICO; 

Trump blasts Democrats, but has not nominated anyone for 79% of key positions-Business Insider; 

Why the Trump administration has so many vacancies - POLITICO

There are numerous press reports that a large number of qualified persons have seen enough of Trump and have rebuffed requests to become part of this out-of-control President's Administration. 

Trump is clearly unfit to be President. 

The Stock Jocks have their head in the sand on that issue, so deep in the sand that their noses, ears and eyes are filled with sand. That is not surprising to me since they are among the 63M who voted for Donald, and viewed him as qualified on 11/8 and now. 

We shall see in the fullness of time.  

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1. Long Term Bond Basket Strategy (Primarily Tennessee Municipal Bonds:

The fund sourcing for the municipal bond purchases discussed below come from the following short term bond/CD maturities.  

1 Southern Co SU 1.3% 8/15/17

1 Caterpillar SU 1.25% 8/18/17

1 Bank of India .8% 8/23/17  

1 Merrick Bank .7% 8/28/17 

6 USTs .625% 8/31/17 

10K

Again, I am assuming more interest rate risk in exchange for more current income. 

A. Bought 5 Nashville Metropolitan 3.875% Airport Revenue Bonds Maturing on 7/1/45:

As noted in the confirmation, this bond is subject to AMT rules. I will not be subject to additional taxation due to this classification.

EMMA Page

YTM at Total Cost (98.694): 3.952% ($10 Schwab Commission/$1 per bond with $10 minimum)
Current Tax Free Yield (No adjustment for AMT): 3.93%

Credit Ratings:
Moody's at A1
Moody's assigns A1 to Metropolitan Nashville Airport Authority's (TN) Series 2015 A&B revenue bonds; affirms outstanding A1 revenue and A3 rental car facility ratings
S & P at A+

Security:

Optional Redemption: AT PAR on or after 7/1/25

Offering Statement.pdf

B. Bought 5 Sullivan County, Tennessee 3% GO Bonds Maturing on 5/1/30:

YTM at Total Cost (100.805) = 2.897%
Current Tax Free Yield = 2.976%

Sullivan County - Google Maps

EMMA Page
Credit Ratings:
Moody's at Aa2
Moody's Assigns Aa2 to Sullivan Cnty, TN's $140M GO School Bonds, Series 2017

Security:

Optional Redemption: AT PAR on or after 5/1/26

Tax: Federally and AMT Tax Free

Offering Statement.pdf

2. Intermediate Term Bond/CD Ladder Basket Strategy:


A. Added 1 Ventas Realty 3.5% Senior Unsecured Bond Maturing on 2/1/25:

I now own 3. The prior add was at a 99.073 total cost.

Issuer:  Operating Partnership of Ventas Inc. (VTR)-A REIT
Fully Guaranteed by VTR
VTR Page at Morningstar
FINRA Page: Bond Detail (prospectus linked)
Credit Ratings:
Moody's at Baa1
S & P at BBB+
FITCH at BBB+
Credit Ratings | ventasreit

YTM at Total Cost (98.397) = 3.741%
Current Yield = 3.557%

2017 First Quarter Report
VTR Analyst Estimates
Ventas SEC Filings
Ventas 2016 Annual Report (debt discussed starting at page 114)

My first 1 bond purchase was at 97.484 and was discussed in  Item #1.A (3/28/17 Post).

I also own other Ventas debt issues.

2 Ventas 3.125% SU Maturing 6/15/23
1 Ventas 3.25% SU Maturing on 10/15/26

Total 5 Ventas Bonds

I may gradually work my way up to 10 Ventas bonds, but I doubt that I will go over that amount based on my risk management. Ventas is a REIT that pays out most of its cash flow to the common shareholders which is a major negative IMO for unsecured bond owners.


3. Continued to Pare Stock Allocations:

All of the sells discussed in this section were immaterial positions held in my IB account.

A. Sold 100  ORKLY at $9.44 and 50 at $9.75:

Quotes:

USD Priced ADR: ORKLY Stock Price - Orkla ASA ADR
Norwegian Krone Priced Ordinary Shares: ORK Stock Price - Orkla ASA (Norway: Oslo)

1 ADR = 1 Ordinary Share
Norwegian Krone/U.S. Dollar

Profit Snapshot:+$18.97

I discussed the purchase here.

This transaction left me with 50 shares bought at $8.8.

I received the annual dividend on the entire 150 share lot.

I later sold the remaining 50 share lot at $9.75:

Profit: $46.48

I decided to sell the remaining 50 IB shares only when I noticed that Interactive Brokers allowed Norway to withhold a 25% tax:

As a U.S. citizen, I am entitled to a 15% withholding rate under Article 8 of the U.S. tax treaty with Norway.

IB allowed Switzerland to withhold 35% of the Roche dividend as shown in the preceding snapshot. The two snapshots are from my dividend section that shows the "dividend" payments credited to my account on 5/15/17. 

It took a few days for the RHHBY credit to show up. Fidelity credited me with the RHHBY dividend on the 11th and only 15% was withheld by Switzerland. as shown in a snapshot below. The GJP and GJS distributions shown in the first snapshot immediately above are interest payments rather than dividends. That classification by IB is incorrect.

As a U.S. citizen, I am entitled to a 15% dividend withholding tax from both Switzerland and Norway, but a broker needs to make a citizenship claim on my behalf. 

Fidelity did make a claim on both the Roche and Orkla dividends which limited the tax to 15%. IB did not bother.

I play small ball with Orkla shares, which simply means capturing the annual dividend and then selling the shares profitably. I will be looking for an opportunity to buy the 100 share lot back at a lower price than $8.8 over the next 11 months or so.

I will not be buying in the future any non-Canadian foreign securities in my IB account when the foreign country collects a dividend tax and I am entitled to a 15% rate under the relevant U.S. tax treaty. I will assume in the future that IB will not claim treaty rights on my behalf. IB does manage to limit Canada to the 15% tax treaty rate.

Admittedly I am playing small ball with Orkla. Trades are intended to capture the annual dividend plus a few bucks in a profit.

Prior Trades:

Sold 100 ORKLY-Update On Portfolio Positioning And Management - South Gent | Seeking Alpha August 2015 (+$51.08)- Bought Back 100 Orkla (ORKLY) At $7.285 - South Gent | Seeking Alpha December 2014

Item # 4  Sold 100 ORKLY at $9 (9/6/14 Post)(profit snapshot $122.48)-Item # 2. Bought 100 ORKLY at $7.61 (1/13/14 Post) 

Total ORKLY Trading Profit: $239.01 

ORKLY is a USD priced ADR. The price will be the ordinary share price in Norwegian Krone converted into USDs. The NOK/USD exchange rate has generally hurt the ADR's price compared to the NOK priced shares for awhile now. 

See Five Year Chart:  XE: NOK / USD Currency Chart. Norwegian Krone to US Dollar

Maybe the NOK/USD has bottomed near .11 vs. .18+ back in 2013.  The decline in the NOK/USD has made ORKLY a tough trade. A 39% decline in a currency creates a powerful headwind for the USD price ADR. But headwinds can turn into tailwinds too.

B. Sold 30 RHHBY at $33.25:

Profit Snapshot: +$178.87

Quotes:
USD Priced ADR: RHHBY Stock Price - Roche Holding AG ADR
Swiss Franc Priced Ordinary Shares: ROG Stock Price - Roche Holding AG (Switzerland: SWX Europe)
1 ADR = .125 Ordinary shares
Swiss Franc/ US Dollar - CHFUSD Currency

This lot was bought at $27.25+ on 12/2/16, and I received the annual dividend payment for that lot.

I discussed purchasing this odd lot here.

Interactive Broker's allowed Switzerland to withhold 35%. That is not tolerable.

When I complained specifically about IB's failure to claim my tax treaty right to a 15% withholding rate, IB's customer representative interpreted the complaint as one dealing with the ADR custodian fee rather than the withholding tax and then told me to jump in the lake. My communication could not have conceivably been interpreted to reference the ADR fee. So, I will not use IB to buy ADRs.

I sold my other 100 share lot at shortly after the annual ex dividend date.

Item # 3.A. Stocks, Bonds & Politics: Observations and Sample of Recent Trades-4/8/17 (RHHBY):

I also received the annual dividend on that 100 shares on 5/11/17:

That dividend was paid into my Fidelity account. The $2.5 fee is paid to the ADR custodian. The $15.41 withholding tax was paid to the Swiss government. The Swiss tax rate was proper at 15% for a U.S. citizen pursuant to Article 10 of the U.S. tax treaty with Switzerland.

After I sold Roche's stock, the market reacted unfavorably to the announcement that it cancer drug Perjeta in combination with Roche's Herceptin had no meaningful on breast cancer recurring compared to Herceptin alone.

Roche Takes Another Cancer-Drug Hit - Bloomberg;

Roche - APHINITY study shows Roche’s Perjeta-based regimen reduced the risk of invasive cancer returning compared to Herceptin and chemotherapy in HER2-positive early breast cancer

Closing Prices 6/5/17:

RHHBY $32.61 -1.76 -5.12% : ROCHE ADR

Roche has been a tough stock for several years now. While I have been successful in capturing the annual dividend and then selling the stock profitably, my trading profits are slim.

Trading Profits 2015-To Date: $383.61

This news will keep on the sidelines until I see much better news or a lower price.

C. Sold 50 SZEVY at $9.23:

Profit Snapshot: +$97.48

Item # 5 Bought 50 SZEVY at $7.24 (1/16/17 Post)

Quote: SZEVY Stock Price - Suez S.A. ADR
€ Priced Ordinary Share Quote: Suez S.A. (France: Paris)
1 ADR = .5 Ordinary Share
EUR / USD Currency Chart 

I concluded based on the preceding tax withholding problems that IB would in all likelihood allow France to keep 30% of the annual dividend, rather than the appropriate 15%, that went ex-dividend shortly after I sold this position. That is something that I will not tolerate.

Based on my prior experience with both Fidelity and Vanguard, both of those brokers will assert my U.S. citizenship rights to a 15% withholding rate applied to dividends paid by France's corporations. That means that Suez will be bought in the future only in those accounts. I will confine my future Orkla and Roche purchases to my Fidelity account.

4. Short Term Bond/CD Ladder Basket Strategy:

A. Bought 2 Towne Bank 1.1% CDs Maturing on 12/7/17:

I have 2 Legacy Bank .8% CDs maturing on 12/8/17. I am picking up more in short term yield as time goes by now.

B. Sold 1 Diageo 1.125% SU Note Maturing on 4/29/18:

Profit = $.77

The proceeds received from this bond purchase will be used in short order to buy a longer term and higher yielding bond.

I am slowly and steadily increasing my current yields. 

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.