Wednesday, June 7, 2017

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 JusticeDid 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.


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 NewsAnalyses - 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 -

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. 


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.  


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 


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.


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+


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


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


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+
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:


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


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.


  1. "How Donald Trump Shifted Kids-Cancer Charity Money Into His Business"

  2. Bad day for crude oil and energy stocks follow:

    Generic 1st 'CL'Future CL1:COM
    $45.79 USD/bbl. -$2.40 -4.98%
    As of 1:01 PM EDT 6/7/2017

    Energy Select Sector SPDR ETF (XLE)
    $64.77 -$1.2048 -1.83%
    June 7, 2017 at 1:15 p.m. EDT

    Crude oil started a decline on May 24th. The acceleration of the decline today is being attributed to a substantial build in inventory when the market was expected a substantial drawdown.

    The EIA earlier today that U.S. crude inventories increased by 3.3M barrels for the week ending 6/2/17.

    The industry data, available by subscription, reportedly showed a decline of 4.6M barrels for the same week.
    Needless to say, one of those reports is way off and the vast disparity calls into question the reliability of both estimates.

    My energy stock exposure is substantially below de minimis for me.

    I had a 50 share position in CNQ but sold that position, making then this comment:

    "I am hoping to buy back these shares at less than $27. Oil prices have started to slide again. U.S. crude production is ramping up. . . Another problem is that the CAD continues to weaken against the USD. CNQ is priced in USDs. . . A decline in the CAD/USD exchange rate flows into the USD priced shares traded on the NYSE. "

    A. Sold 50 Canadian Natural Resources at $33.22 (4/4/17):

    The CAD/USD is down today since the Canadian Dollar is viewed as a commodity currency.

    The USD priced CNQ is down -3.53% as of 1:31 P.M. E.S.T, but the CAD priced ordinary shares are down less at -3.16%. The difference is due solely to the CAD declining in value against the USD.

  3. Comey's Prepared Testimony:

    The problematic meeting for Trump is the Oval Office meeting on February 14th when he asked others present to leave so that he could talk to Comey alone. According to Comey, that is when Trump asked him: " I hope you can let this go", referring to the Flynn investigation.

    At the January 27 dinner meeting, Trump stated that he needs loyalty and expects loyalty. Comey replied that he will be honest with the President. Later in the dinner, Trump said he wants "honest loyalty" which muddies the waters and I do not recall that phrase being mentioned in press reports.

    It could have been worse for Trump.

    1. Coming from the President, behind closed doors and with no witnesses present, the words "I hope you can let this go" carry weight beyond the literal meaning of the words. True, Trump did not say, "I want you to let this go," but it was implied.

      I can see how asking for "honest loyalty" muddies the waters, which are already polluted with lies, evasions and half truths.

      Trump still has other things to worry about, such as the firing of Comey and his subsequent comments to the Russians about "the pressure is off."

    2. Cathie: There is also the WP report last night that claims Trump asked Coats to intervene with the FBI. That request, allegedly made on 3/22, came after the oval office meeting on 2/14.

      The alleged request made to Coats would add context to the request made to Comey and would further indicate that Trump was pursuing other avenues to stop Comey's investigation. It was only after all avenues came up empty that Trump fired Comey with Russia in his mind. The firing occurred on 5/9.

      Asking other participants to leave the oval office meeting is evidence of bad intent which is required for a criminal conviction, but impeachment can be based on evidence of obstruction where the President has not been convicted in a criminal court (e.g. Nixon and Clinton was impeached in the House for obstruction and was never criminally charged with that crime)

      I would anticipate that Mueller will require Coats and Admiral Rogers, the NSA Director, to provide testimony to the FBI about their conversations with Trump on this subject. If they fail to cooperate, then they will likely receive a grand jury subpoena requiring them to testify. The conversations between Trump and those two individuals can not be ignored by the Special Prosecutor.

      Both Coats and Rogers refused to discuss today in their Congressional testimony their conversations with the President, though both mentioned that they did not feel pressured to do anything appropriate.

      What is relevant was not disclosed by Coats or Rogers, and that would be the words and demeanor of the President. The jury can decide whether the words amount to obstruction. It is not for Coats and Rogers to state a conclusion about their feelings about pressure, but it would be for the jury to decide whether the words and other evidence relevant to the President's intent amounted to obstruction of justice.

    3. It is also important that Trump began the dinner meeting "by asking me whether I wanted to stay on as FBI Director, which I found strange because he had already told me twice in earlier conversations that he hoped I would stay"

      The context is that Trump was going to condition Comey's employment on his responses to later questions.

      Comey added that the President was trying to create"some sort of patronage relationship" which concerned Comey "greatly".

      "A few moments later", Comey relates that the President said "I need loyalty, I expect loyalty."

      To me the linkage was clear and I would have understood in Comey' shoes that my job would be taken away unless I swore fealty to Donald.

      The even more problematic meeting for Trump was the one in the Oval Office 18 days later which I discussed in a previous comment.

      The next contact was a phone call on 3/30 and I view that one as problematic for Trump in context.

      In that call, Trump asked Comey what "we" could do to "lift the cloud" handing over Trump.

      I have not seen any negative reactions from GOP politicians. They are continuing to do whatever they can to protect Trump, and their desire to provide cover for him will most likely be on display tomorrow when Comey testifies.

  4. Intermediate Term Bond Allocation:

    Over the past week or so, I have been selling low yielding intermediate term bonds for small profits. I am hoping that the bond rally which has taken the ten year treasury down to 2.14% is just about spent and will soon start to rise. I will be looking for an opportunity to buy those bonds back when the prices are below my lowest prior purchase price.

    For the bonds sold in my Vanguard accounts, I am not giving up much yield since the money market account is currently yielding almost 1%.

    I previously mentioned the yield contraction between certain bonds and the Vanguard Prime MM fund when I sold these bonds:

    Item 3.A. Sold 2 Equifax 2.3% Senior Unsecured Bonds Maturing on 6/1/21 and 2 Cisco 2.2% Senior Unsecured Bonds Maturing on 9/20/23:

    I will mention selling the following bonds in the coming weeks for the reasons outlined above:

    2 Centerpoint First Mortgage 1.85% 6/1/21
    2 Duke Power SU 1.85% 9/1/21
    2 Verizon 1.75% SU 8/15/21
    2 Shell International 2.25% SU 1/6/23
    1 Shell International 1.875% 5/10/21
    2 American Water 3% SU 12/1/26
    2 JNJ 2.45% SU 3/1/26
    2 TIPs .375% 7/15/23
    2 Microsoft 2.125% SU 11/15/22
    2 Microsoft 2% SU 8/8/23
    1 Shell International 1.375% SU 5/10/19
    2 American Express 2.25% SU 5/15/21
    1 Merck 1.3% SU 5/18/18
    2 CVS 2.125% SU 6/1/21
    1 Consolidated Edison 2% SU 5/15/21


    Some of the proceeds were grouped with short term maturities and immediately used to buy higher yielding Tennessee municipal bonds and senior unsecured debt. For bonds sold in the Vanguard accounts, the proceeds destination was the Vanguard Prime MM.

  5. South Gent,

    Thank you for the update.

    Most people probably will be glued to the TV for Comey's testimony this morning.

    The bond rally that you mentioned did not affect much in the short end. I am having difficulty rolling the short term ladder into the January-February period; the higher yielding bonds are mostly financials (JPM 46625HGY0, GS 38141GFG4, WFC 92976WBH8, ...etc.) and their YTMs are about the same as the coupon rates of some CDs.

    1. Y: I will not be watching the Comey testimony today, but I will review the highlights after the market closes.

      The stock market senses, probably correctly, that the republicans in Congress will not do anything to Trump irrespective of the evidence.

      An example is Senator Graham's statements made in an interview late yesterday:

      That is unlikely to change even if there is enough evidence to convict Trump, using guilt beyond a reasonable doubt evidentiary standard, of obstruction of justice.

      IMO, Nixon would have had nothing to worry about if the current crop of republican politicians presided over the Waterhouse investigation and controlled the House Judiciary Committee.

  6. OHI: I made another slight change in strategy regarding OHI. My feel is that the common shares are headed lower.

    Previously, I stated that the common was too risky at current prices for a Roth IRA account purchase.

    A further decline in OHI's price may cause me to take on the risk, but only with a 50 share lot.

    In a Roth IRA account, I sold 2 OHI 4.375% senior unsecured bonds maturing in 2023 at 102.930, realizing a $33.16 gain. Those bonds were purchased in July 2016:

    5. Bought in Roth IRA 2 Omega Healthcare 4.375% Senior Unsecured Bonds Maturing on 8/1/2023 at 100.995 (101.195 with commission):

    At my total cost number for those two bonds, the current yield was 4.32%. The current dividend yield on the stock is over 8%.

    Or, looking at the comparison from a different angle, the 2 bonds would generate $87.5 in annual income.

    At the current quarterly penny rate ($.63 per share), a 50 share lot would generate $126 in annual income with less at risk money. So that is something to consider when looking at tax free income generation alternatives in a Roth IRA.

    I still own two OHI SU bonds maturing in 2025 in a taxable account:

    2. Bought 2 Omega Healthcare 4.5% Senior Unsecured Bonds Maturing on 1/15/2025:

  7. Regional Banks: I have sold into the good rally today.

    SPDR S&P Regional Banking ETF (KRE)
    $54.64 +$2.08 (+3.96%)
    As of 2:10PM EDT

    Possibly the rally as its origins in a House vote today that will gut Dodd-Frank:

    Based on what I have read, it will take 60 votes in the Senate to amend Dodd-Frank. The fact that a Democrat senator is talking about amendments to a republican senator does not indicate that the GOP is going to be able to corral the necessary Democrat votes.

    Hope springs eternal among stock investors, and frequently their hopium knows no rational boundaries, so optimism is high today that the banks will receive a substantial reprieve from Dodd-Frank regulations.

    1. Dodd-Frank: The House did pass today a bill to dismantle parts of the Dodd-Frank law and to defang the Consumer Protection Bureau, but their bill received only one Democrat vote.

      60 votes will be needed in the Senate which seems insurmountable for this piece of legislation. If the bill was limited to reducing only regulations for smaller community banks, it could pass, but that it not what the GOP wants to do.

      The stock market bid up regional banks today in anticipation that the House's bill will become law.

    2. I sold yesterday into the regional bank rally 57+ shares of FNB and 50 shares of FITB, generating a $778.63 profit.

      Snapshots can now be found in my Regional Bank Gateway post near the end.

      The largest unrealized gains in that sector consist of AROW, BDGE, BHB, and WASH. Of those four, BHB has the largest unrealized profit of $3,202.10 at yesterday's closing price of $30.92. BDGE was at +$1609.99 (109 shares) and the unrealized profit for 50 WASH shares was then at $1,743 (+227.25% at $15.04 total cost per share).

    3. I forgot my BBT position, currently at 121+ shares, which has an unrealized gain of $1,275.53 as of yesterday's close ($43.38).

      BB&T Corporation (BBT)
      $43.79+0.41 (+0.95%)
      As of 9:46AM EDT

      I did harvest a profit in my BBT position a few weeks ago. I sold 50 shares at $47.24:

      Item 3.A.

      I also own several BBT senior unsecured bonds with the largest position being 4 of the 1.45% SU bonds maturing on 1/12/18.

      Last discussed in Item 1.C.:

      Regional banks are continuing to rally this morning, possibly assisted some by a rise in interest rates as hope springs eternal that their NIM will expand.

      SPDR S&P Regional Banking ETF (KRE)
      $54.90 +$0.82 (+1.52%)
      As of 9:52AM EDT

      iShares 7-10 Year Treasury Bond (IEF)
      $107.15 -$0.21 (-0.20%)
      As of 9:53AM EDT.

  8. The Federal Reserve's first quarter report on U.S. household net worth was released yesterday.

    "The net worth of households and nonprofits rose to $94.8 trillion during the first quarter of 2017. The value of directly and indirectly held corporate equities increased $1.3 trillion and the value of real estate increased $0.5 trillion"

    Note the most of the increase was due to the rise in stocks whose ownership is concentrated in the top 10%.

    "Household debt increased at an annual rate of 3.2 percent in the first quarter of 2017. Consumer credit grew 5 percent, while mortgage debt (excluding charge-offs) grew 3 percent at an annual rate.

    Nonfinancial business debt rose at an annual rate of 6.2 percent in the first quarter of 2017, up from an annual growth rate of 2.2 percent in the previous quarter."

    The stock ownership rate in the U.S. is estimated at 52%:

    For most households that own stocks, their exposure is indirectly through retirement accounts and is consequently not available to support current spending.

    For direct stock ownership, more families own cats than stocks:

    An investor needs to keep in mind the wealth gap when evaluating household net worth data. For most households, most of their net worth is tied up in their homes and is not liquid.

    About 14% of U.S. households have a negative net worth:

    Trends in Family Wealth 1989 to 2013:

    How Much Wealth Resides in Primary Residences:

  9. ENB: Yesterday, I bought 30 shares of Enbridge at $38.2. I will not be discussing this trade in a post.

    The shares have been sinking as of late due to problems in Enbridge Energy Partners and the decline in crude oil prices.

    ENB's assets extend beyond its ownership stake in EEP and now includes the assets of Spectra Energy which I have owned and have discussed in the past. My only discussion relating to ENB have been in connection with its reset equity preferred stocks and I have now eliminated those positions to harvest good profits.

    I generated C$2,421.25 profit in ENBPRP shares and a few hundred as I recall in ENBPRF.

    Item 4.C. on ENBPRP:

    Yesterday, the company had a mid-year update and possibly some investors were disappointed by that presentation since the shares declining from a $39.11 close on 6/7 to $38.3 yesterday.

    I reviewed the presentation which is available at ENB's website:

    I did not see anything that I would construe as negative so I nibbled on the common shares.

    It will take too much of my time to discuss this company. Each investor needs to do their own research.

    1. I also added 50 of ENF:CA today at C$32.23.

      Enbridge Income Fund: YIELD of 6.34% at closing price of $C32.37

      This stock pays monthly dividends.

      I will not be discussing this stock in a post since it takes too much time.

      I now own 100 shares. I briefly mentioned buying 50 shares in this comment:


      Dividend History:

      The shares can be purchased using USDs in the U.S. Grey Market which is something that I try to avoid doing.

      Schwab is my best broker for buying Canadian ordinary shares in the Grey Market. That broker does the CAD/USD conversion when giving you the Toronto bid/ask spread.

      I previously rented ENF:CA for a few months and netted a profit of C$427:

      1. Sold 100 ENF:CA at C$27.65

      Time to watch the Vanderbilt-Oregon super regional game currently airing on ESPNU until another NCAA tournament game ends on ESPN2. Vanderbilt's # 2 pitcher, Kyle Wright, is likely to be drafted #1 in the upcoming draft.

  10. Short term CD rates continue to tick up.

    I noticed this morning at Fidelity that Merchants Bank (Indiana) was offering .9% on a one month CD maturing on 7/17/17. I own a 3 month CD issued by that bank, maturing on 7/19/17, that has a .8% coupon.

  11. Today was strange.

    Financials led the DJIA higher:
    21,271.97 +89.44 +0.42%

    Apple sank the Nasdaq Composite Index:
    6,207.92 -113.85 -1.80%

    Apple's stock opened at $155.19, which was the high for the day. The stock declined $6.02 to close at $148.97.

    I did not see any news to account for the sudden change and would attribute the decline to profit taking.

    I pulled up a one year YF chart and the stock appears to have closed just above its 50 day SMA line, which YF has at $148.21. The 200 day SMA line is at $126.22.

    Yesterday, I sold my 50 share position in TDIV held in my Roth IRA account at $32.5. I bought back today in that account 50 shares of Tahoe Resources, a gold miner, at $8.73 that I had previously sold in that account at $9.64 (5/22/17)

    Gold had a bad weak.


    Trump laid into Qatar again today just after the Secretary of State was trying to convince the Saudi led anti-Qatar coalition to lighten up.

    It is certainly possible that Qatar will respond to the U.S. by closing the U.S. base, the largest in the Middle East.

  12. South Gent,

    Re. Friday's market behavior of high-flying tech stocks some analysts attributed it to Goldman Sachs' report, but it could also be caused by algorithm trading built with artificial intelligence (AI) and Big Data (just think about "portfolio insurance" in 1987 and "flash crash" in 2010.) and potentially it could be followed by mass exodus through the exit door. Time will tell.

    1. Y: I read in Barron's this morning that a Goldman Sachs strategist opined early yesterday that the big cap techs stocks were overvalued and overextended and that probably contributed to the herd selling.

      "Robert Boroujerdi, head of global securities research at Goldman Sachs, issued a report on Friday warning that the big tech stocks—including Microsoft (MSFT), which he added to make it FAAMG—had become way too crowded a trade."

      Apple, MSFT, GOOGL, AMZN, and FB are up about $600M in value this year before Friday's drop.

      There was also some cautionary comments about the market's valuation from David Bianco, chief investment strategist for the Americas at Deutsche Asset Management, and Guggenheim's Global Chief Investment Officer Scott Minerd who wrote that “stock and bond markets have rarely been more expensive and stable, and that has me worried.”

      I would not say now that a rotation has started out of tech into financials and energy based on Friday's action. The later two industry sectors have their own issues, and the big cap tech trade may be back in vogue next Monday or shortly thereafter.

      I would agree that the FAANG trade is crowded, valuations are high or sky high, and money managers have had to buy them to have any hope of beating the S & P 500. Buying then begets more buying, creating a huge dog pile of buyers, until a noise sounds to frighten the herd and a stampede in the opposition direction occurs.

      In early June 2014, AMZN was selling near $325 and recently crossed over $1K per share. At last Friday's close, the P/E on this year's current E.P.S. estimate is 149.92.

  13. I have published a new post: