Economy:
Markit released on 2/21 its "flash" February U.S. PMI numbers for both services and manufacturing. The composite index was reported at 55.9, a new 27 month high. The services business activity index rose to 55.9 from 53.3 in January. The manufacturing PMI hit a 40 month high: Markit Economics
There was a slight pullback, however, in Markit numbers for the Eurozone: Markit Economics Eurozone composite index fell to 57.8 from 58.8 in January.
There was a slight pullback, however, in Markit numbers for the Eurozone: Markit Economics Eurozone composite index fell to 57.8 from 58.8 in January.
Euro Inflation:
These inflation numbers, with an average of 1.6%, may be insufficient for the ECB to discontinue its extremely abnormal monetary policies, though it could decrease further its monthly asset purchases to avoid eventually running out of bonds to buy.
Only 13% of business' tax cuts are going to workers, Morgan Stanley survey says - Feb. 9, 2018; Well-Heeled Investors Reap the Republican Tax Cut Bonanza - The New York Times (43% to stock buybacks and dividends for investors; 19% to help pay for mergers; 17% for capital investment and 13% to wage increases and bonuses)
Companies buying back stock at record pace since Trump tax bill may aid market's comeback: CNBC
Only 13% of business' tax cuts are going to workers, Morgan Stanley survey says - Feb. 9, 2018; Well-Heeled Investors Reap the Republican Tax Cut Bonanza - The New York Times (43% to stock buybacks and dividends for investors; 19% to help pay for mergers; 17% for capital investment and 13% to wage increases and bonuses)
Companies buying back stock at record pace since Trump tax bill may aid market's comeback: CNBC
+++++++++
Markets and Market Commentary:
The stock market regained its footing and moved higher last Thursday and Friday after interest rates started to decline from the peaks hit on Wednesday.
10 Year Treasury:
2/23 2.88%
2/22 2.94%
2/21 2.92% (FED Minutes Released)
2/20 2.88%
2017 Daily Treasury Yield Curve Rates
S & P 500:
2/23 2,747.30
2/22 2,703.96
2/21 2,701.33 (FED Minutes Released)
2/20 2,716.26
Historical Data
Fed on track for 3 rate hikes in 2018, but 4? No sign in report to Congress - MarketWatch
Nothing really happened last week to cause those gyrations. The uptrend in interest rates is still the dominant trend.
The FED is still on track to raise the FF rate by .75% this year which will push up intermediate term yields.
The inflationary and deflationary forces are still exercising their push and pull with inflationary forces finally becoming ever so gradually more powerful than the deflationary ones. Consumer Price Index Summary for January (all items +2.1% Y-O-Y with core up 1.8%); Underlying Inflation Gauge (UIG) - FEDERAL RESERVE BANK of NEW YORK= 3%.
The stock market regained its footing and moved higher last Thursday and Friday after interest rates started to decline from the peaks hit on Wednesday.
10 Year Treasury:
2/23 2.88%
2/22 2.94%
2/21 2.92% (FED Minutes Released)
2/20 2.88%
2017 Daily Treasury Yield Curve Rates
S & P 500:
2/23 2,747.30
2/22 2,703.96
2/21 2,701.33 (FED Minutes Released)
2/20 2,716.26
Historical Data
Fed on track for 3 rate hikes in 2018, but 4? No sign in report to Congress - MarketWatch
Nothing really happened last week to cause those gyrations. The uptrend in interest rates is still the dominant trend.
The FED is still on track to raise the FF rate by .75% this year which will push up intermediate term yields.
The inflationary and deflationary forces are still exercising their push and pull with inflationary forces finally becoming ever so gradually more powerful than the deflationary ones. Consumer Price Index Summary for January (all items +2.1% Y-O-Y with core up 1.8%); Underlying Inflation Gauge (UIG) - FEDERAL RESERVE BANK of NEW YORK= 3%.
Ed Yardeni: I think inflation is dead: CNBC Video Interview (noting that he may be buried with that forecast)
Buffett has one big investing lesson in this year's annual letter: Do Not Borrow Money to Buy Stocks (I never have and only have cash brokerage accounts)
Buffett's Last Letter To Shareholders. PDF (see page 10 on borrowing money to buy stocks)
Morgan Stanley Takes on Goldman, Buffett With Bullish Bond Call - Bloomberg
The 10 year treasury yield is down slightly in early trading this morning: U.S. 10 Year Treasury Note (2.85% as of 8:00 A.M. E.S.T. vs. 2.88% last Friday)
+++
Portfolio Management:
Buffett Warns Investors That Safe-Looking Bonds Can Be Risky - Bloomberg
I would agree with that statement when referring to most households.
Investing in "safe" and low yielding investments, which are not likely to produce much, if any, real rates of return is just not going to result in a good outcome for most households.
One of the biggest risks that most U.S. households face is whether their investments will grow sufficiently to meet their financial needs, particularly in retirement.
I am primarily referring to both the total asset value and a realistic estimate of the money necessary to meet those financial objectives.
Given the total investable assets which is a hard number and a realistic and informed estimate of future expenses, then the amount of growth and income necessary to meet or preferably beat the expense estimate will guide the investment decisions and asset allocations.
Given my age, lack of any debt, frugal nature and financial resources, the assessment of those factors leads me to a defensive investment posture that focuses primarily on capital preservation and secondarily income generation. Return of my money is more important than the return on my money.
Each individual has to make these assessments at each stage throughout their lives. An intelligent and informed assessment will in part dictate the risks that are either necessary or unnecessary to take.
At the moment, I can buy bonds and CDs maturing in 10-12 months to secure a yield equal to the current 2% inflation rate or roughly a zero per cent real yield using the Bureau of Labor Statistics ("BLS") current annual inflation rate. A positive real yield after taxes would require buying bonds in the 2 to 2 1/2 year range.
However, my inflation rate is lower than the headline or core numbers published by the BLS, since a number of the hot components do not apply to me.
I believe it is important to have a handle on a person's individual inflation rate to know what is necessary to generate a positive real rate of return.
My personal inflation rate is less than 1% Y-O-Y. So a 2% CD maturing in one year provides me at least a 1% real rate of return, which moves higher as the yields go up which I expect will happen throughout 2018.
I have Medicare and own my own home, built in 1982, free and clear. "Owners equivalent rent" is consequently not a concept that applies to me.
Medicare and Medigap premiums reduced my health insurance costs about $600 a month when I first became eligible compared to what I was paying for the Bronze Obamacare plan with a huge deductible.
Since I have been on Medicare for more than a year, the lower premiums are no longer contributing to a substantial decline in expenses Y-O-Y, but a small Y-O-Y increase increase. On a 5 year basis, the savings in health insurance premiums would subsume all other increases in monthly expenses which would be a zero personal inflation rate.
To pick up slightly more yield, I have started to buy back some intermediate term bonds that were sold last year. My purchase prices are below what I originally paid for those sold bonds. I am managing interest rate risk in part by trading intermediate term bonds.
I am continuing to use some cash flow to increase my portfolio income through the purchase of disfavored high yielding securities in small lots using commission free trades.
I am using what I call a "shotgun sprinkle" approach, defined as being a series of small purchases over time, averaging down only with additional purchases and spreading the purchases among a number of stocks within a disfavored sector. This creates a tiny fund in each disfavored sector where I am less dependent on individual stock performance and more focused on the overall total return of the basket.
The disfavored sectors for me include MREITs, BDCs, and out-of-favor equity REITs.
An additional criteria is usually that the stock is already at least 20% off its most recent 52 week high and at least has some investable features beyond the dividend yield.
One of those features is a discount to net asset value per share for BDCs and MREITs.
Another is no earnings debacle causing the recent decline in price which is more likely than not IMO related to institutional investors selling their positions throughout the sector and/or to market dynamics rather than individual company fundamentals.
Buffett has one big investing lesson in this year's annual letter: Do Not Borrow Money to Buy Stocks (I never have and only have cash brokerage accounts)
Buffett's Last Letter To Shareholders. PDF (see page 10 on borrowing money to buy stocks)
Morgan Stanley Takes on Goldman, Buffett With Bullish Bond Call - Bloomberg
The 10 year treasury yield is down slightly in early trading this morning: U.S. 10 Year Treasury Note (2.85% as of 8:00 A.M. E.S.T. vs. 2.88% last Friday)
+++
Portfolio Management:
Buffett Warns Investors That Safe-Looking Bonds Can Be Risky - Bloomberg
I would agree with that statement when referring to most households.
Investing in "safe" and low yielding investments, which are not likely to produce much, if any, real rates of return is just not going to result in a good outcome for most households.
One of the biggest risks that most U.S. households face is whether their investments will grow sufficiently to meet their financial needs, particularly in retirement.
I am primarily referring to both the total asset value and a realistic estimate of the money necessary to meet those financial objectives.
Given the total investable assets which is a hard number and a realistic and informed estimate of future expenses, then the amount of growth and income necessary to meet or preferably beat the expense estimate will guide the investment decisions and asset allocations.
Given my age, lack of any debt, frugal nature and financial resources, the assessment of those factors leads me to a defensive investment posture that focuses primarily on capital preservation and secondarily income generation. Return of my money is more important than the return on my money.
Each individual has to make these assessments at each stage throughout their lives. An intelligent and informed assessment will in part dictate the risks that are either necessary or unnecessary to take.
At the moment, I can buy bonds and CDs maturing in 10-12 months to secure a yield equal to the current 2% inflation rate or roughly a zero per cent real yield using the Bureau of Labor Statistics ("BLS") current annual inflation rate. A positive real yield after taxes would require buying bonds in the 2 to 2 1/2 year range.
However, my inflation rate is lower than the headline or core numbers published by the BLS, since a number of the hot components do not apply to me.
I believe it is important to have a handle on a person's individual inflation rate to know what is necessary to generate a positive real rate of return.
My personal inflation rate is less than 1% Y-O-Y. So a 2% CD maturing in one year provides me at least a 1% real rate of return, which moves higher as the yields go up which I expect will happen throughout 2018.
I have Medicare and own my own home, built in 1982, free and clear. "Owners equivalent rent" is consequently not a concept that applies to me.
Medicare and Medigap premiums reduced my health insurance costs about $600 a month when I first became eligible compared to what I was paying for the Bronze Obamacare plan with a huge deductible.
Since I have been on Medicare for more than a year, the lower premiums are no longer contributing to a substantial decline in expenses Y-O-Y, but a small Y-O-Y increase increase. On a 5 year basis, the savings in health insurance premiums would subsume all other increases in monthly expenses which would be a zero personal inflation rate.
To pick up slightly more yield, I have started to buy back some intermediate term bonds that were sold last year. My purchase prices are below what I originally paid for those sold bonds. I am managing interest rate risk in part by trading intermediate term bonds.
I am continuing to use some cash flow to increase my portfolio income through the purchase of disfavored high yielding securities in small lots using commission free trades.
I am using what I call a "shotgun sprinkle" approach, defined as being a series of small purchases over time, averaging down only with additional purchases and spreading the purchases among a number of stocks within a disfavored sector. This creates a tiny fund in each disfavored sector where I am less dependent on individual stock performance and more focused on the overall total return of the basket.
The disfavored sectors for me include MREITs, BDCs, and out-of-favor equity REITs.
An additional criteria is usually that the stock is already at least 20% off its most recent 52 week high and at least has some investable features beyond the dividend yield.
One of those features is a discount to net asset value per share for BDCs and MREITs.
Another is no earnings debacle causing the recent decline in price which is more likely than not IMO related to institutional investors selling their positions throughout the sector and/or to market dynamics rather than individual company fundamentals.
+++++++
Trump:
The Democrat's rebuttal memo was finally released after several redactions were made by Trump's Justice Department: Correcting The Record on the Russian Investigation
There is enough left after the redactions to prove IMO that Nunes and his republican colleagues were engaged in nothing more or less than a political stunt. The following is a sample of the redactions:
Democrats’ Memo Released Countering GOP Account of Russia Probe - Bloomberg
Democrats' memo charges Republicans trying to undermine Russia probes: Reuters
What we learned from the Democratic response to the Nunes memo — and what we didn’t
5 Takeaways From the Release of the Democratic Memo - The New York Times (1) there was only a "narrow use" of the Steele memo; (2) the FISA court was informed that Steele had a political motive; (3) the Yahoo news article was not used to corroborate Steele; (4) only republican appointed judges approved of the FISA warrants; and (5) the wiretaps of Carter Page revealed useful information).
I would add to the NYT's list the following: (6) the FBI was interested in Page and his Russian contacts for several years prior to Steele being hired to investigate Trump and relied on that prior history to support the first FISA warrant application; (7) the Russia investigation started based on information supplied by a foreign intelligence service and was underway prior to the Page wiretap application; (8) contrary to the republican's assertion, the FBI never paid Steele and did inform the FISA court that Steele was terminated as a source due to his unauthorized media disclosure; and (8) the first FISA warrant was at least 56 pages long since the Democrats' memo referenced that page which proves that there was a lot of information contained therein other than the limited information about Page found in the Steele memo.
Devin Nunes claimed that the Democrat's memo proved that the Justice Department, FBI and the Democrats were conspiring against Trump. This was his analysis in his own words: The Democrats' memo is “clear evidence that the Democrats are not only trying to cover this up, but they’re also colluding with parts of the government to help cover this up.” The GOP loves their conspiracy theories.
Possibly, Nunes tried that incredibly bizarre reality creation out first on his dog, who dutifully barked when he was talking, which convinced him that the argument would work with the True Believers. Just about any reality creation, no matter how absurd or clearly false, will work, so there is no reason to do the dog barking test.
+++
Special counsel Mueller files new charges in Manafort, Gates case
The Democrat's rebuttal memo was finally released after several redactions were made by Trump's Justice Department: Correcting The Record on the Russian Investigation
There is enough left after the redactions to prove IMO that Nunes and his republican colleagues were engaged in nothing more or less than a political stunt. The following is a sample of the redactions:
Note the statements that applications to renew the Page wiretap were supported by "multiple independent sources" and was justified by the "valuable intelligence" gathered in the previous wiretaps, though the specific corroborating information was blacked out by Trump's Justice Department.
Democrats’ Memo Released Countering GOP Account of Russia Probe - Bloomberg
Democrats' memo charges Republicans trying to undermine Russia probes: Reuters
What we learned from the Democratic response to the Nunes memo — and what we didn’t
5 Takeaways From the Release of the Democratic Memo - The New York Times (1) there was only a "narrow use" of the Steele memo; (2) the FISA court was informed that Steele had a political motive; (3) the Yahoo news article was not used to corroborate Steele; (4) only republican appointed judges approved of the FISA warrants; and (5) the wiretaps of Carter Page revealed useful information).
I would add to the NYT's list the following: (6) the FBI was interested in Page and his Russian contacts for several years prior to Steele being hired to investigate Trump and relied on that prior history to support the first FISA warrant application; (7) the Russia investigation started based on information supplied by a foreign intelligence service and was underway prior to the Page wiretap application; (8) contrary to the republican's assertion, the FBI never paid Steele and did inform the FISA court that Steele was terminated as a source due to his unauthorized media disclosure; and (8) the first FISA warrant was at least 56 pages long since the Democrats' memo referenced that page which proves that there was a lot of information contained therein other than the limited information about Page found in the Steele memo.
Devin Nunes claimed that the Democrat's memo proved that the Justice Department, FBI and the Democrats were conspiring against Trump. This was his analysis in his own words: The Democrats' memo is “clear evidence that the Democrats are not only trying to cover this up, but they’re also colluding with parts of the government to help cover this up.” The GOP loves their conspiracy theories.
Possibly, Nunes tried that incredibly bizarre reality creation out first on his dog, who dutifully barked when he was talking, which convinced him that the argument would work with the True Believers. Just about any reality creation, no matter how absurd or clearly false, will work, so there is no reason to do the dog barking test.
+++
Special counsel Mueller files new charges in Manafort, Gates case
Read: Mueller’s new indictment of Paul Manafort and Rick Gates-Vox
That is one detailed indictment.
Gates did what he had to do: Mueller probe: Manafort hit with new charges after Gates pleads guilty - NBC News; What Rick Gates’ plea deal means for the Russia probe | PBS NewsHour
The charges filed against Gates and Manafort so far do not relate to the Russia investigation.
If Manafort does not work out a deal with Mueller, and is convicted, he will be serving a lot of time in the slammer. I do not see the wisdom of taking that chance, and to expend a fortune in legal fees and other expenses to mount a defense that will most likely fail and appeal if convicted, unless Manafort has nothing much to offer Mueller against other currently unindicted co-conspirators.
Personally, I would not believe Manafort's testimony, unless it is supported by properly authenticated documents and possibly even tape recordings. Trump is IMO far less trustworthy than Manafort and will forever occupy the lowest possible rung possible in my credibility scale that is reserved for a few persons in history who are incapable of being honest about anything.
++++
Trump compares immigrants to venomous snakes:
Trump snake story: the anti-immigrant fable in his CPAC speech - Vox
The rest of the world's press picked up that Trump comparison, even though U.S. coverage was negligible.
E.G. Donald Trump reads sinister snake poem AGAIN comparing immigrants to treacherous reptiles | London Evening Standard
That is one detailed indictment.
Gates did what he had to do: Mueller probe: Manafort hit with new charges after Gates pleads guilty - NBC News; What Rick Gates’ plea deal means for the Russia probe | PBS NewsHour
The charges filed against Gates and Manafort so far do not relate to the Russia investigation.
If Manafort does not work out a deal with Mueller, and is convicted, he will be serving a lot of time in the slammer. I do not see the wisdom of taking that chance, and to expend a fortune in legal fees and other expenses to mount a defense that will most likely fail and appeal if convicted, unless Manafort has nothing much to offer Mueller against other currently unindicted co-conspirators.
Personally, I would not believe Manafort's testimony, unless it is supported by properly authenticated documents and possibly even tape recordings. Trump is IMO far less trustworthy than Manafort and will forever occupy the lowest possible rung possible in my credibility scale that is reserved for a few persons in history who are incapable of being honest about anything.
++++
Trump compares immigrants to venomous snakes:
Trump snake story: the anti-immigrant fable in his CPAC speech - Vox
The rest of the world's press picked up that Trump comparison, even though U.S. coverage was negligible.
E.G. Donald Trump reads sinister snake poem AGAIN comparing immigrants to treacherous reptiles | London Evening Standard
World's Approval of U.S. Leadership Drops to New Low
US slumps in global poll after Trump's 1st year - CNN
Trump Unpopular Worldwide, American Image Suffers | Pew Research Center
Confidence in the U.S. President (No confidence) (All) - Indicators Database | Pew Research Center
Yet another Trump Reality Creation: “the world is starting to respect the United States of America again.” World Opinion of Trump and U.S. - FactCheck.org
After testy call with Trump over border wall, Mexican president shelves plan to visit White House - The Washington Post ("both countries agreed to call off the plan after Trump would not agree to publicly affirm Mexico’s position that it would not fund construction of a border wall that the Mexican people widely consider offensive")
Trump Has Abdicated as Leader of the Free World written by Hans Brands
US slumps in global poll after Trump's 1st year - CNN
Trump Unpopular Worldwide, American Image Suffers | Pew Research Center
Confidence in the U.S. President (No confidence) (All) - Indicators Database | Pew Research Center
Yet another Trump Reality Creation: “the world is starting to respect the United States of America again.” World Opinion of Trump and U.S. - FactCheck.org
After testy call with Trump over border wall, Mexican president shelves plan to visit White House - The Washington Post ("both countries agreed to call off the plan after Trump would not agree to publicly affirm Mexico’s position that it would not fund construction of a border wall that the Mexican people widely consider offensive")
Trump Has Abdicated as Leader of the Free World written by Hans Brands
++++++++++++
Republicans and the Pennsylvania Supreme Court:
Gerrymandering by both political tribes is inherently designed to undermine Democracy and is fundamentally anti-democratic.
The republicans in Pennsylvania are most unhappy that the PA Supreme Court found their gerrymandering scheme "clearly, plainly and palpably" violated the Pennsylvania Constitution.
Pa. Supreme Court rules congressional map unconstitutional in gerrymander case, orders change before May primary - Philly (The PA map was one of the most skewed. "Republicans have consistently won the same 13 of 18 House seats since it was drawn in 2011, even as votes cast in the state were evenly split between the parties.")
This is a map of the old 7th Congressional District which was named Goofy Kicking Donald Duck in the butt:
This district sliced and diced pieces of 5 counties and 26 municipalities to create a GOP district currently occupied by Pat Meehan.
The purpose of this particular abomination was to pick up pockets of republican voters wherever they could be found and to exclude as many Democrats as possible.
The map was drawn with software that could identify voter preferences block by block.
In this particular map, a line is drawn through a schoolyard, bi-sects a cu-de-sac, heads north and then abruptly south in order to avoid Democrat voters in Coatesville. Congressman Meehan Combating Harassment Settled His Own Misconduct Case - The New York Times
New 7th Congressional District:
In other words, the GOP has and wants to continue their efforts to undermine Democracy and the election process in order to make it easier for republicans to win elections.
They are not pleased that the 2018 election might actually be a fair one.
Their objection perversely claims that the Court is interfering with Democracy when it is their effort to subvert and undermine Democracy that was found unconstitutional.
That Court gave the republicans a chance to redraw the map, but the result was more of the same. The Court then redrew the districts. New Pennsylvania map gives Democrats big boost in midterms - POLITICO; Pennsylvania's high court issues a new congressional district map - NBC News
Several republican politicians now wan to impeach the judges for their decision. Pennsylvania Republicans lost the redistricting battle. Now, they’re declaring war on the courts. - The Washington Post
Republican representatives who are now at risk of losing their reelection bids are leading the charge for impeachment.
Republican congressman Ryan Costello, who represents Pennsylvania's 6th congressional district, is now in danger of losing his reelection bid and called for impeachment. Rep. Costello calls for impeachment of Pa. justices for approving ‘corrupt’ map Senator Pat Toomay argued that the impeachment discussion now needs to be held.
Since the PA Supreme Court relied on the state's Constitution rather than the U.S. Constitution, the U.S. Supreme Court will probably not intervene.
The GOP will argue that the Pennsylvania Supreme Court violated the Election Clause of the U.S. Constitutions by redrawing the GOP's gerrymandered districts. That would require an expansive interpretation of that Clause which the current Supreme Court, now with a majority appointed by republicans, may do when it suits their political purposes as in their decision in Bush v. Gore, 531 U.S. 98 (2000); A Supremely Bad Decision: The Majority Ruling in Bush v. Gore; Justice O’Connor Regrets | The New Yorker
Elections Clause: Article I Section 4 U.S. Constitution:
+++++++
NRA Finally Comments on the Florida Shooting:
Notwithstanding Trump's rhetoric about background checks after the Florida shooting, he and other republicans in Congress are not going to pass legislation opposed by the NRA. The NRA’s new talking point about background checks is bullshit; The NRA Is Taking Credit For the Background Check System It Tried to Sink; What Happened to the $1.3 Billion Congress Approved to Improve Federal Gun Background Checks?
It is at least conceivable that Florida republicans will take one or more small measures applicable to their state. (e.g. increase the age from 18 to 21 for purchases of AR-15s and similar weapons). I would be surprised if they do anything other than wait and then do nothing.
The NRA fought forcing the states to conduct any background checks in the courts and won their case in a 5-4 Supreme Court decision: Printz v. United States, 521 U.S. 898 (1997)(NRA filed an amicus brief arguing for the abolition of mandatory background checks)
The NRA is invariably engaged in Fake News designed to mislead the public.
Trump's Budget Cuts Millions Of Dollars From Gun Background Check System;
President Trump says he wants to improve background checks, but budget calls for cuts- ABC News
The NRA spokeswoman Dana Loesch said that many in the "legacy" media "loves mass shootings". She did manage to graduate from high school.
Wayne LaPierre: ‘They hate the NRA, they hate the Second Amendment, they hate individual freedom’-MarketWatch LaPierre also launched into a tirade attacking the press, Democrats and the FBI.
Just more disgusting statements from Mr. LaPierre. Trump makes the same argument. The Democrats want to take away all of the guns and are against individual freedoms which is of course hyperbole and deliberately assigns to the opposition an argument that is not being made by them in order to manipulate the weak minded.
NRA lashes out at boycott movement as United, Delta and other corporations cut ties (let them spew their venom, so what)
Days After Parkland, It’s Business as Usual at a Florida Gun Show - Bloomberg
The True Source of the N.R.A.’s Clout: Mobilization, Not Donations (and the counter is for others to mobilize to smother at the voting booth that mobilization)
National Rifle Association Donations: All Recipients | OpenSecrets (all are GOP tribe members-no Democrats)
Barbara Comstock, a vulnerable republican congresswoman from Virginia's 10th congressional district, is #2 on that list. I doubt that NRA money will save her in the November 2018 election. Hillary carried that district with 52.2% of the vote. I would be surprised to see Comstock win reelection.
Gun Rights vs Gun Control • OpenSecrets
The real reason Congress banned assault weapons in 1994 — and why it worked - The Washington Post ("But the 1994 assault weapons ban was never intended to be a comprehensive fix for “gun violence” writ large. Its purpose, according to gun violence experts and the lawmakers who wrote the bill, was to reduce the frequency and lethality of mass shootings like the ones in Parkland, Sandy Hook and elsewhere. And on that front, the data shows it had a significant impact.")
Rampage Nation: Securing America from Mass Shootings: Louis Klarevas, Christopher Price-Amazon.com: Books
Then there is this kind of problem: Sheriff: Armed officer at school never entered building during shooting The officer resigned after being put on unpaid leave. There were multiple failures by governmental agencies and individuals to be sure. But the first act in that chain of events was the easy purchase of an assault weapon by a mentally disturbed young man.
++++
Republicans and the Pennsylvania Supreme Court:
Gerrymandering by both political tribes is inherently designed to undermine Democracy and is fundamentally anti-democratic.
The republicans in Pennsylvania are most unhappy that the PA Supreme Court found their gerrymandering scheme "clearly, plainly and palpably" violated the Pennsylvania Constitution.
Pa. Supreme Court rules congressional map unconstitutional in gerrymander case, orders change before May primary - Philly (The PA map was one of the most skewed. "Republicans have consistently won the same 13 of 18 House seats since it was drawn in 2011, even as votes cast in the state were evenly split between the parties.")
This is a map of the old 7th Congressional District which was named Goofy Kicking Donald Duck in the butt:
This district sliced and diced pieces of 5 counties and 26 municipalities to create a GOP district currently occupied by Pat Meehan.
The purpose of this particular abomination was to pick up pockets of republican voters wherever they could be found and to exclude as many Democrats as possible.
The map was drawn with software that could identify voter preferences block by block.
In this particular map, a line is drawn through a schoolyard, bi-sects a cu-de-sac, heads north and then abruptly south in order to avoid Democrat voters in Coatesville. Congressman Meehan Combating Harassment Settled His Own Misconduct Case - The New York Times
New 7th Congressional District:
In other words, the GOP has and wants to continue their efforts to undermine Democracy and the election process in order to make it easier for republicans to win elections.
They are not pleased that the 2018 election might actually be a fair one.
Their objection perversely claims that the Court is interfering with Democracy when it is their effort to subvert and undermine Democracy that was found unconstitutional.
That Court gave the republicans a chance to redraw the map, but the result was more of the same. The Court then redrew the districts. New Pennsylvania map gives Democrats big boost in midterms - POLITICO; Pennsylvania's high court issues a new congressional district map - NBC News
Several republican politicians now wan to impeach the judges for their decision. Pennsylvania Republicans lost the redistricting battle. Now, they’re declaring war on the courts. - The Washington Post
Republican representatives who are now at risk of losing their reelection bids are leading the charge for impeachment.
Republican congressman Ryan Costello, who represents Pennsylvania's 6th congressional district, is now in danger of losing his reelection bid and called for impeachment. Rep. Costello calls for impeachment of Pa. justices for approving ‘corrupt’ map Senator Pat Toomay argued that the impeachment discussion now needs to be held.
Since the PA Supreme Court relied on the state's Constitution rather than the U.S. Constitution, the U.S. Supreme Court will probably not intervene.
The GOP will argue that the Pennsylvania Supreme Court violated the Election Clause of the U.S. Constitutions by redrawing the GOP's gerrymandered districts. That would require an expansive interpretation of that Clause which the current Supreme Court, now with a majority appointed by republicans, may do when it suits their political purposes as in their decision in Bush v. Gore, 531 U.S. 98 (2000); A Supremely Bad Decision: The Majority Ruling in Bush v. Gore; Justice O’Connor Regrets | The New Yorker
Elections Clause: Article I Section 4 U.S. Constitution:
“We find no suggestion in the [Elections Clause] of an attempt to endow the legislature of the state with power to enact laws in any manner other than that in which the constitution of the state had provided that laws shall be enacted.” Smiley v. Holm, 285 US 355 Supreme Court 1932
In other words, the Pennsylvania's State Legislature is required to obey the PA State Constitution when drawing election districts.
Several reactionary Supreme Court Justices, mistakingly called "conservatives" by the mainstream media, will flush strict constructionism and prior precedents down the judicial toilet when an expansive interpretation is needed to reach the correct ideological result. The Citizens United decision is one example. Judicial activism based on ideology is omnipresent on both sides.
NRA Finally Comments on the Florida Shooting:
Notwithstanding Trump's rhetoric about background checks after the Florida shooting, he and other republicans in Congress are not going to pass legislation opposed by the NRA. The NRA’s new talking point about background checks is bullshit; The NRA Is Taking Credit For the Background Check System It Tried to Sink; What Happened to the $1.3 Billion Congress Approved to Improve Federal Gun Background Checks?
It is at least conceivable that Florida republicans will take one or more small measures applicable to their state. (e.g. increase the age from 18 to 21 for purchases of AR-15s and similar weapons). I would be surprised if they do anything other than wait and then do nothing.
The NRA fought forcing the states to conduct any background checks in the courts and won their case in a 5-4 Supreme Court decision: Printz v. United States, 521 U.S. 898 (1997)(NRA filed an amicus brief arguing for the abolition of mandatory background checks)
The NRA is invariably engaged in Fake News designed to mislead the public.
Trump's Budget Cuts Millions Of Dollars From Gun Background Check System;
President Trump says he wants to improve background checks, but budget calls for cuts- ABC News
The NRA spokeswoman Dana Loesch said that many in the "legacy" media "loves mass shootings". She did manage to graduate from high school.
Wayne LaPierre: ‘They hate the NRA, they hate the Second Amendment, they hate individual freedom’-MarketWatch LaPierre also launched into a tirade attacking the press, Democrats and the FBI.
Just more disgusting statements from Mr. LaPierre. Trump makes the same argument. The Democrats want to take away all of the guns and are against individual freedoms which is of course hyperbole and deliberately assigns to the opposition an argument that is not being made by them in order to manipulate the weak minded.
NRA lashes out at boycott movement as United, Delta and other corporations cut ties (let them spew their venom, so what)
Days After Parkland, It’s Business as Usual at a Florida Gun Show - Bloomberg
The True Source of the N.R.A.’s Clout: Mobilization, Not Donations (and the counter is for others to mobilize to smother at the voting booth that mobilization)
National Rifle Association Donations: All Recipients | OpenSecrets (all are GOP tribe members-no Democrats)
Gun Rights vs Gun Control • OpenSecrets
The real reason Congress banned assault weapons in 1994 — and why it worked - The Washington Post ("But the 1994 assault weapons ban was never intended to be a comprehensive fix for “gun violence” writ large. Its purpose, according to gun violence experts and the lawmakers who wrote the bill, was to reduce the frequency and lethality of mass shootings like the ones in Parkland, Sandy Hook and elsewhere. And on that front, the data shows it had a significant impact.")
Rampage Nation: Securing America from Mass Shootings: Louis Klarevas, Christopher Price-Amazon.com: Books
Then there is this kind of problem: Sheriff: Armed officer at school never entered building during shooting The officer resigned after being put on unpaid leave. There were multiple failures by governmental agencies and individuals to be sure. But the first act in that chain of events was the easy purchase of an assault weapon by a mentally disturbed young man.
++++
1. Small Ball: BDCs and MREITs:
Both BDCs and MREITs are classified by me as disfavored income generating securities. For any such classified security, I am in a trading mode hoping to harvest a few dividends and then selling the security for whatever profit may be had.
A. Bought 30 PFLT at $12.55:
Quote: PennantPark Floating Rate Capital Ltd. (PFLT)
Website: PennantPark – PFLT
PFLT is an externally managed BDC that invests mostly in floating rate debt. The reference to PSSL in the following quote refers to PennantPark Senior Secured Loan Fund I LLC, or PSSL, an unconsolidated joint venture:
"As of December 31, 2017, our portfolio totaled $739.4 million and consisted of $619.3 million of first lien secured debt, $39.9 million of second lien secured debt, $45.4 million of subordinated debt (of which $42.7 million was invested in PSSL) and $34.8 million of preferred and common equity (of which $19.1 million was invested in PSSL). Our debt portfolio consisted of 99% variable-rate investments (including 4% where London Interbank Offered Rate, or LIBOR, was below the floor) and 1% fixed-rate investments. As of December 31, 2017, we had one company on non-accrual, representing 0.4% and 0.2% of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized appreciation of $5.6 million. Our overall portfolio consisted of 84 companies with an average investment size of $8.8 million, had a weighted average yield on debt investments of 8.3%, and was invested 84% in first lien secured debt, 5% in second lien secured debt, 6% in subordinated debt (of which 6% was invested in PSSL) and 5% in preferred and common equity (of which 3% was invested in PSSL). As of December 31, 2017, all of the investments held in PSSL were first lien secured debt." (emphasis added)
Of the investments with Libor floors, only 4% were below the Libor floor. Loans with Libor floors require the Libor rate to go above the floor amount before the coupon is increased to a higher rate.
A list of loans can be found starting at page 8 in the 10-Q SEC filing for the Q/E 12/31/17.
Last Earnings Report: This report released after the market closed on 2/8/18, caused the stock to slide. The shares closed that day at $12.98 and at $12.10 on 2/9/18. "Core net investment income" was below expectations at $.25 per share. The current monthly dividend amounts to $.285 per quarter.
PennantPark Floating Rate Capital Ltd. Announces Financial Results for the Quarter Ended December 31, 2017
There were, however, some extraordinary expenses in the quarter relating to a renegotiation of PFLT's credit facility; and the issuance of a 2023 senior unsecured exchange traded bond.
The 2023 SU bond has a 3.83% coupon and $138.6M in principal amount outstanding. This was a private placement made in Israel. SEC Filed Press Release "The principal on the 2023 Notes will be payable in four annual installments as follows: 15% of the original principal amount on December 15, 2020, 15% of the original principal amount on December 15, 2021, 15% of the original principal amount on December 15, 2022 and 55% of the original principal amount on December 15, 2023."
Dividend: Monthly at $.095 PennantPark Floating Rate Capital Ltd. Announces Monthly Distribution of $0.095 per Share
Last Ex Dividend Date: 2/15/18 (shortly after this purchase)
Total Cost Per Share $12.58: With $1 IB Commission.
Dividend Yield at TC per share = 9.06%
Last Stock Offering in October 2017: 6M shares plus underwriters' option at $14.15 to the public- Prospectus
Net Asset Value Per Share: $13.86 as of 12/31/17
Discount to NAV at a TC of $12.55 per share = 9.45% (using $13.86 NAV)
Risk Summary: Starting at page 14 and ending at page 27 10-K
List of Investments: 10-Q for the Q/E 12/31/17 starting at page 8
Historical Net Asset Values Per Share: Consult 10-Qs
E.G. $14.12 as of 3/31/13 vs. $13.44 9/30/11 Form 10-Q
$13.73 as of 12/31/15 vs. $13.95 as of 9/30/15 Form 10-Q
I would call that relatively stable over time with short term blips both ways.
Prior Discussions:
Item # 2 Bought 50 PFLT at $11.28: Update For Portfolio Management And Positioning As Of 10/16/15 - South Gent | Seeking Alpha
As discussed in that SA post, I sold the following lots for small profits totaling $15.58, noting then that I view a win in the BDC sector as exiting a position at any profit after collecting several dividend payments.
Item # 2 Bought 50 PFLT at $14.24/ (6/2/13 Post)
Item # 5 Added 100 PFLT at $14 (7/20/13 Post)
Any profit is acceptable, no matter how small, when exiting an externally managed BDC position. The general idea has always been here at HQ's Trading Desk to escape with a total return in excess of the dividend yield. And, I do view the word "escape" as an appropriate word here.
B. Bought 50 TPVG at $12.32:
QUOTE: TriplePoint Venture Growth BDC Corp. (TBVG)
I may average down with up to five 10 share purchases.
TPVG is an externally managed micro cap BDC.
TPVG SEC Filings
Current Portfolio Companies
This BDC had its IPO in March 2014. The offering price was $15.
My last trade was to sell 50 shares at $13.39: Item 2.B. (3/4/2017 Post)(snapshot realized gain= $153.08).
I sold earlier in 2017 a 50 share lot at $12.33, realizing a $84.48 gain. Item # 3 (1/16/17 Post) I discussed purchasing that lot at $10.61 in Comment Blog # 3-South Gent | Seeking Alpha
Dividend: Currently Quarterly at $.36
Yield at a Total Cost of $12.32 per share = 11.69%
Last Ex Dividend Date: 11/16/17
2017 Third Quarter Report: SEC Filed Press Release (latest one when I bought shares)
Net Investment Income: $.27 per share
Net Asset Value Per Share = $13.39 as of 9/30/17
Discount to Net Asset Value Per Share Using the 9/30/17 Number = 7.99% at a Total Cost of $12.32 per share for the 50 share lot
In the highlights section for the third quarter, note that TPVG sold 1.6M shares at $13.54 to the "investment funds managed by the Alternative Investments & Manager Selection Group of Goldman Sachs Asset Management, L.P."
TriplePoint Announces $22 Million Investment From Investment Funds Managed By Goldman Sachs Asset Management, L.P. in a Private Placement Offering
This quarter appears to me to be a transition one. TPVG's net income fell due to a number of repayments and it just took some time to redeploy the capital. The capital appears to have largely been redeployed in the 4th quarter:
Sourced 8-K
TriplePoint Venture Growth Wells Fargo 2017 Presentation
D. Added 10 Share of AGNC at a $18.57-Used Commission Free Trade:
Quote: AGNC Investment Corp. (AGNC)
Dividends: Currently, monthly at $.18 per share ($2.16 annually)
2. Sold 50 NSRGY at $81.51-Used Commission Free Trade:
Profit Snapshot: +$682.45
Both BDCs and MREITs are classified by me as disfavored income generating securities. For any such classified security, I am in a trading mode hoping to harvest a few dividends and then selling the security for whatever profit may be had.
A. Bought 30 PFLT at $12.55:
Quote: PennantPark Floating Rate Capital Ltd. (PFLT)
Website: PennantPark – PFLT
PFLT is an externally managed BDC that invests mostly in floating rate debt. The reference to PSSL in the following quote refers to PennantPark Senior Secured Loan Fund I LLC, or PSSL, an unconsolidated joint venture:
"As of December 31, 2017, our portfolio totaled $739.4 million and consisted of $619.3 million of first lien secured debt, $39.9 million of second lien secured debt, $45.4 million of subordinated debt (of which $42.7 million was invested in PSSL) and $34.8 million of preferred and common equity (of which $19.1 million was invested in PSSL). Our debt portfolio consisted of 99% variable-rate investments (including 4% where London Interbank Offered Rate, or LIBOR, was below the floor) and 1% fixed-rate investments. As of December 31, 2017, we had one company on non-accrual, representing 0.4% and 0.2% of our overall portfolio on a cost and fair value basis, respectively. Overall, the portfolio had net unrealized appreciation of $5.6 million. Our overall portfolio consisted of 84 companies with an average investment size of $8.8 million, had a weighted average yield on debt investments of 8.3%, and was invested 84% in first lien secured debt, 5% in second lien secured debt, 6% in subordinated debt (of which 6% was invested in PSSL) and 5% in preferred and common equity (of which 3% was invested in PSSL). As of December 31, 2017, all of the investments held in PSSL were first lien secured debt." (emphasis added)
Of the investments with Libor floors, only 4% were below the Libor floor. Loans with Libor floors require the Libor rate to go above the floor amount before the coupon is increased to a higher rate.
A list of loans can be found starting at page 8 in the 10-Q SEC filing for the Q/E 12/31/17.
Last Earnings Report: This report released after the market closed on 2/8/18, caused the stock to slide. The shares closed that day at $12.98 and at $12.10 on 2/9/18. "Core net investment income" was below expectations at $.25 per share. The current monthly dividend amounts to $.285 per quarter.
PennantPark Floating Rate Capital Ltd. Announces Financial Results for the Quarter Ended December 31, 2017
There were, however, some extraordinary expenses in the quarter relating to a renegotiation of PFLT's credit facility; and the issuance of a 2023 senior unsecured exchange traded bond.
The 2023 SU bond has a 3.83% coupon and $138.6M in principal amount outstanding. This was a private placement made in Israel. SEC Filed Press Release "The principal on the 2023 Notes will be payable in four annual installments as follows: 15% of the original principal amount on December 15, 2020, 15% of the original principal amount on December 15, 2021, 15% of the original principal amount on December 15, 2022 and 55% of the original principal amount on December 15, 2023."
Dividend: Monthly at $.095 PennantPark Floating Rate Capital Ltd. Announces Monthly Distribution of $0.095 per Share
Last Ex Dividend Date: 2/15/18 (shortly after this purchase)
Total Cost Per Share $12.58: With $1 IB Commission.
Dividend Yield at TC per share = 9.06%
Last Stock Offering in October 2017: 6M shares plus underwriters' option at $14.15 to the public- Prospectus
Net Asset Value Per Share: $13.86 as of 12/31/17
Discount to NAV at a TC of $12.55 per share = 9.45% (using $13.86 NAV)
Risk Summary: Starting at page 14 and ending at page 27 10-K
List of Investments: 10-Q for the Q/E 12/31/17 starting at page 8
Historical Net Asset Values Per Share: Consult 10-Qs
E.G. $14.12 as of 3/31/13 vs. $13.44 9/30/11 Form 10-Q
$13.73 as of 12/31/15 vs. $13.95 as of 9/30/15 Form 10-Q
I would call that relatively stable over time with short term blips both ways.
Prior Discussions:
Item # 2 Bought 50 PFLT at $11.28: Update For Portfolio Management And Positioning As Of 10/16/15 - South Gent | Seeking Alpha
As discussed in that SA post, I sold the following lots for small profits totaling $15.58, noting then that I view a win in the BDC sector as exiting a position at any profit after collecting several dividend payments.
Item # 2 Bought 50 PFLT at $14.24/ (6/2/13 Post)
Item # 5 Added 100 PFLT at $14 (7/20/13 Post)
Any profit is acceptable, no matter how small, when exiting an externally managed BDC position. The general idea has always been here at HQ's Trading Desk to escape with a total return in excess of the dividend yield. And, I do view the word "escape" as an appropriate word here.
B. Bought 50 TPVG at $12.32:
QUOTE: TriplePoint Venture Growth BDC Corp. (TBVG)
I may average down with up to five 10 share purchases.
TPVG is an externally managed micro cap BDC.
TPVG SEC Filings
Current Portfolio Companies
This BDC had its IPO in March 2014. The offering price was $15.
My last trade was to sell 50 shares at $13.39: Item 2.B. (3/4/2017 Post)(snapshot realized gain= $153.08).
I sold earlier in 2017 a 50 share lot at $12.33, realizing a $84.48 gain. Item # 3 (1/16/17 Post) I discussed purchasing that lot at $10.61 in Comment Blog # 3-South Gent | Seeking Alpha
Dividend: Currently Quarterly at $.36
Yield at a Total Cost of $12.32 per share = 11.69%
Last Ex Dividend Date: 11/16/17
2017 Third Quarter Report: SEC Filed Press Release (latest one when I bought shares)
Net Investment Income: $.27 per share
Net Asset Value Per Share = $13.39 as of 9/30/17
Discount to Net Asset Value Per Share Using the 9/30/17 Number = 7.99% at a Total Cost of $12.32 per share for the 50 share lot
In the highlights section for the third quarter, note that TPVG sold 1.6M shares at $13.54 to the "investment funds managed by the Alternative Investments & Manager Selection Group of Goldman Sachs Asset Management, L.P."
TriplePoint Announces $22 Million Investment From Investment Funds Managed By Goldman Sachs Asset Management, L.P. in a Private Placement Offering
This quarter appears to me to be a transition one. TPVG's net income fell due to a number of repayments and it just took some time to redeploy the capital. The capital appears to have largely been redeployed in the 4th quarter:
Sourced 8-K
TriplePoint Venture Growth Wells Fargo 2017 Presentation
This company recently redeemed a 6.75% senior unsecured bond that would have matured in 2020 and replaced it with a 5.75% senior unsecured bond maturing in 2022. TriplePoint Venture Growth BDC Corp. Prices Public Offering of $65 Million of 5.75% Notes Due 2022; Quote: TriplePoint Venture Growth BDC Corp. 5.75% Notes due 2022 (TPVY); Prospectus 2022 Note
I did not recall owning this BDC prior to purchasing this last lot. Some of my trading becomes a blur after several months.
C. Started "10 Share Buying Program" in TPVG-Bought 10 at $12.01 Using Commission Free Trade:
This purchase was in another account. I may buy up to 50 shares in this account at lower prices using commission free trades.
I am attempting to use up my Fidelity commission free trades before they expire in August. With my newly minted and not currently copyrighted phrase "10 share buying program", I can only average down with each purchase.
I will need to review the 2017 4th quarter report (and how the market reacts to it) before making any additional purchase decisions. sei
I am attempting to use up my Fidelity commission free trades before they expire in August. With my newly minted and not currently copyrighted phrase "10 share buying program", I can only average down with each purchase.
I will need to review the 2017 4th quarter report (and how the market reacts to it) before making any additional purchase decisions. sei
D. Added 10 Share of AGNC at a $18.57-Used Commission Free Trade:
Quote: AGNC Investment Corp. (AGNC)
Dividends: Currently, monthly at $.18 per share ($2.16 annually)
Importantly, the net asset value declined from the $19.78 reported as of 12/31/17 to the estimated $19.39 as of 1/3/18. AGNC Investment Corp. Announces Fourth Quarter 2017 Financial Results
Based on the most recent estimate, the $18.57 price represents a 4.23% discount to the 1/31/18 estimated net asset value per share.
The next ex dividend is 2/27/18. I am reinvesting the dividend. The first purchase was made one day after the January ex dividend date.
Total Average Cost Per Share (60 Shares) = $18.69
Dividend Yield at Total Cost = 11.557%
Last Sells:
There are a number reasons, previously discussed, why I disfavor MREITs.
The end result of those reasons for AGNC is summarized in its dividend data and AGNC's chart.
This company has cut its dividend several times.
The quarterly rate was $1.5 per share in the 2009 second quarter and was sliced several times before hitting $.65 per share during 2014.
AGNC then went to a $.22 monthly dividend payment, starting in October 2014 which was cut to $.20 and then to the current $.18. AGNC Investment Corp | Investors | Dividends
I will trade the stock hoping to generate a total return in excess of the dividend yield which I have managed to do so far.
The quarterly rate was $1.5 per share in the 2009 second quarter and was sliced several times before hitting $.65 per share during 2014.
AGNC then went to a $.22 monthly dividend payment, starting in October 2014 which was cut to $.20 and then to the current $.18. AGNC Investment Corp | Investors | Dividends
I will trade the stock hoping to generate a total return in excess of the dividend yield which I have managed to do so far.
Total Annual Average Return 2/22/2013 through 2/22/2018 = 2.26%
So that total return number speaks for itself as to why AGNC is viewed with disfavor. If owned in a taxable account, a 2.26% total return would be a negative one after taxes and inflation. That is not going to work.
I would also note that my first escape was at $30.14 (2/15/2012 Post), with the shares bought at at $29.29 (2/28/11 Post).
Way to many individual investors are blinded by the dividend yield and fail to see the big picture risks for MREITs.
Way to many individual investors are blinded by the dividend yield and fail to see the big picture risks for MREITs.
Profit Snapshot: +$682.45
Added To Nestle (NSRGY) At $68.8 - South Gent | Seeking Alpha
South Gent's Comment Blog # 6: Added 30 NSRGY at $66.97
I did not like the earnings report released on 2/15/18. Nestlé reports full-year results for 2017 | Nestlé Global
Last Discussed: Item # 4.C. Sold 50 NSRGY at $77.5 (4/15/17 Post)
I will need to see better numbers and a lower price before buying back shares. Since I am a capital preservation stage, I am content with harvesting dividends and making whatever on the shares.
3. Eliminated TDIV:
A. Sold 50 at $36.56:
Quote: First Trust ETF VI NASDAQ Technology Dividend Index Fund (TDIV)
Holdings
Sponsor's Page: First Trust NASDAQ Technology Dividend Index Fund (TDIV)
Profit Snapshot: $250.01
Item # 4 Added 50 TDIV at $31.28 (7/29/17 Post)
Last Discussed: Item 2 Sold 50 TDIV at $37.07 (1/25/18 Post)(profit snapshot=$270.61)
Item # (4/29/17 Post)(snapshots of prior trades +$683.57)
B. Sold 50+ TDIV at $36:
History This Account:
Profit Snapshot: +$212.8
I am in a trading mode for this TDIV and was simply content in my total return numbers so I harvested them.
Trading Profits to Date: $1,416.99 plus dividends
4. Short Term Bonds/CD Ladder Basket Strategy:
A. Added 1 Treasury .875% Coupon Maturing on 10/15/18:
YTM = 1.737%
I now own 2 bonds.
I can buy fixed coupon treasuries commission free in this account.
B. Added 1 Treasury 1.25% Coupon Maturing on 10/31/18:
YTM = 1.756%
I now own 2 bonds.
C. Bought 2 Abbvie 2.5% SU Bonds Maturing on 5/14/20-A Roth IRA Account:
FINRA Page: Bond Detail (prospectus linked)
Issuer: AbbVie Inc. (ABBV)
ABBV Analyst Estimates
AbbVie Reports Full-Year and Fourth-Quarter 2017 Financial Results
Products
Pipeline
Credit Ratings:
Bought at a Total Cost of 99.756 (bought at 99.556)
YTM at TC Then at 2.616%
Current Yield at TC = 2.5061%
This was a marginal buy in a Vanguard Roth IRA given the current and reasonably foreseeable yield of the Vanguard Prime Money Market fund.
I justified the purchase based on the bond's current yield advantage, a current lack of concern about Abbvie's credit risk, the possibility that the MM fund will not provide a greater yield prior to the bond's maturity and the probability that the bond will provide a greater current yield for at least 16 more months.
D. Bought 2 Sherwin Williams 2.25% SU Bonds Maturing on 5/15/20:
FINRA Page: Bond Detail
Issuer: Sherwin-Williams Co. (SHW)
SHW Analyst Estimates
The Sherwin-Williams Company Reports 2017 Year-end and Fourth Quarter Financial Results
Credit Ratings:
Sherwin-Williams Completes Acquisition Of Valspar, Creates The Global Leader In Paint And Coatings; Sherwin-Williams Wraps Up $11.3B Acquisition of Valspar - June 2, 2017 - Zacks.com
Bought at a Total Cost of 99.062
YTM at TC Then at 2.681%
Current Yield at TC = 2.271%
E. Bought 1 Treasury1.25% Coupon Maturing on 12/15/18:
YTM = 1.896+%
Current Yield = 1.2567%
I now own 4 bonds.
F. Bought 1 Treasury .625% Coupon Maturing on 6/30/18:
YTM = 1.577%
I now own 2 bonds. I also own two 1.375% coupon treasuries maturing on the same day.
This is what the Fidelity order book looked like when I bought this bond:
If I had bought the same bond at Schwab, I would have paid 99.66797 generating at that price a 1.513% YTM or .064% lower:
Vanguard had the same price as Fidelity, except its YTM calculation only went out 3 decimal points. The YTM would be the same as the bond purchased through Fidelity which was 1.576977%:
A. Added 1 Treasury .875% Coupon Maturing on 10/15/18:
YTM = 1.737%
I now own 2 bonds.
I can buy fixed coupon treasuries commission free in this account.
B. Added 1 Treasury 1.25% Coupon Maturing on 10/31/18:
YTM = 1.756%
I now own 2 bonds.
C. Bought 2 Abbvie 2.5% SU Bonds Maturing on 5/14/20-A Roth IRA Account:
FINRA Page: Bond Detail (prospectus linked)
Issuer: AbbVie Inc. (ABBV)
ABBV Analyst Estimates
AbbVie Reports Full-Year and Fourth-Quarter 2017 Financial Results
Products
Pipeline
Credit Ratings:
Bought at a Total Cost of 99.756 (bought at 99.556)
YTM at TC Then at 2.616%
Current Yield at TC = 2.5061%
This was a marginal buy in a Vanguard Roth IRA given the current and reasonably foreseeable yield of the Vanguard Prime Money Market fund.
I justified the purchase based on the bond's current yield advantage, a current lack of concern about Abbvie's credit risk, the possibility that the MM fund will not provide a greater yield prior to the bond's maturity and the probability that the bond will provide a greater current yield for at least 16 more months.
D. Bought 2 Sherwin Williams 2.25% SU Bonds Maturing on 5/15/20:
FINRA Page: Bond Detail
Issuer: Sherwin-Williams Co. (SHW)
SHW Analyst Estimates
The Sherwin-Williams Company Reports 2017 Year-end and Fourth Quarter Financial Results
Credit Ratings:
Sherwin-Williams Completes Acquisition Of Valspar, Creates The Global Leader In Paint And Coatings; Sherwin-Williams Wraps Up $11.3B Acquisition of Valspar - June 2, 2017 - Zacks.com
Bought at a Total Cost of 99.062
YTM at TC Then at 2.681%
Current Yield at TC = 2.271%
E. Bought 1 Treasury1.25% Coupon Maturing on 12/15/18:
Current Yield = 1.2567%
I now own 4 bonds.
F. Bought 1 Treasury .625% Coupon Maturing on 6/30/18:
YTM = 1.577%
I now own 2 bonds. I also own two 1.375% coupon treasuries maturing on the same day.
This is what the Fidelity order book looked like when I bought this bond:
If I had bought the same bond at Schwab, I would have paid 99.66797 generating at that price a 1.513% YTM or .064% lower:
Vanguard had the same price as Fidelity, except its YTM calculation only went out 3 decimal points. The YTM would be the same as the bond purchased through Fidelity which was 1.576977%:
G. Bought 1 Northwest Natural Gas 1.545% SU Bonds Maturing on 12/5/18:
FINRA Page: Bond Detail (prospectus linked)
Issuer: Northwest Natural Gas Co. (NWN)
NWN Analyst Estimates
Credit Ratings:
Bought at a Total Cost of 99.603
YTM at TC Then at 2.043%
Current Yield at TC = 1.551%
Compared to the the Treasury note maturing on 12/15/18, discussed in Item F above, I pick up an additional .147% in YTM with this high quality corporate bond. The NWN corporate bond has a .2943% higher current yield.
H. BOUGHT 1 MORE Northwest Natural Gas 1.545% SU Bonds Maturing on 12/5/18-IB Account:
Bought at a Total Cost of 99.486
YTM at TC Then at 2.193%
Current Yield at TC = 1.553%
FINRA Page: Bond Detail (prospectus linked)
Issuer: Northwest Natural Gas Co. (NWN)
NWN Analyst Estimates
Credit Ratings:
Bought at a Total Cost of 99.603
YTM at TC Then at 2.043%
Current Yield at TC = 1.551%
Compared to the the Treasury note maturing on 12/15/18, discussed in Item F above, I pick up an additional .147% in YTM with this high quality corporate bond. The NWN corporate bond has a .2943% higher current yield.
H. BOUGHT 1 MORE Northwest Natural Gas 1.545% SU Bonds Maturing on 12/5/18-IB Account:
Bought at a Total Cost of 99.486
YTM at TC Then at 2.193%
Current Yield at TC = 1.553%
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.
The market is still in a Stable Vix Pattern. While the recent spike came close to a Trigger Event, which ushers in the troublesome Unstable Vix Pattern, the requisite number of days was not hit. The TE's required day count and VIX levels is based on history. The primary purpose of those requirements is to avoid a false sell signal.
ReplyDeleteCBOE Volatility Index (VIX)
15.80-0.69 (-4.18%)
At close: 4:14PM EST
Equity REITs are still in a funk and barely participated in today's jaunt higher.
S&P 500 Index
2,779.60 +32.30 +1.18%
Vanguard Real Estate ETF
$75.15 +0.21 +0.28%
Part of VNQ's regular trading hours gain has evaporated in after hours trading.
$75.02 -$0.13 (-0.17%)
After hours: 4:59PM EST
The ten year treasury did decline to 2.86% from last Friday's 2.88%:
https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2018
The Stock Jocks may not believe that interest rates are going much further down before moving up again which would explain the poor relative performance of equity REITs since early September 2017.
On 9/11/17, VNQ closed at $84.84 and the S & P 500 closed that day at 2,488.11. Through today's close and unadjusted for dividends, VNQ is down 11.42% while the S & P 500 has gained 11.72%.
I started today at "10 share buying program" in HTA which I last sold at $26.25 in October 2015.
2. Sold 50 HTA at $26.25:
https://seekingalpha.com/instablog/434935-south-gent/4468026-update-reit-basket-strategy-10-28-15
I just rented that one for a few weeks. Generally, I do not fool with HTA, except to buy their SU bonds, since the yield is too low for my tastes. It is probably the highest quality REIT that I now own.
I bought near the low for the day.
https://www.marketwatch.com/investing/stock/hta
I also decided to buy back 50 HT after reading its 4th quarter earnings report, noting the price where I last exited a position and calculating the P/AFFO using the then current market price and the midpoint of HT's 2018 AFFO guidance which was $1.97 per share.
https://globenewswire.com/news-release/2018/02/21/1372952/0/en/Hersha-Hospitality-Trust-Announces-Full-Year-and-Fourth-Quarter-2017-Results.html
Thursday, February 8, 2018
Item 2.B. Sold 50+ HT at $18.58+ (used commission free trade):
https://tennesseeindependent.blogspot.com/2018/02/observations-and-sample-of-recent_8.html
So, in this kind of small ball, I harvested a $59.07 profit on my last 50 share lot, will not miss a quarterly dividend and bought back the lot at a lower price than my last purchase which was $17.41.
This time, however, I bought the shares back in a ROTH IRA rather than a taxable account.
HT's dividends will generally have ROC support and the remainder will not be classified as qualified. 29.05% of the 2017 common share dividend had a ROC classification (return of capital which is nontaxable but will reduce the tax cost basis by the amount so classified)
2017 Tax Classification (note that the dividend paid by the preferred shares, which have a superior claim to income compared to the common shares, had no ROC support but the entire amount was treated as an ordinary, non-qualified dividend)
https://globenewswire.com/news-release/2018/01/22/1298799/0/en/Hersha-Hospitality-Trust-Announces-Dividend-Classification-for-2017.html
I also did some shotgun sprinkles in the equity REIT sector.
Interest rates rose after the new Fed Chairman testified that gradual rate hikes were appropriate given the strong economic outlook:
ReplyDeletehttps://www.bloomberg.com/news/articles/2018-02-27/powell-sees-gradual-rate-hikes-amid-strong-u-s-growth-outlook
Is that news? The FED will likely raise the FF rate by .75% this year and the economy is likely to remain strong as well. The problems that will be created by the tax cuts and continued increases in federal budget deficits lie in the more distant future.
Notwithstanding the obviousness of Powell's testimony, the Bond Ghouls are acting surprised, with interest rates moving up briskly after Powell's prepared remarks were released.
The 10 year treasury is up about .05% to 2.914%:
https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx
Last Updated: Feb 27, 2018 11:06 a.m. EST
REITs are doing what REITs do when interest rates spike up:
Vanguard Real Estate ETF
$73.87 -$1.28 -$1.70%
https://www.marketwatch.com/investing/fund/vnq
I don't think there is anything yet that points to a bottom in that sector, which is one reason why I am using commission free trades to buy 5 and 10 shares. I am not having to wait long before the next lower price target is hit.
LXP reported 2017 4th quarter results before the opening bell.
https://globenewswire.com/news-release/2018/02/27/1395747/0/en/Lexington-Realty-Trust-Reports-Fourth-Quarter-2017-Results.html
The market may react with slight favor to this report provided interest rates cooperate which is not happening at the moment:
Lexington Realty Trust (LXP)
$8.24-0.09 (-1.08%)
As of 11:22AM EST
Day's Range 8.23 - 8.59
The adjusted FFO guidance for 2018 is $0.95 to $0.98 per diluted common share.
LXP is one of the REITs that fails to exclude non-revenues generated by the straight line rent accounting convention in its "AFFO" computation.
The more appropriate calculation is its separate FAD computation which reduces "AFFO" by non-cash revenues and certain real costs (Tenant improvements and Lease costs) while adding back non-charges.
FAD in the 4th quarter was basically unchanged Y-O-Y at $57.281M vs. $57.415
LXP does not specifically do a FAD per share calculation. The number for the quarter was $.236874 compared to the $.26 AFFO number which is calculated by the company.
Still, if I normalize the FAD per share number over a one year period, the result is almost $.95 per share. The problem has been and remains a lack of cash flow growth. Whatever management is doing, buying, constructing and selling properties, is not adding to the FAD numbers or even AFFO.
Aldeyra Therapeutics, Inc. (ALDX)
ReplyDelete$8.40+0.70 (+9.09%)
As of 1:46PM EST
I own 70 shares as part of my small cap biotech basket with an average cost per share of $5.78.
This stock has popped in the past and then retreated.
Today's pop is due to this announcement of a collaboration with JNJ "to advance the development of existing analogs of reproxalap for the treatment of systemic inflammatory diseases", which ALDX says is "a first-in-class drug candidate that has demonstrated anti-inflammatory activity in four Phase 2 clinical trials."
https://www.prnewswire.com/news-releases/aldeyra-therapeutics-announces-agreement-with-johnson--johnson-innovation-to-advance-novel-immune-modulating-drugs-for-systemic-inflammatory-diseases-300604526.html
This appears to be at least to be some confirmation of ALDX's "aldehyde sequestration platform" to treat inflammation, but I did not see any mention that JNJ was paying now anything to ALDX. Instead, there was this statement:
"For a limited period, subject to certain conditions, Janssen will retain an option to negotiate an exclusive license pertaining to compounds developed during the collaboration."
Based on Powell's testimony today, the Bond Bookies have raised the odds somewhat of a 1% hike in the FF rate this year. Currently the probability is at 31.4%, up from 25% yesterday. I am not yet breathing into a paper bag worrying about a FF range between 2.25%-2.5% by year end. And if inflation remains range bound near current levels into 2019, there may not be another increase without a more significant uptrend in inflation from current levels. The current inflation rate is IMO benign for stocks.
ReplyDeleteThis article from Marketwatch contains a verbal response by Powell to a question that apparently caused the Bond Ghouls to have an anxiety attack:
https://www.marketwatch.com/story/powells-first-faux-pas-came-quick-2018-02-27
The quoted statements do appear to put 4 hikes this year in play due to the "strengthening in the economy."
The Bond Ghouls thought the FED's report to Congress, released last week, put that bogeyman to sleep but now maybe that was not the case.
Feb 23, 2018
https://www.marketwatch.com/story/fed-on-track-for-3-rate-hikes-in-2018-but-4-no-sign-in-report-to-congress-2018-02-23
Equity REITs continued their bearish trend today as interest rates rose in response to Powell's testimony.
ReplyDeleteVanguard Real Estate ETF
$73.40 -$1.75 -2.33%
https://www.marketwatch.com/investing/fund/vnq
The ten year treasury rose to 2.9% from 2.86% but is just meandering around 2.9% in a tight range over the past several days. The yield was higher at 2.94% on 2/21.
Rather than focusing on daily gyrations, I simply make a judgment about the dominant trend and that trend is up.
On 9/7/17, the ten year yield was at 2.05% and closed that year at 2.4%.
https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2017
The ten year treasury yield broke through the prior resistance at 2.6%-2.62% decisively starting on 1/19/18 and is now moving closer to 3%.
https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2018
Several equity REITs hit today my target price for an add.
I added a new one to my "ten share buying programs", City Office REIT (CIO), buying 10 at $10.19 late in the day.
https://www.marketwatch.com/investing/stock/cio
I last eliminated this REIT from my portfolio by selling 100 shares at $13.5; and this was my first buy since that elimination.
Item # 8 Eliminated CIO: Sold 100 at $13.5:
https://seekingalpha.com/instablog/434935-south-gent/4900469-update-equity-reit-basket-strategy-7-28-16
About all that I am accomplishing so far, when averaging down in this sector, is lowering my average cost per share and thereby increasing my dividend yield. I am not having to wait long before the downside target is hit. Sometimes, that occurs on the very next trading day.
The sector has become a falling knife due to concerns about rising interest rates. At some point, that will stop, but neither I nor anyone else knows when, which explains why I am buying really small lots using commission free trades and averaging down at predetermined price points.
The European 10 year sovereign yields are up some from their low yields earlier in the year, but are still extremely low by historical standards:
Germany 10 Year Government Bond .678%
https://www.marketwatch.com/investing/bond/tmbmkde-10y/charts?countrycode=bx
Physicians Realty Trust (DOC)
ReplyDeletehttps://www.marketwatch.com/investing/stock/doc
I added 5 shares yesterday at $14.7, bringing me up to 15 shares in my "buying program" using commission free trades.
DOC reported this morning and it was more of the same IMO.
https://www.businesswire.com/news/home/20180228005734/en/Physicians-Realty-Trust-Reports-Fourth-Quarter-Full
My criticism of DOC's management remains in place. The company is in an empire building mode that does not benefit shareholders.
Diluted Shares Outstanding:
12/31/17 = 185,273,236
12/31/16 = 139,602,349
Normalized FFO
12/31/17 $.27
12/31/16 $.27
I would ignore that number and focus on"Funds Available for Distribution" (FAD).
FAD excludes non-cash revenues created by the straight line rent accounting convention. While I admit to being old fashioned, I am not likely ever to view non-cash revenues as cash.
The FAD calculation also excludes capital expenditures. Cash is used for those expenditures and consequently is not available in the cash flow number supporting the dividend payment.
The quarterly dividend is $.23 per share.
While DOC does not separately calculate FAD per share, it does provide the date necessary for that calculation.
FAD Per Diluted Share: Shares: 185,273,236 shares/FAD= $44.207M
12/31/17 = $.238
12/31/16= $.2448
So I have a question for management.
After a flurry of activity last year that involved $1.4B in investment activity, share and debt offerings, are shareholders better off or worse off compared to 12/31/16?
The figures above say worse off for now, but possibly that may change for better or worse.
I do not know now whether that change will be a positive one since the longer term result depends in part on variables that are not known or knowable including the future course of interest rates and their actual impact on capitalization rates. DOC has been buying properties at low capitalization rates.
https://www.reit.com/news/blog/market-commentary/cap-rates-hold-their-ground-interest-rates-move-higher
As I have previously discussed, the Stock Jocks do not fully appreciate IMO the negative impacts that will arise from decreased activity in the housing sector.
ReplyDeleteThe NAR's Pending Home Sales Index, "a forward-looking indicator based on contract signings, fell 4.7 percent to 104.6 in January from a downwardly revised 109.8 in December 2017."
https://www.nar.realtor/newsroom/pending-home-sales-stumble-47-percent-in-january
There is a Triple Whammy in motion for this important sector: (1)mortgage interest rates are rising; (2) the GOP's tax reform legislation takes away tax benefits from home ownership (mostly for households in high tax states that also have above average home prices); and (3) the rise in home prices. Those factors combine to make homes less affordable and will lead to fewer home sales and less economic activity that is generated by and related to new and existing home sales. Just think about everything that goes into a new home construction or remodeling that frequently occurs when an old home changes hands.
The key variables going forward are (1) how much higher will mortgage rates go; (2) how fast will household incomes rise compared to personal consumption expenditure inflation; (3) whether home prices will continue to rise and by how much; and how the negative factors will be balanced by potential home buyers with the benefits of home ownership.
In some localities, I would anticipate that prices will fall materially due to the combined impact of those negative factors. Those localities would be concentrated in high tax states where the increases in home prices over the past few years have exceeded percentage increases in income, making homes less affordable which is then exacerbated by the tax law changes on the deductibility of state income and property taxes and possibility aggravated further by the new limitation on interest deductibility for higher priced homes.
https://www.usatoday.com/story/money/personalfinance/columnist/2018/02/16/tax-reform-changes-alter-home-owning-rationale-some/316729002/
South Gent,
ReplyDeleteJust had to double down on GE today. It will be hard to believe that there could be more skeletons hidden in the closet with such a high profile company. But I have been wrong before on GE so I also wrote the 2020 $18 LEAPs to lower the cost base.
Y: There could be a GE turnaround in motion by 2020 or there could be a recession in motion with a stock price below $10.
DeleteAnyone buying GE stock now will probably have to be patient, far more patience that I could ever muster, and be willing to hold the position for five years or more notwithstanding a possible negative total return. I will take a hard look when and if the price sinks below $10.
Today, I placed and filled 10 buy orders for stocks and did not spend $1k. My daily sprinkles are becoming more absurd by the day.
The sprinkles today included 2 buys of PG and ENB.
Procter & Gamble Co.
$78.52 -$2.02 -2.51%
https://www.marketwatch.com/investing/stock/pg
Enbridge Inc.
$31.82 -1.17 -3.55%
https://www.marketwatch.com/investing/stock/enb
And there were two new "10 share buying programs" started:
Hersha Hospitality Trust
$16.80 -0.16 -0.94%
https://www.marketwatch.com/investing/stock/ht
New Residential Investment Corp.
$16.13 -0.33 -2.00%
https://www.marketwatch.com/investing/stock/nrz
At least I am improving the yield in my portfolio, though by immaterial amounts given the size of these trades.
But I can keep doing it on a daily basis as prices fall, at least until I run out of commission free trades.
Interest rates declined today but that did not help REITs much or not at all in many cases. They are still common stocks and 90% of common stocks, give or take, will go down when the market falls like it did today.
U.S. 10 Year Treasury Note
2.863% -0.034%
https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx
2,713.83 -30.45 -1.11%
https://www.marketwatch.com/investing/index/spx
iShares 20+ Year Treasury Bond ETF
$118.75 +$0.75 +0.64%
Starwood Property Trust Inc. (STWD)
ReplyDelete$20.25 +0.26 +1.30%
STWD is part of my now daily small odd lot buying programs that is constantly expanding, where I am attempting to use up my commission free trades before they expire in August. I am focusing primarily on high yielding common stocks. I am up to 25 STWD shares with a total average cost per share of $20.83. The current yield at that TC number is 9.22%.
STWD bucked the down market today probably due to its earnings report and this statement made therein:
" Given its current outlook, the Company is confident that it will generate Core Earnings in excess of the dividend and expects to maintain a $1.92 per share distribution for the full year."
https://www.prnewswire.com/news-releases/starwood-property-trust-reports-results-for-the-quarter-and-year-ended-december-31-2017-300605547.html
https://seekingalpha.com/news/3335135-starwood-posts-highest-ever-loan-balance-q4-earnings-beat
Gramercy Property Trust (GPT)
ReplyDelete$21.65 -0.24 -1.10%
https://www.marketwatch.com/investing/stock/gpt
After the close today, GPT reported its 2017 4th quarter results which left me with that blah feeling reserved for REITs in an empire building mode with uncertain and unclear benefits to its shareholders.
https://www.businesswire.com/news/home/20180228006588/en/
There is just a lot of dust being kicked up by management buying, selling and building properties and trying to peer through the cloud of dust is no easy task.
So I use the simple minded approach.
AFFO for 2017 was $1.9 down from $2.03 in 2016. AFFO excludes the non-cash revenues generated by the straight line rent computation. So where is the beef there?
For 2018, management predicts AFFO between $1.9 and $1.95. So basically flat with 2017 and down from 2016.
How are the shareholders benefiting with real cash flow per share trending down and then remaining stagnant for two years? The answer is not at all presently or for the next year, but maybe it will be the same, better or worse in 2019 and thereafter. Maybe management is not overpaying for new properties and maybe all of this motion is improving the property portfolio and taking advantage of certain opportunities in the industrial property area. Then again, maybe not. The tell is and will be in the bottom line per share FAD number.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2018/03/observations-and-sample-of-recent.html