Economy:
The Debt Bomb:
Global Debt Jumped to Record $237 Trillion Last Year - Bloomberg About $21 trillion was added to the global debt mountain last year. The debt bomb's fuse has been lit.
The world came very close to another Great Depression in 2008 after the global debt bomb blew up, as it had to do after a slow burning fuse was lit in the mid-1980s, the approximate starting point of what I call the Age of Leverage.
Household debt to disposable income meandered around 60% between 1960 to 1985. Starting in the mid-1980's, the ratio rose in a parabolic fashion, topping out at near 130% shortly prior to the Near Depression period.
The cure for the debt bomb explosion in 2008 was to incur vast amounts of additional debt. The next debt bomb explosion may make the last one look like a firecracker. For now, this bleak future prediction is not relevant to investors.
Yellen says tax cuts are blowing up the budget
CBO expects higher deficit, stronger growth due to recent legislation - ABC News (CBO predicts that the annual federal government deficit will permanently climb over $1 trillion in 2020. "Citing projected revenue loss from the new laws, the agency now estimates the 2018 deficit to be $242 billion larger, and the 2018-2027 cumulative deficit to be $1.6 trillion larger, than it projected in June 2017.")
Future federal government deficits will IMO be far higher than predicted by the CBO.
Trump and China:
The stock market started to recover last Monday night after China's President expressed a willingness to negotiate further economic liberalization, while offering nothing concrete. Xi promises to ‘open’ up China’s markets — and cut tariffs on car imports - MarketWatch
Chinese President Xi Jinping speaks at Boao Forum for Asia: CNBC ("We must refrain from seeking dominance and reject the zero-sum game, we must refrain from 'beggar thy neighbor' and reject power politics or hegemony while the strong bully the weak," Xi said.) China is attempting to set itself of a global world leader in place of the U.S. who is just a "strong bully" who wants to "beggar they neighbor". There is no question who XI is referencing in those comments: Donald and the U.S.
Global Debt Jumped to Record $237 Trillion Last Year - Bloomberg About $21 trillion was added to the global debt mountain last year. The debt bomb's fuse has been lit.
The world came very close to another Great Depression in 2008 after the global debt bomb blew up, as it had to do after a slow burning fuse was lit in the mid-1980s, the approximate starting point of what I call the Age of Leverage.
Household debt to disposable income meandered around 60% between 1960 to 1985. Starting in the mid-1980's, the ratio rose in a parabolic fashion, topping out at near 130% shortly prior to the Near Depression period.
The cure for the debt bomb explosion in 2008 was to incur vast amounts of additional debt. The next debt bomb explosion may make the last one look like a firecracker. For now, this bleak future prediction is not relevant to investors.
Yellen says tax cuts are blowing up the budget
CBO expects higher deficit, stronger growth due to recent legislation - ABC News (CBO predicts that the annual federal government deficit will permanently climb over $1 trillion in 2020. "Citing projected revenue loss from the new laws, the agency now estimates the 2018 deficit to be $242 billion larger, and the 2018-2027 cumulative deficit to be $1.6 trillion larger, than it projected in June 2017.")
Future federal government deficits will IMO be far higher than predicted by the CBO.
Trump and China:
The stock market started to recover last Monday night after China's President expressed a willingness to negotiate further economic liberalization, while offering nothing concrete. Xi promises to ‘open’ up China’s markets — and cut tariffs on car imports - MarketWatch
Chinese President Xi Jinping speaks at Boao Forum for Asia: CNBC ("We must refrain from seeking dominance and reject the zero-sum game, we must refrain from 'beggar thy neighbor' and reject power politics or hegemony while the strong bully the weak," Xi said.) China is attempting to set itself of a global world leader in place of the U.S. who is just a "strong bully" who wants to "beggar they neighbor". There is no question who XI is referencing in those comments: Donald and the U.S.
Trump Hints at Deal on Chinese Trade as Xi Readies Response - Bloomberg (noting that Trump also claims that the U.S. is "fairly close" on reaching a deal to update NAFTA "and if we don’t make the right deal we’ll terminate Nafta and we’ll make the right deal after that")
There appears to be a significant difference between what China is willing to offer and what the U.S. is willing to accept.
U.S.-China Talks Broke Down Over Trump’s Demands on High-Tech Industries - Bloomberg (China offered to narrow its trade deficit by $50B annually but rejected Trump's demand "to stop subsidizing industries related to its" Made in China 2025 initiative that is used as a pretext to force technology transfers from U.S. firms in key growth sectors like robotics and artificial intelligence.)
I would consequently look at Xi's speech at setting a boundary for negotiations with forced technology transfers being off the table.
There appears to be a significant difference between what China is willing to offer and what the U.S. is willing to accept.
U.S.-China Talks Broke Down Over Trump’s Demands on High-Tech Industries - Bloomberg (China offered to narrow its trade deficit by $50B annually but rejected Trump's demand "to stop subsidizing industries related to its" Made in China 2025 initiative that is used as a pretext to force technology transfers from U.S. firms in key growth sectors like robotics and artificial intelligence.)
I would consequently look at Xi's speech at setting a boundary for negotiations with forced technology transfers being off the table.
Fed's Kaplan Says Trade Issues With China Won't Resolve Soon - Bloomberg
The Stock Jocks thought that Xi's speech represented a deal with Trump, signed, sealed and delivered:
DJIA's Close on 4/10/18: 24,408.00 +428.90 +1.79%
The Bond Ghouls were not awaken out of their stupor:
Closing price 4/10/18: IEF $102.76 -$0.18 -0.17%
Closing Price 4/11/18: IEF $102.86 $0.10 0.10% (Mr. Nowhere Man)
The Stock Jocks thought that Xi's speech represented a deal with Trump, signed, sealed and delivered:
DJIA's Close on 4/10/18: 24,408.00 +428.90 +1.79%
The Bond Ghouls were not awaken out of their stupor:
Closing price 4/10/18: IEF $102.76 -$0.18 -0.17%
Closing Price 4/11/18: IEF $102.86 $0.10 0.10% (Mr. Nowhere Man)
+++++++
Markets and Market Commentary:
This Missing Ingredient May Foil Hopes for Faster U.S. Growth - Bloomberg (the problem is productivity growth)
China Is Studying Yuan Devaluation as a Tool in Trade Spat - Bloomberg (that would improve China's competitive export position) This leaked story indicates that Yuan devaluation is one possible response to Trump imposing additional tariffs.
House prices are moving in tandem across the world, and that creates risks, IMF study finds - MarketWatch
+
Excerpt from FED minutes released yesterday:
"With regard to the medium-term outlook for monetary policy, all participants saw some further firming of the stance of monetary policy as likely to be warranted. Almost all participants agreed that it remained appropriate to follow a gradual approach to raising the target range for the federal funds rate. Several participants commented that this gradual approach was most likely to be conducive to maintaining strong labor market conditions and returning inflation to 2 percent on a sustained basis without resulting in conditions that would eventually require an abrupt policy tightening. A number of participants indicated that the stronger outlook for economic activity, along with their increased confidence that inflation would return to 2 percent over the medium term, implied that the appropriate path for the federal funds rate over the next few years would likely be slightly steeper than they had previously expected. Participants agreed that the longer-run normal federal funds rate was likely lower than in the past, in part because of secular forces that had put downward pressure on real interest rates. Several participants expressed the judgment that it would likely become appropriate at some point for the Committee to set the federal funds rate above its longer-run normal value for a time. Some participants suggested that, at some point, it might become necessary to revise statement language to acknowledge that, in pursuit of the Committee's statutory mandate and consistent with the median of participants' policy rate projections in the SEP, monetary policy eventually would likely gradually move from an accommodative stance to being a neutral or restraining factor for economic activity." (emphasis added)
Minutes of March FED Meeting
Fed discussed need to slow the U.S. economy down, minutes show - MarketWatch
One possible scenario is that the FED keeps hiking the FF rate and longer term rates remain relatively stable or even decline. That process can cause a yield inversion which appears to be where the market wants to go:
10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity | FRED | St. Louis Fed
I dumped a number of long duration exchange trade bonds and potentially perpetual preferred stocks last year when the ten year treasury yield was sinking to a 2.15% to 2.3% range. 2017 Daily Treasury Yield Curve Rates
I also sold a bunch of intermediate term corporate bonds.
I am starting to buy back some of these longer duration bonds and potentially perpetual preferred stocks after the rise in longer term interest rates stalled and reversed to lower yields. 2018 Daily Treasury Yield Curve Rates I still believe the dominant trend in longer duration rates is up, but I am less sure now of that prediction. The FED may only succeed in causing an inverted yield curve where short rates are higher than longer term interest rates.
China Is Studying Yuan Devaluation as a Tool in Trade Spat - Bloomberg (that would improve China's competitive export position) This leaked story indicates that Yuan devaluation is one possible response to Trump imposing additional tariffs.
House prices are moving in tandem across the world, and that creates risks, IMF study finds - MarketWatch
+
Excerpt from FED minutes released yesterday:
"With regard to the medium-term outlook for monetary policy, all participants saw some further firming of the stance of monetary policy as likely to be warranted. Almost all participants agreed that it remained appropriate to follow a gradual approach to raising the target range for the federal funds rate. Several participants commented that this gradual approach was most likely to be conducive to maintaining strong labor market conditions and returning inflation to 2 percent on a sustained basis without resulting in conditions that would eventually require an abrupt policy tightening. A number of participants indicated that the stronger outlook for economic activity, along with their increased confidence that inflation would return to 2 percent over the medium term, implied that the appropriate path for the federal funds rate over the next few years would likely be slightly steeper than they had previously expected. Participants agreed that the longer-run normal federal funds rate was likely lower than in the past, in part because of secular forces that had put downward pressure on real interest rates. Several participants expressed the judgment that it would likely become appropriate at some point for the Committee to set the federal funds rate above its longer-run normal value for a time. Some participants suggested that, at some point, it might become necessary to revise statement language to acknowledge that, in pursuit of the Committee's statutory mandate and consistent with the median of participants' policy rate projections in the SEP, monetary policy eventually would likely gradually move from an accommodative stance to being a neutral or restraining factor for economic activity." (emphasis added)
Minutes of March FED Meeting
Fed discussed need to slow the U.S. economy down, minutes show - MarketWatch
One possible scenario is that the FED keeps hiking the FF rate and longer term rates remain relatively stable or even decline. That process can cause a yield inversion which appears to be where the market wants to go:
10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity | FRED | St. Louis Fed
I dumped a number of long duration exchange trade bonds and potentially perpetual preferred stocks last year when the ten year treasury yield was sinking to a 2.15% to 2.3% range. 2017 Daily Treasury Yield Curve Rates
I also sold a bunch of intermediate term corporate bonds.
I am starting to buy back some of these longer duration bonds and potentially perpetual preferred stocks after the rise in longer term interest rates stalled and reversed to lower yields. 2018 Daily Treasury Yield Curve Rates I still believe the dominant trend in longer duration rates is up, but I am less sure now of that prediction. The FED may only succeed in causing an inverted yield curve where short rates are higher than longer term interest rates.
++++++
Trump:
The FBI raided the office, home and hotel room of Trump's attorney Michael Cohen seizing records going back years. Cohen's lawyer, Stephen Ryan, claimed that the records were confidential attorney client communications with Trump. FBI raids offices, home of Trump's personal lawyer: Reuters
‘A bomb on Trump’s front porch’: FBI’s Cohen raids hit home for the president
Raid on Trump’s Lawyer Sought Records of Payments to Women - The New York Times (the angle here is probably undeclared campaign contributions, but the inquiry goes beyond that issue)
Trump asserted that the FBI "broke" into Cohen's office and home. Cohen raid strikes deep into Trump's inner circle - POLITICO
Trump also claimed that the attorney client privilege is dead.
The Justice Department has a specific procedure that has to be followed before seeking a court order to search an attorney's office (section 9-13-4209: Obtaining Evidence | USAM | Department of Justice)
The search warrant was sought by the federal district attorney for the Southern District of New York who was appointed by Trump. The corruption unit of that Office pursued the warrant. Those facts are never mentioned by Trump to his True Believers.
Warrants are issued by a court based on a probable cause showing.
Mueller did apparently refer the matter to the Deputy Attorney General who then referred the investigation to the federal district attorney for the SDNY. The attorneys in that district would have been the ones to proceed with the search warrant application. So the FBI did not break into Cohen's office and residences as Trump claimed, but entered those premises as a result of a court approved search warrant based on a probable cause showing.
Trump slams FBI for raid of his personal attorney's office -CNN; Trump Assails FBI Raid on His Lawyer’s Office as ‘Disgraceful’ - Bloomberg
Trump's claim that the attorney client privilege is just another bogus claim. That privilege is very much alive, but there are well established limits on what the privilege protects.
The attorney client privilege does not apply to "confidential" communication between an attorney and a client when both are involved in a criminal or fraudulent act.
The more common case is that the attorney, who is not involved in the crime, has to disclose matters that fall within the criminal investigation exception, where the attorney's services were used to facilitate the criminal scheme. United States v. Zolin, 491 U.S. 554 (Supreme Court 1989); Clark v. United States, 289 U.S. 1 (1933).
Moreover, documents do not become privileged simply by forwarding them to an attorney (e.g. bank statements). The document must contain a confidential communication between attorney and client. {Page 2 2015 Attorney-Client Privilege Handbook}
Advice on purely business matters may fall outside the scope of protection as well. Other limits and exclusions may apply including communications disclosed to a third party outside of the attorney-client orbit.
Trump lashed out at the FBI: “It’s a disgraceful situation. I have this witch hunt constantly going on.” He added that the lawfully issued search warrant was "an attack on our country" and "on what we all stand for."
The pursuit of lawful court process is viewed by Trump as an attack on the country that he wants, which is one where there is no due process and everyone does what Trump tells them to do.
++++
Trump: Mueller and Rosenstein:
Trump blamed Mueller and claimed that he was running a biased political investigation. Mueller is a life long republican first appointed to be the FBI Director by President Bush. His first Presidential appointment was made by President Reagan.
Trump stated explicitly that he would have fired Jess Sessions if he had known beforehand that Sessions was going to recuse himself and appoint a special prosecutor. That statement is more proof relevant to an obstruction of justice charge against Trump.
I do not think that Mueller will seek an indictment against Trump for obstruction of justice, but will simply compile his findings and deliver them to Congress where the republicans will bury it.
I doubt that Donald could withstand much in depth scrutiny into his past. There is just no telling how many criminal acts he has committed over the years, though I have not formed an opinion yet on whether he has in fact committed even one due to a lack of publicly available information supporting any opinion on this subject.
I don't think that Trump will likely wait for Mueller to issue a report.
Trump considering firing Rosenstein to check Mueller - CNN
Trump really wants to fire Mueller and to end the investigation. He stated on Monday that many people had told him to fire Mueller.
His Press Secretary announced that Trump believes that he can fire Mueller which is not the case. The White House Believes That just let slip a big secret about firing Robert Mueller - CNN
Trump can request that the Deputy AG Rosenstein fire Mueller. If Rosenstein refused, and he probably would refuse, then Trump will have to go down the DOJ's chain of command until he could find someone willing to fire Mueller.
The same scenario occurred during Nixon's Saturday Night Massacre. I view it as likely that there will be a repeat performance soon.
The person who fires Mueller has probably violated the law, specifically section 28 CFR 600.7 (d):
28 CFR 600.7 - Conduct and accountability
A demand by the President that a DOJ official violate the law or be fired will be yet an additional impeachable offense. Any reason given for firing Rosenstein and Mueller would be spurious and nothing more than an unconvincing attempt to provide cover for an unlawful act by Trump.
Many legal scholars would view Mueller's firing to be just an another act-among many-in furtherance of Trump's obstruction of justice.
Trump's favorite tactic: criminalizing his critics
Devin Nunes Threatens to Impeach Rod Rosenstein-Nunes Wins Battle With Rosenstein to See Trump Probe Document - Bloomberg (Democrat Response to Nunes, Mark Meadows and Goodlatte who are simply carrying Trump's water: "The chairman’s rhetoric is a shocking and irresponsible escalation of the GOP’s attacks on the FBI and DOJ," Schiff said in a statement Wednesday.)
As Mueller closes in, I would expect House Republicans to become more desperate to protect Trump, to hurl invective at the FBI and the DOJ, to obstruct investigations, and to distract attention away from Trump by shouting Hillary's name from the rooftops.
Bannon pitches White House on plan to cripple Mueller probe and protect Trump - The Washington Post (Bannon proposes that the White House cease cooperating with Mueller and recommends that Trump fire Rosenstein in an effort to cripple Mueller)
++
Donald and The Free Press:
Donald regards the free press as the "enemy of the people", meaning he really dislikes anyone contradicting his false statements with facts. An accurate statement from Donald is a rarity.
Donald hates the Washington Post in particular since the paper will challenge his Alternate Reality Creations with actual facts and are not his obedient lap dogs like so many in the purported conservative media (e.g. Hannity, Limbaugh, Fox and Friends who dutifully carry Trump's water without reservation or objection.)
The FBI raided the office, home and hotel room of Trump's attorney Michael Cohen seizing records going back years. Cohen's lawyer, Stephen Ryan, claimed that the records were confidential attorney client communications with Trump. FBI raids offices, home of Trump's personal lawyer: Reuters
‘A bomb on Trump’s front porch’: FBI’s Cohen raids hit home for the president
Raid on Trump’s Lawyer Sought Records of Payments to Women - The New York Times (the angle here is probably undeclared campaign contributions, but the inquiry goes beyond that issue)
Trump asserted that the FBI "broke" into Cohen's office and home. Cohen raid strikes deep into Trump's inner circle - POLITICO
Trump also claimed that the attorney client privilege is dead.
The Justice Department has a specific procedure that has to be followed before seeking a court order to search an attorney's office (section 9-13-4209: Obtaining Evidence | USAM | Department of Justice)
The search warrant was sought by the federal district attorney for the Southern District of New York who was appointed by Trump. The corruption unit of that Office pursued the warrant. Those facts are never mentioned by Trump to his True Believers.
Warrants are issued by a court based on a probable cause showing.
Mueller did apparently refer the matter to the Deputy Attorney General who then referred the investigation to the federal district attorney for the SDNY. The attorneys in that district would have been the ones to proceed with the search warrant application. So the FBI did not break into Cohen's office and residences as Trump claimed, but entered those premises as a result of a court approved search warrant based on a probable cause showing.
Trump slams FBI for raid of his personal attorney's office -CNN; Trump Assails FBI Raid on His Lawyer’s Office as ‘Disgraceful’ - Bloomberg
Trump's claim that the attorney client privilege is just another bogus claim. That privilege is very much alive, but there are well established limits on what the privilege protects.
The attorney client privilege does not apply to "confidential" communication between an attorney and a client when both are involved in a criminal or fraudulent act.
The more common case is that the attorney, who is not involved in the crime, has to disclose matters that fall within the criminal investigation exception, where the attorney's services were used to facilitate the criminal scheme. United States v. Zolin, 491 U.S. 554 (Supreme Court 1989); Clark v. United States, 289 U.S. 1 (1933).
Moreover, documents do not become privileged simply by forwarding them to an attorney (e.g. bank statements). The document must contain a confidential communication between attorney and client. {Page 2 2015 Attorney-Client Privilege Handbook}
Advice on purely business matters may fall outside the scope of protection as well. Other limits and exclusions may apply including communications disclosed to a third party outside of the attorney-client orbit.
Trump lashed out at the FBI: “It’s a disgraceful situation. I have this witch hunt constantly going on.” He added that the lawfully issued search warrant was "an attack on our country" and "on what we all stand for."
The pursuit of lawful court process is viewed by Trump as an attack on the country that he wants, which is one where there is no due process and everyone does what Trump tells them to do.
++++
Trump: Mueller and Rosenstein:
Trump blamed Mueller and claimed that he was running a biased political investigation. Mueller is a life long republican first appointed to be the FBI Director by President Bush. His first Presidential appointment was made by President Reagan.
Trump stated explicitly that he would have fired Jess Sessions if he had known beforehand that Sessions was going to recuse himself and appoint a special prosecutor. That statement is more proof relevant to an obstruction of justice charge against Trump.
I do not think that Mueller will seek an indictment against Trump for obstruction of justice, but will simply compile his findings and deliver them to Congress where the republicans will bury it.
I doubt that Donald could withstand much in depth scrutiny into his past. There is just no telling how many criminal acts he has committed over the years, though I have not formed an opinion yet on whether he has in fact committed even one due to a lack of publicly available information supporting any opinion on this subject.
I don't think that Trump will likely wait for Mueller to issue a report.
Trump considering firing Rosenstein to check Mueller - CNN
Trump really wants to fire Mueller and to end the investigation. He stated on Monday that many people had told him to fire Mueller.
His Press Secretary announced that Trump believes that he can fire Mueller which is not the case. The White House Believes That just let slip a big secret about firing Robert Mueller - CNN
Trump can request that the Deputy AG Rosenstein fire Mueller. If Rosenstein refused, and he probably would refuse, then Trump will have to go down the DOJ's chain of command until he could find someone willing to fire Mueller.
The same scenario occurred during Nixon's Saturday Night Massacre. I view it as likely that there will be a repeat performance soon.
The person who fires Mueller has probably violated the law, specifically section 28 CFR 600.7 (d):
28 CFR 600.7 - Conduct and accountability
A demand by the President that a DOJ official violate the law or be fired will be yet an additional impeachable offense. Any reason given for firing Rosenstein and Mueller would be spurious and nothing more than an unconvincing attempt to provide cover for an unlawful act by Trump.
Many legal scholars would view Mueller's firing to be just an another act-among many-in furtherance of Trump's obstruction of justice.
Trump's favorite tactic: criminalizing his critics
Devin Nunes Threatens to Impeach Rod Rosenstein-Nunes Wins Battle With Rosenstein to See Trump Probe Document - Bloomberg (Democrat Response to Nunes, Mark Meadows and Goodlatte who are simply carrying Trump's water: "The chairman’s rhetoric is a shocking and irresponsible escalation of the GOP’s attacks on the FBI and DOJ," Schiff said in a statement Wednesday.)
As Mueller closes in, I would expect House Republicans to become more desperate to protect Trump, to hurl invective at the FBI and the DOJ, to obstruct investigations, and to distract attention away from Trump by shouting Hillary's name from the rooftops.
Bannon pitches White House on plan to cripple Mueller probe and protect Trump - The Washington Post (Bannon proposes that the White House cease cooperating with Mueller and recommends that Trump fire Rosenstein in an effort to cripple Mueller)
++
Donald and The Free Press:
Donald regards the free press as the "enemy of the people", meaning he really dislikes anyone contradicting his false statements with facts. An accurate statement from Donald is a rarity.
Donald hates the Washington Post in particular since the paper will challenge his Alternate Reality Creations with actual facts and are not his obedient lap dogs like so many in the purported conservative media (e.g. Hannity, Limbaugh, Fox and Friends who dutifully carry Trump's water without reservation or objection.)
I wonder when Donald last read a novel or any book. I will give him the benefit of doubt. He may have read "Art of The Deal", part of Trump's stunningly successful creation of a Trump brand representing success when he had experienced so many bankruptcies when actually trying to run a business.. The "Art of the Deal" was written by Tony Schwartz. If he did read that book, I suspect that it was the only book that he has read in the last 50 years.
Donald Trump’s Ghostwriter Tells All | The New Yorker (Schwartz regrets creating the "myth" of Donald Trump)
Trump wants to punish Bezos, who owns the WP, by using his presidential power to harm Amazon. The question is only whether his attorneys will allow him to take a step in that direction which he really want to do. Such an action, when and if undertaken by Trump, would be an impeachable offense by itself. Any effort to obfuscate the intent behind any such effort may ultimately prove unsuccessful:
Amazon is profitable for the U.S. Postal Service, says former Postmaster General - MarketWatch
++
Donald and Scott Pruitt:
Trump justified Pruitt's expensive travel habits based on alleged threats made against him.
Senators: E.P.A. Files Undercut Pruitt’s Need for First-Class Travel - The New York Times
Letter on E.P.A.'s Treat Assessment
EPA documents question justification for Pruitt’s 24/7 security detail, first-class travel - The Washington Post
Pruitt took taxpayer-funded security detail to Disneyland, Rose Bowl game | TheHill
++
Donald and Scott Pruitt:
Trump justified Pruitt's expensive travel habits based on alleged threats made against him.
Senators: E.P.A. Files Undercut Pruitt’s Need for First-Class Travel - The New York Times
Letter on E.P.A.'s Treat Assessment
EPA documents question justification for Pruitt’s 24/7 security detail, first-class travel - The Washington Post
Pruitt took taxpayer-funded security detail to Disneyland, Rose Bowl game | TheHill
++++++++++++++++++++++
North Korea Could Nuke U.S. by Summer, Official Warns
Is it rational to predict a good outcome when Donald and Kim meet?
Tensions with Russia are high.
Russia has suffered economically for generations due to a poor and extremely corrupt government. Russia's true economic potential has never come close to being realized.
Due to decades of mismanagement from the top down, Russia's stock market is irrelevant on the world's stage. One pundit called Russia an Italy with nukes which is the case when looking at GDP. No wonder Putin has an inferiority complex and a huge chip on his shoulder. He confuses military power with economic strength.
Opinion | Is Putin a C.I.A. Agent? - The New York Times ("Putin has undertaken so many actions in recent years that contributed to the weakening of Russia’s economy and human capital base that you have to wonder whether he’s secretly on the C.I.A.’s payroll.")
While Russia has had potential to be a robust economic power, that nation is drowning in military spending and has a lower GDP than California: California Is the World's Eighth Largest Economy
Will Russia outgrow California in GDP? Not unless there is a big earthquake and California falls into the Pacific.
US’ Moscow sanctions finally proving a major game changer for Russia: CNBC (the Ruble declined in value and interest rates on Russian debt rose)
Deripaska Goes From Famous Russian Billionaire to Global Outcast in Just Three Days - Bloomberg (Rusal loses 50 percent of its value in one day)
The West believes that Russia was behind the murder attempt of an old Russian guy, with good reasons, who would have passed away from natural causes soon enough. It is just pure idiocy for Putin to carry out these kind of attacks and nothing is gained by Russia by meddling in the political affairs and elections of western nations.
International chemical watchdog backs Britain’s findings on agent used to poison ex-Russian spy - The Washington Post (The Organization for the Prohibition of Chemical Weapons (OPCW) sent a team to Britain from March 21 to March 23 where they took blood samples from Yulia and Sergie Skripal and the Salisbury police officer and first responder Nicholas Bailey. The OPCW team also took samples of the nerve agent found at the scene. In a report published Thursday, the OPCW said they confirmed “the findings of the United Kingdom relating to the identify of the toxic chemical that was used in Salisbury and severely injured three people.”)
Putin's Kleptocracy - Wikipedia; Putin's Kleptocracy: Who Owns Russia?: Karen Dawisha:-Amazon.com: Books
North Korea Could Nuke U.S. by Summer, Official Warns
Is it rational to predict a good outcome when Donald and Kim meet?
Tensions with Russia are high.
Russia has suffered economically for generations due to a poor and extremely corrupt government. Russia's true economic potential has never come close to being realized.
Due to decades of mismanagement from the top down, Russia's stock market is irrelevant on the world's stage. One pundit called Russia an Italy with nukes which is the case when looking at GDP. No wonder Putin has an inferiority complex and a huge chip on his shoulder. He confuses military power with economic strength.
Opinion | Is Putin a C.I.A. Agent? - The New York Times ("Putin has undertaken so many actions in recent years that contributed to the weakening of Russia’s economy and human capital base that you have to wonder whether he’s secretly on the C.I.A.’s payroll.")
While Russia has had potential to be a robust economic power, that nation is drowning in military spending and has a lower GDP than California: California Is the World's Eighth Largest Economy
Will Russia outgrow California in GDP? Not unless there is a big earthquake and California falls into the Pacific.
US’ Moscow sanctions finally proving a major game changer for Russia: CNBC (the Ruble declined in value and interest rates on Russian debt rose)
Deripaska Goes From Famous Russian Billionaire to Global Outcast in Just Three Days - Bloomberg (Rusal loses 50 percent of its value in one day)
The West believes that Russia was behind the murder attempt of an old Russian guy, with good reasons, who would have passed away from natural causes soon enough. It is just pure idiocy for Putin to carry out these kind of attacks and nothing is gained by Russia by meddling in the political affairs and elections of western nations.
International chemical watchdog backs Britain’s findings on agent used to poison ex-Russian spy - The Washington Post (The Organization for the Prohibition of Chemical Weapons (OPCW) sent a team to Britain from March 21 to March 23 where they took blood samples from Yulia and Sergie Skripal and the Salisbury police officer and first responder Nicholas Bailey. The OPCW team also took samples of the nerve agent found at the scene. In a report published Thursday, the OPCW said they confirmed “the findings of the United Kingdom relating to the identify of the toxic chemical that was used in Salisbury and severely injured three people.”)
Putin's Kleptocracy - Wikipedia; Putin's Kleptocracy: Who Owns Russia?: Karen Dawisha:-Amazon.com: Books
++++++
1. Restarted Position in FIE:CA:
A. Bought 100 at C$7.28 (C$1 commission at IB):
Quote: iShares Canadian Financial Monthly Income ETF
Sponsor's Webpage: iShares Canadian Financial Monthly Income ETF
This ETF owns Canadian banks, insurance companies and REITs. The two largest holdings, however, are two other ETFs as shown in the following snapshot: iShares S&P/TSX Canadian Preferred Share Index ETF (CPD) and iShares Canadian Corporate Bond Index ETF (XCB) Those two ETFs in effect create a balanced fund.
Dividend: Monthly at C$.04 per share ($C.48 annually)
Dividend Yield at Total Cost of C$7.29 = 6.58%
Top 10 Holdings:
Last Sell Discussions:
Item # 5. Sold 300 FIE:CA at C$7.64 (11/26/17 Post)(profit snapshot C$160).
Item # 4.A. Sold 100 FIE:CA at C$7.57 (10/30/17 Post)(profit snapshot=C$35) (contains snapshots of prior round-trip trades= USD$391.32 for 1500 shares and USD$58.07 for 300 shares; C$166 for 200 shares)
Realized Gains To Date: US$449.29 + C$326 (IB account converted to USDs in 1099)
Last Buy Discussions:
Item # Added 200 FIE:CA at C$7.13 (9/3/17 Post)
Item # 5.B. Bought 100 FIE:CA at C$7 (6/1/2017 Post)
Item #5.A. Bought 100 FIE:CA at C$7.2 (6/1/17 Post)
I am concerned that Donald may actually implement policies that will harm Canada's economy. So I will probably limit my exposure to 300 FIE:CA shares until I have more clarity on that potential problems. The next lot would be bought when and if the price hits or breaks below C$7.
Closing Price Yesterday: FIE.TO C$7.25 -C$0.04 -0.55%
2. SMALL BALL USING UP COMMISSION FREE TRADES:
A. Started MFC-Bought 10 at $18.52 and 10 at $18.28:
Quotes:
USD Priced Shares: Manulife Financial Corp. (MFC)
CAD Priced Shares: Manulife Financial Corp (Canada: Toronto)
Manulife Financial Corporation is based in Canada and is "a leading international financial services group". The company operates "as John Hancock in the United States and Manulife elsewhere." MFC provides "financial advice, insurance, as well as wealth and asset management solutions for individuals, groups and institutions." At the end of 2017, MFC "had over 34,000 employees, 73,000 agents, and thousands of distribution partners, serving more than 26 million customers."
The MFC price will reflect the Toronto price converted from CADs into USDs. A rise in the CAD/USD exchange rate after purchase would result in the USD priced shares outperforming the CAD priced shares due to the CAD rising in value against the USD.
Management Discussion: 2017 Annual Report
Annual Report Consolidated Financial Statements
MFC Analyst Estimates ($2.04 this year; $2.14 next year)
P/E = 9.08 at $18.52 and 2018 E.P.S. consensus estimate of $2.04
Dividend: Quarterly at C$.22 per share
Total Position: 20 shares
Average Cost Per Share: $18.4
Dividend Rates
Dividend yield will depend on CAD/USD conversion rate for MFC owners. Last year, the MFC owners were paid US$.6507 per share which works out to a 3.54% dividend yield at a total cost per share of $18.4. The dividend was raised from C$.205 to $C.22 in the 2017 4th quarter, so the yield would be higher in 2018 assuming the same CAD/USD conversion rates. The dividend yield will increase with higher conversion rates and vice versa.
Last Earnings Report: Manulife reports 2017 net income of $2.1 billion, core earnings of $4.6 billion, strong growth in Asia and Wealth and Asset Management
"In 2017, Manulife generated core earnings of $4,565 million, fully diluted core earnings per common share of $2.22 and core return on common shareholders' equity ("core ROE") of 11.3%, compared with $4,021 million, $1.96 and 10.1%, respectively, for 2016. 2017 net income attributed to shareholders included a $2.8 billion post-tax charge related to the previously announced impact of the U.S. Tax Cuts and Jobs Act ("U.S. Tax Reform") and the decision to change the portfolio asset mix supporting our legacy businesses."
Credit Ratings:
Manulife's Credit Ratings
A life insurance company would generally receive a net benefit from a rising rate environment. More income can be generated by buying higher yielding bonds with the redemption proceeds of lower yielding ones. Premiums received from policy owners can likewise be invested at higher rates. One downside is that vintage bonds lose value. Profits formerly generated by selling appreciated bonds into the secondary market dissipate.
S & P has a 4 star rating and a $23 price target. S & P estimates 2018 operating E.P.S. at $2.03. Core operating profits in 2017 were divided by region as follows: U.S. 38%; Canada 29%; and Asia 33%. MFC's Asia operations are growing faster. Life insurance is a commodity business.
The Morningstar analyst has a less favorable view, rating the stock at 3 stars with an $18.5 fair value estimate, which was recently raised. This report is available to Schwab customers. One criticism leveled is that MFC allegedly has one of the highest cost distribution networks, paying out the highest percentage in commissions compared to its peers.
MFC has underperformed the major stock indexes and other life insurance companies.
5 Year Comparison Chart:
Green Line: SPY
Black Line: SLF (Sun Life, another large Canadian life insurance and asset management company)
Blue Line: MFC
Last Purchase Discussions:
Item # 1 Added 50 MFC at $13.1: Update For Portfolio Positioning And Management As Of 7/24/16 - South Gent | Seeking Alpha
Item # 1 Bought 50 MFC at $13.78 Update For Portfolio Positioning And Management As Of 3/13/16 - South Gent | Seeking Alpha
I mentioned selling the 100 shares at $18.28 here
A. Bought 100 at C$7.28 (C$1 commission at IB):
Quote: iShares Canadian Financial Monthly Income ETF
Sponsor's Webpage: iShares Canadian Financial Monthly Income ETF
This ETF owns Canadian banks, insurance companies and REITs. The two largest holdings, however, are two other ETFs as shown in the following snapshot: iShares S&P/TSX Canadian Preferred Share Index ETF (CPD) and iShares Canadian Corporate Bond Index ETF (XCB) Those two ETFs in effect create a balanced fund.
Dividend: Monthly at C$.04 per share ($C.48 annually)
Dividend Yield at Total Cost of C$7.29 = 6.58%
Top 10 Holdings:
Last Sell Discussions:
Item # 5. Sold 300 FIE:CA at C$7.64 (11/26/17 Post)(profit snapshot C$160).
Item # 4.A. Sold 100 FIE:CA at C$7.57 (10/30/17 Post)(profit snapshot=C$35) (contains snapshots of prior round-trip trades= USD$391.32 for 1500 shares and USD$58.07 for 300 shares; C$166 for 200 shares)
Realized Gains To Date: US$449.29 + C$326 (IB account converted to USDs in 1099)
Last Buy Discussions:
Item # Added 200 FIE:CA at C$7.13 (9/3/17 Post)
Item # 5.B. Bought 100 FIE:CA at C$7 (6/1/2017 Post)
Item #5.A. Bought 100 FIE:CA at C$7.2 (6/1/17 Post)
I am concerned that Donald may actually implement policies that will harm Canada's economy. So I will probably limit my exposure to 300 FIE:CA shares until I have more clarity on that potential problems. The next lot would be bought when and if the price hits or breaks below C$7.
Closing Price Yesterday: FIE.TO C$7.25 -C$0.04 -0.55%
2. SMALL BALL USING UP COMMISSION FREE TRADES:
A. Started MFC-Bought 10 at $18.52 and 10 at $18.28:
Quotes:
USD Priced Shares: Manulife Financial Corp. (MFC)
CAD Priced Shares: Manulife Financial Corp (Canada: Toronto)
Manulife Financial Corporation is based in Canada and is "a leading international financial services group". The company operates "as John Hancock in the United States and Manulife elsewhere." MFC provides "financial advice, insurance, as well as wealth and asset management solutions for individuals, groups and institutions." At the end of 2017, MFC "had over 34,000 employees, 73,000 agents, and thousands of distribution partners, serving more than 26 million customers."
The MFC price will reflect the Toronto price converted from CADs into USDs. A rise in the CAD/USD exchange rate after purchase would result in the USD priced shares outperforming the CAD priced shares due to the CAD rising in value against the USD.
Management Discussion: 2017 Annual Report
Annual Report Consolidated Financial Statements
MFC Analyst Estimates ($2.04 this year; $2.14 next year)
P/E = 9.08 at $18.52 and 2018 E.P.S. consensus estimate of $2.04
Dividend: Quarterly at C$.22 per share
Total Position: 20 shares
Average Cost Per Share: $18.4
Dividend Rates
Dividend yield will depend on CAD/USD conversion rate for MFC owners. Last year, the MFC owners were paid US$.6507 per share which works out to a 3.54% dividend yield at a total cost per share of $18.4. The dividend was raised from C$.205 to $C.22 in the 2017 4th quarter, so the yield would be higher in 2018 assuming the same CAD/USD conversion rates. The dividend yield will increase with higher conversion rates and vice versa.
Last Earnings Report: Manulife reports 2017 net income of $2.1 billion, core earnings of $4.6 billion, strong growth in Asia and Wealth and Asset Management
"In 2017, Manulife generated core earnings of $4,565 million, fully diluted core earnings per common share of $2.22 and core return on common shareholders' equity ("core ROE") of 11.3%, compared with $4,021 million, $1.96 and 10.1%, respectively, for 2016. 2017 net income attributed to shareholders included a $2.8 billion post-tax charge related to the previously announced impact of the U.S. Tax Cuts and Jobs Act ("U.S. Tax Reform") and the decision to change the portfolio asset mix supporting our legacy businesses."
Credit Ratings:
Manulife's Credit Ratings
A life insurance company would generally receive a net benefit from a rising rate environment. More income can be generated by buying higher yielding bonds with the redemption proceeds of lower yielding ones. Premiums received from policy owners can likewise be invested at higher rates. One downside is that vintage bonds lose value. Profits formerly generated by selling appreciated bonds into the secondary market dissipate.
S & P has a 4 star rating and a $23 price target. S & P estimates 2018 operating E.P.S. at $2.03. Core operating profits in 2017 were divided by region as follows: U.S. 38%; Canada 29%; and Asia 33%. MFC's Asia operations are growing faster. Life insurance is a commodity business.
The Morningstar analyst has a less favorable view, rating the stock at 3 stars with an $18.5 fair value estimate, which was recently raised. This report is available to Schwab customers. One criticism leveled is that MFC allegedly has one of the highest cost distribution networks, paying out the highest percentage in commissions compared to its peers.
MFC has underperformed the major stock indexes and other life insurance companies.
5 Year Comparison Chart:
Green Line: SPY
Black Line: SLF (Sun Life, another large Canadian life insurance and asset management company)
Blue Line: MFC
Last Purchase Discussions:
Item # 1 Added 50 MFC at $13.1: Update For Portfolio Positioning And Management As Of 7/24/16 - South Gent | Seeking Alpha
Item # 1 Bought 50 MFC at $13.78 Update For Portfolio Positioning And Management As Of 3/13/16 - South Gent | Seeking Alpha
I mentioned selling the 100 shares at $18.28 here
 |
| 2016 MFC 100 Shares +$481.06 |
I have also traded MFC reset equity preferred stocks:
B. Bought 10 Shares LTC at $37.7-Used Commission Free Trade:
Quote: LTC Properties Inc. (LTC)
Financing Senior Housing Since 1992 | LTC Properties Inc.
Portfolio Map for LTC Properties
About: LTC owns 208 properties (105 assisted living; 96 skilled nursing; 7 others)
I have never owned LTC before this 10 share purchase. I have stayed away due to the low yield compared to other REITs that own nursing homes and/or senior housing.
I will discuss this REIT in more detail when I buy more shares.
Dividend: Monthly at $.19 per share ($2.28 annually)
LTC Declares Its Monthly Common Stock Cash Dividend for the Second Quarter of 2018
The dividend was last raised from $.18 to $1.19 effective for October 2016. Dividends
Dividend Yield at $37.7= 6.05%
Next Ex Dividend Date: 4/19/18
Last Earnings Report: LTC Reports 2017 Fourth Quarter Results and Discusses Recent Investment Activity
Q4 2017 Results - Earnings Call Transcript | Seeking Alpha
Closing Price Yesterday: LTC $37.21 -$0.04 -0.11%
I will need lower prices to buy additional shares. Owning nursing homes and senior living facilities are inherently more risky than other REIT sectors.
C. Bought 10 GOV at $12.5, 5 at $12.38 and 5 at $11.99-Used Commission Free Trades: (in orders words, the quintessential falling knife)
If this REIT stock continues to fall toward zero, I will probably take my total position up to 100 shares.
Last Mentioned: Item # 1.B. Bought 5 GOV at $12.87 (4/5/18 Post)(3/26/18 trade)
Closing Price Day of 10 Share Trade (Thursday 4/5/18): GOV $12.48 -$0.59 -4.51%: Government Properties Income Trust (a deservedly hated REIT IMO)
Closing Price Day of First 5 Share Trade (Friday 4/6/18): GOV $12.28 -$0.20 -1.60%
Closing Price Day of Second 5 Share Trade (Monday 4/9/18): GOV $11.88 -$0.40 -3.26%
Chart: Awful befitting its many character flaws
I am starting to think that maybe investors have gone too far. Sure, this REIT is deservedly hated, but the $11.88 price for my last purchase discounts the valid reasons for that hatred and then some IMO.
The most recent downdraft has the feel of institutional liquidations, including one or more major owners selling shares everyday at whatever price that is available to them.
Some of the selling may be from REIT ETFs, though I do not have access to data of inflows and outflows for those funds.
The largest owners are index funds. Holders I would not be surprised to learn that the Vanguard REIT ETF is currently experiencing net redemptions. While that may not matter for a popular REIT stock that has strong institutional support, it would be a negative trend for one that is hated.
The stock started its most recent swan dive after closing at $18.34 (1/25/18). The financial report for the last quarter was released about a month later.
Position: 45 Shares
Total Average Cost Per Share: $12.87
Highest Cost Lot: 10 shares at $13.67
Dividend: Quarterly at $.43 ($1.72 annually)
Government Properties Income Trust-Distributions
Dividend Yield at Total Average Cost = 13.36%
Last Ex Dividend Date: 1/26/18
Last Substantive Discussion: Item # 2.A. Bought 10 GOV at $13.67 (3/22/18 Post)
Closing Price Yesterday: GOV $12.33 -$0.02 -0.16%
3. Eliminated MCDFX:
This was my smallest mutual fund position.
Quote Matthews China Dividend Fund
MCDFX Matthews China Dividend Investor Fund-Morningstar (4 star rating)
Profit Snapshot (dividends reinvested):
Total Returns Through 4/4/18
YTD = 2.27%
2017 = 37.69%
Matthews China Dividend Fund Investor Class (MCDFX) Fund Performance and Returns
My last elimination was near the end of another price spurt in 2015:
4. Short Term Bond/CD Ladder Basket Strategy:
B. Bought 10 Shares LTC at $37.7-Used Commission Free Trade:
Quote: LTC Properties Inc. (LTC)
Financing Senior Housing Since 1992 | LTC Properties Inc.
Portfolio Map for LTC Properties
About: LTC owns 208 properties (105 assisted living; 96 skilled nursing; 7 others)
I have never owned LTC before this 10 share purchase. I have stayed away due to the low yield compared to other REITs that own nursing homes and/or senior housing.
I will discuss this REIT in more detail when I buy more shares.
Dividend: Monthly at $.19 per share ($2.28 annually)
LTC Declares Its Monthly Common Stock Cash Dividend for the Second Quarter of 2018
The dividend was last raised from $.18 to $1.19 effective for October 2016. Dividends
Dividend Yield at $37.7= 6.05%
Next Ex Dividend Date: 4/19/18
Last Earnings Report: LTC Reports 2017 Fourth Quarter Results and Discusses Recent Investment Activity
Q4 2017 Results - Earnings Call Transcript | Seeking Alpha
Closing Price Yesterday: LTC $37.21 -$0.04 -0.11%
I will need lower prices to buy additional shares. Owning nursing homes and senior living facilities are inherently more risky than other REIT sectors.
C. Bought 10 GOV at $12.5, 5 at $12.38 and 5 at $11.99-Used Commission Free Trades: (in orders words, the quintessential falling knife)
If this REIT stock continues to fall toward zero, I will probably take my total position up to 100 shares.
Last Mentioned: Item # 1.B. Bought 5 GOV at $12.87 (4/5/18 Post)(3/26/18 trade)
Closing Price Day of 10 Share Trade (Thursday 4/5/18): GOV $12.48 -$0.59 -4.51%: Government Properties Income Trust (a deservedly hated REIT IMO)
Closing Price Day of First 5 Share Trade (Friday 4/6/18): GOV $12.28 -$0.20 -1.60%
Closing Price Day of Second 5 Share Trade (Monday 4/9/18): GOV $11.88 -$0.40 -3.26%
Chart: Awful befitting its many character flaws
I am starting to think that maybe investors have gone too far. Sure, this REIT is deservedly hated, but the $11.88 price for my last purchase discounts the valid reasons for that hatred and then some IMO.
The most recent downdraft has the feel of institutional liquidations, including one or more major owners selling shares everyday at whatever price that is available to them.
Some of the selling may be from REIT ETFs, though I do not have access to data of inflows and outflows for those funds.
The largest owners are index funds. Holders I would not be surprised to learn that the Vanguard REIT ETF is currently experiencing net redemptions. While that may not matter for a popular REIT stock that has strong institutional support, it would be a negative trend for one that is hated.
The stock started its most recent swan dive after closing at $18.34 (1/25/18). The financial report for the last quarter was released about a month later.
Position: 45 Shares
Total Average Cost Per Share: $12.87
Highest Cost Lot: 10 shares at $13.67
Dividend: Quarterly at $.43 ($1.72 annually)
Government Properties Income Trust-Distributions
Dividend Yield at Total Average Cost = 13.36%
Last Ex Dividend Date: 1/26/18
Last Substantive Discussion: Item # 2.A. Bought 10 GOV at $13.67 (3/22/18 Post)
Closing Price Yesterday: GOV $12.33 -$0.02 -0.16%
3. Eliminated MCDFX:
This was my smallest mutual fund position.
Quote Matthews China Dividend Fund
MCDFX Matthews China Dividend Investor Fund-Morningstar (4 star rating)
Profit Snapshot (dividends reinvested):
 |
| 111+ Shares +$315.95 |
YTD = 2.27%
2017 = 37.69%
Matthews China Dividend Fund Investor Class (MCDFX) Fund Performance and Returns
My last elimination was near the end of another price spurt in 2015:
 |
| 204+ Shares +$821.23 |
A. Bought 2 Thermo Fisher Scientific 2.4% SU Bonds Maturing on 2/1/19:
Finra Page: Bond Detail (prospectus linked)
Issuer: Thermo Fisher Scientific Inc. (TMO)
TMO Analyst Estimates
Thermo Fisher Scientific Reports Fourth Quarter and Full Year 2017 Results
Credit Ratings:
Bought at a Total Cost of 99.843
YTM at Total Cost Then at 2.592%
Current Yield at TC = 2.4038%
B. Bought 1 Treasury 1.5% Coupon Maturing on 1/31/19 (about 10 months):
YTM = 2.008%
I now own 3 bonds.
The best CD rate maturing in January was 1.95% at the time of purchase:
If there was a CD that paid monthly interest with a 1.95% coupon, then that would be close to equivalent to the treasury paying semi-annually with a 2% YTM. The treasury is more liquid but that is not an issue for me.
C. Bought 1 Treasury 1.25% Coupon Maturing on 11/15/18:
YTM = 1.915%
I now own 2 bonds.
D. Bought 2 First N.A. 1.8% CDs (monthly interest payments) Maturing on 10/19/18 (6 month CDs):
3. Intermediate Term Bond/CD Ladder Basket Strategy:
A. Bought 1 Federal Realty 3% SU Bond Maturing on 8/1/22:
FINRA Page: Bond Detail (prospectus linked)
2017 Annual Report (debt listed at page 48)
Credit Ratings:
Fitch at A- Credit Ratings | Federal Realty Investment Trust
Bought at a Total Cost of 99.154
YTM at TC Then at 3.21%
Current Yield at TC = 3.0256%
B. Bought 1 Entergy Arkansas 3.05% First Mortgage Bond Maturing on 6/1/23:
I now own 3 bonds.
FINRA Page: Bond Detail (prospectus linked)
Issuer: Wholly Owned Subsidiary of Entergy Corp. who does NOT guarantee the notes
Page 325 Entergy 10-K
Entergy Arkansas - Service Area
Security: The first lien attaches to substantially all of the assets owned by Entergy Arkansas.
Credit Ratings:
Bought at a Total Cost of 98.903
YTM at TC Then at 3.282%
Current Yield at TC = 3.0838%
B. Bought 1 Entergy Arkansas 3.05% First Mortgage Bond Maturing on 6/1/23:
FINRA Page: Bond Detail (prospectus linked)
Issuer: Wholly Owned Subsidiary of Entergy Corp. who does NOT guarantee the notes
Page 325 Entergy 10-K
Entergy Arkansas - Service Area
Security: The first lien attaches to substantially all of the assets owned by Entergy Arkansas.
Bought at a Total Cost of 98.903
YTM at TC Then at 3.282%
Current Yield at TC = 3.0838%
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.
REITs had a bad day in an up market as interest rates rose.
ReplyDeleteVanguard Real Estate ETF (VNQ):
$74.27 -$0.84 -1.12%
https://www.marketwatch.com/investing/fund/vnq
S&P 500 Index
2,663.99 + 21.80 +0.83%
iShares 7-10 Year Treasury Bond ETF (IEF)
$102.49 -$0.37 -0.36%
https://www.marketwatch.com/investing/fund/ief
The spark for today's rally may have been the report that Trump was going to reconsider joining the Trans-Pacific Partnership according to two republican senators from farm states:
https://www.cbsnews.com/news/tpp-trump-looking-to-re-enter-trans-pacific-partnership-pat-roberts-ben-sasse-say-meeting-today-2018-04-12/
The TPP agreement was not yet ratified by the U.S. when Trump became President. One of his first acts was to withdraw the U.S. from the agreement by executive order.
https://www.whitehouse.gov/presidential-actions/presidential-memorandum-regarding-withdrawal-united-states-trans-pacific-partnership-negotiations-agreement/
The other participants proceeded without the U.S. and finalized that trade treaty. That agreement is now call the "Comprehensive and Progressive Agreement for Trans-Pacific Partnership"
https://international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/index.aspx?lang=eng
Provisions that the U.S. wanted in the original TPP were suspended.
"At the same time, a total of 22 provisions from the original agreement were suspended or otherwise changed, setting aside issues that were priorities for the United States in the original negotiations but did not enjoy similar support among the other TPP countries."
https://www.csis.org/analysis/tpp-cptpp
Trump railed against the TPP throughout his campaign. He did not know what he talking about and his supporters agreed with his criticism without knowing much of anything that was accurate about the TPP, being misled by the Fox news personalities like Sean Hannity. The left in the U.S. also opposed that treaty (e.g. Bernie Sanders calling it a job killing agreement).
The TPP countries are not going to negotiate a separate and more favorable deal with the U.S.
I regard Trump's remarks today as just more jive, telling a couple of GOP farm state senators what they wanted to hear. The Stock Jocks are a gullible breed.
It does not appear that the market cares much about the drama unfolding in Washington.
Up 300 on the DJIA, Down 300; Up 300 etc. and so on. Just a lot of dust being kicked up as the thundering herd moves rapidly in a circle.
+++++
I mailed my tax return today, around 100 pages. Perhaps I need to start trading less. I realized over $48K in capital gains last year, which was a nice supplement to my interest and dividend income. My interest income this year will more than double from 2017 given the rise in interest rates.
Hello southgent,
ReplyDeleteCongrats on your 48,000 Gains. If I may ask do you do your own taxes? Boy a hundred pages! That must be 50 pages of trades!
Do You favor using capital losses to balance out Gains. Or many of your Gains short-term in nature? I know you use the dividend capture strategy which may well be short term gains.
I have been gradually taking money off the table and putting it into short-term bonds or CDs, but I do have some capital gains for 2018, but I am uncertain as to what to do with the losses I have.
The companies that I have losses in I believe will be around at least for the next 20 years or so. The dividends from the stocks which are mostly A to BBB+ rated companies and always at least investment-grade, I have been struggling with what to do as the dividends are quite helpful.
I wondered how you approach this in terms of using loses?
Thanks a lot, SA
I used Turbo Tax this year. I generally generate trading gains to supplement my dividend and interest income. This year had an abundance of small trades. I killed some trees this year with the Form 8649. I do not file electronically when I prepare the return.
DeleteI used a CPA last year which cost me $1800+ and I had to teach him what I would consider to be basic investor accounting and had to correct his mistakes (e.g. a failure to make the accrued interest paid to taxable bond sellers adjustment in schedule B which I mentioned in my cover letter to him and was not done in the first draft).
Prior to that guy, I had an older CPA who knew what he was doing and I used him for about three years. He retired and handed me off to a young guy who was not up to par and charged too much.
Prior to that I prepared my own returns using Turbo Tax.
Turbo Tax is now better in helping me compute the foreign income tax credit using IRS Form 1116 than when I last used it. I was able to take a credit for 100% of the foreign dividend taxes paid last year.
I will do tax loss harvesting to reduce my tax obligation, and I did that last year. I do it every year to some degree.
Basically, my approach involves deciding whether the tax loss has more of a dollar benefit than trying to hold onto a loser and hope it turns around. I invest in distressed stocks and that is going to generate some losses and less than optimal investments.
Interactive Brokers never did provide me with a TXF format where I could download into Turbo Tax. That is the only broker where I have ever had that to happen. I purchased software to convert a CSV file into the TXF format.
I am sitting on a number of significant unrealized gains in my T.Rowe Price mutual funds. I decided a few days ago to harvest the profit in its Emerging Markets fund, which was one of the smallest positions since it was up over 42% last year.
I am taking profits now. Generally, I will wait and decide later what I may want to sell for a loss.
++++
The market turned south when there were reports that the DOJ's investigation of Trump's attorney was a criminal one, largely based on his personal business dealings. There have been references to his investments in taxi medallions which have plummeted in value. I would assume that he has bank loans for that investment.
The prosecutors alleged that documents were being deleted. This investigation is being handled, not by Mueller's team, but by federal prosecutors from the Southern District of NY in NYC. The top prosecutor in that division was appointed by Donald.
CNN had a headlines making that announcement that coincided with the stock market decline.
https://www.cnn.com/2018/04/13/politics/michael-cohen-hearing-fbi-raid/index.html
Dah. That was a given after news broke of the FBI search pursuant to a court issued warrant.
China may be front and center next week again. According to several news reports, Donald is having prepared a preliminary list of imports that would be subject to his $100B in tariffs.
https://www.cnbc.com/2018/04/13/white-house-reportedly-to-increase-trade-pressure-on-china.html
South Gent,
ReplyDeleteMFC is a well run company with good track record. If it ever drops to its 2016 low again during next correction, it should be a full position (5%) stock. By the way, have you ever taken any stock/preferred/bond to a 5% level?
Y: I have not had any position that would come close to 5% in over 20 years. I find some comfort in an extremely diverse balanced portfolio where I am a mile wide and an inch deep. I do not currently have an individual stock position in one of my taxable accounts that exceeds 1% just in a single account.
DeleteMy primary portfolio management change over the past year involves moving cash out of broker sweep accounts into short term CDs and bonds. There was a long time during the ZIRP era where that was not even worth the effort.
My primary nip and tuck over the past several weeks was to increase slightly my equity REIT allocation and to start nibbling again on intermediate term, investment grade corporate bonds. Equity REIT stocks still remain either in a correction or a bear market depending on the stock.
I do view preferred stocks as a disfavored niche
income category since they represent IMO the worst of two worlds: equity capital with no equity ownership in the business and bond-like without the seniority, protection and promise to pay the principal amount at a time certain which are bond characteristics. My equity preferred stock positions have never exceeded .5% of my portfolio's value when all of them are combined into one total. I had a larger allocation than normal in 2008-2010 when many of them could be bought at greater than 50% discounts to their par values.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2018/04/observations-and-sample-of-recent_16.html