Thursday, May 17, 2018

Observations and Sample of Recent Trades: CIO, DEA, GPT, SRET


The Atlanta Fed' GDPNow model is predicting at the moment a 4.1% real GDP growth for the second quarter. 

Retail Sales: The March number was revised up to .8% from .6%.

Sourced: Retail Sales.pdf

The major gains were sales by gasoline stations, due to the price of gasoline  and to online sales. Gasoline sales were up 11.7% Y-O-Y in April. I view the increased cost of gasoline to be a negative factor. The increase in price has a similar economic impact to a tax increase. Filling up the gas tank cost Americans an extra $4.4 billion in April - MarketWatch

The 10 year treasury yield hit its highest level since 2011 last Tuesday. 

The Bond Ghouls believe that it is 100% certain that the FED will raise the federal funds rate range by .25% next month. The odds of another .25% increase in September is close to certain. 

Goldman: Deficit-unemployment rate disconnect could fuel higher interest rates: CNBC 


Markets and Market Commentary


Trump, ZTE and China Loaning Money for a Trump Resort:

Trump's Commerce Department recently imposed sanctions on China's ZTE for selling products to Iran and North Korea. ZTE had pled guilty in March 2017 to violating the sanctions and was fined $1.9 billion. ZTE Corporation Agrees to Plead Guilty and Pay Over $430.4 Million for Violating U.S. Sanctions by Sending U.S.-Origin Items to Iran | OPA | Department of Justice (the other fines were levied by the Commerce and Treasury Departments.

ZTE then violated its plea deal by continuing to sell products to Iran and North Korea. The Commerce Department then prohibited U.S. firms from selling parts to ZTE for seven years as a punishment for ZTE's violation of the sanctions and its plea agreement. Donald talked to China's President who complained; and Trump reversed gears, saying that too many jobs were being lost in China.

Donald did not consult anyone internally that was actually involved in the ZTE matter before reversing his Administration's position.Trump’s ZTE tweet sows confusion before trade talks with China - The Washington Post 

Two days before Trump changed course, a state owned Chinese company agreed to loan $500 million to Indonesian developers building a resort that includes Trump branded hotels, residences and golf course. Trump Indonesia project is latest stop on China’s Belt and Road | South China Morning Post; China Contributes $500 Million to Trump-Linked Indonesia Project | National ReviewTrump helps sanctioned Chinese phone maker after China delivers a big loan to a Trump project - Vox 

I wonder what Sean Hannity would say if Obama did anything remotely similar. Donald Trump and Sean Hannity’s Late Night Calls


Trump: Never Apologize-Just Attack

White House Refuses to Apologize for Kelly Sadler’s Joke About McCain - The New York Times

Donald's apparent response was to blame the media and whoever leaked Kelly Sadler's comment about McCain:

In TrumpWorld, calling the leaker of Kelly Sadler's comment a traitor and blasting the Free Press is better than simply apologizing to McCain.

‘That’s not what we do’: Republicans balk at confronting Trump over McCain smear 


Realistic Estimates of Retirement Expenses:

Health care will cost $280,000 in retirement — and that doesn’t include this huge expense - MarketWatch This estimate is for a couple retiring at age 65 now.

As usual, this estimate does not cover long term care expenses like nursing homes or caregiver services. The number does not include any meaningful change in traditional Medicare coverage such as the GOP's 2011 plan to substitute a voucher system to buy private insurance for traditional Medicare that would have doubled the premium costs.

A Couple Retiring in 2018 Would Need an Estimated $280,000 to Cover Health Care Costs in Retirement - Fidelity


More on Amazon vs. WalMart.Com:

On 3/12/18, I paid Amazon $26.28 for this product:

Early yesterday morning, I checked the WMT price for the same product and size. The price was $21.91:

AMAZON was 20% higher.

Optimum Nutrition Superior Amino 2222 Capsules, 320 Ct -

A few minutes later, I went back to AMZN to confirm the product was the same. AMZN had changed the price to  $21.91, the exact same price as WMT. I could save a $1.1 per order if I set up a regular delivery schedule.

Apparently, Amazon was tracking my movements, noted that I visited WMT's site for this product, and only then lowered its price to match, not beat, the WMT price. 

I did not appreciate being ripped-off unless I first compared AMZN's price to another retailer. And, I was disturbed that my internet movements were apparently being tracked in this fashion.  


1. Small Ball:

A. Sold 40+ GPT at $27.51-Used Commission Free Trade:

Profit Snapshot: +$149.16

Gramercy Property Trust Enters into Definitive Agreement to be Acquired by Blackstone for $27.50 per Share in a $7.6 billion Transaction 

So this will be my last trade in Gramercy. 

Stocks, Bonds & Politics: Gateway Post: Equity REIT Common and Preferred Stock Basket Strategy

Gramercy Trading Profits+$1,133.84 (includes Chambers Property who acquired Gramercy and then changed its name to Gramercy)

B. BOUGHT 50 SRET at $14.8-Used Commission Free Trade:

SRET is a new entry into the small ball "buying program".

Quote: Global X SuperDividend REIT ETF

Sponsor's Website: SuperDividend® REIT ETF (expense ratio .58%)

Holdings as of 5/4/18:

Prior Trades: None

Dividends: Monthly

The next ex dividend date is 6/5/18.

Dividend Yield: The dividends are variable to some extent. If I used an average of $.094 per month, the dividend yield at a TC of $14.8 would be about 7.62%. Note the presence of several Mortgage REITs and foreign REITs among the holdings.

Canadian REITs:

Dream Global Real Estate Investment Trust (Canada: Toronto)(bought & sold)
H&R Real Estate Investment Trust (Canada: Toronto)


Stockland Stock Quote (Australia: Sydney)(own 600 shares)
Vicinity Centres Stock Quote (Australia: Sydney)


Wereldhave N.V. (Netherlands: Euronext Amsterdam)

Among the mortgage REITs, CYS is being acquired by Two Harbors. I recently sold out of my CYS and AGNC positions, both of which are owned by this ETF.

I also own the following stocks owned by this ETF:

Starwood Property Trust Inc. (STWD)

New Residential Investment Corp. (NRZ)
W. P. Carey Inc.  (WPC)
Medical Properties Trust Inc.  (MPW)
Independence Realty Trust Inc.  (IRT)

Government Properties Income Trust (GOV)

BRG, STWD, MPW, NRZ AND GOV were recent buys under the small ball "buying program". IRT is my largest position among those 5 REITs. I own 30 shares of WPC bought at $59.45 and discussed in this comment. I have frequently bought and sold MPW and currently own 63+ shares with the last buy of 10 shares discussed here: Item # 2.C. Added 10 MPW at $12 (2/12/18 Post)(trading profits using small lots at $1,395.20)

It is not surprising that there is overlap since I tend to take small positions in higher yielding equity REITs that are out-of-favor and in many cases deservedly so (e.g. GOV, SIR, SNR, BRG)

C. Sold 10 CIO at $11.58-Used Commission Free Trade:

Perhaps, I need to call this Tiny Weeny Small Ball. I am discussing this trade and the 10 share DEA disposition to point out an issue in dividend coverage.

Profit Snapshot: +$13.94

Item # 1.B. Bought 10 CIO at $10.19 (3/12/18 Post)

Quote: City Office REIT Inc. (CIO)

Why sell 10 shares? I do not have a good bad answer. My best bad answer is that I can do it without incurring a commission and I did not care for some financial metrics in the last earnings report which I view as important longer term.   

Dividend: Quarterly at $.235 per share

CIO Trading Profits: $282.95 ($269.01 in prior trades)

Prior Round-Trips:

Item # 8 Sold 100 CIO at $13.5: Update For Equity REIT Basket Strategy As Of 7/28/16 - South Gent | Seeking Alpha (profit snapshot= $207.97)-Item # 5 Bought 100 CIO at $11.4 at Update For Equity REIT Basket Strategy As Of 4/6/16 - South Gent | Seeking Alpha

Item # 1. Sold 50 CIO at $12.38Update For Equity REIT Basket Strategy As Of 3/7/16 - South Gent | Seeking Alpha (profit snapshot $61.04 plus one dividend)-Scroll to 2. BOUGHT CIO at $11.12Update For REIT Basket Strategy As Of 11/24/15 - South Gent | Seeking Alpha

The lowest previous buy price before this 10 lot purchase was at $11.12 and that was in 2015.

I am lowering my exit and entry points based on my opinions about financial results. 

When I discussed the 10 share lot purchase, I mentioned then that the 2017 4th quarter was not worthy of generating any excitement. 

Last Earnings Report-What is wrong with this one?:

City Office REIT Reports First Quarter 2018 Results

Most REITs do not provide accurate free cash flow numbers IMO. Personally, I view most reports as providing inadequate free cash flow numbers, meaning basically cash that is available for distribution.

Only a few REITs breakout routine maintenance expenditures as a deduction from FFO to arrive at FAD for example. Money spent to maintain the property is not cash available for distribution.

CIO does deduct cash expenses and non-cash revenues to arrive at its FAD/AFFO number. Remember the quarterly dividend is $.235 per share.

Note the deductions from FFO for several recurring expenses like tenant improvement, leasing commission and maintenance expenditures and the non-case revenue item created by the straight line rent accounting convention.

D. Sold 10 DEA at $21.44-Used Commission Free Trade:

Profit Snapshot: $22.59

Item # 1.A. Bought 10 DEA at $19.18 (3/8/18 Post)

Quote: Easterly Government Properties Inc. (DEA)

Prior Round-TripItem 5. A. Sold 50 DEA at $21.59-Used Commission Free Trade (12/11/17 Post)-Item # 3.A.  Bought 50 DEA $19.64 (8/19/17 Post)

DEA is still a sell for me whenever the price exceeds $21, irrespective of the profit or the number of shares owned, assuming I can sell a small lot using a commission free trade and I currently have over 500 of those.

DEA is another REIT that makes a good faith effort to be honest about its free cash flow number as I discussed in the 8/19/17 post linked above. I find this kind of financial disclosure to be rare among REITs. I real effort is made to disclose funds available for distribution in the quarterly reports. 

Dividend: Quarterly at $.26 per share

Dividends | Easterly Government Properties, Inc.

DEA Trading Profits to Date: $120.44

Last Earnings Report: Q/E 3/31/18:

Easterly Government Properties Reports First Quarter 2018 Results

REIT investors will generally focus on FFO. That "cash flow" number will generally include non-cash revenues created by the accounting professions and exclude cash expenses that are recurring in variable amounts. 

DEA reported FFO per share at $.31 which appears to provide good coverage for the quarterly dividend. The company then adjusts that number down to a AFFO of $.26 per share. One of the adjustments is to remove non-cash revenue created by the straight line rent accounting convention. 

DEA then calculates cash available for distribution which comes to $.221 per share. Among the cash expenditures deducted from the AFFO number are "acquisition costs", "maintenance capital expenditures", "contractual tenant improvements" and "leasing related expenditures".
When looking at cash available for distribution, the quarterly dividend of $.26 is not even close to being covered. I will give DEA an "A" for transparency which is rare in REIT land. I will consider buying shares back at or below my last purchase price of $19.18. 

2. Short Term Bond/CD Ladder Basket Strategy:

A. Bought 2 Pinnacle Bank 1.95% CDs (monthly interest payments) Maturing on 11/13/18:

B. Bought 1 Bank of India 1.95% CD Maturing on 10/31/18:

C. Bought 1 Treasury 2.375% Coupon Maturing on 4/30/20:

YTM at 2.468%

3. Intermediate Term Bond/CD Ladder Basket Strategy

A. Bought 1 Laboratory Corp. 3.2% SU Bond Maturing on 2/1/22

I now own 2 bonds.  

FINRA PAGE: Bond Detail (prospectus linked)

2017 Annual Report (debt listed and discussed starting at page F-23)

Credit Ratings: 

Bought at a Total Cost of 98.962
YTM at TC Then at 3.496%
Current Yield at TC = 3.234%

B. Bought 1 AvalonBay 2.95% SU Bonds Maturing on 5/11/26:

FINRA PAGE: Bond Detail (prospectus linked)

Issuer: Avalonbay Communities Inc. (AVB)

AvalonBay Communities, Inc. Announces First Quarter 2018 Operating Results

AVB SEC Filings2017 Annual Report (debt listed starting at page 46)

AVP last bond offering was to sell $300M in a 4.35% SU bond maturing in 2048: Prospectus (March 2018)

Credit Ratings: 

Bought at a Total Cost of  93.328

YTM at TC Then at 3.927%
Current Yield at TC = 3.1609%

I previously sold this bond at 98.255 and at 98.264. Items # 2 B. and 2.C. (10/11/17 Post)

C. BOUGHT 1 Anheuser Busch InBev 2.5% SU Bonds Maturing on 7/15/22:

I now own 3 bonds.

FINRA PAGE: Bond Detail

ISSUER: Anheuser-Busch InBev S.A.

Fitch Affirms Anheuser-Busch InBev at 'BBB'; Outlook Stable (3/22/18)

Bought at a Total Cost of 96.95

YTM at TC Then at 3.281%
Current Yield at TC = 2.5786%

D. Bought 1 Whirlpool 3.7% SU Bond Maturing on 3/1/23:

FINRA Page: Bond Detail (prospectus linked)

Issuer: Whirlpool Corp (WHR)

WHR Analyst Estimates

Whirlpool Corporation Reports First-Quarter 2018 Results

Whirlpool Corporation To Commence Modified Dutch Auction Tender Offer To Purchase Up To $1 Billion of its Common Shares

Whirlpool Corporation Announces Sale Of Embraco Compressor Business And A Modified Dutch Auction Tender Offer (" announced today that it has entered into an agreement to sell the Company's Embraco compressor business to Nidec Corporation for a cash purchase price of $1.08 billion") A bond investor would have preferred that the proceeds be used to retire debt or to fund operations without issuing new debt. 

WHR SEC Filings

WHR 2017 Annual Report (debt discussed and listed starting at page 54; total long term debt increased to $4.392B as of 12/31/17 from $3.876B as of 12/31/16)

Credit Ratings:

Fitch Affirms Whirlpool's IDR at 'BBB'; Outlook Stable

Fitch: Whirlpool's Ratings Unaffected by Pending Sale of Its Embraco Compressor Business

Bought at a Total Cost of 99.874

YTM at TC Then at 3.728%
Current Yield at TC = 3.7047%

Bonds are declining in price due to the ongoing rise in interest rates. I am noticing a lowering in ask prices intra-day far more frequently than in the past. This Whirlpool bond closed yesterday at 99.17. When and if the current yield creeps over 4%, I will consider buying one more bond.  

DisclaimerI am not a financial advisor but simply an individual investor who has been managing my own money since I was a teenager. In this post, I am acting solely as a financial journalist focusing on my own investments. The information contained in this post is not intended to be a complete description or summary of all available data relevant to making an investment decision. Instead, I am merely expressing some of the reasons underlying the purchase or sell of securities. Nothing in this post is intended to constitute investment or legal advice or a recommendation to buy or to sell. All investors need to perform their own due diligence before making any financial decision which requires at a minimum reading original source material available at the SEC and elsewhere. A failure to perform due diligence only increases what I call "error creep". Stocks, Bonds & Politics: ERROR CREEP and the INVESTING PROCESS Each investor needs to assess a potential investment taking into account their personal risk tolerances, goals and situational risks. I can only make that kind of assessment for myself and family members.


  1. "Enbridge Announces Simplification of Corporate Structure with Proposals to Acquire All of the Outstanding Sponsored Vehicle Equity Securities"

    The only "sponsored vehicle" that I own is Enbridge Income Fund (ENF:CA).

    " ENF shareholders will receive 0.7029 common shares of Enbridge per ENF share, representing a value of CAN$29.38 per ENF share, based on the closing price of Enbridge common shares on the TSX on May 16, 2018, reflecting a 5% premium to the closing price of ENF's common shares on the TSX on May 16, 2018."

    If the exchange into ENB shares is a tax free, my current inclination would be to allow that to happen. ENF:CA is not a MLP like the other "sponsored vehicles" Enbridge Energy Partners (EEP) and Spectra Energy Partners (SEP) where the conversion can result in adverse tax consequences for those owning shares in the MLP.

    Since I do not own MLPs directly, I am only generally aware of the issues. Many investors found out the hard way when Kinder rolled up its MLPs into a C corporation.

    I suspect that the days of the MLP energy infrastructure company are numbered due to the recent FERC ruling.

  2. Minerva Neurosciences, Inc. (NERV)
    $7.15 +$ 0.65 +10.00%
    52 WEEK RANGE 4.80 - 11.15
    MARKET CAP $251.87M
    Last Updated: May 17, 2018 at 10:51 a.m. EDT

    This is my small biotech Lotto Ticket mover this morning. I did not discuss my purchase.


  3. After the close yesterday, Novartis and Amgen received FDA approval for the migraine drug Aimovig.


    Campbell Soup (CPB) laid this morning a larger than expected egg. The CEO decided to retire before the earnings call.

    CPB is part of my small ball "buying program". I am up to 25+ shares and will continue to buy, though my purchases now are in 5 share lots as a recognition of the downside risk.

    When this kind of negative news is released, it generally takes awhile for institutional investors to clear out what they want to sell and many will understandably just throw in the towel. Buyers will be in short supply and will want steeper price declines before soaking up the excess supply.

    In the pre-market, as of 8:53 a.m. EST, the shares are down $3.34 to $35.88. That is about where the price was in 2012 and lower than prices prevailing in 2007.

    1. South Gent,

      CPB dropped to a 5-year low of $34.35 in early morning. Then buyers started coming in. I also took a small position when the stock price rose above $35. As always, the price drops after my purchase. It is now $34.55 as of 12:30pm.

    2. Market dynamics are probably more important now than fundamentals. Institutions are throwing in the towel and buyers are not comfortable taking the shares off their hands.

      It does not help matters that CPB took a $600M write-down for its Campbell Fresh business (pre-tax impairment charge). The CEO who left this morning acquired those businesses and CPB is basically saying that it overpaid based on results.

      There is also a strong tendency to project current problems as remaining or becoming worst until the end of days.

      CPB and other companies are being hit by rising commodity costs particularly in steel and transportation costs but also in agricultural commodities.

      We know from experience that commodity costs go up and down over time but that is not going to convince many investors to wait it out or even that conditions will in fact change for the better.

      I will buy 5 shares later today. There are members of the Dorrance family who wanted to sell when the price could have been in the high 50s. It is possible that a consensus could arise to sell the company among family members before matters become worse and while capital is still cheap.

  4. SG, 2 questions if I may
    1. I have the impression that you expect interest rates to continue their slow gradual rise. i that light why are you willing to go out 5+ years on your bond purchases, would it not be better to buy 1-3 years and just wait for higher rates.
    2. Do you currently have an opinion on POW or PWF on Toronto exchange. they both yield more than 5% and have recently increased their DIV, also near 52 week lows

    As always thank you in advance.

    1. John: I currently view a two year bond maturity to be the sweet spot.

      For example, Ventas has a 2.7% SU bond maturing on 4/1/20 that last traded at a 3.24% YTM.

      The Ventas 3.1% maturing on 1/15/23 would give me a 3.9% YTM and a higher current yield.

      So the first question to ask is whether the higher current yield and .66% higher YTM is worth the risk of an additional 3 years in maturity.

      The problem is that I do not know the future. I may be right that interest rates will continue to move up. If I am wrong, and rates plateau and then start to come down, I would have preferred owning the 2023 maturity compared to the 2020. I own both since I do not know the future. As far as I know, the ten year treasury yield may have already plateaued over the near term at around 3.11% and the worst may be over for the time being.

      U.S. 10 Year Treasury Note
      3.079% -0.034%
      Last Updated: May 18, 2018 10:43 a.m. EDT

      The underlying rationale for a bond ladder is a recognition that human beings do not know and can not rationally predict the future. And, the further one goes out in time, the likelihood of being wrong about a current prediction goes up.

      I am dealing with the interest rate risk uncertainty by weighting maturities in short term spectrum which I define as being now out to 3 years.

      As to Power Corporation, I considered buying shares earlier this week after I save the dividend announcement and earnings release. I could not make up my mind whether to buy shares in Toronto using CADs or the USD priced PWCDF. My prior discussion can be found by scrolling down to POW:CA-PWCDF in the symbol list to the right.

      I still have not made a decision. I would go with PWCDF if I was going to make a direct play on the CAD gaining value against the USD. The CAD/USD is in a downtrend with no bottom is sight. There was a report this morning that the NAFTA negotiations were no where near a conclusion and that will weigh on the CAD which is declining in value this morning.

    2. I elected to buy 50 PWCDF at $23.31.

      Prior to entering an order, I converted the current price in CADs, which was C$30.2 when I placed the limit order, into USDs. I then added 1 cent to my limit order which simply made it more likely that the odd lot trade would fill. Volume is currently at 1.3K.

      I bought the shares in my Schwab account where I have commission free trades expiring in August. Schwab is also the best broker that I use for executing pink sheet trades.

      I have repeatedly traded for several years both the CAD and USD price shares.

      Link to SA article published today on Power Corporation:

      My last PWCDF trade was to sell 100 at $23.56:

      Item 4.A.
      Saturday, July 22, 2017

      By buying the USD price shares, I am hoping for a TWOFER. The twofer occurs when the ordinary share price rises in CADs and the CAD gains in value against the USD after my purchase.

    3. I also decided to buy PWCDF at $23.30, I like the dividend and also hoping for share price rise. I also believe that NAFTA will be resolved after the bluster dies down, and money starts to talk.

  5. SG
    If I understand you correctly, you are buying a 2 year bond , and then trying to increase its return by buying another 5 year bond, thus increasing your overall return. If rates increase you roll the 2 year over for a higher yield, if they do not you have obtained a higher yield on the 5 year.
    What you are effectively doing is hedging both sides by averaging, am I interpreting that correctly
    Thanks, again for your patience

    1. John: The result is as you understand it. The investor has to be willing to accept temporary unrealized losses by going out further in maturity when interest rates are rising. It is necessary to go further out to pick up more yield.

      I am dealing with the interest rate risk issue by accepting those unrealized losses as unavoidable for as long as rates rise and by having around $40K to $50K per month (most months) maturing that can take advantage of higher rates

      My general goal now is to raise the portfolio average yield to more than 4%+ since that rate of return will insure that I will be able to meet my expenses without invading my principal.

      See Discussion under "Portfolio Management":
      Monday, May 14, 2018

      I had $3K in short term bonds come due today. One of those was a $1K par value 1.4% Paccar SU bond. I considered going out to 2027 and buying 1 Martin Marietta bond that would have given me about a 4.4% YTM. Instead, for that $1K, I chose instead to buy 1 Ryder 2.875% SU bond maturing on 9/1/20 at a YTM of 3.165%. I also bought 1 for a family member.

      So I am making these decisions throughout the week as I receive proceeds from maturing securities and taking into account my goals and how far I have gone in building the bond ladder for particular months and years. For example, I keep a record of maturities and noted that I only had $6K maturing in September 2020 at the moment and that helped guide my decision to buy the Ryder bond. As I move closer to September 2020, the maturity amount will build up into the $40K to $50K range.

      For the other 2K in proceeds received today, I may go out further to pick up a higher current yield.

      Personally, I prefer buying a bond where the current yield and YTM are close together, rather than having a significant part of my yield tied up in unrealized appreciation to maturity. I can not be choosy since most of the bonds that I would consider buying have lower current yields.

      An example of one where there is a convergence is the 4.125% Realty Income SU bond maturing on 10/15/26, last traded at a 4.416% YTM:

      I have not yet bought that bond. I have $10K in principal amount maturing in October 2016 currently.

  6. thank you for your explanation. My bond investments are out about 24 months ( yield about 2.5%). I am trying to formulate a plan for going forward, as they come due. I just have to get my head around thinking in terms of portfolio contribution instead of individual bond contribution. I like you would be happy with a 4% yield contribution going forward. the trick is obtaining it in the shortest possible time during this period of rising rates.

  7. I constantly have bonds and CDs maturing. I am in an almost daily bond ladder building mode.

    Today, I received $3K in proceeds.

    I bought 2 Ryder 2.875% SU bonds maturing on 9/1/20 (two separate accounts) which I referenced above. I also bought 1 Martin Marietta 3.45% SU Bond maturing on 6/1/27 at a total cost of 92.79 (YTM at 4.433%; current yield at 3.72%)

    Next Monday, I have two $1K 1.45% CDs maturing and 4 American Express 1.55% SU Bonds mature on Tuesday. Another $5K in CDs come due later next week. So $11K will be rolled over next week.

    The final week in a month will generally have the most maturities. I have $17K coming due in the last week of May.

    So I am constantly rolling over which works out for me for as long as interest rates continue to go up.

    As shown by my activity last year, I will trade bonds to harvest profits. I am now buying back many of the intermediate term bonds sold last year at lower prices and higher yields.

    Bonds had a good day for a change so my portfolio values will be solidly in the green notwithstanding my brokers pricing bond values below the last trade and even below the last bid in most cases.

    iShares 7-10 Year Treasury Bond ETF
    $100.75 +$0.39 +0.39%

    iShare Investment Grade Corporate Bond ETF
    $114.28 +$0.47 +0.41%

    Precious metal prices have been drifting down some as the rise in U.S. interest rates have caused the USD to rally.

    U.S. Dollar Index (DXY)
    93.66 +0.19 +0.20%

    The DXY hit a low in mid-February 2018 near 88 and has broken its 50 day SMA line to the upside.

    A rise in the DXY reflects USD strength against a basket of 6 foreign currencies weighted in the Euro.

  8. Hello southgent

    Wonder if you could help me understand this article on the pension fund problem. It is not clear to me from the article who actually is on the hook for all these underfunded pensions. It says in the article that GE owes about $31 billion in his pension. And by 2020 UPS will cut 70,000 pensions.

    I am wondering whether these companies are just administrative bodies that companies pay into or are they money managers and are responsible for generating returns.

    From what you understand, are the companies on the hook or is it the taxpayer? Thank you

    1. G: General Electric has to fund its pension plan. When and if the plan becomes insolvent, the Pension Benefit Guaranty Corporation, a federal agency which is itself underfunded, takes over the pension plan. That agency would participate in the bankruptcy process in order to recover whatever it could to fund the pension obligations.

      'The Pension Benefit Guaranty Corporation’s Fiscal Year 2017 Annual Report, released today, shows that the deficit in its insurance program for multiemployer plans rose to $65.1 billion at the end of FY 2017, up from $58.8 billion a year earlier. The increase was driven primarily by the ongoing financial decline of several large multiemployer plans that are expected to run out of money in the next decade.

      PBGC’s Single-Employer Insurance Program continued to improve as the deficit dropped to $10.9 billion at the end of FY 2017, compared to $20.6 billion at the end of FY 2016."

      Ultimately, the taxpayers are on the hook for unfunded private pension plan payments when the company is no longer able to pay them.

      The rules on how much the PBGC will pay when it takes over a pension plan are complex:

  9. I have published a new post: