Observations and Sample of Recent Trades: BHB, FSTA, T, VNOPRM

Economy: 

Total Household Debt Rises for 15th Straight Quarter, Led by Mortgages, Student Loans - FEDERAL RESERVE BANK of NEW YORK

Delinquencies: 

‘Nowhere near’ close to Nafta deal, U.S. negotiator says - MarketWatch

++++++

Markets and Market Commentary: 

Mortgage rates reach seven-year high in a housing market reckoning - MarketWatch

Mnuchin, Navarro got into ‘screaming match’ on China trip | Trump’s infrastructure plan hits dead end - MarketWatch

Here are Morgan Stanley’s 30 top stock picks - MarketWatch

I can now add the Pope to my market pundit list: Pope warns of ‘a ticking time bomb’ whose explosion would devastate market - MarketWatch

+++++++

Trump: 

Missing Files Motivated the Leak of Michael Cohen’s Financial Records | The New Yorker (two suspicious activity reports filed by Cohen's bank have gone missing. Those two reports allegedly contain information about $3M in money flowing into Cohen's Essential Consultants, L.L.C bank account over and above the millions previously reported in the press). 

Russia favored Trump in 2016, Senate panel says, breaking with House GOP - The Washington Post The House Republicans, led by the Trump Toad Devin Nunes, have no credibility. 

Ethics chief knocks Trump over Stormy Daniels payment - POLITICO (the ethics chief has referred to the Justice Department Trump's failure to disclose that payment in last year's financial report)

Mueller issues grand jury subpoenas to Trump adviser's social media consultant | Reuters

Trump’s personal attorney solicited $1 million from government of Qatar - The Washington Post

In Rebuke of Trump, Tillerson Says Lies Are a Threat to Democracy - The New York Times (Tillerson: “If our leaders seek to conceal the truth, or we as people become accepting of alternative realities that are no longer grounded in facts, then we as American citizens are on a pathway to relinquishing our freedom.”)

I would disagree with Tillerson. The threat to our Democracy occurs when far too many voters are easily misled by leaders who lie. 

Bill Gates: Trump didn’t know the difference between HIV, HPV - MarketWatch (Trump is ignorant of course. He does have a lizard type mentality that may work in some matters.)

+++ 

Trump, Kushner, Qatar, Saudi Arabia and the United Arab Emirates: 

Is U.S. foreign policy for sale? That is now a legitimate question that republican politicians will never investigate. 

I discussed in my last post the timing of a $500+M loan by a state controlled Chinese company to an Indonesian developer and Trump abruptly changing the U.S. position on sanctions against the Chinese firm ZTE. A Trump branded hotel, housing units and golf course are part of that development. 

I also discussed several months ago how Trump abruptly changed U.S. foreign policy for Qatar after that nation turned down Kushner's request for a bailout loan. Kushner had paid $1.8 billion in 2006 for a 41 story property located at 666 5th Avenue. The rent on the property currently covers only about one-half of the mortgage payment and 30% of the building is vacant.  

Jared Kushner’s Real-Estate Firm Sought Money Directly From Qatar Government Weeks Before Blockade

Jared Kushner Backed Qatar Blockade a Month After Qataris Wouldn’t Finance His Property: Report

Prior to turning down the Kushner loan request, Qatar was a key U.S. ally in the Middle East where the U.S. was allowed to maintain a large military base. Qatar hosts largest US military base in Mideast - CNN; Trump Takes Credit for Saudi Move Against Qatar, a U.S. Military Partner - The New York Times; Trump takes sides in Arab rift, suggests support for isolation of Qatar | Reuters

Almost immediately after Qatar turned down the loan request, Trump backed the Saudi Arabia led boycott of Qatar and called Qatar a terrorist state. The autocrats/dictators in the Middle East do not appreciate Qatar harboring Al Jazeera, which broadcasts from Doha, Qatar, a non-state controlled media outlet watched throughout the Arab world. Trump would sympathize with that hostility, viewing a "free press" as the "Enemy of the People". 

Qatar told reporters at the time that Trump's sudden hostility to that nation was due to it turning down the bailout loan for Kushner.

Qatar got the message. Kushners near deal with Qatar-backed firm to save investment in troubled Manhattan high-rise: L.A. Times; Kushners Near Deal With Qatar-Linked Company for Troubled Tower - The New York Times

U.S. policy has now changed back to where it was prior to Qatar turning down the loan. Trump recently called Qatar's emir,  Sheikh Tamim Bin Hamad Al-Thani  a "great friend". Pompeo tells Saudi Arabia to stop Qatar blockade

Kushner also received a $30M dollar loan from a large Israeli company a few days before he flew to Israel for his first diplomatic mission in the region. Kushner’s Financial Ties to Israel Deepen Even With Mideast Diplomatic Role - The New York Times 

More links in the chain were provided in a NYT article published on Saturday. Trump Jr. and Other Aides Met With Gulf Emissary Offering Help to Win Election - The New York Times republished at MSN; Trump Jr. met with Saudi Arabia and UAE rep offering 2016 election help - Vox 

Saudi Arabia and the United Arab Emirates wanted to defeat Clinton and offered to help Trump win the election. 

One of the attendees at the meeting was an Israeli Joel Zamel, who was a specialist in using social media as a form of manipulation. The go-between for the Arab countries was George Nader who is cooperating with Mueller. After the election, Nader delivered up to $2M to Zamel who also has connections to two prominent Russian oligarchs, Oleg V. Deripaska and Dmitry Rybolovlev, whose names keep popping up in the investigation. 

"A company connected to Mr. Zamel had been working on a proposal for a covert multimillion-dollar online manipulation campaign to help elect Mr. Trump, according to three people involved and a fourth briefed on the effort. The plan involved using thousands of fake social media accounts to promote Mr. Trump’s candidacy on platforms like Facebook." 

According to the NYT, Mueller has been investigating this trail for awhile and has seized computers from one of Mr. Zamel's firms according to one source. Zamel through his attorney denies helping Trump. 

It is illegal for foreign citizens and governments to provide aid in a U.S. election. Foreign nationals | FEC; 52 U.S. Code § 30121 - Contributions and donations by foreign nationals;  11 CFR § 110.20 

Yes. Violating Certain Campaign Finance Laws Are Criminal Offenses (JAIL for AND FINES)

[USC04] 52 USC 30109: Enforcement

The criminal act also includes the "receipt" of "any contribution, donation, or expenditure".  A contribution is broadly defined to include "money or other thing of value, or to make an express or implied promise to make a contribution or donation, in connection with a Federal, State, or local election". 
  
The "Fake News" media, meaning a non-state controlled Free Press, can be annoying to Kleptocrats and to pathological liars. 

+++++

Donald Trump said 11 false things in just 5 tweets Sunday morning - CNN 

Since I have documented four false statements in just one tweet, 11 false statements in 5 tweets is just normal for Donald.  

+++++++++

1. REGIONAL BANK BASKET STRATEGY:

A. Sold 50 of 150 BHB at $30.02-Used Commission Free Trade:

Profit Snapshot: +$666.96

YTD +$1,349.9

Average Cost of Remaining Shares: $13.4 Per Share

Quote: Bar Harbor Bankshares (BHB)
Closing Price Last Friday: BHB $30.51 -$0.33 -1.07% 

Last Pare: Item #3.A. Sold 100 BHB at $29.55 (4/26/18 Post)

I discuss the reasons for paring my position in that post.

Chart: Stuck in Neutral

Total BHB Realized Profit= $2,327.88

I have never reinvested the dividend. 

2. Small Ball:

A. Bought 2 AT & T at $31.65-Used Commission Free Trade: 

Quote: AT&T Inc. (T)
Closing Price Last Friday: T $32.05 +$0.12 +0.38% 

T Analyst Consensus E.P.S. Estimates (as of day of trades)
2018: $3.41
2019  $3.47

Last Substantive Discussion:  Item # 2.A. (5/3/18 Post)

Current Position: 37 Shares

Average Cost Per Share= $33.59

Maximum Position: 60 Shares

Purchase Restriction: Small Ball Rule

Dividend: Quarterly at $.50 per share

AT&T Historical Dividends

Dividend Yield at Average Cost Total Cost Per Share: 5.95%

B. Bought 10 FSTA at $29.8 (commission free to Fidelity brokerage customers):

Quote: Fidelity MSCI Consumer Staples Index ETF Overview
Closing Price Last Friday: FSTA $30.00 -$0.14 -0.46% 

Sponsor's webpage: FSTA | ETF Snapshot - Fidelity

Expense Ratio: .084%

Major Holdings:

Rationale: While this sector faces many challenges, valuations are adjusting to those problems. 

The general problem for this sector is margin contraction caused by rising costs and anemic or negative revenue growth. Transportation costs, for example, have risen substantially due in part to a shortage of truck drivers and the rise in diesel fuel prices. Last Thursday, the average national diesel fuel price was at $3.16, the highest level since December 2014.

The latest crash and burn was Campbell Soup whose CEO decided to retire last Friday before the conference call to discuss the last earnings report.  

The Stock Jocks will look at the rising cost data over the last few months and assume that costs will continue to rise until the end of days, a slight exaggeration. Commodity costs go up and down over time of course, but that does not matter when living in the moment and assuming the future will indefinitely have the same or worst cost pressures and margin contraction than the present.  

Note that WMT, Costco, Walgreens, Kroger, Casey General Stores and other grocery store companies are included in this sector rather than in the consumer discretionary sector.

Purchase Restriction: Small Ball Rule (hardly a vote of confidence that the worst is over and only blue skies and sunny days lie in the future) 

Maximum Position: 50 shares

C. Bought 30 VNOPRM at $21.98-Used Commission Free Trade:

Quote: Vornado Realty Trust 5.25% Cumulative Preferred Series M Stock

Issuer: Vornado Realty Trust (VNO)

Last Earnings Report: Vornado Announces First Quarter 2018 Financial Results NYSE:VNO

Capital Structure: Equity Preferred Stock-Superior to common stock only

Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks

Equity REIT Common and Preferred Stock Basket Strategy

Prospectus

Optional Call: On or after 12/13/2022 at par value plus accrued and unpaid dividends

Dividends: Quarterly, cumulative and non-qualified

Par Value: $25

Yield at $21.98: 5.97%

Maximum Position: 50 Shares

Rationale: I currently view interest rate risk to be the main risk. This preferred stock was sold to the public at $25 last December. I bought a token position at a 12% lower price about 6 months after the IPO. The price will go lower in the event interest rates continue to move up. 

This purchase was made pursuant to my investment strategy, which was recently discussed, where I am attempting to move my current yield over 4% on a total portfolio basis. This will take at least 12 months and will depend on interest rates continuing to drift up. Another way to achieve that result would be to have a catastrophic event in the stock market or just a bear market decline of 20+%. 

Next Purchase: 20 shares at < $20 

3. Intermediate Term Bond/CD Ladder Basket Strategy: 

A. Bought 1 Caterpillar Financial Services 2.85% SU Bond Maturing on 6/1/22:

FINRA Page: Bond Detail (prospectus linked)

I am starting to replace in advance CAT bonds maturing on 11/13/18 and 3/22/19 that are owned in this account. I own 2 of 11/13/18 bonds and 3 of the 3/22/19 bonds. 

Credit Ratings:

Fitch Rates Caterpillar Financial Services Limited 'A'

Bought at a Total Cost of 98.631
YTM at TC Then at 3.21%
Current Yield at TC = 2.8896%

4. Short Term Bond/CD Ladder Basket Strategy:

A. Bought 1 Deere Capital 2.875% Bond Maturing on 3/12/21:

FINRA Page: Bond Detail

In this account, I am starting to replace in advance of maturity 4 Deere Capital SU bonds maturing between 10/15/18 and 3/4/19. I own 1 of each of these bonds shown below:

Credit Ratings:

Fitch Affirms Deere at 'A' on Plans to Acquire Wirtgen; Outlook Stable

Bought at a Total Cost of 99.607
YTM at TC Then at 3.019%
Current Yield at TC = 2.8863%

Both the Deere Capital and CAT Financial bonds generally have deep order books and are traded daily. Most of the bonds can be bought in 1 bond lots, so I can average down slowly and in small increments. My commission in this account is $1 per bond so the commission is the same when I buy 1 bond five times or 5 bonds at one time. The 1 bond lots are available sometimes at the best ask price for a buyer or close to it.

B. Bought 1 Wells Fargo 2.75% CD (monthly interest payments) Maturing on 5/11/20 (2 year CD):

C. Bought 1 Treasury 2.375% Coupon Maturing on 4/15/21:
YTM: 2.733%

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.