Economy:
Consumer credit growth increased significantly in May, growing at the fastest pace in six months. The Stock Jocks responded favorably when this data was released last Monday. The Fed - Consumer Credit - G.19
China-U.S. tariffs: Wisconsin cheese industry hopes Trump has strategy in trade disputes - CBS News
Wholesale inflation jumps to six-year high, PPI shows - MarketWatch; Producer Price Index News Release summary("The Producer Price Index for final demand rose 0.3 percent in June, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.5 percent in May and 0.1 percent in April. (See table A.) On an unadjusted basis, the final demand index moved up 3.4 percent for the 12 months ended in June, the largest 12-month increase since climbing 3.7 percent in November 2011.")
Angry About Tariffs and Insults, Canadians Vow to Boycott U.S. Goods and Travel - The New York Times (China's citizens will boycott U.S. products and services as well even if the product is not subject to a tariff or is made in China by an American company. If I was a citizen of China, Canada or a European country, I would already be boycotting U.S. products and services wherever possible)
Wholesale inflation jumps to six-year high, PPI shows - MarketWatch; Producer Price Index News Release summary("The Producer Price Index for final demand rose 0.3 percent in June, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices advanced 0.5 percent in May and 0.1 percent in April. (See table A.) On an unadjusted basis, the final demand index moved up 3.4 percent for the 12 months ended in June, the largest 12-month increase since climbing 3.7 percent in November 2011.")
Angry About Tariffs and Insults, Canadians Vow to Boycott U.S. Goods and Travel - The New York Times (China's citizens will boycott U.S. products and services as well even if the product is not subject to a tariff or is made in China by an American company. If I was a citizen of China, Canada or a European country, I would already be boycotting U.S. products and services wherever possible)
+++++
Markets and Market Commentary:
The 7 reasons behind U.S. oil’s sharpest daily point drop in almost 3 years - MarketWatch (the most important was a return of Libya's production)
Donald is now considering a 10% tariff on another $200B of China's exports to the U.S. The tariffs would be subject to public comments before being imposed. U.S. to slap tariffs on extra $200 billion of Chinese imports | Reuters
China says will hit back after U.S. proposes fresh tariffs on $200 billion in goods | Reuters Once China responds, then the U.S. will likely impose tariffs on the remaining goods exported from China. UBS: China to hit US supply chains next: CNBC
China reportedly looks to ‘hit back in other ways’ in response to latest US tariffs: CNBC
High-level trade talks between U.S. and China break down: report - MarketWatch
U.S.-China Trade Talks Grind to a Halt - Bloomberg
The Stock Jocks are not concerned about the tariff war interfering with their optimistic earnings forecasts. The consensus opinion is that a trade war is a risk on rather than a risk off event. The only rational explanation for that opinion is that Donald will win the trade war before any material and long lasting damage is done to the U.S. economy.
Investors face ‘devastating losses’ if this ‘remarkably accurate’ indicator flashes - MarketWatch (refers to yield inversion)
‘This rally in stocks is a last hurrah!’ warns Guggenheim’s Minerd - MarketWatch
The 7 reasons behind U.S. oil’s sharpest daily point drop in almost 3 years - MarketWatch (the most important was a return of Libya's production)
Donald is now considering a 10% tariff on another $200B of China's exports to the U.S. The tariffs would be subject to public comments before being imposed. U.S. to slap tariffs on extra $200 billion of Chinese imports | Reuters
China says will hit back after U.S. proposes fresh tariffs on $200 billion in goods | Reuters Once China responds, then the U.S. will likely impose tariffs on the remaining goods exported from China. UBS: China to hit US supply chains next: CNBC
China reportedly looks to ‘hit back in other ways’ in response to latest US tariffs: CNBC
High-level trade talks between U.S. and China break down: report - MarketWatch
U.S.-China Trade Talks Grind to a Halt - Bloomberg
The Stock Jocks are not concerned about the tariff war interfering with their optimistic earnings forecasts. The consensus opinion is that a trade war is a risk on rather than a risk off event. The only rational explanation for that opinion is that Donald will win the trade war before any material and long lasting damage is done to the U.S. economy.
Investors face ‘devastating losses’ if this ‘remarkably accurate’ indicator flashes - MarketWatch (refers to yield inversion)
‘This rally in stocks is a last hurrah!’ warns Guggenheim’s Minerd - MarketWatch
Sea of red in Treasury market may signal bond boom is over | Reuters
This reliable indicator of a bear market in stocks — and a recession — just flashed a warning - MarketWatch
Small-caps—a stock leader of 2018—has been downgraded by Morgan Stanley - MarketWatch
+++
Retiree Health Care Costs:
This is the harsh reality about health care costs in retirement - MarketWatch (calculations about health care costs during retirement do not include caregiver or nursing home services and further assume the existence of traditional Medicare rather than the GOP's voucher system proposal for the purchase of private insurance)
A Couple Retiring in 2018 Would Need an Estimated $280,000 to Cover Health Care Costs in Retirement - Fidelity
How to plan for rising health care costs - Fidelity
The last GOP approved plan, passed with almost unanimous House republican support would have just about doubled premium costs compared to traditional Medicare with the government's cost savings used to finance tax cuts for the top 1% (among the proposals was to eliminate the capital gains, dividend and interest taxes in addition to lowering their tax rates for whatever was left to tax)
A husband and wife, who were both 65 in 2022, would end up paying $25K more in health insurance premiums compared to traditional Medicare, just in that one year; and it would get worse in future years as physical conditions deteriorate and the voucher amount is increased just by a CPI inflation rate.
Final Vote Results for Roll Call 151 (228 GOP representatives voted for this plan to bankrupt the middle class in their retirement years. Fortunately for some of those families, the GOP plan to turn Medicare into a private voucher system only applied to those who were then 55 years old or younger that year)
In the Middle Class, and Barely Getting By - The New York Times (book review of Squeezed: Why Our Families Can't Afford America: Alissa Quart: Amazon.com)
This reliable indicator of a bear market in stocks — and a recession — just flashed a warning - MarketWatch
Small-caps—a stock leader of 2018—has been downgraded by Morgan Stanley - MarketWatch
+++
Retiree Health Care Costs:
This is the harsh reality about health care costs in retirement - MarketWatch (calculations about health care costs during retirement do not include caregiver or nursing home services and further assume the existence of traditional Medicare rather than the GOP's voucher system proposal for the purchase of private insurance)
A Couple Retiring in 2018 Would Need an Estimated $280,000 to Cover Health Care Costs in Retirement - Fidelity
How to plan for rising health care costs - Fidelity
The last GOP approved plan, passed with almost unanimous House republican support would have just about doubled premium costs compared to traditional Medicare with the government's cost savings used to finance tax cuts for the top 1% (among the proposals was to eliminate the capital gains, dividend and interest taxes in addition to lowering their tax rates for whatever was left to tax)
 |
| GOP's 2011 Proposal: A Path to Poverty for Middle Income Households with the best alternative being living with the kids in their golden years |
Final Vote Results for Roll Call 151 (228 GOP representatives voted for this plan to bankrupt the middle class in their retirement years. Fortunately for some of those families, the GOP plan to turn Medicare into a private voucher system only applied to those who were then 55 years old or younger that year)
In the Middle Class, and Barely Getting By - The New York Times (book review of Squeezed: Why Our Families Can't Afford America: Alissa Quart: Amazon.com)
++++++
Trump:
At NATO, abrasive Trump lashes Germany for being Russian 'captive' | Reuters (the EU President Donald Tusk told the Duck before this latest fireball thrown at a western democracy to be nicer to Europe since the U.S. has so few allies left. Trump Nato: New war of words with Merkel - BBC News ("Dear America, appreciate your allies, after all you don't have that many.") Under Donald, I would say that the U.S. allies consist of Putin, the King of Saudi Arabia and Israel with South Korea wavering)
Trump NATO summit starts with insults to US allies - CNN
"What good is NATO": Trump criticizes Germany and other allies at summit - CBS News
Trump's attacks leave NATO allies in disbelief
Imagine for a few seconds what Putin would want Trump to say at this NATO meeting. Then, compare that with what Trump actually did say. IMO Putin could just as well write what comes out of the Duck's mouth. Trump is Training His Base to Hate NATO and Like Putin
Donald plans to have a private meeting with Putin attended only by the translators. Trump plans one-on-one meeting with Putin The Duck can be easily played IMO by a wily creature like Vlad. If Donald and Vlad need to discuss the alleged golden shower tape in their private meeting, then I would assume that only a translator loyal to Russia will be present.
Anatomy of a Trump rally: 76 percent of Trump claims are false, misleading or lacking evidence - The Washington Post
The fact that Donald lies and misleads as easily as he breathers and with about the same frequency is irrelevant to the Stock Jocks, who also firmly believe IMO that the Duck is competent and knows what he is doing.
Jimmy Kimmel responds to Trump's attack at rally: 'That never happened' (So Donald just made something up about Jimmy, hardly worth mentioning since the Duck inhabits an Alternate Reality of his own creation that is inhabited by millions of Trumpsters).
According to Donald, everything is going great in the NK negotiations. Pompeo's North Korea meeting went as badly as it could have gone' - CNN
The hypocrisy at the heart of Trump's rancher pardon
At NATO, abrasive Trump lashes Germany for being Russian 'captive' | Reuters (the EU President Donald Tusk told the Duck before this latest fireball thrown at a western democracy to be nicer to Europe since the U.S. has so few allies left. Trump Nato: New war of words with Merkel - BBC News ("Dear America, appreciate your allies, after all you don't have that many.") Under Donald, I would say that the U.S. allies consist of Putin, the King of Saudi Arabia and Israel with South Korea wavering)
Trump NATO summit starts with insults to US allies - CNN
"What good is NATO": Trump criticizes Germany and other allies at summit - CBS News
Trump's attacks leave NATO allies in disbelief
Imagine for a few seconds what Putin would want Trump to say at this NATO meeting. Then, compare that with what Trump actually did say. IMO Putin could just as well write what comes out of the Duck's mouth. Trump is Training His Base to Hate NATO and Like Putin
Donald plans to have a private meeting with Putin attended only by the translators. Trump plans one-on-one meeting with Putin The Duck can be easily played IMO by a wily creature like Vlad. If Donald and Vlad need to discuss the alleged golden shower tape in their private meeting, then I would assume that only a translator loyal to Russia will be present.
Anatomy of a Trump rally: 76 percent of Trump claims are false, misleading or lacking evidence - The Washington Post
The fact that Donald lies and misleads as easily as he breathers and with about the same frequency is irrelevant to the Stock Jocks, who also firmly believe IMO that the Duck is competent and knows what he is doing.
Jimmy Kimmel responds to Trump's attack at rally: 'That never happened' (So Donald just made something up about Jimmy, hardly worth mentioning since the Duck inhabits an Alternate Reality of his own creation that is inhabited by millions of Trumpsters).
According to Donald, everything is going great in the NK negotiations. Pompeo's North Korea meeting went as badly as it could have gone' - CNN
The hypocrisy at the heart of Trump's rancher pardon
++
Brett Kavanaugh:
Brett Kavanaugh:
Trump's Supreme Court pick, Brett Kavanaugh, will be significantly right of center and may end up being slightly less reactionary than Gorsuch, Alito, and Thomas. Who is Brett Kavanaugh, Trump's nominee? - The Washington Post
Kavanaugh is radically conservative. Here’s the data to prove it. - The Washington Post
Of the candidates considered by Trump, all vetted and approved by the reactionary Federalist Society, viewed by me as a ultra right wing organization of lawyers, I would view him as the most qualified to become a Supreme Court Justice. There can be no serious criticism of his credentials.
Kavanaugh is radically conservative. Here’s the data to prove it. - The Washington Post
Of the candidates considered by Trump, all vetted and approved by the reactionary Federalist Society, viewed by me as a ultra right wing organization of lawyers, I would view him as the most qualified to become a Supreme Court Justice. There can be no serious criticism of his credentials.
If the republicans had not refused to even consider Obama's nomination of the centrist Merrick Garland, Kavanaugh would receive affirmative votes from several Democrat senators, possibly capturing over 70 yes votes. That will not be the case now given what the GOP did to Obama's nominee. What Happened With Merrick Garland In 2016 And Why It Matters Now : NPR The worm will turn one day with the Democrats responding to a republican nomination in the same way, but probably not with Kavanaugh.
If the Democrats regain control of the Senate this November, which will not happen IMO unless there is a full blown recession that the public attributes to the trade war, any future Trump nominee who is right of center will be voted down and the vacant seat would be left unfilled until after the 2020 election. The most likely vacant seat between 2018 and 2020 would be one of the "liberal" justices. Since I expect the Senate to remain under GOP control before the 2020 election, that liberal seat would be filled with a judge more reactionary than Kavanaugh.
As I previously argued, there is not much that can be done now to stop the reactionary drift of the Supreme Court. With Kavanaugh's appointment, the republicans will have a majority to implement their far right ideology into constitutional law for at least a generation and possibly longer, certainly for as long as I am likely to live. It is too late for the Democrats to rally their troops IMO.
Kavanaugh will definitely be a supporter of the imperial Presidency which I view as antithetical to real conservative values. He will also support a continued expansion of corporate constitutional rights and increased limitations on the federal governments ability to regulate through a more narrow reading of the Commerce Clause power. Big business will like him since it will find other ways to jettison federal regulations as well. He will be far more pro business than pro consumer.
++++
Eight republican politicians spent July 4th in Russia posing for propaganda photos with Russian officials. They are now known as the Red Square Republicans: Senators Richard C. Shelby (Ala.), Steve Daines (Mont.), John Hoeven (N.D.), John Neely Kennedy (La.), Jerry Moran (Kan.), John Thune (S.D.) and Ron Johnson (Wis.), plus Rep. Kay Granger (Tex.). The Red Square Republicans refused to meet with Putin opposition figures who had not yet been imprisoned or killed.
GOP congressional candidate in Kansas: 'Outside of Western civilization, there is only barbarism' - CNN (in his view Planned Parenthood is worse than Nazi concentration camps. He "loves" Donald which I did not need to hear him say).
Just how much trouble is Rep. Jim Jordan in over alleged Ohio State sexual abuse? I would say zero trouble as to being re-elected in a deep red congressional district that has obviously been gerrymandered by the republican state legislature, just look at the map.
The mere fact that 8 people have come forward so far claiming that Jordan knew about sexual abuse and failed to report it will not impact evangelical support for a republican candidate IMO.
Claims that a republican candidate committed acts of sexual abuse (e.g. Trump) or even allegedly committed inappropriate contact with a minor (e.g Moore) will be disbelieved and dismissed by most republicans as they have done in the past. Those republicans would accept similar charges without reservation when made against a democrat as true.
Jordan has also raised the Locker Room defense that Donald used so successfully as a response to the Access Hollywood tape which will work on those susceptible to such legerdemains (about 1/2 of the U.S. population).
Trumpsters speak: Our Hate Mail | HuffPost
Park officer underfire for response to woman being harassed for wearing a Puerto Rican flag shirt - CBSN Live Video
+++++++
Eight republican politicians spent July 4th in Russia posing for propaganda photos with Russian officials. They are now known as the Red Square Republicans: Senators Richard C. Shelby (Ala.), Steve Daines (Mont.), John Hoeven (N.D.), John Neely Kennedy (La.), Jerry Moran (Kan.), John Thune (S.D.) and Ron Johnson (Wis.), plus Rep. Kay Granger (Tex.). The Red Square Republicans refused to meet with Putin opposition figures who had not yet been imprisoned or killed.
GOP congressional candidate in Kansas: 'Outside of Western civilization, there is only barbarism' - CNN (in his view Planned Parenthood is worse than Nazi concentration camps. He "loves" Donald which I did not need to hear him say).
Just how much trouble is Rep. Jim Jordan in over alleged Ohio State sexual abuse? I would say zero trouble as to being re-elected in a deep red congressional district that has obviously been gerrymandered by the republican state legislature, just look at the map.
The mere fact that 8 people have come forward so far claiming that Jordan knew about sexual abuse and failed to report it will not impact evangelical support for a republican candidate IMO.
Claims that a republican candidate committed acts of sexual abuse (e.g. Trump) or even allegedly committed inappropriate contact with a minor (e.g Moore) will be disbelieved and dismissed by most republicans as they have done in the past. Those republicans would accept similar charges without reservation when made against a democrat as true.
Jordan has also raised the Locker Room defense that Donald used so successfully as a response to the Access Hollywood tape which will work on those susceptible to such legerdemains (about 1/2 of the U.S. population).
Trumpsters speak: Our Hate Mail | HuffPost
Park officer underfire for response to woman being harassed for wearing a Puerto Rican flag shirt - CBSN Live Video
+++++++
1. REGIONAL BANK BASKET STRATEGY:
A. Sold 71+ BBT at $50.72:
Profit Snapshot: +$1,330.82
2018 Realized BBT Gain 121 Shares = +$2,391.84
Quote: BB&T Corp. (BBT)
BBT Analyst Estimates
BBT Trading Profits to Date (all sell trades in 2017 and 2018): +$2,978.29
Rationale: (1) Capital Preservation; (2) Profit Taking; (3) a growing concern that the net interest margins will contract and (4) a growing concern that the positive credit cycle is nearing an end with NPLs and charge-offs at historical lows.
Charge-Off Rate on All Loans, All Commercial Banks
Nonperforming Loans (past due 90+ days plus nonaccrual) to Total Loans for all U.S. Banks- St. Louis Fed
10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity-St. Louis Fed
I view BBT currently as a solid super regional bank.
Last Earnings Report: Q/E 3/31/18
BB&T reports record quarterly earnings of $0.94 per diluted share; Up $0.17, or 22%, compared to fourth quarter 2017
Prior Sell Discussions:
Item # 1. A. Sold Highest Cost 50 BBT Shares at $55.45 (2/8/18 Post)(profit snapshot= $1,061.02)
Item # 3.A. Sold Highest Cost 50 BBT Shares at $47.24 (3/28/17 Post)(profit snapshot = $586.45)
Prior Buy Discussions:
Item # 3. Bought 50 BBT at $35.23-Satellite Taxable Account: Update For Regional Bank Basket As Of 9/23/15 - South Gent | Seeking Alpha
Item # 3. Added 50 BBT at $32.35-Satellite Taxable: Update For Regional Bank Basket Strategy As Of 2/20/16 - South Gent | Seeking Alpha
A number of BBT shares were acquired in exchange for my National Penn shares. BB&T closes National Penn acquisition
I am close to reducing my regional bank allocation to less than $5K. I may start to flip those stocks more frequently without discussing my trades here. In the past, almost all of my trades in that sector have been discussed in this blog on my SA Instablog.
2. Small Ball:
A. Bought 50 RNW:CA at C$12.45 (C$1 IB Commission):
Quote: TransAlta Renewables Inc. (Canada: Toronto)
Dividend: Monthly at C$.0783 per share (C$.94 annually)
RNW:CA Average Cost Per Share= C$12.76
Dividend Yield at Average Total Cost = 7.37%
Maximum Position (Toronto traded shares): 200 shares
This is an average down from a recent purchase: Item # 2.A Bought 100 RNW:CA at CA$12.91 (6/18/18 Post).
Shortly after that purchase, the company had a public stock offering where it sold shares at C$12.65. TransAlta Renewables Announces $150 Million Bought Deal Offering of Common Shares
The ordinary shares trade under the symbol TRSWF in the U.S. Grey Market. I own 100 TRSWF shares bought at $9.55: Item # 2.B. I will not buy more of TRSFWF. I have nothing to add to those prior discussions.
B. Bought 1 PPLT at $77.66-Used Commission Free Trade:
Quote: ETFS Physical Platinum Shares Overview
Current Position: 13 Shares
Maximum Position: 20 Shares
Average Cost Per share= $85.13
Platinum prices have fallen at a greater percentage than gold recently:
PPLT:
1/19/18 $96.52
7/2/18 $77.66
% Decline = -19.54%
PPLT Historical Prices
GLD:
1/19/19 $126.42
7/2/18 $117.46
% Decline = -7.09%
I would attribute part of the greater decline for PPLT to platinum's greater industrial use, with the primary industrial use being in automobile catalytic converters. The tariff wars could spill more into increased tariffs on automobiles that would lower sales by increasing costs. China is already imposing an increased tariff on U.S. manufactured SUVs. Daimler Cuts 2018 EBIT Outlook As Chinese Tariffs Hit U.S.-Built SUVs - Nasdaq.com
There are also estimates that the platinum is in over supply even though the cost of production is now higher than the market price. Platinum near decade-low prices following speculative selloff, big surplus-Seeking Alpha
3. REIT Equity Preferred Stocks:
In this section, I discuss a swap trade based on relative valuation at the then current prices. I view the two REIT equity preferred stocks discussed below as roughly equivalent on credit risk. Both are issued by industrial REITs. Both are subject to the same interest rate risk issues that are inherent in potentially perpetual, fixed coupon preferred stocks that may be redeemed at the issuer's option within five years or so after the IPO.
I do not view either of these two preferred stocks to be attractive at their current prices. The risk/reward is tilted in my opinion toward risk.
Stocks, Bonds & Politics: Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks (9/25/09 Post)
A. Sold 30 REXRPRB at $24.99-Used Commission Free Trade:
REXRPRB Profit: +$49.82
Item # 1.B Bought 30 REXRPRB at $23.33 (6/18/18 Post)
Quote: Rexford Industrial Realty Inc. 5.875% Cumulative Preferred Series B Stock
Issuer: Rexford Industrial Realty Inc. (REXR)
Rexford Industrial Announces First Quarter 2018 Financial Results
I received one quarterly dividend as shown in the previous snapshot.
Last REXRPRB Ex Dividend Date: 6/14/18
REXRPRB Prospectus (optional call on or after 11/13/21; par value = $25)
Functionally Equivalent Preferred Stocks:
Since I started writing this blog back in October 2008, I have discussed trades in functionally equivalent preferred stocks and exchange traded bonds.
Rexford has another equity preferred stock with the same coupon as REXRPRB: Rexford Industrial Realty Inc. 5.875% Cumulative Preferred Series A Stock
I view the series A and series B to be functionally equivalent as to the material terms. The credit risk is identical. Both preferred issues are in pari passu with one another. Both have the same claim superior claim to the common shares and both are inferior to all bonds in the capital structure. Both pay cumulative and non-qualified dividends. Even the coupons are the same, though the more important comparison is yield at total cost when choosing one or the other. The only difference is in the optional call date which is not material. The Series A preferred stock may be called on or after 8/16/21 or about 3 months earlier than than the Series B. Series A Prospectus
When I sold the Series B stock at $24.99, the Series A stock was trading at $24.2. That is an example IMO of irrational pricing. If I was going to buy one or the other at that moment in time, I would have bought the Series A at $24.2.
I have previously bought and sold the Series A: South Gent's Comment Blog # 6: Bought 50 REXRPRA at $22.18 (11/28/16 comment)- Item 3.B. Sold 50 REXRPRA at $23.2 (1/27/17 Post)(clipped the quarterly coupon and realized a $17.97 profit on the shares or just another example of small ball)
B. Bought 50 MNRPRC at $24-Used Commission Free Trade:
MNRPRC Purchase:
Quote: Monmouth Real Estate Investment Corp. 6.125% Cumulative Preferred. Series C Stock
Issuer: Monmouth Real Estate Investment Corp. Cl A (MNR)
Last Earnings Report: Q/E 3/31/18
Monmouth Real Estate Reports Results For The Second Quarter Ended March 31, 2018
MNRPRC Prospectus
Par Value: $25
Optional Call: At par + accrued and unpaid dividends at the issuer's option on or after 9/15/21
MNR.PC Stock Chart
Next Ex Dividend Date: 8/14/18
Previous Round-Trip: Item 5.A. Sold 100 MNRPRC at $24.85 (1/21/17 Post)(profit snapshot = $71.93)
Rational: Income generation and potential dividend harvest strategy
Stocks, Bonds & Politics: Gateway Post: Equity REIT Common and Preferred Stock Basket Strategy
A. Sold 71+ BBT at $50.72:
Profit Snapshot: +$1,330.82
2018 Realized BBT Gain 121 Shares = +$2,391.84
Quote: BB&T Corp. (BBT)
BBT Analyst Estimates
BBT Trading Profits to Date (all sell trades in 2017 and 2018): +$2,978.29
Rationale: (1) Capital Preservation; (2) Profit Taking; (3) a growing concern that the net interest margins will contract and (4) a growing concern that the positive credit cycle is nearing an end with NPLs and charge-offs at historical lows.
Charge-Off Rate on All Loans, All Commercial Banks
Nonperforming Loans (past due 90+ days plus nonaccrual) to Total Loans for all U.S. Banks- St. Louis Fed
10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity-St. Louis Fed
I view BBT currently as a solid super regional bank.
Last Earnings Report: Q/E 3/31/18
BB&T reports record quarterly earnings of $0.94 per diluted share; Up $0.17, or 22%, compared to fourth quarter 2017
Prior Sell Discussions:
Item # 1. A. Sold Highest Cost 50 BBT Shares at $55.45 (2/8/18 Post)(profit snapshot= $1,061.02)
Item # 3.A. Sold Highest Cost 50 BBT Shares at $47.24 (3/28/17 Post)(profit snapshot = $586.45)
Prior Buy Discussions:
Item # 3. Bought 50 BBT at $35.23-Satellite Taxable Account: Update For Regional Bank Basket As Of 9/23/15 - South Gent | Seeking Alpha
Item # 3. Added 50 BBT at $32.35-Satellite Taxable: Update For Regional Bank Basket Strategy As Of 2/20/16 - South Gent | Seeking Alpha
I am close to reducing my regional bank allocation to less than $5K. I may start to flip those stocks more frequently without discussing my trades here. In the past, almost all of my trades in that sector have been discussed in this blog on my SA Instablog.
2. Small Ball:
A. Bought 50 RNW:CA at C$12.45 (C$1 IB Commission):
Quote: TransAlta Renewables Inc. (Canada: Toronto)
Dividend: Monthly at C$.0783 per share (C$.94 annually)
RNW:CA Average Cost Per Share= C$12.76
Dividend Yield at Average Total Cost = 7.37%
Maximum Position (Toronto traded shares): 200 shares
This is an average down from a recent purchase: Item # 2.A Bought 100 RNW:CA at CA$12.91 (6/18/18 Post).
Shortly after that purchase, the company had a public stock offering where it sold shares at C$12.65. TransAlta Renewables Announces $150 Million Bought Deal Offering of Common Shares
The ordinary shares trade under the symbol TRSWF in the U.S. Grey Market. I own 100 TRSWF shares bought at $9.55: Item # 2.B. I will not buy more of TRSFWF. I have nothing to add to those prior discussions.
B. Bought 1 PPLT at $77.66-Used Commission Free Trade:
Quote: ETFS Physical Platinum Shares Overview
Current Position: 13 Shares
Maximum Position: 20 Shares
Average Cost Per share= $85.13
Platinum prices have fallen at a greater percentage than gold recently:
PPLT:
1/19/18 $96.52
7/2/18 $77.66
% Decline = -19.54%
PPLT Historical Prices
GLD:
1/19/19 $126.42
7/2/18 $117.46
% Decline = -7.09%
I would attribute part of the greater decline for PPLT to platinum's greater industrial use, with the primary industrial use being in automobile catalytic converters. The tariff wars could spill more into increased tariffs on automobiles that would lower sales by increasing costs. China is already imposing an increased tariff on U.S. manufactured SUVs. Daimler Cuts 2018 EBIT Outlook As Chinese Tariffs Hit U.S.-Built SUVs - Nasdaq.com
There are also estimates that the platinum is in over supply even though the cost of production is now higher than the market price. Platinum near decade-low prices following speculative selloff, big surplus-Seeking Alpha
3. REIT Equity Preferred Stocks:
In this section, I discuss a swap trade based on relative valuation at the then current prices. I view the two REIT equity preferred stocks discussed below as roughly equivalent on credit risk. Both are issued by industrial REITs. Both are subject to the same interest rate risk issues that are inherent in potentially perpetual, fixed coupon preferred stocks that may be redeemed at the issuer's option within five years or so after the IPO.
I do not view either of these two preferred stocks to be attractive at their current prices. The risk/reward is tilted in my opinion toward risk.
Stocks, Bonds & Politics: Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks (9/25/09 Post)
 |
| REXRPRB History |
Item # 1.B Bought 30 REXRPRB at $23.33 (6/18/18 Post)
Quote: Rexford Industrial Realty Inc. 5.875% Cumulative Preferred Series B Stock
Issuer: Rexford Industrial Realty Inc. (REXR)
Rexford Industrial Announces First Quarter 2018 Financial Results
I received one quarterly dividend as shown in the previous snapshot.
Last REXRPRB Ex Dividend Date: 6/14/18
REXRPRB Prospectus (optional call on or after 11/13/21; par value = $25)
Functionally Equivalent Preferred Stocks:
Since I started writing this blog back in October 2008, I have discussed trades in functionally equivalent preferred stocks and exchange traded bonds.
Rexford has another equity preferred stock with the same coupon as REXRPRB: Rexford Industrial Realty Inc. 5.875% Cumulative Preferred Series A Stock
I view the series A and series B to be functionally equivalent as to the material terms. The credit risk is identical. Both preferred issues are in pari passu with one another. Both have the same claim superior claim to the common shares and both are inferior to all bonds in the capital structure. Both pay cumulative and non-qualified dividends. Even the coupons are the same, though the more important comparison is yield at total cost when choosing one or the other. The only difference is in the optional call date which is not material. The Series A preferred stock may be called on or after 8/16/21 or about 3 months earlier than than the Series B. Series A Prospectus
When I sold the Series B stock at $24.99, the Series A stock was trading at $24.2. That is an example IMO of irrational pricing. If I was going to buy one or the other at that moment in time, I would have bought the Series A at $24.2.
I have previously bought and sold the Series A: South Gent's Comment Blog # 6: Bought 50 REXRPRA at $22.18 (11/28/16 comment)- Item 3.B. Sold 50 REXRPRA at $23.2 (1/27/17 Post)(clipped the quarterly coupon and realized a $17.97 profit on the shares or just another example of small ball)
B. Bought 50 MNRPRC at $24-Used Commission Free Trade:
MNRPRC Purchase:
Quote: Monmouth Real Estate Investment Corp. 6.125% Cumulative Preferred. Series C Stock
Issuer: Monmouth Real Estate Investment Corp. Cl A (MNR)
Last Earnings Report: Q/E 3/31/18
Monmouth Real Estate Reports Results For The Second Quarter Ended March 31, 2018
MNRPRC Prospectus
Par Value: $25
Optional Call: At par + accrued and unpaid dividends at the issuer's option on or after 9/15/21
MNR.PC Stock Chart
Next Ex Dividend Date: 8/14/18
Previous Round-Trip: Item 5.A. Sold 100 MNRPRC at $24.85 (1/21/17 Post)(profit snapshot = $71.93)
Rational: Income generation and potential dividend harvest strategy
Stocks, Bonds & Politics: Gateway Post: Equity REIT Common and Preferred Stock Basket Strategy
4. Short Term Bond/CD Ladder Basket Strategy:
A. Bought 1 Wells Fargo 2.8% CD (monthly interest payments) Maturing on 6/29/20 (2 year CD):
On my day of purchase, the two year treasury bill closed at a yield. 2018 Daily Treasury Yield Curve Rates I see no reason to buy a two year treasury when a two year FDIC insured CD that makes monthly interest payments pays % more.
B. Bought 1 Northern States Power Minnesota 2.2% First Mortgage Bond Maturing on 8/15/20-In A Roth IRA Account:
FINRA PAGE: Bond Detail (prospectus not linked)
Definitive Prospectus Supplement
Security: First Lien on Substantially All Owned Property
Issuer: Wholly owned subsidiary of Xcel Energy Inc. (XEL)
"NSP-Minnesota is a utility primarily engaged in the generation, purchase, transmission, distribution and sale of electricity in Minnesota, North Dakota and South Dakota. NSP-Minnesota also purchases, transports, distributes and sells natural gas to retail customers and transports customer-owned natural gas in Minnesota and North Dakota. NSP-Minnesota provides electric utility service to approximately 1.5 million customers and natural gas utility service to approximately 0.5 million customers. Approximately 88 percent of NSP-Minnesota’s retail electric operating revenues were derived from operations in Minnesota during 2017 and 2016."
2017 XCEL Annual Report
Credit Ratings:
Fitch Rates Northern States Power Company-Wisconsin's FMBs 'A+' (11/27/17)
Bought at a Total Cost of 98.695
YTM at TC Then at 2.834%
Current Yield at TC = 2.2291%
C. Bought 2 Kroger 2.3% SU Bonds Maturing on 1/15/19:
Finra Page: Bond Detail (prospectus linked)
Issuer: Kroger Co. (KR)
KR Analyst Estimates
Credit Ratings:
Bought at a Total Cost of 99.936
YTM at Total Cost Then at 2.417%
Current Yield at TC = 2.3%
D. Bought 1 Bank of China 2.25% CD Maturing on 1/15/19:
E. Bought 2 Sysco 2.6% SU Bonds Maturing on 10/1/2020-In a Roth IRA Account:
FINRA PAGE: Bond Detail (prospectus linked)
Issuer: Sysco Corp. (SYY)
SYY Analyst Estimates
Sysco Reports Third Quarter Earnings (Q/E 3/31/18)
The last bond offering was in March 2009: Prospectus
Credit Ratings:
Fitch Affirms Kroger at 'BBB/F2'; Outlook Revised to Negative (9/19/17)
Bought at a Total Cost of 99.135 (with $4 commission)
YTM at TC Then at 3%
Current Yield at 2.6227%
This is a marginal buy in this account since my money market sweep account, the Vanguard Federal MM fund, had then a yield of . I do pick up some extra current yield, which is likely to be higher at 2.623% than the source of funds yield this year. The YTM of 3% is not likely to be surpassed prior to 2020 by the MM yield.
F. Bought 1 Wells Fargo 2.125% SU Bond Maturing on 4/22/19:
Finra Page: Bond Detail (prospectus linked)
Issuer: Wells Fargo & Co.
WFC Analyst Estimates
Credit Ratings:
Bought at a Total Cost of 99.550
YTM at TC Then at 2.693%
Current Yield at TC = 2.1346%
G. Bought 1 Caterpillar Financial Services 2.1% SU Bond Maturing on 6/9/19:
Finra Page: Bond Detail (prospectus linked)
Issuer: Wholly owned subsidiary of Caterpillar Inc. (CAT)
CAT 2017 Annual Report
Credit Ratings:
Fitch Affirms Caterpillar's IDR at 'A'; Outlook Revised to Stable (12/7/17)
Bought at a Total Cost of 99.608
YTM at TC Then at 2.529%
Current Yield at TC = 2.1083%
FINRA PAGE: Bond Detail (prospectus not linked)
Definitive Prospectus Supplement
Security: First Lien on Substantially All Owned Property
Issuer: Wholly owned subsidiary of Xcel Energy Inc. (XEL)
"NSP-Minnesota is a utility primarily engaged in the generation, purchase, transmission, distribution and sale of electricity in Minnesota, North Dakota and South Dakota. NSP-Minnesota also purchases, transports, distributes and sells natural gas to retail customers and transports customer-owned natural gas in Minnesota and North Dakota. NSP-Minnesota provides electric utility service to approximately 1.5 million customers and natural gas utility service to approximately 0.5 million customers. Approximately 88 percent of NSP-Minnesota’s retail electric operating revenues were derived from operations in Minnesota during 2017 and 2016."
2017 XCEL Annual Report
Credit Ratings:
Fitch Rates Northern States Power Company-Wisconsin's FMBs 'A+' (11/27/17)
Bought at a Total Cost of 98.695
YTM at TC Then at 2.834%
Current Yield at TC = 2.2291%
C. Bought 2 Kroger 2.3% SU Bonds Maturing on 1/15/19:
Finra Page: Bond Detail (prospectus linked)
Issuer: Kroger Co. (KR)
KR Analyst Estimates
Credit Ratings:
Bought at a Total Cost of 99.936
YTM at Total Cost Then at 2.417%
Current Yield at TC = 2.3%
D. Bought 1 Bank of China 2.25% CD Maturing on 1/15/19:
E. Bought 2 Sysco 2.6% SU Bonds Maturing on 10/1/2020-In a Roth IRA Account:
FINRA PAGE: Bond Detail (prospectus linked)
Issuer: Sysco Corp. (SYY)
SYY Analyst Estimates
Sysco Reports Third Quarter Earnings (Q/E 3/31/18)
The last bond offering was in March 2009: Prospectus
Credit Ratings:
Fitch Affirms Kroger at 'BBB/F2'; Outlook Revised to Negative (9/19/17)
Bought at a Total Cost of 99.135 (with $4 commission)
YTM at TC Then at 3%
Current Yield at 2.6227%
This is a marginal buy in this account since my money market sweep account, the Vanguard Federal MM fund, had then a yield of . I do pick up some extra current yield, which is likely to be higher at 2.623% than the source of funds yield this year. The YTM of 3% is not likely to be surpassed prior to 2020 by the MM yield.
F. Bought 1 Wells Fargo 2.125% SU Bond Maturing on 4/22/19:
Finra Page: Bond Detail (prospectus linked)
Issuer: Wells Fargo & Co.
WFC Analyst Estimates
Credit Ratings:
Bought at a Total Cost of 99.550
YTM at TC Then at 2.693%
Current Yield at TC = 2.1346%
G. Bought 1 Caterpillar Financial Services 2.1% SU Bond Maturing on 6/9/19:
Finra Page: Bond Detail (prospectus linked)
Issuer: Wholly owned subsidiary of Caterpillar Inc. (CAT)
CAT 2017 Annual Report
Credit Ratings:
Fitch Affirms Caterpillar's IDR at 'A'; Outlook Revised to Stable (12/7/17)
Bought at a Total Cost of 99.608
YTM at TC Then at 2.529%
Current Yield at TC = 2.1083%
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.
Three month CD rates have declined slightly over the past week or so. I recently bought one maturing in October with a 2.1% coupon. The top rate at Fidelity is now at 1.95%. A similar yield downdraft can be seen in CDs maturing in the 2019 first quarter. This is occurring as inflation accelerates and the FED remains firm on increasing the FF rate, with a .25% increase in September as near certain and another .25% increase in December at better than 50/50.
ReplyDeleteThe government reported that CPI jumped 2.9% Y-O-Y last month. To receive a CD yield that exceeds that number, unadjusted for the tax bite (!), the investor would have to go out to July 2021 where there are a few CD offerings at 3% and one at 3.05% (GS Bank).
In this post, I mentioned buying a Bank of China 2.25% CD maturing on 1/15/18 that had a 7/11/18 settlement date.
DeleteFidelity and Schwab are now offering a 2.1% Bank of China CD maturing on 1/18/19 with a 7/18 settlement date.
This is a typical downdraft in CD rates that I reference in the previous comment above.
Yields on corporate bonds maturing in 2019 are falling as well, though it is still possible to pick up some extra yield with investment grade corporates compared to treasuries and CDs.
Treasury yields for securities maturing within 12 months are generally comparable to CD yields at or near the same maturity, with some treasuries providing slightly higher yields than the comparable maturity CDs after the recent decline in CD rates. I am referring to buying 1 treasury note in the secondary market. Rates at the auction would be slightly higher as would purchases of 100+ treasury notes in the secondary market.
CD rates start to become more favorable than treasuries starting in about a year. There is a WFC CD that pays monthly at 2.45% that matures on 8/27/19. A treasury maturing on 8/31/19, with a 1.625%, could have been today in a one bond lot with a YTM of 2.366% and at 2.412% for a 200 note buy.
With short term rates drifting down some, and intermediate interest rates stuck close to 4% for an investment grade bond maturing in 7 or 8 years, I am not likely to hit my 4% income bogey on a total portfolio basis within the 18 month window previously discussed.
Just another day reaffirming my oft repeated opinion that the Stock Jocks are not concerned about the tariff wars. The risk on trade is still in full bloom.
ReplyDeleteS&P 500 2,798.29 +24.27 (+0.87%)
The movement in the VIX remains consistent with an ongoing stock bull market.
CBOE Volatility Index 12.59 -1.04 (-7.63%)
Persistent movement below 20 indicates that investors are not yet scared of losing their profits and are comfortable with their stock allocations. Persistent movement below 15 is the most bullish indicator given by my Vix Asset Allocation Model.
https://tennesseeindependent.blogspot.com/2009/05/vix-asset-allocation-model-explained.html
The Bond Ghouls have returned to their deep sleep unconcerned about rising inflation and the gradual withdrawal of extremely abnormal monetary policies nine years after the last U.S. recession officially ended.
iShares 20+ Year Treasury Bond ETF (TLT)
$122.41 -$0.01 (-0.01%)
iShares 7-10 Year Treasury Bond ETF (IEF)
$102.44 -$0.04 (-0.04%)
Regional bank stocks bucked the uptrend today:
SPDR S&P Regional Banking ETF
$61.50 -$0.75 -1.20%
https://www.marketwatch.com/investing/fund/kre
I have now harvested all of my regional bank profits exceeding $500 and am now in a trading mode for that sector. I do have a few bank stocks in my ongoing small ball buying program. The exposure is immaterial.
I notice Bank of China is always .5% above other FDIC CDs offered on my TDAmeritrade or Fidelity, China can go FK THEMSELVES, I don't care about their .5% better CD rates, they can be 6 ft under as far as I'm concerned, I would never trust even a CD from China marketed by TDAmeritrade, just my opinion.
ReplyDeleteI have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2018/07/observations-and-sample-of-recent_15.html