Thursday, July 5, 2018

Observations and Sample of Recent Trades: IBM, PWCDF, VEIRX, VNQ

Economy: 

 The June ISM manufacturing PMI index was reported at 60.2, up from 58.7 in May. The new orders component was 63.5. 

 ISM manufacturing index hits 4-month high, but tariffs, delays flagged by executives - MarketWatch


 +++++

Markets and Market Commentary: 

Morgan Stanley says 10 year hit is high for 2018 at 3.12% (utility stocks have been rallying as of late which is consistent with that outlook)


 Trump-era tariffs are hitting this one industry especially hard - MarketWatch (newspapers are having to pay higher prices for paper due to the Duck's tariffs on Canadian uncoated groundwood paper) 

 US pork producers brace for new pork tariffs from China, Mexico: CNBC 

 Kick 'em while they're down: Tariffs hit food, beverage companies: CNBC 

 ‘It’s hard to be bearish stocks’ after looking at this chart, says veteran trader - MarketWatch

 Expect a ‘choppy’ July before an end-of-year blowout, market bull says

 PepsiCo downgraded by Deutsche Bank due to rising ‘cost inflation’

 Enbridge Shakes Debt Woes With $3.3 Billion Sale to Brookfield - Bloomberg

 Morgan Stanley hikes oil price forecast to $85 as Trump targets Iran
More of America's wealthy turn to cash as market enthusiasm hits wall

++++


According to Donald, North Korea and the U.S. would now be at war without his efforts, which is just another delusional statement:

In an interesting tweet, Donald claims to have written several books. Those books were part of his successful effort to create the brand Trump, a self-created version of Trump as a hugely successful businessman in spite of his 6 bankruptcies that consequently allowed him to make a fortune licensing his name: 

I seriously doubt that he wrote the words contained in any of those puff books.
The ghost writer for the most famous one, Art of the Deal, has claimed in the past that Trump wrote nothing. Donald Trump’s Ghostwriter Tells All | The New Yorker

 It is really a full time undertaking to correct the constant barrage of false and misleading news that naturally and inevitably flows from Donald's reptilian brain.  So I will just reference some recent fact check articles that delve into the Duck's misrepresentations made earlier this week. In a Fox-Inspired Tweetstorm, Trump Offers a Medley of Falsehoods and Misstatements - The New York Times; Trump falsely claims Obama gave citizenship to 2,500 Iranians during nuclear deal talks - The Washington Post; Trump Distorts Facts on Agricultural Trade - FactCheck.org; Donald Trump wrong that Mercedes, BMW import cars to U.S. by the millions | PolitiFact 

Yet another baseless conspiracy claim nurtured by Donald and his fellow travelers has been shot down: Congressional IT staffer reaches plea deal that debunks conspiracy theories about illegal information access Donald does not want or need facts, much preferring his reality creations which are frequently used to manipulate the True Believers and to zing anyone who dares to commit treason by challenging those creations with accurate information. 
A few Democrats have called for abolishing ICE, which has allowed Donald to paint the entire party as being in favor of that policy and to present a narrative for the mid-term election that the Democrats have moved to the far left. Calling for the abolition of ICE is a gift to republicans.  

 ++

 Powerful GOP Rep. Jim Jordan accused of turning blind eye to sexual abuse as Ohio State wrestling coach

U.S. softens North Korea approach as Pompeo prepares for more nuclear talks | Reuters

++++

 1. Eliminated Position in the Vanguard Equity Income Fund Admiral (VEIRX) Mutual Fund:

 Profit Snapshot: +$6,519.26 (excludes January 2018 sells)
Rationale: Profit taking, capital preservation some disappointment about recent performance and 2+% return in money market fund 
The proceeds went into my Vanguard Prime Money Market fund that pays over 2% currently. 

 I have been taking recent distributions in cash: 


2. Small Ball:

 A. SOLD 10+ VNQ at $81.08-Commission Free ETF for Vanguard Customers:

Profit Snapshot: +$82.15

Quote:  Vanguard Real Estate ETF Overview - MarketWatch
B. Bought 1 IBM at $139.53-Used Commission Free Trade: 

Current Position: 7+ shares

 Closing Price Last Tuesday: IBM $139.57 -$0.29 -0.21% 

IBM Stock Price 

IBM Analyst Estimates 

CHART: Major BEAR Trend Since February 2007

Average Cost Per share= $144.06

Dividend: Quarterly at $1.57 per share ($6.28 annually)

Dividend Yield at Average Cost = 4.36%

Dividend Reinvestment: Yes

Last Ex Dividend Date: 5/9/18

Maximum Position: 20 Shares

 The limit on my maximum position is based on my opinions about IBM's many challenges and an overall inability to grow revenues.  

Purchase Restriction: Small Ball Rule (next purchase has to be below $139.53) 

Last Earnings Report: Q/E 3/31/18 

 SEC Filings 

 2. Added 50 PWCDF at $22.58:

Quotes:

 CAD Priced Shares: Power Corp. of Canada Stock Quote (Canada: Toronto)

USD Priced Shares (pink sheet exchange):  Power Corp. of Canada

 Current Position: 100 Shares

 Maximum Position: 200 shares  

 My previous maximum position was 400 shares: Item # 1. Sold 400 POW:TO at C$31.05: Update For Portfolio Positioning And Management As Of 4/29/16 - South Gent | Seeking Alpha (USD Profit = $360.45)

 Average Cost Per Share: $22.95

Dividend: The Board recently increased the quarterly dividend by 6.6% to C$.382 per share. 

 The amount payable to the owners of PWCDF will depend on the CAD/USD conversion rate. 

 If I assume a .75 CAD/USD and a total cost per share of US$22.58, the dividend yield would be about 5.08% at a C$.382 per share quarterly rate. The yield increases to 6.77% when 1 CAD buys 1 USD and shrinks to 4.4% at a .65 CAD/USD exchange rate.  

 Canada will withhold 15% when the dividend is paid into a U.S. citizen's taxable account, but there is no withholding when this stock is held in a U.S. citizen's retirement account. 

 Those statements assume that an investor's brokerage company claims U.S. citizen tax treaty rights.   

I received a dividend on my first 50 share lot purchase this month. 

History in This Account (Schwab Provides a 2 Year History): 

  
Last Discussed:  Item # 2 Bought 50 PWCDF at $23.31 (5/31/18)

 Last Earnings Report:  Q/E 3/31/18

Power Corporation Reports First Quarter Financial Results and Dividend Increase 

"Net earnings attributable to participating shareholders and adjusted net earnings attributable to participating shareholders (a non-IFRS financial measure) were $525 million or $1.13 per share, compared with net earnings of $258 million, or $0.56 per share, and adjusted net earnings of $269 million, or $0.58 per share, in 2017."

 Other Discussion Links: 

 Item # 4.A. Sold 100 PWCDF at $23.56 (7/22/17)-Item # 3.A. Bought 100 PWDCF at $22.14 (5/28/17 Post) 
Item # 1. Sold 400 POW:TO at C$31.05: Update For Portfolio Positioning And Management As Of 4/29/16 - South Gent | Seeking Alpha (USD Profit = $360.45)
Trading Profits to Date: $1,088.04


3. Short Term Bond/CD Ladder Basket Strategy: 

A. Bought 2 Sonabank 2.3% CDs (monthly interest payments) Maturing on 6/28/19: 



B. Bought 1 Treasury 1.5% Coupon Maturing on 5/31/19 (commission free at Schwab): 
YTM = 2.302%


I now own 2. 

C. Bought 2 Associated Banc 2.75% SU Bonds Maturing on 11/15/19:

FINRA PAGE: Bond Detail (prospectus linked)

 Issuer: Associated Banc-Corp.  (ASB)

 ASB Analyst Estimates
2017 Annual Report
ASB SEC Filings

 Associated Banc-Corp Increases Prime Rate

 Associated Banc-Corp Reports First Quarter Earnings of $0.40 per common share, or $0.50 per common excluding acquisition cots

 Associated Banc-Corp Closes Acquisition of Bank Mutual Corporation

 Credit Ratings:

Bought at a Total Cost of 99.515
YTM at TC Then at 3.105%
Current Yield at TC = 2.7634%

 The common stock is on my monitor list.

D. Bought 2 BOFI 2.3% CDs (monthly interest payments) Maturing on 3/28/19:

Holding Company: BOFI Holding Inc.
BOFI Analyst Estimates 

E. Bought 1 Bank of China 2.2% CD Maturing on 12/28/18:

F. Bought 1 Citigroup 2.55% SU Maturing on 4/8/19:

FINRA Page: Bond Detail (prospectus linked)

 Issuer: Citigroup Inc.
C Analyst Estimates

 Credit Ratings:

Bought at a Total Cost of 99.991
YTM at TC Then at 2.559%
Current Yield at TC = 2.5502%

 G. Bought 2 Mizrahi 2.1% CDs Maturing on 10/12/18:

I have no intermediate term bond purchases to discuss. I am still expecting interest rates to trend up. I will invest most of the proceeds from short term bonds and CDs that mature later this year into more of the same maturing in 2019. 

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. 
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4 comments:

  1. TENNINDEPENDENTJuly 5, 2018 at 4:14 PM

    As far as I can determine, the acceleration in the tariff wars is causing the Stock Jocks to rejoice and to perform their Happy Dance which is reserved for the most welcomed events.

    Dow Jones Industrial Average
    24,356.74 + 181.92 + 0.75%

    There is no need to worry according to Donald's trade advisor, the wingnut Peter Navarro, who opined that no foreign nation would dare to implement tit-for-tat tariffs and would instead relish the opportunity to submit to Donald's will.

    "Peter Navarro on tariffs: I don't believe any country will retaliate"
    http://video.foxbusiness.com/v/5743778657001/?#sp=show-clips

    And, Donald himself has guaranteed to America that “trade wars are good,” and are "easy to win.”

    https://www.reuters.com/article/us-usa-trade-trump/trump-tweets-trade-wars-are-good-and-easy-to-win-idUSKCN1GE1E9

    What is funny about those statements from the Duck, which are mocked of course by journalists and economic historians, is that the Stock Jocks have swallowed the lines apparently without any reservations.

    So all of those tariffs on U.S. exports, which will be imposed tomorrow and have already gone into effect, are illusions created by the liberal Fake News Media.

    Or for those who have difficulty in accepting that premise, the ultimate economic impacts will be at best small and meaningless diversions to making America great again. Possibly, if that premise turns out to be wishful thinking, a few DT Stock Jocks will want to exchange their Make America Great Again hats for Make America Sane Again ones.

    The Stocks Jocks are by and large Trump supporters and actually believe that Donald knows what he is doing for reasons that are beyond my comprehension. Time will tell whether America's trading partners will buckle, which is clearly the current consensus opinion now.

    The idea underlying that consensus is that exports are far more important to those countries than exports are to the U.S. economy which is true. The problem is the issue is nowhere near that simple for several reasons:

    (1) U.S. manufacturers import foreign products that are incorporated into the manufacturing process for a final product. Supply chains will be disrupted by tariffs and other retaliatory measures. Many U.S. manufacturers will no longer be price competitive in international markets or even in the U.S. for the finished product.

    (2) U.S. consumers will be harmed by U.S. tariffs and many will actually come to realize that fact just before a mid-term election;

    (3) numerous businesses will lose important export markets which is already happening for several agricultural commodities grown in red states and congressional districts.

    (4) As one person noted today, the main trade fight will occur on the fringes and flanks rather than through the tariff mechanism for trade wars. U.S. manufacturers will for a variety of reasons have their products rejected after a bogus inspection or prevented by a government controlled entity from even selling the product. Regulatory scrutinies will increase. In short, foreign commerce by U.S. corporations will suffer thousands of paper cuts that will be mostly out of the limelight.

    5. When U.S. consumers and businesses are being harmed to significant decrees by the GOP's trade war, then it may not matter that much to them that someone else is being hurt more.

    6. Donald has made it difficult, perhaps impossible, for many leaders to buckle since to do so would have profound negative repercussions domestically for them.

    ReplyDelete
  2. TENNINDEPENDENTJuly 6, 2018 at 11:47 AM

    Biogen Inc. (BIIB)
    $346.56 +$47.75 (+15.98%)
    As of 12:35PM EDT.
    https://finance.yahoo.com/quote/BIIB/holders?p=BIIB

    The market is reacting favorably to BIIB's trial results for its alzheimer’s drug:

    https://www.marketwatch.com/story/biogen-stock-surges-16-as-analysts-mostly-cheer-positive-results-in-alzheimers-trial-2018-07-06

    This is not the kind of stock that I will own individually. I do own healthcare funds that have significant positions.

    The Vanguard Health Care Fund (VGHCX) owned 3.592+M shares as of 3/31/18.

    The CEF THQ had 1.9% of the portfolio in BIIB as of 3/31/18:

    Page 7:
    https://www.sec.gov/Archives/edgar/data/1604522/000110465918037521/a18-12508_2ncsrs.htm

    I recently pared my THQ position.

    I have a meaningful position in the T. Rowe Price Health Sciences Fund (PRHSX), currently rated five stars by Morningstar:

    https://www.morningstar.com/funds/xnas/prhsx/quote.html

    Positions in that fund are disclosed semi-annually with the last report being for the period ending 12/31/17. The fund then owned 735+K BIIB shares.

    http://quicktake.morningstar.com/FundNet/SecFiling.aspx?Symbol=PRHSX&Country=usa

    That fund focuses more on biotechnology stocks than the Vanguard fund.

    ReplyDelete
  3. TENNINDEPENDENTJuly 6, 2018 at 3:26 PM

    So the Stock Jocks view an acceleration of a trade war as a risk on event. The rationale is that the U.S. will be better off in a few weeks or months without having to suffer much pain.

    The Stocks Jocks may be right and have at many times proved prescient with their future predictions, but their track record also includes periods where the forecasts could best be described as delusional. Time will tell.

    The Stock Jocks are signaling to Donald that they approve of what he has done on trade which probably makes it more likely that the Duck will continue to increase tariffs until the U.S. trading partners get down on their knees and crawl to him.

    The foreign nations can then decide to deliver an equivalent pain in dollar amounts, aiming as directly as possible at the Trump supporters in swing districts and states, until the mid-term elections and see how the Duck likes them apples.

    That would be how I would deal with a bully who is 100% untrustworthy. Give him what he wants now would only invite more problems down the road.

    The Stocks Jocks do not see that happening.

    S&P 500 Index + 23.21 +0.85%

    The VIX is well within what I define as stable movement that is a characteristic of an ongoing bull market.

    https://www.marketwatch.com/investing/index/vix

    The German 10 year bond closed at below .3% today:

    https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx

    U.S. interest rates were stable today with the 10 year closing at a 2.82% yield, down from a closing high of 3.11% on 5/17/18 (reaching, as I recall, 3.12% intra-day)

    https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield

    ReplyDelete
  4. TENNINDEPENDENTJuly 9, 2018 at 7:07 AM

    I have published a new post:

    https://tennesseeindependent.blogspot.com/2018/07/observations-and-sample-of-recent_9.html

    ReplyDelete

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