Economy:
Personal Income and Outlays, September 2018 | U.S. Bureau of Economic Analysis (BEA):
The core personal consumption price index remained stable at 2%. The personal savings rate was reported at 6.2%.
Personal Income and Outlays, September 2018 | U.S. Bureau of Economic Analysis (BEA):
The core personal consumption price index remained stable at 2%. The personal savings rate was reported at 6.2%.
US trade deficit widens for fourth straight month, hits $76 billion U.S. exports of feed, food, and beverages declined by 8.9% in September after falling 9.5% in August. The culprit was the GOP's tariff war. Table 1: Advance Economic Indicators Report - September 2018
No waivers allowed for US businesses in latest round of Chinese tariffs
Robert Shiller: I don't expect a sharp turn in the housing market While the housing market is slowing down, Shiller is not fearful of big downturn ahead "at this point".
Southern California suffers its worst housing slump in over a decade
Exclusive: Defense firms see only hundreds of new U.S. jobs from Saudi mega deal | Reuters
Robert Shiller: I don't expect a sharp turn in the housing market While the housing market is slowing down, Shiller is not fearful of big downturn ahead "at this point".
Southern California suffers its worst housing slump in over a decade
Exclusive: Defense firms see only hundreds of new U.S. jobs from Saudi mega deal | Reuters
+++++
Markets and Market Commentary:
Goldman Sachs: Sell-off is 'overdone' and Stocks could rally 20% after this bruising rout, says Guggenheim’s Minerd — after that, watch out - MarketWatch but then there is
Morgan Stanley says October sell-off is 'morphing' into a bear market and ‘Godfather’ of chart analysis says ‘damage done to the stock market’ is much, much worse’ than anyone is talking about - MarketWatch
SIT Investment's Bryce Doty issues warning on spiking interest rates
Goldman Sachs: Sell-off is 'overdone' and Stocks could rally 20% after this bruising rout, says Guggenheim’s Minerd — after that, watch out - MarketWatch but then there is
Morgan Stanley says October sell-off is 'morphing' into a bear market and ‘Godfather’ of chart analysis says ‘damage done to the stock market’ is much, much worse’ than anyone is talking about - MarketWatch
SIT Investment's Bryce Doty issues warning on spiking interest rates
The stock market faces ‘unlimited downside risk,’ warns veteran trader - MarketWatch
Sharp decline in housing stocks on higher rates way overdone: Analyst; ITB Chart: iShares U.S. Home Construction ETF (well into bear market territory); Sponsor's website: iShares U.S. Home Construction ETF | ITB
Nearly half of the S&P 500 is in a bear market
US plans more China tariffs if Trump-Xi meeting fails, sources say
U.S. Plans More China Tariffs If Trump-Xi Meeting Fails, Sources Say - Bloomberg These tariffs would be in addition to the ones that have already been levied by the U.S. and would apply to China's remaining exports to the U.S. that are not currently subject to a tariff.
The market rallied yesterday after Trump represented to investors that he expects a "great" trade deal with China. Trump says he expects 'great deal' with China, but more tariffs if not
There is no publicly available information that China and the U.S. are even negotiating. I view Trump's claim as more likely than not to be related to the upcoming election and a desire among republicans to stop the stock market free fall before next Tuesday.
I certainly hope that Donald is successful since it would make my allocations easier and the trade arrangements with China are definitely in need of a major overhaul .
++++++++
Sharp decline in housing stocks on higher rates way overdone: Analyst; ITB Chart: iShares U.S. Home Construction ETF (well into bear market territory); Sponsor's website: iShares U.S. Home Construction ETF | ITB
Nearly half of the S&P 500 is in a bear market
US plans more China tariffs if Trump-Xi meeting fails, sources say
U.S. Plans More China Tariffs If Trump-Xi Meeting Fails, Sources Say - Bloomberg These tariffs would be in addition to the ones that have already been levied by the U.S. and would apply to China's remaining exports to the U.S. that are not currently subject to a tariff.
The market rallied yesterday after Trump represented to investors that he expects a "great" trade deal with China. Trump says he expects 'great deal' with China, but more tariffs if not
There is no publicly available information that China and the U.S. are even negotiating. I view Trump's claim as more likely than not to be related to the upcoming election and a desire among republicans to stop the stock market free fall before next Tuesday.
I certainly hope that Donald is successful since it would make my allocations easier and the trade arrangements with China are definitely in need of a major overhaul .
++++++++
Trump:
Trump has again attacked the free press as the enemy of the people:
The now numerous Trump's tweets attacking the free press as the "enemy of the people" encourages violence against journalists and news organizations.
In TrumpWorld, the Fake News media includes only those outlets that report facts and challenges Donald's lies with facts.
Like all demagogues with strong authoritarian tendencies, Trump does not want anyone pointing out his false public statements made at an average rate of 8+ per day.
Sean Hannity and Fox and Friends are the two main non-Fake News media outlets, but they are just media personalities that regurgitate the Trump's talking points and would never dare to challenge his reality creations.
Donald's tweets about Fake News and the media being the "enemy of the people" are normal for an authoritarian demagogue who wants to silence criticism and to turn people away from any information sources that report accurate information that contradicts the demagogue's lies and false narratives. The sole purpose is to acquire power and wealth, to squash or minimize dissent, and to make challenges to those objectives far less effective.
No current republican office holder would dare to challenge Trump's continuous barrage of Fake News. They are totally cowed by him.
Republican politicians have already been reduced to Trump's sycophants and minions, showing him their abject submissiveness at every turn, and will enable and encourage rather than restrain Trump's demagoguery and strong authoritarian tendencies.
Opinion | Trump’s Corruption: The Definitive List - The New York Times
Donald Trump erroneously claims NYSE re-opened after Sept. 11 attacks to justify holding campaign rally following synagogue shooting
Repeatedly in his campaign rallies, Trump claims that a Vets Healthcare law passed during the Obama Administration is the "greatest idea" that he has ever had. Trump's 'Greatest Idea' for a 2014 Law- FactCheck.org; Obama Passed Donald VA Program Trump Claims at Rallies | Fortune In Trump's America, consisting of roughly 1/2 of the adult population, pointing out this fact is Fake News since it contradicts the false claim made by Trump.
No One Wanted Trump’s Portrait So His Charity Had to Buy It, Lawyer Says
Trump has again attacked the free press as the enemy of the people:
In TrumpWorld, the Fake News media includes only those outlets that report facts and challenges Donald's lies with facts.
Like all demagogues with strong authoritarian tendencies, Trump does not want anyone pointing out his false public statements made at an average rate of 8+ per day.
Sean Hannity and Fox and Friends are the two main non-Fake News media outlets, but they are just media personalities that regurgitate the Trump's talking points and would never dare to challenge his reality creations.
Donald's tweets about Fake News and the media being the "enemy of the people" are normal for an authoritarian demagogue who wants to silence criticism and to turn people away from any information sources that report accurate information that contradicts the demagogue's lies and false narratives. The sole purpose is to acquire power and wealth, to squash or minimize dissent, and to make challenges to those objectives far less effective.
No current republican office holder would dare to challenge Trump's continuous barrage of Fake News. They are totally cowed by him.
Republican politicians have already been reduced to Trump's sycophants and minions, showing him their abject submissiveness at every turn, and will enable and encourage rather than restrain Trump's demagoguery and strong authoritarian tendencies.
Opinion | Trump’s Corruption: The Definitive List - The New York Times
Donald Trump erroneously claims NYSE re-opened after Sept. 11 attacks to justify holding campaign rally following synagogue shooting
Repeatedly in his campaign rallies, Trump claims that a Vets Healthcare law passed during the Obama Administration is the "greatest idea" that he has ever had. Trump's 'Greatest Idea' for a 2014 Law- FactCheck.org; Obama Passed Donald VA Program Trump Claims at Rallies | Fortune In Trump's America, consisting of roughly 1/2 of the adult population, pointing out this fact is Fake News since it contradicts the false claim made by Trump.
No One Wanted Trump’s Portrait So His Charity Had to Buy It, Lawyer Says
Here’s an estimate of how much Trump’s 10% tax cut would cost - MarketWatch My idea is to eliminate taxes altogether. Just borrow and spend and then declare bankruptcy.
Trump’s stunning hypocrisy on preexisting conditions - Vox
One common misrepresentation being promoted by republicans now is that they support insurance for pre-existing conditions, notwithstanding their votes to repeal and gut Obamacare which made that coverage possible at affordable rates.
The republicans claim to have some kind of plan to require insurance companies to provide that insurance but are deliberately murky about the premium costs.
If the GOP has their way, the end result will be unaffordable insurance for pre-existing conditions for those who are not covered by employer plans.
There are voters who rely on Obamacare to cover pre-existing conditions who will vote for republicans that will terminate affordable health insurance for them. There is a decree of justice in that result.
Those same republican voters do not realize that Trump is now attempting to end Obamacare' pre-existing coverage requirements through litigation.
And, the republican bill, which allegedly provided coverage, contained a loophole that allowed insurance companies to exclude pre-existing conditions or to increase premiums based on any number of factors. Pre-existing conditions: Does any GOP proposal match the ACA? | PolitiFact;
Trump says he backs pre-existing conditions coverage-his actions say no
The Republican rush to protect pre-existing conditions, hypothetically - POLITICO;
Scott Walker says he would cover pre-existing conditions, but backs plans that would end protections | PolitiFact The general idea is to intentionally mislead those voters who view this issue to be important.
The Democrats are hammering republicans on this issue, but their existing solution embodied in Obamacare is not fair to those who have to subsidize it. I rarely hear any politician being straight with the voters on this kind of issue.
I was critical of Obamacare from the start for a variety of reasons.
While it is true that insurance is about pooling risks, it was not fair to require younger and healthier individuals to subsidize those with pre-existing conditions who would normally not be a non-employer provided insurance plan. And the entire idea of forcing individuals to buy healthcare insurance or fining them was a bad one.
Medicare for all is a solution, but is not one the nation can afford to pay for the foreseeable future. The existing Medicare program for seniors is going to be a major financial problem that will contribute to a major financial crisis within 15 years or so.
There is a lack of political will to do what is necessary to control medical costs which has to be done. If politicians from one party tried to do it, they would be met with a barrage of effective negative campaign ads basically asserting that they were interfering in the doctor patient relationship, creating "death panels", etc. It is not possible to have a rational, fact based discussion due to tribalism.
My tentative thoughts is that all employers with more than 50 employees need to be compelled to provide comprehensive health insurance or face an increase in their taxes or some other penalty that would cost them more.
For those with pre-existing conditions who are not insured by an employer provided healthcare plan, they need to be segregated out into a separate nationwide health insurance pool supported by government funding and premiums charged based on the ability to pay rather than supported by higher premiums charged to the healthy and mostly younger individuals.
++++++
Republican Voter Suppression in Kansas:
The Kansas Secretary of State Kris Kobach (R), who chaired Donald's fraudulent voter fraud panel until it was dissolved, is running for governor and is in a tight race that could go either way. RealClearPolitics - Election 2018 - Kansas Governor - Kobach vs. Kelly
As the Secretary of State, Kobach is in charge of voting.
Over the past five years, Kansas has closed 100 polling places as the voting population increased by 46,000 and placed restrictions on exercising the right to vote designed to discourage those who vote the wrong way.
One Kobach effort to restrict voting-proof of citizenship- was thrown out recently by a federal district court judge: Kobach-ruling.pdf
How would I prove my citizenship? I would have to locate my birth certificate in the county records that would show that I was born in the U.S. Only the highly engaged would bother.
Since the governor's race is too close to call, and republicans control the voting process, I would naturally expect that efforts will be undertaken to make it difficult to vote in areas where Democrat voters live.
A prime example of republican voter suppression can be found in Dodge City, Kansas which has a white republican county clerk. The voter suppression is taking many forms in that town which is now 60% hispanic.
First, the clerk will open only one precinct for 13,000 registered voters. The average number of voters per precinct is 800. The general idea is to to discourage voting by making people who vote the wrong way to wait in long lines and spend an hour or so before being allowed to cast a vote.
Second, after a very long period of the voting precinct being in the centrally located civic center, which is easily accessible by public transportation, the republican clerk changed the voting precinct to an location outside of the town that is literally across the railroad tracks with no bus route or sidewalk running from the city.
Third, the clerk then sent out notices that the voting location was changed but the location noted in the notice was the old one rather than the new one.
When the ACLU complained, the clerk sent an email to Kobach with the notation "LOL". Dodge City polling place move ignites voter access fears | The Wichita Eagle; To Cast Their Ballots, These Voters Will Have to Get Out of Dodge - The New York Times
+++++++
Trump threatens funds unless California prevents more wildfires | Reuters California points the finger at global warming which is in Trump's words a hoax. In a strikingly ignorant tweet, Trump gets almost everything about California wildfires wrong
Republicans seek to alarm Trump's base in midterm campaign ads
When Trump Phones Friends, the Chinese and the Russians Listen and Learn But what about "Crooked" Hillary's emails the Duck replies?
Text Messages Show Roger Stone Was Working to Get a Pardon for Julian Assange (the guy who released the emails stolen by the Russians)
Maureen Dowd wrote a column titled "Riling up the Crazies" that sums up the GOP's key and long standing election strategy. For as long as she can remember, republicans "have been trying to scare" her. "Sometimes, it has been about gays and transgender people and uppity women looming, but usually it has been about people with darker skin looming." Opinion | ‘Riling Up the Crazies’ - The New York Times FDR once said "The only thing we have to fear is fear itself", referring to the Great Depression. The GOP has turned that phrase upside down, as it does everything else, and turned it into "Make voters fear fear itself". The purpose is to fan the flames of prejudice and to divide a diverse nation into "us" and "them" factions that is the MO of authoritarian movements throughout history.
Bomb suspect Cesar Sayoc, lost and angry, found his tribe with Trump
House majority leader deletes tweet saying Soros, Bloomberg, Steyer are trying to 'buy' election - CNN Kevin McCarthy is a high ranking member of the Demagogue Party and is running to replace the Ayn Rand reactionary Paul Ryan as House Speaker.
In that tweet, McCarthy singled out two Jewish contributors, Bloomberg and Soros, to the Democrats. Steyer's father was Jewish. Soros and Steyer were sent pipe bombs by the Trumpster Cesar Sayoc.
Shortly after the massacre at the Pittsburgh synagogue and the sending of the bomb to Steyer, Demagogue Don thought it was time to attack Steyer as "wacky", "crazed" and a "lunatic":
It was only a day prior that Donald's handlers had him read a statement about being civil. Donald Trump calls for more civility in politics I am curious what Donald means by civil.
Sheldon Adelson, who is also Jewish, has contributed $87+M to the republicans this year. Top Individual Contributors: All Federal Contributions | OpenSecrets; 16. Sheldon Adelson - 50 Most Influential Jews - Jerusalem Post In TrumpWorld, Adelson is not trying to buy an election since he is contributing to the republicans.
For an animal like Kevin McCarthy, there are the good Jews (republican contributors) and the bad Jews (democrat contributors) who he wants to demonize as do other republican politicians.
GOP presses ahead in casting Soros as threat amid criticism that attacks are anti-Semitic
Demagogue Don frequently refers to the caravans as an invasion and claims that the caravans are filled with criminals and other undesirables including Jihadists. There is an abundance of republican campaign commercials making the same claim.
I saw one that has been on speed dial from the Trumpette Marsha Blackburn who will likely become a Tennessee Senator next month. Tennessee Senate race poll: Marsha Blackburn leads Phil Bredesen
Caravan | Marsha Blackburn for US Senate - YouTube
Lying works and lying a lot works even better in American politics. It is important for the deliberate effort to mislead to contain unfavorable images and last no longer than 30 seconds in order to have maximum effect.
This is just the latest example demonizing the caravan from Demagogue Don:
This is the message published by Robert Bowers a few minutes before he entered the Pittsburgh synagogue:
Donald inspires so many people.
Bianna Golodryga's personal connection to HIAS, group assailed by synagogue shooting suspect - CBS News
Republican Claims on Coverage for Pre-Existing Conditions: Republicans seek to alarm Trump's base in midterm campaign ads
When Trump Phones Friends, the Chinese and the Russians Listen and Learn But what about "Crooked" Hillary's emails the Duck replies?
Text Messages Show Roger Stone Was Working to Get a Pardon for Julian Assange (the guy who released the emails stolen by the Russians)
Maureen Dowd wrote a column titled "Riling up the Crazies" that sums up the GOP's key and long standing election strategy. For as long as she can remember, republicans "have been trying to scare" her. "Sometimes, it has been about gays and transgender people and uppity women looming, but usually it has been about people with darker skin looming." Opinion | ‘Riling Up the Crazies’ - The New York Times FDR once said "The only thing we have to fear is fear itself", referring to the Great Depression. The GOP has turned that phrase upside down, as it does everything else, and turned it into "Make voters fear fear itself". The purpose is to fan the flames of prejudice and to divide a diverse nation into "us" and "them" factions that is the MO of authoritarian movements throughout history.
Bomb suspect Cesar Sayoc, lost and angry, found his tribe with Trump
House majority leader deletes tweet saying Soros, Bloomberg, Steyer are trying to 'buy' election - CNN Kevin McCarthy is a high ranking member of the Demagogue Party and is running to replace the Ayn Rand reactionary Paul Ryan as House Speaker.
Shortly after the massacre at the Pittsburgh synagogue and the sending of the bomb to Steyer, Demagogue Don thought it was time to attack Steyer as "wacky", "crazed" and a "lunatic":
Sheldon Adelson, who is also Jewish, has contributed $87+M to the republicans this year. Top Individual Contributors: All Federal Contributions | OpenSecrets; 16. Sheldon Adelson - 50 Most Influential Jews - Jerusalem Post In TrumpWorld, Adelson is not trying to buy an election since he is contributing to the republicans.
For an animal like Kevin McCarthy, there are the good Jews (republican contributors) and the bad Jews (democrat contributors) who he wants to demonize as do other republican politicians.
GOP presses ahead in casting Soros as threat amid criticism that attacks are anti-Semitic
Demagogue Don frequently refers to the caravans as an invasion and claims that the caravans are filled with criminals and other undesirables including Jihadists. There is an abundance of republican campaign commercials making the same claim.
I saw one that has been on speed dial from the Trumpette Marsha Blackburn who will likely become a Tennessee Senator next month. Tennessee Senate race poll: Marsha Blackburn leads Phil Bredesen
Caravan | Marsha Blackburn for US Senate - YouTube
Lying works and lying a lot works even better in American politics. It is important for the deliberate effort to mislead to contain unfavorable images and last no longer than 30 seconds in order to have maximum effect.
This is just the latest example demonizing the caravan from Demagogue Don:
Donald inspires so many people.
Bianna Golodryga's personal connection to HIAS, group assailed by synagogue shooting suspect - CBS News
Trump’s stunning hypocrisy on preexisting conditions - Vox
One common misrepresentation being promoted by republicans now is that they support insurance for pre-existing conditions, notwithstanding their votes to repeal and gut Obamacare which made that coverage possible at affordable rates.
The republicans claim to have some kind of plan to require insurance companies to provide that insurance but are deliberately murky about the premium costs.
If the GOP has their way, the end result will be unaffordable insurance for pre-existing conditions for those who are not covered by employer plans.
There are voters who rely on Obamacare to cover pre-existing conditions who will vote for republicans that will terminate affordable health insurance for them. There is a decree of justice in that result.
Those same republican voters do not realize that Trump is now attempting to end Obamacare' pre-existing coverage requirements through litigation.
And, the republican bill, which allegedly provided coverage, contained a loophole that allowed insurance companies to exclude pre-existing conditions or to increase premiums based on any number of factors. Pre-existing conditions: Does any GOP proposal match the ACA? | PolitiFact;
Trump says he backs pre-existing conditions coverage-his actions say no
The Republican rush to protect pre-existing conditions, hypothetically - POLITICO;
Scott Walker says he would cover pre-existing conditions, but backs plans that would end protections | PolitiFact The general idea is to intentionally mislead those voters who view this issue to be important.
The Democrats are hammering republicans on this issue, but their existing solution embodied in Obamacare is not fair to those who have to subsidize it. I rarely hear any politician being straight with the voters on this kind of issue.
I was critical of Obamacare from the start for a variety of reasons.
While it is true that insurance is about pooling risks, it was not fair to require younger and healthier individuals to subsidize those with pre-existing conditions who would normally not be a non-employer provided insurance plan. And the entire idea of forcing individuals to buy healthcare insurance or fining them was a bad one.
Medicare for all is a solution, but is not one the nation can afford to pay for the foreseeable future. The existing Medicare program for seniors is going to be a major financial problem that will contribute to a major financial crisis within 15 years or so.
There is a lack of political will to do what is necessary to control medical costs which has to be done. If politicians from one party tried to do it, they would be met with a barrage of effective negative campaign ads basically asserting that they were interfering in the doctor patient relationship, creating "death panels", etc. It is not possible to have a rational, fact based discussion due to tribalism.
My tentative thoughts is that all employers with more than 50 employees need to be compelled to provide comprehensive health insurance or face an increase in their taxes or some other penalty that would cost them more.
For those with pre-existing conditions who are not insured by an employer provided healthcare plan, they need to be segregated out into a separate nationwide health insurance pool supported by government funding and premiums charged based on the ability to pay rather than supported by higher premiums charged to the healthy and mostly younger individuals.
++++++
Republican Voter Suppression in Kansas:
The Kansas Secretary of State Kris Kobach (R), who chaired Donald's fraudulent voter fraud panel until it was dissolved, is running for governor and is in a tight race that could go either way. RealClearPolitics - Election 2018 - Kansas Governor - Kobach vs. Kelly
As the Secretary of State, Kobach is in charge of voting.
Over the past five years, Kansas has closed 100 polling places as the voting population increased by 46,000 and placed restrictions on exercising the right to vote designed to discourage those who vote the wrong way.
One Kobach effort to restrict voting-proof of citizenship- was thrown out recently by a federal district court judge: Kobach-ruling.pdf
How would I prove my citizenship? I would have to locate my birth certificate in the county records that would show that I was born in the U.S. Only the highly engaged would bother.
Since the governor's race is too close to call, and republicans control the voting process, I would naturally expect that efforts will be undertaken to make it difficult to vote in areas where Democrat voters live.
A prime example of republican voter suppression can be found in Dodge City, Kansas which has a white republican county clerk. The voter suppression is taking many forms in that town which is now 60% hispanic.
First, the clerk will open only one precinct for 13,000 registered voters. The average number of voters per precinct is 800. The general idea is to to discourage voting by making people who vote the wrong way to wait in long lines and spend an hour or so before being allowed to cast a vote.
Second, after a very long period of the voting precinct being in the centrally located civic center, which is easily accessible by public transportation, the republican clerk changed the voting precinct to an location outside of the town that is literally across the railroad tracks with no bus route or sidewalk running from the city.
Third, the clerk then sent out notices that the voting location was changed but the location noted in the notice was the old one rather than the new one.
When the ACLU complained, the clerk sent an email to Kobach with the notation "LOL". Dodge City polling place move ignites voter access fears | The Wichita Eagle; To Cast Their Ballots, These Voters Will Have to Get Out of Dodge - The New York Times
+++++++
1. REGIONAL BANK BASKET STRATEGY:
A. Bought 50 FNB at $12.2-Used Schwab Commission Free Trade:
Quote: FNB Stock Quote
I am too early on this one again, but have been successful in the past trading FNB. I have a negative opinion about FNB's management and Board as I have discussed many times here.
I am somewhat surprised by the harsh negative reaction to the regional bank third quarter reports.
But, I was not expecting a meaningful increase in net interest margins or robust loan growth.
Anyone believing that NIM expansion was off to the races better familiarize themselves with the yield curve and the rising costs of bank funding through deposits.
FNB Trading Profits to Date = $1,172.38
FNB Analyst Consensus Estimates (as of 10/12)
2019 E.P.S. = $1.18
Last Discussions: Item # 1.A. Sold 50 FNB at $13.65-Used Commission Free Trade (9/5/18 Post)-Item 1.A. Bought Back 50 FNB at $13.08 and 50 at $12.6 (8/1/18 Post)
Of those two 50 share lots, I sold the highest cost lot bought at $13.08 and still own the lot bought at $12.6 which will likely be sold when and if the price goes into a $13 to $14 range. This is what I call small ball trading.
Current Position: 100 Shares
Maximum Position: 150 Shares
I will be on semi-automatic pilot to buy 50 shares at below $11.
Total Average Cost Per Share: $12.4
P/E At Average Cost Using 2019 Consensus Estimate: 10.51
Dividends: Quarterly at $.12
FNB's dividend history is a major negative as explained in prior posts.
Dividend Yield at Total Cost Per Share = 3.87%
Last Ex Dividend Date: 8/31/18
Dividend Reinvestment: Will Start and Keep Doing at less than $13
Last Earnings Report: Q/E 9/30/18
Excluding a one time gain of $4.1M after tax, E.P.S. was $.29 per share compared to $.24 in the 2017 quarter which excluded a $1.4M merger expense.
A major negative shown in the previous snapshots is the decline in the net interest margin Y-O-Y. (3.36% from 3,44% in the 2017 third quarter)
The efficiency ratio is good at 53.73.
Bad Loan Ratios: Good
Charge-Offs (annualized) to Total Loans: .27%.
Non-performing Loans to Total Loans: .47% (NPL ratio)
Non-performing Assets to Total Assets: .42% (NPA ratio)
Earnings are receiving a major lift in 2018 due to the lower federal corporate tax rates. The effective tax rate in the 2018 third quarter was 18.02%, down from 29.92% in the 2017 third quarter. Needless to say, that lift will not be meaningfully present next year.
F.N.B. Corporation Reports Third Quarter 2018 Earnings Per Share of $0.30
F.N.B. Corporation (FNB) CEO Vince Delie on Q3 2018 Results-Earnings Call Transcript | Seeking Alpha
B. Bought 10 ORIT at $15.10-Used Fidelity Commission Free Trade:
Quote: Oritani Financial Corp. (ORIT)
"The Bank currently operates its main office and 25 full service branches in the New Jersey Counties of Bergen, Hudson, Essex and Passaic."
As previously discussed in several prior posts, I view ORIT to be a conservatively managed bank.
ORIT Analyst Estimates (as of 10/12)
2019 Consensus E.P.S. = $1.14
Annual Report F/Y Ending on 6/30/18
Current Position This Account: 92+ shares
Maximum Position: 100 Shares + Shares Purchased with Dividends
Average Cost Per Share = $15.47
Dividend: Quarterly at $.25 per share
Dividend Yield at Total Cost Per Share: 6.46%
Last Ex Dividend Date: 8/2/18
P/E at TC of $15.47 per share and 2019 Consensus E.P.S. = 13.57 (though only up from an estimated $1.13 this year; bank needs to do better than $1.14 next year if $1.13 is the final number for 2018)
Last Discussed: Stocks, Bonds & Politics: Item # 1.B Bought 50 ORIT at $15.8 in a Roth IRA Account(10/7/18 Post)
Last Sell Discussion: Item 1.E. Sold 20 ORIT at $16.91(6/28/18 Post)
Last Earnings Report: Q/E 9/30/18
Oritani Financial Corp. Announces Dividend and Quarterly Results
This report is for the first fiscal quarter and was released after my last purchase.
The company reported net income of $13.4M or $.30 per share, up from $.27 in the year ago quarter.
This bank is based in New Jersey which has just adopted "a temporary surtax of 2.5% for tax years beginning on or after January 1, 2018 through December 31, 2019, and 1.5% for tax years beginning on or after January 1, 2020 through December 31, 2021." This state tax will offset some of the benefits from a lower federal income tax rate. This legislation required a revaluation of the bank's deferred tax balances that caused a $477K non-cash charge in this last quarter.
ROA was reported at 1.29%, close to the industry average.
Charge offs were non-existent in the first fiscal quarter. The NPL and NPA ratios remained excellent:
The bank is not optimistic currently about NIM expansion: "The Company’s spread and margin have been under pressure due to several factors, including: a flattening treasury yield curve, modifications of loans within the existing loan portfolio; prepayments of higher yielding loans and investments, and increased funding costs. The Company executed a previously disclosed balance sheet restructuring partially to counter a portion of the spread and margin compression resulting from these factors."
Competitor banks are offering loans on terms that ORIT will not match: "The CRE market has grown beyond highly competitive to a point where transactions are being completed by our competitors at ever thinner spreads as the yield curve have flattened. We have seen numerous instances of higher loan to value ratios and extended interest only periods, which we choose not to match. We will continue to pursue well structured transactions within our conservative underwriting standards.”
CRE = Commercial Real Estate
There is a price to pay for conservative lending practices. The flip side is that ORIT remained profitable during the Near Depression period:
Annual Report: Form 10-K
Investors did not care for this report. The reason is probably due to the decline in loans. Closing Price 10/31/18: ORIT 15.08 -$0.42 -2.71%
A. Bought 50 FNB at $12.2-Used Schwab Commission Free Trade:
Quote: FNB Stock Quote
I am too early on this one again, but have been successful in the past trading FNB. I have a negative opinion about FNB's management and Board as I have discussed many times here.
I am somewhat surprised by the harsh negative reaction to the regional bank third quarter reports.
But, I was not expecting a meaningful increase in net interest margins or robust loan growth.
Anyone believing that NIM expansion was off to the races better familiarize themselves with the yield curve and the rising costs of bank funding through deposits.
FNB Trading Profits to Date = $1,172.38
FNB Analyst Consensus Estimates (as of 10/12)
2019 E.P.S. = $1.18
Last Discussions: Item # 1.A. Sold 50 FNB at $13.65-Used Commission Free Trade (9/5/18 Post)-Item 1.A. Bought Back 50 FNB at $13.08 and 50 at $12.6 (8/1/18 Post)
Of those two 50 share lots, I sold the highest cost lot bought at $13.08 and still own the lot bought at $12.6 which will likely be sold when and if the price goes into a $13 to $14 range. This is what I call small ball trading.
Current Position: 100 Shares
Maximum Position: 150 Shares
I will be on semi-automatic pilot to buy 50 shares at below $11.
Total Average Cost Per Share: $12.4
P/E At Average Cost Using 2019 Consensus Estimate: 10.51
Dividends: Quarterly at $.12
FNB's dividend history is a major negative as explained in prior posts.
Dividend Yield at Total Cost Per Share = 3.87%
Last Ex Dividend Date: 8/31/18
Dividend Reinvestment: Will Start and Keep Doing at less than $13
Last Earnings Report: Q/E 9/30/18
Excluding a one time gain of $4.1M after tax, E.P.S. was $.29 per share compared to $.24 in the 2017 quarter which excluded a $1.4M merger expense.
A major negative shown in the previous snapshots is the decline in the net interest margin Y-O-Y. (3.36% from 3,44% in the 2017 third quarter)
The efficiency ratio is good at 53.73.
Bad Loan Ratios: Good
Charge-Offs (annualized) to Total Loans: .27%.
Non-performing Loans to Total Loans: .47% (NPL ratio)
Non-performing Assets to Total Assets: .42% (NPA ratio)
Earnings are receiving a major lift in 2018 due to the lower federal corporate tax rates. The effective tax rate in the 2018 third quarter was 18.02%, down from 29.92% in the 2017 third quarter. Needless to say, that lift will not be meaningfully present next year.
F.N.B. Corporation Reports Third Quarter 2018 Earnings Per Share of $0.30
F.N.B. Corporation (FNB) CEO Vince Delie on Q3 2018 Results-Earnings Call Transcript | Seeking Alpha
B. Bought 10 ORIT at $15.10-Used Fidelity Commission Free Trade:
Quote: Oritani Financial Corp. (ORIT)
"The Bank currently operates its main office and 25 full service branches in the New Jersey Counties of Bergen, Hudson, Essex and Passaic."
As previously discussed in several prior posts, I view ORIT to be a conservatively managed bank.
ORIT Analyst Estimates (as of 10/12)
2019 Consensus E.P.S. = $1.14
Annual Report F/Y Ending on 6/30/18
Current Position This Account: 92+ shares
Maximum Position: 100 Shares + Shares Purchased with Dividends
Average Cost Per Share = $15.47
Dividend: Quarterly at $.25 per share
Dividend Yield at Total Cost Per Share: 6.46%
Last Ex Dividend Date: 8/2/18
P/E at TC of $15.47 per share and 2019 Consensus E.P.S. = 13.57 (though only up from an estimated $1.13 this year; bank needs to do better than $1.14 next year if $1.13 is the final number for 2018)
Last Discussed: Stocks, Bonds & Politics: Item # 1.B Bought 50 ORIT at $15.8 in a Roth IRA Account(10/7/18 Post)
Last Sell Discussion: Item 1.E. Sold 20 ORIT at $16.91(6/28/18 Post)
Oritani Financial Corp. Announces Dividend and Quarterly Results
This report is for the first fiscal quarter and was released after my last purchase.
The company reported net income of $13.4M or $.30 per share, up from $.27 in the year ago quarter.
This bank is based in New Jersey which has just adopted "a temporary surtax of 2.5% for tax years beginning on or after January 1, 2018 through December 31, 2019, and 1.5% for tax years beginning on or after January 1, 2020 through December 31, 2021." This state tax will offset some of the benefits from a lower federal income tax rate. This legislation required a revaluation of the bank's deferred tax balances that caused a $477K non-cash charge in this last quarter.
ROA was reported at 1.29%, close to the industry average.
Charge offs were non-existent in the first fiscal quarter. The NPL and NPA ratios remained excellent:
The bank is not optimistic currently about NIM expansion: "The Company’s spread and margin have been under pressure due to several factors, including: a flattening treasury yield curve, modifications of loans within the existing loan portfolio; prepayments of higher yielding loans and investments, and increased funding costs. The Company executed a previously disclosed balance sheet restructuring partially to counter a portion of the spread and margin compression resulting from these factors."
Competitor banks are offering loans on terms that ORIT will not match: "The CRE market has grown beyond highly competitive to a point where transactions are being completed by our competitors at ever thinner spreads as the yield curve have flattened. We have seen numerous instances of higher loan to value ratios and extended interest only periods, which we choose not to match. We will continue to pursue well structured transactions within our conservative underwriting standards.”
CRE = Commercial Real Estate
There is a price to pay for conservative lending practices. The flip side is that ORIT remained profitable during the Near Depression period:
Investors did not care for this report. The reason is probably due to the decline in loans. Closing Price 10/31/18: ORIT 15.08 -$0.42 -2.71%
2. Short Term Bond/CD Ladder Basket Strategy:
The recent turmoil and volatility in the stock market did not cause a meaningful decline in interest rates, which suggests that the dominant directional move continues to be up.
The 10 year treasury closed at a 3.09% yield on 10/1 and at 3.12% yesterday. The stock market's decline did contribute to the yield falling from 3.23% earlier in the month to 3.08% on 10/29, but the yield early this morning is already back up to 3.15%.
There are a number of reasons for having so many different short term fixed income investments.
One reason is to quickly capture higher interest rates with redemption proceeds. The far less weighted longer term part of the fixed income portfolio deals with the possibility that interest rates may move down.
Another reason is to generate a continuous stream of cash flow.
I am also diffusing risk in my senior unsecured bond portfolio through diversity.
Lastly, I can decide almost on a weekly basis whether the redemption proceeds can be redirected in part to other asset classes including stocks as opportunities develop.
This does not take up much of my time.
November Maturities:
The 10 year treasury closed at a 3.09% yield on 10/1 and at 3.12% yesterday. The stock market's decline did contribute to the yield falling from 3.23% earlier in the month to 3.08% on 10/29, but the yield early this morning is already back up to 3.15%.
There are a number of reasons for having so many different short term fixed income investments.
One reason is to quickly capture higher interest rates with redemption proceeds. The far less weighted longer term part of the fixed income portfolio deals with the possibility that interest rates may move down.
Another reason is to generate a continuous stream of cash flow.
I am also diffusing risk in my senior unsecured bond portfolio through diversity.
Lastly, I can decide almost on a weekly basis whether the redemption proceeds can be redirected in part to other asset classes including stocks as opportunities develop.
This does not take up much of my time.
November Maturities:
SU = Senior Unsecured Bond ($1K par value per bond)
CD = Certificate of Deposit ($1K par value per CD)-FDIC Insured
MI = Monthly Interest Payments
Treasury: U.S. Treasury Debt ($1K par value per bill, note or bond)
IR: Investment Rate for Treasury Bill Auctions (no coupons, sold at a discount to par value)
Treasury: U.S. Treasury Debt ($1K par value per bill, note or bond)
IR: Investment Rate for Treasury Bill Auctions (no coupons, sold at a discount to par value)
7 Treasury 28 Day Bills 2.138% IR 11/1/18 (bought at auction)
2 Treasury 13 Week Bills 11/8 2.048% IR (bought at auction)
2 American Express 1.55% CDs 11/8 (15 month CDs)
1 Goldman Sachs BK 1.5% CD 11/8 (11 month CD)
2 Live Oak 1.75% CDs MI 11/9 (9 month CDs)
2 Citizens Bank 1.95% CDs 11/9 (6 month CDs)
1 Shell 1.625% SU 11/10 (bought in January 2018)
2 Wells Fargo 1.45% CDs MI 11/13 (13 month CDs)
2 Enerbank 1.45% CDs MI 11/13 (11 month CDs)
5 Caterpillar 1.8% SU 11/13 (various purchase dates starting last December)
2 Pinnacle 1.95% CDs MI 11/13 (6 month CDs)
2 Monsanto 1.85% SU 11/15 (bought in December 2017)
2 Treasury 1.25% 11/15
2 Treasury 11/15 6 Month T Bill 2.085% IR (bought at auction)
2 Treasury 11/15 6 Month T Bill 2.085% IR (bought at auction)
2 MidAmerica 2% SU 11/15 (bought in March 2018)
2 LegacyTexas 2% CDs MI 11/15 (5 month CDs)
2 AstraZeneca 1.75% SU 11/15 (bought in December 2017)
5 Stanley Black Decker 1.622% SU 11/17 (various purchase dates-all 1 bond lots)
2 Lockheed Martin 1.85% SU 11/23 (bought in December 2017)
2 Wells Fargo 1.45% CDs MI 11/27 (13 month CDs)
2 American Express BK 1.6% CDS 11/29 (15 month CDs)
2 Treasury IR 2.12% 3 Month Treasury Bill 11/29 (bought at auction)
2 Treasury IR 2.12% 3 Month Treasury Bill 11/29 (bought at auction)
3 Merrick Bank 1.6% CDs MI 11/29 (1 Year CDs)
1 MBank 1.55% CD MI 11/30 (1 Year CD)
2 First Commercial 1.45% CDs MI 11/30 (15 month CDs)
3 Treasury 1% 11/30
$62K
2018 Daily Treasury Yield Curve Rates
U.S. 1 Month Treasury Bill
U.S. 3 Month Treasury Bill
U.S. 6 Month Treasury Bill
U.S. 1 Year Treasury Bill
U.S. 2 Year Treasury Note
Since I am using a ladder strategy, it will take some time to work my way out of lower yielding securities. The ladder strategy is one method used to address interest rate risk and the unknowables associated with that risk.
I include within my definition of "interest rate risk" the "risk of lost opportunity" that is inherent in using a ladder strategy when interest rates are rising.
Once money is tied up in a CD or bond, and rates rise thereafter, my choice is to sell the instrument at a loss or to keep it and lose the opportunity to lock in a higher rate using the proceeds.
While there is a secondary market for some CDs, they are illiquid prior to maturity as a practical matter anyway.
The way that I deal with this risk of lost opportunity is by (1) slicing and dicing the purchases into very tiny lots; (2) averaging down some with the bonds (particularly the treasuries); and (3) having a constant flow of proceeds as shown above that can then be reinvested at higher rates. Corporate bonds and treasuries bought in the secondary market are purchased below par value.
For an investor who is not using a ladder strategy that goes far out in time, there is a danger that short term rates will start to go down, quickly reducing income as short term CDs and treasury bills mature.
A. Bought 1 Treasury 2.875% Coupon Maturing on 10/31/20 at Auction (2 year Treasury Note):
YTM = 2.88%
Two Year Treasury Note Auction Results:
B. Bought 1 Merrick BK 3.1% CD (monthly interest payments) Maturing on 10/30/21:
Treasury notes have coupons and pay interest semi-annually. This particular two year treasury note was sold at a slight discount to par value which increases it yield-to-maturity over the coupon rate. That discount is treated as interest and is normally classified in a 1099 as an original issue discount.
C. Bought 2 Three Month Treasury Bills at Auction Maturing on 1/31/19:
IR = 2.351%
Auction Results:
D. Abbott 2% SU Maturing on 3/15/20 Redeemed Early by Issuer-In a Roth IRA Account:
Profit Snapshot: +$11.09
Item 4.D. Bought 2 ABT SU Bonds Maturing on 3/15/20-A Roth IRA Account (2/19/18 Post) I can not explain why the issuer redeemed this bond early.
2018 Daily Treasury Yield Curve Rates
U.S. 1 Month Treasury Bill
U.S. 3 Month Treasury Bill
U.S. 6 Month Treasury Bill
U.S. 1 Year Treasury Bill
U.S. 2 Year Treasury Note
Since I am using a ladder strategy, it will take some time to work my way out of lower yielding securities. The ladder strategy is one method used to address interest rate risk and the unknowables associated with that risk.
I include within my definition of "interest rate risk" the "risk of lost opportunity" that is inherent in using a ladder strategy when interest rates are rising.
Once money is tied up in a CD or bond, and rates rise thereafter, my choice is to sell the instrument at a loss or to keep it and lose the opportunity to lock in a higher rate using the proceeds.
While there is a secondary market for some CDs, they are illiquid prior to maturity as a practical matter anyway.
The way that I deal with this risk of lost opportunity is by (1) slicing and dicing the purchases into very tiny lots; (2) averaging down some with the bonds (particularly the treasuries); and (3) having a constant flow of proceeds as shown above that can then be reinvested at higher rates. Corporate bonds and treasuries bought in the secondary market are purchased below par value.
For an investor who is not using a ladder strategy that goes far out in time, there is a danger that short term rates will start to go down, quickly reducing income as short term CDs and treasury bills mature.
A. Bought 1 Treasury 2.875% Coupon Maturing on 10/31/20 at Auction (2 year Treasury Note):
YTM = 2.88%
Two Year Treasury Note Auction Results:
B. Bought 1 Merrick BK 3.1% CD (monthly interest payments) Maturing on 10/30/21:
Treasury notes have coupons and pay interest semi-annually. This particular two year treasury note was sold at a slight discount to par value which increases it yield-to-maturity over the coupon rate. That discount is treated as interest and is normally classified in a 1099 as an original issue discount.
C. Bought 2 Three Month Treasury Bills at Auction Maturing on 1/31/19:
IR = 2.351%
Auction Results:
D. Abbott 2% SU Maturing on 3/15/20 Redeemed Early by Issuer-In a Roth IRA Account:
Profit Snapshot: +$11.09
3. Small Ball-Income Generation from BDCs and MREITs:
A. Added 10 BIZD at $16.03 and 5 at $15.66-Commission Free for Vanguard Customers:
Quote: VanEck Vectors BDC Income ETF Overview
Sponsor's Website: VanEck Vectors BDC Income ETF
Last Substantive Discussion: Item 1.B. (9/9/18 Post)
Last Purchase Discussion: Item # 1.C Bought 5 BIZD at $16.67 and 5 at $16.3 (10/10/18)
Current Position: 75+ shares
Average Cost Per share: $16.86
Maximum Position: 100 Shares + shares purchased with dividends
Purchase Restriction: Small Ball Rule
Dividends: Quarterly at a Variable Rate
Past 4 Quarters Dividend Per Share = $1.546
Last Ex Dividend: 10/1/18 (50 shares received that dividend)
Dividend Yield = 9.17% (difficult to calculate given the variable rate, dividend increases and decreases by the BDC components; using prior 4 quarters and a $ TC per share, the dividend yield with those assumptions and caveats is shown)
BDCs are heavily owned by individual investors who are easily spooked by market downturns. I would generally expect BDC market prices to have larger percentage declines than the S & P 500 during heightened volatility periods accompanied by meaningful stock market index declines.
BDCs will fair particularly bad in a recession due to panic selling by individual investors as well as a material increase in loan defaults and loan work-outs on unfavorable terms to the BDC.
A. Added 10 BIZD at $16.03 and 5 at $15.66-Commission Free for Vanguard Customers:
Quote: VanEck Vectors BDC Income ETF Overview
Sponsor's Website: VanEck Vectors BDC Income ETF
Last Substantive Discussion: Item 1.B. (9/9/18 Post)
Last Purchase Discussion: Item # 1.C Bought 5 BIZD at $16.67 and 5 at $16.3 (10/10/18)
Current Position: 75+ shares
Average Cost Per share: $16.86
Maximum Position: 100 Shares + shares purchased with dividends
Purchase Restriction: Small Ball Rule
Dividends: Quarterly at a Variable Rate
Past 4 Quarters Dividend Per Share = $1.546
Last Ex Dividend: 10/1/18 (50 shares received that dividend)
Dividend Yield = 9.17% (difficult to calculate given the variable rate, dividend increases and decreases by the BDC components; using prior 4 quarters and a $ TC per share, the dividend yield with those assumptions and caveats is shown)
BDCs are heavily owned by individual investors who are easily spooked by market downturns. I would generally expect BDC market prices to have larger percentage declines than the S & P 500 during heightened volatility periods accompanied by meaningful stock market index declines.
BDCs will fair particularly bad in a recession due to panic selling by individual investors as well as a material increase in loan defaults and loan work-outs on unfavorable terms to the BDC.
B. Bought 20 SUNS at $16.3 and 10 at $15.81-Used Fidelity Commission Free Trades:
Quote: Solar Senior Capital Ltd. Stock Quote
Closing Price Yesterday: SUNS $15.99 +0.09 +0.57%
Position This Account: 60 Shares
Maximum Position in This Account: 100 shares
Average Cost Per Share: $16.4
Chart: Weak in October
A 52 week low was set intra-day at $15.71 on 10/26.
Dividend: Monthly, currently at $.1175 per share ($1.41 per share annually)
Solar Senior Capital Ltd. Announces Monthly Distribution of $0.1175 Per Share for October 2018
Dividend Yield at TC Per Share = 8.6%
Last Ex Dividend Date: 10/23/18 (shortly after 20 share purchase and before 10 share purchase)
Dividend Reinvestment: Will start with next dividend payment and continue for as long as the reinvestment price is below the last reported net asset value per share (change from prior requirement of greater than 5% discount)
Last Substantive Discussion: Item # 1.A. Bought 30 SUNS at $16.62 (9/9/18 Post) I have nothing further to add to that discussion.
Quote: Solar Senior Capital Ltd. Stock Quote
Closing Price Yesterday: SUNS $15.99 +0.09 +0.57%
Position This Account: 60 Shares
Maximum Position in This Account: 100 shares
Average Cost Per Share: $16.4
Chart: Weak in October
A 52 week low was set intra-day at $15.71 on 10/26.
Dividend: Monthly, currently at $.1175 per share ($1.41 per share annually)
Solar Senior Capital Ltd. Announces Monthly Distribution of $0.1175 Per Share for October 2018
Dividend Yield at TC Per Share = 8.6%
Last Ex Dividend Date: 10/23/18 (shortly after 20 share purchase and before 10 share purchase)
Dividend Reinvestment: Will start with next dividend payment and continue for as long as the reinvestment price is below the last reported net asset value per share (change from prior requirement of greater than 5% discount)
Last Substantive Discussion: Item # 1.A. Bought 30 SUNS at $16.62 (9/9/18 Post) I have nothing further to add to that discussion.
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.
