Economy:
The BLS March jobs report relieved some anxiety about a recession within the next 12 months. Hiring speeds up as U.S. economy adds 196,000 jobs in March - MarketWatch
The February number was revised up to 33K from 20K. Over the past 12 months through March, average hourly earnings increased by 3.2%, down from 3.4% year-over-year in February. Employment Situation Summary
The 3.2% increase comfortably exceeds the inflation rate which I view as important. A more durable and healthy economy occurs when consumer spending is sourced more from disposable income and less from debt accumulation.
The important number is disposable income after mortgage debt service payments and taxes.
The decline in mortgage interest servicing costs due to the refinancing tsunami at historical low interest rates has been a major source of disposable income increases. Money saved from servicing mortgage debt can be saved, spent on consumer purchases and/or used to reduce higher cost debt obligations.
Mortgage Debt Service Payments as a Percent of Disposable Personal Income-St. Louis Fed
The problem with that chart is that includes about 1/3rd of households that have no mortgage debt, a consistent number within a few per cent over time based on census data and private surveys. Nearly one-third of U.S. homeowners have no mortgage-LA Times; 20.6 Million U.S. Homeowners Own Homes Free And Clear Of Mortgage Debt - Jan 10, 2013; American homeowners are making headway on mortgage debt, report finds - The Washington Post (8/2017 article-"According to ATTOM researchers, 34 percent of all American homeowners have 100 percent equity in their properties"); Homes on the Range: Homeownership Rates Are Higher in Rural America (Census Bureau 12/16); 2013 Housing Profile: United States (Census Bureau Survey)
The chart does provide trend numbers for the remaining 2/3rds. And the downward slop since the last recession is consistent with the refinancing numbers at lower interest rates.
Disposable income can be sourced from after tax wage gains exceeding inflation, increases in interest and dividend income, profits from self-owned businesses, and other profit making activities including stock ownership.
The main problem for almost five decades is that there has been negligible increases in real disposable income from wages except at the top end. For most Americans, real wages have barely budged for decades | Pew Research Center; Real Wage Trends, 1979 to 2017; The Productivity–Pay Gap | Economic Policy Institute Neither political tribe has addressed the underlying causes IMO.
A secondary problem is of more recent origin and involves interest rate suppression that has resulted in negligible or negative real income on risk free instruments after taxes and inflation. This is a major problem given the sheer amount of household savings in savings accounts, CDs, money market funds and treasury bills. The Fed - Money Stock and Debt Measures - H.6 Release - April 04, 2019 In savings accounts alone, the FED is currently showing over 9 trillion dollars. Total Savings Deposits at all Depository Institutions-St. Louis Fed
So I view wage gains in excess of the inflation rate to be a major positive trend provided it lasts. I doubt that it will last long.
The BLS March jobs report relieved some anxiety about a recession within the next 12 months. Hiring speeds up as U.S. economy adds 196,000 jobs in March - MarketWatch
The February number was revised up to 33K from 20K. Over the past 12 months through March, average hourly earnings increased by 3.2%, down from 3.4% year-over-year in February. Employment Situation Summary
The 3.2% increase comfortably exceeds the inflation rate which I view as important. A more durable and healthy economy occurs when consumer spending is sourced more from disposable income and less from debt accumulation.
The important number is disposable income after mortgage debt service payments and taxes.
The decline in mortgage interest servicing costs due to the refinancing tsunami at historical low interest rates has been a major source of disposable income increases. Money saved from servicing mortgage debt can be saved, spent on consumer purchases and/or used to reduce higher cost debt obligations.
The problem with that chart is that includes about 1/3rd of households that have no mortgage debt, a consistent number within a few per cent over time based on census data and private surveys. Nearly one-third of U.S. homeowners have no mortgage-LA Times; 20.6 Million U.S. Homeowners Own Homes Free And Clear Of Mortgage Debt - Jan 10, 2013; American homeowners are making headway on mortgage debt, report finds - The Washington Post (8/2017 article-"According to ATTOM researchers, 34 percent of all American homeowners have 100 percent equity in their properties"); Homes on the Range: Homeownership Rates Are Higher in Rural America (Census Bureau 12/16); 2013 Housing Profile: United States (Census Bureau Survey)
The chart does provide trend numbers for the remaining 2/3rds. And the downward slop since the last recession is consistent with the refinancing numbers at lower interest rates.
Disposable income can be sourced from after tax wage gains exceeding inflation, increases in interest and dividend income, profits from self-owned businesses, and other profit making activities including stock ownership.
The main problem for almost five decades is that there has been negligible increases in real disposable income from wages except at the top end. For most Americans, real wages have barely budged for decades | Pew Research Center; Real Wage Trends, 1979 to 2017; The Productivity–Pay Gap | Economic Policy Institute Neither political tribe has addressed the underlying causes IMO.
A secondary problem is of more recent origin and involves interest rate suppression that has resulted in negligible or negative real income on risk free instruments after taxes and inflation. This is a major problem given the sheer amount of household savings in savings accounts, CDs, money market funds and treasury bills. The Fed - Money Stock and Debt Measures - H.6 Release - April 04, 2019 In savings accounts alone, the FED is currently showing over 9 trillion dollars. Total Savings Deposits at all Depository Institutions-St. Louis Fed
So I view wage gains in excess of the inflation rate to be a major positive trend provided it lasts. I doubt that it will last long.
ADP reported that the economy added 129K private sector workers last month, the lowest number in 18 months and below the consensus estimate of 165K. Private sector hiring falls to 18-month low, and manufacturing sheds jobs, ADP says - MarketWatch
U.S. services, private payrolls data highlight slowing economy | Reuters
ISM Services Report for March 2019 The index decreased to 56.1 from 59.7. The new orders component fell 6.2 to 59. Business activity/production declined by 7.3 to 57.4. While those numbers were weaker compared to March, they are still comfortably in expansion territory. The February numbers were strong so March just backtracked some. For a more extended discussion, see Brian Wesbury's blog which has historical charts ISM Services Index.PDF
U.S. services, private payrolls data highlight slowing economy | Reuters
ISM Services Report for March 2019 The index decreased to 56.1 from 59.7. The new orders component fell 6.2 to 59. Business activity/production declined by 7.3 to 57.4. While those numbers were weaker compared to March, they are still comfortably in expansion territory. The February numbers were strong so March just backtracked some. For a more extended discussion, see Brian Wesbury's blog which has historical charts ISM Services Index.PDF
Health-care costs for retirees climb to $285,000 This is an estimate that is periodically made by Fidelity. The estimate is for a healthy female-male couple retiring now at age 65. The estimate does not include expenses that are not covered by Medicare.
++++++
Markets and Market Commentary:
The probability of a rate cut on or before the January 2020 FED meeting did decline some from the Thursday reading, with most of the decline occurring late in the trading day.
The probability of at least one 25 basis cut on or before the January 2020 meeting closed at 57.6% down from 70% as of 3/29.
Most of that decline occurred before the jobs report in response to slightly more upbeat economic data released earlier in the week that I discussed in my prior post.
**
It is difficult to imagine two worse picks for the Federal Reserve than Stephen Miller and now Herman Cain. Trump says he will nominate Herman Cain to Fed in move that provokes strong reaction - MarketWatch The Trumpsters have informed us countless times that Donald only picks the best and most qualified people. Trump hires only the worst people - The Washington Post
Trump’s Fed nominee Stephen Moore was found in contempt of court for failing to pay ex-wife more than $333,000 - The Washington Post
Herman Cain Opens a New #MeToo Minefield for Republicans - The New York Times
Stephen Moore and Herman Cain are Warm Toward the Gold Standard - Bloomberg The gold standard in existence prior to the Great Depression was a cause of that economic calamity. How Did the Gold Standard Contribute to the Great Depression? - HISTORY Ignorance is a virtue in TrumpWorld.
++
Two top Fed officials push back against economic doom and gloom - MarketWatch
The probability of a rate cut on or before the January 2020 FED meeting did decline some from the Thursday reading, with most of the decline occurring late in the trading day.
The probability of at least one 25 basis cut on or before the January 2020 meeting closed at 57.6% down from 70% as of 3/29.
Most of that decline occurred before the jobs report in response to slightly more upbeat economic data released earlier in the week that I discussed in my prior post.
It is difficult to imagine two worse picks for the Federal Reserve than Stephen Miller and now Herman Cain. Trump says he will nominate Herman Cain to Fed in move that provokes strong reaction - MarketWatch The Trumpsters have informed us countless times that Donald only picks the best and most qualified people. Trump hires only the worst people - The Washington Post
Trump’s Fed nominee Stephen Moore was found in contempt of court for failing to pay ex-wife more than $333,000 - The Washington Post
Herman Cain Opens a New #MeToo Minefield for Republicans - The New York Times
Stephen Moore and Herman Cain are Warm Toward the Gold Standard - Bloomberg The gold standard in existence prior to the Great Depression was a cause of that economic calamity. How Did the Gold Standard Contribute to the Great Depression? - HISTORY Ignorance is a virtue in TrumpWorld.
++
Two top Fed officials push back against economic doom and gloom - MarketWatch
They can't give it away: Texas natural gas at all-time negative lows | Reuters
U.S. jobless claims hit 49-year low; labor market resilient - Reuters
Initial unemployment claims have been trending down persistently since topping out during the last recession:
Initial Claims-St. Louis Fed
This chart shows that this data is a coincident indicator for a recession already in progress. The spike up in claims starts to occur when a recession starts. It is not a leading indicator for a recession about to happen. The peak numbers are generally hit at the end of the recessionary period.
see also: 4-Week Moving Average of Initial Claims-St. Louis Fed
+++++
U.S. jobless claims hit 49-year low; labor market resilient - Reuters
Initial unemployment claims have been trending down persistently since topping out during the last recession:
This chart shows that this data is a coincident indicator for a recession already in progress. The spike up in claims starts to occur when a recession starts. It is not a leading indicator for a recession about to happen. The peak numbers are generally hit at the end of the recessionary period.
see also: 4-Week Moving Average of Initial Claims-St. Louis Fed
+++++
Trump:
This is not surprising: Some on Mueller’s Team See Their Findings as More Damaging for Trump Than Barr Revealed
When all is said and done, and the report is finally released with all supporting documents, I suspect that thoughtful and informed Americans will conclude that Barr deliberately misled the public in his letter. Time will tell. He has a long history of being a loyal GOP foot soldier. Cover-up Attorney General Bill Barr strikes again | Salon.com
We can all learn many new revelations from Donald provided we just open our minds to new realities. Certified Moron Donald Trump Thinks Wind Turbines “Cause Cancer” | Vanity Fair. What can you say about a President who makes that claim while making the sounds of a windmill?
Trump’s long history of pushing wild misinformation about wind turbines - Vox
"Very Stable Genius": “If you have a windmill anywhere near your house, congratulations, your house just went down 75 percent in value. And they say the noise causes cancer.”
Trump Spokesperson Mercedes Schlapp won’t contradict Trump’s claim that wind turbines cause cancer - Vox
Trump Tweet 9/5/13: "Sorry losers and haters, but my IQ is one of the highest - and you all know it! Please don't feel so stupid or insecure, it's not your fault."
Trump: "I'm intelligent. Some people would say I'm very, very, very intelligent." Fortune 3/4/2000
You know what else they say.
If you drink a strawberry milkshake once a day for seven straight days, you can be cured from the cancer caused by windmill noise. That is what they say too.
In TrumpWorld, windmill noise will either kill you with cancer or cause you "to go crazy after a couple of year". FactCheck.org
The solution for Donald and the Trumpsters is to build more coal plants to replace clean energy that causes so much human misery.
All of the following is just Fake News in the Alternate Reality Universe known as TrumpWorld: "There is ample evidence linking the particulate pollution from coal plants to heart disease, respiratory problems, and lung cancer. When Mr. Trump moved to relax restrictions on coal plant pollution last year, his own Environmental Protection Agency estimated that the change could lead to as many as 1,400 additional premature deaths each year by 2030."We Fact-Checked President Trump’s Dubious Claims on the Perils of Wind Power - The New York Times Republican ideology can kill you in many ways.
Do you know why the Mexican wall needs to be transparent? Donald will edify you on this issue:
Trump: “As horrible as it sounds, when they throw the large sacks of drugs over, and if you have people on the other side of the wall, you don’t see them—they hit you on the head with 60 pounds of stuff? It’s over. As crazy as that sounds, you need transparency through that wall." Trump Wants a “Transparent” Border Wall to Prevent Injuries from Falling “Sacks of Drugs” | Vanity Fair You are right Donald, that sounds really crazy.
And we all know from listening to Donald's lectures that global warming is a hoax created by China to take away our manufacturing jobs.
So Doofus Don is the smartest guy in the room, who will pick the best people to run our government, or so I have been told many times by Trumpsters.
It has to be tiresome exposing every day Trump's false and misleading statements. Trump Misleads on Aid to Puerto Rico - FactCheck.org
I had been hearing for days that Donald will close down the border last week, and he claimed that he was not bluffing.
Trump made this promise on 3/29/19: “If Mexico doesn’t immediately stop ALL illegal immigration coming into the United States throug [sic] our Southern Border, I will be CLOSING . .the border or large sections of the Border, next week.”
On Thursday, he said that he will not close the border and instead will give Mexico one year to do something about drugs. If drugs are still entering the U.S. from Mexico, which will of course happen, Demagogue Don will then impose 25% tariffs on Mexico's car exports, notwithstanding that the tariffs would be a violation of his recently negotiated trade agreement. Trump Walks Back Threat To Close Border, Giving Mexico '1-Year Warning' : NPR (4/4/19); Trump Vows to Close Border, Even if It Hurts the Economy - The New York Times (4/2/2019).
The only constant with Trump is that he always changes his mind - The Washington Post The other constants are that he is unable to tell the truth, rarely provides accurate information, enjoys manipulating the brain dead with false information and narratives, and is the primary source of Fake News and false information in the world today.
This is not surprising: Some on Mueller’s Team See Their Findings as More Damaging for Trump Than Barr Revealed
When all is said and done, and the report is finally released with all supporting documents, I suspect that thoughtful and informed Americans will conclude that Barr deliberately misled the public in his letter. Time will tell. He has a long history of being a loyal GOP foot soldier. Cover-up Attorney General Bill Barr strikes again | Salon.com
We can all learn many new revelations from Donald provided we just open our minds to new realities. Certified Moron Donald Trump Thinks Wind Turbines “Cause Cancer” | Vanity Fair. What can you say about a President who makes that claim while making the sounds of a windmill?
Trump’s long history of pushing wild misinformation about wind turbines - Vox
"Very Stable Genius": “If you have a windmill anywhere near your house, congratulations, your house just went down 75 percent in value. And they say the noise causes cancer.”
Trump Spokesperson Mercedes Schlapp won’t contradict Trump’s claim that wind turbines cause cancer - Vox
Trump Tweet 9/5/13: "Sorry losers and haters, but my IQ is one of the highest - and you all know it! Please don't feel so stupid or insecure, it's not your fault."
Trump: "I'm intelligent. Some people would say I'm very, very, very intelligent." Fortune 3/4/2000
You know what else they say.
If you drink a strawberry milkshake once a day for seven straight days, you can be cured from the cancer caused by windmill noise. That is what they say too.
In TrumpWorld, windmill noise will either kill you with cancer or cause you "to go crazy after a couple of year". FactCheck.org
The solution for Donald and the Trumpsters is to build more coal plants to replace clean energy that causes so much human misery.
All of the following is just Fake News in the Alternate Reality Universe known as TrumpWorld: "There is ample evidence linking the particulate pollution from coal plants to heart disease, respiratory problems, and lung cancer. When Mr. Trump moved to relax restrictions on coal plant pollution last year, his own Environmental Protection Agency estimated that the change could lead to as many as 1,400 additional premature deaths each year by 2030."We Fact-Checked President Trump’s Dubious Claims on the Perils of Wind Power - The New York Times Republican ideology can kill you in many ways.
Do you know why the Mexican wall needs to be transparent? Donald will edify you on this issue:
Trump: “As horrible as it sounds, when they throw the large sacks of drugs over, and if you have people on the other side of the wall, you don’t see them—they hit you on the head with 60 pounds of stuff? It’s over. As crazy as that sounds, you need transparency through that wall." Trump Wants a “Transparent” Border Wall to Prevent Injuries from Falling “Sacks of Drugs” | Vanity Fair You are right Donald, that sounds really crazy.
And we all know from listening to Donald's lectures that global warming is a hoax created by China to take away our manufacturing jobs.
So Doofus Don is the smartest guy in the room, who will pick the best people to run our government, or so I have been told many times by Trumpsters.
It has to be tiresome exposing every day Trump's false and misleading statements. Trump Misleads on Aid to Puerto Rico - FactCheck.org
I had been hearing for days that Donald will close down the border last week, and he claimed that he was not bluffing.
Trump made this promise on 3/29/19: “If Mexico doesn’t immediately stop ALL illegal immigration coming into the United States throug [sic] our Southern Border, I will be CLOSING . .the border or large sections of the Border, next week.”
On Thursday, he said that he will not close the border and instead will give Mexico one year to do something about drugs. If drugs are still entering the U.S. from Mexico, which will of course happen, Demagogue Don will then impose 25% tariffs on Mexico's car exports, notwithstanding that the tariffs would be a violation of his recently negotiated trade agreement. Trump Walks Back Threat To Close Border, Giving Mexico '1-Year Warning' : NPR (4/4/19); Trump Vows to Close Border, Even if It Hurts the Economy - The New York Times (4/2/2019).
The only constant with Trump is that he always changes his mind - The Washington Post The other constants are that he is unable to tell the truth, rarely provides accurate information, enjoys manipulating the brain dead with false information and narratives, and is the primary source of Fake News and false information in the world today.
The White House whistleblower bombshell, and what it could mean (" a new White House whistleblower ... alleges that the Trump administration has awarded 25 security clearances to people who had been denied those clearances by national security officials.") What would the Trumpsters say if Hillary had done this? That is not difficult to answer: "Lock her Up". Do the Trumpsters complain about his use of an unsecured telephone to make calls? U.S. officials concerned Trump discussing sensitive information on unsecured cellphone; When Trump Phones Friends, the Chinese and the Russians Listen and Learn - The New York Times
The republican approach to consumer protection is aptly illustrated by this article: How Trump appointees helped the makers of BOB jogging strollers fight off a safety recall - The Washington Post
+++++++
The republican approach to consumer protection is aptly illustrated by this article: How Trump appointees helped the makers of BOB jogging strollers fight off a safety recall - The Washington Post
+++++++
1. Eliminations and Pares:
A. Sold 100 PWCDF at $23.41:
Quotes:
CAD Priced Shares: Power Corp. of Canada Stock Quote (Canada: Toronto)
USD Priced Shares (pink sheet exchange): Power Corp. of Canada (PWCDF)
A symbol ending in "F" denotes the ordinary shares of a foreign corporation priced in USDs rather than an ADR.
Profit Snapshot: $41.1
Item # 2 Added 50 PWCDF at $22.58 (7/5/18 Post); Item # 2 Bought 50 PWCDF at $23.31 (5/31/18)
Prior Discussions:
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)
Item # 2 Sold 100 PWCDF at $28.07 (11/22/14 Post) (profit snapshot=+$210.03)-Bought Back Power Corporation Of Canada At $25.81
Item # 5 SOLD Taxable Accounts: 100 PWCDF at $28.83 (8/2/14 Post)(profit snapshot+$138.71)-Item # 4 Bought 100 PWCDF at $27.29 (7/12/14 Post)
Trading Profits to Date All Accounts: $1,129.14 (+$1,088.04 in prior trades)Recent Earnings Report: Power Corporation Reports Fourth Quarter and 2018 Financial Results
Dividends: Paid in Canadian Dollars
I did receive the last quarterly dividend:
For owners of the USD priced ordinary shares, the Canadian dollar dividend will be converted into USDs with Canada withholding a dividend tax.
Last Ex Dividend Date: 3/7/19
Rationale: Same as discussed in connection with my pare of PWF:CA, see Item # 2.A..
B. Sold Highest Cost 17 GIS shares at $51.69-Used Commission Free Trade:
Quote General Mills Inc. (GIS)
General Mills Inc. Interactive Charts
GIS Analyst Estimates
Profit Snapshot: +$12.01
GIS is owned in my small ball basket and is subject to small ball trading rules. Any purchase has to be at the lowest price in the chain and the highest cost lots will often be sold when I can do so profitably.
Position Before Pare: Average Cost Per Share = $43.91
Position After Pare: Average Cost Per Share = $40.89
Dividend Yield at New Average Cost Per Share: 4.79%
Dividend: Quarterly at $.49 (stuck at that level for awhile to pay down debt)
Next Ex Dividend Date: 4//9/18
Dividend Reinvestment: Yes currently but may turn off due to price appreciation
Lowest Priced Purchase in Chain: 5 shares at $36.75, Item # 5 A. Bought 2 GIS at $40.25, 2 at $39.45, 10 at $38.3 and 5 at $36.75-Used Commission Free Trades (12/29/18 Post)
Last Substantive Discussion: Item # 3.A. (3/25/18 Post)
Last Sell Discussion: Item #2.A. Sold 10 GIS at $56.18-Used Commission Free Trade (12/21/17 Post)
Realized Gains 2007-2019 = $1,821.01 (snapshots of prior trades in Item 1.B-no realized losses yet)
Last Earnings Report:
General Mills Reports Fiscal 2019 Second-Quarter Results And Reaffirms Full-Year Guidance
Discussed at What's Next For General Mills After Encouraging Q2? (NYSE:GIS) | Benzinga; General Mills Makes Progress Toward Steadying the Ship-The Motley Fool
This last report gave GIS shareholders some hope about the future and contributed to a price pop that allowed me to profitably sell my highest cost lots.
I also own GIS bonds, with the last purchased discussed in this post: Item # 3.A. Bought 2 GIS 3.2% SU Maturing on 2/10/27 at a TC of 94.421 (3/13/19 Post); FINRA Bond Detail
2. Intermediate Term Bond/CD Ladder Basket Strategy:
A. Bought 2 Cigna 3.05% SU Maturing on 10/15/27:
FINRA Page: Bond Detail (prospectus not linked)
Prospectus
Issuer: Cigna Corp. (CI)
CI Analyst Estimates
2018 Annual Report
Cigna Delivers Strong 2018 Results as it Completes Express Scripts Transaction; Company Positioned for Significant Growth
Cigna Completes Combination with Express Scripts, Establishing a Blueprint to Transform the Health Care System (12/20/18)
Credit Ratings:
Bought at a Total Cost of 93.725 (with $2 Commission)
YTM at TC Then at 3.919%
Current Yield at TC = 3.2542%
Last Round-Trip on a Cigna Bond Item # 4.B. Sold 2 CIGNA 3.25% SU Maturing on 4/15/25 at 100.433 (7/19/17 Post)-ITEM # 1.D. Bought at 99.457; Bond Detail
B. Sold 1 Anheuser Busch 3.65% SU Maturing on 2/1/26:
Profit Snapshot: +$14.4
FINRA Page: Bond Detail
Sold at 101.047
YTM at 101.047 = 3.471%
The Cigna bond has about a .45% higher YTM and the same credit ratings as the BUD SU bonds. I would personally view the BUD bonds to be riskier given its debt levels and would be more inclined to agree with the BBB rating made by Fitch: Fitch Affirms Anheuser-Busch InBev at 'BBB'; Outlook Stable
2. Short Term Bond CD/Ladder Basket Strategy:
Adds: $10K
A. Bought 5 Treasury Bills Maturing on 5/7/19 at Auction:
IR = 2.434%%
This is another punt with cash proceeds recently received from maturing securities in this account. Punting is just a shorter expression for "running out of options.".
B. Bought 5 DTE Energy 1.5% SU Maturing on 10/1/19:
I now own 8 bonds.
FINRA Page: Bond Detail (prospectus linked)
Issuer: DTE Energy Co. (DTE)
DTE Analyst Estimates
DTE Energy reports strong 2018 financial results; reaffirms guidance for 2019
CEO Gerry Anderson on Q4 2018 Results - Earnings Call Transcript | Seeking Alpha
Credit Ratings:
Bought at a Total Cost of 99.44
YTM at TC Then at 2.604%
Current Yield at TC = 1.5091%
For such a short maturity, where I have no credit risk IMO, the relevant yield number for me is the YTM.
This was a marginal buy which provides me with a slightly better YTM than a 6 month treasury bill. I have no concerns about the credit risk for this bond.
I was going to buy 5 six month treasury bills that mature in October this month but suspected that the yield would fall some between 3/22/19 to the first auction date in April which was on
I could have bought 5 treasury bills, with a 1% coupon, maturing on 9/30/19 at 99.629, producing at that total cost number a 2.433% YTM.
DTE Energy reports strong 2018 financial results; reaffirms guidance for 2019
CEO Gerry Anderson on Q4 2018 Results - Earnings Call Transcript | Seeking Alpha
Credit Ratings:
Bought at a Total Cost of 99.44
YTM at TC Then at 2.604%
Current Yield at TC = 1.5091%
For such a short maturity, where I have no credit risk IMO, the relevant yield number for me is the YTM.
This was a marginal buy which provides me with a slightly better YTM than a 6 month treasury bill. I have no concerns about the credit risk for this bond.
I was going to buy 5 six month treasury bills that mature in October this month but suspected that the yield would fall some between 3/22/19 to the first auction date in April which was on
I could have bought 5 treasury bills, with a 1% coupon, maturing on 9/30/19 at 99.629, producing at that total cost number a 2.433% YTM.
3. Small Ball Commission Free ETFs:
The following purchases are what I call "bookmarks". I am bookmarking low cost ETFs with small lot initial purchases where my attention can be focused for subsequent adds during market meltdowns. At current prices, I am not going to assume much stock market risk.
A. Bought 10 IEMG at $51.04-Commission Free for Fidelity Customers:
Quote: iShares Core MSCI Emerging Markets ETF
Closing Price Last Friday: IEMG $53.39 +$0.38 +0.72%
This ETF is currently rated 4 stars by Morningstar: iShares Core MSCI Emerging Markets ETF ETF (IEMG)
Sponsor's Website: iShares Core MSCI Emerging Markets ETF
Expense Ratio: .14%
Net Assets in Fund: $58+B spread out over 2,228 holdings as of 41/19
Dividends: Semi-Annually in June and December
Top 10 Holdings:
B. Bought 5 VT at $73.1-Commission Free For Vanguard Customers:
Quote: Vanguard Total World Stock ETF Overview
Closing Price Last Friday: VT $74.81 +$0.30 +0.40%
Sponsor's Webpage: Vanguard Total World Stock ETF
Expense Ratio: .09%
This ETF is currently rated 4 stars by Morningstar. Vanguard Total World Stock ETF ETF VT Quote Price News
Dividends: Paid Quarterly
Last Ex Dividend Date: 3/25/19
Portfolio:
C. Bought 10 SCHK at $27.76-Commission Free For Schwab Customers:
The following purchases are what I call "bookmarks". I am bookmarking low cost ETFs with small lot initial purchases where my attention can be focused for subsequent adds during market meltdowns. At current prices, I am not going to assume much stock market risk.
A. Bought 10 IEMG at $51.04-Commission Free for Fidelity Customers:
Quote: iShares Core MSCI Emerging Markets ETF
Closing Price Last Friday: IEMG $53.39 +$0.38 +0.72%
This ETF is currently rated 4 stars by Morningstar: iShares Core MSCI Emerging Markets ETF ETF (IEMG)
Sponsor's Website: iShares Core MSCI Emerging Markets ETF
Expense Ratio: .14%
Net Assets in Fund: $58+B spread out over 2,228 holdings as of 41/19
Dividends: Semi-Annually in June and December
Top 10 Holdings:
B. Bought 5 VT at $73.1-Commission Free For Vanguard Customers:
Quote: Vanguard Total World Stock ETF Overview
Closing Price Last Friday: VT $74.81 +$0.30 +0.40%
Sponsor's Webpage: Vanguard Total World Stock ETF
Expense Ratio: .09%
This ETF is currently rated 4 stars by Morningstar. Vanguard Total World Stock ETF ETF VT Quote Price News
Dividends: Paid Quarterly
Last Ex Dividend Date: 3/25/19
Portfolio:
C. Bought 10 SCHK at $27.76-Commission Free For Schwab Customers:
Closing Price Last Friday: SCHK $28.41 +$0.15 +0.53%
Sponsor's Webpage: SCHK - Schwab 1000 Index® ETF
Expense Ratio: .05%
This ETF is not currently rated by Morningstar: SCHK Schwab 1000 Index ETF ETF
Dividends: Quarterly
Last Ex Dividend Date: 3/20/19
Top 10 Holdings as of 4/1/19:
Some brokers, including Fidelity, offer the IWB iShares Russell 1000 ETF (IWB) commission free. The expense ratio is slightly higher at .15%. The performance will closely track a S & P 500 ETF. The 15 year annual average total return for IWB was 8.61% through 4/3/19 compared to 8.44% for SPY. That period of course includes the Near Depression fiasco. The ten year average annual total returns are better at 15.41% for SPY and 15.4% for IWB. The Russell 1000 index will include 500 more stocks and consequently the weightings in the mega caps will generally be lower than in SPY.
One ETF for Mega Cap U.S. stock exposure is the iShares S&P 100 ETF (OEF) but that one has slightly underperformed both IWB and SPY over the 10 and 15 year periods with 14.68% and 7.77% annual average total returns. OEF is available commission free at Fidelity and Vanguard and has a .2% expense ratio. The volatility index for the S & P 100 is the oldest with data going back to 1986. It has generally been the least volatile of the major stock U.S. indexes.
CBOE S&P 100 Volatility Index: VXO | FRED | St. Louis Fed
All of the foregoing are subject to the small ball purchase restriction rule. Each subsequent purchase has to be at the lowest price in the chain.
I am also using a Vanguard ETF for emerging market stock exposure and will periodically alternate purchases between IEMG and the Vanguard FTSE Emerging Markets ETF (VWO). So far, I have bought 10 VWO:
Item # 3.B. Bought 5 VWO at $38.89-Commission Free for Vanguard Customers (12/5/19 Post) and Item # 4.B. (11/18/18 Post)
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.
I invariably find some errors when I download 1099s into TurboTax. The problem does not originate from TurboTax but the brokers which is why line items need to be manually checked. I have gone over some past problems in earlier post.
ReplyDeleteThere were two major problems this year.
First, Fidelity did not include the cost basis of 4 Nextera bonds that matured last year. My cost basis was $4K and I received $4K at maturity. By failing to report the cost basis, I had a $4K profit in that bond when I actually had none. I had to manually enter the cost basis.
The second major series of related problems originate from Interactive Brokers which is an aggravating broker at tax time.
I can not download IB sale transaction directly into TurboTax. I had to buy software that converted the download from IB into information that could then be downloaded into TurboTax.
This year, the IB download did not report the sales as being reported to the IRS in the 1099 when in fact the information was so reported. The 8949 form was checked in TurboTax that the cost basis was not reported on the 1099 and was not reported to the IRS. Both were erroneous. Once I discovered that issue, I had to manually enter for every sell the particular IRS Form 8949 to report the transaction (e.g. short term or long term covered, or non-covered short or long term). Each of those categories have a separate 8949 form. Reporting the transactions in the manner downloaded from IB could have resulted in the return being kicked out for review.
It is also necessary to manually enter the basic 1099 information for IB (e.g. dividends, interest, OID, foreign tax, qualified, etc) even after you buy the software. I use TXF Creator software to convert the IB sales information.
http://www.txfexpress.com/software/txf_creator.html#standard
"So I view wage gains in excess of the inflation rate to be a major positive trend provided it lasts. I doubt that it will last long. "
ReplyDeleteHello South Gent,
Thank you for continuing your blog. Given the above statement, I am a little bit confused. Are you saying that wage growth will be less in the future due to the decrease in productivity/jobs or are you saying that inflation will be higher?
It seems like from the your explanation of the fall in jobs growth, fall in ISM. that you are saying that real wages will actually not rise anymore or even fall.
Thanks
G: There is a five decade trend where most households have either negative or anemic real wage growth. Part of the problem is a lack of bargaining power. Another part is that the minimum wage and wages near that number have not kept pace with inflation.
DeleteSee chart:
https://www.politifact.com/truth-o-meter/statements/2018/may/22/tina-smith/minimum-wage-worth-less-now-50-years-ago/
Wages have increased recently due in large part to the tight labor market and employers finding it necessary to pay more to keep employees from bolting. This has been the underlying cause of several large publicly traded companies increasing their minimum start pay for what amounts to unskilled labor.
When more people enter the labor force as jobs become more plentiful, that will cause some stagnation in wage growth but the main culprit with be an economic slowdown or recession where employers will be back in the driver's seat.
There is also longer term some pressure on wage growth occurring when baby boomers retire, becoming more plentiful now, and are replaced by younger lower paid workers.
The Atlanta Fed uses a different measure of wage growth which will be higher than the BLS number.
https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx
That number hit a high of 3.9% last November and has been drifting down since then. It is now at 3.4% for February 2019.
The Atlanta Fed model "is an estimate of the wage growth of continuously employed workers—the same worker's wage is measured in the current month and a year earlier."
The BLS wage growth estimate "is an estimate of the change in the typical wage of everyone employed this month relative to everyone employed a year earlier. Most of these workers are continuously employed, but some of those employed in the current month were not employed the prior year, and vice versa. These changes in the composition of employment can have a significant effect."
The BLS estimate will pick up new entrants in the labor force, who are generally paid less, while the Atlanta Fed model would include only those workers employed a year ago and in the latest survey month.
I do not see inflation picking up much steam, but a persistent rise would cause real wage growth to reverse some.
When trying to assess the durability of real wage growth, my first suggestion is to ask yourself what has caused real wage growth to stagnant for almost 50 years. That is one powerful trend.
DeleteI linked a chart that shows that most of the income generated by worker productivity increase since 1975 has been captured by those in the top 10%. That was not the case prior to 1975 when workers received a substantial portion of the income generated by their increased productivity.
But why is that happening? It is imbedded in the economic system now, which is why real wage growth for the bottom 3 quintiles will not last for long with those in 2nd highest income quintile managing meagre gains in real wages.The top quintile will see real wage growth.
We are now seeing some modest real wage growth with (1) unemployment at 3.8%, (2) real GDP growth in excess of 2% annually; (3) the federal government stimulating the economy by spending about $1 trillion more per year than it receives in revenues; (4) interest rates remaining near historical lows for any past expansionary period; (5) inflation remaining subdued and (6) an economy in its 10th year of expansion. So that is about as optimal as it gets and yet real wage growth is just showing up.
The reasons for the wealth gap increasing are too numerous to discuss in any detail.
The loss of higher paying manufacturing jobs to foreign countries over the past 50 years and the diminishing power of unions are two related reasons.
The lack of meaningful increases in the minimum wage to just reflect the increased cost of living is another.
Republican tax cuts have not been aimed at those who are struggling, primarily households in middle to upper middle class. A large number of households do not pay federal income tax but are hit with regressive sales taxes, property taxes and SS withholding that squeezes them.
In short, trickle down economics does not work to lift the fortunes of those in the bottom 3 quintiles or for most households in the second highest quintiles that are struggling with higher incomes. It works just fine for the top 1% and the top 10% to a lesser degree.
And, a point that is never discussed by the democrats is a lack of initiative among millions to better themselves and improve their own situation. There are a lot of really ignorant people out there who are not stupid. They have had the capacity to better but never put in the effort to succeed financially. There is not much that can be done for the folks who check both the stupid and ignorant boxes other than increase the minimum wage substantially.
There are higher paying manufacturing jobs that go unfilled now due to a lack of qualified applicants. Why is there a shortage? It comes down to it takes too much effort to learn so no effort is made to learn much of anything.
I do not publish what I consider spam comments. I receive a number of those which is why I have to approve publication before a comment actually appears here.
ReplyDeleteI just deleted a comment from a Trumpster who claimed that his blog used to be good but the author is suffering from "TDS". I viewed the comment as idiotic and ignorant.
TDS is an abbreviation used by Trumpsters to mean Trump Derangement Syndrome.
That characterization is usually leveled by Trumpsters against anyone who has valid and factual observations about Donald.
The expression is used as an alternative to actually engaging in factually based and intelligent conversations which are not the Trumpsters fortes and could not be since a Trumpster is by definition immune to accurate information and becomes enraged when someone actually provides accurate information to them.
The provider of accurate information is the one who is deranged in Trumpworld.
I sold my 103+ shares of the MREIT Dynex Capital at $6.18, using a commission free trade for two reasons.
ReplyDeleteI noticed when reviewing its proxy solicitation that the company wanted shareholder approval for a reverse stock split (1 for 3) which I dislike with some fervor when I own a small number of shares.
The second reason is that I am not generating much of a total return before adjusting for ROC. I recently discussed here a purchase of 50 shares at $6.
Item # 4.A.
https://tennesseeindependent.blogspot.com/2019/03/observations-and-sample-of-recent_27.html
""ADP reported that the economy added 129K private sector workers last month""
ReplyDeleteI was going to then ask, does the slow down in employment tend to coincide with the euphoric last phase and market climbs (initially)?
Gold? Do these people every stop thinking in 1950s soundbites?
Land: I would not yet draw any firm conclusions from ADP's private payroll data. It does seem that private payroll growth will slow this year compared to last year.
ReplyDeleteWhen looking at the BLS data, which includes government hires, I see only a continuation of what was happening during Obama's second term which started in 2013. Note how lumpy the data can be month-to-month.
https://data.bls.gov/timeseries/CES0000000001?output_view=net_1mth
Continued job and wage growth acts as a continuing reaffirmation of a bullish view about the economy and an optimistic outlook for the future. The problem is that job and wage growth are more coincident indicators than future indicators. The trend can be positive going right up to a recession when the trend reverses.
https://fred.stlouisfed.org/series/UNRATE/
An investor who focuses just on job data will never see a recession coming.
But job and wage growth creates a level of comfort for the Stock Jocks continuing to drive up stock prices. As the duration of an economic cycle lengthens, and we are in one of the longest in U.S. history, the memory of past recessions and stock market calamities fade into a distant memory and that can create a sense of euphoria similar to what has happened in prior market tops (e.g. 1929, 1999, the mid-to-late 1960s) with any negative economic developments dismissed as temporary or unimportant in the big picture.
Most people IMO think and form opinions in soundbites and cliches provided to them, usually by those who want to manipulate them and find it easier to do so when individuals are conditioned to accept those sound bites without analysis.
Acquiring accurate information and forming opinions based on real facts rather than sound bites is difficult and time consuming and consequently only a small minority ever make the effort.
Trump and his media acolytes and apparatchiks at Fox and other GOP propaganda outlets are excellent at creating these sound bites and cliches that are accepted and then parroted by millions.
The same process can occur in making investing decisions that creates greater risks of making unsound investment selections and decisions.
The underlying issue is whether the individual will accept the sound bites provided to him, rejecting all information that does not conform to the cliches, or will make the effort to accumulate accurate information and then form rational opinions on wherever the facts take them. The Trumpsters are incapable of the later alternative as are most investors IMO.
So jobs data tends to not show slow downs during the euphoric state either. Not till the market is already declining.
DeleteYes, sound bites are popular... makes my verboseness look "odd" to people.
Novartis AG ADR
ReplyDelete$84.79 -$10.14 -10.68%
https://www.marketwatch.com/investing/stock/nvs
The $10+ price decline is due to NVS spinning of its Alcon unit to NVS shareholders who will receive 1 share of Alcon for every 5 shares of NVS.
https://www.marketwatch.com/story/novartis-spins-off-alcon-unit-2019-04-09?mod=mw_quote_news
I no longer have a position in NVS but have restarted a position in the CEF SWZ that has a major position in NVS.
The symbol for Alcon on the NYSE is ALC, currently trading in its debut at $58.
https://www.marketwatch.com/articles/alcon-stock-debut-strong-eye-care-novartis-51554815529?mod=mw_quote_news
I mentioned in an earlier post that I kept NVS in a family's account that I manage.
DeleteItem # 3.A. Sold 2 Novartis Capital 2.4% SU Maturing on 5/17/22-In a Roth IRA Account:
https://tennesseeindependent.blogspot.com/2019/03/observations-and-sample-of-recent_27.html
That discussion was in connection with Fidelity failing to claim tax treaty rights in connection with the payment of the NVS annual dividend to that family member . The Swiss-US tax treaty limits the foreign tax to 15% but Switzerland withheld more than 30% of the last payment. That can only result based on my research into this issue when the broker does not assert treaty rights on behalf of their customers. And, that was the first for Fidelity for a NVS annual dividend payment.
I checked the family member's account this morning and he has already been credited with the Alcon (ALC) shares received in the spin-off.
The decision to sell my shares in retrospect was the wrong one looking at today's price. I sold my remaining NVS shares at $86.36:
Item # 1 Sold Remaining 29 NVS Shares at $86.36-Used Commission Free Trade:
https://tennesseeindependent.blogspot.com/2018/10/observations-and-sample-of-recent_24.html
The prior lot was sold a few weeks earlier at $83.66:
3. Sold 108+ Novartis at $83.66 ($7 Vanguard Commission):
https://tennesseeindependent.blogspot.com/2018/09/observations-and-sample-of-recent_12.html
While the current NVS price is close to those prices, I would have owned as of today 27 Alcon valued at $58 by keeping the shares sold last fall.
I do not view that as a mistake however. I netted a good profit on the shares plus the dividend payments. My mindset and objectives are different than someone who needs to take risks. So I may sell shares to harvest a profit in my account and keep the same stock in a family member's account who has different objectives and risk tolerances.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2019/04/observations-and-sample-of-recent_10.html