Observations and Sample of Recent Trades: ELC, EMP, FHLC, LRGF, VHT

Economy: 

Real disposable income increased fell .2% last month as real personable consumption expenditures rose .7%.  

Personal Income and Outlays, March 2019 | U.S. Bureau of Economic Analysis (BEA)

Mnuchin stated last Sunday that the trade negotiations with China are entering the final lap and we will know soon whether there will be a resolution.  US-China trade talks are in the 'final laps': Steven Mnuchin tells NYT Overall, his comments sounded slightly less positive than recent comments. 

Mick Mulvaney says Trump China trade talks will be resolved in two weeks

As previously noted, it is possible that Donald will try to push the envelope too far which results in a breakdown. 

One kind of envelope push would be to insist on keeping U.S tariffs in place until China complies with whatever it has agreed to do. 

There is also some advantage to China IMO in stringing Donald along for as long as possible, moving closer to the 2020 election season, and then refuse to bend on one or more issues, daring the Duck to impose more tariffs on China's imports. China has a President for life while the U.S. still has elections with consequences. 

China is letting its currency decline in a 'snub' to Trump, ING says (the recent moves have been relatively small) The Yuan's most significant recent decline started in early April 2018, when the USD bought 6.27 CNY, and ended in November 2018 near 6.98 or about a 11.32% Yuan devaluation, roughly equivalent to wiping out the cost of a 10% tariff for U.S. importers. Currency Chart. US Dollar to Chinese Yuan Renminbi Rates THE USD/CNY currency conversion rate is now hovering around US$1 for 6.7-6.75 CNY, closer to the top end of that range currently.   

At various times in the past, Donald has claimed that China is paying the tariffs. That is not true. The tariffs are paid by U.S. importers and then passed along, in whole or in part, in higher prices for goods purchased by U.S. consumers. What Is A Tariff And Who Pays It? | Tax Policy Center; Does China Pay Tariffs? - FactCheck.org 

I wonder how many Trumpsters believe Donald's assertions that China pays the tariffs. 

A more insidious type of silent, as to cause, price increase, operating as a tax increase in effect, occurs when manufacturers raise prices for domestically manufactured goods, since the tariff creates a price umbrella for them. It is important to think of tariffs as taxes and the GOP has imposed a variety of new taxes over the past year or so on U.S. consumers. 

A case in point involves the GOP's tariffs on washing machines that have resulted in prices being raised by domestic producers for both washing machines and dryers in tandem, even though dryers are not covered by the GOP's tariff tax on U.S. consumers.  Trump's washing machine tariffs are costing Americans almost $100 more per appliance When will a republican acknowledge that Trump, with their tacit consent, has in effect imposed a $200 tax on U.S. consumer purchases of a washer and dryer set. The answer is of course never. 

Caixin PMI: China factory output weakened in April - MarketWatch

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Markets and Market Commentary: 

How to Spot a Bear Market in Stocks - Barron's This article discusses Citigroup's "18 potential signs that a bull market has ended, including measures of valuation, sentiment, corporate behavior, and credit-market strength." Each indicator is assigned a red light (1) point, a yellow light (1/2) point or no lights (zero points). Before the 2000-2002 meltdown, the score was at 17.5. The indicators were at 13 before the 2008 meltdown. The current score is 7. 

The Citigroup equity strategist responsible for this model believes that it may provide some guidance during the next market selloff. If the total is over 10, be wary of buying the dip: “We would certainly turn more wary of buying the dips if the red flags headed over 10.” 

Some of the indicators currently in red include the Schiller CAPE P/E, which has been high for years, the yield curve, and net debt to EBITDA (excluding financials). 

Yellow indicators (4) include investment grade bond spreads and the trailing P/E at 21. 

So the worrisome signs are generally known to informed investors and relate mostly to debt, valuation using most but not all measures, and the flat yield curve. 

Overleveraged companies at the edge of a drop to ‘junk’ will sharply cut debt — and could roil bond market - MarketWatch

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Trump: 

Donald really does not want anything related to his past finances revealed in response to subpoenas. Trump team sues Deutsche Bank and Capital One to keep them from turning over financial records to Congress - CNN

Donald believes that he deserves the Nobel Peace Prize for whatever he thinks that he has accomplished with North Korea. 

He is angling for the wrong Nobel. I am nominating him for the Nobel Prize for Fiction. 

President Trump has made more than 10,000 false or misleading claims since his inauguration-The Washington Post ("It took President Trump 601 days to top 5,000 false and misleading claims. But on April 26, just 226 days later, the president crossed the 10,000 mark — an average of nearly 23 claims a day in this seven-month period"). His cult members believe he is a truth teller even though it is virtually impossible for the Duck to make an accurate statement. I do not know a different descriptive term that adequately describes those who attend Trump rallies and cheer him as he tells one false or misleading statement after another. 

The following linked article discusses the now typical false claim made by Trump for no discernible reason other than to elevate himself by falsely criticizing and belittling others. Trump ridicules weather forecasters for getting it ‘wrong the most’ when they made a spot-on prediction - The Washington Post ("The “big, big” snow totals the president referenced simply were never predicted by any commercial or government weather agency." Trump just made it up).
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Trump Will Win in 2020, Money Managers Say in Exclusive Survey My estimation is that Trump currently has about a 50/50 chance of re-election which could move up to 55% with no recession prior to the 2020 election His odds could go up or down slightly based on who is selected as the Democrat's candidate and the outcome of the China trade negotiations. 

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The Trumpsters are upset that Dan McGahn told the truth which included his testimony that Trump asked him to lie. Trump and Allies Ramp Up Attacks as McGahn Emerges as Chief Witness in the Mueller Report

It was not only McCahn who testified under penalties of perjury that Trump directed him to fire Mueller or effectively end the investigation by limiting its scope to future events which would have resulted in Mueller's resignation.  

After McGahn threatened to resign rather than carry out the order to fire Mueller, the Duck requested Corey Lewandowski, a fierce Trump defender, to implement his order requiring Sessions to denounce the investigation, to clear Trump of any wrongdoing, and then to limit Mueller's investigation to future acts of election interference. Lewandowski took handwritten notes and later turned them over to Mueller.  

Lewandowski mentioned Trump's order to Hope Hicks. They got a giggle out it when Lewandowski that Sessions would become the first AG fired by a private citizen. He ask Hope to type up his notes which she did. 

Lewandowski then tried to get a senior White House official, Rick Dearborn, who had previously been Sessions' Chief of Staff, to implement Trump's directive, giving him the typewritten version of the directive from Trump. 

Dearborn testified that he refused to act on Trump's order, throwing the memo into the trash and later telling Lewandowski that he "acted" on the order.  

So there are at least 5 people (probably 6 including Reince Priebus)  who testified that Donald wanted to stymie Mueller's investigation, either by limiting its scope to future acts or to fire him outright. All of these witnesses knew that lying to the FBI was a felony.   

Corey Lewandowski Dodges Trump's Wrath Over Mueller Report - Bloomberg

Stymied by aides, Trump sought out loyalist to curtail special counsel — and drew Mueller’s glare - The Washington Post

Trump claimed a lack of recollection when answering interrogatories under oath. 

This lack of memory about events occurring in 2016 was under oath and in response to the few questions that Mueller was allowed to ask Donald (no questions were permitted about obstruction) Trump said he could not recall, remember or recollect more than 30 times in his answers to Mueller - CNN; Read: Trump's written responses to special counsel Robert Mueller-CNN So why did Mueller agree to all of that. Why not ask Trump when he is under oath questions relating to the obstruction investigation? 

Once free of the perjury law, Trump now has an excellent memory once again, back to having the greatest memory in the history of the universe since the Big Bang. 

Donald claims now that all of those people lied under oath and it is the Duck who is the truth teller: 

Trump says he did not try to fire Mueller. Here’s what Mueller’s report says. - The Washington Post

If he wanted to fire Mueller, he would have done it himself, which is an argument designed to convince the hopelessly brain dead. 

{Maybe I need to afford more credibility to the golden shower allegation since Trump's defense was similar, amounting to an argument that he would not have done such a thing since he knew that Russia had hidden cameras in the room. Comey talks Trump-Russia “pee tape” allegation: the claim, explained - Vox Donald is the only President in U.S. history capable of engaging in that kind of conduct IMO. Clinton may have had sex with a prostitute, and Kennedy was known for his infidelity, but neither of those Presidents would engage in the golden shower on a bed.}

Trump may want to read this statute before threatening potential congressional witnesses: 18 U.S. Code § 1513 - Retaliating against a witness, victim, or an informant | U.S. Code; ‘This is risky’: Trump’s thirst for Mueller revenge could land him in trouble - POLITICO; Donald Trump May Already Be Committing New Crimes | Vanity Fair

Donald's Presidency is proof beyond any doubt, reasonable or otherwise, that lying works in American politics, far better than being straight and honest with the voters, and repeating lies over and over again, even when they are easily proven to be false, works the best. 

The U.S. is fertile soil for an autocratic demagogue like Trump, nurtured and protected by both a political party and their fellow traveler media outlets pumping out false propaganda in support of this demagogue 24/7.  

This is not surprising: Mueller complained that Barr’s letter did not capture ‘context’ of Trump probe; Mueller complained Barr did not fully capture context of Russia probe - CNN 

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1. Intermediate Term Bond/CD Ladder Basket Strategy:

A. Sold 1 Morgan Stanley  2.75% SU Maturing on 5/19/22:

Profit Snapshot: +$22.29

Item 2.C. Bought 1 Morgan Stanley 2.75% SU Maturing on 5/19/22 at a TC of 97.017 (5/10/18 Post)

FINRA Page: Bond Detail

Sold at 99.346
YTM at 99.346 = 2.972%
Current Yield at 99.346 = 2.768%
Proceeds at 99.246 (after $1 commission)

This one is just outside the three year range for the short term bond ladder.

I will consider buying this bond back at less than 97.

The profit on this 1 bond was $22.29. The annual interest payment for that 1 bond is $27.5.

B. Sold 2 Boston Properties L.P. 3.125% SU Maturing on 9/1/23:

Profit Snapshot: +$33.83

I bought one of the 2 bonds last December at a total cost of 96.7. Item # 5.A. (12/26/18 Post) The other bond was bought in March 2017.

FINRA Page: Bond Detail

Sold at 100.321
YTM at 100.321 =  3.042%
Current Yield at 100.321 = 3.115%
Proceeds at 100.121 (after $4 commission)

I previously sold the same bond at 101. Item # 2.A. (1/8/18 Post)

Assuming no material adverse change in BXP's credit risk, I would consider restarting a position at less than 97.

C. Sold 2 JPM 3.375% "Senior Subordinated" Maturing on 5/1/23:

Senior subordinated is just a Wall Street name for junior bond that is subordinated to senior unsecured debt. That will not make much of a difference until there is a bankruptcy and the recovery for this junior bond would probably be zero or close to it.

Profit Snapshot: +$28.49

Item # 2.A.  Bought 1 JPM 3.375% Junior Bond at a TC of 98.975(4/30/18 Post); Item #1.A. Bought 1 (3/22/17 Post)

FINRA Page: Bonds Detail

Sold at 101.144
YTM at 101.144 = 3.072%
Proceeds at 101.044 (after $2 commission/$1 per bond at IB)

2. Short Term Bond/CD Ladder Basket Strategy:

$10K in adds

All treasury purchases mentioned below, both in the secondary market and at auction, are commission free. 

A. Bought 1 Treasury 1.25% Coupon Maturing on 10/31/19: 

YTM = 2.427%

I now own 5 bonds. 

B. Bought 1 Treasury Maturing on 9/19/19: 

YTM = 2.441%

The was a secondary market purchase of a zero coupon treasury bill. 

C. Bought 1 Treasury 1.625% Coupon Maturing on 8/31/19:
YTM = 2.407%

I now own 3 bonds.

D. Bought 1 Treasury 1.5% Coupon Maturing on 5/15/20:
YTM = 2.404% (note the yield flatlining with the one maturing on 8/31/19)  

I now own 4 bonds. 

E. Bought 3 Treasuries Maturing on 10/17/19 at Auction-6 Month Bills:
IR = 2.46%

6 month Treasury Bill Auction Results: 182 days

F. Bought 3 Treasury Bills Maturing on 6/25/19 at Auction: 56 Day Bills
IR = 2.429%

Auction Results:

Yet another punt using proceeds from maturing short term bonds or CDs.

3. Small Ball-ETF Adds:

A. Bought 5 FHLC at $44.03; 5 at $43.75 and 5 at $41.4 -Commission Free for Fidelity Customers:

Quote: Fidelity MSCI Health Care Index ETF Overview

Closing Price Yesterday: FHLC $43.30 $0.14 0.33% 

Investors responded positively yesterday to the earnings report released by Pfizer and Merck: 

MRK $78.71 +$1.93 +2.51%: Merck & Company, Inc 
PFE +$40.61 +$1.02  +2.58%: Pfizer, Inc. 

Sponsor's Webpage: FHLC | ETF Snapshot - Fidelity

Expense Ratio: .08%

Last Discussed: Item # 5.B. Bought 10 FHLC at $44.59  (4/3/19 Post)

Purchase Restriction: Small Ball Rule (Each purchase has to be at the lowest price in the chain. The next purchase has to be below $41.4)

Current Position: 25 shares

Maximum Position: 200 shares

B. Bought 10 LRGF at $31.93 (Roth IRA Account)-Commission Free at Vanguard:

Quote: iShares Edge MSCI Multifactor USA ETF Overview

Closing Price Yesterday: LRGF $31.98 +$0.10 +0.31% 

Sponsor's Website: iShares Edge MSCI Multifactor USA ETF | LRGF

What is factor investing? | BlackRock

Fidelity overview of factor investing.pdf

Expense Ratio: .2%

Top 10 Holdings:

Purchase Restriction: Small Ball Rule

Maximum Position: 100 Shares

C. Bought 2 VHT at $168.75 and 1 at $160.81-Commission Free Trade at Vanguard:

Quote: Vanguard Health Care ETF Overview

Closing Price Yesterday: VHT $167.83 +$0.56 +0.33% 

Sponsor's Page: VHT - Vanguard Health Care ETF | Vanguard

Expense Ratio: .1%

Last Discussion: Item # 5.A. Bought 5 VHT at $173 (4/3/2019 Post)

I have nothing to add to that recent discussion.

Current Position: 8 shares

Maximum Position: 20 Shares (possibly 30 after a meltdown)  

Purchase Restriction: Small Ball Rule 

4. Eliminations:

A. Sold 70 EMP at $24.87:

1 Year History Schwab Account

Profit Snapshot: +$207.92 

Item # 1.B. Bought 70 EMP at $21.76 (1/2/19 Post)

Quote: Entergy Mississippi LLC 4.9% First Mortgage Bond

Categories: Exchange Traded Baby Bonds, a subset of Exchange Traded Bonds

Ratings: A2/A

Next Ex Interest Date: 6/27/19 

Par Value: $25

Optional Issuer Call Date: At anytime on or after 10/1/21

Unless called early at the issuer's option, the bond matures in 2066. 

Security: First Lien on Substantially all of issuer's assets 

5 Year Chart:  

Prior EMP Round Trips: 

Item # 2.A. Sold 50 EMP at $24.47 (7/22/17 Post)(profit snapshot = $66.98)-Item # 2.B. Bought 50 EMP at $22.85-A Roth IRA Account;

Item # 2.B. Sold 30 EMP at $24.44  (2/13/19 Post)(profit snapshot = $7.04)-Item # 4.A. Bought 30 EMP at $24.04-Used Commission Free Trade (5/28/18 Post)

EMP Trading Profits = $281.94 

Rationale: I currently own 6 Entergy Mississippi 3.1% First Mortgage bonds ($1K par value), with the last purchase discussed in this post: Item # 3.A. Bought 3 Entergy Mississippi 3.15% First Mortgage Bonds Maturing on 7/1/23 (2/13/19 Post)

I also own 1 Entergy Mississippi 3.25% First Mortgage bond maturing in 2027: Item # 3.A. Bought 1 at a TC of 96.53 Bonds & Politics: Observations and Sample of Recent Trades: ENBPRP:CA, VLY

B. Sold 30 ELC at $24.87-Used Commission Free Trade: 

Quote: Entergy Louisiana LLC  First Mortgage Bonds 4.875% Series due 2066

Profit Snapshot: +$91.58 (excludes $20.22 from prior 2019 sell)

Item #3.A. Bought 10 ELC at $21.37-Used Commission Free Trade (12/12/18 Post); Item # 4.A. Added 20 ELC at $22.04-Used Commission Free Trade (12/17/18 Post)

Categories: Exchange Traded Baby Bonds, a subset of Exchange Traded Bonds

Last Sell Discussion: Item # 4.A. Sold 30 ELC at $23.48-Used Commission Free Trade (2/27/19 Post)(profit snapshot +20.22)

PAR VALUE:  $25

Interest Payments: Quarterly at $.304688 per share

Yield at a $21.82 Total Cost Per Share = 5.59%   

Trades Flat 

Optional Call: On or after 9/1/2021 at par value plus accrued and unpaid interest

Last Ex Interest Date: 11/29/18

Maturity Date if Not Called: 9/1/2066  

Credit Ratings: A2/A

Prospectus 

Security: First Lien on substantially all Entergy Louisiana Assets

I still own the 2022 Entergy Louisiana 3.3% First Mortgage bond: Item # 3.B. Bought 1 Entergy Louisiana 3.3% First Mortgage Bond Maturing on 12/1/2022  (4/23/18 Post) I also recently pared my position in its 2026 First Mortgage bond:

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.