Economy:
U.S. soybean prices hit a 10-year low on Monday.
China's new tariffs are hitting US farmers at 'every single angle'
Fed’s Bostic: Higher tariffs could result in interest-rate cuts if consumer spending suffers - MarketWatch The Bond Ghouls are predicting that a .25% cut in the FF is more likely than not on or before the October 2019 meeting. Countdown to FOMC: CME FedWatch Tool
U.S. soybean prices hit a 10-year low on Monday.
China's new tariffs are hitting US farmers at 'every single angle'
Fed’s Bostic: Higher tariffs could result in interest-rate cuts if consumer spending suffers - MarketWatch The Bond Ghouls are predicting that a .25% cut in the FF is more likely than not on or before the October 2019 meeting. Countdown to FOMC: CME FedWatch Tool
These charts show Trump's trade war could hit his base of voters most
Wage growth hot and more raises are coming, major employers tell CNBC
Trump's new tariffs will cost Americans about $500 per household, by one estimate
All 2,493 items targeted by China's tariffs in US trade war — Quartz
Wage growth hot and more raises are coming, major employers tell CNBC
Trump's new tariffs will cost Americans about $500 per household, by one estimate
All 2,493 items targeted by China's tariffs in US trade war — Quartz
Trump's 25% China tariff: How much would it raise the price of sneakers? — Quartz
Republicans surrender to Trump’s China tariffs
Republicans surrender to Trump’s China tariffs
++++++
Markets and Market Commentary:
Looking at a 2 year chart of the Wilshire 500, the broadest U.S. stock index, the double top line is almost precise at 30,424 (9/17/18) and at 30,460 (4/29/19) W5000 Interactive Stock Chart
Looking at a 2 year chart of the Wilshire 500, the broadest U.S. stock index, the double top line is almost precise at 30,424 (9/17/18) and at 30,460 (4/29/19) W5000 Interactive Stock Chart
Trump’s tariff war with China will hit TVs, dishwashers, toys, lithium batteries, iPhones — even Silly Putty - MarketWatch There is no reason for the Middle Class to worry about prices going up since, according to the Duck, China pays the U.S. tariffs, so no increased cost will be passed on to U.S. voters.
Of course, Donald has repeatedly lied when claiming that China pays the U.S. tariffs. The tariffs are taxes on American businesses and consumers. Who Pays Trump's China Tariffs? US Businesses and Consumers - Bloomberg; Donald Trump Claims China Pays for Higher Tariffs, but Economists Say It's U.S. Companies and Consumers Who Pay
Of course, Donald has repeatedly lied when claiming that China pays the U.S. tariffs. The tariffs are taxes on American businesses and consumers. Who Pays Trump's China Tariffs? US Businesses and Consumers - Bloomberg; Donald Trump Claims China Pays for Higher Tariffs, but Economists Say It's U.S. Companies and Consumers Who Pay
Pages 22-23 (tariffs were paid by U.S. consumers and U.S. businesses; study prepared by the NY Federal Reserve and economists from Princeton and Columbia Universities) It only gets worse when the tariffs are raised to 25% from 10% and possibly applied at 25% to all remaining imports that are not subject to tariffs.
Goldman: Trump tariff costs fall entirely on US businesses, households
Goldman: Trump tariff costs fall entirely on US businesses, households
For the first time, I heard a republican acknowledge that Americans may pay for the tariffs on China's exports but even that statement was qualified. Kudlow acknowledges US will pay for China tariffs, contradicting Trump
Trump's dishonesty makes public debate on every issue more difficult since he creates his own facts. It is impossible to have a factual and honest discussion about difficult issues that must be resolved when one side lives in an Alternate Reality.
There are ways to salvage the trade deal with China, but that will require a competent negotiator who recognizes the limits of U.S. power and how far the U.S. can push China on trade issues.
The U.S. needs to abandon the demand that it will keep all tariffs as an enforcement mechanism, for example. Instead, a provision can be inserted that both parties reserve the right to reimpose tariffs for non-compliance.
As to unfair subsidies of China's businesses, the two main culprits are probably the steel and aluminum industries and tariffs can be kept on those exports while removing them for now on all other products.
Requiring China to pass laws demanded by the U.S. is not going to happen unless the U.S. reciprocates which is not going to happen either. A compromise needs to be reached where China is required to be more transparent in how it subsidizes its industries.
Donald expressed optimism Monday night that a trade deal will be finalized in 3 or 4 weeks, asserting that he has "a feeling it's going to be very successful". China says U.S. has agreed to keep talking over trade war - Reuters That prediction about the near future was sufficient for the Stock Jocks to conclude all will be well. The Duck said so.
The Duck believes IMO that China will kneel before him rather than to be hit with 25% tariffs on $300B or so of its exports that are not now subject to any tariffs. I believe that opinion to be the basis for Trump's optimism. If that is his plan, and I believe that it is, then the tariff war will soon accelerate.
China is making it clear to Donald in polite terms that a resolution will not happen based on certain U.S. demands which are viewed as worse than no trade deal from China's perspective.
You can see those clear signals in remarks made by Vice Premier Liu after the meeting in Washington and in statements made by China's foreign ministry last Monday. China says agreed with U.S. to keep talking over trade war - Reuters (“We hope that the U.S. side does not misjudge the situation and not underestimate China’s determination and will to safeguard its interests.”)
The Duck is not listening IMO.
Trump falsely claimed on Monday that the U.S. had collected “hundreds of billions of dollars” in tariff revenue as a result of the tariff increases.
In Trumpworld that representation is better than true since the real number is not zero and is reasonably close to the $39B actual number over the first seven months of the current fiscal year (starts 10/1), which was only $19B above the amount collected in the same period in the year earlier period.
Trump claims money pours in because of tariffs, but it is not much
Sooner or later, investors may even come to a realization that Donald just makes things up which sound good to him at the moment and serves some manipulation purpose that he has.
U.S.-China trade war: Beijing announces retaliatory tariffs on $60 billion in U.S. goods - The Washington Post (“Using standard economic methods, we find that the full incidence of the tariff falls on domestic consumers, with a reduction in U.S. real income of $1.4 billion per month by the end of the 2018,” concluded a March paper by economists from the Federal Reserve Bank of New York, Princeton University and Columbia University.)
Wall Street is mistakenly pricing in a trade deal, Invesco warns
Trump's dishonesty makes public debate on every issue more difficult since he creates his own facts. It is impossible to have a factual and honest discussion about difficult issues that must be resolved when one side lives in an Alternate Reality.
There are ways to salvage the trade deal with China, but that will require a competent negotiator who recognizes the limits of U.S. power and how far the U.S. can push China on trade issues.
The U.S. needs to abandon the demand that it will keep all tariffs as an enforcement mechanism, for example. Instead, a provision can be inserted that both parties reserve the right to reimpose tariffs for non-compliance.
As to unfair subsidies of China's businesses, the two main culprits are probably the steel and aluminum industries and tariffs can be kept on those exports while removing them for now on all other products.
Requiring China to pass laws demanded by the U.S. is not going to happen unless the U.S. reciprocates which is not going to happen either. A compromise needs to be reached where China is required to be more transparent in how it subsidizes its industries.
Donald expressed optimism Monday night that a trade deal will be finalized in 3 or 4 weeks, asserting that he has "a feeling it's going to be very successful". China says U.S. has agreed to keep talking over trade war - Reuters That prediction about the near future was sufficient for the Stock Jocks to conclude all will be well. The Duck said so.
The Duck believes IMO that China will kneel before him rather than to be hit with 25% tariffs on $300B or so of its exports that are not now subject to any tariffs. I believe that opinion to be the basis for Trump's optimism. If that is his plan, and I believe that it is, then the tariff war will soon accelerate.
China is making it clear to Donald in polite terms that a resolution will not happen based on certain U.S. demands which are viewed as worse than no trade deal from China's perspective.
You can see those clear signals in remarks made by Vice Premier Liu after the meeting in Washington and in statements made by China's foreign ministry last Monday. China says agreed with U.S. to keep talking over trade war - Reuters (“We hope that the U.S. side does not misjudge the situation and not underestimate China’s determination and will to safeguard its interests.”)
The Duck is not listening IMO.
Trump falsely claimed on Monday that the U.S. had collected “hundreds of billions of dollars” in tariff revenue as a result of the tariff increases.
In Trumpworld that representation is better than true since the real number is not zero and is reasonably close to the $39B actual number over the first seven months of the current fiscal year (starts 10/1), which was only $19B above the amount collected in the same period in the year earlier period.
Trump claims money pours in because of tariffs, but it is not much
Sooner or later, investors may even come to a realization that Donald just makes things up which sound good to him at the moment and serves some manipulation purpose that he has.
U.S.-China trade war: Beijing announces retaliatory tariffs on $60 billion in U.S. goods - The Washington Post (“Using standard economic methods, we find that the full incidence of the tariff falls on domestic consumers, with a reduction in U.S. real income of $1.4 billion per month by the end of the 2018,” concluded a March paper by economists from the Federal Reserve Bank of New York, Princeton University and Columbia University.)
Wall Street is mistakenly pricing in a trade deal, Invesco warns
++++++
Trump:
White House Reviews Military Plans Against Iran, in Echoes of Iraq War
White House Reviews Military Plans Against Iran, in Echoes of Iraq War
White House invokes executive privilege to bar former counsel from turning over documents to Congress; Mnuchin rejects Democrats’ demand to hand over Trump’s tax returns, all but ensuring legal battle Trump's obstruction efforts have entered into a new phase, fully supported by the Attorney General who is acting as Donald's defense attorney rather than as the lead attorney for the U.S. That is why he was appointed to the job. Barr can be counted upon to do what is best for Donald. The U.S. Justice Department is now an active co-conspirator in Trump's obstruction efforts. It is sad.
Trump Asserts Executive Privilege Over Full Mueller Report I view that frivolous claim to constitute obstruction.
"Conservative" jurists complain about liberal justices creating rights that are not enumerated specifically in the Constitution (e.g. right to privacy that led to the Roe v. Wade, 410 U.S. 113 decision).
A right to assert executive privilege does not exist in the Constitution.
Article 1 does provide that legislators have a right "not to be questioned" about "any Speech or Debate in either House." Article I Section 6 U.S. Constitution That is a privilege found in the Constitution.
Article II, which sets out the powers of the President, is silent on the subject. Why would the framers omit any reference to a President's right to withhold information while providing legislators with one? Article II U.S. Constitution
If a "conservative" jurist wished to be consistent, and that may occur from time to time when it suits their ideology, the only option for them would be to reject any and all constitutionally based assertions of executive privilege. Otherwise, they would be creating a non-enumerated right.
Unable to rely on a constitutional basis for executive basis, Presidents have instead cited history, referring to actions taken by Presidents Washington, Adams and Jefferson. Yet those Presidents did not assert a right to withhold information from Congress. ‘Executive privilege’ is a new concept built on a shaky legal foundation - The Washington Post Executive privilege was a Supreme Court created right whose origin was the 1974 decision in United States v. Nixon. The Roe v. Wade decision was decided in 1973.
The five republican judges have no regard for stare decisis, trashing the doctrine whenever it suits them. Earlier this week they overturned yet another long standing ruling. Supreme Court’s conservatives overturn precedent as liberals ask ‘which cases the court will overrule next’ - The Washington Post Politically, that is what the republican base wants and the republican Supreme Court judges are delivering.
For those who believe in a constitutional right to an abortion, stare decisis is all that stands in the way of a 5 to 4 decision overruling it. Supreme Court Shows It's Ready To Overrule Precedent, Dissent Sounds Alarm In California V. Hyatt
++
Republicans say that climate science is Fake News: CO2 levels: Carbon dioxide hit the highest level in human history - The Washington Post
"Conservative" jurists complain about liberal justices creating rights that are not enumerated specifically in the Constitution (e.g. right to privacy that led to the Roe v. Wade, 410 U.S. 113 decision).
A right to assert executive privilege does not exist in the Constitution.
Article 1 does provide that legislators have a right "not to be questioned" about "any Speech or Debate in either House." Article I Section 6 U.S. Constitution That is a privilege found in the Constitution.
Article II, which sets out the powers of the President, is silent on the subject. Why would the framers omit any reference to a President's right to withhold information while providing legislators with one? Article II U.S. Constitution
If a "conservative" jurist wished to be consistent, and that may occur from time to time when it suits their ideology, the only option for them would be to reject any and all constitutionally based assertions of executive privilege. Otherwise, they would be creating a non-enumerated right.
Unable to rely on a constitutional basis for executive basis, Presidents have instead cited history, referring to actions taken by Presidents Washington, Adams and Jefferson. Yet those Presidents did not assert a right to withhold information from Congress. ‘Executive privilege’ is a new concept built on a shaky legal foundation - The Washington Post Executive privilege was a Supreme Court created right whose origin was the 1974 decision in United States v. Nixon. The Roe v. Wade decision was decided in 1973.
The five republican judges have no regard for stare decisis, trashing the doctrine whenever it suits them. Earlier this week they overturned yet another long standing ruling. Supreme Court’s conservatives overturn precedent as liberals ask ‘which cases the court will overrule next’ - The Washington Post Politically, that is what the republican base wants and the republican Supreme Court judges are delivering.
For those who believe in a constitutional right to an abortion, stare decisis is all that stands in the way of a 5 to 4 decision overruling it. Supreme Court Shows It's Ready To Overrule Precedent, Dissent Sounds Alarm In California V. Hyatt
++
Republicans say that climate science is Fake News: CO2 levels: Carbon dioxide hit the highest level in human history - The Washington Post
Huawei CFO extradition case: Canada arrested Meng for the U.S. As China retaliates, it’s on its own - The Washington Post
Trump shares laugh with Florida crowd over rally attendee’s call to shoot migrants - MarketWatch
Bob Woodward: U.S. In "Dire" Crisis; "Most Unsteady Hands We've Had In The American Presidency Ever" | Video | RealClearPolitics
Pentagon to transfer $1.5 billion to border wall from Afghan forces, other areas - Reuters
White House Asked McGahn to Declare Trump Never Obstructed Justice
Donald Trump Spends Another Saturday Morning Rage Retweeting
Bob Woodward Says You’re Right to be Worried About Trump - INDY Week
Trump believes that the way to acquire and maintain political power is through causing fear in voters and to scare them.
Trump: “Real power is — I don’t even want to use the word — fear.”
Just scare voters as much as possible. It is irrelevant that no accurate information is used to stoke that fear. Trump Once Said Power Was About Instilling Fear. In That Case, He Should Be Worried. - The New York Times; Donald Trump Uses Fear to Campaign in Midterms | Time; Trump and Republicans settle on fear — and falsehoods — as a midterm strategy - The Washington Post; Donald Trump and the Politics of Fear - The Atlantic; Paranoia, lies and fear: Trump’s presidency laid bare by Mueller report - The Washington Post; Donald Trump: President Uses Fear in Rhetoric | Time
Trump owns the republican party.
Donald is more than the face of the GOP. He is the GOP. It can not be overlooked that his approval rating among republicans is 91% based on the latest poll and republican politicians cower before him, nurture and protect him.
Trump shares laugh with Florida crowd over rally attendee’s call to shoot migrants - MarketWatch
Bob Woodward: U.S. In "Dire" Crisis; "Most Unsteady Hands We've Had In The American Presidency Ever" | Video | RealClearPolitics
Pentagon to transfer $1.5 billion to border wall from Afghan forces, other areas - Reuters
White House Asked McGahn to Declare Trump Never Obstructed Justice
Donald Trump Spends Another Saturday Morning Rage Retweeting
Bob Woodward Says You’re Right to be Worried About Trump - INDY Week
Trump believes that the way to acquire and maintain political power is through causing fear in voters and to scare them.
Trump: “Real power is — I don’t even want to use the word — fear.”
Just scare voters as much as possible. It is irrelevant that no accurate information is used to stoke that fear. Trump Once Said Power Was About Instilling Fear. In That Case, He Should Be Worried. - The New York Times; Donald Trump Uses Fear to Campaign in Midterms | Time; Trump and Republicans settle on fear — and falsehoods — as a midterm strategy - The Washington Post; Donald Trump and the Politics of Fear - The Atlantic; Paranoia, lies and fear: Trump’s presidency laid bare by Mueller report - The Washington Post; Donald Trump: President Uses Fear in Rhetoric | Time
Trump owns the republican party.
Donald is more than the face of the GOP. He is the GOP. It can not be overlooked that his approval rating among republicans is 91% based on the latest poll and republican politicians cower before him, nurture and protect him.
++++++
1. Intermediate Term Bond Basket Strategy:
A. Sold 2 Brookfield Asset Management 4% SU Maturing on 1/15/25:
Profit Snapshot: +$54.24
This was a recent purchase: Stocks, Bonds & Politics:Item # 2.A. Bought 1 BAM 4% SU at a TC of 99.238 (3/6/19 Post)
Finra Page: Bond Detail
Sold at 102.05
YTM Then at 3.583%
Proceeds at 101.95
2. Short Term Bond/CD Ladder Basket Strategy:
$8K in adds
A. Bought 5 56 Day Treasury Bills at Auction Maturing on 7/2/19:
IR = 2.439%
Auction Results:
B. Bought 1 Marathon Oil 2.7% SU Maturing on 6/1/20:
FINRA Page: Bond Detail (prospectus not linked)
Prospectus
Issuer: Marathon Oil Corp. (MRO)
MRO Analyst Estimates
2018 Annual Report (SU debt listed at page 86 with this 2020 note being the first to mature)
Marathon Oil posts Q1 earnings beat on higher production, lower costs - -Seeking Alpha; Marathon Oil Reports First Quarter 2019 Results
Credit Ratings:
This will be my only MRO bond purchase.
Bought at a Total Cost of 99.915
YTM at TC Then at 2.779%
Current Yield at TC = 2.7023%
C. Bought 2 Treasury 2.375% Coupon Maturing on 4/30/20:
YTM = 2.396%
I now own 7 bonds.
FINRA Page: Bond Detail (prospectus not linked)
Prospectus
Issuer: Marathon Oil Corp. (MRO)
MRO Analyst Estimates
2018 Annual Report (SU debt listed at page 86 with this 2020 note being the first to mature)
Marathon Oil posts Q1 earnings beat on higher production, lower costs - -Seeking Alpha; Marathon Oil Reports First Quarter 2019 Results
Credit Ratings:
This will be my only MRO bond purchase.
Bought at a Total Cost of 99.915
YTM at TC Then at 2.779%
Current Yield at TC = 2.7023%
C. Bought 2 Treasury 2.375% Coupon Maturing on 4/30/20:
YTM = 2.396%
3. Eliminations:
A. Eliminated TWOPRC-Sold 50 Shares at $24.65:
Quote: Two Harbors Investment Corp. 7.25% Cumulative Preferred Series C Stock
Closing Price Yesterday: TWO-PC $24.86 +$0.02 +0.08%
Profit Snapshot: +$7.69
Item # 1 Bought 50 TWOPRC at $24.4 (8/9/18 POST)
Total Return: $75.67 (6.2% annualized in about 9 months)
Prospectus
TWOPRC is a fixed-to-floating rate equity preferred stock issued by the mortgage REIT that pays cumulative dividends and non-qualified dividends.
The issuer is an MREIT, viewed generally as a more riskier preferred stock than one issued by an equity REIT.
Par Value: $25
Optional Redemption: This stock can not be redeemed prior to 1/27/25 "except under circumstances where it is necessary to preserve our qualification as a REIT for U.S. federal income tax purposes and except . . . upon the occurrence of a Change of Control" as defined in the prospectus.
Dividends: Paid quarterly, cumulative and non-qualified (pass through entity/can't avoid taxation at the corporate level and have the dividend treated as qualified).
Fixed Coupon: 7.25% to but excluding 1/27/25
Last Ex Dividend Date: 4/11/19
Floating Rate-Spread over the Three Month Libor Rate: If not redeemed by the issuer, from and including 1/27/25 at a floating rate equal to the three month Libor rate plus a spread of 5.011%.
Libor Rate: This benchmark rate will no longer exist in 2021 and is scheduled to be phased out. Update: SONIA set to replace Libor by 2021; Smooth transition from scandal-hit Libor in 2021 'highly unlikely', banks warned
There is an alternate rate mechanism discussed in the prospectus, but it remains to be seen how that will work out. I may liquidate any holding that remains whose floating rate is tied to Libor before that rate ceases to exist.
I still own 100 shares of TWOPRD: Two Harbors Investment Corp. 7.75% Cumulative Preferred Series D Stock I will probably exit that position somewhere in the $25.25 to $25.5 range.
Issuer's Last Earnings Report:
Two Harbors Investment Corp. Reports First Quarter 2019 Financial Results
The GAAP numbers are scary.
B. Eliminated BIZD-Sold 106+ at $16.6-Commission Free For Vanguard Customers:
Quote: VanEck Vectors BDC Income ETF Overview
Closing Price Yesterday: BIZD $16.40 +$0.12 +0.74%
Sponsor's Website: BIZD - VanEck Vectors BDC Income ETF | Snapshot | Income ETF- VanEck
Barely Profitable: $14.42
Quarterly Dividends Received = $94.85
Goal: Total Return in excess of the dividends
Last Discussions: Item # 1.B. Added 20 BIZD at $15.61-Commission Free(1/27/19 Post); Item # 3.C. Bought 5 BIZD at $14.95 (1/9/19 Post); Item # 3.A. Bought 10 BIZD at $16.03 and 5 at $15.66-Commission Free To Vanguard Customers (10/31/18)
A. Eliminated TWOPRC-Sold 50 Shares at $24.65:
Quote: Two Harbors Investment Corp. 7.25% Cumulative Preferred Series C Stock
Closing Price Yesterday: TWO-PC $24.86 +$0.02 +0.08%
Profit Snapshot: +$7.69
Item # 1 Bought 50 TWOPRC at $24.4 (8/9/18 POST)
Total Return: $75.67 (6.2% annualized in about 9 months)
Prospectus
TWOPRC is a fixed-to-floating rate equity preferred stock issued by the mortgage REIT that pays cumulative dividends and non-qualified dividends.
The issuer is an MREIT, viewed generally as a more riskier preferred stock than one issued by an equity REIT.
Par Value: $25
Optional Redemption: This stock can not be redeemed prior to 1/27/25 "except under circumstances where it is necessary to preserve our qualification as a REIT for U.S. federal income tax purposes and except . . . upon the occurrence of a Change of Control" as defined in the prospectus.
Dividends: Paid quarterly, cumulative and non-qualified (pass through entity/can't avoid taxation at the corporate level and have the dividend treated as qualified).
Fixed Coupon: 7.25% to but excluding 1/27/25
Last Ex Dividend Date: 4/11/19
Floating Rate-Spread over the Three Month Libor Rate: If not redeemed by the issuer, from and including 1/27/25 at a floating rate equal to the three month Libor rate plus a spread of 5.011%.
Libor Rate: This benchmark rate will no longer exist in 2021 and is scheduled to be phased out. Update: SONIA set to replace Libor by 2021; Smooth transition from scandal-hit Libor in 2021 'highly unlikely', banks warned
I still own 100 shares of TWOPRD: Two Harbors Investment Corp. 7.75% Cumulative Preferred Series D Stock I will probably exit that position somewhere in the $25.25 to $25.5 range.
Issuer's Last Earnings Report:
Two Harbors Investment Corp. Reports First Quarter 2019 Financial Results
The GAAP numbers are scary.
B. Eliminated BIZD-Sold 106+ at $16.6-Commission Free For Vanguard Customers:
Quote: VanEck Vectors BDC Income ETF Overview
Closing Price Yesterday: BIZD $16.40 +$0.12 +0.74%
Sponsor's Website: BIZD - VanEck Vectors BDC Income ETF | Snapshot | Income ETF- VanEck
Barely Profitable: $14.42
Goal: Total Return in excess of the dividends
Last Discussions: Item # 1.B. Added 20 BIZD at $15.61-Commission Free(1/27/19 Post); Item # 3.C. Bought 5 BIZD at $14.95 (1/9/19 Post); Item # 3.A. Bought 10 BIZD at $16.03 and 5 at $15.66-Commission Free To Vanguard Customers (10/31/18)
4. Small Ball-Commission Free ETFs:
A. Bought 5 DGRO at $37.17 and 5 at $36.71-Commission Free For Fidelity Customers:
Quote: iShares Core Dividend Growth ETF Overview
Closing Price Yesterday: DGRO $36.94 +$0.25 +0.68%
Sponsor's Website: iShares Core Dividend Growth ETF | DGRO
Expense Ratio: .08%
Last Discussed: Item # 4.B. (5/5/19 Post)
Current Position: 25 Shares (not yet near a starter position)
Average Cost Per Share Now at $37.62
Maximum Position: 200 Shares
Purchase Restriction: Small Ball Rule (each purchase has to be at the lowest price in the chain)
Last Round Trip: +$69.15 (sold too soon)
I was in one of my stock allocation reduction modes in the 2015 summer.
B. Bought 5 FDVV at $29.3-Commission Free For Fidelity Customers:
Quote: Fidelity High Dividend ETF Overview
Closing Price Yesterday: FDVV $29.59 +$0.20 +0.68%
Sponsor's Website: FDVV | ETF Snapshot - Fidelity
Last Discussed: Item # 4.A. Bought 10 FDVV at $30.2 (4/27/19 Post)
Current Position: 15 Shares
Average Cost Per Share: $29.9
Maximum Position: 500 Shares
Purchase Restriction: Small Ball Rule
C. Bought 2 MGC at $97-Commission Free for Vanguard Customers:
Quote: MGC Fund - Vanguard Mega Cap ETF Overview
Closing Price Yesterday: MGC $97.97 +$0.80 +0.82%
Sponsor's Website: MGC - Vanguard Mega Cap ETF | Vanguard
Current Position: 7 shares
Maximum Position: 50 Shares
Purchase Restriction: Small Ball Rule
Last Discussed: Item # 4.A. Bought 5 MGC at $99.23 (4/14/19 Post)
Quote: iShares Core Dividend Growth ETF Overview
Closing Price Yesterday: DGRO $36.94 +$0.25 +0.68%
Sponsor's Website: iShares Core Dividend Growth ETF | DGRO
Expense Ratio: .08%
Last Discussed: Item # 4.B. (5/5/19 Post)
Current Position: 25 Shares (not yet near a starter position)
Average Cost Per Share Now at $37.62
Maximum Position: 200 Shares
Purchase Restriction: Small Ball Rule (each purchase has to be at the lowest price in the chain)
Last Round Trip: +$69.15 (sold too soon)
I was in one of my stock allocation reduction modes in the 2015 summer.
B. Bought 5 FDVV at $29.3-Commission Free For Fidelity Customers:
Quote: Fidelity High Dividend ETF Overview
Closing Price Yesterday: FDVV $29.59 +$0.20 +0.68%
Sponsor's Website: FDVV | ETF Snapshot - Fidelity
Last Discussed: Item # 4.A. Bought 10 FDVV at $30.2 (4/27/19 Post)
Current Position: 15 Shares
Average Cost Per Share: $29.9
Maximum Position: 500 Shares
Purchase Restriction: Small Ball Rule
C. Bought 2 MGC at $97-Commission Free for Vanguard Customers:
Quote: MGC Fund - Vanguard Mega Cap ETF Overview
Closing Price Yesterday: MGC $97.97 +$0.80 +0.82%
Sponsor's Website: MGC - Vanguard Mega Cap ETF | Vanguard
Current Position: 7 shares
Maximum Position: 50 Shares
Purchase Restriction: Small Ball Rule
Last Discussed: Item # 4.A. Bought 5 MGC at $99.23 (4/14/19 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.
Stocks went into a rally mode soon after Mnuchin claimed that trade talks were "constructive" and that he would be traveling to China "in the near future".
ReplyDeleteIs that any different than what he said after the meeting in D.C.? No, but that does not matter.
Mnuchin's comments are intended to calm investors. If trade talks break down, then those buying now based on his comments may want to remember them when Mnuchin tries to manipulate them again.
China keeps saying that they are not going to take a knee and are expressing that position now in its social media:
https://www.usatoday.com/story/money/2019/05/14/tariff-china-imports-china-posts-sassy-message-us-internet/3670279002/
There was also news that Donald "may" delay imposing tariffs on auto imports for 180 days.
ReplyDeletehttps://www.cnbc.com/2019/05/15/trump-administration-to-delay-auto-tariffs-amid-trade-war.html
This would be a new front in the tariff wars. This is not new since I have read a number of prior news report that the decision would likely be delayed.
The Commerce Department issue a report that Trump had the power to levy up to 25% tariffs on imported cars based on national security threats. That is ridiculous but that is nothing new for this administration. After receiving that report, Donald had to make a decision this Saturday on whether or not to levy those tariffs, but had the option to delay the imposition for 180 days.
Europe had already made it clear that it was going to retaliate with tariffs on $20B in U.S. exports.
https://www.bloomberg.com/news/articles/2019-05-13/eu-is-ready-to-retaliate-as-trump-s-auto-tariff-deadline-nears
Question is... are investor's worry getting the air let out as they get used to this. Or will it return when reality hits?
DeleteThat rally took me by surprise.
DeleteI don't know what the down futures are about now. I'm sure he'll tweet something reassuring in the morning.
Land: We are in a period where there will not be concrete news contradicting the optimistic trade narrative spun by Donald and Mnuchin.
DeleteConsequently investors latch onto what will likely be a false narrative IMO that everything will work out just fine.
My main concern now is that the economy may be weakening, as shown in the consumer spending numbers, and an acceleration of the tariff war with China may be enough to cause a recession due to its timing.
The Bond Ghouls are accepting that narrative in the yield curve and the ongoing decline in rates throughout the maturity spectrum after 6 months.
If you look at the 2-10 treasury yield spreads, the reason why there has been no inversion is that the 2 year yield has been coming down rapidly as the Bond Ghouls increase the odds of two .25% cuts before year end. On 1/28/19, the 2 year treasury note was at a 2.6% yield and closed yesterday at 2.16%.
https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yieldYear&year=2019
The yield inversion starts with the 6 month T Bill at 2.43% which is now the highest yield through the 10 year treasury and only 20 basis points lower than the 20 year treasury which closed at 2.63% yesterday.
As to the auto tariffs, and assuming the news stories are correct, Trump is merely planning to delay tariffs on auto imports for 6 months, not to abandon them.
Perhaps a Trumpster can explain to me why a 25% tariff on a Volvo or BMW is necessary to protect the national security interest of the U.S. This is just another example of how Trump is abusing his Presidential power (in this case, from 19 U.S.C. §1862) and Congresses abdication of its responsibilities by delegating broad authority to the executive and then failing to check clear abuses of that power. True conservatives would be alarmed about the growing Imperial Presidency, taking on more attributes of a King than an American President, which is one among many reasons why Trump's party is not a conservative one.
It looks like that investors continue to buy dips, no matter how small.
ReplyDeleteThe Atlanta FED revised down its real GDP growth forecast for the 2nd quarter to 1.1%.
https://www.cnbc.com/2019/05/15/atlanta-fed-forecast-for-gdp-growth-sliding-rate-cut-chances-surging.html
It is important to keep in mind that the government's first estimate for the 1st quarter of 3.2% would have been about 1.5% without two temporary gooses that would likely soon reverse, one being an $218.4B annualized inventory buildup.
Consumer spending was weak in that report. Growth in consumer spending declined to 1.2% from 2.5% in the 2018 4th quarter. Residential construction fell 2.8%, which is the 4th straight decline.
The consumer spending report for April released today was disappointing:
https://www.reuters.com/article/us-usa-economy-retail/weak-u-s-retail-sales-industrial-output-highlight-slowing-economy-idUSKCN1SL1JX
The German 10 year slid today to a -.093% yield:
https://www.marketwatch.com/investing/bond/tmbmkde-10y?countrycode=bx
Notwithstanding the optimism that trade disputes will soon be in the rear view mirror, the Bond Ghouls took the U.S. ten year treasury yield down 3+ basis points to 2.38%.
The yields for BBB+ corporate bonds maturing in 6 years generally fall in the 3%-3.25% range. I thought that was sufficiently disgusting that I sold one that I owned.
I am fine with stocks going up as long as my bonds keep going up as well.
Over the last few weeks, the only significant percentage paring in my stock portfolio has been in the regional bank sector due to zero optimism about the yield curve expanding anytime soon.
There was a small inverse again? In the past patterns, this would be more of the same tiny dip. It only starts to matter when the dip widens.
Delete"China has cut its holdings of US debt to the lowest level in two years amid trade tensions"
ReplyDeletehttps://www.cnbc.com/2019/05/16/china-has-cut-its-holdings-of-us-debt-to-the-lowest-level-in-two-years.html
The U.S. government requires buyers of its debt paper to plug the $1 trillion or so in budget deficits and to refinance maturing debt securities.
China does not need to sell treasuries. As one of its many non-tariff options, China only needs to allow existing holdings to run off and then cut back or even eliminate new purchases.
The issue is not, as many argue, that China would be hurt by selling in bulk its treasury holdings.
When an insufficient number of buyers start showing up at treasury auctions, what are the government's options other than to monetize the debt by having the FED buy the treasuries with newly created money. The FED would argue, as it did during the QE era, that this is not debt monetization because its "intent" is not to monetize the debt but has some other "temporary" purpose. Another part of the argument is that there would be buyers of treasury debt without the FED being a major purchaser.
Eventually, when another QE program is launched to soak up treasury supply as its real purpose, investors will have trouble accepting those explanations. At some point, this future legerdemain cycle of the treasury issuing debt and the FED buying it in bulk with its funny money will cause a collapse in the USD.
I keep coming back to your posts and comments about how the VIX isn't looking as stable. It's not under 12 and humming along as much.
ReplyDeleteYet I'm missing out by not buying stocks into the optimism.
SnP's currently at 1.11% up! VIX is just over 15.
Customer optimism is the big push up today. Other then trade, which I believe will peter out on reactions (even though nothing positive will come out of this)... I don't see anything to hold this market down.
Land: I still have the stock market in a Stable Vix Pattern.
ReplyDeleteThe stock market has become more volatile than in prior SVPs as shown by the VIX chart starting in January 2018.
The Stock Jocks are not currently concerned about the good times ending, which is reflected in current market levels and multiples.
They have experienced some recent and brief anxiety attacks about international trade, but those were quickly snuffed out with soothing words from Donald and Mnuchin.
Mnuchin said earlier this week that he will be visiting China "in the near future". China's Commerce Ministry told the U.S. earlier today do not bother unless the U.S. first proves its "sincerity", noting further that no further meetings are currently scheduled.
https://www.reuters.com/article/us-usa-trade-china-media-talks/us-not-sincere-about-wanting-more-trade-talks-with-china-media-idUSKCN1SN0ES
Over the past week, China's state media has been ramping up attacks against the U.S.. I view those articles as preparing their population for an all out trade war with the U.S. The articles are also likely to provoke widespread Chinese nationalism and boycotts of American made products and businesses.
We will know soon enough whether China and the U.S. will come to an agreement. I doubt it unless Donald caves on certain U.S. demands which I do not see him doing.
The consensus now appears to be that an acceleration of the tariff war is no big deal for the U.S. economy, possibly knocking off .3% of real GDP growth. We shall see when and if everything blows up. I would anticipate the overall ramifications to be more.
As to consumer confidence, I personally do not pay much attention to those numbers, preferring instead to focus on what consumers actually do rather than what a few of them say in response to survey questions. Consumer spending was below expectations in April and weak in the first quarter according to the last GDP report.
Thanks. I remember consumer spending was down, so was wondering about the survey.
ReplyDeleteI heard on bloomberg state media's using some obscure blog to unofficially push their stance (non-cooperation with whatever is it that Trump has/hasn't offered with any clarity). So ramping up ... is happening. Hadn't thought about the boycott being ramped up too.
Even if business isn't directly effected, there will be businesses that slow down just to avoid being stuck if/when a slow down comes. Tends to be self-fulling to some extent? Not all the way into recession, but more than .3% off GDP.
Russia doesn't want a powerful China. This gives them more power over USA. But Trump so eagerly had non-recorded meetings with Putin recently. Bet there's something about this, that came out of those meetings. Wonder what?
While VIX is in stable state... you're comments about it being more violable than normal within stable state, seem worthwhile. I haven't looked yet compared to other pre-periods, if there's rocky times like this showing up before there's an extended spike that moves to unstable vix pattern.
Land: Consumer spending in the first quarter was probably negatively impacted by the government shutdown which started in December and ended in late January as I recall.
DeleteWhen consumers become worried about something, they have a tendency to pull back first on durable good orders including the bigger ticket items like cars. A potentially far more severe and long lasting reaction would be reasonably predictable in response to an all out trade war, with some spillover in reduced spending for non-durable goods. Consumers might also cut back spending in response to price increases caused by the tariffs.
In the government's first estimate for 2019 first quarter GDP, durable good orders were a 0.4% drag on GDP, with motor vehicles and parts declining 0.5% compared to the last quarter of 2018.
Chart (spending on durable goods starts to decline in November 2018)
https://fred.stlouisfed.org/series/PCEDG
The volatility that we have seen since January 2018, occurring within the parameters of an ongoing SVP, is a historical first. In prior SVP periods, there could be years of continuous movement below 20 with only a quick peek slightly over 20.
What does this mean? Hard to say except that the stock market is riskier compared to prior SVP periods and the Unstable Vix Pattern trading strategy would have worked starting in January 2018.
I have been buying into the volatility spikes and then selling when the SPX recovers and either moves to new highs or moves back toward an all time high. Buying into volatility spikes over 26 works until it doesn't. A case in point would the volatility spike that started after Lehman Brother's went bankrupt in September 2008 would have been a bad idea since the VIX continued spiking up into a Catastrophic Event. When I saw that one developing in late September 2008, I did not like the looks of it and sold into it before it turned really nasty and then I started to buy again.
I would just say that a major volatility event, which can be clearly classified as a Trigger Event in the model given duration and height of the spike over 26, is probably more likely than not at this point. The cause may be a total breakdown in the China negotiations.
For now, I am just pleased that the Duck did not slap 25% tariffs on auto imports, deemed necessary to protect U.S. "national security", though the decision has only been postponed for 180 days. That could have been the first disaster this year.
All of that makes sense. Taxes aren't getting turned over. Neal's talking about could be in court as early as next week. I'm baffled. They didn't expect this? I would have announced, will be brought to court on Monday first thing. They need to start naming "the thing." It's one of Trump's most favorite and most effective methods. Though he only looks for mild shades of relevance. Neal will want to stick with truth.
DeleteOne conclusion I learned in the 2016 nearly VIX unstable trigger... was that under 15 when not expected, mattered. It was telling. Now, being in a higher no man's land (new) matters too.
The VIX model... you always put into container with looking at the environment. Right now is hard. The usual environment is something meaningful that the market is ignoring. This is something meaningful that may resolve or not.
That wasn't a very long inversion. .05% one day.
DeleteLand: I am not sure what you are referring to here. The yield curve remains inverted starting at the 6 month T Bill through the 10 year treasury note.
Deletehttps://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
The one year T Bill is not inverted with the 10 year but only just barely (6 basis points) and the 1 year would go up in yield when and if it becomes clear that the FED will not be cutting the FF rate anytime soon.
The VIX movement since January 2018 is worrisome to me. It indicates that investors can return to comfort levels for several months but that calmness is easily pierced since many worries and anxieties are lurking underneath the surface. Donald and Mnuchin will not be able to able to sooth investors by claiming everything will work out fine and soon after the Duck imposes 25% tariffs on $300B of China's exports that are not subject to tariffs, with China retaliating beyond increasing their own tariffs for U.S. exports.
The settlement with Canada and Mexico announced today, which will result in the U.S. lifting tariffs on steel and aluminum tariffs when melted, poured or smelted regionally, was aimed at China and will not go unnoticed by that country already smarting from Donald's executive order blacklisting Huawei. The design of the agreement is to form a three country trading black that requires Canada and Mexico to stop transshipments into the U.S. of Chinese steel and aluminum without mentioning China by name. If a company uses Chinese steel in a product, then that steel would be subject to a U.S. tariff.
https://www.bloomberg.com/news/articles/2019-05-17/u-s-poised-to-remove-steel-aluminum-tariffs-on-canada-mexico
Several U.S. companies that provide products to Huawei have been slammed in recent U.S. trading:
https://www.cnn.com/2019/05/17/tech/huawei-us-ban-suppliers/index.html
At this point, I would more than surprised that China and the U.S. will agree to a trade deal while Trump is President.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2019/05/observations-and-sample-of-recent_18.html