Observations and Sample of Recent Trades: EMAPRC, HT, HTPRD, THQ

Economy: 

The June jobs report released by the BLS was positive. Employment Situation Summary 

The U.S. added 224K new jobs last month. Of that amount, 33,000 census related jobs were added by the U.S. government. 

Wage growth Y-O-Y was estimated at 3.1%, unchanged from the prior month. 

Job gains for April and May were revised down by 11K. 

For the first six months, the U.S. economy added an average of 172K jobs per month compared to 223K during the 2018 first half. 

The U-6 number ticked up to 7.2% from 7.1%. Table A-15. Alternative measures of labor underutilization  

Chart: Total unemployed, plus all marginally attached workers plus total employed part time for economic reasons 

Home sales point to recession in late 2019 or 2020, Fed economist says

US proposes $4 billion additional tariffs over EU aircraft subsidies This $4B is on top of the $21B in new tariffs announced last April. When and if the U.S. levies the $25B in tariffs, Europe will retaliate by levying tariffs on U.S. exports.  

Median CPI: Latest Data (+2.7% Y-O-Y through May 2019)

Sticky-Price CPI - Federal Reserve Bank of Atlanta (+2.4% Y-O-Y through May)

'No credible path at the moment' for tariffs ending: Morgan Stanley  I would agree provided a time limitation is placed on the opinion. I view it as unlikely that a trade deal with China covering the major sticking points, which results in the removal of existing tariffs, will occur prior to the November 2020 election. 

And, it is also unlikely that Donald will levy the List 4 tariffs prior to the election unless he wants to lose and to increase substantially the probability of a Democrat trifecta. 

++

Markets and Market Commentary: 

Earnings recession risk increases as a flood of warnings hit - MarketWatch ("the number of companies cutting guidance is among the highest seen in the past 13 years.")

80% of the stock market is now on autopilot The 80% estimate is based on 60% ownership through passive investments and 20% ownership in quantitative funds that are momentum driven rather than based on fundamental research. 

'Dr. Doom' economist Nouriel Roubini sees trade war tipping global economy into recession

Trade spat may blindside investors with weak earnings, warns Prudential - MarketWatch

6 Dividend Stocks That Beat the S&P 500 - Barron's (subscription publication) The 6 stocks identified in the article are Consolidated Edison (ED), Illinois Tool Works (ITW), Kimberly Clark (KMB), Pepsico (PEP), Procter & Gamble (PG), and Target (TGT). All six companies are members of the S & P 500 Dividend Aristocrats and would consequently be owned by the ProShares S&P 500 Dividend Aristocrats ETF ( NOBL); ProShares S&P 500 Dividend Aristocrats ETF Overview | MarketWatch  

Bond ETF inflows forge new record in June - Seeking Alpha I have been selling bonds. 

+++++

Trump: 

Trump says he is 'moving forward' with census question on citizenship - CNN

7/3/19

Donald's tweet directly contradicted written statements made by Wilbur Ross, Commerce Secretary, and by the DOJ. Justice Department Reverses Course on Citizenship Question on Census, Citing Trump’s Orders - The New York Times 

In TrumpWorld, it is fake news for the media to report what is actually said by members of the Trump administration. Donald's reality creations are the only real news.

It is noteworthy that the Trump Administration represented to the Supreme Court that printing of the census forms had to start no later than 6/30/19: Trump administration says it may add citizenship question to 2020 census  

Trump Admits He 'Gets Along' Better With Dictators Than With U.S. Journalists; Trump on 'coziness' with dictators - CNN Video

Study suggests Russian social media trolls had impact on 2016 election - Axios

Trump and Putin Share Joke About Election Meddling, Sparking New Furor - The New York Times  Shortly after this big funny shared between Vlad and the Duck, Donald referenced fake news as something Putin does not have in Russia which is just another incredible statement from Demagogue Don. 

This is a transcript of what was said: 

Trump: "Get Rid of them. (referring to the free press). Fake news is a great term, isn't it. You don't have this problem in Russia, but we do."

Putin (speaking in English): "We also have. It is the same".

Donald Trump trips up on history in 4th of July speech, mentions airports during Revolutionary War We can all be thankful that George Washington, proving his tactical genius once again, secured the airports. Otherwise British harrier jets could have strafed the Continental Army's position around Yorktown. 

It is not surprising that fact checkers are not employed at the White House. If one was employed, the best course of action to stay employed would be to confirm Donald's reality creations as facts. 

Donald also claimed that the battle of Fort McHenry, which inspired Francis Scott Key to write the "The Star Spangled Banner", was fought during the American Revolution. That battle occurred during the War of 1812.  

Trump's Federal Reserve pick: Judy Shelton is a fan of the gold standard  Ms. Shelton blasted the Federal Reserve for its loose monetary policy under the Obama administration. With Donald wanting a looser monetary policy, and Ms. Shelton desiring to become a FED member, she is now calling for a  loose monetary policy and rate reductions. Trump's Federal Reserve pick: Judy Shelton's economic policies 

Trump Fed pick Judy Shelton: Gold standard support explained - CBS News   

Trump can’t use Pentagon funds to build border wall, appeals court says - MarketWatch

Clueless Don had no idea what busing to achieve racially integrated schools meant. Trump, Dumb as Always, Thinks Busing is About Transportation – Rolling Stone 

So Senator Harris is not for court ordered busing now after sticking a knife in Fumbling Joe for having the same position. Biden laughs at Kamala Harris shift on busing: 'Our positions aren't any different' | Fox News Before sticking a knife in Joe's back, Harris began her assault by stating that she did not "believe" Biden was "a racist". Just disgusting, with about the same level of demagoguery that is an everyday occurrence with Donald. 

Senator Harris may generate support from the far left with this kind of position: Kamala Harris proposes $100B in home ownership assistance - MarketWatch If she becomes the Democrat nominee, her far left positions will assist Donald in winning a second term. The same observation would apply to Senators Warren and Sanders.  

++++++++

1. Canadian Reset Equity Preferred Stocks:

A. Bought 50 EMAPRC at C$18.7 (C$1 IB Commission):

Quote: EMA.PRC | Emera Inc. Pfd. Series C Overview
Company Website: Home | Emera

Closing Price Last Friday: EMA-PC.TO C$19.46 +C$0.24 +1.25% 

The issuer is Emera Inc., a Canadian electric and gas utility company with operations in the U.S. Emera Closes Acquisition of TECO Energy

Emera Reports 2019 First Quarter Financial Results

EMAPRC is a C$25 par value Canadian reset equity preferred stock that pays cumulative dividends.

The coupon reset in August 2018 at 2.65% spread to the 5 year Canadian government bond yield. The new coupon will be 4.721% per annum commencing on 8/15/18 and ending on 8/14/23. Emera Incorporated Announces Dividend Rates for Series C and Series D First Preferred Shares

EMA.PR.C To Reset At 4.721% « PrefBlog

The coupon will then reset again at a 2.65% spread to then existing five year bond. Emera has the option to redeem at par value, plus accrued and unpaid dividends, on each five year reset date only.

Dividend Yield at C$18.7 = (.0471% x. C25 par value = C$1.18 per year ÷ C$18.7 =  6.31%

The original offering was in 2012: Emera Announces Offering of Ten Million Preferred Shares

Prospectus Excerpt:

Dividend Stopper Clause: (enforces preferred shareholders superior claim to cash vs. the common shareholder)

I recently had 4 Emera Finance SU bonds mature:

Profit $16.34

Item # 3.D. (7/22/18 Post)

Prior EMAPRC Round-Trip: +C429

South Gent's Comment Blog # 8: Sold 100 EMAPRC at C$21.96---Item # 2 Bought 50 EMAPRC at C$17.44 and 50 at C$17.84 Update For Exchange Traded Bond And Preferred Stock Basket Strategy As Of 7/13/16 - South Gent | Seeking Alpha

Other Emera Preferred Stock Round Trips:

EMAPRF +C$109

EMAPRB +C$120

2.  Short Term Bond/CD Ladder Basket Strategy:

$9K in adds

A. Bought 3 Merchants Bank 2.3% CDs Maturing on 8/27/19 (2 month CD):

B. Bought 1 Treasury Maturing on 8/20/19 at Auction (2 month Bill):
IR: 2.147%

I only had $1,450 available to trade in my Schwab account as of 6/20, which explains the 1 bond purchase. I had 3 treasuries mature on 6/20 in this account, but this broker does not make those proceeds available for trading until the day after the funds are received in my account.

I will generally keep my cash balance near zero in this account since Schwab pays almost nothing for funds held in a sweep account:

.3% as of 6/20/19

C. Bought 5 United Bank 2.3% CDs Maturing on 7/29/19 (1 month CDs):

Rated 4 stars: United Bank of Fairfax, VA Reviews and Ratings - Bankrate.com

3. Intermediate Term Bond Ladder Basket Strategy: 

A. Sold 2 Cigna 3.05% SU Maturing on 10/15/27: 

Profit Snapshot: +$78.72

I recently purchased this bond: Item # 2.A. Bought 2 CI SU at a Total Cost  of 93.725 (4/7/19 Post) 

FINRA Page: Bond Detail

Issuer: Cigna Corp  (CI) 

Sold at 97.776

YTM at 97.776 = 3.358%

Current Yield at 3.12%

Proceeds at 97.676 (after $1 per bond commission)

I have discussed several times that Fidelity and other brokers use a third party service to price bonds owned in my accounts. The prices are invariably below the fair market value of the bonds. 

For this Cigna bond, for example, Fidelity showed the value as 96.686 as of the 6/10 close: 

While I sold this bond on 6/11, intermediate term interest rates had risen on 6/11.

Yet when I went to the order book, I had no trouble selling this bond at 97.776 notwithstanding the rise in interest rates since the 6/10 close.   

CIGNA Order Book at time of trade on 6/11

This is just aggravating since I never know the fair value of my bonds until I look at each bond's order book.

4. Equity REIT Common and Preferred Stock Basket Strategy: 

A. Bought 50 HT at $16.27 ($1 IB Commission):

Quote: Hersha Hospitality Trust Cl A (HT)
Company Website: Hersha Hospitality Trust
Properties

I believe that $16.27 is the lowest price that I paid for HT. 

Closing Price Last Friday: HT $16.88 +$0.19 +1.14% 

"Hersha Hospitality Trust (NYSE: HT) is a self-advised real estate investment trust in the hospitality sector, which owns and operates high quality upscale, luxury and lifestyle transient hotels in urban gateway markets and coastal destinations. The Company’s 48 hotels totaling 7,644 rooms are located in New York, Washington, DC, Boston, Philadelphia, Miami and select markets on the West Coast." Hersha Facts - Hersha Hotels & Resorts

Strategy: Equity REIT Common and Preferred Stock Basket Strategy (profit snapshots)

Without double checking, I believe that Hotel REITs have been the weakest equity REIT sector this year. While the issues and their importance vary, the major concerns are their sensitivity to economic slowdowns (e.g. less business travel, daily tenants), a decrease in visitors from China, competition from new hotels and Airbnb, and high capital costs.  

Dividends: Quarterly at $.28 per share ($1.12 annually)

Dividends - Hersha Hospitality Trust

Last Ex Dividend: 6/27/19  (day after purchase)

Dividend Yield at $16.27 = 6.88%

Last Earnings Report: Hersha Hospitality Trust Announces First Quarter 2019 Results 

2019 Outlook: 

"In the first quarter 2019, the Company repurchased 273,538 common shares for an aggregate repurchase price of $4.6 million at a weighted average price of $16.91. Since January 1, 2014, the Company has repurchased $245.8 million in common shares, representing 23.4% of the January 1, 2014 float." 

Recently renovated hotels averaged 25.9% RevPAR growth. I view that as an important statistic. 

Last HT Round Trips:

Item # 2.B. Sold 50 HT at $19.02-In a Roth IRA Account (4/23/18 Post)-Item # 4.A. Bought 50 HT at $17.37-In a Roth IRA Account (3/1/2018 Post)

Item # 2.C. Sold 10 HT at $19.11-Used Commission Free Trade (4/23/18 Post)-Item 4.B. Bought 10 HT at $16.83 Used Commission Free Trade (3/1/2018 Post)

Item # 2.B. Sold 50 HT at $18.58-Used Commission Free Trade (2/8/18 Post)-Item 5.B. Bought 50 HT at $17.41 (12/18/17 POST)

There have been multiple 50 share lot trades. The largest dollar gain was on a 50 HT share round-trip in 2016: 

2016 HT 50 Shares +$95.47

HT Trading Profits to Date: $322.21.

B. Sold 50 HTPRD at $24.36: 

Quote: Hersha Hospitality Trust 6.5% Cumulative Preferred Series D Stock  

Closing Price Last Friday: HT-PD $24.43 +$0.03 +0.12% 

I sold the highest cost 50 shares, bought on 2/16/18, that was owned in my Schwab account: 

Item # 3.A. Bought 50 HTPRD at $22.98-Used Commission Free Trade (3/1/18 Post) 

Profit = +$64.02

Security: Issuer: Hersha Hospitality Trust Cl A (HT)

Par Value: $25 Final Prospectus Supplement
Optional Call Date: On or after 5/31/21

Cumulative Dividends: Yes
Stopper Clause: Yes  

Dividends: Paid Quarterly

Last Ex Dividend Date:  6/28/19 
Maturity Date: Potentially perpetual subject to issuer's call right

Qualified Dividends: No, pass through entity

I now own 50 shares in this account: Item # 1.A. Bought 50 HTPRD at $22.3-Used Schwab Commission Free Trade  (11/11/18 Post)

Last Ex Dividend Date: 6/28/19 (before sell)

Last Discussed: Item # 1 B. (3/6/19 Post).

HTPRD Trading Profits to Date: $416 ($351.98 in prior trades)

I still own my lowest cost lot owned in a Roth IRA account. Item # 1.A. Bought 50 HTPRD at $20.11 in a Roth IRA Account (12/26/18 Post) Note that the purchase at $20.11 was a recent one.  

Remaining Position: 100 shares

Strategy: Equity REIT Common and Preferred Stock Basket

Category:  Equity REIT Cumulative Equity Preferred Stocks

I have sold this preferred stock at higher prices: Item # 1.A. Sold Last 50 HTPRD Shares at $25.85 (10/9/17 Post); Item # 2 Sold 150 HTPRD at $25.8  (9/18/17 post)

5. Pared THQ-Sold Highest Cost 100 shares at $17-95-Used Commission Free Trade:

Quote: Tekla Healthcare Opportunities Fund (THQ)-a leveraged CEF

Profit Snapshot: +$78.98

Position Before Pare: Average Cost Per Share = $16.96

Position After Pare: Average Cost Per Share = $16.79 

Data Day of Trade (7/1/19): 
Closing Net Asset Value Per share = $19.56
Closing Market Price: $17.98
Discount = -8.08%
Average 3 Year Discount = -9.26%

Sourced: THQ-CEF Connect

Dividend: Monthly at $.1125 (supported by ROC)
Distributions | Tekla Capital Management LLC

Last Ex Dividend Date: 6/19/19

Last Purchase Discussion: Item # 1 Bought 50 THQ at $16.5 (6/12/19 Post) I still own that recently bought lot. 

Dividend Reinvestment: Yes, at greater than a 5% discount to net asset value per share.

Last Elimination: Item # 6 Eliminated THQ at $17.65 (12/29/18 Post)

Other Recent Purchase Discussions: Item # 4.B. (1/23/19 Post); Item # 3.C. Bought 10 THQ at $16.1 (3/29/18); Item 2.A. Bought 10 THQ at $16.96-Used Commission Free Trade (3/8/18 Post)

Chart: THQ Interactive Chart

This trade is typical small ball where I sell the highest cost lots profitably,  thereby reducing my average cost per share, increasing my dividend yield, and minimizing the tax obligation. 

Capital is freed up to buy back the shares sold at either the lowest price in the chain or at a price that reduces my average cost per share. The later option will be the guide for subsequent THQ purchases. 

The strategy was implemented several years ago primarily as a capital preservation technique accomplished through reducing total dollar risk exposure over time while making a nod to the secondary objectives of income generation and capital appreciation.  

The most THQ realized gains in one year occurred in 2017: +$555.56

Item # 2.C. Sold  232+ THQ at 17.59 (7/3/17 Post) 
Item # 2.D. Sold 118+ THQ at $18.7 in a Roth IRA Account (7/3/17 Post)
Item # 3. Sold 160+ THQ at $17.41 (6/5/17 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.