K, POFNF, PWF:CA

Economy: 

ADP reported earlier today that 202,000 private sector jobs were added last month. ADP National Employment Report That is more than the consensus forecast.   

ISM's December services index rose to 55% from 53.9% in November. However, the new orders component fell to 54.9 from 57.1 and the order backlog declined from $8.5 to 47.5. Numbers below 50 indicate an ongoing contraction.

ISM's December manufacturing index was reported at 47.2%, the lowest reading since June 2009, and was down from 48.1% in November. The new orders component fell to 46.8 from 47.2. The employment component declined to 45.1 from 46.6. 

The Atlanta Fed's GDP model is currently forecasting 2.3% real GDP growth in the 2019 4th quarter, which is consistent with a ISM services PMI around 55. 

GDPNow - Federal Reserve Bank of Atlanta

The NY Fed's model currently forecasts 1.2% real GDP growth for the 2019 4th quarter and the 2020 1st quarter. Nowcasting Report - FEDERAL RESERVE BANK of NEW YORK

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Markets and Market Commentary: 

The fear that something really bad will happen in the Middle East was not sufficient to cause the Stock Jocks to lose their enthusiasm and optimism. 

Something concrete will need to happen that will have a material negative blowback to the U.S. economy and corporate profits. Based on pre-opening U.S. market activity, the conclusion reached so far is that there is no need to be concerned about developments in the Middle East. 

Iran's missile attack launched last night on two Iraqi air bases housing U.S. troops/citizens may end up being the trigger for a larger conflict that the Stock Jocks can not ignore. Iran Fires Missiles at U.S. Troops at Two Bases in Iraq: Live Updates It is too early to tell one way or the other. 

A lot will depend on how Trump responds to those missile attacks. 

Iraq and the U.K. announced earlier today that their forces did not suffer any casualties. The Pentagon is still assessing the damage. It looks like Iran may have deliberately hit targets where it knew no persons would be late at night, which says a lot about their missile capabilities. I would not be surprised to learn later today that the attacks were aimed at the housings for U.S. drones.  

Investors may end up being surprised, even shocked, about the tit-for-tat reprisal. The consensus now is that the worst is over. 

I am expecting attacks against the U.S. inside Iraq from Iranian backed Shia militias. Qais al-Khazali, who leads the Iran-backed Asaib Ahl al-Haq group, called for those reprisals to begin. Similar statements have been made by another Shia militia group in Iraq, Kataib Hezbollah, who lost their leader, the Iraqi citizen Abu Mahdi al-Muhandis, in the missile attack that killed the Iranian Major General Qasem Soleimani.

Iran's supreme leader Ayatollah Ali Khamenei says missile attack was just a 'slap on the face' for US and "wasn't enough"

Iran Fires on U.S. Forces at 2 Bases in Iraq, Calling It ‘Fierce Revenge’  Iran's Revolutionary Guards issued a statement claiming that "fierce revenge .. . has begun". 

The Stock Jocks will experience anxiety attacks that generate a sell and flee response, but those will usually be linked to events that are actually happening that will have a direct impact on the economy (e.g. the FED signaling continued rate hikes after increasing the FF rate several times before stopping at 2.5% and then going in reverse) 

In those anxiety attacks, there is something actually happening that is material to the U.S. economy that generates the fear response, which generally moves quickly from recognizing that something bad is happening now to all of the imaginable bad things that may flow therefrom happening (the fear run amok chicken little stage). 

Something changes which calms the fears and the greed emotion dominates once again. 

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Legendary Wall Street investor Byron Wien warns of ‘several’ 5% market corrections in 2020 - MarketWatch A 5% to 10% decline is generally referred to as a "dip". A correction is generally as a 10% to 20% decline from a recent high, with the bear market moniker covering everything over 20%. My name for the 45%+ declines is Catastrophic Event. 

Yardeni has historical charts of the declines here: Market Briefing: S&P 500 Bull & Bear Markets & Corrections 

Since the 56.8% S & P decline in 2008 that ended in early March 2009, the most recent Catastrophic Event, there have been no "bear markets". There has been 7 "dips" and 6 "corrections" (see figure 1). This is consistent with an ongoing long term secular bull market. 

My first long term secular bear market (1/1/66 through 7/1981) had 1 Catastrophic Event (-48.2%); 4 bear markets ( including the Catastrophic Event: -22.2%, -36.1%, -48.2%, -27.1%); 9 corrections; and NO DIPS. 

Wall Street market analysts see deeper sell-off ahead

Cramer: 'Endless buying for gold' could signal shift to fear in stocks

Pompeo says U.S. expects a "little noise" from Iran 

US dairy farmers battle extinction Trump trade wars lower milk prices

Jeremy Siegel says one of the biggest stock-market dangers in 2020 is ‘people could be throwing risk to the wind’ - MarketWatch

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Long Term Nasdaq Composite and S & P 500 Charts: 

Nasdaq Composite

S & P 500

I do not find any comfort in those charts. Unreasonable expectations about the future are already built into valuations IMO. 

Why does 1929 crash and Great Depression appear on the S & P chart. The decline is present but the move from around 100 in 1982 to 3236 results in everything prior to 1982 flatlining on a long term chart. 

Can anyone identify the "magic elixir" that transformed U.S. stocks into a money making machine unparalleled in history starting in 1982? The main driver, and the perma bulls will never concede this point, is the parabolic increase in debt held by governments, corporations and individuals worldwide. Spending borrowed money will create growth until the piper has to be paid, and then the BIG UGLY starts.    

Total Federal Government Debt

Total U.S. Consumer Credit 

Non-Financial U.S. Business Debt

Domestic Financial Sector Debt

State and Local Governments Excluding Employee Retirement Funds

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Trump: 

Iran Ends Nuclear Limits as Killing of Iranian General Upends Mideast; 

Iran Challenges Trump, Announcing End of Nuclear Restrictions; Iran Abandons Nuclear Deal Limitations In Wake Of Soleimani Killing : NPR

Trump abandoned the Iran nuclear accord in May 2018. 

In TrumpWorld, no restraint on Iran's acquisition of nuclear weapons is better than the abandoned accord called the Joint Comprehensive Plan of Action. 

Donald has threatened to blow up sites that have cultural significance for Iranians. It is a violation of the Geneva convention for a nation to intentionally target cultural sites. Trump Reiterates Threat to Commit War Crimes in Iran; US: Trump Threatens War Crimes Against Iran | Human Rights Watch

Secretary of State Pompeo denied that Trump had threatened to target Iranian cultural sites. By all accounts, Pompeo was the driving force behind the targeted killing of Maj. Gen. Qassim Suleimani and his entourage that included Iraqi citizens. 

To prove his point that Donald did not threaten to destroy Iran's cultural sites, Pompeo told viewers during an interview to just read the Duck's tweet, an approach reminiscent of Trump's claim that the summary of his call with Zelensky proved that the call was perfect. Pompeo says Trump did not threaten to target Iranian cultural sites -Fox - Reuters Claiming that black is white is proof that black is white in Trump's America.  

Sounding crazy, which is Donald's default mode, may have some deterrence impact on Iran. 

Trump is now threatening to impose sanctions on Iraq: 

Trump: "If they do ask us to leave, if we don’t do it in a very friendly basis, we will charge them sanctions like they’ve never seen before eve It’ll make Iranian sanctions look somewhat tame.”

In TrumpWorld, Iraq needs to be punished for being upset that the U.S. killed a top Iranian leader and several Iraqi citizens on its soil without permission.   

After Trump’s threat, administration begins drafting possible sanctions against Iraq - The Washington Post

Iran wants the U.S. military to leave Iraq since that will increase its growing influence over that countries affairs. Donald is helping Iran achieve that goal. Iraq votes to expel U.S. troops It is my understanding that this resolution is not binding on the Iraqi government, but it will be enforceable when and if the Iraqi PM, who drafted the resolution, implements it. Most of the Kurd and Sunni legislators did not vote on that resolution. The Shia legislators were united in demanding expulsion of U.S. troops.    

Donald Trump threatens Iraq sanctions after vote to expel US troops Notwithstanding that vote, Donald said the U.S. would not leave unless the U.S. received compensation from Iraq. 

The Iraqi Prime Minister received a letter from the U.S. commander announcing that U.S. troops would be withdrawing from Iraq at that government's request. The Pentagon later claimed the letter was a mistake. Confusion builds over letter on US troop withdrawal in Iraq  

Nikki Haley is already going after the Trumpster vote when she runs for President in 2024: Nikki Haley says Democrats are 'only ones that are mourning the loss of Soleimani' Just another asinine statement. 

A recent poll, taken after Trump killed the Iranian General, found that 1 in 10 republicans disapproved of that attack. The poll also found that 27% of Americans would approve a first strike on Iran, and we know who those people will vote for in 2020. Americans increasingly critical of Trump's record on Iran, most expect war: Reuters/Ipsos poll - Reuters

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Donald: “Every Democratic candidate running for president is trying to punish religious believers and silence our churches. This election is about the survival of our nation." Trump looks to cement, expand evangelical support with launch of new 2020 coalition in Miami 

Donald promised the evangelicals that he would bring back prayer in the public schools soon. Trump Celebrates Efforts to Put God and Bible Back in Schools | CBN News I would point out that students can voluntarily pray in school, provided they are not disruptive. The constitutional prohibition involves state sanctioned prayer. 

Annual pilgrimages to the Creation Museum in Kentucky, where students can see Adam and Eve walk with the dinosaurs, may be in order soon as well. Creation Museum -Adam and Eve in the Age of the Dinosaurs: The New York Times; A. A. Gill on Kentucky's Creation Museum | Vanity Fair 

Yes, the Christians are under attack in TrumpWorld and are being silenced by Satan's followers, you know, the evildoers who call themselves democrats.  

Donald repeatedly claims that the Christians are being silenced and punished, which is part of the victimology myth propagated by republican politicians. 

Outside of Alternate Reality inhabited by the Trumpsters, meaning the real world, Christians are not being silenced by anyone. Freedom to practice religion is alive and well.   

Every Sunday, when I pass several churches jammed together over a 3 mile stretch as I travel down Franklin Road, I only see traffic jams and full parking lots, with the police directing traffic given the number of vehicles turning into Church parking lots or out of them. 

One of the churches, located near the intersection of Franklin Road and Concord Road, could function as a junior college. Brentwood Baptist

The Lord will decide how many Christians are actually in attendance. I would not hazard a guess other than the number is significantly less than 100%.   

In the Alternate Reality of Trumpworld, the only way for students to learn about the bible is through classes taught in public schools.

Separation of Church and State is not viewed as a worthy objective by Trumpsters, even though such a separation is overwhelmingly justified by centuries of human history. 

One facet of the republican victimology myth is that Christians in the U.S. are being punished (1) by not having their religious doctrines taught in public schools and (2) by other constitutional restrictions on state sanctioned religious activities. In other words, punishment is defined as anything that separates church and state.   

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'Only saved people can love Trump,' says televangelist Jim Bakker Bakker ran into some some sex and financial scandals in the 1980s. The scandals that brought down the Bakkers, once among US's most famous televangelists - ABC News

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All trades are commission free unless otherwise noted.  

I have been implementing my plan to realize capital gains this month that meet my minimum annual goal. I decided to implement that plan late in 2019, so it has nothing to do with current developments in the Middle East.  

The minimum annual goal is to harvest $25K in capital gains. Looking at my 2017 and 2018, the annual average was $45,466, with both years being close together in the amounts.  

In a subsequent post, I will mention eliminating yesterday (1/6/20) my position in the T. Rowe Price Small-Cap Stock Fund (OTCFX) at $52.32. 

1. Eliminated Power Financial: 

The symbol POFNF represents the ordinary shares of Power Financial that are priced in USDs and traded on the U.S. pink sheet exchange. OTC Markets | POFNF Symbols ending in "F" denote the ordinary shares of a foreign stock priced in USDs (not an ADR) and traded on either the U.S. pink sheet exchange or the U.S. Grey Market. 

PWF:CA is the symbol used for the Power Financial ordinary shares traded in Toronto and priced in CADs. 

Power Financial Corporation | Home

I owned 50 shares of both POFNF and PWF:CA.   

Last month, Power Corporation of Canada offered to acquire the shares of Power Financial that it did not own.

Power Corporation of Canada | December 13, 2019 - Power Corporation and Power Financial Announce Reorganization, Simplified Corporate Structure and Refocused Strategy 

The Power Financial shares popped in response to the acquisition offer made by its majority shareholder Power Corporation of America. 

I view the merger as a positive. There was no good reason to have these two corporations as separate entities. 

I have talked about the corporate structure of these companies in the past. 

This is the current organization chart: 

A. Sold 50 POFNF at US$27.04: 

Quote: Power Financial Corp. (U.S.: OTC)

Website: Power Financial Corporation | Home

Profit Snapshot: US$299.2

Item # 2 Bought 50 POFNF at US$20.96 (8/14/19 Post)

Dividends: Quarterly at $.4555 per share

Power Financial Corporation | Dividends

Last Ex Dividend: 12/30/19 (before sell)

Power Financial Reports Third Quarter 2019 Financial Results

Both Power Financial and Power Corporation completed a large share buyback during the 2019 2nd quarter. Power Financial Announces Final Results of Substantial Issuer Bid; Power Corporation Announces Final Results of Substantial Issuer Bid 

B. Sold 50 PWF:CA at C$35.14 (C$1 commission): 

Quote: Power Financial Corp. (Canada: Toronto)

Profit Snapshot: +C$480

Item # 5.A. Bought 50 PWF:CA at C$25.5 (1/23/2019 Post)

Previous Round-Trip: Item # 2.A. Sold 50 of 100 PWF:CA at C$30.99 (3/31/19 Post)(profit snapshot = C$161)-Item # 4.A. Bought 50 PWF:CA at C$27.73 (12/23/18 Post)

I will simply wait for an opportunity to buyback Power Corporation of Canada shares which I have bought and sold many times.

Item # 4 Sold 100 PWCDF at US$22.03 (10/5/19 Post)(profit snapshot = $110.05)- Item # 1 Bought 100 PWCDF at US$20.83 (5/29/19 Post); 

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 # 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)

PWCDF-POW:CA Trading Profits:  $1,239.2 ($1,129.15 prior trades)

Victory in PWCDF trades is defined as (1) selling at profit after (2) collecting one or more quarterly dividends and (3) buying the stock back at a lower price than the previous purchase without missing a dividend payment. 

When I receive my 2020 IRS Form 1099, IB will have converted the CAD realized gain into USDs for tax reporting purposes. The calculation will be based on the currency exchange rates in effect when the shares were bought and when they were sold. The calculation is not based on converting the CAD profit into USDs using just the exchange rate in effect when the shares were sold.  The CAD/USD rate is now close to .77.  CAD/ USD Currency Chart. Canadian Dollar to US Dollar Rates 

The CAD has been moving up in value against the USD since early December 2019 when the CAD/USD was near .75.  

When and if the CAD/USD exceeds .8, I may elect, as I have done in the past, to exchange CADs back into USDs, realizing a taxable gain on currency exchange. See, generally, Item # 1 Another CAD/USD Exchange: Bought USD $15K by Selling C$18,747.15 CADs (8/31/17 Post) 

The CAD proceeds realized from selling 50 PWF:CA will have a USD cost basis. When those CADs are sold, either to pay for a security bought in Toronto, or to simply realize a currency gain, a taxable event is created that is reported in my IRS schedule D. The general idea is to reap both a profit on the securities bought with CADs and then to realize a gain at some point exchanging CADs back into USDs.  

2. Pared Kellogg-Sold 10 at $69.3: 

Profit Snapshot:  $138.58

Quote: Kellogg Co. (K)
K | Kellogg Co. Analyst Estimates | MarketWatch

Closing Price Yesterday: K $68.81 +$0.87 +1.28% 

I mentioned that I would sell 10 shares in a comment to my last post. 

The shares popped some yesterday in response to Credit Suisse raising its rating to outperform from market perform. The PT was increased to $78 from $60. I did review this report, which is available to Charles Schwab customers, and did not find it convincing. The $78 target price is based on a 18.5 multiple (up from the previous 15.3) against the analyst's 2021 E.P.S. estimate. 

This 10 share lot was part of a 50 share lot bought at $55.54. Item # 1 Bought 50 Kellogg at $55.44 and 10 at $54.68-Used Commission Free Trades (7/20/19 Post)

I have now sold 30 out of the 60 shares discussed in the previously linked post. 

Dividend: Quarterly at $.57 per share ($2.28 annually)

Dividends – Kellogg Company

Last Ex Dividend: 11/29/19

Average Cost Per Share Remaining Position = $55.19

At Close on 1/7/20  

Current Dividend Yield at a TC of $55.19 =  4.13%

Realized Gain from 30 of the 60 Shares Bought = $332.24

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.