DUK, ENBPRP, IBM, SKT, STWD, UBS

Economy: 

Industrial output slumps in January for fourth decline in past five months - MarketWatch

Household debt jumps the most in 12 years, Federal Reserve report says Household debt rose by $601B last year. U.S. GDP growth is dependent on the U.S. government and U.S. households spending borrowed money every year.  

The federal government's fiscal year starts on October 1. In the first four months of Fiscal 2020 ending on 9/30/20, the budget deficit increased 25% compared to the first 4 months in the 2019 fiscal year. US deficit swells 25% in fiscal 2020, $1.1 trillion over past year 

US retail sales January 2020 Seasonally adjusted retail sales rose .3% in January compared to December. The December number was revised down from to .2% from .3%. Clothing store sales declined by 3.1%. Retail Sales Report.pdf  

The Cleveland Fed's median CPI gauge rose .3% in January, with the annual increase at 2.9%. Median CPI: Latest Data

The Atlanta Fed's sticky price CPI rose 3.4% in January, with the annual increase at 2.8%. Sticky-Price CPI - Federal Reserve Bank of Atlanta 

Germany reported last Friday that its economy has zero real GDP growth in the last quarter compared to the third quarter. Real GDP growth was up .3% in the 2019 4th quarter Y-O-Y. Gross domestic product stagnates in the 4 quarter of 2019 - Statistisches Bundesamt

Eurostat reported last Friday that the eurozone grew only .1% in the 2019 4th quarter. For 2019, growth in the Eurozone was estimated at 1.2%, down from 1.9% in 2018. Eurostat Press Release (2/14/20) 

I  doubt that China is providing the world with accurate statistics of new coronavirus infections and deaths. Coronavirus: Why have two reporters in Wuhan disappeared? - BBC News; They Documented the Coronavirus Crisis in Wuhan. Then They Vanished. - The New York Times If China's official numbers are accurate, then the spread of the coronavirus appears to be largely contained to Hubei province and nearby areas. 

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Markets and Market Commentary: 

Longtime bull says he’s sitting on cash ahead of a possible market correction - MarketWatch; Coronavirus is the biggest threat to rally right now, Ed Yardeni warns

'Four reasons to be fundamentally bullish' despite coronavirus

Under Armour (UAA) reports fiscal fourth quarter 2019 earnings

Bed Bath & Beyond shares plunge 26% on weak same-store sales warning

How an ‘epic bond bubble’ sent Greece’s 10-year yield below 1% for the first time ever - MarketWatch

Amazon spokesman Carney says company wants to question Trump Donald wanted to punish Amazon because its CEO owns the Washington Post. 

FTC to investigate ‘hundreds’ of past acquisitions made by Microsoft, Google, Apple, Amazon and Facebook - MarketWatch

Charlie Munger warns there are 'lots of troubles coming' because of 'too much wretched excess'

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Trump: 

Donald notified Congress last week that he was going to divert $3.8B from the Pentagon's budget to the border wall construction. Congress had appropriated those funds to pay for military equipment. Mexico's check apparently got lost in the mail. 

Trump Claims ‘Legal Right’ to Interfere in Justice Dept. Cases  

Don the Authoritarian, supported by 95% of republicans, has repeatedly claimed that he can do whatever he wants. 

All the times Trump said the constitution let's him do whatever he wants - YouTube (as of June 2019); Trump said the U.S. Constitution lets him do ‘whatever I want as president.’ On Constitution Day, students learn otherwise. - The Washington Post (9/17/19 article)

Justice Dept. to reduce sentencing recommendation for Trump associate Roger Stone, official says, after president calls it ‘unfair’ - The Washington Post 

2/11/20 Tweet

Donald is publicly meddling in sentencing recommendations made by career federal prosecutors. All 4 prosecutors on Roger Stone case quit as Justice Department set to walk back 7- to 9-year prison recommendation - MarketWatch The same interference is occurring in the military justice system. 

Donald demanded that those 4 prosecutors apologize to his buddy Roger Stone. Their sin in TrumpWorld was to present evidence to a jury who concluded that Stone had committed multiple felonies beyond a reasonable doubt. Trump says prosecutors ‘ought to apologize’ to Roger Stone | The Seattle Times They should not have done that since Roger and Donald are friends. 

Roger Stone's Crimes - FactCheck.org

Trump defends Roger Stone, attacks judge Amy Berman Jackson and prosecutors in Twitter Tirade - The Washington Post 

Trump takes on Judge Amy Berman Jackson ahead of Roger Stone’s sentencing

On the same day that Donald interfered in the Roger Stone sentencing process, Trump withdrew his appointment of Jessie K. Liu, the former U.S. District Attorney for D.C. who oversaw the Stone prosecution, from a top Treasury Department position. 

Trump withdraws Treasury nomination of ex-US attorney who oversaw Stone prosecution-CNN (she subsequently resigned); 

Trump withdraws Treasury nomination of former U.S. attorney for D.C. Jessie K. Liu after criticism of her oversight of Mueller prosecutions-The Washington Post 

Demagogue Don and and Barr claim that they have not discussed Stone's sentencing. 

It was just a coincidence that Barr undercut the sentence recommendation made by the DOJ's career prosecutors, which were based on the DOJ's sentencing guidelines, immediately after Trump tweeted his disapproval. DOJ wants lighter sentence for Roger Stone after Trump tweet It is a unique event for any Attorney General to interfere in sentence recommendations made by federal prosecutors who are following DOJ sentencing guidelines.   

Barr is now claiming that he was going to disapprove of the sentencing recommendation before he read Donald's tweet. Barr blasts Trump's tweets on Stone case: 'Impossible for me to do my job': ABC News Exclusive-ABC News He has zero credibility IMO. If anyone wants to believe him, that is their prerogative. He needs to be put under oath and competently questioned.   

Sally Yates blasts Trump for using DOJ as 'personal grudge squad'

Trump escalates campaign of retribution as Republican senators shrug - The Washington Post 

Trump claimed that Colonel Vindman deserved to be punished by the Pentagon for telling the truth. Trump suggests Army should punish officer who testified in impeachment inquiry: Military Times  

One characteristic that is common to autocrats throughout history is to use the government's power to punish enemies and to reward friends.  

Trump's impeachment lesson: Democrats are 'crooked' Republicans need to be punished in November 2020 for protecting, nurturing, aiding and abetting this lying, repulsive, and authoritarian demagogue. 

Over 100 US troops have been diagnosed with traumatic brain injuries following Iran strike - CNN  

Trump calls Bloomberg 'A TOTAL RACIST' over tape of ex-NYC mayor defending 'stop and frisk' 

Donald supported Mayor Bloomberg's stop and frisk policy. So, if one accepts Donald's statement, then Donald admitted being a "TOTAL RACIST" too, which explains why he later deleted this tweet. 

{I personally do not view that abandoned policy as per se racist but the implementation of that policy resulted in racial targeting according to a federal district court judge who heard a constitutionally based challenge to it.} 

I found several comments by Donald supporting stop and frisk just in his first debate with Hillary. This is one passage just from that debate: 

Senate GOP blocks three election security bills; Russia will try to meddle in 2020 U.S. election, intel report says

Fact check: Trump makes 86 false claims over two weeks, including whoppers about Bloomberg, Pelosi and Social Security According to the most recent polls, a majority of republicans believe that the word "honest" describes Donald "very or extremely well". 

84% of republicans believe Donald was pursuing the national interest, rather than his personal interests, in his dealings with Ukraine (Question 26: National (US) Poll - December 16, 2019 )

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All trades are commission free unless otherwise noted. 

The reasons for selling the highest cost lots first are (1) to reduce my income tax obligation resulting from a sell; (2) to generate a total return in excess of the dividend payments; (3) to increase my dividend yield on the remaining shares; (4) to take advantage of normal up and down volatility by selling the highest cost lots profitably and then by buying when the price falls below the lowest price paid in the chain; (5) to make it more likely that I will buy during a meltdown after selling higher cost shares (psychological); and (6) to mitigate risk through less at risk monetary exposure. 

Identifying specific lots to be sold is generally allowed at brokers. 

At Schwab, I would first scroll to the "sell" tab. I would then list the quantity to be sold:  

Schwab Order Page

Note the blue link to the cost basis method. My default option is FIFO. If I do nothing, the oldest shares will be sold. If I wanted to identify the shares to be sold, usually to reduce my taxable gain, I would need to click "First In First Out" and then choose specific identification. A list of all of the lots owned would then appear. I can then identify the specific shares that I want to sell. I did that last Thursday on a 50 share lot.       

Risk is also controlled through small odd lot trades made economically feasible now with zero brokerage commissions.

I am not concerned about the dollar value of the profit provided I am in achieving the objectives set out above. 

1. Small Ball Trading: 

A. Sold 10 STWD at $25.96: 

Quote: Starwood Property Trust Inc.  (STWD)
Website: Starwood Property Trust

SEC Filings

10-Q for the Q/E 9/30/19

Profit Snapshot: +$47.74

Item # 1.C. Bought 10 STWD at $21.19 (1/11/18 Post)

Last Buy Discussions: Item # 4.B. Added 10 STWD at $19.4-Used Commission Free Trade(1/16/19 Post); Item 1.A. Added 5 STWD at $19.96-Used Commission Free Trade (2/19/18 Post)

I reduced my average cost per share from $20.73 to $20.58:

Snapshot Intraday on 2/4/20

Tax Classification for 2019 Dividends: Since my first purchase, STWD has not supported the dividend with ROC. 

Starwood Property Trust Announces Updated Tax Reporting Information

Dividend: Quarterly at $.48 per share ($1.92 annually)

The dividend announcements can generally be found in the earnings' press releases.  

Last Ex Dividend Date: $12.31/19

Dividend Yield at $20.58 = 9.32%

Last Earnings Report (Q/E 9/30/19):  

"The Company’s third quarter 2019 GAAP net income was $140.4 million, or $0.49 per diluted share, and Core Earnings (a non-GAAP financial measure) was $152.6 million, or $0.52 per diluted share."

Starwood Property Trust Reports Results for the Quarter Ended September 30, 2019 or SEC filed press release.

B. Sold 2 IBM at $155.4:

Quote: International Business Machines Corp.
SEC Filings
IBM Consensus Analyst EPS
IBM Investor relations

Closing Price Yesterday: IBM $150.70 -$3.61 -2.34% 

Profit Snapshot: +$12.72

I sold my highest cost shares. Item # 1. A. Bought 2 IBM at $148.78 (4/26/18 Post)

My average cost per share was reduced to $132.91 from $135.38.

Last Purchase Discussion: Item # 1.A. Bought 1 IBM at $108.48 (1/23/19 Post)

Last Substantive Discussion:  Item # 1.A. (11/21/18 Post)

Dividend: Quarterly at $1.62 per share ($6.48 annually)

I view this stock as a bond substitute which governs my goal from owning shares.

Last Ex Dividend: 2/7/20

Dividend Yield at  $132.91= 4.88%

Last Earnings Report (Q/E 12/31/2019): SEC Filed Press Release

SEC Filed Non-GAAP Supplemental Material

Maximum Position: 20 Shares + shares purchased with dividends

Current Position: 10+ shares

Purchase Restriction: Based on the last earnings report, I changed the purchase restriction from the Small Ball Rule to a purchase price lower than my average cost per share number.

C. Sold 2 DUK at $97.05:

Profit Snapshot: +$15.29

Quote: Duke Energy Corp. (DUK)
DUK Analyst Estimates | MarketWatch
SEC Filings
Investors - Our Company - Duke Energy

Closing Price Yesterday: DUK $101.28 +$1.17 +1.17% 

My average cost per share was reduced to $88.47. 

Last Discussed: Item # 2.A. Bought 2 DUK at $86.55 (12/7/19 Post); Item # 3.A. Bought 2 DUK at $87.94 and 3 at $87.65 (11/16/19 Post)

Dividend: Quarterly at $.945 per share ($3.79 annually), raised from $.927 effective for the 2019 third quarter payment

Dividend Information- Duke Energy

Dividend Yield at $88.47 = 4.28%

I view this position as a bond substitute.

Last Ex Dividend Date: 2/13/20 (last Thursday)

Last Earnings Report (Q/E 12/31/20): This report was released on 2/13/20 after my pare. SEC Filed Press Release

Non-GAAP of  $.91, beating the consensus estimate by 4 cents. 

Duke Energy Corp (DUK) CEO Lynn Good on Q4 2019 Results - Earnings Call Transcript | Seeking Alpha

5 Year Chart as of 2/11/20:

This pare was caused by looking at the five year chart. Note the price topping at $97+ on 10/4/19 and then declining to $87 in November. The stock hit a new all time high in response to the earnings report released on 2/13 and discussed above. 

D. Bought 10 SKT at $13.9; 10 at $13.41; 10 at $13.25 and 10 at $13.05 :

Prior to these averaging down buys, my average cost per share was $14.34.

Closing Price Yesterday: SKT $13.01 -$0.11 -0.84%  Falling Knife

Quote: Tanger Factory Outlet Centers Inc.

10-Q for the Q/E 9/30/19 (debt listed at page 22; share repurchases discussed at page 27-needs to be expanded at current price levels)

SEC Filings

It is impossible to know how much of the recent decline is associated with a large ETF having to sell its substantial position. ETF may be forced to unload chunk of Tanger Factory stake-SPDR S&P Dividend ETF (SDY)-Seeking Alpha That ETF is no longer reporting a position as of 2/13/20. SDY: SPDR® S&P® Dividend ETF (download positions into Excel)

Yahoo Finance has the short position at 62.55% of the outstanding shares as of 1/30/2020. SKT Something needs to happen to scare those shorts into covering. A major stock buyback might cause that to happen. 

Investment Category: Equity REIT Common and Preferred Stock Basket Strategy

Last Sell Discussions: Item # 1.C. Sold 10 SKT at $16.73 (1/29/20 Post)(discussed 2019 4th quarter report in that post, SEC Filed Earnings Press Release 2019 4th quarter); Item # 1.A. Sold 50 SKT at $16.85 (9/28/19 Post)

Last Buy Discussion: Item # 1.D. Bought 10 SKT at $14.08 (1/11/20 Post) I discussed the 2019 third quarter report in that post.

Average Cost per share this Account: $13.8

Dividend: Quarterly at $.3575 ($1.43 annually)

Last Ex Dividend Date: 1/30/20

Next Ex Dividend Date: 4/29/20

Dividend Yield at Current Average Cost = 10.36%

Dividend Reinvestment: Yes 

On 1/29/20, KeyBanc cut the PT to $12 from $13 and kept an underweight recommendation. I do not have access to that report.

5 Year Chart as of 2/12/20: Major Bear Market/Widow Maker

E. Sold 50 UBS at $13.16:

Profit Snapshot: +$124.98

Item # 3.B. Bought 50 UBS at $10.66 (9/14/19 Post)

Quote: UBS Group AG  (U.S.: NYSE)
UBS Group AG Consensus Analyst E.P.S. Estimates

Dividend: Annually

Detailed dividend payment history | UBS Global

2020 Dividend: US$.73 per share

UBS proposes annual dividend of $0.73/share - UBS Group AG (NYSE:UBS) | Seeking Alpha

Ex Dividend: 5/5/20

I will be looking for an opportunity to buy this one back before the ex dividend date, but the price will need to be below $11.

Last Earnings Report (Q/E 12/31/19):

UBS Group AG (UBS) CEO Sergio Ermotti on Q4 2019 Results - Earnings Call Transcript | Seeking Alpha

2. Intermediate Term Corporate Bonds:

A. Sold 1 Public Service E & G 2.25% First Mortgage Bond Maturing on 9/15/26 at 101.66:

Note the unexplained $7.75 "misc fee" in addition to the standard $1 bond commission. 

I inquired about that unexplained charge on 2/10 and received this entirely unsatisfactory response on 2/14 from Interactive Brokers:

Why was I charged a a $7 exchange fee and a $1 execution fee in addition to the $1 IB commission?  

I have decided to quit trading bonds at IB. I view those charges as hidden fees. I have questions whether they were even properly incurred or charged to me.     

As to the so called "FINRA Trading Activity Fee" of $.75, for example, I doubt that any fee was even assessed against my 1 bond trade. If one was, it is my understanding that it would be no more than $.00075 for 1 bond, see page 2 Trading Activity Fee (TAF) Rule Flow - Equities.  

YTM at 101.66 = 2.053%

For a bond maturing in over 6 years, a 2.053% YTM is one indicia of why investors are buying stocks. This YTM, unadjusted for taxes, is likely to be below the inflation rate.

Finra Page Prospectus not linked

Pricing Supplement to Prospectus

Profit Snapshot: $59.04

Item # 2.A. Bought 1 Public Service Electric and Gas First Mortgage Bond at a Total Cost of 94.387 (5/28/17 Post)

Issuer: Wholly owned subsidiary of Public Service Enterprise Group Inc. (PEG)

This bond was held in my Interactive Brokers account.

I have really soured on Interactive Brokers and would have already moved my account to another broker but for the lower commissions for foreign stock exchange trades and currency exchanges.

This is a 2/12 currency conversion from USDs to CADs, where IB took a $2 commission which is built into the conversion exchange rate: 

US$2,000 Bought C$2,648.82

The commission that Schwab or Fidelity would charge $20 for this $2000 currency exchange.  USD / CAD Currency Chart 

Material problems at Interactive Brokers include (1) having to pay for real time quotes which I refuse to do; (2) poor customer service IMO which I would describe as easily the worst among my brokers; and (3) cumbersome and incomplete downloads into TurboTax that required me to purchase third party software as an intermediary and even then I have to add information into Schedule D.  

Besides these hidden and unexplained fees that ate up what would be my profit from this bond transaction when sold at another broker, I am still paying a $1 commission for up to 100 share trades on U.S. stock exchanges.

The only explanation for Barron's rating IB as the #1 online broker is that the persons rating this broker do not actually use it IMO. 

I see no reason to use Interactive Brokers for trading on U.S. stock exchanges and would strongly recommend against it. 

That recommendation is for cash only investors who do not trade options and futures. I am not familiar with margin interest rates offered by brokers since I am a cash only investor. Since I do not trade options or futures, I can not compare IB with other brokers for those trades. 

There was a reason to put up with this broker's many shortcomings when my other brokers were charging higher commissions for trades on U.S. stock exchanges. 

I am not going to buy any more bonds or U.S. traded securities in that account, and will simply allow my remaining bonds to run off. 

Eventually, I will liquidate my foreign securities and convert the proceeds back into USDs, which is when I will transfer all assets out of IB to another broker. 

3. Canadian Reset Equity Preferred Stocks:

A. Added 50 ENBPRP at C$16.47 (C$ IB Commission):

Quote: Enbridge Preferred Series P (ENB-PP.TO)

This Canadian equity preferred stock just reset its coupon for five years at 4.35%, which is higher than the 4% coupon paid during the five year fixed coupon period.  The reset is based on a 2.5% spread to 5 year Canadian government bond.  Enbridge Provides Notice of Series P Preferred Shares Conversion Right and Announces Reset Dividend Rates 

The 4.35% coupon will last to, but excluding 3/1/24. At that time, Enbridge can redeem at par value plus accrued and unpaid dividends. 

At a TC of C$16.47, the dividend yield at 4.35% would be 6.6% (computation: .0435 x. C$25 par value = C$1.0875 annual dividend per share ÷ C$16.47 = 6.6%) 

If ENB does not redeem, then the coupon will reset at a 2.5% spread to the then existing 5 year Canadian bond. This kind of provision provides a rolling five year call protection for the owners. 

Unlike a U.S. equity preferred stock, the option to redeem arises for a brief period once every 5 year. Enbridge can not redeem this preferred stock until 3/1/2024. And if the redemption is not exercised during that brief time window in 2024, ENB would lose the option to redeem until 2029. 

Given my purchase at a steep 34% discount to par value, I would want ENB to exercise its optional redemption right but it may never do so.  

Par Value: C$25 

The prospectus can be found here: Preferred Shares and Hybrid Securities - Enbridge Inc.

Dividends: Quarterly and Cumulative

This brings me up to 200 shares. Item # 2.A. Bought 50 ENBPRP at C$ 15.68 (11/27/19 Post); Item # 4.A. Bought 100 ENBPRP:CA at C$16.5 (3/20/19 Post)

At the current coupon rate, 200 shares will generate C$217.5 annually in dividends paid in CADs after Canada withholds its 15% bounty. 

Prior Round-Trips: Item # 4.A. Sold 200 ENBPRP at C$19.91 (3/25/17 Post)(realized gain snapshot= C$963). That post also contains a snapshot of a 300 share round-trip that netted U.S.$1,458.25. That 300 share lot was bought at C$12.39. Update For Exchange Traded Bond And Preferred Stock Basket Strategy As Of 2/29/16 - South Gent | Seeking Alpha Fidelity converts the CAD profit into USDs while I have to wait for IB to send out a 1099 showing the reportable USD profit.

I include snapshots of the round-trip Canadian reset equity preferred stocks in the Advantages and Disadvantages of Equity Preferred Floating Rate Securities post. 

This security went ex dividend the day after I bought this 50 share lot.

Last Ex Dividend Date: 2/13/20

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.