Economy:
Morgan Stanley releases new forecast showing U.S. economy may drop as much as 38% in the 2nd quarter - MarketWatch
Job losses could total 47 million, unemployment rate of 32%, Fed says
The BLS reported last Friday that the economy shed 701,000 jobs in March. Employment Situation Summary Average hourly earnings reportedly increased 3.1% over the past year. The average work week fell by .2 of an hour. Employment gains for January and February were revised down by 57K. The U-6 number rose to 8.7% from 7%. Table A-15. Alternative measures of labor underutilization That number will be rising fast along with job losses. Payrolls drop by 701,000, unemployment rate rises to 4.4% from 3.5% The worst is yet to come.
Coronavirus 'way worse than the global financial crisis,' IMF says
Jobs report: Household survey shows nearly 3 million out of work The 701K job loss comes from the BLS survey of employers.
The U.S. officially lost 701,000 jobs in March, but in reality millions vanished - MarketWatch
ADP reported that private employers cut only 27K jobs vs. expectations of a 125K loss. ADP National Employment Report | March 2020; ADP jobs report: Companies cut 27,000 jobs before the worst of the coronavirus
The ADP number does not reflect what actually happened in March. Jobless claims leap record 6.6 million at end of March as coronavirus triggers mass layoffs - MarketWatch I am assuming that ADP did not include the 1 million or so layoffs in the March report but will do so when it releases its April report.
It is practically a given now that a broad shutdown will continue through April.
At least Donald has finally accepted the medical reality. Coronavirus: Trump extends social distancing guidelines through April 30
Brace for the ‘deepest recession on record,’ says BofA analysts, as jobless claims surge to 6.6 million-MarketWatch That is a reasonable prediction, but investors have already accepted that the second quarter will be a disaster.
U.S. service sector continued to expand in March, ISM says - MarketWatch ISM's services PMI for March was reported at 52.5, down from 57.3% in March. Any number over 50 indicates an ongoing expansion. Any PMI report for March that shows expansion is immediately suspect.
The question is whether a robust recovery can start no later than the third quarter and definitely avoid being delayed into 2021.
With depression like conditions continuing into the third quarter and no positive GDP growth in the 4th quarter, the likelihood of a Financial Armageddon scenario will increase substantially IMO.
That kind of scenario would most likely be triggered by widespread debt defaults and blowups of various derivative and other complex financial instruments that would make the 2008 debt bomb implosion look tame in comparison.
There is after all more than $90 trillion more worldwide debt now than back in 2007. (note the last compilation that I have seen was $72 trillion in new debt starting in 2009 through the 2017 third quarter Global debt: An interactive data visualization | McKinsey
The current estimate is that global debt closed at $253 trillion in last year's third quarter. The world is drowning in debt - CNN So if that is close, call it somewhere near $260 trillion now and about to expand parabolically.
The world's financial system is simply in a more precarious state when a worldwide depression comes into contact with excessive debt levels. The depressionary conditions can not continue for long before there is another catastrophic debt implosion.
Morgan Stanley releases new forecast showing U.S. economy may drop as much as 38% in the 2nd quarter - MarketWatch
Job losses could total 47 million, unemployment rate of 32%, Fed says
The BLS reported last Friday that the economy shed 701,000 jobs in March. Employment Situation Summary Average hourly earnings reportedly increased 3.1% over the past year. The average work week fell by .2 of an hour. Employment gains for January and February were revised down by 57K. The U-6 number rose to 8.7% from 7%. Table A-15. Alternative measures of labor underutilization That number will be rising fast along with job losses. Payrolls drop by 701,000, unemployment rate rises to 4.4% from 3.5% The worst is yet to come.
Coronavirus 'way worse than the global financial crisis,' IMF says
Jobs report: Household survey shows nearly 3 million out of work The 701K job loss comes from the BLS survey of employers.
The U.S. officially lost 701,000 jobs in March, but in reality millions vanished - MarketWatch
ADP reported that private employers cut only 27K jobs vs. expectations of a 125K loss. ADP National Employment Report | March 2020; ADP jobs report: Companies cut 27,000 jobs before the worst of the coronavirus
The ADP number does not reflect what actually happened in March. Jobless claims leap record 6.6 million at end of March as coronavirus triggers mass layoffs - MarketWatch I am assuming that ADP did not include the 1 million or so layoffs in the March report but will do so when it releases its April report.
It is practically a given now that a broad shutdown will continue through April.
At least Donald has finally accepted the medical reality. Coronavirus: Trump extends social distancing guidelines through April 30
Brace for the ‘deepest recession on record,’ says BofA analysts, as jobless claims surge to 6.6 million-MarketWatch That is a reasonable prediction, but investors have already accepted that the second quarter will be a disaster.
U.S. service sector continued to expand in March, ISM says - MarketWatch ISM's services PMI for March was reported at 52.5, down from 57.3% in March. Any number over 50 indicates an ongoing expansion. Any PMI report for March that shows expansion is immediately suspect.
The question is whether a robust recovery can start no later than the third quarter and definitely avoid being delayed into 2021.
With depression like conditions continuing into the third quarter and no positive GDP growth in the 4th quarter, the likelihood of a Financial Armageddon scenario will increase substantially IMO.
That kind of scenario would most likely be triggered by widespread debt defaults and blowups of various derivative and other complex financial instruments that would make the 2008 debt bomb implosion look tame in comparison.
There is after all more than $90 trillion more worldwide debt now than back in 2007. (note the last compilation that I have seen was $72 trillion in new debt starting in 2009 through the 2017 third quarter Global debt: An interactive data visualization | McKinsey
The current estimate is that global debt closed at $253 trillion in last year's third quarter. The world is drowning in debt - CNN So if that is close, call it somewhere near $260 trillion now and about to expand parabolically.
The world's financial system is simply in a more precarious state when a worldwide depression comes into contact with excessive debt levels. The depressionary conditions can not continue for long before there is another catastrophic debt implosion.
As I mentioned earlier, an important development on the path to normalcy is the ability to receive COVID-19 test results quickly. Coronavirus: FDA authorizes Abbott Labs' 5-minute COVID-19 test Abbott's test device is the size of a toaster and is portable to point-of-care locations. Workers can be tested before entering the workplace. Those who are identified as having COVID-19 can then be quickly isolated and treated if necessary.
Coronavirus: Cramer says science can prevent economy from a depression
World's busiest border falls quiet with millions of Mexicans barred from U.S. - Reuters
China reports March manufacturing PMI amid coronavirus outbreak
Germany faces big growth hit in first half, second-half recovery possible: minister - Reuters
U.K. government forces banks to lend to small businesses on the brink of collapse - MarketWatch
Why the Global Recession Could Last a Long Time - The New York Times (quotes Kenneth S. Rogoff, author of “This Time Is Different: Eight Centuries of Financial Folly ”: "“I feel like the 2008 financial crisis was just a dry run for this. . This is already shaping up as the deepest dive on record for the global economy for over 100 years. Everything depends on how long it lasts, but if this goes on for a long time, it’s certainly going to be the mother of all financial crises.”
Banks warn of 'utter chaos' in new small business lending program
The ‘red’ states on this map are putting the rest of the country at risk amid the spreading coronavirus pandemic - MarketWatch This should surprise no one.
Protecting Your Family From COVID-19 by Dr. David Price - YouTube
Coronavirus: Cramer says science can prevent economy from a depression
World's busiest border falls quiet with millions of Mexicans barred from U.S. - Reuters
China reports March manufacturing PMI amid coronavirus outbreak
U.K. government forces banks to lend to small businesses on the brink of collapse - MarketWatch
Why the Global Recession Could Last a Long Time - The New York Times (quotes Kenneth S. Rogoff, author of “This Time Is Different: Eight Centuries of Financial Folly ”: "“I feel like the 2008 financial crisis was just a dry run for this. . This is already shaping up as the deepest dive on record for the global economy for over 100 years. Everything depends on how long it lasts, but if this goes on for a long time, it’s certainly going to be the mother of all financial crises.”
Banks warn of 'utter chaos' in new small business lending program
The ‘red’ states on this map are putting the rest of the country at risk amid the spreading coronavirus pandemic - MarketWatch This should surprise no one.
Protecting Your Family From COVID-19 by Dr. David Price - YouTube
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Markets and Market Commentary:
Jeffrey Gundlach says the coronavirus sell-off will worsen again in April, taking out the March low
Coronavirus unleashing an 'economic shock wave,' Mark Yusko warns
Moody's cuts outlook on $6.6 trillion US corporate debt pile to 'negative'
Oil drops more than 6% to 18-year low as global demand evaporates (3/30 article)
It certainly looks like the FED has some responsibility for blowing up the MREITs. Mortgage bankers warn Fed purchases of mortgages unbalanced market, forcing margin calls
As the Fed steps into the municipal bond market, will it be enough? - MarketWatch
Prices of publicly traded securities tell a story.
The story is about the future.
The prices for regional bank stocks and BDCs are currently telling a grim story for the U.S. economy that includes massive and rapidly accelerating credit defaults.
Father of Wall Street's 'fear gauge' sees wild volatility continuing until coronavirus cases peak I doubt that much upside is possible, other than as a short term trade, until infections peak and fall significantly, or a vaccine becomes available which is probably a 2021 event as a best case scenario.
Why do so many people need financial help? - MarketWatch Calls by millennials to their parents have probably surged in recent days.
Stanley Black & Decker withdraws 2020 guidance over coronavirus, reins in costs - MarketWatch
OPEC+ virtual meeting in doubt for Monday after Saudi Arabia sharply criticizes Russia - MarketWatch Oil rallied last week based on Trump's claim that he had brought OPEC and Russia together on production cuts.
+++++
Portfolio Management:
As of last Friday the current 7 day yield on Fidelity Government Money Market fund was .07%:
The result of the FED's 10+ year Jihad Against the Savings Class is shown in this snapshot:
My general approach continues to be extreme caution.
I am keeping a very large cash reserve.
Since I am unlikely to reinvest all or even most of proceeds received from maturing bonds, treasury bills and CDs, the cash pile will be growing from already elevated levels in the coming months.
For common stock purchases, it may take as many as 20 purchases before I reach 100 shares.
I am using the small ball "buying program" strategy to restart positions in stock ETFs that were jettisoned last December. The wave "buy programs" usually occur on big down days and will definitely happen when the market is headed for a new 52 week low.
Those ETFs include the following: ProShares S&P 500 Dividend Aristocrats ETF (NOBL) and Fidelity High Dividend ETF (FDVV)
I will also use a few Fidelity mutual funds in future small ball "buying programs". I can buy those with no minimums at Fidelity. I will focus on two of them for now: Fidelity Select Technology Portfolio (FSPTX) and Fidelity Contrafund (FCNTX)(mentioned below)
Over the past 2 to 3 weeks, I substantially increased my purchases of high quality corporate bonds maturing within 1 year. The opportunities in that space have mostly disappeared, though it may be possible to pick up some strays with limit orders. Last Friday, I had no fills on 10 limit buy orders.
The window of opportunity for purchases of those short term corporate bonds lasted for about 2 weeks. I diverted over $100K in cash held in money market funds into those purchases. The Fidelity Government MM fund is now yielding less than .1%. The YTMs on the bond purchases mostly fell into the 4% to 6% range.
The nation has entered a quarter that will probably have the worst economic numbers in U.S. history, higher than any quarter during the Great Depression.
Millions of households, who were on the brink of financial disaster before the pandemic, will be unable to pay their bills.
The stimulus checks may allow them to put food on the table and to pay utility bills when they start to arrive in a few weeks, but will be insufficient to pay or partially pay 1 month's rent and most other expenses.
The impact of going from full employment to a record unemployment number within 30 days is not fully understood, both as to the present consumer spending and to future consumer spending based on psychological trauma resulting from what is happening now and about to happen.
The massive increases in federal spending, coupled with losses in federal revenues due to the deep recession, will cause close to a $4 trillion dollar budget deficit in 2020 or about 4 times more than the entire U.S. debt in 1980.
The Day of Reckoning is consequently moved closer to the present, when a financial disaster of epic proportions can not be averted by issuing trillions more in new government debt since the inability to refinance all of the maturing debt, without the FED engaging in a massive debt monetization, precipitated the Day of Reckoning.
Stanley Black & Decker withdraws 2020 guidance over coronavirus, reins in costs - MarketWatch
OPEC+ virtual meeting in doubt for Monday after Saudi Arabia sharply criticizes Russia - MarketWatch Oil rallied last week based on Trump's claim that he had brought OPEC and Russia together on production cuts.
Portfolio Management:
As of last Friday the current 7 day yield on Fidelity Government Money Market fund was .07%:
 |
| Fidelity Government Money Market Fund |
I am keeping a very large cash reserve.
Since I am unlikely to reinvest all or even most of proceeds received from maturing bonds, treasury bills and CDs, the cash pile will be growing from already elevated levels in the coming months.
For common stock purchases, it may take as many as 20 purchases before I reach 100 shares.
I am using the small ball "buying program" strategy to restart positions in stock ETFs that were jettisoned last December. The wave "buy programs" usually occur on big down days and will definitely happen when the market is headed for a new 52 week low.
Those ETFs include the following: ProShares S&P 500 Dividend Aristocrats ETF (NOBL) and Fidelity High Dividend ETF (FDVV)
I will also use a few Fidelity mutual funds in future small ball "buying programs". I can buy those with no minimums at Fidelity. I will focus on two of them for now: Fidelity Select Technology Portfolio (FSPTX) and Fidelity Contrafund (FCNTX)(mentioned below)
Over the past 2 to 3 weeks, I substantially increased my purchases of high quality corporate bonds maturing within 1 year. The opportunities in that space have mostly disappeared, though it may be possible to pick up some strays with limit orders. Last Friday, I had no fills on 10 limit buy orders.
The window of opportunity for purchases of those short term corporate bonds lasted for about 2 weeks. I diverted over $100K in cash held in money market funds into those purchases. The Fidelity Government MM fund is now yielding less than .1%. The YTMs on the bond purchases mostly fell into the 4% to 6% range.
The nation has entered a quarter that will probably have the worst economic numbers in U.S. history, higher than any quarter during the Great Depression.
Millions of households, who were on the brink of financial disaster before the pandemic, will be unable to pay their bills.
The stimulus checks may allow them to put food on the table and to pay utility bills when they start to arrive in a few weeks, but will be insufficient to pay or partially pay 1 month's rent and most other expenses.
The impact of going from full employment to a record unemployment number within 30 days is not fully understood, both as to the present consumer spending and to future consumer spending based on psychological trauma resulting from what is happening now and about to happen.
The massive increases in federal spending, coupled with losses in federal revenues due to the deep recession, will cause close to a $4 trillion dollar budget deficit in 2020 or about 4 times more than the entire U.S. debt in 1980.
The Day of Reckoning is consequently moved closer to the present, when a financial disaster of epic proportions can not be averted by issuing trillions more in new government debt since the inability to refinance all of the maturing debt, without the FED engaging in a massive debt monetization, precipitated the Day of Reckoning.
+++++
Trump:
February 24:
March 9th Trump Tweet:
Trump administration's lack of a unified coronavirus strategy will cost lives, say a dozen experts
Inside the coronavirus testing failure: Alarm and dismay among the scientists who sought to help
Trump does not believe a national pandemic requires a coordinated national response with the President leading the way. The United States leads in coronavirus cases, but not pandemic response-AAAS; Trump ended coronavirus detection pandemic program - Los Angeles Times
Denial and dysfunction plagued U.S. government as coronavirus raged - The Washington Post In TrumpWorld, inhabited by almost 50% of the American population, Donald's handling of this crisis is graded either at A or A+.
After Jared Kushner redefined the "national stockpile" of respirators and personal protective equipment as being for the federal government, the Trump Administration changed the webpage at HHS to conform to Kushner's redefinition. Coronavirus: After Kushner, 'national stockpile' redefined
This is what the HHS website said before Kushner's statement:
“When state, local, tribal, and territorial responders request federal assistance to support their response efforts, the stockpile ensures that the right medicines and supplies get to those who need them most during an emergency.”
After Trump and his son-in law decided to change the scope of federal assistance and responsibilities during national emergencies, HHS redefined what the government's role by deleting the sentence quoted above and then replacing it with the following:
“The Strategic National Stockpile’s role is to supplement state and local supplies during public health emergencies. Many states have products stockpiled, as well. The supplies, medicines, and devices for life-saving care contained in the stockpile can be used as a short-term stopgap buffer when the immediate supply of adequate amounts of these materials may not be immediately available.”
After Kushner says 'it's our stockpile,' HHS website changed to echo his comments on federal crisis role - ABC News
The Trump Administration is distributing much needed items to private distributors who can then sell the product for a profit. This practice leads to states bidding against one another for essential medical supplies. NBC News - Navy Rear Adm. John Polowczyk: "I'm not here to disrupt a supply chain"; Bidding wars break out as cities, states, hospitals struggle to procure personal protective equipment - ABC7 Los Angeles
U.S. could face 200,000 coronavirus deaths, millions of cases, Fauci warns The issue with this kind of virus is that it only takes one infected person to start the ball rolling. This virus does not respect borders or quarantines. The only way to stop the ball rolling altogether is to develop an effective vaccine.
Dr. Birx predicts up to 200,000 U.S. coronavirus deaths 'if we do things almost perfectly'
WHO says 'more and more' young people are dying from the coronavirus
Fauci urges nationwide stay-at-home order: ‘I don’t understand why that’s not happening’ - MarketWatch
Mike Pence was on the phone to Thai officials last week requesting medical supplies from that country. He was informed that the U.S. had just shipped those same supplies to Thailand. Pence task force freezes coronavirus aid amid backlash-POLITICO; US freezes shipments of protective gear overseas The Trump Administration realized on March 27, 2020 that the U.S. government was shipping personal protective equipment to foreign countries.
Trump sent to China in February 17.8 million tons of medical supplies now urgently needed by U.S. hospitals. Trump administration sent protective medical gear to China while he was minimizing the virus threat to US,
See: The United States Announces Assistance To Combat the Novel Coronavirus - United States Department of State
According to Donald's revisionist history, he knew then that there would be a devastating pandemic in the U.S. long before the World Health Organization declared one.
If that claim is true, a reasonable question to ask is why did his Administration send 18 tones of medical supplies from the U.S. to China last February.
The Trump Administration did not renew a contract to maintain the ventilators held in reserve. As a result, over 20% of the ventilators in the federal government's reserve no longer work. A Ventilator Stockpile, With One Hitch: Thousands Do Not Work - The New York Times
Fact check: Trump again misleads on ventilator shortages and coronavirus timeline at off-topic briefing
February 24:
 |
| Don the Magnificent Has it Under Control-Buy Stocks the Duck Recommends |
 |
| Just Another Juvenile Tweet-One Among Thousands |
Inside the coronavirus testing failure: Alarm and dismay among the scientists who sought to help
Trump does not believe a national pandemic requires a coordinated national response with the President leading the way. The United States leads in coronavirus cases, but not pandemic response-AAAS; Trump ended coronavirus detection pandemic program - Los Angeles Times
Denial and dysfunction plagued U.S. government as coronavirus raged - The Washington Post In TrumpWorld, inhabited by almost 50% of the American population, Donald's handling of this crisis is graded either at A or A+.
After Jared Kushner redefined the "national stockpile" of respirators and personal protective equipment as being for the federal government, the Trump Administration changed the webpage at HHS to conform to Kushner's redefinition. Coronavirus: After Kushner, 'national stockpile' redefined
This is what the HHS website said before Kushner's statement:
“When state, local, tribal, and territorial responders request federal assistance to support their response efforts, the stockpile ensures that the right medicines and supplies get to those who need them most during an emergency.”
After Trump and his son-in law decided to change the scope of federal assistance and responsibilities during national emergencies, HHS redefined what the government's role by deleting the sentence quoted above and then replacing it with the following:
“The Strategic National Stockpile’s role is to supplement state and local supplies during public health emergencies. Many states have products stockpiled, as well. The supplies, medicines, and devices for life-saving care contained in the stockpile can be used as a short-term stopgap buffer when the immediate supply of adequate amounts of these materials may not be immediately available.”
After Kushner says 'it's our stockpile,' HHS website changed to echo his comments on federal crisis role - ABC News
The Trump Administration is distributing much needed items to private distributors who can then sell the product for a profit. This practice leads to states bidding against one another for essential medical supplies. NBC News - Navy Rear Adm. John Polowczyk: "I'm not here to disrupt a supply chain"; Bidding wars break out as cities, states, hospitals struggle to procure personal protective equipment - ABC7 Los Angeles
U.S. could face 200,000 coronavirus deaths, millions of cases, Fauci warns The issue with this kind of virus is that it only takes one infected person to start the ball rolling. This virus does not respect borders or quarantines. The only way to stop the ball rolling altogether is to develop an effective vaccine.
Dr. Birx predicts up to 200,000 U.S. coronavirus deaths 'if we do things almost perfectly'
WHO says 'more and more' young people are dying from the coronavirus
Fauci urges nationwide stay-at-home order: ‘I don’t understand why that’s not happening’ - MarketWatch
Mike Pence was on the phone to Thai officials last week requesting medical supplies from that country. He was informed that the U.S. had just shipped those same supplies to Thailand. Pence task force freezes coronavirus aid amid backlash-POLITICO; US freezes shipments of protective gear overseas The Trump Administration realized on March 27, 2020 that the U.S. government was shipping personal protective equipment to foreign countries.
Trump sent to China in February 17.8 million tons of medical supplies now urgently needed by U.S. hospitals. Trump administration sent protective medical gear to China while he was minimizing the virus threat to US,
See: The United States Announces Assistance To Combat the Novel Coronavirus - United States Department of State
According to Donald's revisionist history, he knew then that there would be a devastating pandemic in the U.S. long before the World Health Organization declared one.
If that claim is true, a reasonable question to ask is why did his Administration send 18 tones of medical supplies from the U.S. to China last February.
The Trump Administration did not renew a contract to maintain the ventilators held in reserve. As a result, over 20% of the ventilators in the federal government's reserve no longer work. A Ventilator Stockpile, With One Hitch: Thousands Do Not Work - The New York Times
Fact check: Trump again misleads on ventilator shortages and coronavirus timeline at off-topic briefing
Coronavirus Live Updates: Grim Models Project High U.S. Toll in Months-Long Crisis
Coronavirus COVID-19 (2019-nCoV)- John Hopkins running worldwide tally
Gov. Hogan (R-_MD) Critical Of Trump Administration, FEMA’s Lack Of Coordination On COVID-19 Tests, Supplies-CBS Baltimore;
Maryland’s Governor, a Republican, Is Willing to Spar With Trump for Supplies
Trump’s botched response and the lack of testing, explained - Vox;
Why Trump's Coronavirus Response Was Never Going to Work | Time;
Trump blames states for lack of supplies-The Guardian
He blames governors and mayors for whining about shortages, suggesting that their requests are merely political attacks on him, and claiming that the federal government is merely a backstop in a national crisis.
More than 1,000 in US die in a single day from coronavirus, doubling the worst daily death toll of the flu (4/2/2020)- FACT CHECK: Coronavirus Is Not The Flu, Despite Trump's Comparison-NPR; Trump's Deadly Mistake in Comparing Coronavirus to Flu
Coronavirus COVID-19 (2019-nCoV)- John Hopkins running worldwide tally
Gov. Hogan (R-_MD) Critical Of Trump Administration, FEMA’s Lack Of Coordination On COVID-19 Tests, Supplies-CBS Baltimore;
Maryland’s Governor, a Republican, Is Willing to Spar With Trump for Supplies
Trump’s botched response and the lack of testing, explained - Vox;
Why Trump's Coronavirus Response Was Never Going to Work | Time;
Trump blames states for lack of supplies-The Guardian
He blames governors and mayors for whining about shortages, suggesting that their requests are merely political attacks on him, and claiming that the federal government is merely a backstop in a national crisis.
 |
| 4/2/20 Tweet |
President Trump touts his ‘astounding’ TV ratings, compares his coronavirus press briefings to ‘The Bachelor’ - MarketWatch At least we know what is really important to Donald. He has turned the daily coronavirus briefing into yet another self promotion scheme.
Teflon Don has given more time to Trumpster CEOs at his COVID-19 briefings than the medical professionals. Corporate executives play an outsize role at Trump’s coronavirus briefings - The Washington Post
On 3/31, Trump gave time for the "My Pillow" pitchman, Michael J. Lindell, to do an informercial and religious sermon:
Lindell: “God gave us grace on November 8, 2016, to change the course we were on. God had been taken out of our schools and lives. A nation had turned its back on God. . Thank you, Mr. President, for your call to action, which has empowered companies like “My Pillow” to help our nation win this invisible war." The Trumpster CEOs praise Donald effusively and, by doing so, earn the Duck's gratitude as President.
I can understand why Donald, the guy who gave us Trump University, is so simpatico with MY Pillow's pitchman: MyPillow accreditation revoked by the Better Business Bureau; BBB rates MyPillow with a "F". My Pillow, Inc. | Complaints | Better Business Bureau® Profile
When Montana's governor told Donald last week that his state was one day away from being unable to test anyone, Donald said he knew nothing about the shortage of test kits. I have been reading daily about those shortages for weeks. I have no doubt that Donald has been briefed about the shortages.
Leaked audio: Trump says “I haven’t heard” about coronavirus testing problem - Vox;
Governors plead for medical equipment from federal stockpile plagued by shortages and confusion - The Washington Post;
Trump Suggests Lack of Testing Is No Longer a Problem. Governors Disagree. - The New York Times
Fact check: Trump again touts unproven drugs for coronavirus (3/20/20)
A breakdown of false and misleading statements at Trump Rose Garden briefing (3/29/20)
Fact-checking President Trump’s marathon news conference - The Washington Post
Trump's idea to use scarf is unproven, doctors say
Trump and the Coronavirus Death Projections-FactCheck.org Trump claims that he just found out on 3/30, as a new revelation, that hundreds of thousands could die in the U.S. without immediate actions. Sitting at a desk in Brentwood, Tennessee, with no hot line to experts but only an internet connection and curiosity, I started to talk about those projections being made by experts in early March.
Donald is the primary source of Fake News. He is constantly making statements that are not true. He just makes stuff up. Trump's Premature Claim about Ventilator Production - FactCheck.org
Politifact rated these recent Trump statements "Pants on Fire": PolitiFact | Reporter was right: Trump did question governors’ ventilator requests; PolitiFact | Trump blames past administrations for a flawed COVID-19 test. The test couldn’t have existed earlier
Trump’s Virus Defense Is Often an Attack, and the Target Is Often a Woman - The New York Times Disgusting Don, the personification of a white republican Alpha Male, routinely views women as inferiors and woefully inadequate to perform a job competently.
When a black woman asked Donald about his statement that states were making requests for ventilators that were not needed, he snapped at her and made the following statement without answering the question of course: “Be nice. Don’t be threatening. Don’t be threatening. Be nice.” Donald will snap at women who mark him feel inferior, challenge him in any manner or ask him a question as part of their job that he does not want to answer.
Donald will become instantly hostile when anyone questions the revisionist history that he is writing, which will of course be accepted as gospel by the Trumpsters, notwithstanding the fact that Trump's own words, caught on tape or published on Twitter, contradict his attempts to revise recent history.
Trump administration sent protective medical gear to China while he was minimizing the virus threat to US
‘Where Are The Masks Going?’ Trump Questions Use Of Supplies As Coronavirus Cases Surge Trump's general approach is formulate conspiracy theories that are not grounded in fact to deflect from his own incompetence.
Liberty University Brings Back Its Students, and Coronavirus Fears, Too - The New York Times Jerry Falwell, a 100% pure Trumpster, runs Liberty University and, like Trump, has downplayed the pandemic comparing it to the flu. He dismissed concerns as a "overreaction" driven by liberals wanting to hurt the Messiah in the White House. Falwell made the following statements on March 11, 2020 during a "Fox and Friends" interview: “It’s just strange to me how many are overreacting” to the pandemic It makes you wonder if there is a political reason for that. Impeachment didn’t work and the Mueller report didn’t work and Article 25 didn’t work, and so maybe now this is their next attempt to get Trump.”
Falwell invited Liberty University's students back to campus and now many are displaying symptoms of COVID-19. Falwell, who claims to be a conservative, says the criticism of his actions are only motivated by anti-Christian sentiments. An authoritarian power structure brought coronavirus to Liberty University - The Washington Post
Far right reactionaries send their children for indoctrination at Liberty which now has close to 100,000 students. Falwell fits neatly into the modern day GOP.
‘Someone’s Gotta Tell the Freakin’ Truth’: Jerry Falwell’s Aides Break Their Silence - POLITICO Magazine; The Three Craziest Takeaways From Politico's Jerry Falwell Jr. Deep Dive | RELEVANT Magazine
Inside Liberty University’s ‘culture of fear’: How Jerry Falwell Jr. silences students and professors who reject his pro-Trump politics.-The Washington Post;
Jerry Falwell's Systematic Censorship at Liberty University Is Shocking—and Bound to Backfire; Jerry Falwell Jr. just unmasked social conservatism | Salon.com
Trump's bad character and incompetence has been obvious for decades. Tens of millions confuse continuous bragging about competence and actual competence.
Trump's areas of competence are shamelessness; creating a false image and brand; innate understanding of the gullible and uninformed and how to manipulate them; braggadocio like the world has rarely seen; daily doses of demagoguery; malignant narcissism that is so pervasive that it may deserve a #1 rating the the Guinness World Records; and making false statements all of the time about almost everything while being able to keep a straight and serious face. In TrumpWorld, those are all admirable qualities that parents need to teach their children.
Politicians desiring success can learn a lot from Donald. Lying works in American politics because so many are ignorant, stupid or both, and people became quickly bored with long sentences that contain real facts about critical issues facing the nation. 72 percent of Republicans think Trump is 'a good role model for children' Hopeless is a word that comes to mind.
Donald claims that his actions are "perfect". When confined to the preceding categories of competence, he has achieved perfection or at least as close as any human desiring to possess those qualities.
Medical Expert Who Corrects Trump Is Now a Target of the Far Right - The New York Times Trumpsters will direct their frenzied vitriol at anyone who contradicts Donald's reality creations with facts. The only requirement is that they become aware of someone having the gall to do it.
Teflon Don has given more time to Trumpster CEOs at his COVID-19 briefings than the medical professionals. Corporate executives play an outsize role at Trump’s coronavirus briefings - The Washington Post
On 3/31, Trump gave time for the "My Pillow" pitchman, Michael J. Lindell, to do an informercial and religious sermon:
Lindell: “God gave us grace on November 8, 2016, to change the course we were on. God had been taken out of our schools and lives. A nation had turned its back on God. . Thank you, Mr. President, for your call to action, which has empowered companies like “My Pillow” to help our nation win this invisible war." The Trumpster CEOs praise Donald effusively and, by doing so, earn the Duck's gratitude as President.
I can understand why Donald, the guy who gave us Trump University, is so simpatico with MY Pillow's pitchman: MyPillow accreditation revoked by the Better Business Bureau; BBB rates MyPillow with a "F". My Pillow, Inc. | Complaints | Better Business Bureau® Profile
When Montana's governor told Donald last week that his state was one day away from being unable to test anyone, Donald said he knew nothing about the shortage of test kits. I have been reading daily about those shortages for weeks. I have no doubt that Donald has been briefed about the shortages.
Leaked audio: Trump says “I haven’t heard” about coronavirus testing problem - Vox;
Governors plead for medical equipment from federal stockpile plagued by shortages and confusion - The Washington Post;
Trump Suggests Lack of Testing Is No Longer a Problem. Governors Disagree. - The New York Times
Fact check: Trump again touts unproven drugs for coronavirus (3/20/20)
A breakdown of false and misleading statements at Trump Rose Garden briefing (3/29/20)
Fact-checking President Trump’s marathon news conference - The Washington Post
Trump's idea to use scarf is unproven, doctors say
Trump and the Coronavirus Death Projections-FactCheck.org Trump claims that he just found out on 3/30, as a new revelation, that hundreds of thousands could die in the U.S. without immediate actions. Sitting at a desk in Brentwood, Tennessee, with no hot line to experts but only an internet connection and curiosity, I started to talk about those projections being made by experts in early March.
Donald is the primary source of Fake News. He is constantly making statements that are not true. He just makes stuff up. Trump's Premature Claim about Ventilator Production - FactCheck.org
Politifact rated these recent Trump statements "Pants on Fire": PolitiFact | Reporter was right: Trump did question governors’ ventilator requests; PolitiFact | Trump blames past administrations for a flawed COVID-19 test. The test couldn’t have existed earlier
Trump’s Virus Defense Is Often an Attack, and the Target Is Often a Woman - The New York Times Disgusting Don, the personification of a white republican Alpha Male, routinely views women as inferiors and woefully inadequate to perform a job competently.
When a black woman asked Donald about his statement that states were making requests for ventilators that were not needed, he snapped at her and made the following statement without answering the question of course: “Be nice. Don’t be threatening. Don’t be threatening. Be nice.” Donald will snap at women who mark him feel inferior, challenge him in any manner or ask him a question as part of their job that he does not want to answer.
Donald will become instantly hostile when anyone questions the revisionist history that he is writing, which will of course be accepted as gospel by the Trumpsters, notwithstanding the fact that Trump's own words, caught on tape or published on Twitter, contradict his attempts to revise recent history.
Trump administration sent protective medical gear to China while he was minimizing the virus threat to US
‘Where Are The Masks Going?’ Trump Questions Use Of Supplies As Coronavirus Cases Surge Trump's general approach is formulate conspiracy theories that are not grounded in fact to deflect from his own incompetence.
Liberty University Brings Back Its Students, and Coronavirus Fears, Too - The New York Times Jerry Falwell, a 100% pure Trumpster, runs Liberty University and, like Trump, has downplayed the pandemic comparing it to the flu. He dismissed concerns as a "overreaction" driven by liberals wanting to hurt the Messiah in the White House. Falwell made the following statements on March 11, 2020 during a "Fox and Friends" interview: “It’s just strange to me how many are overreacting” to the pandemic It makes you wonder if there is a political reason for that. Impeachment didn’t work and the Mueller report didn’t work and Article 25 didn’t work, and so maybe now this is their next attempt to get Trump.”
Falwell invited Liberty University's students back to campus and now many are displaying symptoms of COVID-19. Falwell, who claims to be a conservative, says the criticism of his actions are only motivated by anti-Christian sentiments. An authoritarian power structure brought coronavirus to Liberty University - The Washington Post
Far right reactionaries send their children for indoctrination at Liberty which now has close to 100,000 students. Falwell fits neatly into the modern day GOP.
‘Someone’s Gotta Tell the Freakin’ Truth’: Jerry Falwell’s Aides Break Their Silence - POLITICO Magazine; The Three Craziest Takeaways From Politico's Jerry Falwell Jr. Deep Dive | RELEVANT Magazine
Inside Liberty University’s ‘culture of fear’: How Jerry Falwell Jr. silences students and professors who reject his pro-Trump politics.-The Washington Post;
Jerry Falwell's Systematic Censorship at Liberty University Is Shocking—and Bound to Backfire; Jerry Falwell Jr. just unmasked social conservatism | Salon.com
Trump's bad character and incompetence has been obvious for decades. Tens of millions confuse continuous bragging about competence and actual competence.
Trump's areas of competence are shamelessness; creating a false image and brand; innate understanding of the gullible and uninformed and how to manipulate them; braggadocio like the world has rarely seen; daily doses of demagoguery; malignant narcissism that is so pervasive that it may deserve a #1 rating the the Guinness World Records; and making false statements all of the time about almost everything while being able to keep a straight and serious face. In TrumpWorld, those are all admirable qualities that parents need to teach their children.
Politicians desiring success can learn a lot from Donald. Lying works in American politics because so many are ignorant, stupid or both, and people became quickly bored with long sentences that contain real facts about critical issues facing the nation. 72 percent of Republicans think Trump is 'a good role model for children' Hopeless is a word that comes to mind.
Donald claims that his actions are "perfect". When confined to the preceding categories of competence, he has achieved perfection or at least as close as any human desiring to possess those qualities.
Medical Expert Who Corrects Trump Is Now a Target of the Far Right - The New York Times Trumpsters will direct their frenzied vitriol at anyone who contradicts Donald's reality creations with facts. The only requirement is that they become aware of someone having the gall to do it.
Fox News’ Laura Ingraham Forced to Delete Misleading Coronavirus Tweet – Variety
Alarm, Denial, Blame: The Pro-Trump Media’s Coronavirus Distortion - The New York Times
In a recent article written by Karen Swisher, she detailed how hard it was to convince her elderly mother, who only watched Fox "News", that she needed to take precautions. Opinion | Fox’s Fake News Contagion - The New York Times
Twitter DELETES Rudy Giuliani Lie About Coronavirus, Whitmer Showboat Rudy and Laura Ingraham are two of the leading providers of Fake News. Donald, of course, is the primary provider of Fake News in World History.
Alarm, Denial, Blame: The Pro-Trump Media’s Coronavirus Distortion - The New York Times
In a recent article written by Karen Swisher, she detailed how hard it was to convince her elderly mother, who only watched Fox "News", that she needed to take precautions. Opinion | Fox’s Fake News Contagion - The New York Times
Twitter DELETES Rudy Giuliani Lie About Coronavirus, Whitmer Showboat Rudy and Laura Ingraham are two of the leading providers of Fake News. Donald, of course, is the primary provider of Fake News in World History.
++++++++
All trades are commission free except as otherwise noted.
Small Ball Rules:
(1) Each purchase has to be at the lowest price in the chain;
(2) Purchases are made in small lots, using commission free trades;
(3) On price pops, I will consider selling my highest cost shares at a profit, no matter how small;
(4) Some positions will be eliminated altogether on price pops when the goal is achieved:
For some purchases, I scrap (1) above and substitute a purchase restriction that permits purchases when the price lowers my existing cost per share.
The overreaching goal is to reduce risk through a controlled trading strategy that realizes gains particularly through selling the highest cost lots that reduce my average cost per share which increases my dividend yield. When this works, I end up with less at risk money producing income at or near the highest yield.
Risks are controlled by a variety of techniques including the limitations on dollar exposures to each stock and on each purchase. The strategy is primarily one for bear markets that will be characterized by strong cyclical rallies and declines.
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. Risk is also controlled through small odd lot trades
1. Equity REIT Preferred Stocks:
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Sub-Category: Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks
A. Bought 10 GNLPRB at $17.7; 5 at $15.5; 10 at $15.11; 2 at $10.86; 3 at $15.49 (Fidelity account small ball):
As with other REIT preferred stocks the price collapse in early March as stock market volatility spiked and common stocks went into the crapper. On 3/5/20, GNLPRB closed at $25.05.
GNLPRB Information: IPO in November 2019
Coupon: 6.875%
Par Value: $25 Prospectus
Issuer: Global Net Lease Inc.
Issuer Issuer SEC Filings
Issuer Optional Redemption: on or after 11/26/24
Stopper Clause: Yes
Capital Structure Placement: Senior only to common stock, junior in priority to all debt
Average Cost Per Share This Account: $15
Dividend Yield at $15 Total Cost = 11.46%
Dividends: Quarterly, Cumulative and Non-Qualified (pass through entity)
I also own 100 shares in my Schwab account
Last Ex Dividend: 4/2/20 (all shares purchased prior thereto)
Maximum All Accounts: 150 shares
All trades are commission free except as otherwise noted.
Small Ball Rules:
(1) Each purchase has to be at the lowest price in the chain;
(2) Purchases are made in small lots, using commission free trades;
(3) On price pops, I will consider selling my highest cost shares at a profit, no matter how small;
(4) Some positions will be eliminated altogether on price pops when the goal is achieved:
For some purchases, I scrap (1) above and substitute a purchase restriction that permits purchases when the price lowers my existing cost per share.
The overreaching goal is to reduce risk through a controlled trading strategy that realizes gains particularly through selling the highest cost lots that reduce my average cost per share which increases my dividend yield. When this works, I end up with less at risk money producing income at or near the highest yield.
Risks are controlled by a variety of techniques including the limitations on dollar exposures to each stock and on each purchase. The strategy is primarily one for bear markets that will be characterized by strong cyclical rallies and declines.
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. Risk is also controlled through small odd lot trades
1. Equity REIT Preferred Stocks:
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Sub-Category: Advantages and Disadvantages of Equity REIT Cumulative Equity Preferred Stocks
A. Bought 10 GNLPRB at $17.7; 5 at $15.5; 10 at $15.11; 2 at $10.86; 3 at $15.49 (Fidelity account small ball):
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GNLPRB Information: IPO in November 2019
Coupon: 6.875%
Par Value: $25 Prospectus
Issuer: Global Net Lease Inc.
Issuer Issuer SEC Filings
Issuer Optional Redemption: on or after 11/26/24
Stopper Clause: Yes
Capital Structure Placement: Senior only to common stock, junior in priority to all debt
Average Cost Per Share This Account: $15
Dividend Yield at $15 Total Cost = 11.46%
Dividends: Quarterly, Cumulative and Non-Qualified (pass through entity)
Last Ex Dividend: 4/2/20 (all shares purchased prior thereto)
Maximum All Accounts: 150 shares
B. Added 50 BRGPRA at $24.65; 10 at $22.78; 10 at $20.5; 5 at $14.5; 5 at $16; 5 at $17.05; 1 at $14.89:
Issuer: Bluerock Residential Growth REIT (BRG)- An Apartment REIT
BRG 2019 Annual Report (mortgages on apartments listed at pages F-38 and F-39; information on revolving credit facility at pages F-36 and F-37; cash on hand at $50.768M with $19.085 restricted, at page F-6)
2019 Annual Report (risk factor summary starts at page 7 and ends at page 49)
Last Ex Dividend Date: 3/24/20 (all but 6 shares purchased prior thereto)
Average Cost Per Share (86 shares) = $22.3
Dividend Yield at $22.39 = 9.25%
Highest Cost Lot: 50 shares bought at $24.65 (3/9/20). Will be sold when and if I can do so profitably
Security: Prospectus
Par Value: $25
Coupon: 8.25%
Dividends: Quarterly, Cumulative and Non-Qualified
Capital Structure Placement: Junior to all bond and senior only to common stock
Optional Redemption Date: On or after 10/21/20
Dividend Stopper Clause: Yes (company would have to eliminate the cash common dividend paid to common shareholders before deferring the preferred stock dividend)
Apartment REIT common and preferred stocks have been in a dive mode due to concerns about renters being unable to make their monthly payments.
Many households can not go without a paycheck for a month without suffering a financial meltdown and an inability to pay bills.
Apartment REITs now have more risk than they did before the COVID-19 pandemic.
Those risks have resulted in much lower prices for their common and preferred stocks. It remains to be seen whether those risks will materialize in the manner predicted by the current share prices.
Last Sells:
Item # 6.A. Sold BRGPRA at $26.58 (10/19/17 Post)(profit snapshot= $93.28)
Item # 4 Sold 50 BRGPRA at $26.26 (10/11/17 Post)(profit snapshot=$139.64)
Purchase Restriction: Each subsequent purchase must reduce my average cost per share. The highest cost will be sold when and if it becomes profitable to do so.
Maximum Position This Account: 100 shares
I have up 14 shares left, likely to be bought in 1 or 2 share lots.
Maximum Position All Accounts: 200 shares
C. Bought 10 GOODM at $20; 5 at 19:
This one is lightly traded with large/bid ask spreads. I just place a limit order and see what happens.
Security: Prospectus
Par Value: $25
Coupon: 7% paid on $25 par value
Annual Rate: $1.75 per share
Dividend: Paid Monthly and Cumulative
Optional Issuer Redemption: At par on or after 5/25/21
Change of Control Provision: Yes
Stopper Clause: Yes (page S-17)
Last Ex Dividend Date: 3/19/20
Average Cost Per share: $19.67
Average Cost Per share: $19.67
Dividend Yield at $19.67 = 8.9%
Prior GOOD Preferred Stock Purchases: None
Last Common Stock Discussion: Item # 1.C. Eliminated GOOD in Schwab Account-Sold 50+ at $20.88 and Item # 1.D. Sold Highest Cost GOOD Share in Fidelity Account at $21.36 (3/3/19 Post) I will be discussing, probably in the next post, some recent purchases.
Common Stock Close 4/3: GOOD $12.33 -$0.43 -3.37%
Recent GOOD COVID-19 Press Release: Gladstone Commercial Corporation Provides Corporate (3/24/20)
Common Stock Close 4/3: GOOD $12.33 -$0.43 -3.37%
Recent GOOD COVID-19 Press Release: Gladstone Commercial Corporation Provides Corporate (3/24/20)
2. Closed End Bond Fund:
A. Bought 200 PPT at $5.15; 50 at $4.88; 50 at $4.75; 50 at $4.56; 20 at $4.32; 10 at $4.1; 10 at $3.9; 10 at $4.02; :
This fund probably has more moving parts and the most complex structure than any CEF that I have owned in the past. By "structure", I am referring to the use of interest rate swaps, total return swaps, and credit default contracts.
Sponsor's Website: Putnam Premier Income Trust
SEC Filings
Current Position: 403+ shares
Dividend: Monthly at $.035 or $.42 annually (supported by ROC)
Average Cost Per Share: $4.86
Dividend Yield at Average Cost = 8.64%
Last Ex Dividend Date: 3/23/20
Current Position: 403+ shares
Dividend: Monthly at $.035 or $.42 annually (supported by ROC)
Average Cost Per Share: $4.86
Dividend Yield at Average Cost = 8.64%
Last Ex Dividend Date: 3/23/20
Credit Quality Weightings (an odd mixture of Junk and AAA):
Last SEC Filed Shareholder Report (period ending 7/31/19)
Data Date of 200 Share Trade (3/6/20):
Closing Net Asset Value Per Share: $5.34
Closing Market Price: $5.2
Discount: -2.62%
Data Date of 50 Share Trade (3/9/20):
Closing Net Asset Value Per Share: $5.18
Closing Market Price: $4.92
Discount: -5.02%
Data Date of 50 Share Trade (3/10/20):
Closing Net Asset Value Per Share: $5.17
Closing Market Price: $4.79
Discount: -7.35%
Data Date of 50 Share Trade (3/11/20):
Closing Net Asset Value Per Share: $5.13
Closing Market Price: $4.59
Discount: -10.53%
Data Date of 3/18/20 Trade:
Closing Net Asset Value Per Share: $4.67
Closing Market Price: $3.82
Discount: -18.2%
Data Date of 4/3/20 Purchase:
Closing Net Asset Value per share: $4.46
Closing Market Price: $4.02
Discount: -9.87%
Average Discounts as of 4/3/20:
1 Year -2.51%
3 Year -4.72%
5 Year -6.77%
Data Date of 50 Share Trade (3/9/20):
Closing Net Asset Value Per Share: $5.18
Closing Market Price: $4.92
Discount: -5.02%
Data Date of 50 Share Trade (3/10/20):
Closing Net Asset Value Per Share: $5.17
Closing Market Price: $4.79
Discount: -7.35%
Data Date of 50 Share Trade (3/11/20):
Closing Net Asset Value Per Share: $5.13
Closing Market Price: $4.59
Discount: -10.53%
Data Date of 3/18/20 Trade:
Closing Net Asset Value Per Share: $4.67
Closing Market Price: $3.82
Discount: -18.2%
Data Date of 4/3/20 Purchase:
Closing Net Asset Value per share: $4.46
Closing Market Price: $4.02
Discount: -9.87%
Average Discounts as of 4/3/20:
1 Year -2.51%
3 Year -4.72%
5 Year -6.77%
Sourced: PPT Putnam Premier Income CEF Connect (click "Pricing Information" tab)
Maximum Position: 1000 shares
When and if the highest cost lot can be sold profitably based on my original cost (before ROC adjustments to the tax cost basis), I will do so.
Purchase Restriction: Each subsequent purchase must reduce my average cost per share.
Goal: Total Return in excess of the dividend
3. Canadian REITS:
A. Added 50 NWHUF at $8.3; 50 at $8; 50 at $6.75 and 50 at $5.57:
Quotes:
USD Priced Shares: NWHUF (U.S. Grey Market)
CAD Priced Shares: NWH-UN.TO
Website: NorthWest Healthcare Properties
Property Map
Investor Presentation November 2019
Dividend: Monthly at C$.06667 per unit or C$.8 annually.
Yield: The yield for NWHUF will depend on several factors: (1) the penny rate in CADs; (2) the conversion rate into USDs for each payment; and (3) the amount of the Canadian withholding tax that can be recovered through a foreign tax credit.
Covid-19 Update: NorthWest Healthcare Properties Real Estate Investment Trust Comments on COVID-19 Impact, Implementation of NCIB and $380 Million of Liquidity ("As at March 18, 2020 we are not aware of any known cases at our facilities and we continue to work with our operating partners to take appropriate cautionary measures.")
Last Buy Discussions: Item # 4.A. Bought 100 NWHUF at $9.09 (12/18/2019 Post)(discussed 2019 third quarter earnings report in that post); Item # 1.B. Bought 100 NWH.UN:CA at C$9.67 (/20/19 Post); Item #1.A Bought 100 NWH.UN:CA at C$10.58 -C$1 IB Commission (3/12/18 Post)
Last Sell Discussions: Item # 1. A. Sold 1000 at C$10.68 (/7/31/17)(profit after CAD to USD conversion = US$606.31); Item # 1.B. Sold 100 NWHUF at US$8.79 (8/21/17 Post)
Northwest Healthcare Properties Real Estate Investment Trust Announces Increase to Previously Announced Equity Financing from $225 Million to $250 Million (12/11/2019)("due to strong demand, it has increased the size of the previously announced public offering to 18,450,000 trust units (“Units”) at a price of $12.20 per Unit (the “Offering Price”) for gross proceeds of approximately $225.1 million (the “Public Offering”)
Last Earnings Report (12/31/2019):
"AFFO per unit increased by 3.7% to $0.84 in 2019 ($0.92 per unit on a normalized basis) as a result of accretive strategic acquisitions, increased management fees and SPNOI growth;
AFFO payout ratio of 95% (87% normalized) based on the REIT's $0.80 per unit annual distribution;
"Strong portfolio occupancy of 97.3% rising 60 bps from Q4 2018 and the international portfolio holding stable above 98.3% occupancy";
Net asset value per unit increased by 7.0% to $13.17 primarily driven by portfolio valuation gains and the expansion of the asset management platform.
Consolidated leverage of 49.6% (including convertible debentures) is down 600 bp YOY and proforma full deployment of proceeds of the December equity offering and planned asset dispositions into the REIT's capital platforms is expected to fall by a further 720 bps to approximately 42.4%" (emphasis added)
NorthWest Healthcare Properties Real Estate Investment Trust Releases Strong Fourth Quarter and Full Year 2019 Results
Maximum Position: 1000 Units (both USD and CAD priced)
Current Position: 900 units (600 NWH.UN:CA and 300 USD price NWHUF
B. Restarted DIR.UN:CA-Bought 100 Units at C$8.83 (C$1 commission):
Quotes:
CAD Priced DIR-UN.TO
USD Priced DREUF (Grey Market)
Website: Dream Industrial REIT
2019 Annual Report.pdf (120 pages)
Property Portfolio: Portfolio-Dream Industrial REIT ("owns and operates a portfolio of 209 geographically diversified industrial properties comprising approximately 21.9 million square feet of gross leasable area, in key markets across North America. . . 29 properties, comprising 7.3 million square feet, are located in the U.S.")
Last Round Trip: Item # 3.A. Sold 100 DIR.UN:CA at $11.92 (4/27/19 Post)(profit snapshot = C$215)
Dividend: Monthly at C$.05833 per share (annually at C$.7)
DREAM INDUSTRIAL REIT ANNOUNCES MARCH 2020 MONTHLY DISTRIBUTION & PROVIDES BUSINESS UPDATE
Dividend Yield: 7.93% (at C$.7 annual and C$8.83 cost)
Last Earnings Report (Q/E. 12/31/19):
The company calculated its net asset value per share at C$11.76 as of 12/31/2019.
European Expansion in the Netherlands and Germany:
(see also, Dream Industrial REIT Announces European Expansion in Germany and the Netherlands, Strategy to Reduce Cost of Debt (1/22/2020)
Capital Highlights:
Sourced: Dream Industrial REIT Reports 2019 Financial Results and Progress on European Expansion Strategy
Last Public Unit Offerings: Dream Industrial REIT Announces $200 Million Public Equity (2/3/20 Press Release)(at C13.65 per share); Dream Industrial REIT Completes $173 Million Equity Offering (12/11/2019 Press Release)(at C$13.45 per share)
The amounts shown in the public offering announcements do not include the greenshoe option granted to the underwriters. The February 2020 offering resulted in C$230 in gross proceeds. Dream Industrial REIT Completes $230 Million Equity Offering (2/12/20 Press Release)
4. Small Ball:
A. Added 5 GNL at $17.65; 5 at $16.87; 5 at $16.3; 5 at $14.6 and 5 at $14; 5 at $13.5; 5 at $13.5; 5 at $12.94; 2 at $12.66; 2 at $12.1; 2 at 11; 1 at $10.1; 4 at 11.48; 2 at $10.8:
Maximum Position: 1000 shares
When and if the highest cost lot can be sold profitably based on my original cost (before ROC adjustments to the tax cost basis), I will do so.
Purchase Restriction: Each subsequent purchase must reduce my average cost per share.
Goal: Total Return in excess of the dividend
3. Canadian REITS:
A. Added 50 NWHUF at $8.3; 50 at $8; 50 at $6.75 and 50 at $5.57:
Quotes:
USD Priced Shares: NWHUF (U.S. Grey Market)
CAD Priced Shares: NWH-UN.TO
Website: NorthWest Healthcare Properties
Property Map
Investor Presentation November 2019
Yield: The yield for NWHUF will depend on several factors: (1) the penny rate in CADs; (2) the conversion rate into USDs for each payment; and (3) the amount of the Canadian withholding tax that can be recovered through a foreign tax credit.
Covid-19 Update: NorthWest Healthcare Properties Real Estate Investment Trust Comments on COVID-19 Impact, Implementation of NCIB and $380 Million of Liquidity ("As at March 18, 2020 we are not aware of any known cases at our facilities and we continue to work with our operating partners to take appropriate cautionary measures.")
Last Buy Discussions: Item # 4.A. Bought 100 NWHUF at $9.09 (12/18/2019 Post)(discussed 2019 third quarter earnings report in that post); Item # 1.B. Bought 100 NWH.UN:CA at C$9.67 (/20/19 Post); Item #1.A Bought 100 NWH.UN:CA at C$10.58 -C$1 IB Commission (3/12/18 Post)
Last Sell Discussions: Item # 1. A. Sold 1000 at C$10.68 (/7/31/17)(profit after CAD to USD conversion = US$606.31); Item # 1.B. Sold 100 NWHUF at US$8.79 (8/21/17 Post)
Northwest Healthcare Properties Real Estate Investment Trust Announces Increase to Previously Announced Equity Financing from $225 Million to $250 Million (12/11/2019)("due to strong demand, it has increased the size of the previously announced public offering to 18,450,000 trust units (“Units”) at a price of $12.20 per Unit (the “Offering Price”) for gross proceeds of approximately $225.1 million (the “Public Offering”)
Last Earnings Report (12/31/2019):
AFFO payout ratio of 95% (87% normalized) based on the REIT's $0.80 per unit annual distribution;
"Strong portfolio occupancy of 97.3% rising 60 bps from Q4 2018 and the international portfolio holding stable above 98.3% occupancy";
Net asset value per unit increased by 7.0% to $13.17 primarily driven by portfolio valuation gains and the expansion of the asset management platform.
Consolidated leverage of 49.6% (including convertible debentures) is down 600 bp YOY and proforma full deployment of proceeds of the December equity offering and planned asset dispositions into the REIT's capital platforms is expected to fall by a further 720 bps to approximately 42.4%" (emphasis added)
NorthWest Healthcare Properties Real Estate Investment Trust Releases Strong Fourth Quarter and Full Year 2019 Results
Maximum Position: 1000 Units (both USD and CAD priced)
Current Position: 900 units (600 NWH.UN:CA and 300 USD price NWHUF
Quotes:
CAD Priced DIR-UN.TO
USD Priced DREUF (Grey Market)
Website: Dream Industrial REIT
2019 Annual Report.pdf (120 pages)
Property Portfolio: Portfolio-Dream Industrial REIT ("owns and operates a portfolio of 209 geographically diversified industrial properties comprising approximately 21.9 million square feet of gross leasable area, in key markets across North America. . . 29 properties, comprising 7.3 million square feet, are located in the U.S.")
Last Round Trip: Item # 3.A. Sold 100 DIR.UN:CA at $11.92 (4/27/19 Post)(profit snapshot = C$215)
Dividend: Monthly at C$.05833 per share (annually at C$.7)
DREAM INDUSTRIAL REIT ANNOUNCES MARCH 2020 MONTHLY DISTRIBUTION & PROVIDES BUSINESS UPDATE
Dividend Yield: 7.93% (at C$.7 annual and C$8.83 cost)
Last Earnings Report (Q/E. 12/31/19):
European Expansion in the Netherlands and Germany:
Capital Highlights:
Last Public Unit Offerings: Dream Industrial REIT Announces $200 Million Public Equity (2/3/20 Press Release)(at C13.65 per share); Dream Industrial REIT Completes $173 Million Equity Offering (12/11/2019 Press Release)(at C$13.45 per share)
The amounts shown in the public offering announcements do not include the greenshoe option granted to the underwriters. The February 2020 offering resulted in C$230 in gross proceeds. Dream Industrial REIT Completes $230 Million Equity Offering (2/12/20 Press Release)
4. Small Ball:
A. Added 5 GNL at $17.65; 5 at $16.87; 5 at $16.3; 5 at $14.6 and 5 at $14; 5 at $13.5; 5 at $13.5; 5 at $12.94; 2 at $12.66; 2 at $12.1; 2 at 11; 1 at $10.1; 4 at 11.48; 2 at $10.8:
I discuss purchases of the preferred stock in Item # 1.A. above.
I did not realize that entered two separate 5 share orders at $13.5 (3/12/20).
Quote: Global Net Lease (GNL)
Website: Global Net Lease
SEC Filings
Property Type Diversification | GNL
Management: External
Global Net Lease Comments On COVID-19 (3/18/20)
2019 Annual Report (risk factor summary starts at page 9 and ends at page 31)("As of December 31, 2019, we owned 278 properties consisting of 31.6 million rentable square feet, which were 99.6% leased with a weighted-average remaining lease term of 8.3 years. Based on the percentage of annualized rental income on a straight-line basis as of December 31, 2019, 63.2% of our properties are located in the U.S., Puerto Rico and Canada and 37% are located in Europe.") The properties are subject to net leases.
Last Sell Discussions: Item # 1.E. Sold 10 GNL at $21.51 (2/19/20 Post); Item # 2.B. Pared GNL-Sold Highest Cost 50 Shares at $20.05 (12/11/19 Post)
Last Buy Discussions: Item # 1.C. Added 30 GNL at $19.31 and 10 at $18.84 (10/19/19 Post); Item # 1.C. Added 10 GNL at $17.28 (1/20/19 Post)
Dividend: Quarterly at $.40 per share or $1.6 per share, cut from an annual rate of $2.13 per share. Global Net Lease Announces Dividend Change The reason given was "limited visibility on the long-term impact of the COVID-19 virus."
The dividend needed to be cut before the pandemic since it was not being covered by cash flow, as I have noted in the past and point out once again when discussing the last earnings report below. The COVID-19 pandemic gave the company the cover to do what needed to be done. I do not view it as a negative but a correction of a clearly excessive penny rate.
Current Position: 112 + shares
Average Cost: $ 16.29 per share
Dividend Yield at Average Cost = 9.82 % (at new penny rate)
Next Ex Dividend Date: 4/9/19
 |
| Dividend Yield Based on $11 Closing Price 4/3 |
Highest Cost Lot in Current Chain: 20 shares at $18.97 (excluding shares purchased with dividends) This lot will be sold when and if I can do so profitably using my original cost per share.
5 Year Chart:
"AFFO per diluted share was $0.44, a decrease from $0.50 per diluted share in fourth quarter 2018 due to the absence of full period rent from acquisitions that closed late in the quarter and changes to European tax policies that increased income tax expenses by $2.0 million from prior year" Cash flow per share was significantly lower the dividend penny rate prior to the slash noted above.
99.6% leased with a remaining weighted-average lease term of 8.3 year
93.2% of the portfolio contains contractual rent increases based on square footage
49% Office, 46% Industrial / Distribution and 5% Retail (based on an annualized straight-line rent)
68.2% of portfolio annualized straight-line rent derived from investment grade and implied investment grade rated tenants"
Sourced: Global Net Lease Reports Fourth Quarter And Full Year 2019 Results
B. Added 5 FNB at $8.8; 5 at $8.43; 5 at $7.62; 5 at $6.6 :
Quote: F.N.B. Corp.
SEC Filings
FNB | F.N.B. Corp. Analyst Estimates | MarketWatch
Investment Category: Regional Bank Basket Strategy
Last Buy Discussion: Item 1.E. Added 10 FNB at $11.08; 5 at $10.49; 10 at $10; and 5 at $9.69 (3/7/20 Post)
Last Sell Discussions: Item # 2.C Sold 31 FNB at $12.17 and Item # 2.D Sold 100 FNB at $12.17 (11/2/19 Post); Item # 5.A Sold 20 FNB at $11.42 (9/28/19 Post); Item # 3.A. Sold 30 FNB at $11.95-Used Fidelity Commission Free Trade (5/18/19 Post); Item # 1.A. Sold 50 FNB at $13.65-Used Commission Free Trade (9/5/18 Post); Item # 1.D. Sold 50 FNB at $13.9-Used Commission Free Trade (6/18/18 Post); Item 2.A. Sold 60 FNB at $14.59 (3/5/2018);Item # 4.A. Sold 100 FNB at $13.94-Satellite Taxable Account (10/23/17 Post)
FNB 5 Year Chart: Bear Market
Dividend: Quarterly at $.12
Average Cost Per Share = $11.10
Dividend Yield at Average Cost: 4.32%
Last Earnings Report (Q/E 12/31/19): SEC Filed News Release
I discussed this report in Item # 1.E.
Quote: Ares Capital Corp. (ARCC)
Closing Price 4/3/2020: ARCC $9.13 -$0.52 -5.39%
The stock exceeded that $9.13 closing price- on a non-temporary basis -late in 2009. The lows for the Near Depression period were in the $4-$5 range. A new 52 week low was set intraday at $7.9 on 3/16/20. The 52 week high was at $19.33 hit on 2/12/20.
In my opinion, the closing price reflects a current Stock Jock consensus opinion that ARCC will cut its dividend roughly in half due to a 50% or so obliteration in its net assets.
The last reported net asset value per share was $17.32.
The stock was selling at a premium to that net asset value in February 2020. ARCC Historical Prices
The issue as always is whether the future prediction embedded in the current stock price will be right or close to being so or will it turn out to be ridiculously too pessimistic, or even optimistic or somewhere in between.
Who knows? The forecast embedded in the current price is consistent with the dire future scenario outlined above, but is too pessimistic based on a robust V shape recovery starting in the third quarter.
I am only confident in predicting that net asset value per share will take a hit and will not be increasing this year compared to the $17.32 number as of 12/31/19.
A reasonable prediction is that net income investment income will not cover a $.4 per share dividend paid in the current quarter. I would expect some borrowers to be unable, at least temporarily, to make interest payments. That does not mean that ARCC will cut the next dividend.
Place you bet on a future forecast and take your chances, or keep the money in your pocket.
Website: ARCC-Home
S & P Credit Rating: On 3/24/20, S & P affirmed the BBB- credit rating for ARCC's senior unsecured notes but changed its outlook from positive to stable. The outlook change reflects that a credit upgrade is unlikely. S & P noted that it expected COVID-19 to cause increased credit losses and calls for more funds under existing loan commitments. The stable outlook and affirmation of the BBB- rating reflects S & P's opinion that ARCC has a "very strong capital position" and a "favorable funding profile".
2019 Annual Report (risk factor summary starts at page 27 and ends at page 49)(investment list starts at page F-6)
Using the small ball trading system, I had been prevented from buying more ARCC since the price was higher than my lowest cost lot in the current chain. That lot had been bought at $14.86 on 12/21/18. Item # 4.B. Bought 10 ARCC at $14.86-Used Commission Free Trade (1/2/19 Post)
The recent slide below that price triggered a discretionary "small ball buying program" that is ongoing.
The next purchase, if any, has to be below $9.4.
Highest cost lot in current chain: Item # 2.A. Bought 10 ARCC at $15.39- Used Commission Free Trade (3/25/18 Post) This lot will likely be sold when and if the price exceeds $16, the flip side of averaging down in small lots.
Average Cost Per Share: $12.83
5 Year Chart:
ARCC-Dividends
Dividend Yield at $12.83 (regular dividend only) = 12.47%
The company paid 4 two cent special dividends last year. I am not expecting any this year.
Last Ex Dividend Date: 3/13/20
Net Asset Value Per Share History: Better than Most, if not all, Externally Managed BDCs
12/31/19: $17.32 10-K
9/30/19: $17.26 10-Q 9/30/18: $17.16
12/21/17: $16.65
9/30/17: $16.49 10-Q
6/30/17: $16.54 10-Q
12/30/16: $16.45
9/30/16: $16.59
6/30/16: $16.62
3/31/16: $16.5
12/31/14: $16.82
9/30/13: $16.35
3/31/12: $15.47
6/30/10: $14.11
12/31/09: $11.44 10-K
9/30/09: $11.16 10-Q
12/31/08: $11.27
6/30/08: $12.83 10-Q
12/31/07: $15.47 10-K at page 57
9/30/07: $15.74
3/31/05: $14.96
5 Year Financial Data: 2019 Annual Report at page 58
Last Earnings Report (Q/E 12/3/2019):
Sourced: SEC Filed Press Release
Last Senior Unsecured Note Offering (1/20): Prospectus $750M 3.25% Maturing in 2025
12/30/16: $16.45
9/30/16: $16.59
6/30/16: $16.62
3/31/16: $16.5
12/31/14: $16.82
9/30/13: $16.35
3/31/12: $15.47
6/30/10: $14.11
12/31/09: $11.44 10-K
9/30/09: $11.16 10-Q
12/31/08: $11.27
6/30/08: $12.83 10-Q
12/31/07: $15.47 10-K at page 57
9/30/07: $15.74
3/31/05: $14.96
5 Year Financial Data: 2019 Annual Report at page 58
Last Senior Unsecured Note Offering (1/20): Prospectus $750M 3.25% Maturing in 2025
Item # 1.C. Sold 50 ARCC at $16.98 (6/18/18 Post);
Item 2.A. Eliminated ARCC-Sold Remaining 50 Shares at $17.25 (2/15/17 Post);
Item # 1, Sold 102+ ARCC at $15.32 and 50 at $15.26: Update For Portfolio Positioning And Management As Of 8/21/16 - South Gent | Seeking Alpha
Sold 100 ARCC at $17.195 (4/28/15 Post);
Item # 3 Sold 100 ARCC Roth IRA at $17.05 (2/25/15 Post); Sold 100 ARCC at $17.54-IRAs in Two 50 Share Lots (9/13/12 Post)
Other Buy Discussions: While a $14.86 buy price is not my lowest purchase price, it is lower than all but one of my prior purchases.
Item # 1 Bought 50 ARCC at $14: Update For Portfolio Positioning And Management As Of 7/9/16 - South Gent | Seeking Alpha;
Bought 50 ARCC at $15.41-A Typical Small Lot Purchase Of An Externally Managed BDC Stock - South Gent | Seeking Alpha;
Item # 4 Added 50 ARCC at $16.9-Regular IRA (5/21/11 Post)
Item # 3 Bought 50 ARCC at $16.89 (12/3/2010 Post)
Realized Gains to Date: $525.41
Goal: Total return in excess of the dividend payments.
I view ARES as the best of breed among externally managed BDCs.
On 4/1/20, Janney cut its fair value estimate to $12 from $17.
On 4/2/20, Compass Point cut its price target to $13 from $18.5 but raised its rating to buy.
Generally, analysts will tell you that your house is burning after the entire structure is engulfed in flames. That is at least understandable in that describing the current reality is far easier than predicting the future, even when the time period is 30 days forward starting in mid-February 2020, which is the case with all of the analyst downgrades now.
D. Added 5 CIO at $6.8:
Quote: City Office REIT Inc.
Current Position: 30 Shares
Dividend: Quarterly at $.15, recently slashed ($.6 annually)
The coronavirus pandemic gave the company cover for slashing its common share dividend which was way too high and was never entirely supported by FAD.
Average Cost Per Share: $7.17
Dividend Yield at Average Cost: 8.37%
I discussed this REIT in my last post. Item # 3.A. Restarted CIO-Bought 10 at $7.3; 5 at $7 (3/28/20 Post) I have nothing to add to that prior discussion.
E. Restarted DES-Bought 5 at $21.13 ; 5 at $20.3; 5 at $17.2; 5 at $15.6:
Chart:
Buy Discussions: Item # 5.B. Added 5 DES at $26.26; 5 at $25.25; 5 at $24.2 and 5 at $23.4 (1/2/19 Post)
Sponsor's Website: WisdomTree U.S. SmallCap Dividend Fund
Dividends: Monthly at a variable rate
Dividend Reinvestment: Yes starting with the next payment
For at least 60 days, I will not be buying more shares unless the price falls below $12.
F. Restarted NMFC -Bought 10 at $11.45; 10 at $11.15; 10 at $9.85; 5 at $8.3; 2 at $7.36; 3 at $5.96; 1 at $5.94; 2 at $4.95 :
I am very gradually working my way up to a 100 share position and now stand at 43+ shares. So far, as with most purchases during the market's most recent meltdown, I would have been better off doing nothing.
Time will tell whether the current buying spree is smart or stupid when judged with 20/20 hindsight.
I am 100% certain that I am buying shares at the lowest prices that I have ever paid for this BDC.
Quote: New Mountain Finance Corp. (NMFC)
Closing Price 4/3/20: NMFC $5.06 -$0.58 -10.28%
Subsequent to these purchases, Fitch placed its BBB- for NMFC's senior unsecured debt on negative credit watch. The reasons are discussed in this Fitch press release: Fitch Places New Mountain Finance Corp's 'BBB-' Ratings on Negative Watch on Elevated Valuation Risk
The current price has imbedded in it a future forecast that NMFC will suffer about a 60% to 65% decline in net asset value per share and will be forced to slash its dividend. The percentage asset destruction assumes that NMFC will continue to sell, as it has in the past, within 10% of its net asset value per share with temporary movements outside of that range.
E.G. $5 stock price:
high NAV at $5.25/low NAV at $4.75 (5% variance)
Last Reported NAV at $13.26 per share
% decline to $4.75 = 64% decline in net assets
Management: External
SEC Filings
2019 Annual Report (risk factor summary starts at page 21 and ends at page 47) Lists of investments with basic descriptions can be found starting at page 95)
5 Year Chart:
On 4/1, Janney cut its fair value to $8 from $14.5. I do not have access to that brokerage firm's report. The analyst did slash on the same day fair value estimates for other BDCs. The price closed at $5.96 on 4/1 /20 and at $14.44 on 2/13/20. NMFC Historical Prices
Net Asset Value Per Share History:
12/31/19 = $13.26
6/30/19: $13.41 10/Q at page 4
12/31/18: $13.22
6/30/18: $13.57
3/31/18: $13.60 10-Q at page 3
12/31/17: $13.63
12/31/16 $13.46
9/30/15 $13.73
12/31/14 $13.83
9/30/14 $14.33
12/31/13 $14.38
6/30/13 $14.32
12/31/12 $14.06 Sourced from 10-Qs
IPO Price: $13.75 Prospectus (filed 5/23/11)
5 Year Financial Data (page 52 Annual Report)
Dividend: Quarterly at $.34 per share ($1.36 annually)
Average Cost Per Share: $9.66
Dividend Yield = 14.08% (assumes no dividend cut which is definitely not the market's current forecast)
Last Ex Dividend: 3/12/20 (shortly after first two 10 share purchases and after other listed purchases)
Dividend Reinvestment: Yes
Last Elimination: Item # 2 Eliminated NMFC-Sold 102+ at $14.2 (1/25/20 Post)
Last Substantive Sell Discussion: Item # 2.A. Sold 50 NMFC at $13.95 (1/15/20 Post)
Last Buy Discussion: Item # 2.A. Bought 100 NMFC at $13.37 (9/18/19 Post)(shares were previously sold)
NMFC Trading Profits to Date: +$229.57
5 Year Annual Average Total Return Through 4/3/20: -10.58%
DRIP Returns Calculator | Dividend Channel
Considering what has happened to the share price since February, that annual average total return number is not surprising. The five year total return was -42.81%.
Last Earnings Report (Q/E 12/31/19): I thought this report was okay. It will be last okay report for awhile.
Sourced: SEC Filed Press Release
Recent Stock Offering: "On July 11, 2019, the Company completed a public offering of 6,900,000 shares of the Company’s common stock at a public offering price of $13.68 per share. The Company’s Investment Adviser paid a $0.39 per share portion of the $0.42 per share underwriters' sales load such that the Company received net proceeds of $13.65 per share in this offering. All payments made by the Company’s Investment Adviser are not subject to reimbursement by the Company. The Company received total net proceeds of approximately $94.2 million in connection with this offering."
Current Position: 43 shares
Maximum Position: 100 Shares + shares purchased with dividend
Purchase Restriction: Small Ball Rule (next purchase has to be below $4.95)
Goal: Return in excess of the dividend payments (not likely anytime soon) I may end up with a net profit on the shares after selling some lots at losses which counts as a successful exit.
G. Restarted Small Ball "Buying Program" in JTD-Bought 20 at $11.38; 10 at $11 and 10 at $9.79:
Quote: Nuveen Tax-Advantaged Dividend Growth Fund Overview
SEC Filed Shareholder Report: Nuveen Tax-Advantaged Dividend Growth Fund (period ending 12/31/19; Total investment cost: $280.028+M; Value as of 12/31/19= $374.486+M; Borrowings at $111.1M)
Cost of Borrowings: "Interest is charged on these Borrowings at 1-Month LIBOR (London Inter-Bank Offered Rate) plus 0.65% per annum on the amount borrowed. The Fund is typically charged an undrawn fee of 0.50% per annum if the undrawn portion of the Borrowings on that day is more than 20% of the maximum commitment amount, however these fees were waived in 2019. During the current fiscal period, the average daily balance outstanding (which was for the entire current reporting period) and average annual interest rate on these Borrowings were $104,590,411 and 2.87%, respectively." Page 42. This cost has already fallen since 12/31/19 and will fall further.
Dividends: Quarterly at $.31 per share ($1.24 annually)
May be cut due to market decline
Dividend Yield at $11.38: 10.9%
Data Date of Trade (3/13/20):
Closing Net Asset Value Per Share: $13.47
Closing Market Price: $11.81 (late day rally after purchase)
Discount: -12.32%
Data Date of Trade (3/16/20):
Closing Net Asset Value Per Share: $11.62
Closing Market Price: $10.5
Discount: -9.64
Data Date of Trade (3/17/20):
Closing Net Asset Value Per Share: $12.19
Closing Market Price: $10.76
Discount: -11.73%
1 Year Average Discount as of 3/13 = -3%
Sourced: JTD Nuveen Tax-Advantaged Dividend Growth Fund-CEF Connect
H. Restarted BIF-Bought 10 at $9.26; 10 at $8.75:
Quote: Boulder Growth & Income Fund Inc. (BIF)
Sponsor's Website: Boulder Funds - Home
As previously discussed, this stock CEF is weighted heavily in Berkshire Hathaway stock:
The fund owns both BRK/A and BRK/B:
Sourced: SEC Filed Shareholder Report (period ending 11/30/19)
Both positions have large unrealized gains. As of 11/30/19, the portfolio's value was $1.392+B with a cost basis of $589.7+M.
BIF SEC Filings
Dividends: Quarterly at $.102 per share (.408 annually)
Average Cost per share (20 shares) = $9.01
Dividend Yield at $9.01: 4.53%
Next Ex Dividend Date: 4/22/20
According to CEFConnect, the recent quarterly payments gave been supported by ROC. The fund could support the dividend easily by harvesting capital gains but tends to refrain from doing so. It would not be a reasonable prediction IMO to forecast any meaningful capital gain distribution given the buy and hold approach.
Data Date of 3/30/20 Trade:
Closing Net Asset Value Per Share: $11.02
Closing Market Price: $9.28
Discount: -15.79%
Data Date of 4/1/20 Trade:
Closing Net Asset Value Per Share: $10.54
Closing Market Price: $8.72
Discount: -17.27%
Sourced: BIF Boulder Growth & Income-CEF Connect
Last Elimination: Item # 3.E. Eliminated BIF-Sold 156+ at $11.42 (12/18/19 Post)
Prior Round-Trips: Item # 3.C. Sold 50 BIF at $11.28 (11/13/19 Post); Item # 3.B. Eliminated BIF: Sold 116+ (2/16/17 Post)(profit snapshot = $137.25, with snapshots of prior 2013 and 2016 round-trips realizing a $284.19 profit).
BIF Trading Profits to Date: $413.12
Current Position: 15 shares
Maximum Position: 200 Shares
Purchase Restriction: Small Ball Rule
I. Started FCNTX-Bought $100 at $11.46; and $50 at $11.28:
There are no minimums for Fidelity customers.
Quote: FCNTX | Fidelity Contrafund Overview
Morningstar Page: Currently rated 4 stars.
Sponsor's Website: FCNTX - Fidelity ® Contrafund ®
J. Started FSPTX-Bought $100 at $16.94:
There are not minimums for Fidelity customers.
Quote: FSPTX | Fidelity Select Technology Portfolio Overview
Morningstar Page: Currently rated 4 stars
Sponsor's Website: FSPTX - Fidelity ® Select Technology Portfolio
K. Added $50 to FZROX-Bought at $8.57:
Quote: FZROX | Fidelity ZERO Total Market Index Fund Overview
This mutual fund attempts to track the total U.S. stock market.
It has a zero expense ratio.
I believe it is closed to new investors.
Sponsor's webpage: FZROX - Fidelity ZERO SM Total Market Index Fund
Morningstar Page
A similar low cost ETF is the Vanguard Total Stock Market ETF (VTI) which has a .03% expense ratio.
5. Short Term Corporate Bonds as an Alternative to Money Market Funds:
A. Bought 2 J P Morgan 2.75% SU Bonds Maturing on 6/23/20:
FINRA Page: Bond Detail
Bought at a Total Cost of 99.8
YTM at TC = 3.63%
Issuer: JPMorgan Chase & Co. (JPM)
I now own 4 bonds. The other 2 were bought in November 2018 at 99.269. Item # 2.B. Bought 2 JPM 2.75% SU in a Roth IRA account (11/28/18 Post)
This purchase is being discussed out of time sequence. I wanted to highlight the ongoing problem of reinvesting cash flow.
This JPM bond was purchased on 4/1/20 in my Fidelity taxable account.
I received the following bond redemption proceeds and interest payments in that account on 4/1:
I attempted to reinvest the $4K in redemption proceeds by placing several limit orders which I can do at Fidelity but not at my other brokers. I am only willing to pay so much so I am not hitting the best ask numbers for the number of bonds that I want to buy.
This is what the order book for this bond looked shortly after I received the fill:
If I wanted to hit the best ask price, I would have had to pay 100.095 but the commission would drive the total cost number to 100.195. The YTM at that total cost number would be close to 1.25% which I would be unwilling to accept. So I receive at a fill at my price or none at all.
B. Bought 5 Wisconsin Electric 2.45% SU Bonds Maturing on 6/15/20:
I now own 7 bonds.
FINRA Page: Bond Detail (prospectus linked)
Issuer: The issuer's new name is the WEC Energy Group Inc. (WEC)
WEC | WEC Energy Group Inc. Analyst Estimates
WEC Energy Group posts strong 2019 results
Credit Quality:
Bought at Total Cost of 99.796
YTM at 99.796 = 3.33%
C. Bought 1 Citigroup 2.65% SU Maturing on 10/26/20:
FINRA Page: Bond Detail
Bought at a Total Cost of 98.909
YTM at TC = 4.227%
Issuer: Citigroup Inc. (C)
C | Citigroup Inc. Analyst Estimates | MarketWatch
Credit Ratings:
2019 Annual Report
D. Bought 2 BB&T 2.625% SU Bonds Maturing on 6/29/20:
I now own 4 bonds.
FINRA Page: Bond Detail
Credit Ratings:
Bought at a Total Cost of 99.822
YTM at TC = 3.292%
BB & T is a super regional bank. The company recently changed its name and stock symbol to Truist Financial Corp. (TFC).
TFC | Truist Financial Corp. Analyst Estimates | MarketWatch The current stock price reflects a disregard for those estimates.
I eliminated my common stock and discussed the dispositions in these posts: Item # 1. A. Sold 71+ BBT at $50.72 (7/25/18 Post)(profit snapshot = $1,330.82); Item # 1. A. Sold Highest Cost 50 BBT Shares at $55.45 (2/8/18 Post)(profit snapshot = $1,061.02); Item # 3.A. Sold Highest Cost 50 BBT Shares at $47.24 (3/28/17 Post)(profit snapshot $568.45).
I have just restarted a small ball purchase program with 1 and 2 lot purchases. With 3 shares purchased yesterday, I am up to 7 shares.
Common Stock Close 4/3: TFC $27.21 -$1.27 -4.46%: Truist Financial Corporation
D. Bought 2 Fortune Brands Home and Security 3% SU Bonds Maturing on 6/15/20:
FINRA Page: Bond Detail Prospectus linked
Issuer: Fortune Brands Home & Security Inc. (FBHS)
FBHS Analyst Estimates
Fortune Brands Reports Strong Sales and EPS Growth in Q4 and Full Year 2019; Provides 2020 Annual Outlook for Continued Growth
Credit Ratings: Baa3/BBB+ (see confirmation above)
Bought at a Total Cost of 99.834
YTM at TC = 3.722%
The total cost number includes a $1 per bond commission. Unlike Fidelity, Vanguard will not include the commission in the reported price. However, the YTM number shown above is based on the price paid 99.734 plus the $1 per bond commission. The YTM based on the price only was 4.173% according to FINRA.
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.
Time will tell whether the current buying spree is smart or stupid when judged with 20/20 hindsight.
I am 100% certain that I am buying shares at the lowest prices that I have ever paid for this BDC.
Quote: New Mountain Finance Corp. (NMFC)
Closing Price 4/3/20: NMFC $5.06 -$0.58 -10.28%
Subsequent to these purchases, Fitch placed its BBB- for NMFC's senior unsecured debt on negative credit watch. The reasons are discussed in this Fitch press release: Fitch Places New Mountain Finance Corp's 'BBB-' Ratings on Negative Watch on Elevated Valuation Risk
The current price has imbedded in it a future forecast that NMFC will suffer about a 60% to 65% decline in net asset value per share and will be forced to slash its dividend. The percentage asset destruction assumes that NMFC will continue to sell, as it has in the past, within 10% of its net asset value per share with temporary movements outside of that range.
E.G. $5 stock price:
high NAV at $5.25/low NAV at $4.75 (5% variance)
Last Reported NAV at $13.26 per share
% decline to $4.75 = 64% decline in net assets
Management: External
SEC Filings
2019 Annual Report (risk factor summary starts at page 21 and ends at page 47) Lists of investments with basic descriptions can be found starting at page 95)
5 Year Chart:
On 4/1, Janney cut its fair value to $8 from $14.5. I do not have access to that brokerage firm's report. The analyst did slash on the same day fair value estimates for other BDCs. The price closed at $5.96 on 4/1 /20 and at $14.44 on 2/13/20. NMFC Historical Prices
Net Asset Value Per Share History:
12/31/19 = $13.26
6/30/19: $13.41 10/Q at page 4
12/31/18: $13.22
6/30/18: $13.57
3/31/18: $13.60 10-Q at page 3
12/31/17: $13.63
12/31/16 $13.46
9/30/15 $13.73
12/31/14 $13.83
9/30/14 $14.33
12/31/13 $14.38
6/30/13 $14.32
12/31/12 $14.06 Sourced from 10-Qs
IPO Price: $13.75 Prospectus (filed 5/23/11)
Dividend: Quarterly at $.34 per share ($1.36 annually)
Average Cost Per Share: $9.66
Dividend Yield = 14.08% (assumes no dividend cut which is definitely not the market's current forecast)
Last Ex Dividend: 3/12/20 (shortly after first two 10 share purchases and after other listed purchases)
Dividend Reinvestment: Yes
Last Elimination: Item # 2 Eliminated NMFC-Sold 102+ at $14.2 (1/25/20 Post)
Last Substantive Sell Discussion: Item # 2.A. Sold 50 NMFC at $13.95 (1/15/20 Post)
Last Buy Discussion: Item # 2.A. Bought 100 NMFC at $13.37 (9/18/19 Post)(shares were previously sold)
NMFC Trading Profits to Date: +$229.57
5 Year Annual Average Total Return Through 4/3/20: -10.58%
DRIP Returns Calculator | Dividend Channel
Considering what has happened to the share price since February, that annual average total return number is not surprising. The five year total return was -42.81%.
Last Earnings Report (Q/E 12/31/19): I thought this report was okay. It will be last okay report for awhile.
Recent Stock Offering: "On July 11, 2019, the Company completed a public offering of 6,900,000 shares of the Company’s common stock at a public offering price of $13.68 per share. The Company’s Investment Adviser paid a $0.39 per share portion of the $0.42 per share underwriters' sales load such that the Company received net proceeds of $13.65 per share in this offering. All payments made by the Company’s Investment Adviser are not subject to reimbursement by the Company. The Company received total net proceeds of approximately $94.2 million in connection with this offering."
Current Position: 43 shares
Maximum Position: 100 Shares + shares purchased with dividend
Purchase Restriction: Small Ball Rule (next purchase has to be below $4.95)
Goal: Return in excess of the dividend payments (not likely anytime soon) I may end up with a net profit on the shares after selling some lots at losses which counts as a successful exit.
SEC Filed Shareholder Report: Nuveen Tax-Advantaged Dividend Growth Fund (period ending 12/31/19; Total investment cost: $280.028+M; Value as of 12/31/19= $374.486+M; Borrowings at $111.1M)
Cost of Borrowings: "Interest is charged on these Borrowings at 1-Month LIBOR (London Inter-Bank Offered Rate) plus 0.65% per annum on the amount borrowed. The Fund is typically charged an undrawn fee of 0.50% per annum if the undrawn portion of the Borrowings on that day is more than 20% of the maximum commitment amount, however these fees were waived in 2019. During the current fiscal period, the average daily balance outstanding (which was for the entire current reporting period) and average annual interest rate on these Borrowings were $104,590,411 and 2.87%, respectively." Page 42. This cost has already fallen since 12/31/19 and will fall further.
Dividends: Quarterly at $.31 per share ($1.24 annually)
May be cut due to market decline
Dividend Yield at $11.38: 10.9%
Data Date of Trade (3/13/20):
Closing Net Asset Value Per Share: $13.47
Closing Market Price: $11.81 (late day rally after purchase)
Discount: -12.32%
Data Date of Trade (3/16/20):
Closing Net Asset Value Per Share: $11.62
Closing Market Price: $10.5
Discount: -9.64
Data Date of Trade (3/17/20):
Closing Net Asset Value Per Share: $12.19
Closing Market Price: $10.76
Discount: -11.73%
1 Year Average Discount as of 3/13 = -3%
Sourced: JTD Nuveen Tax-Advantaged Dividend Growth Fund-CEF Connect
H. Restarted BIF-Bought 10 at $9.26; 10 at $8.75:
Quote: Boulder Growth & Income Fund Inc. (BIF)
Sponsor's Website: Boulder Funds - Home
As previously discussed, this stock CEF is weighted heavily in Berkshire Hathaway stock:
 |
| As of 11/30/19 |
Both positions have large unrealized gains. As of 11/30/19, the portfolio's value was $1.392+B with a cost basis of $589.7+M.
BIF SEC Filings
Dividends: Quarterly at $.102 per share (.408 annually)
Average Cost per share (20 shares) = $9.01
Dividend Yield at $9.01: 4.53%
Next Ex Dividend Date: 4/22/20
According to CEFConnect, the recent quarterly payments gave been supported by ROC. The fund could support the dividend easily by harvesting capital gains but tends to refrain from doing so. It would not be a reasonable prediction IMO to forecast any meaningful capital gain distribution given the buy and hold approach.
Data Date of 3/30/20 Trade:
Closing Net Asset Value Per Share: $11.02
Closing Market Price: $9.28
Discount: -15.79%
Data Date of 4/1/20 Trade:
Closing Net Asset Value Per Share: $10.54
Closing Market Price: $8.72
Discount: -17.27%
Sourced: BIF Boulder Growth & Income-CEF Connect
Last Elimination: Item # 3.E. Eliminated BIF-Sold 156+ at $11.42 (12/18/19 Post)
Prior Round-Trips: Item # 3.C. Sold 50 BIF at $11.28 (11/13/19 Post); Item # 3.B. Eliminated BIF: Sold 116+ (2/16/17 Post)(profit snapshot = $137.25, with snapshots of prior 2013 and 2016 round-trips realizing a $284.19 profit).
BIF Trading Profits to Date: $413.12
Current Position: 15 shares
Maximum Position: 200 Shares
Purchase Restriction: Small Ball Rule
I. Started FCNTX-Bought $100 at $11.46; and $50 at $11.28:
Quote: FCNTX | Fidelity Contrafund Overview
Morningstar Page: Currently rated 4 stars.
Sponsor's Website: FCNTX - Fidelity ® Contrafund ®
J. Started FSPTX-Bought $100 at $16.94:
Quote: FSPTX | Fidelity Select Technology Portfolio Overview
Morningstar Page: Currently rated 4 stars
Sponsor's Website: FSPTX - Fidelity ® Select Technology Portfolio
K. Added $50 to FZROX-Bought at $8.57:
Quote: FZROX | Fidelity ZERO Total Market Index Fund Overview
This mutual fund attempts to track the total U.S. stock market.
It has a zero expense ratio.
I believe it is closed to new investors.
Sponsor's webpage: FZROX - Fidelity ZERO SM Total Market Index Fund
Morningstar Page
A similar low cost ETF is the Vanguard Total Stock Market ETF (VTI) which has a .03% expense ratio.
5. Short Term Corporate Bonds as an Alternative to Money Market Funds:
A. Bought 2 J P Morgan 2.75% SU Bonds Maturing on 6/23/20:
Bought at a Total Cost of 99.8
YTM at TC = 3.63%
Issuer: JPMorgan Chase & Co. (JPM)
I now own 4 bonds. The other 2 were bought in November 2018 at 99.269. Item # 2.B. Bought 2 JPM 2.75% SU in a Roth IRA account (11/28/18 Post)
This purchase is being discussed out of time sequence. I wanted to highlight the ongoing problem of reinvesting cash flow.
This JPM bond was purchased on 4/1/20 in my Fidelity taxable account.
I received the following bond redemption proceeds and interest payments in that account on 4/1:
I attempted to reinvest the $4K in redemption proceeds by placing several limit orders which I can do at Fidelity but not at my other brokers. I am only willing to pay so much so I am not hitting the best ask numbers for the number of bonds that I want to buy.
This is what the order book for this bond looked shortly after I received the fill:
B. Bought 5 Wisconsin Electric 2.45% SU Bonds Maturing on 6/15/20:
 |
| Price Reflects $1 Per Bond Commission |
FINRA Page: Bond Detail (prospectus linked)
Issuer: The issuer's new name is the WEC Energy Group Inc. (WEC)
WEC | WEC Energy Group Inc. Analyst Estimates
WEC Energy Group posts strong 2019 results
Credit Quality:
Bought at Total Cost of 99.796
YTM at 99.796 = 3.33%
C. Bought 1 Citigroup 2.65% SU Maturing on 10/26/20:
Bought at a Total Cost of 98.909
YTM at TC = 4.227%
Issuer: Citigroup Inc. (C)
C | Citigroup Inc. Analyst Estimates | MarketWatch
Credit Ratings:
D. Bought 2 BB&T 2.625% SU Bonds Maturing on 6/29/20:
FINRA Page: Bond Detail
Credit Ratings:
YTM at TC = 3.292%
BB & T is a super regional bank. The company recently changed its name and stock symbol to Truist Financial Corp. (TFC).
TFC | Truist Financial Corp. Analyst Estimates | MarketWatch The current stock price reflects a disregard for those estimates.
I eliminated my common stock and discussed the dispositions in these posts: Item # 1. A. Sold 71+ BBT at $50.72 (7/25/18 Post)(profit snapshot = $1,330.82); Item # 1. A. Sold Highest Cost 50 BBT Shares at $55.45 (2/8/18 Post)(profit snapshot = $1,061.02); Item # 3.A. Sold Highest Cost 50 BBT Shares at $47.24 (3/28/17 Post)(profit snapshot $568.45).
I have just restarted a small ball purchase program with 1 and 2 lot purchases. With 3 shares purchased yesterday, I am up to 7 shares.
Common Stock Close 4/3: TFC $27.21 -$1.27 -4.46%: Truist Financial Corporation
D. Bought 2 Fortune Brands Home and Security 3% SU Bonds Maturing on 6/15/20:
Issuer: Fortune Brands Home & Security Inc. (FBHS)
FBHS Analyst Estimates
Fortune Brands Reports Strong Sales and EPS Growth in Q4 and Full Year 2019; Provides 2020 Annual Outlook for Continued Growth
Credit Ratings: Baa3/BBB+ (see confirmation above)
Bought at a Total Cost of 99.834
YTM at TC = 3.722%
The total cost number includes a $1 per bond commission. Unlike Fidelity, Vanguard will not include the commission in the reported price. However, the YTM number shown above is based on the price paid 99.734 plus the $1 per bond commission. The YTM based on the price only was 4.173% according to FINRA.
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.
"when a worldwide depression comes into contact with excessive debt levels. The depressionary conditions can not continue for long before their is another catastrophic debt implosion."
ReplyDeleteWhat is a debt implosion? What's it look like?
Also can't all this money flooding create deflation?
If so, what's deflation look like to a portfolio? Will the same cash dollars have more value and therefore what's saved up will last longer? Stock prices though will deflate?
Land: When a company has excessive leverage, and finds itself in a position where it has no revenues, which is common now, their financial condition worsens rapidly.
DeleteThose who were on the edge already quickly default and others will soon follow. There is a snowball effect as employees are laid off and vendors and rent are not paid which puts those expecting payments in a bind. Then they cut back, and so on.
Trillions of debt obligations are incinerated and bank failures accelerate.
Lending conditions, already under pressure from narrow net interest margins, become tighter, causing more firms to fail.
The snowball effect is more job layoffs that in turn reduce consumer demand for products and even employed consumers become more fearful about spending.
Depressionary conditions would include an acceleration of debt defaults with recoveries generally pennies on the dollar.
Since the depressionary conditions now in motion in the U.S. are happening quickly, I will use the phrase "debt implosion" rather than debt bomb explosion to describe the more sudden incineration of trillions compared to what was more of a slow burn in 2008 and into 2009.
Perhaps, the small business loan program that is part of the CARE Act will keep employers with less than 500 employees solvent for awhile.
https://www.vox.com/2020/4/3/21196191/cares-act-apply-small-business-loans-grants-ppp-eidl
The severity of the last Near Depression was due to an economic recession being encapsulated in a bank financial disaster and a near collapse of the financial system.
The problem largely originated with improvident loans granted to home buyers who could not afford to service their loans, and then the packaging of those loans into products, designed by the Masters of Disasters, that no one really understood or could value when loan defaults started to accelerate.
What could happen now is that loans made to both consumers and businesses, all types of loans, could go bad if depressionary conditions continue for too long. The last two words in that sentence are the key.
I view a continuation of depressionary conditions into the third quarter as potentially more serious than what happened in 2008.
A lot will depend on whether the nation can start to get back to work this quarter with a robust recovery in motion in the third and 4th quarter.
If the pandemic requires shutdowns into the third quarter, then the odds of a financial disaster, which would make matters far worse, go up.
So if anyone knows the answer to that problem, it would be helpful to share it since it will determine whether or not I should be buying stocks now or moving more rapidly into safe and secure investments with little or no credit/repayment risk.
So debt leads to bankrupcy and closures, and the next domino's debt makes them weak, which leads to more.
DeleteThat would be horrific.
The FDA has approved some 15 mins tests. So we should have some ability to get out of this before a vaccine is available. China and So Korea are. There's gov't support too.
It would be nice to know - because it's a totally different strategy still. I'd be selling all stocks not nailed down, i.e. all. Well maybe not a few dollars worth of indices bought a long time ago.
So even if this worst case doesn't happen, there's still enough closure to point that stock values should be lower than the recent bottom.
I can feel the exuberance wearing off. There's less sense of waiting to buy the dips now. It's not gone though. Almost every article offering stock ideas, is about finding solid dividend paying companies. CNBC guests are less focused on that narrow sector though.
Thanks for explaining!
DeleteLand: The nation needs to be able to get back to work during the second quarter in a manner consistent with protecting health.
DeleteThe new Abbott test kits are one part of the answer. Workers can be tested for infection before entering the workspace.
Fast response serology tests could also be part of that return to work.
https://www.nbcnews.com/health/health-news/home-fingerprick-blood-test-may-help-detect-your-exposure-coronavirus-n1176086
That test can determine whether the person has had the COVID-19 infection. While more investigation is needed, those who have developed antibodies from an infection may be immune to further infection and can return to work.
One way that a virus dies out is that it runs out of people to infect since the population develops antibodies to ward off the infection. The Spanish Flu, the worst pandemic in the modern era, suddenly ended in the summer of 1919.
https://www.history.com/topics/world-war-i/1918-flu-pandemic
I am making small bets now that there will be a V shape recovery taking shape in the third quarter. Several sectors are being priced now more consistently with the dire scenario where depressionary conditions linger on into the third quarter and negative growth in the 4th. That is when the financial meltdown could happen that would impede a recovery and make matters much worse.
There's one tiny fly in the oinment I'm keeping ears open for.
DeleteOn CNN an infected guest nurse commented that the 2nd time around getting coronavirus, is worse than the first. There was no follow through asking her. I was under the impression it was her first round and she was talking based on her the nursing experiences of the nursing staff that had gotten it.
It is so much more likely that antibodies work on a virus. (since it's not bacterial.)
I really don't know what the trajectory will be. I do think prices are a little high even for the best case scenarios. I also lean to the better or not full disaster cases to be most likely. The imagination of doom is usually over done.
I have nearly no skills at pricing shares. It's something I need to work on learning. I'm basing my sense on how 30% is from PE expansion in the last year. Add that earnings will be less than they were projected they were headed to for all sectors except groceries and streamingTV and some online shopping. Market's down 20%, was shy of 30%. So prices should be another 10% below the lows that were 30% off the highs.
The truly damaged sectors should be even more. I'm not totally sure what sectors that includes. REITS, mREITS, BDCs, cruiselines, airlines, price-based energy. But Hotels are making rooms up as emergency hospitals. They may recoup some costs. There are other effected sectors that aren't getting enough attention yet for being effected.
Meanwhile, it has slowed down the other big doom problem - climate change.
With some punctuation.
DeleteI have nearly no skills at pricing shares. It's something I need to work on learning. I'm basing my sense on how 30% is from PE expansion in the last year. Add that earnings will be less than they were projected they were headed to, for all sectors except groceries and streamingTV and some online shopping. Market's down 20%, was shy of 30%. So prices should be another 10% below the lows. (The lows were 30% off the highs.)
The truly damaged sectors should be even more down.
I grocery shopped yesterday. I stood in lines outside stores to be let into busy stores.
ReplyDeleteWhile in line, I wondered about the wisdom of being 6 ft from various someones for 10-20 mins while the wind gently blew the air around us.
Some foods were hard to get - namely frozen vegetables. Also apparently there is still expectation of a future t-p war and dire need to build up arsenal stockpiles for the upcoming battle.
We have switched our Passover seder to virtual from 3 houses. This should make the "who's the leader and who's in charge now and who's turn is it to read" game quite adventure-some. Also hiding, then finding, the afikomen might be quite a challenge if it's hidden in a different state and video screen. Happily it's not the same night as Easter, for which I'm sure the airwaves will be equally overloaded.
My takeaway is that I hope I don't have to go out again for a while. I didn't enjoy the risk factor.
Land: I am using Amazon Fresh to deliver food. Generally, I am able to arrange next day delivery.
DeleteI did leave the house today, mainly to drive my 1987 Mercedes that becomes finicky when left dormant for too long, but did mail a bill payment. Most of bills are on automatic payment but this one was for my annual car tags. Tennessee has closed its car testing stations until further notice so maybe I do not need a pass certificate.
While driving, I did see people wearing makeshift masks for the first time.
Church gatherings have been a source of group infections. Several republican governors have exempted church services from stay at home orders or requests.
A church in California is an example
https://www.cnn.com/2020/04/03/us/sacramento-county-church-covid-19-outbreak/index.html
The infections in South Korea started with a church congregation.
I can buy meats and vegetables from Amazon Fresh as well. Their bread offering, "Dave's Killer Bread", organic with 21 whole grains and seeds, is good for sandwiches.
I order the organic Fuji apples and eat one of those everyday.
Amazon fresh is not available in my area (to quote their website). I've very surprised.
DeleteThe local delivery services were out of so much that I thought it easier to go to the store, so I could see what I could spot. The stores had more than the online. As in, I found chicken. Not the type I usually get (that's humane to the chicken but not pricey organic). Still, last trip I could only find overpriced chicken backs. I bought enough to feed everyone, before this 3 house decision. Humm...
A 1987? So a rotary engine or at least carborator? Cars do need to be used or stuff dries up. I may take mine for a ride to take a walk.
I have one of those formal blue masks. My doctor rather annoyingly misdiagnosed me this fall, so I was wearing them for low immunity that at the time, I didn't have. I should say - my former doctor. There's something super weird about everyone now doing what I just was doing a few months ago.
The church exceptions are disturbing.
Sounds like good bread. I've been using diet bread. It's okay.
Hello SG,
ReplyDeleteperhaps you could help me understand what happens when the GOVT creates a massive amount of dollars to loan/give to those in need; the outcome of this is confusing to me.
It seems if one monetizes the debt. then you get massive inflation , but the Fed is buying so many bonds that they will keep a lid on rates; so I am confused; thanks
GS: The increases in government debt originating from the CARES act is intended to partially offset losses in GDP resulted from widespread shutdowns. Replacing private demand with government spending is not inherently inflationary but a counter to deflationary effects that would follow from a rapid decline in employment and GDP.
DeleteThe spending could end up being a contributor to inflation if the stimulus largely hits when conditions are almost back to normal with most businesses open and laid off employees rehired and earning a paycheck. That is a possibility. It depend on how quickly the aid is disburse and how soon the pandemic is brought under sufficient control that the shutdowns can largely end.
Notwithstanding Trump's claims, the banks are not set up to process and approve the millions of loan applications being made now.
There appears to be a massive logjam.
E.G.
https://www.reuters.com/article/us-health-coronavirus-stimulus-banks/us-banking-group-warns-of-massive-delays-tech-issues-with-small-business-rescue-program-idUSKBN21N0QW
https://www.politico.com/news/2020/04/03/small-business-lending-program-coronavirus-163333
Trump calls those report Fake News:
Page 49 Transcript:
https://www.whitehouse.gov/briefings-statements/remarks-president-trump-vice-president-pence-members-coronavirus-task-force-press-briefing-19/
The loans are important in that the business recipients will use the funds to cover payroll costs, most mortgage interest, rent and utility costs, and the loans will be forgiven when used for those permitted reasons:
https://home.treasury.gov/system/files/136/PPP--Fact-Sheet.pdf
It is important to get money quickly to those businesses to ameliorate what I call the snowball effects.
No one should be surprised that the most of the money is disbursed when businesses, or at least the ones who managed to survive with no government assistance, are starting to move back toward normal operations. Maybe the money will be disburse sooner, but I would not take that as a given.
Central Banks in the developed world have manipulated interest rates throughout the maturity spectrum to abnormally low levels since 2007. In the U.S. all treasury yields from 1 month through the 30 year bond have yields below the last reported annual inflation rate which was 2.3%.
https://www.bls.gov/news.release/cpi.nr0.htm
The negative real returns is before a further loss of buying power due to any taxes owed on the interest.
I view it as more probable than not that CB manipulation of nominal rates below the inflation rate creates misallocations of capital that will come back to haunt us all and is actually a deflationary force (in part due to reducing household income)
I have pointed out in the past that the FED was able to hold the ten year treasury yield at an abnormally low level even during a period of abnormally high inflation. This occurred after WWII through 1950:
https://www.nber.org/chapters/c11485.pdf
So based on prior experience there are facts that substantiate a claim that massive monetary stimulus that lasts for an extended period does not contribute to inflation for a variety of reasons that are not well understood now. That stimulus does contribute to the mispricing of risk assets, excessive borrowing, and the use of borrowed funds to buy back stocks, increase dividends and other purposes that do not have a direct relationship to economic growth.
Does this feel like a bottom is forming?
ReplyDeleteI haven't bought yet today. I looked for weak shares to sell into this rally.
INDA India, at 10%, $74 gain sold at $23.51. I'd bought all of $748.
Right after buying it'd popped even more to $25. I was waiting for a return to that. However, news there is about cases increases and will overwhelm them. I bought for the long run claim back to $30-40's highs. But getting out now so it doesn't turn into a long, long wait, and depressing if it tanks for now. Timing, it will probably keep climbing today so should have waited a few more hours, but I decided not to be patient.
Nothing else I have that was a poor buy is high enough to sell.
I'm going to keep doing reading & looking up stocks to get a base of what I might want to buy on good buying days.
---
Today is over the better news out of NY.
This feels different from the other rallies. Like the edge of wondering how long it will last, is off.
If so it's happening before the bankruptcy disaster scenarios are likely.
Definitely showing that the market is currently driven by news blurbs.
Or the big question...am I being upbeat because it's an up day and that's all, swinging mood to go with swinging market?
Land: The market has had similar up days since it started to go into the crapper.
DeleteWhatever optimism existed on those 1K+ DJIA days since 2/24/20 was quickly snuffed out by more bad news.
The recent big rallies and declines days are indicative of how the market is reacting to the most recent news about the pandemic which means stocks could turn on a time or continue moving higher based on what happens tomorrow, later this week or month.
Investors want and hope for an end to all of these pandemic problems and worries.
I have been buying stock based on the possible scenario that there will be a V shaped recovery starting later this quarter, but I do not view that as a more likely than not scenario.
On the other hand, the odds are not immaterial and are worth IMO playing with increases in my stock allocation, which I have done.
Today, I decided to restart a "buying program" in MAPTX which I eliminated last year.
1. Eliminations: Sold Shares of MAPTX at $27.9:
https://tennesseeindependent.blogspot.com/2019/06/observations-and-sample-of-recent_23.html
That fund owns stocks in the Asia-Pacific region ex-Japan.
https://www.marketwatch.com/investing/fund/maptx
The restart buy is extremely timid at $100.
Sitting at a desk in Brentwood, Tennessee, where I am unable to see what is happening in that region, being more visually impaired than Sarah Palin, I have the impression that Asia ex-Japan will be returning to normal business operations before the U.K., continental Europe and the U.S. who have not dealt with the pandemic as effectively even though both the EU and the U.S. had at least a two month warning the virus was coming and basically did nothing to prepare for the arrival.
Your $100 buys show an extreme of confidence in the v-shaped recovery. I say that with no intent of hyperbole.
DeleteEverything including how this will move from here over the long term, depends on news.
If I knew the news, it wouldn't be news.
I've been looking at Asia as an indicator of how short it can be for US/EU. But that's a good point to keep in mind, that they used actual processes often from the start.
Land: I am not discussing trades in my Roth IRA accounts, other than occasionally a $1K par value bond transaction.
DeleteI am now looking at one of those accounts and I did buy over 70 common stocks, stock CEFs, preferred stocks and exchange traded bonds in that account last month and this month. I am attempting to deal with an excess cash balance in a MM fund whose yield is going down.
No one will sell me investment grade corporate bonds at prices that third party pricing services consider fair market value or even a little higher. .
The only way to buy one is to hit the ask price which I did earlier today by buying 1 Boston Properties 3.215% senior unsecured bond maturing on 9/1/23. I had sold 2 of those bonds earlier at over par value and bought 1 back this morning at a 98.885 total cost creating a YTM of 3.475%. The bond is rated Baa+/A-. So far, I am responsible for the entire trading today.
http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C627516&symbol=TIAA3990354
Bonds trade and are priced at 1/10 of par value. So that bond will cost me $987.85 + a $1 broker commission. I bought it in a Roth IRA where I turn the taxable interest into tax free.
Corporate bonds are moving up in price today and down in yield even though treasuries are moving down in price and up in yield. The reason is that investors are more optimistic today than last Friday about the their credit risk.
Vanguard Intermediate-Term Corporate Bond
$86.91 +$ 0.67
Last Updated: Apr 6, 2020 at 3:18 p.m. EDT
https://www.marketwatch.com/investing/fund/vcit
iShares 7-10 Year Treasury Bond ETF
$121.43 -$0.515
Last Updated: Apr 6, 2020 at 3:19 p.m. EDT
https://www.marketwatch.com/investing/fund/ief
I also added $100 to the Matthews China Dividend investor fund.
You've been reporting some of the CEF, and bond buys. So that's been an important part of how you've invested in this.
DeleteHave you bought much common stock? It's not as relevant in your long term goals as they are in mine.
That rally into the close is something else. (And not good for FOMO.)
Wonder if the support that turned stocks back in the prior rallies, will hold here. I think it was the 20 day MA.
There's a market shift into more enthusiasm based on reports of plateauing in NY. This feels more firm than before to me. That's because the early day dip & rebuy was more shallow than before & sooner in the morning. When it's sooner, it seems to have more of a hold.
However, while it can be start of a bottom...the other factor is that to get to another leg down, *also* requires relief then enthusiasm so that negative info can cause a new (and active) run to worry.
So FWIW that's my writing out loud on all this. ...hopefully not too boring.
Land: I was bored today and managed to stay alert with chugging a 12 ounces of refrigerated coffee, splashing cold water on my fact once an hour and listening to Bruce Springsteen sing Born to Run on ITunes repeat.
Deletehttps://www.youtube.com/watch?v=IxuThNgl3YA
No, I do not discuss any of the trades in my retirement accounts other than $1K par value bonds. I use to discuss some, but not anymore.
I will frequently buy the same exchange trade bond or preferred stock in a retirement account that I discuss buying in the blog in a taxable account. I will generally wait for a lower price to reduce risk.
I would say that I have added about 50 new common stocks over the past 30 days in my Roth IRA accounts.
I am becoming more sanguine about taking risks in the ROTH IRA accounts since I am now confident that I will never need the funds. I think at least one of my heirs views my money as his and is only technically mine as a lawyer might say. So I guess that I am working for the heirs now in those retirement accounts.
The decline in the VIX from its recent parabolic spike highs is consistent with prior long roads back toward <20 movement after a major volatility event.
The VIX decline today, however, was disappointing:
CBOE Volatility Index
45.24 -1.56 -3.33%
S&P 500 Index 2,663.68 +175.03 +7.03%
https://www.marketwatch.com/investing/index/spx
The recent low was intraday at 2,191.86 on March 23, 2020. The rise from that level to today's close is +21.43%.
I think the fear is still there, just underneath a thin coat of confidence and optimism that can easily be shattered with another round of pandemic contagion and longer than currently expected shutdowns.
I will probably restart SDS as a hedge after further gains in SPX.
Finally, I accomplished something today! I found a single brown knee-hi sock in my laundry. It as now been placed safely in my "unique one of a kind sock" pile.
DeleteThat is a disappointing VIX decline. When I looked earlier today it was at 5% and that seemed out of line with the rise too.
You are sounding like the CNBC experts. (The ones I respect.) They are talking about maybe getting to 2790, another 5%, then they'll be putting on hedges. Others talked again about retesting the lows, or even lower.
I really hadn't been thinking that way.
It's so news dependent.
The one thing I think the TV analysis keep making a mistake about... is using past time periods. They say "but it's early and takes time to work out of." But past events didn't come on this fast either. Nor have a non-economic cause.
Land: Socks will grow legs and walk away from their brother or sister as the case may be. That is a well known, though seldom discussed, law of nature.
DeleteIf I start SDS back up, the first buy will probably be 10 shares, so no big deal. I want a lower price to restart, though I did seriously consider a purchase shortly before the close today.
ProShares UltraShort S&P 500
$28.12 -$4.38 -13.48%
https://www.marketwatch.com/investing/fund/sds
In my last hedging effort, all of which were sold into the bid dive last month, I also used QID and TWM. I think that most of buy of TWM were below $15 and that one closed today at $19.4. That is a double short for the Russell 2000.
https://www.marketwatch.com/investing/fund/twm
Cash is my main hedge followed by short term investment grade corporate bonds, treasury bills and CDs.
I am placing about 10 limit orders to buy short term corporate bonds early every morning. I am just not receiving fills as of late. I would be content now to limit my excursions into risk assets to those orders unless and until stocks reenter a another dive mode.
ha ha :). I'm hoping the brother or sister has fulfilled his or her bucket goals, and comes home soon.
DeleteSouth Gent,
ReplyDeleteRe. NMFC's stock offering "...The Company’s Investment Adviser paid a $0.39 per share portion of the $0.42 per share underwriters' sales load ....." why would the Investment Adviser paid a big portion of the sales load? Does it sound like a rebate to NMFC for the business?
BDC's took a bit hit in 2015-2016, but this time it's much worse. I am now compiling a watchlist with ARCC, NMFC, TPVG, HRZN ...etc. Time will tell.
Y: The underwriters' compensation is the discount that they receive to the public offering price. That is their business. It would not make any sense for the underwriters to reimburse the NMFC external manager who paid $.39 per share of the discount.
DeleteNew Mountain decline in price yesterday, notwithstanding the huge rally in stocks.
BDC share price gains were muted which indicates that the concerns about credit losses and leverage are still present.
I will be discussing TPVG in my next post.
The decline in BDCs this year is worse than prior declines excerpt for 2008. Most of the current crop were not then in existence.
TPVG and other externally managed BDCs have on occasion paid all or part of the underwriters' commission in the past. As I recall, TPVG had two stock offerings within the past 12 months or so. In the first of those, it paid for the underwriter's commission and did not do so on the second offering.
Why do it? Without looking at the details again, the external manager's failure to pay all or most of the underwriters' commission would result in the offering being dilutive to existing shareholders before the BDCs own own-of-pocket costs connected with the stock offering which are significant. The external manager will recoup the amount paid through the generous compensation paid to it, which includes a base fee on total assets, including assets purchased with debt, and an incentive fee.
For example, say the manager is paid 2% per annum for assets under management and raises $70M in a stock offering. The 2% on $70M would produce an additional $1.4M per year in compensation assuming the assets purchased with the new funds did not lose or gain in value.
Another reason is that the underwriters may force the BDC to pay part or all of the commission in order to bind themselves to purchase shares that they will then offer to the public at a higher price. There may be concerns that a dilutive offering would cause them to take a loss on the shares, being unable to sell their allotment at the public offering price. Remember that the share price will invariably retreat after a public offering announcement. When the investment advisor eats part of the underwriters commission, the share price decline pre-offering will generally be less than one when the external manager eats none of the selling commissions. That may explain what is really happening.
South Gent,
DeleteLeverage is a double-edged sword.
"...The average leverage for publicly traded BDCs increased for the ninth straight quarter to a debt-to-equity ratio of 1.05 times, up from a five-year low of 0.73 times in the third quarter of 2017, according to Refinitiv LPC data.
BDCs borrowed US$6.4bn over the last 14 months, and the debt held by BDCs is, on average, due to mature in 2022, according to Fitch Ratings...."
https://www.reuters.com/article/bdcletters-coronavirus/bdcs-reassure-investors-as-they-confront-coronavirus-recession-fears-idUSL1N2BK0VX
Y: As noted in that article, the BDCs were given the legal right to increase their leverage as a result of the Small Business Credit Availability Act. I commented at the time that this would give the BDCs more rope to hand themselves.
DeleteYou have to look at each individual BDC on leverage and debt maturities.
+++
The rally in early trading today is probably linked to the COVID-19 model used by the Trump Administration showing a decrease in the projected infection rates from its most recent prediction. That model originates from the University of Washington and is more optimistic now than other models.
Washinton Post:
https://www.washingtonpost.com/health/2020/04/06/americas-most-influential-coronavirus-model-just-revised-its-estimates-downward-not-every-model-agrees/
The CDC head downplayed the COVID-19 models this morning and opined that the deaths will be “much, much, much lower” than projected by those models.
https://abcnews.go.com/Health/cdc-director-downplays-coronavirus-models-death-toll-lower/story?id=70011918&cid=clicksource_4380645_4_heads_hero_live_hero_related
Both of those news events are feeding the buying frenzy that is based on a V shape recovery taking place.
I don't have the fortitude to buy SDS at this point. But the midmorning pull back did not v-shape back up. So there's some hesitation in there (written at spy $270.35).
DeleteKramer mentioned maybe insider knowledge of some test coming available but that he couldn't find evidence of one.
I've been wondering why Trump was willing to let anyone take negatively and he did as well. He may have known about this data coming? That would be his kind of setup manipulation, create fear, then play it down. With elevated fear, people will listen more easily to the next piece of whatever you have to sell to make them feel better.
I was never convinced on that the data. It didn't seem in line AS LONG AS we did the most we could. (Just my sense at the time - I could have been convinced to believe if studied and shown accurate.)
Also he's pushing this malaria drug. Kramer tried to get some for himself because the recovery stories were too many and too good to ignore. My thought being not about whether it works, but that the "convincing" is at high levels.
Kramer's doctor and the pharmacy told him no, because he's stockpiling.
He also talked about bigwigs having their own private islands to isolate on. Reports I have is they all went to upstate NY, rented hotel rooms and are missing the whole point of isolating as they walk around ... and make locals vulnerable.
No more Kramer stories - I changed the channel.
I did restart SDS this morning as a hedge buying a few shares at $26.12. I do not trade pre-market or in extended hours after the close. I placed the limit order shortly before the open at $26.3 which was below where SDS was then actively trading in pre-market. My fill would be a the limit price of $26.3 or at a lower price, which was $26.12. The purchase price was the opening one which is the way it works when the limit price is over the opening price.
ReplyDeleteProShares UltraShort S&P 500
$27.08 -$1.0399 -3.70%
OPEN $26.12
DAY RANGE 25.99 - 27.07
Last Updated: Apr 7, 2020 at 10:16 a.m. EDT
https://www.marketwatch.com/investing/fund/sds
I don't know whether to sell a few things. So I'll do nothing, I think.
ReplyDeleteWalmart now at $125. Up 24%.
Intel now at $29.15. Up 27%
Take profits, or partial sells? I'm not overloaded in either one. Probably good timing to sell. But it is using timing.
Not sure why Intel's doing so well. SOXX isn't doing as well.
Land: I can only offer cold comfort on when to sell this rally.
DeleteI suspect that the Stock Jocks will have their ardor cooled when first quarter earnings reports are released, which will be underway soon, and managements complain about a lack of visibility after having withdrawn 2020 guidance.
I did sell KO this morning that I had bought last month in the $38 to $39 range. I was going to talk about that restart but will not being doing so now.
Coca-Cola Co.
$48.31 +$1.64 +3.51%
https://www.marketwatch.com/investing/stock/ko
I just have zero interest in KO at today's price.
I had eliminated my earlier position too early based the price later moving somewhat higher moving higher:
Item # 2.A. Sold 265+ KO Shares at $45.85+:
https://tennesseeindependent.blogspot.com/2017/06/observations-and-sample-of-recent_25.html
That sell occurred in June 2017.
Profit Snapshot: $5,338.55
I would prefer selling at a profit too early than too late given my capital preservation objectives.
As to whether the anti-malaria drugs chloroquine and hydroxychloroquine benefit COVID-19 patients, the drugs are currently in trials.
Donald and others are misleading the public about non-scientific trials of that drug. So far those small experimental uses to treat COVID-19 patients have been unsuccessful in two out of 3 reported efforts.
https://www.washingtonpost.com/business/2020/04/06/chloroquine-hydroxychloroquine-coronavirus-cur/
Trump and others are relying on those drugs helping 6 patients in France but then fail to mention that another sample consisting of 11 persons showed no benefits and a Chinese study likewise showed no benefit over a standard course of treatment.
I read this in a timely way. Thought it was helpful and your point was convincing. So I was assessing whether to chance a sell or simply go up and down with these. (What emotions would I deal with better, what's more likely to be a profit?) The phone rang for a needed call. In that extended time, I missed the chance to spend more time... sitting on a fence, with a pondering look on my face.
DeleteI'm still not sure what I would have decided. But concluded that the small ball buying or any style review of my holdings for strong ones, to add to during lower times... would give something to sell higher. Emotionally it wouldn't have to be high quality timing because anything would be a profit. If it tanked, it'd be more of a high quality stock.
Intel made it up to 32% up
Walmart to 27%
Land: For me, It is easier to move off the fence during uncertain times when downside risks are controlled through a trading strategy.
DeleteThe small ball trading system is primarily a risk mitigation strategy but it has emotional and psychological reasons for using it.
The stock market crash last month and the simultaneous yield opportunities created in the bond market gave me a chance to significantly increase my income generation.
I will earn significantly more dividend and interest income this year compared to last. Most of the increase will be from bond interest rather than common stock dividends.
The yields provided by bond purchases were greater than what I was able to secure during the interest rate spike in 2013 that took the ten year treasury yield over 3% by late December.
I would readily admit that some of the small ball trading is ridiculous even by my cautious standards, but they are buys.
If I had to commit $5K to each purchase rather than say $50 or $100, I would not buy at all. I would only be buying investment grade bonds.
Possibly one of the most ridiculous examples of the small ball trading system at work involves BUD. I have only bought senior unsecured debt issued by Anheuser for years. Recently, I started a small ball " buying program" in BUD with the following purchases:
2 shares at $43.21
1 share at $38.9
1 share at $36.68
1 share at $34.69
1 share at $33.80
Yesterday I sold 2 shares at $47.95 that were bought at $43.1.
Anheuser-Busch InBev S.A. ADR
Close 4/7: $46.77 +$2.09 +4.68%
52 WEEK RANGE 32.58 - 102.70
While selling 2 shares out of 6 is hilarious, it is required by the small ball system. I will discuss this stock probably in my last April post.
I came to realize or appreciate the advantage of the small Ball by program, as I sat on the fence.
DeleteI generally don't believe in doubling down that I see touted a lot on Seeking Alpha. That's generally resulted in excessive amount of a particular stock.
However the small ball buying has a different quality. It's buying during a dip. It's buying a small enough amount not to overwhelm. And it's buying into quality. When I've been looking at my list, I've been looking for things that were down a lot and good deals. And missed buying into things that were not down as much but were not down because they were high quality.
All of 6 shares isn't a lot. So can be great fun to talk about. But meanwhile it keeps one comfortable buying. So it may have a psychological advantage of stopping any freezes.
Somehow I missed that there's a sell criteria in the small ball buy program.
Sometimes my gut instinct does not lead me astray. When looking at the pre-market SPX numbers this morning, I thought the high would be made at the open or shortly thereafter which is why I had an order in for SDS. Losing the entire early morning gain and ending up in the red has an ominous tone to it.
ReplyDeleteNo one know what will happen in the next several months. Maybe Covid-19 infections will tail off dramatically, allowing most businesses to reopen this quarter with a full blown recovery in the 3rd and 4th quarters. I doubt it and would not, as I said earlier, award that scenario a more likely than not moniker.
A more likely scenario is that pain continues through the current quarter and into the third.
Before the coronavirus hit, was economic growth sufficient to generate corporate earnings that justified a 2800 handle on the S & P 500. I would say no. In fact, S & P 500 earnings were flat last year even though the index gained over 30%. Growth was slowing before the COVID-19 epidemic hit and was being propped up in the U.S. by trillion dollar annual budget deficits which will grow to over $3, probably closer to $4T, in 2020.
Europe was turning to negative growth late in 2019 before the onset of the coronavirus. China was already starting to wobble.
The U.S. is now in a recession though it will be months before NBER declares one. GDP growth will probably be negative in the first quarter and deeply negative in the second, likely going far beyond the worst quarter in U.S. history. You will have to have a lot of hope to take SPX to 2800 now which can not be diminished through an avalanche of bad corporate reports and economic data.
++
I did buy $14K in investment grade corporate bonds today by hitting ask prices. The largest was a 10 bond fill in my Schwab account where I had $12K in proceeds received today from a maturing CD and treasury bill.
Blue chip apartment REIT bonds are selling outside of a range for bonds similarly rated bonds maturing at about the same time. The fear has to do with renters being unable to meet their rent obligation and the emergency orders in most states that prohibit evictions for several weeks or months.
One of the blue chip apartment REITs is Essex Property Trust:
$214.63 +$2.02 +0.95%
https://www.marketwatch.com/investing/stock/ess
The common stock has already paid a steep price related to COVID-19 pandemic with a 52 week high at $334.17 hit in February.
I will discuss in about a month or so the purchase of 10 Essex Portfolio L.P. 3.375% SU notes maturing on 1/15/23, the operating entity for Essex Property (ESS) who guarantees the notes. The yield to maturity at my total cost is 4.494%. The ratings are currently at Baa1/BBB+
http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C615351&symbol=ESS4162820
The bond can be called on or after 10/15/22 at par value (page 48 of the prospectus) which I would anticipate happening provided rates are near current levels and the issuer's credit risk is about the same as now, which is at least an open question given the uncertain course of the pandemic.
Essex Property 2019 Annual Report: Unsecured debt listed at page F-39
https://www.sec.gov/ix?doc=/Archives/edgar/data/920522/000092052220000026/ess-123119x10k.htm
Most of the apartments owned by Essex are located in California where there is an eviction moratorium in place. The rent is still owed and will have to be paid once the moratorium is lifted.
https://thehill.com/homenews/state-watch/489910-california-gov-newsom-declares-statewide-moratorium-on-evictions-for
That was a fortuitous buy of SDS.
ReplyDeleteWill the new SDS buy signal be when VIX goes under 40 / 45 instead of 20? (It's all so odd, maybe that will be it.)
I can't tell where the market's going, long or short term. Technicals says down again. But it's totally news blurb dependent. Mid day NY's #s came out and they were back up a little. Maybe that was the sell off. Someone on media blamed it on getting out higher of people who'd been stuck in positions.
Earnings mostly won't look good. Normally in a bull, the market finds some reason to rally through earnings season. I'll find out how it works in a bear.
The numbers won't be good, but will the be worse than the market think's it's priced in?
As you put it, there is a thinly veiled worry.
This will all be obvious in hindsight!
Land: The SDS purchase at yesterday's open was proven correct for that day only. I will ease into further buys when and if the market continues to rise notwithstanding horrific corporate earnings and economic data. I may later expand the hedges to include QID and TWM.
DeleteInvestors may not be so comfortable about their V shape recovery prediction when bad news arrives on a daily basis.
Bad economic and corporate earnings news will not change the V shape recovery forecast, currently being made by a majority of Stock Jocks, when and if good news about the pandemic becomes more prevalent than now.
News that an effective vaccine has been developed and has been fast tracked in trials would be the best possible news.
I do not yet see a leveling off in new U.S. infections or deaths.
https://www.cnn.com/interactive/2020/health/coronavirus-us-maps-and-cases/
The new cases now stand at 399,929. That number likely grossly understates the actual number due to inadequate testing nationwide.
During the night, Futures were flashing between red and green. Multiple times.
DeleteThe market can't make up its mind what it thinks of this whole thing.
Anything that can be grabbed is good news will be grabbed onto. The economy was already lining up for a pullback and recession. So if prices don't wind up in a Range for comfortable buying, there may be more opportunity.
If vix goes back under 20, it will be easier now for me to feel more comfortable buying in during a bull trend.
Those are my fomo soothing remarks to myself. I still have half my funds in cash, and not taking advantage.
Markets above 20 day moving average, but still below 50 and 200.
I'm on an alert system for local traffic accidents and emergencies. How could there be a big traffic jam from an accident (I received a notice)? How many cars can there be on the road?
ReplyDeletehttps://twitter.com/ScottGottliebMD
ReplyDeleteSG, any thoughts if life will return to somewhat normal over the next year? thanks
G: I have no problem with accepting a prediction that life will be back to normal, or close to it, within a year. I may also be dead in a year, not from COVID-19, but from a heart attack.
DeleteOver the next few months, the answer seems to be grounded in rolling out massive testing. Notwithstanding Donald's claims to the contrary, one of the most serious problems is inadequate testing throughout the nation.
If someone is going to invest in stocks, then they needed to invest when there is blood in the streets or something close to it. For me, the past 30 trading days has been a gift for bond investing, but I did increase my common stock allocation as well.
I would not rule out a retest of the March lows. However, without a major uptick in infections that requires shutdowns into summer, I would view a decline back down to 2150 as unlikely unless a recession grabs hold and doesn't let go in the second half.
https://www.theatlantic.com/ideas/archive/2020/04/contact-tracing-could-free-america-from-its-quarantine-nightmare/609577/
ReplyDeleteI meant to include this in my question
G: I seriously doubt that Americans would tolerate that kind of intrusive tracking. Smacks too much of Big Brother.
DeleteIt could work, however.
For now, everything that I read indicates that most jurisdictions are not performing tracing very well or at all.
When infections plateau and start to turn down, combining far more comprehensive testing with far better gumshoe tracking of an infected person contacts is needed.
I am somewhat surprised about how well self isolation and quarantines are going, and those efforts will work, though not completely.
I went out to mail a bill payment this morning, one of the few that is not on automatic draft, and would estimate that activity was no more than 5% of normal. Retail clothing stores were close as were restaurants except Chick Fil-A had its drive through running. The roads were almost deserted with about 1% to 3% of normal traffic levels. About the only activity that I saw was road construction happening on Franklin Road where the state is widening the road. GDP for the second quarter will be horrific.
My bond for today is the Kimco Realty 3.2% SU bond maturing on 5/1/21.
ReplyDeletehttp://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C610029
I bought only 2 when 25 were available. The total cost was at 99.325 (bought at 99.225). The YTM at total cost is 3.861%. The credit rating is still Baa1/BBB+ but the Bond Ghouls are pricing that near maturity closer to BB or BB+.
A reader asked me about the common stock several months ago, and I replied that retail REITs were totally unappealing to me. The KIMCO common stock is slightly more appealing now, with the price at less than $10, but I prefer this bond to the higher yielding common stock since it is safer (not safe in an absolute sense but only a relative one) and contains a legally binding commitment, short of bankruptcy, to pay me $2000 on or before 5/1/21 + the coupon interest. KIMCO may redeem the notes on or after 3/1/21 without making a make whole payment.
Took a nap. Woke up to news that Sanders is out.
ReplyDeleteAfter a big smile, grabbed my computer to see what I could sell into the rally.
This didn't get as high as yesterday's high.
Pundit's are still calling for more pullback, when earnings come out. They're tapering back to "might not get to the lows."
This pundit has interesting info (maybe Howard Marks, a bonds not equity guy):
Yesterday the rally was small size buys of retail. The end of day decline was large orders of big money.
With all the desks closed not just the exchanges but the bank's investors are working from home, they aren't sharing info like they are usually able to. So he expects less volatility when they return (which of course will also be a time of more certainty so that's an easy prediction.)
----
I think the "hit to american psyche" is a poor idea. People take 2 weeks to bounce back in the market - people change moods well. They may save more. That's true. But humans naturally move to activity. This needs better testing first.
Earnings will determine which stocks gain and which lose. So there's an excuse to procrastinate and see earnings before buying.
----
Sanders would have been extremely dangerous to the Jewish community. Also nearly every other group thinks he's dangerous to them too. Black people report him having staffing that are racists.
Antisemites have been using his Jewish heritage (he doesn't consider Judaism important to him), to claim their views aren't antisemitic because they support a Jew. That's dangerous.
His twitter supporters use it as a reason to call me an antisemite, any time I point out that he's surrounded himself with antisemites, or reference his lack of connection to the Jewish community and outright avoidance of it (more than non-Jewish candidates ever have.) I've never been called one before. This is by non-Jewish people who know a lot less about the topic than I do. They don't even know as much as I've read up on Sander's relationship over the years to the Jewish community (denial, avoidance, and no connection).
He's flat out lied repeatedly about Israel. It feeds his base well. He lied with his Obama clip in his TV ad. So, tells me a lot about his character.
Basically, DNC let a 3rd party equivalent to a green-party concept, run with the DNC. That allowed a 3rd party to influence or try to dominate the DNC platform. It allowed a near takeover of the DNC by a 3rd party concept and candidate. Bernie was able to use the visibility and credibility lent by the DNC who gained that with moderation & equality ideas, to raise up a 3rd party and take away DNC voters that it would never have gained crediblity to otherwise.
After 2016, I'm not sure who to blame for allowing this in 2020. Party will have some work to recover.
I'm still an independent.
I am not sure that testing for already infected individuals will be ready on a large scale for summer; ie , antibody testing and that outbreaks will not continue;
ReplyDeletePlus I am not sure what you mean by shutdowns; it will be very hard for uninfected individuals to ( at least in my opinion) to go to crowded venues like sports events, restaurants, movies especially those who are at higher risk like us Boomers, to really interact on a fairly normal manner; So i wonder if a retest is more likely than not ;
and the other question i had : would you buy larger amounts of stocks other than small ball if a retest were to happen?
thanks!
G: Shutdowns would include all retail establishments which are now closed and that is just about all of them except for grocery stores and places like CVS.
DeleteIt will take a long time before restaurants reach pre-pandemic levels. I doubt that sporting events will be back to normal this year.
If there is a will to ramp up testing to include most people, including almost everybody in more densely populated areas, and the necessary funds are made available, it can be done. Workplaces which are now shutdown, and many are, can reopen with on-site testing of workers probably before the end of April.
As to what I will do when and if the market retests the March lows, I am just not in the market for large stock purchases. I probably increased my stock allocation by over $100K in March and would do the same on another retest provided I am comfortable that the world is not coming to an end.
If I take chances, it will be in bonds. An example would be the purchase earlier today of 2 Main Street Capital 5.2% senior unsecured bonds maturing on 5/1/24. That is about as frisky as I am going to get. I bought at a total cost of 92.727 (at 09:01:40), creating a YTM at that price of 7.306%.
thanks; i am searching your site for the best way to look for bond ratings; I wonder how you a factoring in a recession to your credit eval for any company?
DeleteG: I am not buying junk rated bonds. For bonds where the risk will be enhanced for a recession lasting several quarters, I will keep my exposure to 2 bonds. That would include Main Street Capital and Ares bonds, even though I have no reason to believe that those best of breed BDCs will fail. The common shareholders of those two BDCs would likely take a dividend cut hit with a recession lasting into the fall.
DeleteYou can register with Moody's to read their bond reports. It is free, but requires a registration.
Fitch ratings reports are available without a registration.
https://www.fitchratings.com/search/?expanded=entity&
Fitch generally does not rate BDC and REIT debt.
The best way to learn about corporate bonds is to become familiar with the FINRA website. Whenever I buy a corporate bond, I refer to the relevant FINRA page.
http://finra-markets.morningstar.com/BondCenter/Default.jsp
I will also use the detailed FINRA advanced search to look at how the Bond Ghouls are pricing identically rated bonds maturing at about the same time. That will provide me with an alternative opinion about credit ratings. I also reach a judgment call on safety by being familiar with the company, as familiar as I would be or become when buying the common stock.
An increase level of risk will either cause me to pass or limit my purchase to 1 or 2 bonds.
An identically rated bond to Kimco maturing about the same time is the electric utility holding company WEC where the last trades were in the 2.% to 2.4% YTM range.
http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C762427&symbol=WEC4641201
This generally tells me that the Bond Ghouls do not agree with the Baa1 rating for Kimco since I bought 2 bonds earlier today at a 3.863% yield at my total cost. That YTM is closer to a range for Baa3 rated bonds like this one from Mylan:
http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C669239&symbol=MYL4448194
If there was ever an argument against Sanders, this shows his character.
ReplyDelete"Bernie said he's staying on the ballot and encouraged his supporters to vote for him. So Biden supporters still have to show up and vote till he gets a majority.
The only thing that's changed is he's no longer actively campaigning. "
He gets to keep the campaign money while it's active.
Apparently it's true:
https://twitter.com/thehill/status/1247927940110843911?s=20
He also had nothing kind to say about Biden and there is no united front now for the democrats; plus the fear of standing lines to vote and Scotuses who used remote voting to compel Wisconsinites to stand in line and risk infection for INMO political reason.
ReplyDeleteSo who know what kind of disadvantages the Dems will be for the election; while trump has daily Pep rallies while he saves the country from the mess he helped create!
Yep!!
DeleteG: I will discuss the Wisconsin primary election yesterday in my next post. It is just disgusting what the republicans did but I expect the Trumpster politicians to act in a repulsive manner.
DeleteI suspect that the Sanders voters will stay at home again or even vote for Trump as they did in the last election. Hillary would have won with if Sanders voters had not switched to Trump in just one of the 3 close states.
I suspect that COVID-19 will impact the turnout and that will hurt the Democrats. The same calculation was made by the Wisconsin politicians by forcing the election yesterday, rather than waiting until June when it would be safer than now.
What was far more important than the health of the voters for Wisconsin republicans? Do you see the picture the republican Speaker of the Wisconsin House made of himself to assure voters it was safe? He was head to toe in protective gear.
The answer is clearly a state Supreme Court seat where the republicans now hold a 5 to 4 majority and could have lost that 1 vote margin in an election with more voter turnout. Why is that important? The republicans are trying to cull the voting rolls by 200,000, which is a power politics play, and the case will soon be decided in that court. Republican justices will go along with efforts to make voting harder and more difficult for voters who vote the wrong way.
Easterly Government Properties Inc (DEA)
ReplyDelete28.81 +$ 2.15 +8.06%
EX-DIVIDEND DATE Mar 4, 2020
Last Updated: Apr 8, 2020 at 1:39 p.m. EDT
https://www.marketwatch.com/investing/stock/dea
Prior to the COVID-19 Pandemic Panic, I had sold my DEA position down to 21+ shares and now those shares are gone as of a few minutes ago.
I did not see any news other than a Citigroup PT increase to $29 from $23 while maintaining a neutral rating.
DEA did announce an acquisition of a VA outpatient facility in Mobile, Alabama on 4/6 but that is no big deal.
I last discussed a sell here which is the one that brought me down to 21+ shares:
Item # 3.A. Pared DEA-Sold 10 at $22.39
https://tennesseeindependent.blogspot.com/2019/11/observations-and-sample-of-recent_20.html
I am doing some light selling today which is consistent with starting a SDS position yesterday morning and buying more bonds at ask prices.
I decided to move a little, little bit off the fence and try some selling.
ReplyDeletePut in orders for 10 shares of Intel. That's the difference between my basis and it's current value. That was my compromise.
3 shares of SPY. Was going to do 5 but well...
1 share of SOXX on the same theory of $ gain from basis.
SPY and SOXX filled. Put them in for highish amount at that time. Intel hasn't, probably won't. I missed that $1 more climb that SPY just did, sigh...
That's it. That's as much excitement as I can take for one day.
SG, what is the farthest you will go out on a bond date ; if you are satisfied with management and credit rating? and what is the lowest credit rating you will endure from both s&p and moody's?? , thanks
ReplyDeleteG: For $1 par value bonds, my average weighted rating is BBB+/A-. I have not bought any $1K corporate bonds rated in junk territory at the time of purchase. The BBB- rated bonds are practically non-existent. I made an exception today for Main Street given the much higher current yield and YTM and my somewhat comfortable opinion on the credit risk issue.
DeleteWhen looking at BDC and REIT bonds, it is important to keep in mind that income is flying out the door to common shareholders and that makes them more risky for senior unsecured debt owners who would prefer somewhere between zero and 50% payout ratios to GAAP earnings with the remaining cash/cash flow used as a cushion and to grow the business.
Most of my bond purchases over the past 30 trading days are investment grade corporate bonds maturing in less than a year. I view those bonds to be the best risk/reward given their yields and short maturities. I am starting to venture out some in 2023-2025 maturities, but the buying is light.
For exchange traded bonds, where I could limit my exposure to a few shares, I may dabble in junk rated bonds and preferred stocks. An example of a bond would be DDT, but my exposure is less than $200. I will also buy exchange traded bonds that have potentially longer maturities. I discussed in a recent comment buying several first mortgage bonds that trade like stocks including EAI, ELC and EMP when there prices cratered to around $20 to $21.
As far as $1k par value bonds go, I do not have any maturities beyond 2027 and the total exposure to that year is $7K in principal with about half of that in first mortgage bonds.
Investment grade corporate bonds outperformed treasuries today which continues a trend that started about a week or so ago when the FED announced that it would be buying broad based investment grade corporate bond ETFs.
ReplyDeleteiShares 7-10 Year Treasury Bond ETF (IEF)
$120.70 -$0.15 -0.12%
https://www.marketwatch.com/investing/fund/ief
iShares Investment Grade Corporate Bond ETF (LQD)
$125.91 +$2.23 +1.80%
https://www.marketwatch.com/investing/fund/lqd
LQD qualifies as one of the broad ETFs that qualify for FED purchases.
Both LQD and IEF have similar durations.
IEF has an effective duration of 7.68 years:
https://www.ishares.com/us/products/239456/
LQD has an effective duration of 9.01 years.
https://www.ishares.com/us/products/239566/ishares-iboxx-investment-grade-corporate-bond-etf
The better performance of LQD is not explainable by duration but by a more benign view of credit risks, better liquidity and FED purchases of ETFs (related to liquidity) that have combined to narrow the yield spreads to treasuries which increased dramatically during March.
I restarted PWCDF today with a 100 share purchase at U.S.$15.65. It will be May before I get around to discussing this purchase in a blog post.
ReplyDeleteThis is the ordinary shares of Power Corporation of Canada that are priced in USDs and trade on the U.S. pink sheet exchange.
https://www.otcmarkets.com/stock/PWCDF/quote
The main trading occurs on the Toronto exchange.
https://www.marketwatch.com/investing/stock/pow?countrycode=ca
I have bought and sold this stock many times, either in Toronto or on the U.S. pink sheet exchange.
See "POW:CA-PWCDF" link to the right for discussions.
The last elimination was a 100 share PWCDF lot sold at $22.03.
Saturday, October 5, 2019
4. Sold 100 PWCDF at $22.03:
https://tennesseeindependent.blogspot.com/2019/10/observations-and-sample-of-recent_5.html
I had been more adventuresome in the past as noted in the links contained in that discussion (e.g. selling 400 shares at C$31.05)
The $15.65 price is by far the lowest that I had paid for shares.
The stock did go ex dividend prior to my purchase on 3/20/20.
Power Corporation recently acquired the shares in Power Financial that it did not own. Fortunately, I sold my Power Financial at a nice profit and did not wait to receive Power Corporation shares which tanked in March.
https://www.powerfinancial.com/en/news/press-releases/2020/power-corporation-and-power-financial-announce-completion-of-reorganization-and-the-determination-of-the-final-offer-price-for-the-pre-emptive-right-122598/
see 1. Eliminated Power Financial:
https://tennesseeindependent.blogspot.com/2020/01/pofnf-pwfca.html
I really have not seen anything specific that would justify such a precipitous drop in the share price. Lower interest rates are not good for life insurance companies and that is what Power Financial brought with it.
I don't think the last earnings report justified the selloff.
https://www.powercorporation.com/en/news/press-releases/2020/power-corporation-reports-fourth-quarter-and-2019-financial-results-and-dividend-increase-122596/
I did note that two brokerage firms lowered their ratings with CIBC going from C$36 to C$22 and RBC cuts its price target to C$30 from C$40. Those downgrades occurred on 3/19. I do not have access to the reports. Morningstar has a 4 star rating with a C$27 FV in a 3/31/20 report, available for review by Charles Schwab brokerage customers. Most of the value in Power Corporation is tied up in its majority stakes in publicly traded Great West Life and the asset manager IGM Financial with both of those stocks seeing similar declines in March.
Earlier I linked the FINRA "search" page that is one starting point for researching bonds.
ReplyDeletehttp://finra-markets.morningstar.com/BondCenter/Default.jsp
Sometimes, when a company name is entered in the search box, nothing returns even though there are bonds outstanding for that company. The problem usually involves some kind of abbreviation used by FINRA.
The alternate way to find bonds using the FINRA site is to go to this page:
http://finra-markets.morningstar.com/MarketData/CompanyInfo/default.jsp
Enter the stock symbol symbol which takes you to "Company Information Detail".
This is a link to AT & T's page:
http://finra-markets.morningstar.com/MarketData/CompanyInfo/detail.jsp?query=14:0P00000031
Then click the "Bond Issues" tab.
All of the bonds may not be listed on that page so it is necessary to click "More Bond Information".
I then arrange the page by "maturity" with the shortest maturities first. That is accomplished simply by clicking the "maturity" link at the top.
Some bonds will have no trade information. Usually that is due to a bond first being issued in a private placement and then a prospectus is filed with the SEC that enables the public to buy the bonds. The privately placed bonds, which are assigned a CUSIP number, are then exchange for publicly traded ones (same terms) that are given a different CUSIP number.
Finra does not do a good job of removing bonds from the list that have already matured.
Searches can also be made at broker websites.
E.G. Fidelity for individual corporate bonds
https://fixedincome.fidelity.com/ftgw/fi/FILanding#tbindividual-bonds|corporate
What I will do now is go that page and enter a short term maturity range to focus on those bonds first. Fidelity allows me to enter limit orders, so I may enter a few early in the morning.
There are other ways at Fidelity's website to search for bonds.
Remember that bonds traded in the bond market have $1K par values but the prices are quoted at 1/10th of par value.
So if you want to buy 1 bond, and the price is 100, the cost would be $1000 + accrued interest paid to the seller + the broker's commission.
And, you need to fully understand how to account for accrued interest paid to bond sellers in schedule B of the tax return. Surprisingly, some CPAs do not know how to do it, resulting in their clients paying taxes on interest income that was actually received as an accrued interest by the seller. That is find with the IRS since the seller's 1099 would show the accrued interest paid by the buyer as interest income so the IRS can receives tax payments for the same interest income from two separate taxpayers.
I view the lending program announced by the FED this morning to be more important to the real economy than the relaunch of QE and the return of ZIRP, which I view as a net negatives for Main Street as opposed to Wall Street.
ReplyDeleteFED Announcement:
"The Main Street Lending Program will enhance support for small and mid-sized businesses that were in good financial standing before the crisis by offering 4-year loans to companies employing up to 10,000 workers or with revenues of less than $2.5 billion. Principal and interest payments will be deferred for one year. Eligible banks may originate new Main Street loans or use Main Street loans to increase the size of existing loans to businesses. Banks will retain a 5 percent share, selling the remaining 95 percent to the Main Street facility, which will purchase up to $600 billion of loans. Firms seeking Main Street loans must commit to make reasonable efforts to maintain payroll and retain workers. Borrowers must also follow compensation, stock repurchase, and dividend restrictions that apply to direct loan programs under the CARES Act. Firms that have taken advantage of the PPP may also take out Main Street loans."
https://www.federalreserve.gov/newsevents/pressreleases/monetary20200409a.htm
Interesting point about the influence of this program.
DeleteSG, is this similar to what japan has done to their market with what looks like endless QE?
ReplyDeletethanks
G: QE and ZIRP will be more normal FED policies going forward than in the past. QE was rare before 2008 and was mostly limited as I recall to about a 4 year period during the Great Depression, starting in 1933.
DeleteWhat the FED has been doing in response to the pandemic is far more intrusive into the real economy. The announcement today involves the FED becoming a lending bank for small and middle sized businesses.
The earlier announcement that the FED would be buying investment grade corporate ETFs is probably the first intervention in securities trading on the stock exchange. I am not 100% sure of that but that is my current memory.
Today, the FED expanded that bond ETF buying program to include junk bonds ETFs:
https://www.marketwatch.com/story/bond-etfs-surge-as-fed-pledges-more-support-2020-04-09?mod=mw_latestnews
Then you have direct FED involvement in lending to state and local governments:
"Help state and local governments manage cash flow stresses caused by the coronavirus pandemic by establishing a Municipal Liquidity Facility that will offer up to $500 billion in lending to states and municipalities. The Treasury will provide $35 billion of credit protection to the Federal Reserve for the Municipal Liquidity Facility using funds appropriated by the CARES Act."
So all of this goes way beyond QE and ZIRP.
That explains the rally.
DeleteI'm hoping since I need to buy in, that if the market is so reactive to this... it will be reactive to earnings reports too (which I'm assuming will be poor.)
This was probably timed to counter the earnings report. Like the last programs's release a week or two ago, that didn't work then, may not now.
At least Trump is letting businesses get some support from Congress - instead of calling it a hoax every day.
DeleteLand: Trump's reelection bid may be saved by the FED and the Democrats in the House.
DeleteYep. The alternative is letting so many people have too much pain in the immediate.
DeleteLatest poll does put 55% of Americans thinking he's handled the crisis poorly.
Land: 86.5 % of republicans believe he is doing a good job handling the pandemic.
Deletehttps://projects.fivethirtyeight.com/coronavirus-polls/
If a Democrat president had done exactly what Donald has done to date, 90% of republicans would give that democrat President a failing grade.
That is just the way it is.
I am not pulling that number out of my a--. In several historical instances, republican and democrat president has done the same thing for the same reason. (e.g. launching cruise missiles against Syria after a chemical weapons attack). When Trump did it, an overwhelming number of republicans approved whereas an overwhelming % disapproved when Obama did the exact same thing for the exact same reason. For Democrats, opposition was a constant percent irrespective of the party affiliation of the President.
"In 2013, when Barack Obama was president, a Washington Post-ABC News poll found that only 22 percent of Republicans supported the U.S. launching missile strikes against Syria in response to Bashar al-Assad using chemical weapons against civilians.
A new Post-ABC poll finds that 86 percent of Republicans support Donald Trump’s decision to launch strikes on Syria for the same reason. Only 11 percent are opposed. .. Some 37 percent of them back Trump’s strike, compared to a statistically indistinguishable 38 percent who backed a strike in 2013
https://www.washingtonpost.com/news/volokh-conspiracy/wp/2017/04/13/48229/
"For Democrats, opposition was a constant percent irrespective of the party affiliation of the President. "
DeleteInteresting.
I'd read in 2017, results that when fake claims were posted, they went around the GOP communities online. Same site tried it with DEMs and they were identified as fake and rejected early on and never went around.
I had assumed the 55% for poor job, were independents and dems.
I was more worried with the results last week of 55% approval of his job handling the virus. That said that there was some swing towards him over "looking presidential."
When exactly does earning's season start?
ReplyDeleteI'd been buying IWM before now. It's up 4.5% compared to the other indices.
One thought is to sell a little to take advantage of the disparity - which will correct itself. Seems like this rally on those will continue into tomorrow morning. I think it usually works that way.
Land: Earnings season starts this week and picks up some steam next week:
DeleteSee:
https://finance.yahoo.com/calendar/earnings/?from=2020-04-05&to=2020-04-11
The stock market is closed tomorrow.
https://www.nyse.com/markets/hours-calendars
The bond market closed early today.
I had no idea it was a holiday. Now when I log on I see announcements. Not all of my banks closed.
DeleteOn earnings season I'm having trouble sorting it out.
DeleteThere's under 20 a day this week.
Then next week starting April 13th, mostly under 40 a day.
By the week of April 20th it's still not that high. 58, 99, 137, 158, 39.
Then in the weeks of April 27th and May 4th, there are several days over 200.
By week of May 11th it starts coming down.
Until July 20th.
So one could say somewhere around April 20th things heat up. Lasts 3ish weeks. Then starts again around July 20th.
I guess then I did sort it out. It's just labeled as earnings period starting with during the "mostly under 40" weeks.
You'd think I've have figured that out by now. But better late than never.
I've wondered too, if maybe it's considered earnings period in part by WHICH companies are reporting. So that when the bigwig ones are reporting, it gets more excitement. And therefore the label.
https://www.factset.com/hubfs/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_040920.pdf
ReplyDeleteFactset earnings estimate Q1
I wonder if the market is so used to being bailed out by the Fed that earnings losses will not even matter and we will have an upward explosion?
I think you are correct about Trump; he will be saved by the above 2 parties and how does the Fed unwind all this on can it never and does it bring a debt collapse so much more forward that we see it in our lifetime? thanks
G: Gold is currently up over $46. That is signalling that some investors are concerned the FED and the federal government are in effect debasing the USD through money and debt creation.
DeleteI believe that the end result will be as described recently by Ray Dalio:
https://www.marketwatch.com/story/founder-of-worlds-largest-hedge-fund-doubles-down-on-cash-is-trash-argument-warning-of-debt-fueled-inflation-2020-04-08
It is not a question whether he will be right but when.
"It is not a question whether he will be right but when. "
DeleteDo you see this as possibly taking a long time to blow up or a purely unknown time period. Or has you impression moved to a shorter time that can be counted in a few years?
Dalio seems to put it as a concern for now and coming in the short term.
Land: The inflation part of Dalio's prediction could occur relatively soon provided the fiscal stimulus mostly arrives when the nation is already starting to return to normal. There will be delays in delivering that stimulus.
DeleteI view the time frame as more likely being in the more distant future.
The Day of Reckoning, which generally refers to a future period where the U.S. Treasury can not sell enough new debt to pay off maturing debt and to finance budget deficits, has been moved forward in time as a result of massive increases in deficit spending connected to the recently passed federal stimulus, automatic increases in federal spending tied to safety net programs triggered by a recession, and lower federal revenues normally associated with a recession.
The Day of Reckoning causes a depression and a collapse in the USD, as the FED has no choice but to monetize the debt by buying what can not be sold through more money creation.
The period prior to that will likely be marked by increasing inflation and a devaluation of the USD for the reasons mentioned by Dalio and others.
There will come a time when investors will demand a real rate of return on money borrowed by sovereign governments. The U.S. government will not be able to afford a normal interest rate on U.S. debt which will likely exceed $1 trillion per year within a few years even at today's abnormally low rates.
So look for signs of trouble as the decade progresses.
One sign may be the price of gold which I view as an alternative to fiat currencies as a store of value.
South Gent,
ReplyDeleteSDS is more of a short term trading vehicle. I think there is a good chance it will be a profitable trade so I also took a position. I just need to remind myself of selling it when there is an opportunity.
Y: SDS has to be a short term hedge to work which means the timing has to be spot on or close to it in time. The double short ETFs will start to lose tracking after 1 day. I added to SDS today around $25.3 and started QID (maybe 5 shares, but it is a blur to me now). I will add in incremental amounts if and when the market continues higher.
DeleteIt may be difficult for investors to maintain their enthusiasm through a horrific earnings season and really bad economic news. We shall see soon enough.
Investment grade corporate bonds continued to outperform similar duration U.S. treasuries today by a wide margin.
ReplyDeleteiShares Investment Grade Corporate Bond ETF (LQD)
$131.83 $5.92 $4.70%
https://www.marketwatch.com/investing/fund/lqd
iShares 7-10 Year Treasury Bond ETF (IEF)
$120.96 +$0.26 +0.22%
https://www.marketwatch.com/investing/fund/ief
The primary reason for LQD's outperformance is the FED creating money to buy shares.
The FED has expanded its buying spree to include junk bond ETFs:
SPDR Bloomberg Barclays High Yield Bond ETF (JNK)
$101.64 +6.39 +6.71%
https://www.marketwatch.com/investing/fund/jnk
The better performance of corporate bonds will not be entirely (or in some cases not reflected at all) in the third party prices provided to Fidelity and other brokers which are uniformly inaccurate on the low side.
It is not unusual for me to see a 96 price for a high quality corporate bond with all of the trades above par value.
Those third party pricing services are an abomination and mislead uninformed bond investors about the fair market value of their bonds. I could increase the market value of my Fidelity account by about $3,000 simply by selling my corporate bonds at their fair market values.
The Russell 2000 Index outperformed the DJIA, S & P 500 and the Nasdaq by a wide margin today.
iShares Russell 2000 ETF
$123.72 +$5.65 +$4.79%
https://www.marketwatch.com/investing/fund/iwm
I would attribute that better performance to the FED's massive intervention into bank lending on highly favorable terms. Those loans are not going to big companies but to small and medium sized businesses.
I did some light selling today and was able to buy only $3K in principal amount of investment grade corporate bonds.
Intel that I didn't sell day before was down today (Thursday).
DeleteEverything I would have skimmed from by selling was down. Everything I sold yesterday was up today.
So I didn't do much.
I'm finding I get sleepy. My niece pointed out that by 'stay at home' our bodies may think we are hibernating and conserving energy with sleep. I've added that the underlying stressors of the times add adrenaline which in turn is draining.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2020/04/bdnchn-fhn-gdo-good-maptx-mcdfx-mspra.html