Economy:
Child tax credit payments will start hitting bank accounts today. Here's what you need to know. (7/15/21)
CPI rose 5.4% for the 12 month period ending in June 2021. The Core CPI was up 4.5%:
A one year treasury bill purchased in July 2020 would have produced a negative real yield of about 5.25% before any tax obligation. 2020 Daily Treasury Yield Curve Rates
'Bond King' Gundlach says inflation environment today reminds him of the 1970s: 'Jimmy Carteresque'
Paul Krugman makes the case that Trump's trade policies are significantly responsible for the chip shortages and bottlenecks that are retarding US GDP growth now and contributing to inflation. Opinion | The Trumpian Roots of the Chip Crisis - The New York Times He cites the paper written by Chad Brown of the Peterson Institute for International Economics and published recently in Foreign Affairs. I have been mentioned here how the chip shortage has negatively impacted new car production, leading to shutdowns at several major plants. The result is that used car prices are skyrocketing, contributing about 1/3rd to the rise in May's CPI.
The index for new vehicles rose 2% in June, the fastest increase since 1981.
Delta accounts for nearly all virus cases in southwestern Missouri, where Mercy Hospital recently ran out of ventilators. - The New York Times Springfield is a city in Greene County, MO where only 35% of the population had received vaccinations.
McDonald’s minimum wage raise and the fast food franchise future McDonald's intends to reach a mean average $15 wage in all company owned restaurants by 2024. The company currently owns 650 restaurants. The rest are owned by franchisees. McDonald's raised wages by an average of 10% last month, with entry level positions starting at $11 to $17 per hour depending on the location.
Hospitalizations rising again as delta variant spreads among the unvaccinated, doctors say
Powell says the Fed is still a ways off from altering policies, expects inflation to moderate
OPEC reportedly reaches compromise on oil production after dispute with UAE
Empire State Manufacturing Survey (overview) - FEDERAL RESERVE BANK of NEW YORK ("general business conditions index shot up twenty-six points to 43.0. New orders and shipments increased robustly. Delivery times continued to lengthen substantially, and inventories expanded. Employment grew strongly, and the average workweek increased. Input prices continued to increase sharply, and selling prices rose at the fastest pace on record.") Any number above zero indicates expansion. This is a very robust report.
 |
| Empire State Manufacturing Chart |
Sourced: Empire State Manufacturing Survey.pdf. The prices paid index was reported at 76.8.
The Covid infection rate is starting to spike again, though the percentage increases, while large, come off a low level. Delta variant spreads as infections rise in 48 states (7/15/21, USA Today) The NYT claims that the U.S. reported 26,513 new infections on 7/14, with the 14 day average increasing +111%.
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Markets and Market Commentary:
Several commentators believe that the recent decline in intermediate and longer term treasury yields lends support to the FED's opinion that the inflation spike is temporary. Ron Insana: The bond market agrees with the Federal Reserve — inflation is temporary; Randall Forysth: Bonds’ Odd Behavior May Presage Weaker Second-Half Economy | Barron's
Those opinions are based on the mistaken belief that inflation and inflation expectations are being factored into treasury yields which has not been the case for several years.
Since intermediate and longer interest rates have reflected for centuries an inflation component, it is difficult to accept that this is no longer the case.
Only in recent times have lenders paid borrowers to take their money. The amount of negative nominal yield debt stood at about $18+ trillion last November and is currently around $13T. The Amount of Negative Yielding Debt Is Trending Lower | LPL Financial Research A much larger chunk has positive nominal yields that are negative adjusted for current inflation or anticipated inflation (e.g. U.S. treasuries with inflation measures embodied in the breakeven inflation rates for the 5, 10, 20 and 30 year TIPs)
Interest rates are being set by the FED and other central banks without regard to inflation and inflation expectations.
The end result is that yields have been suppressed far below the current and anticipated inflation rates.
The existence of negative real yields and negative nominal yields are not consistent with a belief that GDP growth and inflation are considerations being factored by a free market into yields. The slight changes in treasury yields for notes and bonds are not reflecting any market opinion about GDP growth or future inflation.
There can be a more significant upward movement when a consensus forms that inflation will force central banks to abandon their extremely abnormal monetary policies. That would include ending QE programs and increasing the benchmark rates to levels consistent with fighting inflation.
The recent spike to a 5.4% 12 month inflation rate is probably a temporary event, at least at that level, but may not be, particularly if current monetary policies are continued by the FED, ECB and other major central banks in developed, democratic countries, all of whom have been suppressing interest rates below the inflation rate in unison.
The Bond Ghouls are currently forecasting an average annual CPI rate over the next 10 years at 2.32%, based on today's closing yields, a consensus opinion reflected in the 10 year TIP breakeven inflation rate. 10-Year Breakeven Inflation Rate-St. Louis Fed The 5 year TIP breakeven inflation rate is slightly higher at 2.53% (see tables below). 5-Year Breakeven Inflation Rate-St. Louis Fed
The Bond Ghouls response to higher than expected inflation was to take treasury yields down:
 |
Real Yields-TIPs:
Duke Energy announces dividend payments to shareholders The quarterly rate was increased 2 cents to $.985 per share.
PepsiCo (PEP) Q2 2021 earnings crush estimates
Goldman Sachs GS earnings Q2 2021 (E.P.S. of $15.02 vs. consensus at $10.24)
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Earnings Reports-Owned Stocks:
Bank of America (BAC) SEC Filed Press Release (net income of $9.02B or $1.03 per share, which includes a $1.6B boost from release of credit loss reserves and a $2B positive tax adjustment relating to the revaluation of a U.K. deferred tax asset; the E.P.S. consensus was $.774 per Fidelity; revenue, net of interest expense, declined 4% to $21.5B)
BNY Mellon (BK) Reports Second Quarter 2021 Earnings Of $991 Million Or $1.13 Per Common Share (E.P.S. of $1.13 with the consensus at $1 per Fidelity; repurchased 12.8M shares; total revenue decreased by 1%; fee revenue increased by 4% and at +10% excluding money market waivers which is costing this bank a lot of money; ROE =10%; ROTE = 19%; investment and wealth management revenue up 13% with AUM up 18% to $2.3T; increased quarterly dividend by 10% to $.34 per share)
Conagra Brands (CAG) Reports Strong FY21 Fourth Quarter And Full-Year Results or SEC Filed Press Release (E.P.S. "from continuing operations (EPS) for the fourth quarter grew 56.1% to $0.64, and adjusted EPS declined 28.0% to $0.54. On a two-year compounded annualized basis, fourth quarter EPS increased 56.9% and adjusted EPS increased 22.5%."; "Net sales decreased 16.7%, and organic net sales decreased 10.1% driven by lapping the prior year's significant surge in at-home food consumption at the onset of the COVID-19 pandemic. On a two-year compounded annualized basis, fiscal 2021 fourth quarter net sales increased 2.4% and organic net sales increased 4.5%."; revised fiscal 2022 results due to the negative impact from inflation to an adjusted E.P.S. of $2.5 which compares unfavorably to the $2.64 E.P.S. for the F/Y ending in May 2021)
J.P. Morgan (JPM) SEC Filed Earnings Press Release (GAAP E.P.S. of $3.78 vs. $3.178 consensus per Fidelity; GAAP includes $.75 per share of credit reserve release or a net benefit of $2.3B from releasing $3B; excluding credit reserve release, E.P.S. was $3.03 and return on tangible equity was 18%; average loans flat; deposits up 23%; total capital ratio of 17.1%; tangible book value per share = $68.91; discussed at JPM earnings 2Q 2021)
Morgan Stanley (MS) Second Quarter 2021 Earnings Results (Net income of $3.511B or E.P.S. of $1.85 with consensus at $1.66)
Truist Financial (TFC) SEC Filed Press Release (adjusted earnings of $2.1B or $1.55 per share with the consensus at $1.173 per Fidelity; adjusted ROTE = 24.7%; adjusted ROA = 1.69%; GAAP E.P.S. = $1.16, adjustments to GAAP include "merger-related and restructuring charges of $297 million ($228 million after-tax), incremental operating expenses related to the merger of $190 million ($146 million after-tax) and charitable contributions of $200 million ($153 million after-tax"; the Stock Jocks responded positively to this report: TFC $55.86 +$1.43 +2.63%)
US Bancorp (USB) SEC Filed Press Release (net income of $1.982B or $1.28 per share with the consensus at $1.123 per Fidelity; ROA = 1.44%; ROE = 16.3%; ROTE = 20.9%; NIM = 2.53%; Efficiency Ratio = 59%; Charge Off Ratio = .25%; NPA Ratio = .36%; total risk based capital ratio = 13.4%; the Stock Jocks responded positively to this report: USB $58.82 +$1.83 +3.21%)
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Charts:
Capacity Utilization: Total Index-St. Louis Fed
All Sectors; Debt Securities and Loans; Liability, Level/Gross Domestic Product-St. Louis Fed
Nonfinancial Corporate Business; Debt Securities; Liability, Level-St. Louis Fed
Federal Debt Held by Federal Reserve Banks-St. Louis Fed
Households and Nonprofit Organizations; Consumer Credit; Liability, Level-St. Louis Fed
Household Debt Service Payments as a Percent of Disposable Personal Income-St. Louis Fed
Household Financial Obligations as a percent of Disposable Personal Income-St. Louis Fed
Personal Consumption Expenditures (PCE-St. Louis Fed
Velocity of M2 Money Stock St. Louis Fed
Personal Saving Rate-St. Louis Fed
4-Week Moving Average of Initial Claims- St. Louis Fed
Unemployment Rate-St. Louis Fed
Households; Owners' Equity in Real Estate, Level -St. Louis Fed
New One Family Houses Sold: United States -St. Louis Fed
15-Year Fixed-Rate Mortgage Average in the United States-St. Louis Fed
S&P/Case-Shiller 20-City Composite Home Price Index-St. Louis Fed
Median Sales Price for New Houses Sold in the United States-St. Louis Fed
Share of Labor Compensation in GDP at Current National Prices for the United States -St. Louis Fed
Light Weight Vehicle Sales: Autos and Light Trucks- St. Louis Fed
Cass Freight Index: Shipments-St. Louis Fed
Leading Index for the United States-St. Louis Fed
University of Michigan: Consumer Sentiment-St. Louis Fed
E-Commerce Retail Sales-St. Louis Fed
Consumer Price Index for All Urban Consumers: All Items in the U.S. City Average-St. Louis Fed
Crude Oil Prices: West Texas Intermediate (WTI) - Cushing, Oklahoma-St. Louis Fed
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Trump wanted 'leaker' of bunker story executed, book says Trump is a psychopath with no feelings of empathy. Say it plainly: Trump is a psychopath If he could, Trump would cause the execution of anyone who dared to criticize or contradict him, point out his lies or who just displeased him in some way that virtually anyone else would ignore such as the innocuous story that the Secret Service took him to the bunker.
Will the GOP Steal the 2024 Election? - The Atlantic The answer is yes and that effort will be endorsed and encouraged by the rank-and-file as noted by the authors of this article.
A weekend of demagoguery shows why Trump can't be ignored
GOP Senators React to Trump's Latest Comments About January 6 Rioters Trump called the rioters "peaceful" and "great people". In Trump's America, it is of course irrelevant that there is a massive amount of video evidence showing that the Republican attack on the nation's capitol was not peaceful.
Fact check: Untethered to reality, Trump lies over and over about the 2020 election at CPAC I am unable to identify any living person who is more dishonest than Donald. No one is even close.
There can be financial incentives for Trumpsters to spread fact free conspiracy theories. How Sean Turnbull made a career at SGT Report anonymously amplifying dark plots - The Washington Post
According to NOAA, last month was the hottest June since NOAA started to keep records in 1907. Climate at a Glance | National Centers for Environmental Information (NCEI); New Wildfires In Western U.S. At 10-Year High: NPR
At Mercy Culture, the nations fastest-growing Christian movement is openly political and central to Trump’s GOP - The Washington Post The goal is to turn America into a theocracy controlled by middle aged white evangelical males who regularly talk with, and receive instructions from God.
The self-described "conservatives" at CPAC cheered a speaker when he mentioned that the government had failed to reach its vaccination goals. CPAC crowd cheers missing vaccination goal. Hear Fauci's response The CPAC members overwhelmingly chose Donald as their preferred 2024 candidate for President, fervently hoping for 4 more years of Kakistocracy. Trump and the GOP are one and the same, so he will be the nominee of his party if he wants it.
Cramer, who has morphed into a Trumpster, blamed Biden for the refusal of Trumpsters to get their vaccinations. Jim Cramer blasts governments for failing to contain the spread of Covid-19 delta variant - YouTube And what would happen if the government tried to compel Republicans to get vaccinations? Harvard poll: Americans sharply divided over vaccine mandates - POLITICO (guess who opposes the mandates, Republicans or Democrats?); The Red/Blue Divide in COVID-19 Vaccination Rates is Growing | KFF ("One of the main factors driving differences in COVID-19 vaccination rates across the country is partisanship. Our surveys consistently find that Democrats are much more likely to report having been vaccinated than Republicans, and Republicans are much more likely to say that they definitely do not want to get vaccinated.")
Newsmax Anchor Rob Schmitt claimed that vaccines were "against nature". Schmitt: “I feel like a vaccination in a weird way is just generally kind of going against nature. Like, I mean, if there is some disease out there — maybe there’s just an ebb and flow to life where something’s supposed to wipe out a certain amount of people, and that’s just kind of the way evolution goes. Vaccines kind of stand in the way of that.” Mr. Schmitt may not like the result of his recommendation since the number of Newsmax viewers would substantially decline.
Tennessee vaccine official's story reveals an ugly truth about GOP and children's rights; CDC chief: Tennessee move to halt vaccine outreach to teens 'incredibly disturbing'; Tennessee's vaccine manager fired over vaccinating kids against Covid Tennessee is a Charter Member of TrumpWorld.
Maria Bartiromo Bashed for Spreading 'Reckless' Info About Ashli Babbit's Death This is to be expected from Fox "news". Ms. Bartiromo called the violent Trumpster attack on the nation's capitol a peaceful protest. The rioters were just tourists in TrumpWorld.
Trump rioter Douglas Austin Jensen thought he invaded White House, not Capitol
The thin gruel of Trump’s latest voter-fraud revelation-The Washington Post, republished at MSN.com-The thin gruel of Trump’s latest voter-fraud revelation The pure Trumpster William McSwain, who was a Trump appointed Federal prosecutor in PA and who craves Donald's endorsement in his bid to become Pennsylvania's Governor, wrote Donald a letter claiming Bill Barr stopped him from investigating election fraud in Pennsylvania. Barr immediately denied the allegation pointing out that he was told by McSwain that his letter was written to get Trump's endorsement: Barr's response: “Any suggestion that McSwain was told to stand down from investigating allegations of election fraud is false. It’s just false.” Barr added that the assertions “appeared to have been made to mollify President Trump to gain his support for McSwain’s planned run for governor.” William McSwain letter to Trump prompts rebuke from Bill Barr - The Washington Post
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1. Small Ball:
My annual goal is to harvest at least $25K in short-term capital gains as a supplement to my dividend and interest income. I am not concerned about the tax issues associated with short term capital gains, given that I am retired with no earned income; SS is my only pension; and I generate significant income that is either tax free or taxed at the 15% qualified dividend or long term capital gain rates.
The general goal is to generate significantly more income than I am likely to spend so that there is no need to withdraw from either my retirement accounts or the total principal amount in taxable accounts.
This is going to be difficult going forward unless the market craters, interest rates rise significantly, allowing me to lock in higher yields, or I abandon the small ball risk mitigation strategy that I am now using.
I am, however, on a glide path in 2021 to reach that goal having harvested-to date- approximately $20K in short-term capital gains, but the market has had a strong tailwind this year, providing optimal conditions for achieving that objective.
The small gains are adding up given their abundance so far this year.
The small ball trading strategy is primarily about risk mitigation.
Part of the strategy involves selling my highest cost lots profitably, regardless of the profit amount.
Another aspect is selling fractional shares bought with dividends in order to harvest the original dividend amount plus a small profit on the shares. I am doing that regularly now, having turned off the dividend reinvestment option in virtually all stocks that I own.
The primary known threats to stock prices are valuations and inflation. A less likely threat is a reemergence of a more deadly Covid variant that is resistant to the vaccines. Another possibility is a massive increase in hospitalizations and deaths due to a more infectious variant that spreads among the millions who are unvaccinated or have failed to take the second shot.
A. Started REGN- Bought $100 at $544.72; $50 at $543.8:
Quote: Regeneron Pharmaceuticals, Inc.
Closing Price 7/15/21: REGN $589.32 +$8.26 +1.42%
Previously, I have discussed REGN only in connection with its drug partnership with Sanofi (SNY). The most important drug in this collaboration is Dupixent which generated worldwide revenue of $1.2629B in the 2021 first quarter. REGN discovered that compound.
REGN has an agreement with Bayer to market REGN's blockbuster drug EYLEA outside the U.S.
REGN has a collaboration agreement with Roche to distribute the antibody cocktail REGEN-COV used to treat Covid. This was the compound given to Don the Authoritarian when he contracted Covid. (see page 10, 10-Q)
Collaboration agreements are more fully described in the 2020 Annual Report starting on page 18. Note on page 18 that REGN bought 9,806,805 of its shares owned by SNY for $5B in January 2020.
REGN Analyst Estimates | MarketWatch
2020 Annual Report (summary of drugs starts on page 7 and includes both approved and clinical-stage compounds)
Dividend: No and none expected.
Last Earnings Report (Q/E 3/31/21): SEC Filed Press Release
Total Revenue: $2.529B, up 38% Y-O-Y
Diluted GAAP E.P.S. = $10.09
Diluted Non-GAAP E.P.S. = $9.89
Product Sales and Collaboration Revenues:
Note footnote (b) in the first snapshot: "Sanofi records global net product sales of Dupixent, Kevzara, and ZALTRAP. The Company records its share of profits/losses in connection with global sales of Dupixent and Kevzara, and Sanofi pays the Company a percentage of net sales of ZALTRAP."
This is a breakdown of REGN's sales in the U.S. which excludes $754M in collaboration revenues:
"Net cash provided by operating activities in the first quarter of 2021 was $669 million, compared to $698 million in the first quarter of 2020, resulting in $553 million in free cash flow for the first quarter of 2021, compared to $528 million for the first quarter of 2020."
Purchase Restriction: The price spiked outside of my consider to buy range shortly after initiating a placeholder type position. Each subsequent purchase must reduce my average cost per share.
Maximum Position: 10 shares
B. Started BNS-Bought 5 BNS at $64.97 in Fidelity taxable; 1 at $62.83 after ex-dividend:
BNS is Canada's third largest bank based on assets, deriving about 1/2 of its revenue from Canada and the remainder outside of Canada. International operations, excluding the U.S., generate about 40% of revenues.
Quotes:
USD: Bank of Nova Scotia (BNS)
CAD: Bank of Nova Scotia Stock Quote (Canada: Toronto)
BNS Analyst Estimates | MarketWatch
Canadian Dollar to US Dollar Exchange Rates Chart
This is a new name for me.
I also bought a few shares in a Roth IRA account. Canada will not tax dividends paid by Canadian corporations (non-pass through entities) into a U.S. Citizen's retirement accounts.
Investment Category: Bond Substitute with some dividend growth. I will add to this position in small lots over time.
Dividend: Quarterly at C$.90 per share
I am anticipating that BNS will return to increasing its dividend later this year, probably in the 4th quarter. The last increase was from C$.87 to the current C$90 effective for the 2019 4th quarter. Many banks froze their dividends in 2020 in response to the uncertainties created by the pandemic.
Recent Dividend History:
Last Ex Dividend Date: 7/5/21 (owned 5 as of)
Average Cost per share = $64.61 (6 shares)
Next Ex Dividend Date: 10/4/21
Last Earnings Report (Q/E 4/30/21): Scotiabank reports second quarter results
Net Income: C$2.456B
Diluted E.P.S. = C$1.88, up from C$1
ROE = 14.8%
Total Capital Ratio = 15.7%
The Bank of Nova Scotia (BNS) Q2 2021 Earnings Call Transcript | The Motley Fool
Broker Reports (available to Schwab customers):
Morningstar (6/1/21): 3 stars with a FV of US$64
S & P (6/7/21): 4 stars with a 12 month PT of US$72, raised from a US$63 PT based on the last earnings report.
Purchase Restriction: Each subsequent purchase must reduce my average cost per share.
Maximum Position: 100 shares
C. Added to SAIC-Bought 1 at $87.5:
Quote: Science Applications International Corp.
Closing Price 7/15/21: SAIC $88.34 +$0.48 +0.55%
SAIC Analyst Estimates | MarketWatch
SAIC Annual Report F/Y ending 1/29/21
Prior Buy Discussion: Item # 3.C. Bought 1 SAIC at $88.17 (5/14/21 Post)
Dividend: Quarterly at $.37 per share ($1.48 annually)
Average Cost per share: $87.84 (2 shares)
Yield at AC per share = 1.68%
Last Ex Dividend Date = 7/15/21
On 6/7/21, Morgan Stanley increased its PT to $101 from $97 and maintained its overweight rating. On the next day, Goldman Sachs downgraded the stock to sell while maintaining its $88 PT.
Last Earnings Report (First 2022 Fiscal Q ending 4/30/21):
GAAP E.P.S. = $1.38
Adjusted E.P.S. = $1.94
Free Cash Flow = $164M, up 4%
Revenues: $1.878B, up 7%
Fiscal 2022 Guidance:
Purchase Restriction: 1 share buys only with each subsequent purchase having to be at the lowest price in the chain.
Maximum Position: 10 shares
D. Bought 50 CLPR at $7.36:
Quote: Clipper Realty, Inc.
Closing Price 7/15/21: CLPR $8.20 +$0.09 +1.11%
Clipper Realty is an internally managed REIT that primarily owns multifamily residential properties in the New York metropolitan area. Clipper Equity REIT This REIT has been negatively impacted by the pandemic.
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Most REITs that I buy also qualify as Bond Substitutes.
This is a new name for me.
Dividend: Quarterly at $.095 per share ($.38 annually)
Clipper Equity REIT Dividend History
Yield at $7.36 = 5.16%
Last Ex Dividend: 5/19/21
Last Earnings Report (Q/E 3/31/21): SEC Filed Press Release
FFO to AFFO Calculation:
E. Started CLPR in Schwab Taxable-Bought 20 at $7.3:
See Item # 1.D. Above.
Yield at $7.3 = 5.21%
Maximum Position all Accounts: 200 shares
F. Bought 1 FISV at $106.67-Placeholder:
Quote: Fiserv, Inc. (member of the S & P 500)
Closing Price 7/15/21: FISV $110.80 +$1.06 +0.97%
Website: Financial Services Technology, Mobile Banking, Payments | Fiserv
Investor Relations - Fiserv, Inc.
Businesses:
 |
| Except from 10-Q filing |
This is a new name for me. As part of my junk bond ladder strategy implemented mostly in 2011, I did own 1 junior unsecured bonds issued by First Data, a company that was later acquired Fiserv. Item # 2 Bought 1 First Data 11.25% Senior Subordinated Bond Maturing on 3/31/2016 at 98.75 (3/29/2011 Post)
10-Q for the Q/E 3/31/21 The components of FISV's long term debt of $20.838B are listed at p.15.
5 Year Historical:
 |
| Page 30 Annual Report |
Dividend: None, and none expected.
Last Earnings Report (Q/E 3/31/21): SEC Filed Press Release
GAAP E.P.S. = $.45
Adjusted E.P.S. = $1.17, up 18% Y-O-Y
Revenues: $3.755B, adjusted to $3.557B
Shares Repurchased During Quarter: 5.2M shares for $612M
Free Cash Flow: $821M, up 8% Y-O-Y
GAAP to Non-GAAP:
The next report is scheduled for release on 7/27/21.
G. Bought 1 PAY at $35; 1 at $34.5, 1 at $33-Placeholder:
Quote: Paymentus Holdings
Closing Price 7/15/21: PAY $33.05 -$1.74 -5.00%
"Paymentus is a leading provider of cloud-based bill payment technology and solutions." In 2020, the company processed over $37.9B in payments. 57% of the total dollar volume was in utilities, 23% in financial institutions and 16% in insurance. Revenue rose 32% in the 2021 first quarter.
Investment Category: Lottery Ticket Basket Strategy
PAY Analyst Estimates | MarketWatch
Website: Powering the Next Generation of Electronic Bill Payments
IPO Prospectus Shares were sold to the public at $21 last May.
Paymentus Announces Pricing of Initial Public Offering | Business Wire (5/25/21)
This is a new name for me. I decided to follow it after reading this article. Buy These 3 New Stocks Before They Jump Over 40%, Says Goldman Sachs
H. Added $100 to FBIOX at $22.62:
Quote: FBIOX | Fidelity Select Biotechnology Portfolio Overview
Sponsor's Website: FBIOX - Fidelity ® Select Biotechnology Portfolio
Expense Ratio: .7%
I discussed the failure of this fund to have an overall meaningful position in gene editing stocks in a 7/1/21 comment. The only shareholder report then available was for the period ending 4/30/21.
Fidelity® Select Biotechnology (FBIOX) Portfolio | Morningstar (3 stars currently)
Last Discussed: Item # 2.H. (5/30/20 Post)
I. Bought 5 VIRT at $27.75; 5 at $27:
Quote: Virtu Financial
I would describe this company as a market maker.
"Virtu is a leading financial services firm that leverages cutting-edge technology to provide execution services and data, analytics and connectivity products to its clients and deliver liquidity to the global markets. Leveraging its global market making expertise and infrastructure, Virtu provides a robust product suite including offerings in execution, liquidity sourcing, analytics and broker-neutral, multi-dealer platforms in workflow technology. Virtu’s product offerings allow clients to trade on hundreds of venues across 50+ countries and in multiple asset classes, including global equities, ETFs, foreign exchange, futures, fixed income and myriad other commodities. In addition, Virtu’s integrated, multi-asset analytics platform provides a range of pre and post-trade services, data products and compliance tools that clients rely upon to invest, trade and manage risk across global markets."
VIRT Analyst Estimates | MarketWatch
Investment Category: Bond Substitute
This is a new name for me.
Average Cost Per Share: $27.38 (10 Shares)
Dividend: Quarterly at $.24 ($.96 annually) since VIRT became a publicly traded company in 2015.
Recent Dividend History:
I do not expect the dividend rate to change. Any cash surplus will most likely be used to increase share buybacks than to increase the dividend IMO.
Yield at $27.38: 3.5%
Last Ex Dividend Date: 5/28/21
Last Earnings Report (Q/E 3/31/21):
Diluted GAAP E.P.S. = $1.89
"Normalized" E.P.S. = $2.04
Total Revenues by segment:
"Market Making principally consists of market making in the cash, futures and options markets across global equities, options, fixed income, currencies and commodities. As a market maker, the Company commits capital on a principal basis by offering to buy securities from, or sell securities to, broker dealers, banks and institutions." This business is subject to potentially adverse regulatory changes. Payment for Order Flow (PFOF): Explaining the Controversial Trading Practice. | Barron's
"Execution Services comprises agency-based trading and trading venues, offering execution services in global equities, options, futures and fixed income on behalf of institutions, banks and broker dealers. The Company also provides proprietary technology and infrastructure, workflow technology, and trading analytics services to select third parties."
"Corporate contains the Company's investments, principally in strategic trading-related opportunities, and maintains corporate overhead expenses."
"As of March 31, 2021, Virtu had $1,021.8 million in cash, cash equivalents and restricted cash, and total long-term debt outstanding in an aggregate principal amount of $1,666.7 million."
Quote: Janus Henderson Small Cap Growth Alpha ETF Overview
Expense Ratio: .3%
Sponsor's Website: Small Cap Growth Alpha ETF ("A small-cap growth ETF leveraging a rigorous fundamental-based process for selecting stocks based upon Janus Henderson’s more than 45 year history in bottom-up equity research. . . A proprietary methodology that evaluates small-cap stocks from a universe of 2,000, in three key areas: growth, profitability and capital efficiency . . Each stock is evaluated on 10 fundamental factors to identify companies that can exhibit durable growth. Growth measures include revenue growth rate; profitability measures include operating profit and earnings per-share; and capital efficiency measures include return on invested capital.")
Janus Henderson Small Cap Gr Alpha ETF (JSML)-Morningstar: 3 stars
Dividends: Inconsequential and paid quarterly
Top 10 Holdings as of 7/9/21:
K. Bought 2 CALF at $44.48; 1 at $43:
Quote: Pacer US Small Cap Cash Cows 100 ETF Overview
I briefly discussed this ETF in comments published on 7/2/21 and 7/4/21.
Sponsor's Website: CALF | Pacer ETFs
Expense Ratio: .59%
This ETF owns the 100 of the 600 stocks in the S & P SmallCap 600 index. The stocks selected have the highest trailing 12 month free cash flow yields. The 100 companies are weighted by free cash flow and the holdings are rebalanced quarterly.
Free Cash Flow Yield explained.
Top 10 holdings as of 7/12/21:
Of those stocks, I currently own only AMCX. Item # 1 Started AMCX-Bought 1 at $25.02; 1 at $23.75; 1 at $23.99; 1 at $23.15; 1 at $23; 1 at $21.99; 2 at $21.9, 3 at $21.4; 2 at $21.17; 2 at $20.9; 1 at $20.32 (9/26/20 Post); AMC Networks Inc. Cl A (AMCX)
L. Bought 2 ATKR at $69.04:
 |
| Snapshot Intraday on 6/12/21 |
Quote: Atkore Inc.
Closing Price 7/15/21: ATKR $68.92 +$0.09 + 0.13%
ATKR is "a leading manufacturer of Electrical Raceway products primarily for the non-residential construction and renovation markets and Mechanical Products and Solutions ("MP&S") for the construction and industrial markets. Electrical Raceway products form the critical infrastructure that enables the deployment, isolation and protection of a structure's electrical circuitry from the original power source to the final outlet. MP&S frame, support and secure component parts in a broad range of structures, equipment and systems in electrical, industrial and construction applications." The company believes that it holds a "#1 or #2 positions in the United States by net sales in the vast majority of our products."
ATKR Analyst Estimates | MarketWatch The trend indicates that ATKR is viewed as an early cyclical play that will experience robust earnings growth coming out of a recession which will quickly taper off.
Annual Report for the F/Y Ending 9/30/20
5 Year Financials:
ATKR 10-Q for the F/Q 3/26/21 This is the second fiscal quarter.
Dividend: None
Last Earnings Report (Q/E 3/26/21): SEC Filed Press Release
Diluted GAAP E.P.S. = $2.58, up from $.80
Free Cash Flow: $132.872M, up from $32.145M
 |
| Snapshot as of close on 7/12/21/Share Price = $29.54 |
 |
| As of 7/14/21 close |
I backedup my computer. I'm now working on updates. I wonder when that will end. It's hours already. I use Windows computer. This is where Apples are better quality.
ReplyDelete"Child tax credit payments"
ReplyDeleteSo rally time coming as they're spent and seen as stimulus.
The Trump supporters need to give that money back to the government since republicans voted against the child tax credit. They will complain about receiving that money as many did when cashing the Biden stimulus checks. Fox and Newsmax will cook up reasons that have no basis in reality to make them angry and dissatisfied about receiving what amounts to a lot of free money for them.
DeleteYep, the party of blame and resentment. It is the definition of nerve that they take credit for what they voted against.
DeleteLife has gotten crazy.
"Several commentators believe that the recent decline in intermediate and longer term treasury yields lends support to the FED's opinion that the inflation spike is temporary."
ReplyDeleteOh... that's what's going on.
That isn't true. It isn't.
But that 1) explains why the market isn't going down
2) has some vibes of how it's going down before once some ignored reality finally sets in. In this case that rates aren't reflecting inflation. And so inflation is real.
I'm not economist. But that's my perception. This is the beginning of that knot about muckiness that I've been rambling (very vaguely) about.
I really need to get off that topic and focus on specific layouts of what I want to own.
Typos:
Deletemarket is going down WHEN ignored reality finally sets in. In this case that ...inflation exists.
"Mr. Schmitt may not like the result of his recommendation since the number of Newsmax viewers would substantially decline. "
ReplyDeleteMaybe a new religion will form that it against medical care. That will burn itself out and leave the rest of us alone.
Jesen thought he was at the white house? Amazing.
PAY got my attention reading through. I'll read up the article and such.
Still want to look at LKQ some more to take advantage of the used car rally.
Rather than focusing on immediate buys, I should build a very good watch list. Including watches in different groupings (Broad ETFs vs individual div payers, tech growth vs div paying...) so it's easier to make good moves when opportunity arises.
The DOW has a 4.5% div but DIA has 1.6%?
ReplyDeleteDOW https://finviz.com/quote.ashx?t=DOW&ty=c&ta=1&p=d
DIA https://finviz.com/quote.ashx?t=dia&ty=c&ta=1&p=d
Land: Dow Inc. is a chemical company. Bofa Securities downgraded the stock to underperform today with a $68 PT due to concerns about Dow's commodity chemicals. Overall total returns have been subpar for long term buy and hold even though the dividend is substantially higher than DIA.
DeleteLol... Of course.. DOW company, not Dow Jones index.
ReplyDeleteIt seems like a lot of the companies with decent dividends are no longer reliable slow growth, and quality.
DOW - just reinforces that I shouldn't do things early in the morning. I saw Dow and was thinking it was the index itself. Versus dia the ETF for the index. So the difference in amount of dividends seen bizarre for an ETF versus the index it was based on.
ReplyDeleteMaybe I'll go back to sleep now.
I was just yawning and thinking not time to buy, not time to sell, when I got notice of SnP crossin below 15DMA.
ReplyDeleteAt 3pm on a Friday, that's unusual.
Doesn't change whether I'll buy or sell at the moment, but does get my attention.
The stock market today reflected again concerns about the pandemic as well as a continuation of negative real interest rates throughout the Treasury bill, note and bond maturity spectrum.
ReplyDeleteI noted increasing concerns about the pandemic in late June as expressed in stock price signals.
Many Bond substitutes bucked the downtrend today. Stocks that can be classified as bond substitutes that I own, which were up today, include the following:
Utility: AEP, AGR, BKH, CDUAF & CU:TO, D, DUK, ED, ETR, EVRG, FTS, IDA, PEG, PPL, SO, WEC (and the utility ETF FUTY)
Drug: ABBV, AMGN, GILD, GSK, MRK, NVS, PFE, RHHBY, SNY (NVO was up $1.05, but the dividend is too low to qualify as a Bond Substitute) The drug stocks that I own, which do not pay a dividend were mostly down (VRTX was up).
Packaged Foods and other Consumer Staples: CAG, CLX (+$4.75), FLO, GIS, K, KMB (+$2.38), REYN, UL
REITs: BRG, CUBE, DEA, DOC, GOOD, HTA, PLYM, SBRA, STAG, WPC (STAG is my largest $ position among equity REITs. STAG was up $.42 or 1.06% today)
The sectors benefiting from the reopening were down which includes the bank, energy, and material stocks.
The Covid testing plays were up which is another price signal being sent. Those include HOLX, QDEL and CODX.
Ten Year Treasury Nominal 1.31%
Ten Year TIP Real Yield -1.02%
Breakeven Inflation Rate = 2.33%, the annual average CPI over the next ten years for the buyer of the ten year TIP to breakeven with the buyer of the non-inflation protected 10 year treasury.
Thanks for the summary and stock names!
DeleteIt's a confounding situation. Vaccines help. But no idea if it will be contained yet.
My last TIP matured yesterday. It was a 10 year TIP with a .625%. The inflation accretion to the $1K principal amount was $118.91.
ReplyDeleteI have no interest in acquiring any TIPs now, viewing their real yields as ridiculous.
There was another period when the longer term TIPs went into negative real yield territory and I could not sell what I owned fast enough.
Item # 1 Sold 3 Treasury Inflation Protected Bonds at 120.45 Last Tuesday-ROTH IRA
http://tennesseeindependent.blogspot.com/2012/05/sold-3-tip-bonds-maturing-in-2019-at.html
Even though that one had a 1.875% coupon, the yield at 120.45 was a negative -.89. I realized a profit of $838.87.
Buying TIPs in the secondary market requires a lot of learning. It involves a different skill set than buying non-inflation protected treasuries, corporate or municipal bonds.
I did discuss these issues is several old post published at SA:
https://seekingalpha.com/instablog/434935-south-gent/4886072-mechanics-purchasing-tip-secondary-market
https://seekingalpha.com/instablog/434935-south-gent/4901042-update-on-buying-tips-in-secondary-market
I still own IBonds in my Treasury Direct account, which is an alternative for individual investors who want to avoid learning the intricacies involved in making informed TIP buying decisions.
I discussed IBonds in this 2016 SA post:
https://seekingalpha.com/instablog/434935-south-gent/4886289-buying-ibonds-through-treasury-direct
I've never bought TIPs on primary or 2ndary market. Something for me to learn about. I put 80+% of my portfolio into ETFs, mutual funds, and closed "bonds" and CDs, for years.
DeleteI suppose if I put my money where my thoughts are:
- inflation is a factor
- only current offset is market when it's going up (since it doesn't raise interest rates)
- Already missed the beginning claim on div stocks, but it's time to buy some, because they'll be the next sector rallying.
This article was suggested by google to me on editing stocks. Saying they're out of favor with big money.
Though 1) it's retro active info 2) just means it's moving into a good time to buy. Some of these will be bought out and made into new drugs.
https://finance.yahoo.com/news/hedge-funds-aren-t-crazy-141518616.html
A good question is what will 2022 election portend for drug stocks, especially biotech? Not too soon to start mulling that...
I appear to still be sleeping off this vaccine. Many more hours a day than I'd like. While I like vaccines, this is one of the downsides...
I would start buying energy and ford here or soon, but I own too much already.
DeleteLand: I am not going to even consider buying a bond that starts out with a negative yield, which is the case now for all $1K par value TIPs.
DeleteThe IBONDs (Series I Savings Bonds) are a better inflation hedge that TIPs even though they are currently being sold by the Treasury with no coupons.
https://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm
The best time to buy them was in the late 1990s when the fixed coupon was over 3%:
https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm
The current composite rate for a IBOND bought May 2021-November 2021 is 3.54% which is based on a zero fixed coupon and inflation.
https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm
At least the investor does not start out with a negative yield and the principal amount is increased by inflation. And they do not need to be owned in a retirement account.
There are certain conditions that will need to be met before I will consider buying TIPs again. First, the coupon has to be positive. Second, and this is harder to evaluate, the breakeven inflation rate needs to be significantly lower than what I view as a reasonable future prediction.
E.G. Say the fixed coupon was +.5% and the breakeven inflation rate was 1.5% for a 10 year TIP. And, I had reasonable grounds to believe that the 1.5% breakeven inflation rate was too low.
That compares favorably to what exists now: a starting real yield of -1.01% and a breakeven inflation rate of 2.32%.
If I bought that TIP now, I could do better than the nominal Treasury at 1.31% with the average annual inflation rate of 2.32% over the next 10 years, but so what is my attitude. Both would produce negative real returns with that inflation assumption since the ten year TIP is starting out with a significant negative yield.
That's really interesting. That rate covers inflation for about 6 months where very little else does that's secured.
DeleteThe problem with Ibonds is that if the rate moves in a way that's perceived as unfavorable compared to stocks or cash... it can be hard to sell out of the bonds without receiving a discount at 6 months.
The TIP and is not nearly as opportune at this time. It's a guaranteed loss.
Land: The IBond resets its interest rate every 6 months to reflect CPI so it will not have a negative real rate of return unlike many bonds that are bought today.
DeleteTo produce a positive real rate of return, the investor would have to buy an IBOND when the treasury is offering a coupon above zero for the fixed rate portion of the interest coupon.
That may happen when the new fixed rate is set on 11/1/21.
The fixed rate offered when the IBond is bought will stay the same until the bond is redeemed, but the inflation rate will vary with CPI and will reset every 6 months.
So a buyer on 10/1/1998 received a 3.4% fixed coupon and is still receiving that rate + the inflation rate.
The owner of the IBONDs does not sell them in the bond market, but redeems them directly with the Treasury through their Treasury Direct Account.
Redemption is not allowed for the 1st year and thereafter 3 months interest is forfeited until the Ibond has been held for 5 years. Redemptions after 5 years have no penalty. All of the ones that I own can be redeemed without penalty now.
As with other treasury obligations, interest can not be taxed by a state.
For the IBonds that I own, I will not pay taxes on the interest until I redeem the bonds. The bonds quit earning interest 30 years after issuance.
So there's not secondary market for IBonds?
DeleteIf you can redeem with a 3 mo interest penalty, that's not a bad deal, all other current options considered.
The risk is that you buy at current fixed rates. IF interest rates start climbing, you can lose on rates paid. Except... you don't because you turn them in, and lose 3 months interest.
Also you're stuck for a year. If it's a wild year for rates, you lose a little opportunity. The Fed would have a collective panic attack before that happens. Market down, money safe in a bond.
At 3.5% it's not making money over inflation, but it's way ahead of banks for rainday non-market funds. The most you lose is a chance to earn more for up to a year... and a 3 month penalty on 3.5% which is 2.6% for a year... WAY above high yield banks at .04%.
This may be a good idea for my rainday.
Land: If I was going to more IBonds, I would wait until 11/1/21 to see whether the Treasury increases the fixed rate to something higher than zero. To buy you have to have set up a Treasury Direct account and link it to a bank account. Then when a purchase is made, the Treasury debits that account and will send redemption proceeds to the linked account as well.
DeleteAnd to emphasize, the current 3.5% rate is only for the six month period starting on 5/1/21 through October 2021. The rate then resets at the inflation rate for the prior six months. The next six month period will probably have a higher inflation rate coupon but subsequent periods may be much lower.
DeleteI would recommend reading the information at the links that I gave in a prior comment.
Yes definitely, I started reading the links when you posted them... need to go through some more.
DeleteThe composite formula is confusing.
It seems like they're listing inflation as 1.77 for HALF a year. Then doubling. I thought when they set this inflation based on PAST 6 months, was still at around 2% so that 3.4ish% as an officially paid rate surprised me.
And also multiplying the base rate (that's currently 0) by that 1/2 year's inflation rate. I don't know why the base is getting increased by the inflation rate this way.
The inflation rate is what you get when you buy and for 6 months after - even though the bond offering rate changes in Nov. They don't make this simple - but it does seem like a good deal.
"""Unlike the fixed rate which does not change for the life of the bond, the inflation rate can and usually does change every six months.
We set the inflation rate every six months (on the first business day of May and on the first business day of November)....
However, the change is applied to your bond every six months from the bond's issue date."""
It's not compounded daily like a bank. So it's closer to being an APY rate for comparison purposes to other rates.
I can dump in my rainday $ and get 3.5% for the next 6 months. Then for another 6 months, get some unknown inflation rate that reflects the official CPI rates. Thereafter, can leave at any time.
That 1st year is a bit of a catch since if market drops, I may want that $ around for that.
AND that becomes a rolling problem. Because I'd be buying now into a zero fixed rate. At some point, one would want to redeem those bonds and rebuy when some fixed rate is offered. But that'd start the 1 year requirement before redeeming, from scratch again.
I'll come back to re-read the pages again. But other than wanting $ potentially for other uses, this may be a way to get something on rainday $ that's supposed to be safe anyway.
To make sure I've got the zeros right...
Delete100k at 3.5% is $3500 for a year.
vs
100k at .5% is $500 for a year.
So it'd be a useful gain over sitting in a bank account.
This a low point in bonds - they can go lower, but I want to look at the redeem rules more. Because what makes this work is the ability to get out without losing principle after a short while, while getting inflation coverage which bank CDs and any other rates aren't covering.
If I'm reading right this is limited. Only 10k buyable per year per person is not much.
Delete"Maximum purchase
Electronic: $10,000, total, each calendar year"
https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm
Land: Interest accrues every month but can not be compounded until it is paid:
Delete"The interest is compounded semiannually: twice a year, the interest the bond earned in the previous six months is added to the bond's principal value; then, interest for the next six months is calculated using this adjusted principal."
The only way to earn a return in excess of CPI is buying when there is a fixed rate above zero.
I have discussed in the past exchange traded corporate bonds that paid a spread over CPI (PFK, OSM) but all of those have matured.
see discussion at
https://seekingalpha.com/instablog/434935-south-gent/4737606-baby-bonds
Occasionally, I run across a $1K par value corporate bond that pays a spread over CPI.
It would idiotic for an investment grade rated company to offer one of those now given their ability to finance at fixed coupon rates below the inflation rate.
Definitely ibonds are less interesting in real rate situations when corporate rates are more normal.
DeleteThese are interesting now, because, so rates are so low compared to inflation currently.
Land: The limit is $10K per year. The current deal is too good compared to buying for example a 5 year TIP which has a negative real yield of -1.75% as of last Friday.
Deletehttps://fred.stlouisfed.org/series/DFII5
The treasury is not going to allow the top 1% to load up on the IBONDs when they can sell them 5 year TIPs at a negative yield.
They have a limited appeal for me, partly due to being able to harvest the interest when I have a low earnings year.
And compared to other high quality bonds, the buyer is not locking in a negative nominal or negative real rate of return.
I will probably buy $10K when and if the Treasury adds a fixed rate above zero which they should do on 11/1/21 but may not since it would be more than the Treasury has to pay now.
There are not going to be many green arrows today.
ReplyDeleteS&P 500 Index 4,252.43 -74.73 -1.73%
Last Updated: Jul 19, 2021 at 9:56 a.m. EDT
CBOE Volatility Index 21.72 3.27 17.72%
Last Updated: Jul 19, 2021 at 8:42 a.m. CDT
Delayed quote
https://www.marketwatch.com/investing/index/vix?mod=over_search
The rapid spread of the Delta Covid variant among unvaccinated people is not being ignored.
The ten year treasury is sinking in yield, currently down about 7 basis points to 1.22%.
The stocks that were working last Friday are either up today again or down significantly less than the major stock indexes.
The kind of downdraft seen so far today will cause declines in just about all stocks.
I posted about it being red and CNBC is pointing to covid.
DeleteThey're thinking it's a dip consolidating, and not a bigger move coming.
google glitched when I posted, so no idea if it sent the comment.
The ten year treasury is currently down 10 basis points and has fallen below 1.2%.
ReplyDeleteAlmost nothing is working now other than cash and high quality bonds. Just a sea of red.
Dow Jones Industrial Average
33,770.86 -916.99 (-2.64%)
As of 1:42PM EDT.
CBOE Volatility Index (^VIX)
24.57 +6.12 (+33.17%)
As of 1:32PM EDT
I did execute a few minutes ago what I call a small ball scatter "buy program", focusing on depressed dividend paying stocks that have become slightly more attractive due to share price declines and the decline in interest rates.
Ligand Pharmaceuticals Incorporated (LGND)
120.54 +7.36 (+6.50%)
As of 1:49PM EDT
I own 1 share and have already written up a discussion that will be included in my next post.
Ligand is primarily engaged in drug discovery and licenses its technology or compounds to other drug companies who bear the monetary risk of trials and the laborious FDA approval process.
Merck received approval today from the FDA today "a 15-valent pneumococcal vaccine utilizing Ligand’s CRM197 vaccine carrier protein, which is produced using the patent-protected Pelican Expression Technology™ platform."
https://www.businesswire.com/news/home/20210719005193/en/
LGND received a $2M milestone and will receive royalties in the low single digits.
As of 12/31/2020, LGND had 130 partnerships or license agreements with other pharmaceutical companies (and 10 more that remain secret). The list starts at page 7 of the Annual Report:
https://www.sec.gov/Archives/edgar/data/886163/000088616321000050/lgnd-20201231.htm
While the MRK news is probably giving the stock a lift today, I suspect the enthusiasm is at least partly due to do with Gilead's production of remdesivir which uses LGND's Captisol, "a patent-protected, chemically modified cyclodextrin with a structure designed to optimize the solubility and stability of drugs." LGND sells Captisol which generated $31.3M in revenues in the first quarter, "compared with $21.1 million for the same period in 2020, with the increase primarily due to higher sales of Captisol for use with remdesivir."
https://www.sec.gov/Archives/edgar/data/886163/000088616321000064/q12021earningsreleaseex99_1.htm
So this ties back into the Stock Jock theme today which involves renewed concerns about the pandemic.
Tomorrow will be a headline about progress on a booster, to give the rally a break.
DeleteI have a meeting but will try to do some ETF buying after hours assuming it's not a rally into the close.
*obviously I meant pullback, not rally.
DeleteAnd market's back again... i would have liked to sell and rebuy into this. But holding wasn't a bad choice.
ReplyDeleteI'm still reaching a willy point where I'm going to look at next highs as a place to sell. It could be a long time, year or two, but something is wrong. It's lining up, that rotten underneath, feeling has returned.
So timing is hard. But it is a new idea for me...that the market isn't feeling so safe anymore.
I'm going to keep looking around and pondering on this. And looking at traditional signals and trying to sort them out as well.
I'm a little worried saying that, because I don't want to spread irrational fear to other investors, that can hurt investing. It's not conscious evidence based.
I guess the pull back and worry about delta is over.
DeleteI'm first getting worried.
I didn't seen anything notable about the market today. A recovery rally.
Land: The Stock Jocks are not going to continue an anxiety attack for long until what is feared actually comes to pass.
DeleteThe Delta variant (and others likely to come) may never have a significant adverse impact on the U.S. economy given the current level of vaccinations.
There will be negative results for those who refuse vaccinations. Fewer than 1/2 of the population is fully vaccinated, with 59.6% of the U.S. population 18 and up.
The NYT has the 14 day change in new infections up 171% through 7/21. The "average" for 7/21 was reported at 41,310.
I suspect there will be a non-temporary freak out at some point with infections continuing to spike higher, provided hospitalizations and deaths spike higher as well. It is anyone's guess what those numbers will be, but I would guess 200,000 new daily cases by the end of August with 3K daily deaths.
As of yesterday, the total U.S. deaths is reported at 609,508 with 34,221,526 infections.
I can not access any of my brokerage accounts at this time. There appears to be a widespread internet outage. The SEC.Com website is down as well.
ReplyDeleteI wasn't at my computer to try earlier, but was able to get in now.
DeleteNo mention of outage on cnbc yet.
A lot of my names are down in spite of it being an "up" day. TXN down over 5% on a beat yesterday. (Portfolio or non-retirement account is down only .03%).
Land: The source of the outage which was widespread involved a problem at Akamai:
Deletehttps://www.cnbc.com/2021/07/22/several-major-websites-go-down-in-widespread-internet-outage.html
While I own a fractional share of TXN, just to monitor it, I view TXN as a slightly overvalued cyclical.
Earnings growth is being predicted in the consensus estimates.
https://www.marketwatch.com/investing/stock/txn/analystestimates?mod=mw_quote_tab
The consensus non-GAAP E.P.S. for 2023 is $8.22. The stock closed today at $183.91. The P/E using the $8.22 2023 number is 22.38.
GAAP E.P.S. was close to flat during 2018-2020 ranging from a low of $5.24 to a high of $5.97.
See page 15
https://www.sec.gov/ix?doc=/Archives/edgar/data/97476/000009747621000006/txn-20201231.htm
With a meaningful slowdown in the economy, earnings will likely return to that range.
Between 2011-2013 the E.P.S. was reported between $1.51 and $1.91 with the $1.51 earned in 2012 down $1.88 in 2011.
The 52 week range suggests TXN as a trading vehicle and being used as such.
52 WEEK RANGE
125.43 - 197.58
Even after a $10.33 decline today, the stock is still near its 52 week high and is up around 100% off its March 2020 lows.
I have to sell off some more of my TXN on the next up. 18 shares left.
DeleteI'd sold too soon before.
But I'm starting to not care. Just want to change my play money into real and bring it home. Find something less overgrown to put it into. Maybe industrial commodities or travel.
You'd bought some TXN around the time I'd sold and rebought. You must have sold that off after that and not mentioned or I missed it. I thought you still had some.
Unilever had a bad day after warning that commodity price inflation will pressure margins in the second half.
ReplyDeleteUnilever PLC ADR
$55.52 -$3.19 -5.43%
https://www.marketwatch.com/investing/stock/ul?mod=over_search
I own shares.
The company expects high teens cost inflation in the second half. UL is accelerating price hikes. Since the first quarter the company noted the following increases in input costs: crude oil up 12%; soybean oil +21%; and transportation costs by 7%.
This is the same type of warning given recently by Conagra.
+++
Co-Diagnostics Inc. (CODX)
$10.54 +1.84 +21.15%
https://www.marketwatch.com/investing/stock/codx?mod=over_search
I sold 25 of my highest cost shares at $10.61 and kept my lowest cost 20 share lot bought in my Vanguard account.
CODX is possibly the smallest market cap company that is engaged in Covid testing. The market cap is close to $250M. Before the pandemic started, CODX was a $1 stock. I have it classified as a Lotto.
Website:
https://codiagnostics.com/
SEC Filings:
https://www.sec.gov/edgar/browse/?CIK=1692415&owner=exclude
Last Earnings Report:
https://www.sec.gov/Archives/edgar/data/1692415/000149315221011289/ex99-1.htm
My last discussion:
Item # 2.K. Bought 20 CODX at $8.92
https://tennesseeindependent.blogspot.com/2021/05/codx-crsp-dea-duk-gnom-holx-kr-mo-orkly.html
I later averaged with a 5 share purchase at $8.2. Those lots were sold today at $10.61.
The largest company with a substantial COVID testing business is probably Hologic (HOLX) whose stock is harder to move up with its $18B market cap.
Hologic Inc. (HOLX)
$71.77 $1.77 $2.53%
https://www.marketwatch.com/investing/stock/holx?mod=over_search
I am not sure how many HOLX shares that I own since they are spread out in multiple accounts. Maybe 40 or so, give or take 10.
HOLX used its cash bonanza from Covid testing to fund over $1B in acquisitions over the past year. I do not have the exact number before me, but the largest was a European firm that was acquired for close to $808M in enterprise value. The cash payment was $714M.
https://investors.hologic.com/press-releases/press-release-details/2021/Hologic-Completes-Acquisition-of-Mobidiag/default.aspx
https://investors.hologic.com/press-releases/press-release-details/2021/Hologic-to-Acquire-Mobidiag-Innovator-in-Near-Patient-Acute-Care-Diagnostic-Testing-for-Approximately-795-Million/default.aspx
+++
The internet outage that I mentioned earlier was resolved in about 30 minutes.
++
The ten year treasury yield declined slightly to 1.28%.
Regional BANK ETF KRE
$61.44 -$1.40 -2.23%
Some of the earnings reports have been lower than expected with MTB easily having what I consider to be the worst one given its rapid acceleration of non-performing loans.
M&T Bank Corp.
$128.99 -4.06 -3.05%
https://www.marketwatch.com/investing/stock/mtb?mod=over_search
I have changed my opinion of that bank to negative.
A few others reported lower than expected earnings because revenues and profits from selling mortgage loans, a major contributor to earnings for several quarter, turned down significantly though still a profit center.
For most banks, NIM is down Y-O-Y.
I guess the bank earnings coming in lower is backward looking, and doesn't point to anything about the broad economy.
DeleteINTC's down on beat and good guidance but earnings gained over a tax one shot benefit. They are still cash flush from what I can see.
Lots of talk about buying AMD or other chips. I want to see if INTC goes down a little more and buy in some again. In part for the div.
---
Problem with div growth investing is.... at this high valuation a market, there isn't much that's quality with divs that can beat inflation by 2%.
Land: Bank earnings that I have reviewed so far, with MTB being the exception, have reflected continued positive trends in non-performing loans and charge offs. Most of the ones that I own have beaten expectations.
DeleteThe primary problem is that banking is a spread business and the net interest margin continues to contract. That is a major headwind for earnings growth.
The second problem is that earnings growth was juiced by mortgage banking revenues for several quarters. While that is part of the business and is included in GAAP earnings, earnings had to come down from historically high levels and that is making some Y-O-Y comparisons look worse even though the bank may be increasing revenues and profits from regular banking and trust operations.
An example today comes from WASH.
Washington Trust Bancorp Inc.
$46.75 -4.32 -8.46%
NIM actually rose Y-O-Y which is rare now. NPL Ratio was sold at .24%.
E.P.S. was reported at $1 with the consensus at $1.07.
The problem was not banking operations but the decline in profits from selling mortgages. WASH realized gains on loan sales in the 2021 second quarter at $8.562M, down from $14.851M in the 2020 second quarter and $$13.745M in the 2021 first quarter. When that kind of number moves up and down so much for a small bank, E.P.S. consensus estimates are meaningless as a practical matter and need to be given a wide range.
Hum,okay. Banking it doing okay. Mortgages will slow down.
DeleteI noticed invites to average joe's to join the RE boon.
That's a topping sign. I wonder how wide spread it is?
A twitter post explaining how RE's made 20% a year being passive while stocks make 8% on average year. And invite for small fry to add their funds to a company that buys houses and sells/rents for profits.
I've seen other hints of inviting Joe public. Robinhood is a good example.
Valuations are high but can stay so for a long, long time. But is this sign of topping first starting to show up? In Real Estate OR the market? That's a good question here.
I don't know if this political thing is effecting Unilever. I don't have a way to tell.
DeleteUnilever put out a message that Ben & Jerry's that they own will no longer sell ice cream in the territories of Israel as part of BDS.
(BDS's indirectly stated goal is wiping out Israel. Quotes from their top say it a lot:
https://www.jewishvirtuallibrary.org/bds-in-their-own-words)
The whole thing is ridiculous. They don't take political positions on anywhere else in the world. Turns out a month ago B&Js was pressured for not being good enough lefties Jews in Vermont, so they're trying to appease. (Though it's now company, not individual owned.)
I have no idea how much this effects stocks. I don't know how widely it's announced or investors are reacting.
But it's possible reason on that stock.
Meanwhile HaganDas is a winner in this, based on how it was started. And that it's good ice cream.
Land: The Ben and Jerry's issue has had and will have zero impact on UL's stock. The problem is rapid increases in commodity inflation that will take time to recoup in product price increases.
DeleteI bought some Häagen-Dazs earlier today. That brand has gone through so many ownership transitions that I have to do research to find out who owns what now.
I do know that GIS has rights outside of the U.S.
https://www.generalmills.com/en/Brands/ice-cream/haagen-dazs
Nestle sold its interest in the U.S. recently to a venture capital firm.
https://www.bizjournals.com/twincities/news/2019/12/12/what-the-sale-of-h-agen-dazs-u-s-licensing-means.html
That ice cream was developed by 2 Jewish Polish immigrants who were living in NYC. The name is supposed to sound Scandinavian which it is not.
Problem has been for a while that it's not products of companies you can buy but large conglomerates. So you're buying high up board quality and a fundamentals sheet... much more than in the past when you could buy actual isolated product areas.
DeleteYep, it was immigrants and they named it with a Danish name to honor the Danish rescue program that largely worked. There's a story about them being survivors who developed it after the war. But that seemed to be a false story the last time I'd seen it.
I went back to counting calories without dieting. I need to not gain...
Unilever issued a statement distancing themselves from the B&J board's decision.
DeleteThere's been movement (various state attorney's looking into) to remove B&J from gov't funded contracts since they're supporting a hate movement, which the gov't won't, even though private companies can.
When AirBnB did something similar, they wound up walking it back. I don't know if it got as far as effecting their finances or it was just after all the fact inaccuracies in their release were pointed out.
So I don't know if this kind of thing has an impact on stock prices - but I'm not sure about ruling it out. I did well buying the Nike dip after their political adventure supporting Kaspernack. This is of course has vastly less awareness of it, to make any impact.
Doesn't matter with this stock. Unilever disassociated so it won't effect here.
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Futures are up again. Day 3, so the recovery rally is on. I missed but at least I didn't sell anything and get left not getting back in.
Didi's being penalized by China's govt.
ReplyDeleteBABA is possibly (at the extreme end) going to be delisted.
So there's the risk of foreign stocks in a high risk gov't. I'm putting BABA on long term watch list.
From Tennessee. A change of pace.
ReplyDeletehttps://thehill.com/homenews/state-watch/564479-tennessee-votes-to-remove-bust-of-confederate-general-and-kkk-grand
Land: Republicans in Tennessee voted in June of last year to keep the statue of Nathan Bedford Forrest in the state capitol building, as I noted in a June 20, 2020 post:
Delete"As I mentioned in the last post, Tennessee republicans have refused to remove a statue of Nathan Bedford Forrest prominently featured in the state capital building and are unperturbed by the fact that Forrest was a founder of the KKK and its first Grand Wizard. The statue needs to be pulverized and then buried."
For the Trumpsters who now control Tennessee's government, removing the statue was equivalent to "canceling" culture. As I understand this claim, if TN did not venerate the founder of the KKK by keeping a statue in a prominent public place, that amounts to canceling culture in a way that only the Trumpsters can comprehend. Forrest also has the baggage of murdering 300 Black Union soldiers who tried to surrender at Fort Pillow, though he denied giving the order which is not credible IMO.
https://www.history.com/topics/american-civil-war/fort-pillow-massacre
So it was a very long effort to convince enough Republicans that keeping the statue in the state capitol was causing more economic harm with bad publicity than it was worth as red meat thrown to the Trumpster population.
So economics from more sane people gained enough weight to work on them.
DeleteJust goes to show, if you can't use facts and logic, use economic pressure :).
Land: I would add that enough Republican support was secured only by also removing the statues of "Adm. David Farragut, the first leader of the U.S. Navy, who served in the Union Army during the Civil War, and another Tennessean, Adm. Albert Gleaves, a commander in World War I and naval historian." The Republicans did not want their base to think that they were just singling out the founder of the KKK.
Deletehttps://www.nytimes.com/2021/07/23/us/nathan-bedford-forrest-bust.html?action=click&module=In%20Other%20News&pgtype=Homepage
Ha ha because that would just be too terrible if you singled out the founder of the KKK...
DeleteI have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2021/07/afin-axunca-biref-bk-cet-cube-cva-fitb.html