Economy:
The FED is expected to increase the FF rate by 75 basis points tomorrow.
 |
| 87% probability of a raise to 3.75%-4% |
Current Range: 3%-3.25%
The government estimated that real GDP growth was at a 2.6% annualized in the third quarter. This is the first estimate. "The increase in real GDP reflected increases in exports, consumer spending, nonresidential fixed investment, federal government spending, and state and local government spending, that were partly offset by decreases in residential fixed investment and private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased (table 2)." The PCE price index increased by 4.2%, compared to 7.3% in the second quarter. Gross Domestic Product, Third Quarter 2022 (Advance Estimate) | U.S. Bureau of Economic Analysis (BEA)
Personal consumption expenditures were up at an annualized +1.4%, down from +2% in the second quarter.
New homes sales declined by 10.9% in September compared to August and were 17.6% below the September 2021 estimate. New Home Sales-Census Bureau.pdf The median sales price was at $470,600 with the average price at $517,700.
Home prices cooled at a record pace in August, S&P Case-Shiller says
Treasury Yield Curve-October 2022:
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Trump and His Party:
Jon Meacham: America Facing ‘The Gravest Test Of Citizenship Since The Civil War’ - YouTube Meacham has recently published a new book. And There Was Light: Abraham Lincoln and the American Struggle
A Political Party Unhinged From Truth - The Atlantic This article is adapted from Robert Draper's recently published book Weapons of Mass Delusion: When the Republican Party Lost Its Mind.
The dominant and long term historical trend of societies is to accept authoritarian rule by 1 person. You can not study the past 20 centuries or so of human history and come to a different conclusion.
Democracies are the rare exception; and those that have managed to survive so far, including the U.S., are under internal attack by authoritarian forces that are gathering strength, implementing already anti-democracy policies and increasingly becoming more bold in clearly authoritarian rhetoric. Media critic on threat to democracy: Press is "asleep at the switch" - YouTube
Election denier Mark Finchem's sleeper campaign closes in on MAGA prize - The Washington Post (noting that Finchem has a 4 point lead over his democrat opponent. Finchem would have discarded the certified vote count showing Biden won in Arizona and would have accepted presidential electors appointed by Arizona's republican legislature)
Mark Finchem- Wikipedia; Arizona secretary of state 2022 Republican candidate: Mark Finchem
David Raskin, Top National Security prosecutor, joins Trump Mar-a-Lago probe - The Washington Post
How Wisconsin Became the GOP’s Laboratory for Dismantling Democracy The republican party in Wisconsin has so gerrymandered the state House and Senate districts that the republicans can gain a super majority, capable of overturning every veto of the Democrat governor, with about 45% of the statewide vote. In 2018 Democrats received 53% of the statewide vote and only 36% of state legislative seats. That was not tolerable for Wisconsin's republicans so the districts were redrawn in 2021 to ensure that the Democrats would win even fewer seats with over 50% of the statewide votes. Democrats would need to win over 62% of the statewide votes to win a 1 vote majority in the state House.
Alaska GOP votes to censure McConnell over his support for Murkowski - The Washington Post Senator Murkowski voted to impeach Don the Authoritarian for his role in the January 6th republican insurrection. There is no other word to accurately describe what happened that day other than "insurrection" against Democracy.
Alito Assured Ted Kennedy in 2005 of Respect for Roe v. Wade, Diary Says - The New York Times; High court Justice Alito assured Kennedy on abortion rights: NY Times I have no doubt that Alito told Kennedy that he supported the right to privacy. Alito wanted to become a Supreme Court Justice who would, when the first opportunity arose, abolish the right of privacy that was the constitutional foundation of the Roe v. Wade decision.
Kennedy wrote the following in his diary after meeting with Alito:
Alito: “I recognize there is a right to privacy. I think it’s settled.”
Kavanaugh Gave Private Assurances on Roe v. Wade. Collins Says He ‘Misled’ Her.-The New York Times When Kavanaugh gave his assurances to Senators, there is no doubt in my mind that he was going to vote to overturn Roe. Senator Collins had to know she was being misled and just pretended she did not know by voting for Kavanaugh.
Head of Republican Party mocks speaking abilities of Fetterman, Biden - The Washington Post
Only the GOP Celebrates Political Violence - The Atlantic
Paul Pelosi attack follows years of GOP demonizing Nancy Pelosi - The Washington Post A loyal Trumpster committed the attack.
Suspect in Pelosi Attack Charged With Assault and Attempted Kidnapping - The New York Times
Facts do not matter to Trumpsters who are unreachable with accurate information. It is a total waste of time and effort to use accurate information to undermine their reality creations.
It did not take long for Trumpsters to start spinning fact free conspiracy claims, including the claim that the attack was a false flag operation. Paul Pelosi attack prompts Elon Musk and political right to spread misinformation - The Washington Post; Prominent conservatives share online disinformation about Paul Pelosi assault - POLITICO; Conservative figures push salacious theory about Pelosi attack as local police chief debunks it Those "prominent conservatives" are not conservatives.
Among the Trumpsters, Dinesh D'Souza had this to say to this 2.5M followers: "The Left is going crazy because not only are we not BUYING the wacky, implausible Paul Pelosi story but we are even LAUGHING over how ridiculous it is. What this means is that we are no longer intimidated by their fake pieties. Their control over us has finally been broken." Attack on Paul Pelosi - Wikipedia
Elon Musk joined in the wingnut chorus pointing to an article "published" by the Santa Monica Observer that claimed, without evidence of course, that Paul Pelosi was drunk and that his attacker was a male prostitute. The "Santa Monica Observer" is a notorious far right online publisher that once claimed that Hillary Clinton had died in 2016 and had been replaced by a body double; that sunlight cured Covid; and that Bill Gates caused the polio epidemic. That is undoubtedly a credible source for Mr. Musk. Editorial: Now, for your local fake news … - Los Angeles Times ( Santa Monica Observer, "owned by onetime City Council candidate David Ganezer, is notorious for publishing false news."); Column: Elon Musk takes Twitter into the sewer - Los Angeles Times Under Musk's leadership, Twitter will become so toxic that major advertisers will have no choice but to flee.
Donald Trump Makes Perhaps His Wildest Claim Yet About 2020 Election
Analysis: Donald Trump Jr.'s reaction to Paul Pelosi's attack shows exactly how low we have sunk;Donald Trump Jr. mocks Paul Pelosi attack | The Hill
Arizona governor candidate Kari Lake jokes about Paul Pelosi attack | The Hill
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Russia/Putin/Orwellian:
Timothy Snyder: 6 steps to prove Russian genocide in Ukraine. Putin and Hitler act similarly - YouTube Snyder is a Yale history professor who has written books about tyranny and the loss of freedom. The Road to Unfreedom: Russia, Europe, America; On Tyranny: Twenty Lessons from the Twentieth Century; Bloodlands.
The Remote Control Killers Behind Russia’s Cruise Missile Strikes on Ukraine - bellingcat Bellingcat has identified the Russian officers directly responsible for missile attacks against apartment buildings and other civilian structures.
Russia has now threatened to shoot down U.S. satellites. 'Absolute f**king hell': Putin's soldiers reeling on the front line in new video - YouTube
Top Putin general told troops 'kill everyone' and 'take no prisoners' | Metro News An example is a 19 year old who was first shot in the leg by a Russian soldier who then cut off his ears before killing him after he "confessed".
Where Russians Retreated, Ukrainians Find Devastation - The New York Times The Russians destroy civilian property and steal whatever they can carry with them.
Putin Wants to Divide Ukrainians. Mykolaiv Is a Test Case. - The New York Times Russia destroyed the clean water infrastructure in Mykolaiv, leaving the residents only with sea water for bathing and bottled water for drinking which is at best sporadic in supplies. Just more war crimes and crimes against humanity.
Abandoned Russian base holds secrets of retreat in Ukraine - YouTube
Putin insists U.S. tell Kyiv to seek peace - The Washington Post Putin's speech and remarks last week were fact free and delusional, as noted in that WP article. One of his many bizarre claims was that the West was trying to force Russia to hold gay pride parades in Moscow.
Russia has quit blaming the U.S. for the sabotage of the Nord Stream pipelines and is now pointing a finger at the U.K. Russia blames UK for Nord Stream pipelines sabotage
While it will probably never be established in a court of law who sabotaged those pipelines, the only nation with a motive is Russia.
The sabotage of those pipelines allows Russia to invoke Force majeure in its contractual commitments to deliver natural gas and thereby attempt to avoid severe financial penalties. Russia’s Purported Sabotage Of The Nord Stream Pipeline Marks A Point Of No Return
Russia is also sending at least 2 messages to Europe: (1) Europe's energy infrastructure is an easy and soft target, which is also shown by Russia's attacks on Ukraine's civilian infrastructure facilities and (2) Russia will use energy supplies as a weapon to secure acquiescence to Russia's territorial ambitions.
Yes, we already have been told that Russia and China are going to bring freedom and true democracy to the entire world. Beijing and Moscow unite in efforts to redefine democracy itself : NPR
Earlier this week, Russian missiles destroyed or damaged civilian infrastructure facilities throughout Ukraine. In Kiev, Russia targeted a facility that knocked out 80% of that city's clean water supply. Kyiv and other Ukraine cities hit by barrage of Russian missile strikes | CNN
Putin claims that there are people in the West who share Russia's “traditional, primarily Christian, values, freedom, patriotism, the richest culture”. He was referring to republicans. Putin’s Play for the Western Right - The Atlantic
What does Putin mean by Russia's traditional Christian values?
Was he referring to intentionally murdering Ukrainian civilians; destroying Ukraine's civilian infrastructure including power stations and water treatment plants; Russian soldiers torturing civilians; Russians raping Ukrainian women and young girls; Russians stealing whatever they can carry with them; Russians sending their missiles to level apartments buildings, homes, businesses and schools into rubble; and committing daily war crimes and crimes against humanity.
There has never been any doubt whatsoever what the Russians are capable of doing, though many in European democracies needed to be reminded. One result of this much needed reawakening to what history so clearly reveals about Russians is that NATO has been strengthened and military spending by western democracies will increase to deter further Russian aggression.
A message was sent by the U.S. in deploying the 101st Airborne to Romania for war drills. The U.S. Army's 101st Airborne is practicing for war with Russia just miles from Ukraine's border - CBS News This is the first deployment for the 101st to Europe since WWII. The miniseries Band of Brothers focused solely on one 101st company starting from D-Day to the war's end.
It is clear that Putin will not stop until Ukraine recognizes the 4 recently annexed territories and Crimea as Russian territory, as well as meet other Russian demands clearly unacceptable to Ukraine. That is what Putin means by a negotiated settlement. This is just a territorial grab by Russia.
Putin may be successful after reducing the Ukrainians willingness to suffer through daily Russian atrocities, which will continue unabated and likely increase, and western democracies become less willing to provide military and other financial support.
Longer term it is obvious that the western democracies can not depend on Russia for anything, particularly energy supplies, as a national security matter.
A question that the average Russian may ask themselves is whether the war was started to benefit them, or Putin and his gang of Kleptocrats with the average Russian just paying the price.
++
1. Pared FHN in Fidelity Taxable Account - Sold 450 at $24.33:
Quote: First Horizon Corp. (FHN)
FHN is in the process of being acquired by Toronto Dominion. TD to Expand in the Southeastern U.S. with Acquisition of First Horizon
Profit Snapshot: +$1,261.77 (10/25/22 sale only)
As mentioned in a comment published on 10/25, I sold the 450 shares bought as arbitrage play. Item # 1. Added 450 FHN at $21.53 (5/19/22 Post)
Average Cost per share after pare this account: $8.97 (47+ shares)
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| Snapshot Intraday on 10/25/22 |
Dividend: Quarterly at $.15 per share
FHN has continued to pay the dividend pending its acquisition
Yield at $8.97 = 6.69%
Last Ex Dividend: 9/8/22 (owned all as of) I reinvested the dividend and have already sold those shares.
Next Ex Dividend: 12/15/22
I discussed FHN in my last post and have nothing further to add here. Item # 5.K. Pared FHN in Fidelity Taxable Account - Sold 26+ at $24.02 and Item # 5.L. Pared FHN in Schwab Account - Sold 10 at $24.15 (10/25/22 Post)
I used $2000 of the proceeds to buy 2 more FHN SU bonds, see Item # 2.M. below.
FHN Realized Gains to Date = $1,747.15
2. Corporate Bonds: $21,000.
For the bonds discussed in this section, $5K in principal amount mature next year and the remaining $16K in 2024.
I am obviously far more interested in increasing my bond allocation than my common stock allocation.
Bond, Treasury Bills and CD Purchases Discussed in this post: +$43,000 increase compared to a net $10+K reduction in my stock allocation.
The current bond yields easily satisfy my financial goals and needs.
While bond prices continue to drift down, resulting in unrealized losses in my prior purchases, I am not concerned.
The bond ladder is heavily weighted in short term investment grade corporate bonds and treasuries. Today, I will receive $20K in redemption proceeds. I will not have any need to sell a bond prior to maturity and hopefully the proceeds can be reinvested at higher yields. I want interest rates to trend up.
I am only concerned about a significant decline in interest rates that results in lower yields when I reinvest the proceeds received at maturity or at an early issuer redemption.
2024 will be the most important year for reinvesting proceeds given that year's weighting in bond maturities, now over $300K.
A. Bought 1 Virginia Electric 3.45% SU Maturing on 2/15/24 at a 99.598 Total Cost; and 1 at a 98.32 Total Cost:
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Issuer: Wholly owned subsidiary of Dominion Energy Inc. (D)
Dominion Earnings Report for the Q/E 6/30/22
Dominion Energy 2021 Annual Report The results for the Virginia Electric subsidiary can be found starting at page 91. Revenue in 2021 was $7.47B with net income at $1.712B.
FINRA Page: Bond Detail (Prospectus linked)
Credit Ratings: A2/BBB+
YTM at 99.598 Total Cost = 3.741%
Current Yield at 99.598 TC = 3.46%, rounded down.
YTM at 98.32 Total Cost = 4.721%
Current Yield at 98.32 TC = 3.51%
The price decline, given the short maturity, will have far greater impact on YTM than on current yield.
B. Bought 1 Virginia Electric 3.45% SU Maturing on 2/15/2024 at a Total Cost of 97.962:
%203.45%25%202:15:2024.png){kind=small}
Purchased 10/19/22. Discussed out of time order.
This is the same bond discussed in Item # 1.A. above.
YTM at Total Cost: 5.066%
Current Yield at TC = 3.52%
I now own 3.
So between 9/8/22 to 10/19/22, the YTM rose from 3.741% to 5.066%. The only way for the bond bought at a 3.741% YTM to adjust is to go down in. price.
This bond is generally available in 1 bond lots at or near the best ask price. I may buy 2 more bonds when and if the price continues to drift down.
C. Bought 2 Kimco 2.7% SU Maturing on 3/1/24 at a Total Cost of 98.375:
Purchased: 9/8/22.
Issuer: Kimco Realty Corp. (KIM)
KIM SEC Filed Earnings Report for the Q/E 9/30/22
Last Bond Offering (9/22): $650M of 4.6% SU Maturing in 2033 SU Proceeds were used to redeem SU notes maturing in 2023.
FINRA Page: Bond Detail (prospectus linked)
Credit Ratings: Baa1/BBB+
YTM a Total Cost: 3.85%, rounded up.
Current Yield at TC = 2.74%, rounded down
D. Bought 1 AvalonBay Communities 3.5% SU Maturing on 11/5/24 at a Total Cost of 99.075:
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Issuer: Avalonbay Communities Inc (AVB)
FINRA PAGE: Bond Detail (prospectus linked)
Credit Ratings: A3/A-
YTM at Total Cost: 3.947%
Current Yield at TC = 3.5327%
I now own 2 bonds.Last Bond Offering (11/21): $400M 1.9% SU Maturing in 2028
E. Bought 1 AvalonBay Communities 3.5% SU Maturing on 11/15/24 at a Total Cost of 96.713:
This is the same bond discussed in Item #1.D. above.
Purchased 10/19/22. Discussed out of time order.
YTM at Total Cost = 5.197%
Current Yield at TC = 3.619%
I now own 3 bonds.
F. Bought 1 Boston Properties LP 3.8% SU Maturing on 2/1/24 at a Total Cost of 99.36:
%203.8%25%202:1:24.png)
Issuer: Operating entity for Boston Properties Inc. (BXP)
Website: The largest publicly traded developer in the United States - BXP
Investor Overview | Boston Properties, Inc.
FINRA Page: Bond Detail (prospectus linked)
Credit Ratings: Baa1/BBB+
YTM at Total Cost = 4.28%
Current Yield at TC = 3.8245%
G. Bought 2 Bank of Nova Scotia 4.25% SU Maturing on 9/16/24 at Par Value:
%204.25%25%209:16:24%20%20.png)
Offering under Fidelity's Corporate Notes Program.
Issuer: Bank of Nova Scotia (BNS)
BNS Analyst Estimates | MarketWatch
Interest Payments: Quarterly
Finra Page: Bond Detail
Credit Rating: A2 Moody's/A+ S&P
Fitch has an AA rating.
I have a small ball position in the common stock.
H. Bought 1 Nextera Capital 4.255% SU Maturing on 9/1/24 at a Total Cost of 99.658; 1 at a 99.049 Total Cost; 1 at 98.401 Total Cost:
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Issuer: Wholly owned subsidiary of NextEra Energy Inc. (NEE) who guarantees the note.
NEE SEC Filed Earnings Press Release for the Q/E 9/30/22 (GAAP net income of $1.696B, revenues = $6.719B)
Credit Ratings: Baa1/BBB+
Fitch has an A- rating.
Financial Strength – NextEra Energy, Inc.
9/21/22 is a key date explaining a rise in interest rates thereafter. The Fed - September 21, 2022: FOMC Projections materials, accessible version The FED then signaled that it anticipated raising the FF higher in both 2022 and 2023 than previously expected.
YTM at 99.658 Total Cost = 4.433% 9/16/22
Current Yield at 99.658 TC = 4.2696%
YTM at 99.049 Total Cost = 4.767% 9/22/22
Current Yield at 99.049 TC = 4.2959%
YTM at 98.401 Total Cost = 5.167% 10/28/22
Current Yield at 98.401 TC = 4.3241%
NEE is viewed as a blue chip utility holding company. Based on yesterday's closing price of $77.5, the dividend yield is only 2.19%.
I. Bought 2 Eversource Energy 4.2% SU Maturing on 5/27/24 at a Total Cost of 98.377:
%204.2%25%206:27:24.png)
Purchased 10/19/22. Discussed out of time order.
Issuer: Eversource Energy (ES)
ES Analyst Estimates | MarketWatch
I have eliminated my common stock position.
Finra Page: Bond Detail (prospectus not linked)
Prospectus ($900M, offered in June 2022 at 99.964)
Credit Ratings: Baa1/BBB+
YTM at Total Cost = 5.247%
Current Yield at TC = 4.2693%
J. Bought 2 Eversource Energy 4.2% SU Maturing on 6/27/24 at a Total Cost of 99.055:
%204.2%25%206:27:2024.png)
Purchased on 9/22/22.
This is the same bond discussed in Item # 1.I. above.
YTM at Total Cost = 4.765%, rounded up.
Current Yield at TC = 4.24%
I now own 4.
K. Bought 2 Piedmont Operating LP 3.4% SU Maturing on 6/1/23 at a Total Cost of 98.783:
%203.4%25%206:1:23%20%20.png)
Purchased 10/24/22. Discussed out of time order.
Issuer: Operating entity for Piedmont Office Realty Trust Inc. Cl A (PDM) who guarantees the notes. I own the common stock.
FINRA Page: Bond Detail (prospectus linked)
Credit Ratings: Baa2/BBB
YTM at Total Cost = 5.493%
Current Yield at TC = 3.44%
L. Bought 1 Marsh & Mclennan 4.05% SU Maturing on 10/15/23 at a Total Cost of 98.954:
%204.05%25%2010:15:23%20.png)
Purchased 10/24/22. Discussed out of time order.
Issuer: Marsh & McLennan Cos. (MMC)
MMC Analyst Estimates | MarketWatch
Last Bond Offering (10/22): Prospectus
FINRA Page: Bonds Detail (prospectus linked)
Credit Ratings: Baa1/A-
YTM at Total Cost = 5.169%
Current Yield at TC = 4.0928%
M. Bought 2 First Horizon 3.55% SU Maturing on 5/26/23 at a Total Cost of 99.106:
%203.55%25%205:26:23.png)
Purchased 10/25. Discussed out of time order. I now own 4.
Issuer: First Horizon National Corp. (FHN)
As discussed in Item # 1. above, FHN is in the process of being acquired by Toronto Dominion.
Finra Page: Bond Detail (prospectus linked)
Credit Ratings: Baa3
YTM at Total Cost: 5.127%
Current yield at TC: 3.782%
FHN's acquisition by TD may be completed prior to this bond maturing.
The prospectus allows for an optional redemption at par + accrued interest on or after 4/26/23:
3. Treasuries -Secondary Market: $3K
A. Bought 1 Treasury 2.625% Coupon Maturing on 4/15/25 at 97.6514:
%204:15:25.png){kind=small}
Current Yield at TC = 2.688%
I now own 3 bonds and will not be buying more.
B. Bought 1 Treasury 2.75% Coupon Maturing on 2/15/24 at 99:
%202:15:24.png){kind=small}
Purchased 9/2/22.
YTM at Total Cost = 3.47%
Current Yield at TC = 2.78%, rounded up.
I now own 4 bonds and will not be buying more.
C. Bought 1 Treasury 2.75% Coupon Maturing on 7/31/23 at 98.8131:
%207:31:23%202.75%25%20%20.png){kind=small}
Purchased on 10/19/21. Discussed out of time order.
YTM at Total Cost: 4.309%
Current Yield at TC = 2.783%
I now own 4 and will not be buying more.
4. Treasury Auction Purchases: $19,000.
A. Bought at 10/27/22 Auction $10,000 Treasury Bill at 99.4058:
Matures on 12/27/22
Investment Rate: 3.896%
B. Bought at 10/25/22 Auction $2,000 Treasury Note at 99.839071:
%20.png){kind=small}
2 year Treasury treasury note
Matures on 10/31/24
Coupon: 4.375%
YTM = 4.46%
5. CDs: $4,000
FDIC Insured: Security Blanket/Pacifier for the Old Geezer.
A. Bought 2 Flushing Financial 4.6% CDs Maturing on 5/6/24:
Interest paid monthly.
B. Bought 2 FVC Bank 4.45% CD Maturing on 7/31/23:
6. Small Ball:
A. Added to JRI - Bought 10 at $10.98 - Vanguard Taxable Account:
Quote: Nuveen Real Asset Income & Growth Fund Overview
Investment Category: Monthly Income Generation
This fund will own debt, common and preferred stock issue by REITs and infrastructure companies which includes pipelines and utilities.
Nuveen Real Asset Income & Growth Fund- SEC filed semiannual report for the period ending 6/30/22.
Sponsor's website: Nuveen Real Asset Income and Growth Fund | Closed-End Fund | Nuveen
Number of Holdings as of 9/30/22: 496
Leverage as of 9/30/22: 31.99%
Data Date of 10/18/22 Trade:
Closing Net Asset Value per share: $12.86
Closing Market Price: $11.09
Discount: -13.76%
Sourced: JRI- CEF Connect (Click "Pricing Information" Tab)
Top 10 Holdings as of 9/30/22:
Average cost per share this account: $11.27 (68+ shares)
Dividend: Monthly at $.0965 per share ($1.158), reduced from $.117 per month effective for the April 2020 payment.
(JRI) Dividend History | Nasdaq
Yield at AC = 10.28%
Last Ex Dividend: 10/13/22
I quit reinvesting the dividend in this account effective with the July 2021 payment.
Sell Discussions: Item # 1.I. Pared JRI Again-Sold 12.661 shares at $16.31-Remaining Shares Bought With Dividends in Fidelity Taxable Account (10/1/21 Post)(profit snapshot = $53.03); Item # 2.C. Pared JRI-Sold 22.235 at $16.11(8/6/21 Post)(profit snapshot = $42.31); Item # 2.A. Pared JRI-Sold 30 at $15.9-highest cost shares (6/19/21 Post)(profit snapshot = $14.73); Item # 1.K Eliminated JRI in Schwab Taxable Account-Sold 100 at $11.48 (6/6/20 Post)(profit snapshot = $69.35); Item # 2.A. Sold 102+ JRI at $17.98 (12/22/19 Post)(profit snapshot = $140.67); Item # 1.A. Sold 100 JRI at $17.51(10/30/19 Post )(profit snapshot = $100.41); Item # 4 Sold 100 JRI at $17.23 (10/2/19 Post)(profit snapshot = $40.45)
JRI Realized Gains to Date = $480.92 (includes $19.97 realized gain from selling 9 shares in my Vanguard account in July 2021 that was not discussed in posts)
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| Sold at $16.11 |
B. Added 5 HPP at $10.2:
Quote: Hudson Pacific Properties Inc. (HPP)
Website: Hudson Pacific Properties: A West Coast Real Estate Group
Investment Categories: Equity REIT Common and Preferred Stock Basket Strategy/Bond Substitute
Last Discussed: Item # 3.E. Added to HPP - Bought 5 at $11.25 (10/4/22 Post)
Last Substantive Discussion: Item # 3.A. Added to HPP in Fidelity Taxable Account - Bought 5 at $13.3; 5 at $12.75 (9/6/22 Post) I discussed the last earnings report in that post. SEC Filed Press Release
New Average cost per share: $12.75 (40 shares)
Dividend: Quarterly at $.25 per share, last raised from $.20 effective for the 2017 first quarter payment.
Yield at New AC = 7.84%
Last Ex Dividend: 9/16/22
C. Added to NYCB - Bought 10 at $8.43 in Vanguard Taxable Account:
Quote: New York Community Bancorp Inc. (NYCB)
"Based in Hicksville, N.Y., New York Community Bancorp, Inc. is a leading producer of multi-family loans on non-luxury, rent-regulated apartment buildings in New York City, and the parent of New York Community Bank. At September 30, 2022, the Company reported assets of $63.0 billion, loans of $49.0 billion, deposits of $41.7 billion, and stockholders' equity of $6.7 billion. Reflecting our growth through a series of acquisitions, the Company operates 237 branches through eight local divisions, each with a history of service and strength: Queens County Savings Bank, Roslyn Savings Bank, Richmond County Savings Bank, Roosevelt Savings Bank, and Atlantic Bank in New York; Garden State Community Bank in New Jersey; Ohio Savings Bank in Ohio; and AmTrust Bank in Florida and Arizona."
Investment Categories: Regional Bank Basket Strategy/Bond Substitute
Last Discussed: Item # 3.N. Added to NYCB in Vanguard Taxable Account - Bought 10 at $8.57 (10/4/22 Post)
Last Sell Discussion: Item # 2. Sold 100 NYCB in Vanguard Taxable Account at $10.87 (8/23/22 Post) I discussed the second quarter earnings report in that post.
Average cost per share this account: $9.03 (52+ shares)
Dividend: Quarterly at $.17 per share ($.68 annually)
Yield at AC = 7.53%
Last Ex Dividend: 8/5/22
Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release
Report released after my purchase.
GAAP E.P.S. = $.30
Non-GAAP E.P.S. = $.31 (excludes merger related expenses)
Consensus at $.32.
NIM = 2.22%, down from 2.44% in the 2021 third quarter. Prepayment income contributed 7 basis points to NIM during the 2022 third quarter compared to 14 basis points in the 2021 third quarter. Interest expense is rising at a faster rate than interest income:
Unlike most banks, NYCB liabilities will reprice faster than its assets. When interest rates rise, NIM will decline. This unfavorable trend has been IMO the primary cause of the share price decline, but may be ameliorate somewhat when and if NYCB closes its acquisition of Flagstar Bancorp. New York Community Bancorp, Inc. To Acquire Flagstar Bancorp, Inc. In An All Stock Strategic Merger (4/26/21 Press Release) Based on a recent SEC filing, the deal looks iffy to me.
Efficiency Ratio: 38.57% (excellent)
NPA Ratio: .08% (excellent)
NPA Ratio: .09% (excellent)
Charge off ratio: zero (excellent)
Coverage Ratio: 480.22%
ROA = .96%
ROE = 9.01%
ROTE = 14.81%
Tangible Book Value Per Share: $8.19, down from $8.68 in the 2021 third quarter.
S & P Analyst Report (9/22/22): 3 stars with a $10 PT.
NYCB Realized Gains to Date: $1,505.34
D. Pared FENY - Sold 10 at $23.17:
Quote: Fidelity MSCI Energy Index ETF
Sponsor's website: FENY | ETF Snapshot - Fidelity
Expense Ratio: .08%
Profit Snapshot: $70.64 (10/20/22 sale only)
I have been paring this position throughout 2022, selling my highest cost lots using the specific identification method except for 1 five share lot where I used FIFO.
The $1.15 loss from selling 1.07 shares on 1/12/22 was due to my error in identifying lots to sell.
Last Discussed: Item # 4.C. Pared FENY in Fidelity Taxable Account - Sold 10 at $25 (6/15/22 Post)
Average cost per share before pare: $14.02
Average cost per share after pare: $13.68 (60+ shares)
 |
| Snapshot Intraday 10/20/22 after pare |
Dividends: Quarterly at a variable rate
I quit reinvesting the dividend effective with the September 2021 payment.
Last 4 dividend payments: $.742 per share
Yield Using and New AC of $13.68: 5.424%
Top 10 Holdings as of 9/30/22:
Of those stocks, I have small ball positions in Exxon (XOM) and Chevron (CVX). I discuss selling 1 XOM share below which reduced my AC per share to $35.71.
E. Pared SU - Sold 4 at $33.12:
Quotes:
Profit Snapshot = $53.97 (10/21/22 Sale Only):
Average cost per share this account before pare: $15.66
Average cost per share after pare = $14.83 (19+ shares)
 |
| Snapshot Intraday 10/21/22 after pare |
Dividend: Quarterly at C$.47 per share (C$1.88 annually)
Dividends – Stock Information | Suncor
Yield at $14.83 = Will vary depending on the CAD/USD exchange rate. At a .75 CAD/USD , the yield would be about 9.51% before taxes.
Last Ex Dividend Date: 9/1/22
The 3rd quarter earnings report will be released on 11/2/22.
Suncor Energy Reports Second Quarter 2022 Results:
 |
| In CADs |
F. Added 5 CODIPRA at $21.85; 5 at $20.6 in Fidelity Taxable Account:
Working my way up to 50 shares in this account.
Quote: Compass Diversified Holdings 7.25% Preferred Series A Stock
Issuer: Compass Diversified Holdings (CODI)
CODI Analyst Estimates | MarketWatch
Average cost per share this account: $22.9 (25 shares)
Yield at New AC = 7.91%
Last Ex Dividend: 10/13/22 (owned 15 as of)
Security Prospectus
Par Value: $25
Optional Redemption: On or after 7/30/22 at par plus accrued and unpaid dividends.
Maturity: Potentially perpetual unless the issuer exercises its optional redemption right.
Dividend: Paid quarterly and non-cumulative.
A non-cumulative dividend can be eliminated provided the issuer does not violate the Stopper Clause.
Stopper Clause: Yes, standard provisions. CODI can not eliminate the non-cumulative preferred share dividend and pay a cash dividend to common shareholders or use cash to buy common stock. The stopper clause enforces the preferred shareholders superior claim to cash compared only to the common shareholders.
Purchase Restriction: 5 share lots with each lot required to be at the lowest price in the chain.
Maximum Position: 100 shares in all accounts.
G. Added to HR- Bought 5 at $18.65:
Quote: Healthcare Realty Trust Inc. (HR)
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Working my way up to 100 shares.
Last Discussed: Item # 5.I. Added to HR - Bought 5 at $19.7; 5 at $19.31 (10/18/22 Post)
Average Cost per share as currently shown in account = $22.3 (80 shares)
Estimated AC after 2022 ROC adjustment = $19.29 (current total cost $1,783.93 - $241 in a 2022 special distribution likely to be 100% classified as ROC)
Dividend: Quarterly at $.31 per share ($1.24 annually). The last dividend was prorated due to the combination of HTA-HR. SEC Filing
Yield at Estimated Revised AC = 6.43%
The third quarter earnings report has not yet been released.
H. Added to CPF - Bought 5 at $19.8; 5 at $19.55:
Quote: Central Pacific Financial Corp.
Working my way up to 100 shares.
Investment category: Regional Bank Basket Strategy
Last Discussed: Item # 3.D. Added to CPF - Bought 5 at $21.35 (9/13/22 Post) I discussed the second quarter earnings report in that post. SEC Filed Earnings Press Release
Average cost per share: $22.43 (35+ shares)
Dividend: Quarterly at $.26 per share ($1.04 annually)
Yield at AC = 4.64%
Last Ex Dividend: 8/30/22
Next Ex Dividend: 11/29/22
Last Earnings Report (Q/E 9/30/22): Released after these purchases. Investors reacted negatively to this report.
Comparisons are to the 2021 third quarter. All of the comparisons noted below are negatives.
However, the 2021 third quarter was an aberration and included $8.1M "in net PPP interest income and fees, compared to $0.7 million in the current quarter."
E.P.S. = $.61, down from $.74
Consensus at $.60 per Fidelity
NIM: 3.17%, down from 3.31% (NIM rose 12 basis points compared to the 2022 second quarter and 20 basis points compared to the first quarter)
Efficiency Ratio: 64.62%, up from 62.32%
NPA Ratio: .06%
Coverage Ratio: 1,525.64%
ROA: .91%, down from 1.15%
ROE: 14.49%, down from 14.82%
I. Added to EPRT - Bought 2 at $19.19-Fidelity Taxable:
Quote: Essential Properties Realty Trust Inc. - A Net Lease REIT
Working my way up to 100 shares.
"Essential Properties Realty Trust, Inc. is an internally managed REIT that acquires, owns and manages primarily single- tenant properties that are net leased on a long-term basis to companies operating service-oriented or experience-based businesses. As of September 30, 2022, the Company’s portfolio consisted of 1,572 freestanding net lease properties with a weighted average lease term of 14.0 years and a weighted average rent coverage ratio of 4.2x. In addition, as of September 30, 2022, the Company’s portfolio was 99.8% leased to 329 tenants operating 486 different concepts in 16 industries across 48 states."
Last Discussed: Item # 4.N. Added to EPRT - Bought 2 at $19.95 (10/11/22 Post) I discussed the second quarter report in that post. SEC Filed Press Release
Average cost per share: $24.39 (35+ shares)
Dividend: Quarterly at $.27 per share ($1.08 annually)
Yield at New AC = 4.43%
Last Ex Dividend: 9/29/22
Last Earnings Report (Q/E 9/30/22):
SEC Filed Press Release and Supplemental
AFFO per share increased by 15% to $.38
Number of tenants: 329
Weighted Average Lease Term: 14 years
Number of properties: 1,572
"The Company reiterates its previously issued expectation that 2022 AFFO per share on a fully diluted basis will be within a range of $1.52 to $1.54."
Net Income to FFO to AFFO Reconciliation:
AFFO for a net lease REIT will be very close to the FFO number since maintenance and other expenses are paid by the tenants. The largest adjustments to FFO will be to deduct pretend revenues created by the straight line accounting convention and to add back non-cash expenses like amortization and stock compensation. The end result is that FFO and AFFO per share were both at $.38.
J. Added to BNS in Schwab Taxable - Bought 1 at $47.05:
Quotes:
USD: Bank of Nova Scotia (BNS)
CAD: Bank of Nova Scotia (Canada: Toronto)
BNS Analyst Estimates | MarketWatch
Last Discussed: Item # 4.H. Added to BNS in Schwab Account - Bought 1 at $51.87; 1 at $49.48 (9/27/22 Post)
Last Substantive Discussion: Item # 3.E. Added to BNS - Bought 1 at $53.85; 2 at $53.3 (9/13/22 Post) I discussed the last earnings report for the F/Q ending 7/31/22 in that post. SEC Filing
Average cost per share: US$59.45 (16 shares)
Dividend: Quarterly at C$1.03
Canadian Dollar to US Dollar Exchange Rate Chart | Xe
Last Ex Dividend: 10/3/22
K. Added to VZ in Schwab Taxable Account - Bought 1 at $35.09:
Quote: Verizon Communications Inc.
VZ Analyst Estimates | MarketWatch
Investment Category: Bond Substitute defined in terms of the goal: 2% or higher annual total return in excess of the dividend payments, with the dividend yield starting at 4% or greater with the first purchase.
Last Discussed: Item # 5.M. Added to VZ in Schwab Taxable Account - Bought 1 at $38.65; 1 at $36.76; 1 at $35.73 (10/18/22 Post) I summarize my negative opinion about this stock in that post and earlier ones.
I am not backing up the truck even as VZ hits new 52 week lows. I will, however, start to buy 2 share lots when and if the price drifts into the $30 - $35 range and 5 share lots under $30. I remain negative on the company, though I have some interest in buying at lower prices.
Average cost per share: $46.29 (14+ shares)
Dividend: Quarterly at $.652 per share ($2.608 annually)
Yield at new AC = 5.634%
Last Ex Dividend: 10/6/22
Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release
The Stock Jocks did not like this report.
GAAP E.P.S. at $1.17, down from $1.56
Non-GAAP E.P.S. = $1.32, down from $1.42
Reconciliation GAAP to Non-GAAP:
Revenues: $34.2B, up 4%
Guidance:
"In third-quarter 2022, Consumer reported 189,000 wireless retail postpaid phone net losses, due to elevated churn partially as a result of recent pricing actions."
VZ increased the price for my plan during the quarter by over 10%.
L. Added to SLG- Bought 1 at $36.57:
Quote: SL Green Realty Corp.
Investment categories: Equity REIT Common and Preferred Stock Basket Strategy/Bond Substitute
Last Discussed: Item # 3.I. Added to SLG - Bought 1 at $39.39 (10/4/22 Post)
Last Substantive Discussion: Item # 2.G. Added 2 SLG at $45 (8/30/22 Post)
New AC per share: $53.14 (25+ shares)
Dividend: Monthly at $.3108 ($3.73 annually)
Dividend History | SL Green Realty Corp.
Yield at New AC = 7.02%
Yield at Last Purchase Price of $36.57 = 10.2%
Last Ex Dividend: 10/28/22 (Owned all as of)
Last Earnings Report (Q/E 9/30/22):
SEC Filed Press Release and Supplemental
The NYC office properties have suffered more than most markets from the pandemic and the WFH trend. That is reflected in the renewal lease rents and rent concessions disclosed in this earnings release:
Manhattan Office Occupancy: 92.1%
FFO per share = $1.66, down from $1.78
M. Added to DEI - Bought 3 at $16.45:
Quote: Douglas Emmett Inc. (DEI)
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Last Discussed: Item # 4.L. Added to DEI - Bought 2 at $17.66; 3 at $17.19; 2 at $16.48 (10/11/22 Post) I discussed the 2022 second quarter report in that post. SEC Filed Press Release
Average cost per share: $19.72 (20 shares)
Dividend: Quarterly at $.28 per share ($1.12 annually)
Yield at $19.72 = 5.68%
N. Pared XOM in Fidelity Account - Sold 1 at $103.69:
Quote: Exxon Mobil Corp.
XOM Analyst Estimates | MarketWatch
Profit Snapshot: +$64.33 (10/19/22 sale only)
Average cost prior to pare = $36.04
Average cost after pare this account = $35.71 (10 shares)
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| Snapshot Intraday on 10/19/22 after pare |
Dividend: Quarterly at $.91 per share ($3.64 annually), raised 3 cents effective for the 2022 4th quarter payment.
Yield at $35.71 AC per share = 10.19%
Last Earnings Report (Q/E 9/30/22): SEC Filed Press Release
GAAP E.P.S. = $4.68
Non-GAAP E.P.S. = $4.45, up from $1.58 in the 2021 third quarter
Free Cash Flow: $22.047B.
Revenues: $112.070B, up from $73.786B in the 2021 third quarter.
O. Added 1 FLSW at $26.73:
Quote: Franklin FTSE Switzerland ETF Overview
Investment Category: Exposure to assets priced in Swiss Francs.
Sponsor's website: Franklin FTSE Switzerland ETF - FLSW
Expense Ratio: .09%
Last Discussed: Item # 4.F. Added 2 FLSW at $28.9 (6/28/22 Post)
Some Top Holding as of 10/24/22:
Nestle, Roche and Novartis then weighted at 47.29%.
Dividends: Paid Semiannually
Last Dividend paid in June 2022 at $.543 per share.
P. Started AQN in Vanguard Taxable Account - Bought 10 at $10.92:
Quotes:
Algonquin Power & Utilities (U.S.: NYSE)
Algonquin Power & Utilities (Canada: Toronto)
Website: Algonquin Power & Utilities Corp.
AQN Analyst Estimates in USD | MarketWatch
I discussed this utility in my last post Item # 5.A. Added to AQN in Schwab Account - Bought 5 at $10.69; 5 at $10.26 (10/25/22 Post) The AC per share in that account is currently at $13.25 (50 shares). I will continue averaging down in that account until I hit 100 shares.
Investment Category: Bond Substitute
I am starting a new chain in my Vanguard account that will have a lower average cost per share than the position in my Schwab account.
When and if I can liquidate the position in my Schwab account profitably (all shares), I will consider doing so and then keep the lower cost position in my Vanguard account.
Yield at $10.92 : 6.62%
Last Ex Dividend: 9/28/22
Last Elimination: Item # 1. Sold 300 AQN:CA at C$19.51 (4/21/22 Post)(profit snapshot = C$303)
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 sale 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 my family members.
The new IBond rate will be 6.89%.
ReplyDeletehttps://treasurydirect.gov/savings-bonds/
The rate resets every six months.
The IRS lied (again.)
Delete1) My refund was in my bank on 10-26. It took only 1 week, not the promised 3 for the IBond certificate to arrive!
2) Other was that on 10-28 the refund status still said "coming soon."
So my $5k will get 9.6% for 6mo then drop.
6.9% is a nearly 30% drop, yet still above everything else. AND it's 4xs going rate of many banks, a tiny .4% basic interest...
Ibonds historically
" From 1998 to 2022....the highest fixed rate on record—3.60%—was established on May 1, 2000, and the highest inflation rate of 4.81% was set on May 1, 2022."
https://www.sounddollar.com/current-i-bonds-rates#section-6-are-i-bonds-a-good-investment
Land: The Treasury added a .4% fixed rate which is included in the IBonds 6.89%. The inflation part of the revised coupon was 6.48%.
Deletehttps://www.treasurydirect.gov/news/2022/release-11-02-rates/
The fixed rate will remain constant while the inflation component is variable. And, having any fixed rate means the total return will be in excess of the inflation rate.
Perhaps the treasury wanted to make the IBond more competitive with the 5 year TIP that closed yesterday with a 1.62% real yield, up from -1.58% on 1/3/22.
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_real_yield_curve&field_tdr_date_value=2022
I mentioned earlier that the Treasury has started auctioning 4 month bills. I will be participating in the one tomorrow. That bill will mature on 3/7/23.
ReplyDeleteThe 4 month bill closed yesterday at 4.33%.
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202210
I put in for 5k for 2 mo at Ameritrade. Currently showing 3.8% at Vanguard. I don't see 17 week, 4 mo on Ameri's list. I need to call, but also move more funds to Vanguard.
DeleteLand: As you know, I do not now have and never will have in the future a TD Ameritrade account.
DeleteVanguard, Schwab and Fidelity do have the 17 week treasury bill listed for purchase. The 17 week and 4 month are describing the same T Bill.
In my Schwab account, I have placed an order to buy the 1 month T Bill at tomorrow's auction I placed the purchase on automatic roll. The Schwab sweep account pays .25% so it is an easy decision to go with the 1 month bill as an alternative. The 1 month T Bill closed yesterday at a 3.72% yield. The 2 month was at 4% and the 4 month at 4.35%.
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202211
- So the economy is slowing it's growth..
ReplyDelete- But not yet contracting.
- Rates are straightened out until 1 year, inverted thereafter.
So it's going to take awhile for the recession to set in, with a contracting environment.
That's not unprecedented after rate inversions.
Land: The 1 year T Bill is now at a 4.75% yield, which is the highest throughout the treasury yield curve.
DeleteThe 4 month T Bill closed today at 4.35%, which is higher than the 10 year note at 4.07%.
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=2022
I am just hoping that rates will be higher than now when my bonds mature in 2023-2024.
I am currently willing to lock in now 5%+ YTMs for investment grade corporate bonds maturing within 2 years. I am starting to see some with 6% YTMs and bought one today rated Baa2 with a 6.07% YTM and a 12/2023 maturing date.
I will also buy 2 year CDs that pay monthly interest and have 4.75% or higher coupons. I will discuss two such purchases in my next post.
The risk to this bond ladder approach that focuses on the higher yielding short end of the curve is that the FED may return to QE and ZIRP again, so that a 10 year T note yielding 4.07% would look like a good buy now in retrospect a few years down the road.
I am also nibbling most days on equity REIT preferred stocks that yield over 8%.
That is one of the big questions... are these higher rates going to last and climb, so grab them now, or will zirp become a repeat norm.
DeleteREITs are pretty complicated. I haven't dipped a toe in yet. Even with the siren songs of the yields.
Well, got to look up downballot candidates. Meanwhile, Dan Cox did not present any seconds of thought on who to vote for.
Oops, the opposite. Will Zirp make it worth grabbing now.
DeleteLand: I analyze equity REIT preferred stocks in much the same way as I do bonds. The issue is not what the business is worth or a reasonable P/E range, since the preferred stock owner has no equity interest in the business. The bond like quality of preferred stocks dominate over their equity classification which is meaningless to their owners except when assessing credit risk.
DeleteThe issues for a preferred stock purchase are credit and interest rate risks.
The credit risk issue becomes more acute during periods of financial stress and stock market turbulence with a strong downside bias. The fear of a total wipe out in value, even when that is a remote possibility, will dominate and control the pricing action.
An example that I sometimes give is a REIT preferred stock, which had a 8.75% coupon paid on a $25 par value, that I bought for $2.9 per share in November 2008 (75.43% current yield). The issuer never missed a dividend payment and the security was later redeemed at $25.
There is a need to evaluate whether the dividend is likely to be paid and that requires review of the earnings reports.
A company can not eliminate a cumulative preferred stock dividend but only defer it, and a condition of deferral is the elimination of a cash dividend for the common shareholders. And, a REIT has to pay a common share dividend when it has net income to maintain its tax status as a pass through entity.
Unlike mortgage REITs, where debt is at a significant multiple to equity ( 6 to 8 times generally), an equity REIT will generally have debt close to 50% of its total property value.
If a mortgage REIT collapses into a BK the preferred stock will be worthless.
There would likely be a recovery for the equity REIT shareholder in a bankruptcy. The amount will depend on how badly the then current economic conditions have destroyed property values.
For interest rate risks, preferred stock prices have fallen significantly with this year's significant uptrend in interest rates and will likely continue declining with that trend continuing.
IMO, the interest rate risk issue is mitigated some when the preferred dividend yield is 4% higher than the 10 year treasury yield when the stock is purchased. That is a cushion that I am willing to accept, at least in small doses, given the low placement that equity preferred stocks have in the capital structure, senior only to common stock.
One that I bought yesterday, just 10 shares, was GOODN at $19.2. Dividend are paid monthly and the yield at that TC number is 8.63%.
https://www.marketwatch.com/investing/stock/goodn?mod=search_symbol
I also own the common shares (GOOD), which have a similar yield at yesterday's closing price and also pays dividends monthly.
https://www.marketwatch.com/investing/stock/good?mod=search_symbol
I have sold my highest cost GOOD common shares reducing my AC to somewhere near $11 as I recall without checking.
I need to reread this a few times to absorb it. I got burnt on BDCs. But REITs seem more solid to work with.
DeleteLAND: I was not referring to REIT common stocks in my previous comment. Preferred stocks are a different animal.
DeleteI am not aware offhand of any BDC companies that have issued preferred stocks. I own only BDC common stocks and a few senior unsecured bonds.
The fact that both REITs and BDCs are pass through entities, paying out most of their cash flow in common share dividends, is a negative for SU bond owners and REIT preferred stock owners.
I mentioned in a prior comment that I owned Gladstone Commercial (GOOD), a REIT common stock and guessed that my average cost per share was near $11. The preferred stock symbol is GOODN.
DeleteThat was a good guess. I found GOOD positions in 3 taxable accounts, ranging in AC between $8.83 to $12.11. Totaling all positions up, I currently own 95+ shares at an average cost per share of $10.88 which gives me a 13.83% dividend yield based on a current monthly dividend of $.1254 per share. That stock closed at $16.94 today, down -$.62.
https://www.marketwatch.com/investing/stock/good?mod=search_symbol
The Bond Ghouls are currently, as of 5:48 CDT, assigning a meaningful chance that the FED will hike another 75 basis points next month.
50 basis points at 56.8%
75 basis points at 43.2%
Yesterday, the probability was at 5.7% for 25 basis points, 44.5% for 50 basis points and 49.7% for 75.
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
A 50 basis point increase would bring the range to 4.25% to 4.5%. The next meeting is on 12/14/22.
I'm ignoring my tiny VZ 30-share position. Nice div, but it's weak. I'm hoping it's a long term hold so the stock gain/loss can be ignored.
ReplyDeleteNYCB, New York Community Bank (owned by Bankcorp) is who took on HMBradley as their underlying bank.
There's still stock buys from last blog, I want to look at more.
First a look at tomorrow's auction!
TTE is up 2% today on a jump up. Earnings was 10-27.
The 4 month bill was auctioned at 98.5852 this morning. The actual day count is 119 days. The investment rate was 4.402%. The bill matures on 3/7/23.
ReplyDelete4.4% is fine by me! I haven't figured out the 2 mo rate yet that I bought. I don't see how to see it in the vanguard listings. I had a treasury link the other day, somewhere in my browser, so should be there!
DeleteLand: The 2 month T bill was not auctioned today. It will be auctioned tomorrow along with the 1 month bill.
DeleteLol, well that explains it.
DeleteThe market's moves seem odd today. First a rally off Fed raise, maybe off the call for slowing the raises.
ReplyDeleteBut then a dip. Okay sometimes goes up and down like that.
But the late day slide seemed inconsistent with the earlier reaction. I don't seen anything adding to triggering that slide. After hours earnings were poor, but not before that.
Maybe it was this comment from Powell.
"window of opportunity for a "soft landing" has narrowed this year"
https://www.reuters.com/markets/us/feds-powell-soft-landing-chances-have-narrowed-2022-11-02/
Though that then contradicts the idea of slowing the rate hikes. (As a side note, is a mistaken until it's closer to the inflation rate. Running half a race doesn't usually get to the finish line.)
Any which way, I need down since I've shorted by going so much to cash.
Land: The positive upswing in stocks and bonds after the FED released its press release was short lived and based on a misreading of this sentence in the release:
DeleteThe Fed “will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
That sentence does not mean that the FED is about to pause the FF rate increases. When Powell started to talk, he made that clear and the stock market went into a tailspin and the ten year treasury swung from a 8 basis point decline to a 3 basis point increase.
It is clear that the FED does not know how far it will ultimately take the FF rate. That will depend on future inflation data. If inflation is running at 8% this time next year, then that would mean a higher than currently expected terminal rate, while a 3% rate would point to no further increases and possibly a cut depending on economic conditions.
Future FF rate increases are not likely to be 75 basis points but a 50 basis point hike in December and then 1 or more 25 basis point hikes next year, with the number and timing dependent on the inflation reports. T
The pace and amounts of future increases will slow compared to the time and amounts of 2022 increases. That is what the FED means by the lag and the cumulative effects of increases. I did not see any material change in what I expected the FED to do going forward.
Oh, it was a misread or overread. Lots of articles were headlining with that misread.
DeleteSo maybe there's be a slowdown in size of hikes, to let the lag catchup so it's easier to judge what's needed. He's hoping that helps keep the landing more accurate and softer.
That totally makes sense and is to be expected. They took off from the starting gate, and now will look around and find their pace.
I would expect 50 in Dec, maybe even 25 because it's holiday season and human emotion tries to do things more gently this time of year.
Next year can be anything. Depends on the data.
Thanks for explaining!!
I would attribute the rallies in stock and crude oil to a mistaken belief that China will soon meaningfully relax its zero Covid policies. The belief gained some impetus after some vague government statements in response to some public outrage relating to the death of a young boy due to the lockdowns.
ReplyDeletehttps://www.cnn.com/2022/11/03/china/china-covid-lanzhou-child-death-outrage-intl-hnk
Even if policies were relaxed, at this point the housing bubble has slowed down and will continue to spiral into the economics. Inflation wasn't caused by mostly China and the Ukraine war exists and prior covid assistance spending causing liquidity. So it might help a make softer thug of a landing, but there's more than China in this economic pullback.
DeleteI expect China to ease it's policies on Covid over time. Not so sure it'd be "meaningfully" enough to matter. They'd got a lot of steps possible between current policy & total ease up.
Land: China and Russia are controlled by 1 man dictatorships. XI and Putin are only concerned about squashing any dissent and maintaining an absolute grip on power. Neither are accountable to the people and can not be removed from their absolute control based on flawed policies or poor judgment. Putin will ultimately be widely viewed outside of Russia as the worst leader in Russia's history and that is saying a lot given that really bad leaders are the norm.
DeleteXI recently reiterated his adherence to zero-COVID:
https://www.bbc.com/news/world-asia-china-63226230
Since some Covid variant is likely to be around forever, China will eventually have to abandon the zero Covid policy to avoid a major economic downturn. I don't see Xi backtracking anytime soon, nor do I see Putin ending the war in Ukraine that he started unless Ukraine capitulates and becomes part of the Russian federation.
So I do not see any reason for optimism on a meaningful loosening in the Xi's zero Covid policy. The backtracking in stock prices suggests that more investors share that view and sold into the rally as I did earlier today.
Overall, for the U.S., there is no indication yet that the economy has slipped into a recession. The jobs report released today is just another indicator that is inconsistent with an ongoing recession as was the first estimate of the third quarter real GDP. Banks are reporting third quarter loan growth and most are reporting Y-O-Y declines in non-performing loans as a % of total loans. Charge offs remains below what I would call an average for an economic expansion.
The recent moves also fit technically. Rather than being dependent on a China policy.
DeleteEmployment is a trailing indicator ... though maybe not this trailing :). Are non-performing loans also trailing?
But if below average for expansion, there's some impact happening.
Land: A steady and meaningful rise in the NPL Ratio (nonperforming loans to total loans) has historically been a leading indicator for an upcoming recession, with the sudden onset of the pandemic induced recession being an exception. In the 2020 recession, the NPL ratio started to rise meaningfully after the recession started.
DeleteIn the 2008 recession, total bank nonperforming loans to total loans rose from about .8% in early 2006 to 3% before the recession, and bank stocks started to top out in 2006, pointing to trouble ahead.
Currently the total U.S. bank NPL ratio is trending down. In the third quarter of 2020 and 2021, the ratio was at 1.17% and .94% respectively. The 2022 third quarter NPL ratio is at .72%, which is also lower than the pre-pandemic ratio for the 2019 4th quarter of .91%.
https://www.bankregdata.com//allAQmet.asp?met=NPL
About all that I can say about today's intraday swing is that it kept me from taking an afternoon nap.
ReplyDeleteI did some light stock selling in the morning and late this afternoon.
My main focus continues to be short term investment grade corporate bond buying.
Most of the regional bank stocks that I own have released better than expected earnings. NIM is expanding nicely for most of them, with NYCB being an exception, while there is no evidence yet that a slowing economy is negatively impacting credit losses.
KRE rose $1.46 or 2.36% today.
SPDR S&P Regional Banking ETF
https://www.marketwatch.com/investing/fund/kre?mod=search_symbol
Regional bank stocks are still my highest weighted stock sector. The trick will be to reduce the weighting before credit losses cause a meaningful downdraft in earnings.
I am leaning more toward selling my remaining FHN position. At today's closing price, the gain would be over $1K.
My income will be far lower this year for sure than next year when my interest income will go up close to 100% and hopefully markets will improve enabling me to harvest more trading profits. I am somewhere near $15K in realized gains so far this year and will try to move that closer to $20K by year end.
The Vanguard Federal MM Fund, Admiral Class (VMRXX), has a current 7 day yield of 3.03% as of 11/3/22, while the Vanguard sweep Federal MM fund (VMFXX) is currently at 2.98%. Most of cash in my brokerage accounts are now in those Vanguard MM funds.
I am now keeping the Schwab sweep account close to zero, with temporary surges resulting from maturing treasury bills. The current yield in that sweep account is .4%. So a good deal for Schwab.
Hopefully over the weekend, you've were able to catch up on that nap!
DeleteTTE and SHEL are still climbing. I'm watching for a selling point.
Wonder if NYCB was impacted by it's partnering with HMBradley? Not sure what the relationship is.
HMB announced 4% on $250k until April 23. That extra 1% is attractive over 3% elsewhere. But this always felt like a ponzi scheme. They're transition from Hatch bank has been a mess. Time to leave.
Figured out who I'm voting for. It almost always seems like the least "not-good." Only two of the GOP candidates on my ballot hasn't swallowed and stated at least some of the false myths.
Land: NYCB is under selling pressure due to net interest margin compression when other banks are reporting increases in NIM.
DeleteI doubt that most investors who own or consider owning or selling NYCB are even aware of HM Bradley. That banking relationship, even if known, would not impact the stock price IMO.
There's nothing showing up in searching NYCB stock news and HMB. So yes, no one cares.
ReplyDeleteI sold 10 more SHEL at the opening 57.30.
ReplyDelete20 more TTE at 58.26
Hadn't realized Vanguard has no pre-hour trading. Prices held up until shortly after the opening, but this could have been frustrating.
Both were at a price loss of $2-3 per share. But with divs, SHEL was 2.7% per year return. TTE was 3.7%. Not good compared to the market, but stellar compared to savings accounts.
I'm piling up cash by pairing.
Land: I last discussed SHEL in the following post published in August.
Delete1. Eliminated SHEL in Schwab Account - Sold 38+ Shares at $55.05:
https://tennesseeindependent.blogspot.com/2022/08/argo-bdn-cibr-cto-opi-pdm-pine-shel-slg.html
As noted in that post, that left me with 10+ shares in my Vanguard account with an AC per share of $27.51 and 14 in my Fidelity account with an AC of $25.76. I still own those lots. The lowest price paid in my Fidelity account was $22.12 in October 2020.
It is difficult mentally to keep buying during a stock plunge, particularly after SHEL, unlike CVX and XOM, cut its dividend, properly characterized as a dividend slash. I have to at least question my judgment given the way major investors are bailing.
I can deal with that psychological issue by buying in small amounts and continuing to do so. SHEL is overall a good company, which helps resolve the reluctance to average down,
I considered eliminating the 10+ share position today in my Vanguard account but punted for two reasons. The stock goes ex dividend on 11/9 and the last earnings report was good.
The key to my SHEL trading was to continue buying down as the stock price collapsed in 2020 which I did using the small ball trading approach. I had some higher cost shares purchased in the low 50s and 40s before the pandemic .
The 2022 elimination in my Schwab account was in two stages, netting a total profit of $916.07 due to those average downs. The first sale was at $58.34 and the last one at $55.05.
I have never owned Total.
I thought I"d looked up both ex-div dates. I must have missed Shel's. My total loss of divs on 20 shares sold so far will be $10. So it's okay.
DeleteThey did raise div earlier this year. They've consistently underperformed the other two for years. And I have too much in big oil energy.
TTE's div is currently 5%.
I haven't been buying down. But right before this rally, with SnP about 11% from 2020 pre-pandemic high... I thought it was the right time for me to start.
Of course if any case having to do with Trump surprisingly comes to fruition, I'll buy like everyone else.
I decided to participate in the 3 year treasury note auction tomorrow, but only with a $2,000 buy.
ReplyDeleteThe 3 year closed today at a 4.63% yield, less than the 1 year bill and the 2 year note. The highest treasury yield from 1 month through 30 years is the 1 year bill at 4.8%.
The only reason for extending the maturity for treasury purchases some is that I do not know the future. It is possible that the FED will be aggressively cutting the FF rate in response to a recession at some point, which could give the 3 year note a better total return than buying 3 one year treasury bills.
I did not know whether I had hit the 2022 $10K in IBond purchases so I checked this morning. I bought $2K more.
For I Bonds purchased during the 6 month period starting on 11/1/22, there will be a .4% fixed coupon rate until the bond matures (30 years or early redemption). That is the highest fixed rate of the ones that I now own.
https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/
Over time, the total return with that contant .4% fixed rate + the CPI component will be greater than an I Bond purchased during the prior 6 month period, which has no fixed rate coupon, even though that savings bond starts out with a higher inflation derived coupon for just 6 months.
I started to buy I Bonds in 2016 and have no current intention of redeeming them. If I redeem the earlier ones, it will be because the inflation coupon had become so low that a redemption might make sense compared to using other funds to replenish my checking account used to pay expenses.
Hard to know the future and whether to grab the current 3-4+% for a long term... or not to lock up.
DeleteCNBC near the close wasn't talking about any news that sparked today's rally. No idea at all why.
The energy stocks went down through the day against the rally.
I was disappointed when the .4% iBond rate came out. Using tax refund there wasn't a way to control when it's bought. But the 9.6-8.4 or so is a 1.2% more for 6 months. Then it's .4% less for the rest of the 30 years possible to hold the bond.
I improved my interest rates today, by moving cash from Ameritrade's .3% settlement account to Vanguard's 3.26%.
DeleteHow are banks getting away with such low rates? No wonder their spreads (NIM?) are solid.
Land: A typical bank may have 30% to 40% of its deposits in non-interest bearing accounts.
DeleteBroker sweep accounts will vary widely in yield. Schwab's sweep account currently has a .4% yield.
It is possible to purchase a MM fund at Schwab that pays more and then move funds back into the sweep account when needed to purchase securities.
I have some funds in the the Schwab Treasury MM fund (SNOXX) that currently has a 3.264% 7 day SEC yield. The expense ratio is .34%, higher than the comparable Vanguard MM fund.
The MM yields are adjusting higher more quickly now, given the 4 consecutive .75% increases in the FF rate and the short maturities which allows for rapid rollover and reinvestment into higher yielding securities.
Some MM managers have shortened the weighted average maturity in response to the expectation that more increases will come soon. The SNOXX fund has a 9.8 day weighted average maturity.
I believe that Ameritrade now offers Schwab MM funds. The symbol for the Schwab Treasury fund would be different (SNSXX) The expense ratio is the same at .34%. Exchanges in and out for Ameritrade customers are NTF (no transaction fee)
https://research.tdameritrade.com/grid/public/mutualfunds/profile/profile.asp?symbol=SNSXX
This page lists the current 7 day yield at 2.915% but that is as of 10/31/22. The yield will be moving up as new securities with higher yields are purchased and as the FED increases the FF rate.
I hadn't thought about using a MMF as my cash reserves at Ameritrade! That's essentially what Vanguard is doing only they set it up automatically.
DeleteI'll have to see if moving out can happen fast enough for same day stock buying at Ameritrade. What I moved to Vanguard can be pulled back with ACH into Ameritrade & used to buy stocks on the same day.
Land: I suspect that it will take 1 day for a transfer from the purchased MM fund to the sweep fund, and there may even be a time limit on when that has to happen.
DeleteI have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2022/11/abbv-argo-argd-cag-cfg-dgx-fnb-ftklx.html