Economy:
First quarter economic growth was actually 2%, up from 1.3% first reported in major GDP revision Most likely, this report raises the probability of a .25% rate hike next month to almost 100% IMO. From the FED's viewpoint, inflation is still hot and is not coming down fast enough. The GDP growth and job numbers do not indicate yet that the economy will tilt into a recession due to the rate hikes.
Personal Savings Rate: 4.3%
PCE: +2%
PCE Price Index: +4.1%
PCE inflation May 2023 The May PCE and PCE inflation numbers were released yesterday.
Personal Income and Outlays, May 2023 | U.S. Bureau of Economic Analysis (BEA)
Annual Core PCE CPI: 4.6%, down from 4.7% in April
Annual PCE CPI: 3.8%, down from 4.3% in April
PCE CPI Month-to-Month Change: .1%
Core CPI PCE Month-to-Month Change: .3%, down from .4% March to April.
The start of America’s infrastructure decade Many of the stocks that will benefit have already made substantial gains.
Why There Won’t Be a Recession in 2023 | Barron's "But the most positive fact, certainly over the longer term, is the underrecognized $2 trillion of spending from Washington in three bills:" Infrastructure Investment and Jobs Act | EY - US, The CHIPS and Science Act-McKinsey, and the Inflation Reduction Act (IRA) of 2022 | McKinsey
Most of the ETFs that claim own infrastructure are heavy into electric utilities which IMO dilutes the play on future infrastructure spending. An example is iShares U.S. Infrastructure ETF (IFRA) with 8 of its top 10 holdings being utility stocks. The U.S. Infrastructure Development ETF (PAVE) does not have any utilities in its top 10 holdings. I have owned both ETFs and decided to restart a position in PAVE discussed in Item # 1.F. below. The dividend yield is too low for me to buy now more than 5 shares. In order of importance, my investment objectives are preservation of capital, income generation and capital appreciation using multiple risk mitigation strategies.
HSBC: Global economies are out of sync; 2024 will be a ‘year of contraction’
 |
| As of May 2023, 71% Probability within 12 months |
China June PMI: manufacturing activity shrinks dashing recovery hopes
US Leading Indicators (trend points to upcoming recession); Composite Index of Leading Indicators: Definition and Uses
The 10 year TIP breakeven inflation rate continues to reflect a consensus that problematic inflation will soon be brought under control:
10-Year Breakeven Inflation Rate St. Louis Fed
Using that breakeven inflation rate, the average annual inflation rate over the next 10 years is currently predicted at 2.2%. With the ten year treasury yield at 3.81%, the annual average real rate of return would be 1.61% provided that inflation prediction is spot on. That would explain why the ten year treasury yield will continue to be substantially inverted with the 3 month treasury bill yield, with the inversion increasing with more FF rate increases.
10 Year Treasury Yield Minus 3 Month Treasury Yield:
June 2023 Treasury Yield Curve:
+++
Allocation Shifts Discussed in this Post:
Corporate Bonds: $7,000 in principal amount
Treasury Bills: $5,000 in principal amount
CDs - FDIC Insured: $4,000
U.S. Common Stocks: +$106.43 (consisting of $637.77 in purchases minus $531.34 in proceeds)
CAD Priced Common Stock: +C$555 (valuing at US$416 for this purpose)
Stock ETF: +$181.55
Inflow Common Stocks/Stock Funds: +$703.98
Canadian Reset Equity Preferred Stock: +C$1,559
2023 Outflow Common Stocks/Funds: -$30,128.44
The outflow is primarily caused by the current risk free yields and my emphasis on income generation with a capital preservation restraint on risk taking.
++++
Putin and His Servile Orcs:
Russia routinely commits crimes against humanity and war crimes by targeting Ukrainian civilians with its missiles. One of the latest examples is a missile attack that were directed at restaurants located in Kramatorsk that murdered at least 11 civilians so far including 3 children. Kramatorsk: Russian missile strike hits restaurants in Ukrainian city - BBC News, Missile Strike Kills 11 in Restaurant in Kramatorsk, Ukraine - The New York Times; Ukraine: Man accused of 'treason' after Kramatorsk attack – DW – 06/29/2023 (the attack was intentional). Will the Orcs take responsibility for targeting civilians?
Russians seize and torture two 16-year-old Ukrainian lads, threaten 20-year sentences;
Ukrainian Teens 'Tortured' by the Russians Took Revenge;
Russian General Knew About Prigozhin’s Rebellion Plans, U.S. Officials Say - The New York Times U.S. intercepts indicate that at least one and probably more Russian generals helped plan Prigozhin's rebellion which explained the lack of response by Russia's army. The plan was launched prematurely after the plot was allegedly leaked by someone who knew of the plan. Wagner’s Prigozhin Planned to Capture Russian Military Leaders - WSJ; WSJ: Wagner boss planned to capture top Russian defense chiefs | CNN
Opinion | Prigozhin’s Mutiny Against Putin’s Reign of Lies - The New York Times In the alternate universe that is Russia, where everything is upside down as is the case also in TrumpWorld, Putin claims that the Russian army stopped the Wagner forces from reaching Moscow. Putin Claims Russia's Military Had Crucial Role In Stopping Wagner Mutiny, Admits Group Funded By State; CNN Reporter calls out 'lie' after Putin thanks troops for stopping 'civil war' - YouTube That fact free claim is the norm in a 100% pure Orwellian state.
The truth is that a few Russian soldiers, operating primarily helicopters, made an effort to stop the Wagner forces, but they were quickly eliminated and no other effort was made to impede the movement until Prigozhin decided to pull back 125 miles from Moscow.
Putin is correct in saying there were no civilians casualties. Russian civilians were cheering Wagner's advance in the streets. Eventually I suspect that the Russian army may have engaged Wagner somewhere in Moscow, but that is far from certain.
Putin also asserted without laughing that he wanted to save Russian lives which is why he agreed to a negotiated settlement.
Stephen Kotkin. Did Yevgeny Prigozhin's Revolt Undermine Putin's Authority? - YouTube Kotkin is a well known Russian scholar who is currently teaching at Stanford.
'Nightmare’ for Putin as Wagner and Russian soldiers kill each other - YouTube
Ukraine has not yet deployed its 12 well equipped and trained storm brigards in its counteroffensive. (Brigade: close to 4,000 soldiers) A Ukrainian tank brigade will have 3 or 4 battalions. When those are deployed, they will be a lot of dead Russians.
The top Ukrainian commander sounded downbeat in his WP interview. Ukraine’s top general, Valery Zaluzhny, wants shells, planes and patience - The Washington Post His main issue is the lack of airplanes to cover an offensive operation which is a valid point. Ukrainian pilots plead for F-16s as they battle Russian air superiority | CNN It may not be until the Fall before a few F-16s are delivered to Ukraine.
+++
Trump and His Anti-Democracy Party:
President: Republican primary : 2024 Polls | FiveThirtyEight
RealClearPolitics-Election-2024 Republican Presidential Nomination (Using the average of all polls, Trump leads DeSantis by 30.9%. DeSantis peaked at 30.1% in May and is now at 21.5%)
RealClearPolitics - Election 2024 - General Election: Trump vs. Biden (Using the average, Trump is at 44.1% with Biden at 43.5%)
Exclusive: CNN obtains the tape of Trump's 2021 conversation about classified documents | CNN Politics (audio linked); Audio Undercuts Trump’s Assertion He Did Not Have Classified Document - The New York Times. Trump is saying now that he was only waving news clippings when discussing information about a Pentagon contingency attack plan against Iran.
In the audio, Demagogue Don admits that he held a classified document in his hand, waving it in front of people who were not cleared to hear the information, and acknowledged that he did not declassify it when he was President. If Trump wants to testify under oath that he did not have the classified document, but only some news clippings, then I hope he is willing to tell that story under penalties of perjury. No competent lawyer would want Trump to testify in his criminal trial, since multiple criminal charges of perjury would flow therefrom.
In my opinion, there is no well known person alive today who is more dishonest than Don the Authoritarian and that includes Putin, who is Donald's soulmate. This opinion has nothing to do with Trump's party affiliation or policy positions. Trump enjoys lying and manipulating people with demonstrably false statements and narratives IMO.
Trump attack includes special counsel family after tape revealed
Justice Dept. asking about 2020 fraud claims as well as fake electors - The Washington Post
Trump Steers Campaign Donations Into PAC That Covers His Legal Fees - The New York Times; Trump has been 'quietly diverting' money away from his 2024 re-election campaign: report-Raw Story The mom and pop republicans are helping Donald pay his legal bills, though they are probably unaware that he using PAC campaign donations for that purpose. It is so kind of them to help out a purported multi-billionaire pay his bills associated with two separate criminal indictments.
Trump: "I’m being indicted for you." "In the end, they're not coming after me. They're coming after you — and I'm just standing in their way." Donald Trump Says He's 'Being Indicted for You'; Trump delivers fiery post-indictment speech: 'They're coming after you' Demagogue Don claimed that his "incredible poll numbers are one of the main reasons the Marxist left is weaponizing the criminal justice system to try and stop us... If I was doing badly in the polls, all of this investigation bullshit would stop immediately". Donald told his cult members that the U.S. is a "failing nation" and this next election is the "final battle", a phrase which has religious imagery from Revelations. Revelation 19:11–20 Donald then added that once he becomes President again, he will "demolish the Deep State, drive out the globalists, cast out the communists, marxists and fascists," and "we will liberate America from those villains." Final Battle: Trump & his deadly serious fight to topple democracy; Trump Vows to 'Liberate' U.S. From List of 'Villains' in Michigan Speech; After Indictment, Trump Speaks at Georgia and North Carolina Conventions - The New York Times; Retread scare: Trump and other Republicans evoke another era by calling Democrats ‘communists’ | PBS NewsHour
It is impossible to comprehend how those lines actually work on anyone with an IQ higher than a potted plant, but the Trumpsters' belief in those claims at least fits with their opinions that Donald is honest and a role model for their children. Trump’s false or misleading claims total 30,573 over 4 years - The Washington Post (the list includes only publicly disseminated statements); Republicans overwhelmingly praise Trump as a good role model for kids (72% of republicans)
Donald Trump sues E. Jean Carroll for defamation After Carroll won her civil case against Donald for sexual abuse, she reaffirmed her claim that Trump raped her. That is apparently the comment that triggered Trump's decision to sue her for defamation.
McCarthy floats impeachment inquiry into Garland over DOJ ‘weaponization’ | The Hill; Garland denies whistleblower claims of DOJ interference in Hunter Biden investigation | PBS NewsHour The "whistleblower" is Gary Shapely who is employed by the IRS. The U.S. prosecutor in charge of the Hunter Biden investigation, David C. Weiss, was appointed by Trump. It does appear that Shapley's testimony is inconsistent with statements made by David Weiss that he had full authority to make charging decisions against Hunter Biden.
Haley says GOP should start impeachment proceedings against Biden; IRS agent tells House committee there was meddling with Hunter Biden case (DOJ denied the truth of those claims, note that most of the claims about political interference occurred when Trump was President, not Biden)
Fox News Host Calls Merrick Garland 'Corrupt to The Core'; Trump Calls Indictment a "BADGE OF HONOR & COURAGE" in Social Media Rant
In this article, David Frum, a former speechwriter for President Reagan, discusses renewed republican efforts to pass a law authorizing U.S. military operations in Mexico. Don't Bomb Mexico - The Atlantic
Ron DeSantis, who has little traction against Trump in the 2024 republican presidential polls, says he will eliminate birth citizenship for children of illegal immigrants. That plays well to republican base. DeSantis says he would seek to end birthright citizenship for children of undocumented immigrants-ABC News There is just one really big problem. Birth citizenship is a constitutional right set forth in the 14th Amendment: "All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside."14th Amendment | U.S. Constitution
To eliminate that right through an Amendment, mini-Trump would have to secure a two thirds vote in both the Senate and House and three-fourths of the state legislatures. The alternative route is for three-fourths of the states to request conventions to approve an amendment and then receive approvals from three-fourths of those state conventions. Article V - Amendment Process | Constitution Center
DeSantis agency sent $92 million in covid relief funds to donor project - The Washington Post
Opinion: The Supreme Court rewrites American society once again | CNN Starting with the Roe v. Wade decision in 1973, the vast majority of republicans arrived at a consensus opinion that opposition to abortions was the litmus test for their support. That required almost 50 years of voting against all Democrats running for political office, starting with State House candidates to and including the President. Through that persistent effort, they finally achieved the desired result.
Anyone who is unhappy with the Supreme Court's current direction will need to do the same by never voting for a republican candidate again. It is just that simple.
The Supreme Court is now controlled by Justices who will interpret the Constitution based on prevailing views and laws when the Constitution was originally adopted or when the 14th Amendment was passed in 1868 (e.g. guns and abortions).
Depending on the issue, the clock will be turned back to 19th century or earlier jurisprudence and beliefs.
This is now something that is inevitable and will only be capable of reversing after decades of effort, which if ultimately successful, eventually replaces the deeply reactionary Republican Justices. I certainly will never live to see that happen. Maybe someone who is 30 or younger will.
It is not so much a question of what the Constitution means, as arguments exist for both sides, but the political and religious beliefs of the Justices. And, more people will come to see it that way when it comes to these divisive social issues which is not a positive long term for the country, since the Supreme Court will simply be viewed as just another arena or forum for divisive political and religion based fights where prior decisions no longer have any weight under the stare decisis doctrine, which is the case now for the Republican dominated Supreme Court.
++++
1. Small Ball Buys:
I am averaging down with the following small ball, common stock buys.
A. Added 50 RNW:CA at C$11.1:
Quote: TransAlta Renewables (RNW:CA)
Cost: C$556 with C$1 commision, translates into about US$479.7 based on exchange rate at time of purchase.
1 CAD to USD - Canadian Dollars to US Dollars Exchange Rate
New Average cost per share: C$11.49
Dividend: Monthly at C$.0783 (C$.94 annually)
TransAlta Renewables Declares Dividends - TransAlta Renewables
Yield at New AC = 8.18%
I discussed the 2023 first quarter earnings report in my last post and have nothing further to add. Item # 3. Restarted RNW:CA - Bought 100 at C$11.67 (6/24/23 Post); TransAlta Renewables Reports First Quarter 2023 Results - TransAlta Renewables
B. Added 3 TRP at US$39.77:
Quotes:
USD Priced: TC Energy Corp. (TRP)
CAD Priced: TC Energy Corp. (Canada: Toronto)
Canadian Dollar to US Dollar Exchange Rates Chart | Xe
Website: TC Energy-Home
TC Energy owns Transcanada Pipelines which owns several energy infrastructure companies:
TC Energy — Operations — Natural Gas Map
TRP SEC Filings (foreign company forms)
TRP 2022 SEC Filed Annual Report and Audited Financial Statements
TC Energy confirms termination of Keystone XL Pipeline Project (6/9/21).
I discussed buying a TRP reset equity preferred stock in my last post.
I last discussed a common stock purchase in this post: Item # 3.B. Added to TRP-Bought 1 at $49.92; 1 at $39.59; 1 at $39 (11/7/20 Post)
Investment Categories: Bond Substitute/Dividend Growth
Average cost per share: US$43.89 (22 shares)
Dividend: Quarterly at C$.93 per share (C$3.72 annually)
TC Energy — Dividend Information
Yield: Will depend on the CAD/USD conversion.
Just for illustration, if the CAD/USD conversion never changed at .75, the C$3.72 annual dividend would convert to US$2.79 for the TRP owners, which generates a 6.36% yield. The actual before tax yield will depend on both the penny rate and the CAD/USD conversion rate.
Canada will withhold a 15% tax when the shares are owned in a U.S. citizens non-retirement account.
Last Ex Dividend: 6/29/23 (owned all as of)
Last Earnings Report (Q/E 3/31/23): SEC Filing
Net Income: C$1.313B
E.P.S. = C$1.29, up from C$.36 in the 2022 first quarter
USD E.P.S. at $.89 with consensus at $.85 per Schwab.
Revenues: C$3.928B
Non-GAAP "Comparable Results": E.P.S. = C$1.21
Long Term Debt Issued in the 2023 First Quarter: Refinancing costs are increasing.
Analyst Reports (available to Schwab customers):
Morningstar (6/6/23): 4 stars with a fair value of US$47, narrow moat
S&P (5/5/23): 3 stars with a 12 month PT of US$46, cut by $1 in May.
One concern is Canada's carbon tax that increases from C$40 per ton to C$170 by 2030. Carbon price jumps to $65/tonne, but rebates will also rise for millions of households | CBC News (4/1/23)
The Morningstar analyst also sees hydrogen based generation as a potential threat to natural gas generation. Hydrogen Fueling for Power Generation Maybe that will happen in the distant future but I doubt that hydrogen will replace natural gas fired generation in my lifetime, at least in any meaningful way.
C. Bought 5 DCOM at $17.35:
Quote: Dime Community Bancshares Inc. (DCOM)
Investment Category: Regional Bank Basket Strategy
DCOM Analyst Estimates | MarketWatch
Last Reported Tangible Book Value Per Share: $23.52 as of 3/31/23
Discount to TBV at AC per share: 22.7%
New average cost per share: $18.18 (40+ shares)
Dividend: Quarterly at $.25 per share
Yield at New AC = 5.5%
Last Ex Dividend: 4/14/23
I discussed the last earnings report in a recent post and nothing further to add here. Item # 2.E. Added 7 DCOM at $18.79 (6/10/23 Post); SEC Filed Earnings Press Release
D. Added 5 LXP at $9.37:
Cost: $46.85
Quote: Lexington Industrial Trust (LXP)
52 Week Price Range: $8.81 to $11.92
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
2022 Annual Report (debt discussed starting at page 84)
New Average cost per share: $9.52 (15 shares)
2022 Dividend Tax Classifications:
LXP Industrial Trust Announces Final 2022 Dividend
The nondividend portion, also called "return of capital", reduces the tax cost basis for the shares that generated the dividend and is not included in reportable dividend income. The downward adjustment in the tax basis to reflect the ROC classification will impact the capital gain amount when the shares are sold.
The Section 199A classification refers to a section in the law known as the Tax Cuts and Jobs Act which in effect reduced the tax rate for REIT dividends that are classified as ordinary income that would have been taxed like interest before this law. Sec. 199A and Subchapter M: RICs vs. REITs; What are Section 199A Dividends? – The FI Tax Guy Last year, this tax section created a $410 deduction through IRS form 8995.
Dividend: Quarterly at $.125 per share ($.5 annually)
LXP Industrial Trust (LXP) Dividend History | Seeking Alpha
LXP Industrial Trust Announces Quarterly Common Share
Yield at New AC = 5.25%
Last Ex Dividend: 6/29/23 (owned all as of)
Last Buy Discussion: Item # 3.A. Restarted LXP - Bought 10 at $9.56 (5/13/23 Post) I discussed the last earnings report in that post.
LXP Realized Gains to Date: $1,957.80
Three Largest Gains: Item # 1.C. Sold 137+ LXP at $9.08 and 53 at $9.06 In 2 Separate Roth IRA Accounts (9/12/18 Post)(profit snapshots = $914.11); Sold 100 LXP in Fidelity Roth IRA at $11.15 (1/6/17 comment- reference profit of $271.9 (profit snapshot below and in Gateway Post for this Basket Strategy linked above); Item # 2 Sold 250 LXP on Ex-Dividend Date in Two Taxable Accounts-Update For Equity REIT Basket Strategy As Of 4/6/16 - South Gent | Seeking Alpha (profit snapshot = $224.65)
The other gains are mostly in the $50 to $100 range. For the most part, I have waited for a lower price before buying.
Last Elimination: Item # 1.D. Eliminated LXP - Sold 20+ at $11.57 (2/13/23 Post) So I have now bought back 15 of those 20+ shares.
As previously discussed, prior dividend history is poor. I do not expect much, if any, dividend growth, certainly no meaningful growth, and consequently the stock is more like a bond than equity.
Higher REIT debt refinancing costs will make it difficult to grow cash available for distribution.
E. Added 2 MATV at $14.62:
Quote: Mativ Holdings Inc. (MATV)
Cost: $29.24
MATV Analyst Estimates | MarketWatch
New AC per share: $17.05 (22 shares)
Dividend: Quarterly at $.40 per share
Yield (assuming no cut, which may soon happen): 9.38%
Last Ex Dividend: 5/25/23 (owned 20 shares as of)
Last Discussed: Item # 1.E. Added 5 MATV at $15.5 (6/3/23 Post) As previously in that post, it would be prudent IMO to slash the dividend unless earnings improve drastically soon. The slash may need to be at least 50% IMO. The last earnings reports have been poor. I discussed the last earnings report in that post. SEC Filed Earnings Press Release for the Q/E 3/31/23
Last Eliminations: Item # 3.A. Eliminated MATV - Sold 30 at $27.97 (2/27/23 Post)(profit snapshot = $209.35); Item # 5.C. Eliminated MATV in Schwab Account - Sold 18+ at $25.06 and Item #5.D - Pared MATV in Fidelity Account - Sold 15 at $26.05 (1/23/23 Post)(profit snapshots = $107.15)
I highlighted the 2023 sale prices just to emphasize the strong negative impact of the most recent earnings reports.
MATV Realized Gains to Date: $316.5
Purchase Restriction: I am now in a 2 share, then 3 share average down mode. The Stock Jocks are predicting more trouble ahead with the recent stock prices. I am doing some light buying since (1) predicted disasters do not always materialize and (2) the company claims that the recent poor reports have primarily resulted from short term problems that will improve as the year progresses.
F. Restarted PAVE - Bought 5 at $30.37:
History this account:
Quote: Global X US Infrastructure Development ETF Overview
Cost $181.55
Last Discussed: Item # 7.D. Eliminated PAVE - Sold 6 at $28.19; 5 at $28.15(4/28/22 Post)(profit snapshots = $54.36)
Last Purchase Discussion: Item # 2.Q. Bought 8 PAVE - Multiple Purchases with an AC at $22.38 (3/6/21 Post)
Sponsor's website: U.S. Infrastructure Development ETF
Expense Ratio: .47%
Top 10 Holdings as of 6/23/23:
This ETF is probably more attractive now than when I eliminated the position in April 2022, based on the recently passed laws that will direct $2 trillion or so toward infrastructure projects.
P/E multiples for the top 25 holding can be found at Global X US Infrastructure ETF (PAVE) Portfolio - Morningstar
PAVE -Morningstar (currently rated 5 stars)
Dividends: Paid semi-annually
2022 per share payment = $.22
From my perspective, I view the dividend as meaningless based on the cost per share.
Maximum Investment: $500
G. Started GSBD - Bought 10 at $14.17:
Dividend: Quarterly at $.45 per share ($1.8 annually)
Goldman Sachs BDC (GSBD) Dividend History | Seeking Alpha
Yield at $14.17 TC = 12.7%
Last Ex Dividend: 6/29/23 (owned as of)
Net Asset Value per share history: Poor
3/31/23 $14.44
12/31/22 $14.61
12/31/21 $15.92
12/31/20 $16.75
12/31/19 $16.75
12/31/18 $17.65
12/31/17 $18.09
12/31/16 $18.31
12/31/15 $18.97
IPO at $20 (March 2015): Prospectus (proceeds at $19.64 before internal expenses)
Last Earnings Report (Q/E 3/31/23): SEC Filed Press Release
Net Investment Income Per share: $.45, excluding 1 cent for purchase discount amortization.
Net Asset Value per Share: $14.44
Portfolio Summary:
1st Lien 89.3%
Weighted average yield on income securities: 12.3% (based on amortized cost)
Non-accruals: 1.6% of total investment portfolio at amortized cost and at .6% based on fair value.
10-Q for the Q/E 3/31/23 (summary of investments starts at page 8)
Company assessment of impact on net income resulting from changes in interest rates:
 |
| Page 62 10-Q |
Over 99% of debt investments are at floating rates.
Company assessment of credit quality:
 |
| P.53 10-Q |
 |
| P.16, Supplemental for Q/E 3/31/23 |
2. Small Ball Sell:
A. Eliminated SNY - Sold 10 at $53.13:
Quote: Sanofi ADR
Proceeds: $531.34
Quote in Euros: Sanofi S.A. (France: Euronext Paris)
ADR Ratio: 2 ADRs = 1 Ordinary Share
Euro to US Dollar Exchange Rate Chart | Xe
Website: Sanofi, an innovative global healthcare company - Sanofi
SEC Filed 2022 Annual Report (foreign company form)
Investment Category: Mostly Dividend Harvest, capturing 1 or more annual dividend payments, selling at a profit and then waiting for another buying opportunity. Given my increased emphasis on capital preservation now, the lot sizes of purchases have been reduced from 50 to 5 or 10 shares.
Profit Snapshot: $52.41
Last Buy Discussion: Item # 3.G. Added 5 SNY at $46.6 (8/16/22 Post)
Last Substantive Buy Discussion: Item # 3.A. Bought 5 SNY at $48.9 (8/10/22 Post)
Dividend ADR Shares: Annual, with the last payment at US$1.9.
Sanofi ADS (SNY) Dividend History | Nasdaq
Last Ex Dividend: 5/30/23 (owned as of)
Last Earnings Report (Q/E 3/31/23): SEC Filing
 |
| In Euros - Ordinary Shares |
Earnings are heavily dependent on revenues from the blockbuster drug Dupixent, sold in collaboration with REGN.
The quarterly revenue for Dupixent was reported at €2.316B, up 39.7% CER.
CER = Constant Exchange Rates
The second highest selling drug was Aubagio at €419M, down 16.9% due to generic competition in the U.S. starting in mid-March.
Sell Discussions: Item # 2.A. Eliminated SNY - Sold 20 at $54.04 (6/1/22 Post)(profit snapshot = $116.91); Item # 2 Sold 50 SNY at $41.54 (1/18/17 Post)(profit snapshot = $130.36); Item # 6 Sold 50 SNY at $42.56- Update For Healthcare Basket Strategy As Of 8/12/16 - South Gent | Seeking Alpha (profit snapshot = $177.4)
Other sales:
 |
| 2015 SNY 50 Shares $121.93 |
 |
| 2009 SNY 50 Shares +$83.46 |
Realized Gains SNY to Date: $682.43 (no realized losses yet)
Current Position: None
As part of SNY's collaboration with REGN, SNY bought REGN stock, as I recall, and sold 22.8 M shares at $515 per share in 2020, keeping 400K shares according to this press release. Sanofi announces closing of Regeneron stock sale SNY recognized a gain of €7.362B. P.62, 2020 SNY SEC Filed Annual Report
2. Corporate Bonds:
The first two purchases were made in my cash heavy Vanguard Taxable Account using the proceeds from a lower yielding treasury bill that matured.
A. Bought 1 Kinder Morgan Energy Partners 4.25% SU Maturing on 9/1/24 a Total Cost of 98.242:
New Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa2/BBB
YTM at Total Cost: 5.81%
Current Yield at TC = 4.33%
I now own 2 bonds.
B. Bought 1 Enterprise Products 3.9% SU Maturing on 2/15/24 at a Total Cost of 98.84:
New Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa1/A-
YTM at Total Cost: 5.7828%
Current Yield at TC = 3.9458%
I now own 3 bonds.
Last Bond Offering (January 2023): Prospectus, $750M 5.05% SU Maturing in 2025 and $1B 5.35% SU Maturing in 2033
C. Bought 2 American Express 3.4% SU Maturing on 2/22/24 at a Total Cost of 98.639:
%203.4%25%202:22:24%20.png)
Issuer: American Express Co. (AXP)
AXP Analyst Estimates | MarketWatch
New Finra Page: Bond Page | FINRA.org
Credit Ratings: A2/BBB+
YTM at Total Cost = 5.56%
The YTM at the purchase price was 5.274%. The low commission of $1 per bond will have a greater impact on YTM when the maturity is so short.
Current Yield at TC: 3.447%
D. Bought 1 Old National Bancorp 4.125% SU Maturing on 8/15/24 at a Total Cost of 97.55:
%204.125%25%208:15:24.png)
ONB Analyst Estimates | MarketWatch
New Finra Page: Bond Page | FINRA.org
Credit Rating: A3
YTM at Total Cost: 6.41%
Current Yield at TC = 4.23%
I was unable to locate the prospectus. The security is referenced as a senior unsecured debt obligation at page 112 of the 2022 Annual Report. The note was issued in 2014, and there are no SEC filings from that period that are now available.
E. Bought 1 National Fuel Gas 5.2% SU Maturing on 7/15/25 at a Total Cost of 98.039:
Issuer: National Fuel Gas Co. (NFG)
NFG Analyst Estimates | MarketWatch
New Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa3/BBB-
YTM at Total Cost: 6.24%
YTM at Purchase Price: 6.294%
Current Yield at TC: 5.355%
Last Bond Offering (May 2023): Prospectus ($300M of 5.5% notes maturing in 2026)
F. Bought 1 DTE 4.22% SU Maturing on 11/1/24 at a Total Cost of 97.885:
%204.22%25%2011:1:24.png)
Issuer: DTE Energy Co. (DTE) - A Utility Holding Company
DTE Analyst Estimates | MarketWatch
New Finra Page: Bond Page | FINRA.org
Prospectus The FINRA page has the incorrect current coupon. This bond is a remarketing of a 2.25% SU that was originally issued as a component of corporate units that included a purchase contract of common stock. When the bond is separated out of that corporate unit, and remarketed with no equity interest, the coupon went from 2.25% to 4.22%.
Credit Ratings: Baa2/BBB
YTM at Total Cost = 5.882%
YTM at Purchase Price: 5.962%
Current Yield at TC = 4.31%
Last Bond Offering (May 2023): Prospectus $800M of 4.875% SU Maturing in 2028 The proceeds will be used to pay down short term debt whose coupons are at spreads to SOFR.
3. Treasury Bills Purchased at Auction:
The purchases were funded with proceeds from maturing treasury bills.
A. Bought 2 Treasury Bills at the 6/26/23 Auction:
%209:28:23.png){kind=small}
Matures on 9/28/23
91 Day Bill
Interest: +$26.19
Investment Rate: 5.336%
B. Bought 3 Treasury Bills at 6/28/23 Auction:
%2010:31:23%20.png){kind=small}
118 Day Bill
Matures on 10/31/23
Interest: $51.38
Investment Rate: 5.405%
4. Canadian Reset Equity Preferred Stocks:
A. Added 100 TRPPRD at C$15.59:
This purchase was made the day before the quarterly ex dividend date.
Quote: TRP-PD.TO
I mentioned this Canadian reset equity preferred stock in my last post.
Issuer: TC Energy Corp. (TRP)
Last Discussed: Item # 3.A. Bought 50 TRPPRD at C$13 (7/3/20 Post); Item # 1.A. Bought 50 TRPPRD at C$16.09 (11/2/19 Post)
Par Value: C$25
Last Ex Dividend: 6/29/23 (owned 200 as of)
%207:8:24%20.png){kind=small}
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.
That's a lot of good information. Thanks!
ReplyDeleteNow I need an Alka-Seltzer.
The leading indicators are so clear at pointing towards trouble. And the market is so clear it's saying we're done with it. In 2 years, the next two years will be clear what are the important factors.
So that explains why the coup didn't work. It was preempted.
De Santa's looks like he's not going to get anywhere compared to Trump. He's only a mini Trump in the skill set needed against Trump.
I haven't seen on the news, but on Twitter apparently France is burning up. Wonder how that's going to factor into the market. With this market I would expect a rally. Then I have to think backwards as to why it would be a rally. Making it up: It's going to reduce French consumption, so that'll bring down EU inflation, and EU rates, and that's good for the market.
If inversion was taken out of the leading indicators, I wonder if it would look significantly different? I don't know why, but inversion is not causing the usual pattern that leads to recession. So would be worth taking it out of the indicators.
It's also curious why safe alternatives aren't overwhelming market betting. But they aren't. I'm feeling safe getting nearly 5% or over. while I try and figure this stuff out.
There's fireworks outside. Somebody celebrating early this year.
Land: The duration and size of the yield inversion without a recession occurring is an historical anomaly.
DeleteOne explanation why this time may be different is that investors believe inflation will soon be brought under control, providing buyers of longer term debt an acceptable real rate of return.
This may prove prescient as inflation falls faster than I currently expect and the FED reverses its FF rate increases and goes back to a 2% or lower range. Or possibly the FED lowers the FF rate in response to an economic contraction resulting in a recession.
The buyer of the 3 month treasury bill, who continually rolls over proceeds into additional 3 month bill purchases over the next years, would have less income under that scenario than the buyer of the 10 year treasury note today.
Part of that explanation is that the real rate of return investors are willing to accept is much lower now after more than a decade of being offered negative real rates resulting from CB manipulation of rates. So a 1.5% real rate of return on a 10 year treasury looks really good to many investors compared to what they have grown accustomed to receiving.
I suppose it is different that investors think the long term rate will be so low. They're conditioned from the QE-forever policy.
DeleteThe whole point of inversion is that the long term rate is lower. But this is 'much' lower than usual expectations.
So this may be a piece of the puzzle.
Fireworks reminded me that Smithsonian folkart festival this year is focusing on Appalachian culture. With your family and your grandfather moving in Tennessee to better everything, were they part of the Appalachian community/culture at some point? Not that I know much about the culture, beyond traveling through the Smokies on a family vacation in a motorhome as a kid.
ReplyDeleteLand: In my maternal line, my 9 x. great grandfather arrive in America in 1635 traveling from Bristol England. He was extremely successful. Over the ensuing decades, with wealth (land mostly) divided among numerous children or otherwise dissipated, this line of ancestors moved west in search of cheaper land to farm. The first migration was to middle Virginia and then around 1750 to western North Carolina near present day Asheville. My 5 x. maternal great-grandfather, who fought in Revolutionary War as a Captain, received land grants from NC in territory that later become western Tennessee and moved into that area in the early 1800s. The migration to find cheaper land continued westward to Maury County Tennessee, just south of where I live now, with my 4 x. great grandfather settling there th the early 1820s. His handwritten will was the first probated in that county.
DeleteOn my father's side, my 3 x. great grandfather was born in NYC in 1790. He fought in the War of 1812 which took him to Fort Point Peter in Georgia that was attacked by the British in 1815. He survived and decided to stay in the south.
His first son, my 2 x. great grandfather, moved to Alabama and was a sharecropper. The 1860 Census shows that the value of his assets was less than $100. The most important decision for future generations he ever made was to leave and move to Nashville sometime prior to 1870.
On my maternal side, the most important decision for future generations was my grandfathers decision to leave rural Hickman County, TN and move to Nashville during the Great Depression.
The end result was that my father and mother were living on the same street in Nashville and went to the same high school.
Sometimes, just moving from one place to another makes a huge difference in the economic prospects of future generations.
Prior to both sides moving to Nashville, almost no one finished high school and poverty was the norm. Now, in my generation, virtually everyone has a college degree and has been financially successful which has carried on the next generation.
Cool story/history! Interesting how the first move from England was successful but it took later moves to regain that successful opportunity. The 1st will probated? That's a founding family in that county!
DeleteSo your parents met easily, while younger. My parents met while both in high school 15 & 17, and then never dated anyone else. They essentially raised each other.
Moving from rural to city was a big part of success for your family. There's probably a lot of history written about that kind of move. I don't know if that's currently true in this country. Switching from farming to other work seems to often be beneficial, even though owning land and land wealth is considered a big deal.
I've considered the ignoring of the challenges that rural america's been facing post-near-depression has been part of how Trump got a toe-hold into the rust and rural belts.
Land: Farm land will soar in per acre prices when a city expands into what was previously farm country. That has never happened in rural Hickman County Tennessee, where my ancestors scratched out a living, but would be the case for those who owned farm land in Brentwood, TN., where I now live, as Nashville expanded far beyond its historical starting in the 1960s.
DeleteFor those who did not want to work hard, and farming in the 19th century would certainly be characterized that way, the primary occupations for my ancestors were preaching, followed by some "profession" like being a "doctor".
My maternal great grandfather has Dr. on his gravestone. He did not leave Hickman County which looks much like it did when he was buried there in the 1930s. He only finished the 8th grade, a much less stressful, costly and time consuming path to that exalted title than what my youngest nephew had to follow when graduating from the Northwestern Medical School. He also just received a MBA from that university.
In rural areas during the that period, buying the Grey's Anatomy book and reading it was all that was required to become a country doctor, where payment for services rendered might be in chickens.
For my direct ancestors with the surnames of my parents, my parents were the first to graduate from high school marrying a few days before Pearl Harbor. Finishing the 8th grade prior to then made you equivalent to a Rhodes Scholar.
There is one family line that goes back to Jamestown with an arrival in 1618. In that line, my 12th great grandmother was Mary Boleyn, sister to Ann, which makes Queen Elizabeth I my 1 cousin 13x removed.
Lines diverge a lot as you move further back in history since new surnames are brought in the mix through the women who took their husband's names.
Cousins with the Queen :). 13x isn't that far. To think of that beheading being in one's family tree....
DeleteSeems like Mary was important to the whole sequence. Both had a lot of spunk.
https://allthatsinteresting.com/mary-boleyn
I forgot about the land value of selling into city and suburb development. I'm still wishing I'd bought a 2nd property a little further out around where years ago.
Much as I gripe about doctoring these days, I'm glad it involves more than reading Grey's Anatomy. And chickens.
Education used to be so much more rare than it is now. Not sure if that's helped with intelligence and smarts though, given many views such as polling about Donald Trump being truthful...
I would guess that my parents were the 1st with college degrees in their families for a generation or two. None of my grandparents would have. Who knows before then, but unlikely. Though my grandfather was raised in a very religious environment so probably had rabbis in the family.
This article argues that manufacturing contraction isn't as meaningful as it sounds.
Delete""The purchasing manager index is calculated as a diffusion, and thus does not show actual levels of production but merely how widespread the change in activity is throughout the sector.""
https://finance.yahoo.com/news/the-tricky-story-behind-a-us-manufacturing-downturn-morning-brief-100005448.html
Land: The available evidence is consistent that the manufacturing sector is in contraction. The ISM numbers, as a diffusion index, do not provide information on level of contraction and its usefulness is further limited by the fact that is a survey.
DeleteIn the past, I have placed more emphasis on the New Orders component which will generally turn higher during a recession before other leading indicators. That was the case, for example in early 2009. Along with other data, that kind of information gave me more confidence to reallocate back into stocks, and out of short term high quality debt, back then.
"With the ten year treasury yield at 3.81%, the annual average real rate of return would be 1.61% provided that inflation prediction is spot on. That would explain why the ten year treasury yield will continue to be substantially inverted with the 3 month treasury bill yield, with the inversion increasing with more FF rate increases."
ReplyDeleteI don't understand this. How do these numbers explain the inversion?
Thanks.
D.
The explanation comes into two parts. The first is that the FED controls the 3 month treasury bill with the FF rate which has risen in yield with each FED increase in the FF rate.
DeleteThe second part is the eager willingness of large institutional investors and others o accept a predicted 1.5% to 2% real rate of return on the 10 year treasury. The real rate of return prediction is reflected in the 10 year TIP breakeven inflation rate and the current nominal rate. That predicted real rate of return is actually much better than it has been during the extended period when the FED drove yields below the inflation rate. This willingness to accept a 1.5%-2% real rate of return moors the 10 year treasury yield close to where it is now even with more FF rate increases.
Another reason that can cause reversions is FED monetary policies that drive long term rates below the anticipated inflation rate. The FED managed to do that in 1945-1951, as I have previously discussed, and the FED was able to fix the long term yields lower than the inflation rate with QE as demonstrated by more recent history.
I did not realize that the 10 year treasury minus the 3 month treasury bill chart was limited to five years.
ReplyDeleteI have replaced that one with the long term chart that starts in 1982 which highlights better how the inversion has occurred in the past. Generally, the inversion occurs a few months before the start of a recession.
When looking at breakeven inflation charts for the 5, 7, 10, 20 and 30 year TIPs, it is important to keep in mind that this rate is a prediction for the average annual CPI over the relevant TIPs term.
Last Friday, the 5 year TIP had a breakeven spread of 2.18% computed as follows:
Nominal Yield 4.13%
Real Yield: 1.95%
Breakeven Inflation Rate: 2.18%
If someone believed that the 2.18% breakeven was too low, and the average annual CPI will end up being higher, then buying the 5 year TIP with a 1.95% real yield would be better than buying the nominal 5 year treasury. My best guess is that the inflation prediction is too low so, if I had to buy either a 5 year nominal or a 5 year TIP, I would go with the TIP in a retirement account due to tax issues.
I am using data from the Treasury's website for both the nominal and real rates:
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202306
5 Year Breakeven Inflation Rate Chart
https://fred.stlouisfed.org/series/T5YIE
Another part of the past pattern is that the inversion's started to improve when the recession hits.
DeleteLand: When the FED becomes convinced that a recession has started, the general tendency is to significantly lower the FF rate, which in turn causes the 3 month T Bill yield to plummet. The 10 year yield may not be impacted much, so the spread narrows and may then return to a positive slope where the 10 year yields more than the 3 month.
DeleteThe question is how will the FED respond when it is clear that a recession has started but inflation remains problematic. Recessions did not stop the Volcker FED from raising the FF rate during the double dip recession between January 1980-July 1980 and July 1981-November 1982. Inflation was far more problematic then compared to now.
https://www.investopedia.com/articles/economics/08/past-recessions.asp
So that's why there's generally un-reverse before the market reacts to the recession that's coming.
DeleteI'm not going to guess what this Fed would do with inflation and a recession :)!
But good to know lowering rates isn't a guarantee. Volker was facing out of control inflation though. A little slow down and current inflation could reasonable get under control or at least head that way even more clearly.
I noticed today that the real yield for a 5 year TIP has gone over 2%.
ReplyDeleteI bought in a ROTH IRA account the .5% coupon TIP maturing on 1/15/28 at 93.328, producing at that TC a 2.052% real yield. I have to compensate the seller for the inflation accretion since issuance which brought the principal amount up to $1,148.26 using the inflation factor of 1.23035. I view this TIP as a better buy than a IBond given the higher real yield component, its liquidity and no penalty associated with an early redemption. Being a better deal does not necessarily make either option a good deal. Almost all of the total return for this purchase will be the inflation accretion to the principal amount going forward. This purchase will be a better option than buying the 5 year non-inflation protected treasury only if the breakeven inflation rate, priced into the TIP, is too low based on what actually happens until maturity.
I have more option to buy ibonds, but have stopped. I finally submitted my taxes without the paper ibond request form. The current rate of .4% with inflation attached, and redemption penalties isn't a good deal.
DeleteMy current ibonds will soon be earning less than in vang settlement fund because they're paired with 0% real interest. Total is $25k so I won't worry too much. But .
Target's way down. Maybe a good time to buy, when it's down? Payout is 70% so that's a bit of caution. PE 13 so not superlow but not high.
DeleteStill above 2020's high so if a market bear happens, it too will come down. But at least it's on a good sale now.
The store seemed a little off on my last trip. Too much nicer home decor that wasn't as creative as Homegoods or online sources. Foods no longer a deep discount. But otherwise fine.
Land: I will compare the real rate of the IBond with the 5 year TIP real rate.
DeleteThe 5 year TIP closed yesterday with a real rate of 2.05% compared to the current .9% for the IBond. That is the highest real rate among the TIPs maturing in 5, 7, 10 and 30 years.
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_real_yield_curve&field_tdr_date_value_month=202307
I can easily sell the TIP at anytime without incurring a penalty. The inflation protection is the same.
+++
I generally avoid retailers.
While Target ran into an issue with Trumpsters about LGBTQ merchandise last May, losing about $10B in sales over a ten day period due to a boycott, it was already in an earnings downtrend before then. Adjusted E.P.S. was $6.02 for the F/Y ending 1/28/23, down from $13.56 in the prior fiscal year.
https://www.sec.gov/Archives/edgar/data/27419/000002741923000010/a2022q4ex-99.htm
TGT attributed the decline to the following factors:
"Full-year operating income of $3.8 billion in 2022 was down 57.0 percent from $8.9 billion last year. Full-year gross margin rate was 23.6 percent, compared with 28.3 percent in 2021, reflecting pressure from higher clearance and promotional markdown rates, higher net merchandise and freight costs, higher supply chain costs reflecting increased compensation and headcount in the Company's distribution centers, and higher inventory shrink."
So the question which has no certain answers is whether the problems reflected in last fiscal year were temporary or part of larger secular trend.
Analysts are predicting growth for the lower F/Y ending in 1/23 after that major decline, but it will take years before the E.P.S. estimate surpases the F/Y ending 1/29/22. The current average estimate for 2026 is $11.52. I am not comfortable with that estimate given the more recent results. The price chart since August 2021, when the stock was trading near $262, reflects some modest pessimism IMO about whether TGT can regain its Mojo. The current price is near $132.
The Bond Ghouls and Stock Jocks are in the process of reassessing today their consensus forecast for FF rate increases and interest rates based on the robust ADP jobs report released earlier today. ADP estimated ath private payrolls increased by 497,000 compared to the 220,000 consensus estimate.
DeleteDonald claimed in a "Truth Social" that the U.S. "ECONOMY IS IN SHAMBLES", something that I did not know until being so informed by the "VERY STABLE GENIUS".
The CME FEDWatch tool has the probability of a .25% FF increase later this month at 92.4%. For year end, the probability is at 91.6% that the range will be at least 5.25-5.5% or higher. The current range is 5% to 5.25%. One month ago, the year end probability was 21.4% that the rate would be at 5.25%-5.5% or higher by year end. And it was not that long ago that the Bond Ghouls were pricing in rate cuts this year.
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
For as long as the U.S. economy remains this resilient and inflation remains too high for the FED, I would not expect anything from the FED other than more rate increases.
That's a huge report disconnect from expected.
DeleteI don't understand how jobs and the economy are so robust with the tailwinds. Inflation, credit slowdown. How are businesses profiting enough to expand so fast?
Rates are going up very likely.... how is this bad for the market? It means a soft landing will happen. This isn't saying inflation isn't under control.
Haven't bought today yet.
I wouldn't expect Target to climb back up to near it's high. It'd be a question of if it's oversold. That's a lot of good data to take into account!
DeleteDuring covid, Target was the darling of customers. So it's a big drop in profits by comparison. Walmart's doing fine meanwhile.
Land: Yahoo Finance has the TGT TTM P/E at 22.33.
DeleteThe forward P/E is around 15.79 using the consensus estimate of $8.24 and today's close at $130.14.
My gut has informed that $8.24 for the F/Y ending in January 2024 is too high.
TGT will have a lot of institutional interest that may support the stock near current levels unless there is another significant earnings miss.
Part of a decision to buy at least a starting position is how much confidence does an investor have in a $8.24 E.P.S. in the current fiscal year and $10.2 in the fiscal ending in January 2025 which would be a 69.4% increase from the actual $6.02 in the last F/Y.
That is being optimistic and requires the discounting of the last F/Y results as more of a one off year even though the economy was in a growth mode while a recession and a retrenchment in consumer discretionary spending may be in the offing either in the current fiscal year or the next one.
I'm going to trust your gut. Since the drop in earnings was nearly 1/2 YOY, particularly with the unclear risk of where this market is going, it reinforces that impression. That's HUGE. Something's not right, rather than just a bad moment. From a chart perspective, it's in a bear. So better to wait for momentum upward. That would coincide with better numbers.
DeleteAlso you're 1st comment on PE over 15 forward, is too expensive. It's not a bargain.
Thanks!!
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2023/07/bac-cfgprd-dea-goodn-icmb-jef-matv-pch.html