Economy:
The BLS reported yesterday that the economy added 336,000 jobs last month. The consensus estimate was 170,000. The unemployment rate was unchanged at 3.8%. Average hourly earnings rose 7 cents, or .2%, to $33.88. Over the past 12 months, average hourly earnings increased by 4.2%, which is above the last reported annual CPI increase of 3.7%. The BLS increased its prior estimates for job gains in July and August by 119,000. Employment Situation Summary - 2023 M09 Results
The U-6 number was reported at 7%, down from 7.1% in August. Table A-15. Alternative measures of labor underutilization - 2023 M09 Results
Job Growth in Thousands:
Bureau of Labor Statistics Data
As Paul Krugman observed in his last column, most Americans have accepted republican and Fox "news" messaging that the economy is in bad shape, notwithstanding the reality of low unemployment, rising wages, robust job growth, normal real GDP growth and inflation returning to the FED's target. Opinion | Will Voters Send In the Clowns? - The New York Times At least 1/2 of U.S. voters live in an alternate reality creation bubble that can not be pierced with accurate information.
ADP Private Employment Report for September: +89,000 jobs with the consensus forecast at 160,000. ADP Jobs report: Private payrolls rose 89,000 in September While this report is consistent with a slowing economy, it is not consistent with the BLS report discussed above.
Mortgage demand falls to lowest level since 1996; Mortgage rate heads toward 8% The recent increase in mortgage rates will cause less demand for new housing and a probable correction in existing home prices IMO. Mortgage Rates - Freddie Mac
Mortgage Rates Climb Fastest Since June. Expect Home Sales to Sag. - Barrons
Ackman says the economy is slowing and the Fed is likely done hiking
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Allocation Shifts Discussed in this Post:
Treasury Bills Purchased at Auction: $15,000 in principal amount
Corporate Bonds: $7,000 in principal amount
CDs: $3,000
Canadian Reset Equity Preferred: +C$873.5 (current yield 10%)
U.S. Equity Preferred: +$531.26 (weighted average yield = 8.75%)
Leverage Bond CEF: +$48.05 (yield at 10%)
Exchange Traded Baby Bond: -$125.5 (profit +$14.67)
Net Inflow Common Stocks: +$1,789.46
(Consisting of $1,789.46 in purchases and no sales)
Weighted average yield commons stock buys: 6.67%
Stock Funds (ETFs): -$692.73
Net Inflow Stocks/Stock Funds: +$1,089.46
Realized Gain Stock Funds: +$120.38
2023 Net Outflow Stocks/Stock Funds: -$38,265.97
I have switched my portfolio management strategy to net weekly common stock/stock funds inflow, focusing on dividend paying common and preferred stocks that have been hit hard by the recent rise in intermediate and longer term treasury yields as well as other factors. The common stock sectors include packaged food, utility, and REIT stocks.
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Psychopath Putin and His Murderous Orcs:
Last Thursday, the Orcs deliberately targeted with 2 Iskander ballistic cruise missiles a grocery store and cafe, located in the small village of Hroza, murdering at least 52 civilians. Strike in Ukraine’s northeast Kharkiv region kills at least 50 - The Washington Post (noting that Russia's Dear Leader for Life claimed once again that Russia was not the aggressor); Russian Strike on Hroza Killed 1 in 6 of Village’s Residents-The New York Times This is of course a war crime and crime against humanity that Russia routinely commits on a daily basis. The Orcs targeted mourners at a service for a dead Ukrainian soldier.
Another favorite Orc genocide tactic is called the Russian Double Tap. The Orcs attack an apartment building with missiles and then attack the responders who are trying to rescue the civilians out of the rubble.
Hroza missile attack: Putin's deadliest strike on Ukraine since 2022 kills 52 - YouTube
Russia also attacked civilians in Kharkiv murdering a 10 year old child and his grandmother and wounding many others including a baby. Everything got blown out': Russia strikes Kharkiv with two ballistic missiles - YouTube
On Russian Nuclear Threat, Putin Lets Others Rattle the Saber - The New York Times Russia is a terrorist state. Putin and clique of Kleptocrats believe that Russia's imperial ambitions can not be met with resistance without making a nuclear war started by Russia more likely.
Russia is an Orwellian state, controlled by a lying, murderous psychopath, willing to commit, and actually committing genocide, war crimes and crimes against humanity on a vast scale.
Sweden Offers Ukraine Warplanes — If It Is Allowed Into NATO - The New York Times I mentioned in an earlier post that it appeared a deal was in progress whereby the U.S. would allow F-16s to be sold to Turkey provided Turkey withdrew its block on Sweden's request to join NATO.
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Trump and His Party:
RealClearPolitics - Election 2024 - 2024 Republican Presidential Nomination
Using the average of all polls, Trump is now leading DeSantis by 44.8%.
RealClearPolitics - Election 2024 - General Election: Trump vs. Biden
Using the average of all polls, Trump is leading Biden by 1.1%.
Trump’s Influence Reaches a Post-Presidency Peak - The New York Times
Ray Dalio says McCarthy ouster 'another step away from democracy and toward civil war' | Morningstar
Trump allegedly discussed US nuclear subs with foreign national after leaving White House: Sources - ABC News; Trump Goes Nuclear - The Atlantic; Trump Said to Have Revealed Nuclear Submarine Secrets to Australian Businessman - The New York Times The Australian then told many other people.
Judge in fraud trial imposes gag order after Trump attacks Judges clerk Alison Greenfield- POLITICO; Trump goes after clerk Allison Greenfield mid-fraud trial
Trump called the black NY AG Letitia James a "RACIST". Trump calls prosecutor racist, says he's the victim in courthouse remarks before fraud trial - YouTube
John Kelly goes on the record to confirm several disturbing stories about Trump Trump has no positive personality characteristics.
31 Senate Democrats have called upon the recently indicted Senator Menendez (D-NJ) to resign in response to his bribery indictment. 31 Senate Democrats now calling for Sen. Menendez to resign - YouTube No republican senator has joined them. Why? How would they explain continued support for the frequently indicted Donald, the unchallengeable Dear Leader of Trump's party, if they demanded that Menendez resign?
McCarthy became the latest victim of Trump's extreme GOP revolution Matt Gaetz, who wanted the government to shut down unless his spending cut demands were met, is in charge of the House's agenda now. This is just the most extreme example yet of what political commentators mean by the Tyranny of the Minority. Tyranny of the Minority: Why American Democracy Reached the Breaking Point-Amazon.com Books
While McCarthy managed to avoid a government shutdown for 45 days by allowing a vote on a continuing resolution, just hours before the start of a shutdown, that decision cost him his Speakership. The "political terrorists" among House republicans are still in a position to cause one in a few weeks.
Jim Jordan (R-OH) wants to become the House Speaker and has been endorsed by Don the Authoritarian. Trump endorses Jim Jordan as next House speaker - POLITICO Jordan was instrumental in Donald's efforts to overturn the 2020 election results. Jim Jordan was deeply involved in the attempted coup to overturn the 2020 Election - Ohio Capital Journal; The 147 Republicans Who Voted to Overturn Election Results - The New York Times
If Jordan wins, perhaps republicans want to remind voters about the travails of another republican House Speaker, Dennis Hastert, who was an evangelical Christian and a family values republican who was also a child sexual molester. Judge sentences 'serial child molester' Hastert to 15 months; A man two heartbeats away from the presidency was a serial child molester - Vox I am sure most people have forgotten about that republican House Speaker.
Jordan has never been accused of being a child molester but was accused of being told about one and failing to report it. Six former wrestlers say Rep. Jim Jordan knew about abusive OSU doctor; Powerful GOP Rep. Jim Jordan accused of turning blind eye to sexual abuse as Ohio State wrestling coach Jordan has denied those claims.
The former republican John Boehner referred to Jordan as a "political terrorist". Former House Speaker John Boehner accuses some in Congress of being "political terrorists" - CBS News
The other declared candidate for Speaker is the ultra right Steve Scalise, who is currently GOP's House Minority Leader, the number two position in the House GOP hierarchy.
Scalise is perhaps best known for being shot at a congressional baseball game and for reportedly saying that he is David Duke without the baggage. David Duke was a former Grand Wizard of the KKK. House speaker contender Steve Scalise reportedly called himself ‘David Duke without the baggage’ - The Guardian; Scalise’s pitch to Duke supporters seems plausible-theadvocate.com ("This is what I remember about the first time I met Steve Scalise nearly 20 years ago: He told me he was like David Duke without the baggage.")
Matt Gaetz (R-FL), who arguably has more power than President Biden now, said Scalise would make a phenomenal Speaker.
I doubt the House Republicans will be able to avoid a government shutdown after the brief grace period provided by the recently passed continuing resolution that cost McCarthy his job as Speaker.
Even if the Agents of Chaos and Anarchy can agree on a new Speaker, passing another continuing resolution will not happen, unless several republicans become temporarily sane or become confused about the meanings of Yes and NO when casting their ballots. And, agreeing internally on a budget is not likely to happen either.
If the House Republicans are able to pass a budget before the expiration of the continuing resolution, maybe with a few hours left before the government has to shut down, the budget will have discretionary spending cuts that go far beyond what they agreed to just a few weeks ago when many of them joined with the Democrats to increase the budget limit.
The republican plan that they were working on just prior to the passage of the continuing resolution, formulated with no effort to bring the Democrats on board or to compromise even a little bit, on any republican policy objectives and spending cuts, called for 30% cuts in discretionary spending other than for defense and veterans benefits.
If that kind of budget plan ultimately passes the House, the intent would be to cause a government shutdown since the republicans know that no Senate democrat would vote in favor. The republican budgets so far have been purposely designed to be far too toxic to receive a single Democrat vote or Biden's signature.
Opposition to Ukraine Aid Becomes a Litmus Test for the Right - The New York Times (Noting that 117 House republicans voted last week against a $300M program to train and equip Ukrainian soldiers)
Ex-Trump Org. executive testifies that Eric Trump led him to inflate values of some properties One method used to inflate property values involved dramatically increasing the square footage. For example, Trump claimed that his triplex apartment in NYC had 30,000 square feet and was worth $327M. The reality was that the property had less than 11,000 square feet. Trump real estate case: what to know about the civil fraud trial- The Guardian Another part of the scheme was to value apartments as if they were not subject to rent controls or that a property could be sold in violation of a zoning ordinance. The trial judge has already concluded that the Trumps committed fraud. Donald Trump liable for fraud-CNN Politics
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I will discuss small ball stock CEF buys, made last week, in my next post.
The stock sectors that I characterize as bond substitutes are in steep price declines in response to the spike in intermediate and longer term treasury yields. I have not had to wait long after a purchase to buy at a lower price. While this can be disconcerting, I am use to it after 40+ years following this approach.
1. Small Ball Buys:
A. Added to OLP - Bought 5 at $18.80; 5 at $17.6:
Quote: One Liberty Properties Inc. (OLP) - Internally Managed REIT
Cost: $182
"OLP acquires, owns and manages a geographically diversified portfolio consisting primarily of industrial and retail properties, many of which are subject to long-term net leases. As of June 30, 2023, OLP owns
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
New Average cost per share: $19.91 (45 shares)
Gradually working my way up to 100 shares.
Dividend: Quarterly at $.45 per share ($1.8 annually)
OLP Dividend History | Seeking Alpha
Yield at New AC = 9.04%
Last Ex Dividend: 10/2/23 (owned 40 as of)
I discussed the last earnings report in this post. Item # 1.B. Added to OLP - Bought 5 at $20 (8/12/23 Post); SEC Filed Earnings Press Release
Since my last discussions, there have been some developments regarding troubled properties.
OLP has a 50% interest in a joint venture that owns a shopping center in Manahawkin, New Jersey. The JV has entered into an agreement to sale this property for about $36.6M. After paying off the $10.4M mortgage, OLP estimates that it will receive approximately $6 to $8M for its interest and will use the proceeds to pay down the credit facility, which had $16.5M outstanding as of 8/31/23 at a 7.07% interest rate:
 |
| Equity Loss in the range of $800,000 to $900,000 |
The company summarized its new lease agreements with Regal Cinemas, which recently emerged from bankruptcy, covering two wholly owned OLP properties and one owned by the Manahawkin property JV:
I do not regard these issues as major, but will nick this REIT.
The other problem properties listed in the 10-Q consist of 1 leased to Bed, Bath and Beyond, which has for BK and rejected the lease in that proceeding, and the other is a 38,000 square feet property leased to L.A. Fitness. The BBBY property generated $629,000 in annual rental income.
B. Added to CAG - Bought 2 at $28.07; 2 at $27.68; 3 at $27.31; 3 at $27.05; 5 at $26.95; 5 at $26.7; 5 at $26.4; 5 at $25.8:
Quote: Conagra Brands, Inc.
Cost: $803.82
Last Discussed: Item 1.G. Added to CAG - Bought 2 at $28.47, 3 at $28.38 (9/16/23 Post)
CAG Analyst Estimates | MarketWatch
New Average Cost per share: $28.44 (60 shares)
I will take this position up to 100 shares, assuming subsequent purchases can be made at the lowest price in chain.
Dividend: Quarterly at $.35 per share ($1.4 annually)
Yield at New AC = 4.92%
Next Ex Dividend: 11/1/23
Last Earnings Report (Q/E 8/27/23): SEC Filed Press Release
The last 5 share lot was bought on the earnings release day which was last Thursday.
This report is for the first fiscal quarter.
GAAP E.P.S. = $.67
Non-GAAP E.P.S. = $.66, up 15% from the year ago quarter.
Consensus non-GAAP E.P.S. at $.60
Net sales were flat at $2.9B. FactSet consensus was at $2.95B.
Organic sales decreased by .3% "driven by a 6.6% decrease in volume largely due to industry-wide slowdown in consumption and recent consumer behavior shifts, partially offset by a 6.3% improvement in price/mix."
Input cost inflation has caused packaged food companies to raise prices that has resulted in lower volume. No one should have been surprised that revenues missed estimates.
CAG reaffirmed its $2.7-$2.75 adjusted E.P.S. guidance for the current F/Y.
Besides the ongoing problems with lower volume growth caused by price hikes, there is a growing concern that the weight loss drugs will result in lower food sales which makes sense since those drugs suppress appetite. Users of weight loss drugs like Ozempic are buying less food, Walmart says While I am not dismissing that concern, which will decrease volume some, it is probably not a major issue for packaged food companies and not as significant as the volume declines resulting from significant price hikes to offset rapidly increasing costs which pressure is now dissipitating.
{I would note that a recent study found that about 1% of those taking Ozempic developed significant digestive and other issues. Ozempic, Wegovy linked to severe medical conditions including stomach problems, study finds}
I started to increase my CAG odd lot purchases to 5 shares at below $27, with each subsequent purchase required to be at the lowest price in the chain.
I will not require much of a decline before buying more shares, viewing the current price as presenting an acceptable risk/reward based on both valuation and dividend yield and making it more likely that an 8% annual average total return can be achieved over time.
C. Added to OGN - Bought 1 at $18.72; 3 at $18.15; 2 at $17.46; 2 at $16.83; 1 at $16.23:
Cost: $157.98
OGN Analyst Estimates | MarketWatch (As of 10/6/23, the current average 2023 E.P.S. estimate is $4.40; $4.59 in 2024 and $4.77 in 2025. Using the $4.59 2024 consensus E.P.S. forecast, and my last purchase price of $16.23, the P/E is 3.54, rounded up)
New Average cost per share: $23.73 (65+ shares)
Dividend: Quarterly at $.28 per share ($1.12 annually)
I am reinvesting the dividend based on valuation.
Yield at AC = 4.72%
Last Ex Dividend: 8/17/23
I discussed the last earnings report in this post. Item # 1.F. Added to OGN - Bought 1 at $19.53; 4 at $19.23 (9/16/23 Post)
Last Sell Discussion: Item # 5.A. Eliminated OGN in Vanguard Taxable Account - Sold 12 at $30.67 (1/23/23 Post)
D. Added to LXP - Bought 5 at $9.1; 5 at $8.6:
4 Year History this Account:
Quote: Lexington Industrial Trust (LXP)
Cost: $88.5
Management: Internal
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
2022 Annual Report (property list starts at page 29)
Last Discussed: Item # 1.D Added to LXP - Bought 5 at $9.37 (7/1/23 Post). I discussed the 2023 first quarter report in that post. I made this comment in that post: "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."
New Average cost per share: $9.25 (25 shares)
Dividend: Quarterly at $.125 ($.5 annually)
LXP Industrial Trust (LXP) Dividend History | Seeking Alpha
Yield at New AC = 5.41%, rounded up.
Last Ex Dividend: 9/28/23 (owned 20 as of)
Last Financial Report (Q/E 6/30/23):
Net income to Adjusted FFO:
Adjusted FFO to Funds Available for Distribution (FAD):
FAD Per Share: $.1595 comfortably covers the quarterly dividend of $.125 per share.
LXP did not provide a FAD per share number. I calculated by taking the $46.430M in FAD and dividing that number by 291.015M weighted average diluted shares outstanding. The FAD per share would be slightly lower at $.157 adjusted for the equity preferred stock outstanding, which has a preferential right to cash and unvested share based compensation awards.
Ongoing Developments:
10-Q for the Q/E 6/30/23 Debt is discussed starting at page 14. $800M of the senior unsecured debt is at low rates (2.375% and 2.7%) with maturities in 2030 and 2031. I own the 4.4% SU that matures in June 2024 which has a $200M in principal amount. There were no borrowings under the credit facility which has small spread to SOFR. There was $66.353M in mortgage debt at low rates with maturities ranging out to 12/31/32 with a weighted average interest rate of 4%. LXP issued a fixed-to-floating rate "Trust Preferred" security in 2007, which I would classify as a junior bond, in the amount of $127+M, with a coupon now at a 170 basis point spread to the 3 month Libor rate. SEC Filed Prospectus at page 18 That would be a 170 basis point spread to SOFR + the tenor spread now. It would be slightly cheaper for LXP to use its credit facility to pay off that Trust Preferred. Overall, the interest rate management and debt situation is better than most REITs that I follow.
Stabilized Industrial Properties (defined in press release): 99.5% leased
Estimated 2023 Adjusted FFO per diluted share = $.66 to $.7
LXP Realized Gains to Date: $1,957.8
The largest gain was realized in 2018. 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 snapshot = $914.11).
Last Elimination: Item # 1.D. Eliminated LXP - Sold 20+ at $11.57 (2/13/23 Post)
D. Added 5 BTZ at $9.61 - Schwab Account:
Quote: BlackRock Credit Allocation Income Trust (BTZ)
Cost: $48.05
Sponsor's Website: BlackRock Credit Allocation Income Trust | BTZ
Effective Duration: 6.02 years as of 8/31/23
(As a rule of thumb, multiply the effective duration in years by a change in interest rates to determine percentage impact on net asset value. For example, if interest rates moved up 1% and the duration was 6.2 years, the approximate net asset value per share decline for an unleveraged bond fund would be about 6.02% without taking into account other factors that may impact the prices of bonds owned by the fund. The purest example would be a fund that owns nothing but non-inflation protected treasuries.)
Last Discussed: Item # 1.D. Bought 5 BTZ at $9.88 (9/2/23 Post)
Investment Categories: Monthly Income Generation/Diversification in a Bond Portfolio
BTZ SEC Filed Semiannual Report (period ending 6/30/23; BTZ information starts at page 77; leverage is discussed at pages 144-145 with the average weighted cost reported at 4.95% for the six month period ending 6/30/23)
Number of Holdings: 1,642
Leveraged: Yes and substantial at close to 38%
Credit Quality: Significant Junk exposure (below BBB ratings)
New Average cost per share: $10.07 (35+ shares)
Dividend: Monthly at $.0839 per share ($1.01 annually, rounded up)
BTZ Dividend History | Seeking Alpha
Significant ROC support.
Yield at AC: 10% (unadjusted for ROC support)
Last Ex Dividend: 9/14/23
Data as of 9/29/23:
Closing Net Asset Value per share: $10.82
The net asset value per share was at $14.06 on 3/2/2022.
Closing Market Price: $9.68
Discount: -10.83%
Average 3 year discount: -6.11%
Sourced: BTZ - CEF Connect
As previously discussed, this leveraged bond CEF has suffered the infamous Triple Whammy: (1) the rise in short term rates increases the borrowing costs; (2) the rise in interest rates causes the securities owned by the fund to go down in price, made worse by buying some assets that have declined in price with borrowed money that is going up in costs and (3) the blowback from the first two costs the discount to net asset value per share to expand.
Part of the decline in net asset value per share over the past 18 months is attributable to paying out in dividends more than the fund has received in income. (Click distribution tab at CEF Connect link above)
BTZ-Morningstar (currently rated 3 stars)
Last Elimination: Item # 1.C. Eliminated BTZ- Sold Remaining 37+ Shares at $14.88 (1/9/21 Post)(profit snapshot = $149.05)
Other Sell Discussions: Item # 1.J. Pared BTZ-Sold Highest Cost Lots (6/13/20 Post)(profit snapshot = $31.09);Item # 3.A. Eliminated BTZ Sold 50+ at $12.42 (4/4/19 Post)(profit snapshot = $60.1); Item #1.B. Sold 50 out of 100 BTZ at $12.05 (2/23/2019 Post)(profit = $23.5); Sold 103+ at $13.4+ (5/8/17 Post) (contains snapshots of trading profits starting in 2010 through May 2017 = +$870.19);
Goal: Harvest the dividends and sell at a profit before ROC adjustments to the tax cost basis.
E. Added to AGR - Bought 1 at $30.77; 1 at $30.22; 1 at $29.5; 2 at $29.1; 1 at $28.62; 1 at $28.27; 1 at $27.7 - Schwab Account:
Cost: $233.28
AGR is a utility holding company that owns renewable energy generation and provides electricity and gas to customers in New York, Connecticut, Maine and Massachusetts.
The electric and gas operating utilities are New York State Electric and Gas Company, Maine Natural Gas, Central Maine Power, Connecticut Natural Gas, United Illuminating, Rochester Gas and Electric, Southern Connecticut Gas and Berkshire Gas. Company Profile - Avangrid
The company owns about 8.6 gigawatts of wind and solar generation which makes it one of the largest developers of renewable energy projects in the U.S.
The Spanish utility Iberdrola has ownership control over AGR.
A global leader in renewables energy - Iberdrola
To fund its potential all cash purchase of PNM Resources (PNM), announced in October 2020, AGR sold in two private placements 77,821,012 shares of stock at $51.4. "Iberdrola purchased
After that private stock placement, Iberdrola had an 81.6% ownership interest in AGR.
Since the acquisition has not closed due to regulatory opposition in New Mexico, those shares have simply resulted in E.P.S. dilution. 75% of the proceeds were used to repay a loan made by Iberdrola in connection with the proposed acquisition.
AGR Investor Relations Website
AGR Analyst Estimates | MarketWatch
Last Discussed: Item # 1.D. Restarted AGR - Bought 5 at $35 (8/12/23 Post) I discussed the last earnings report in that post. SEC Filed Press Release
Last Elimination: Item # 2.H. Eliminated AGR - Sold 3 at $53.2 (12/3/21 Post)
New Average cost per share: $31.11 (14+ shares)
Dividend: Quarterly at $.44 per share ($1.76 annually), last raised from $.432 effective for the 2018 third quarter payment.
AGR Dividend History | Seeking Alpha
Yield at New AC = 5.65%, rounded up.
Last Ex Dividend: 8/31/23
Analyst Report (available to Schwab customers):
Morningstar (8/10/23): 4 stars with a fair value estimate of $38 and a narrow moat.
F. Added to CLPR - Bought 5 at $4.84:
Quote: Clipper Realty, Inc. - Primarily a NYC Apartment REIT
Cost: $24.2
Last Discussed: Item # 4.D. Added to CLPR - Bought 10 at $5.3 (6/24/23 Post)
Website: Clipper Realty — A Premier New York Investment Partner
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
Management: Internal
New Average Cost per share: $6.12 (142+ shares)
Dividend: Quarterly at $.095 per share ($.38 annually)
Clipper Realty Inc. (CLPR) Dividend History | Seeking Alpha
I am reinvesting the dividend.
Yield at New AC = 6.21%
Last Ex Dividend: 8/14/23
Last Earnings Report (Q/E 6/30/23): SEC Filed Press Release
Revenues: $34.5M
Some store leased occupancy: 99.2%
Overall collection rate: 96.3%
AFFO = $5.5M
AFFO per share: $.13
Net GAAP Loss to FFO to AFFO:
10-Q for the Q/E 6/30/23
Properties:
 |
| P. 7, 10-Q |
The Pacific Street property, located at 1010 Pacific Street in Brooklyn, was recently completed and was "already over 77% leased".
Debt: Mostly low coupon, fixed rate debt maturing between 2028-2032.
 |
| P. 15, 10-Q; Footnotes Omitted |
G. Added to SAR - Bought 5 at $24.4:
Quote: Saratoga Investment Corp. - Externally Managed BDC
Cost: $122
SEC Filed Annual Report for the F/Y ending 2/28/23
New Average cost per share: $25.64 (20 shares)
Dividend: Quarterly at $.71 per share ($2.84 annually)
Yield at New AC = 11.08%
Last Ex Dividend: 9/13/23
I discussed the last earnings report in this recent post: Item # 2.G Started SAR - Bought 5 at $26.45 (8/19/23 Post); SEC Filed Press Release
H. Added to IVZ - Bought 5 at $13.58:
Cost = $67.9
New Average Cost per share: $14 (15 shares)
Dividend: Quarterly at $.20 per share ($.80 annually)
Yield at New AC: 5.71%
Last Ex Dividend: 8/10/23
I discussed the second quarter earnings report in my last post: Item # 2.H. Restarted IVZ - Bought 5 at $14.22; 5 at $14 (9/30/23 Post); SEC Filing
I. Added to CTO - Bought 1 at $15.84; 1 at $15.71:
Quote: CTO Realty Growth Inc. (CTO) - Externally Managed REIT
Cost: $31.55
Investment Category: Equity REIT Common and Preferred Stock Basket Strategy
New Average cost per share: $18.15 (64+ shares)
Dividend: Quarterly at $.38 per share ($1.52 annually)
CTO Dividend History | Seeking Alpha
I am reinvesting the dividend.
Yield at New AC = 8.37%
Last Ex Dividend: 9/13/23 (owned 56+ as of)
I discussed the last earnings report in this post: Item # 1.B. Added to CTO - Bought 3 at $16.65 (8/26/23 Post);
SEC Filed Earnings Press Release and Supplemental
J. Added to HIW - Bought 1 at $20.2; 1 at $19.85; 1 at $19.31; 1 at $18.87:
New average cost per share: $24.57 (47+ shares)
I am working my way up to 100 shares and will stop buying when and if I reach that number, except for shares purchased through reinvestment of the dividends.
Dividend: Quarterly at $.50 per share
I am reinvesting the dividend.
Yield at New AC = 8.14%
Yield at $18.87 = 10.6%
Last Ex Dividend: 8/18/23
The dividend yield points to a belief among many investors that HIW will join other Office REITs in cutting the dividend.
Overall, I view HIW as less impacted by WFH than Office REITs located in major east and west coast cities. HIW owns Office properties in the South which is further along in reversing the pandemic caused WFH trend.
I discussed the last earnings report in a recent post. Item # 1.C. Bought 1 HIW at $22.51; 1 at $22.23; 1 at $21.03 (9/23/23 Post ); HIW 2023 2nd Quarter.pdf
Last Elimination: Item # 1.I. Eliminated HIW - Sold 7 at $47.22 (2/3/22 Post)
2. Canadian Reset Equity Preferred Stocks:
A. Bought 50 AXPRI:CA at C$17.45 (IB Commission C$1):
Quote: AX-PI.TO
Issuer: Artis Real Estate Investment Trust (AX-UN.TO) I have owned the common "units" in the past but do not have a position now.
Website: Artis REIT
Artis Real Estate Releases 2023 Second Quarter Results Recent results have been disappointing in part due to excessive reliance on short term debt.
This is a fixed-to-floating rate preferred stock. The fixed rate period has expired. The floating rate period just started with a 5 year coupon set at 6.993%.
Par Value: C$25
Current Coupon: 6.993%
Total Cost per share: C$17.47
Yield at TC = 10% (.06993% coupon x. C$25 par value = C$1.74825 annual dividend per share ÷ C$17.47 total cost per share = 10%)
Reset effective for the 5 year period starting on 5/1/23: Artis (press release dated 4/18/23)
Coupon resets every 5 years at the greater of 6% or a 3.93% spread to the 5 year Canadian government bond. It is unusual to have a fixed-to-floating rate preferred stock providing for a minimum rate during the floating rate period.
Dividends: Paid quarterly and cumulative.
Stopper Clause: Yes, standard
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| 50 Shares |
3. Treasuries Purchased at Auctions:
A. Bought 13 Treasury Bills at the 10/5/23 Auction:
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This is a reinvestment of 13 treasury bills that matured on 10/3/23:
The settlement day for the two month T bill auctioned on a Thursday will be the next Tuesday. The proceeds received on Tuesday 10/3/23 was from a two month T Bill.
Matures on 12/5/23
56 Day Bill
Interest: $108.29
Investment Rate: 5.49%
B. Bought 2 Treasury Bills at the 10/2/23 Auction- 1 in Schwab & 1 in Fidelity Account:
%2010:3:24%20.png){kind=small}
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1 Year T Bill
Matures on 10/3/24
Interest: $104.86
Investment Rate: 5.448%
4. Corporate Bonds:
A. Bought 2 Blue Owl Capital 4% SU Maturing on 3/30/25 at a Total Cost of 95.351:
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Issuer: - Blue Owl Capital Corp. (OBDC)-Externally Managed BDC (formerly known as Owl Rock Capital)
I own a few common shares: Item # 3.A. Eliminated Duplicate Position in OBDC - Sold 30 at $13.78 (9/23/23 Post) I discussed the last earnings report in that post. Blue Owl Capital Corporation Reports Second Quarter Net Investment Income Per Share of $0.48 and NAV Per Share of $15.26
New Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa3/BBB-
BDC bonds are risky for several reasons: (1) almost all net investment income is paid to common shareholders; (2) the loans made by BDCs are inherently risky; and (3) significant amounts of senior debt have to serviced and refinanced periodically.
YTM at Total Cost: 7.347%
Current yield at TC = 4.195%
57% of the yield, expressed in the YTM, is concentrated in the profit realized at maturity.
I now own 4 bonds.
B. Bought 1 GATX 3.25% SU Maturing on 3/30/25 at a Total Cost of 96.047:
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Issuer: GATX Corp. (GATX)
"GATX leases transportation assets including railcars, aircraft spare engines and tank containers to customers worldwide."
I have never owned the common stock.
GATX SEC Filed Earnings Press Release for the Q/E 6/30/23
New Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa2/BBB
YTM at Total Cost: 6.066%
Current yield at TC = 3.38%
I now own 3 bonds.
Last Bond Offering (9/2023): Prospectus $300M 6.05% SU Maturing in 2024 ($250M used to pay off borrowings under the credit facility that costs more)
C. Bought 2 Allegion US Holding 3.2% SU Maturing on 10/1/24 at a Total Cost of 97.116:
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Issuer: Wholly owned subsidiary of Allegion PLC (ALLE) who guarantees the notes.
ALLE Analyst Estimates | MarketWatch
ALLE SEC Filed Earnings Press Release for the Q/E 6/30/23
New Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa2/BBB
YTM at Total Cost: 6.252%
Current Yield at TC = 3.295%
Since this bond just paid its semiannual annual interest payment, I paid less than $1 to the seller in accrued interest.
D. Bought 2 Campbell Soup 3.95% SU Maturing on 3/15/25 at a Total Cost of 97.182:
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Issuer: Campbell Soup Co. (CPB)
CPB Analyst Estimates | MarketWatch
CPB SEC Filed Earnings Press Release for the 4th Fiscal Quarter Ending on 7/30/23
CPB SEC Filed Annual Report for the F/Y ending 7/30/23
I have owned the common shares but do not currently have a position.
Last CPB Elimination: Item # 3.I. Eliminated CPB - Sold 5 at $49.85 (5/19/22 Post) The price closed yesterday at $39.46.
Largest CPB Profit: Item # 3 Sold 70 CPB at $35.79 (9/8/2010 Post)(profit snapshot = $714.84)
I am considering a small ball 5 share purchase but want a lower entry price.
New Finra Page: Bond Page | FINRA.org
Credit Ratings: Baa2/BBB-
S&P downgraded its rating to BBB- from BBB in response to the Sovos acquisition discussed below. I agree with that downgrade for the reasons discussed below, but am not concerned about CPB paying off this bond in March 2025.
YTM at Total Cost: 6.014%
Current Yield at TC = 4.0645%
Last Bond Offering (4/2020): Prospectus for $500M of a 2.375% SU Maturing in 2030 and a $500M of a 3.125% SU Maturing in 2050. I give them an "A" on raising that much capital at low long term rates.
CPB announced the all-cash acquisition of Sovos for $23 per share, who products include "pasta sauces, dry pasta, soups, frozen entrées, frozen pizza and yogurts under the brand names Rao’s, Michael Angelo’s and noosa." SEC Filed Press Release
Sovos Brands SEC Filed 10-Q for the Q/E 7/1/23 (103.271+M weighted average diluted shares outstanding; GAAP net income of $5.389M or $.05 per share; revenues at $217.635M, up from $197.433M in the year ago quarter; the Rao's brand accounted for $154.88M of the total revenue; long term debt of $482.824M through a credit facility) CPB is overpaying for Sovos IMO, which includes the assumption of its high cost debt and the need to issue a significant amount of new debt to pay the Sovos common shareholders. CPB will IMO need to quit using cash to buy back stock and to refrain from increasing the common dividend until there is a significant reduction in debt after the Sovos acquisition.
5. Small Ball Sells:
A. Eliminated SPYD - Sold 16 at $34.93:
Quote: SPDR Portfolio S&P 500 High Dividend ETF Overview
Proceeds: $558.87
Number of Holdings: 79
Expense Ratio: .07%
Top 10 Holding as of 10/4/23:
Last Buy Discussion: Item # 3.I. Started SYPD in Fidelity Taxable-Bought 5 at $29.44, 2 at $28.62, 3 at $27.76, 5 at $27.23 (7/18/20 Post)
Profit Snapshot: +$108.32
Overall, performance has been poor.
SPYD-Morningstar (rated at 2 stars)
I have dividend yield can be achieved by owning a selected number of stocks included in this index fund. If the price sinks back below $30, I will likely restart a small ball position.
B. Eliminated REGL - Sold 2 at $66.93:
Quote: ProShares S&P MidCap 400 Dividend Aristocrats ETF Overview
Proceeds: $133.86
Profit Snapshot: +$12.06
Sponsor's website: ProShares S&P MidCap 400 Dividend Aristocrats ETF
Expense Ratio: .4%
Holdings: 49 as of 7/31/23
Some Top Holdings as of 10/4/23:
Last Discussed: Item # 2.I. Bought 1 REGL at $61.1; 1 at $60.1 (12/20/2o Post)
Dividends: Quarterly at a variable rate
REGL Dividend History | Seeking Alpha
Last 4 Dividends: $1.67 per share
Yield at $66.93 using $1.67 annual rate = 2.5%, rounded up.
Last Ex Dividend: 9/20/23 (owned as of)
While the concept looked good when I bought this ETF, performance has been poor compared to the S&P 500 ETF SPY and has slightly underperformed MDY, an ETF for the S&P 400 Midcap Index.
REGL- Morningstar (currently rated at 4 stars)
Average Annual Total Returns for 5 Years Thru 10/4/23:
REGL +5.6%, REGL-Performance
SPY +9.8%, SPY – Performance
MDY +5.72% MDY – Performance
6. U.S. Equity Preferred Stocks & Preferred Stock ETF:
Equity preferred stock prices will respond negatively to increases in intermediate term treasury yields, viewed by investors as the credit risk free alternative to equity preferred stocks that are senior only to common stocks in the capital structure.
In addition, even without an increase in treasury yields, equity preferred stock prices will decline in response to turmoil in the stock market, even if treasury yields are falling. Depending on the then existing circumstances, investors may be reacting to increased concerns about credit risks and/or just to the pervasive fear that has engulfed the stock market.
A. Added to CODIPRA - Bought 4 at $21.88 - Schwab Account:
Quote: Compass Diversified Holdings 7.25% Preferred Series A Stock
Cost: $87.52
Issuer: Compass Diversified Holdings (CODI)
CODI Analyst Estimates | MarketWatch
Security Prospectus: Prospectus
Par Value: $25
Coupon: 7.25%
New Average cost per share this account: $22.47 (10 shares)
Yield at New AC = 8.07%, rounded up.
Next Ex Dividend: 10/12/23
Optional Redemption: On or after 7/30/22 at par plus accrued and unpaid dividends.
Dividend: Paid quarterly and non-cumulative.
Stopper Clause: Yes, standard provisions. CODI can not eliminate the 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.
B. Added to FBRTPRE - Bought 2 at $19.22; 3 at $18.65:
Quote: Franklin BSP Realty Trust, Inc. 7.5% Cumulative Preferred Stock (FBRT-PE)
Cost: $94.39
Issuer: Franklin BSP Realty Trust Inc. (FBRT)
Par Value: $25
New Average cost per share: $19.65 (15 shares)
Yield at AC = 9.54%
Last Ex Dividend: 9/28/23 (owned 10 as of)
I discussed this equity preferred stock in my last post and have nothing further to add here: Item # 1.C. Started FBRTPRE - Bought 10 at $20.03 (9/30/23 Post)
C. Added to UMHPRD - Bought 5 at $20.28:
Quote: UMH-PD
Cost: $101.25
Issuer: UMH Properties Inc. (UMH) - A REIT that owns manufactured home communities.
Coupon: 6.375% paid on a $25 par value.
Average cost per share = $20.75
Yield at New AC: 7.68%
Next Ex Dividend: 11/14/23
I have nothing further to add to my recent discussion: Item # 5.A. Started UMHPRD - Bought 5 at $21.23 (8/26/23 Post)
My next add will be a 5 share purchase below $20.
D. Added 5 GNLPRD at $17.63:
Quote: Global Net Lease, Inc. 7.5% Cumulative Preferred Stock (GNL-PD)
Cost: $88.15
Issuer: Global Net Lease Inc. (GNL)
Coupon: 7.5% paid on a $25 par value
Dividends: Paid quarterly and cumulative
New Average cost per share this account: $19.2 (35 shares)
Yield at $19.2 AC per share: 9.77%, rounded up.
Yield at $17.63 = 10.64%
Last Ex Dividend: 10/5/23 (owned all as of)
I discussed this equity preferred stock in my last post and have nothing further to add here. Item # 1.B. Added to GNLPRD in Fidelity Account - Bought 5 at $19.35; 5 at $19.2 (9/30/23 Post)
E. Added to PFXF - Bought 5 at $16.04; 5 at $15.95:
Quote: VanEck Preferred Securities ex Financials ETF Overview
Cost: $159.95
Sponsor's website: VanEck Vectors Preferred Securities ex Financials ETF
Last Discussed: Item # 1.J. Added 5 PFXF at $16.63 (1/3/23 Post); Item # 3.J. Restarted PFXF - Bought 10 at $17.04 (12/27/22 Post)
New Average Cost per share: $16.54 (25 shares)
Slowly working my way up to 100 shares. Each subsequent purchase will have to be at the lowest price in the chain, but I will not require much of a decline before adding a 5 share lot given the dividend yield.
Dividend: Monthly at a variable rate
Last 12 monthly Dividends: $1.25 per share, rounded down
Yield at AC (using annual $1.25 per share) = 7.56%, rounded up
Last Ex Dividend: 10/2/23 at $.1061 per share (own 15 as of)
Sell Discussions: Item # 3.B. Eliminated PFXF-Sold 76+ at $18.95 (8/1/2020 Post)(profit snapshot = $133.4); Item # 1.B. Eliminated PFXF-Sold 110 at $20.51 (1/29/20 Post)(profit snapshot = $52.05)
PFXF Realized Gains to Date: $185.45
7. Exchange Traded Baby Bond:
A. Eliminated ZIONL - Sold 5 at $25.10:
Quote: Zions Bancorp 6.95% Fixed-to-Floating Rate Subordinated Notes due September 15, 2028 (ZIONL)
Investment Category: Exchange Traded Baby Bonds, a subcategory of Exchange Traded Bonds: New Gateway Post.
Other categories of Exchange Traded Bonds:
Trust Certificates: New Gateway Post
Trust Preferred Securities: Links in One Post
Item # 1 Principal Protected Notes
Item # 2 Principal Protected Notes
ING HYBRIDS: Links in one Post
Issuer: Zions Bancorporation | Corporate Profile - Bank Holding Company
ZION Analyst Estimates | MarketWatch
Profit Snapshot: $14.67
Par Value: $25
Fixed Rate: 6.95% to but excluding 9/15/23. The fixed rate was set through an auction process described in the prospectus.
Floating rate: 3.89% spread to the 3 month Libor
Maturity: 9/15/28
Issuer Optional Redemption: On or after 9/1/5/23 at par value + accrued and unpaid interest.
Last Discussed: Item # 1.L. Bought 5 ZIONL at $22.17 (5/20/23 Post)
Last Ex Interest Date: 8/31/23
A junior bond issued by a bank holding company will become worthless, or almost so, when and if the operating bank is seized by the FDIC. I am not suggesting that this is going to happen but merely emphasizing that the downside risk is a zero value. Measured against that risk, the current yield at $25.1, taking into account that the floating rate may go down next year, compared to the risk free yields, mitigates against holding this exchange traded junior bond compared to selling it for a profit after collecting 2 quarterly interest payments.
Another consideration is that I have not seen an announcement from Zions on what rate will replace the now defunct Libor rate. The security is now in its first floating rate three month period.
8. CD Purchases - FDIC Insured:
A. Bought 1 Merrick Bank 5.4% CD Maturing on 4/4/25:
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Interest Paid Monthly.
B. Bought 1 Wells Fargo 5.5% CD Maturing on 4/11/25:
%204:11:25%205.5%25%20MI%20.png)
Interest paid monthly.
C. Bought 1 Wells Fargo 5.4% CD Maturing on 10/14/25:
Interest paid monthly
9. TIPs - Roth IRA Account:
A. Bought 1 TIP .625% Coupon Maturing on 1/15/2026 at 95.008:
Real Yield = 2.901%
Inflation Factor: 1.28688
The inflation factor compensates the seller for the accretion to the principal amount resulting from the CPI increase since the original issuance.
My purchase cost of $950.08 ($49.92 below the original par value of $1,000) is multiplied by the inflation factor of 1.28688 to arrive at a principal amount of $1,222.64 plus another $1.75 in accrued interest paid to the seller.
The maturity is close to two years. The 2 year nominal yield closed at a 5.12% yield on 10/2. The breakeven inflation is about 2.22%. I am betting that the annual average inflation rate will be higher than 2.22% which will be required for this TIP purchase to produce a higher total return than the non-inflation protected treasury maturing at about the same time.
10. Cash Flow Credited to my Schwab Account on 10/2:
Tennessee Municipal Bond Interest: $384.38
Common Stocks: $78.74
Treasury Note Interest Payments (based on coupons) = $73.75
CD Interest: $62.24 (mostly monthly payments)
Preferred Stocks: $30.54
CEFs: $24.31 (monthly payments)
Exchange Traded First Mortgage Bond (EMP): $9.19
Total: $663.15
In this account, my corporate bond allocation is $20K in principal amount, consisting of two 10 bond lots in senior unsecured debt issued by the Nextera Capital, guaranteed by the utility holding company Nextera, and American Electric Power. All of those bonds mature next year with the 10 Nextera Capital maturing on 3/21/24. Most likely, I will use the Nextera proceeds to buy an investment grade bond issued by an electric utility. Almost all of my corporate bond trading occurs in my Vanguard, Fidelity and Interactive Brokers Accounts where I pay a $1 per bond commission. Schwab has a minimum charge of $10 for corporate bond trades. Most of my corporate bond trades are 1 or 2 bond lots.
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.
I think the current moves may be technical again. I looked at the chart 2 days ago and it's kind of a support area.
ReplyDeleteI would have expected the market to move down with the rates moving up. But the report just creates too much excitement about the economy for investors to ignore. At least for a couple of days until they decide that the rate increases are really a problem after all. I was listening to Bloomberg yesterday I think, and the anchor was asking the question and rambling through, kind of why is the market going up and down non-consistently to any factor. The guests only answer was well maybe the expectation on rates is now all of a sudden built in.
So I switch to buying, if there's a recession, those sectors are still likely to continue to go down more? It's more that they're down enough now that in more normal times when they're not in a bear market they're bound to be higher?
My world's gotten flooded with news from the Middle East. This is more horrific than it's ever been since probably '48. The surprise factor is being like into the Yom Kippur war.
It's a reaction to the Saudi Israeli move towards peace agreement. Basically, it's a Hamas war against peace.
Mostly I've been trying to get ready to head to my dad's for probably a month, as he moves towards Independent living and he's really stressed out and needs lots of support. He's totally worried about how to set up an apartment. Also how to make friends, cuz he thinks he's not really that sociable. This is a person who will talk to anybody, and in any language. I seen him have conversations with people and languages he doesn't speak. And actually get into depth with them. He's that interested in talking to people. Totally opposite to the rest of us introverts in the family.
I finally feel like it's time to start buying bond ladder material. Rates could keep going up but I don't think they're going to go much higher. First time I've been thinking that.
Land: The initial reaction last Friday to the jobs report was for the ten year treasury yield to spike up to 4.85%, from a close at 4.72% last Thursday. Stock indexes responded by going down, which is the same Pavlovian inverse correlation (rates up, stocks down) that was dominant in the third quarter. Stocks started to rally after the ten year yield started to come back down, falling back to 4.76% near 12 E.D.T. and ultimately closing at 4.78%:
ReplyDeletehttps://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202310
The slight uptick in the ten year yield in afternoon trading after hitting an intraday low took a few points off the S&P 500 intraday high of 4358+.
At the present time, I view better than expected economic news to be more important than the ten year treasury yield rising a few basis points. More jobs does not necessarily translate into higher inflation. Annual wage growth is coming down and fell from 4.3% through August to 4.2% through September. The annual rate was 5.2% in July 2022.
The breakeven inflation rate for the 10 year TIP closed at 2.31% last Friday and at 2.31% last Thursday. So the nominal yield rose even though inflation expectations did not change.
The Israeli government had no clue until the attack was underway. About 50 years or so ago, I formed an opinion that the Israeli-Palestinian conflict was intractable and incapable of resolution. And, I have not changed that opinion based on subsequent events. The taking of hostages by Hamas appears to be a new tactic.
https://www.bbc.com/news/world-middle-east-67044255
++
While I have not tallied a total, my best guess is that about 80% of my assets held in taxable brokerage accounts consist of municipal and corporate bonds, treasuries, MM cash primarily at Vanguard, and CDs. I have transitioned from a Stock Jock to a Bond Ghoul.
I am using a bond ladder approach. The short term part of that ladder, which I define as up to 3 years from today, has more than 80% of fixed income total dollar value and consists of treasury bills bought at auction, some treasury notes mostly bought in the secondary market, CDs, and investment grade corporate bonds. That is the part of the yield curve where I capture the most bang for buck.
For treasuries purchased at auction, I am not yet ready to participate in the 3 year treasury auction, which will be held next Tuesday. The yield closed at Friday at 4.87% vs the 3 month T Bill at 5.63%. I will buy 2 of the 3 month T Bill. Ultimately, successful interest rate management, meaning more interest income each year, will require buying more 3 to 5 year maturities but I am not there yet.
Major U.S. stock indexes have barely reacted to the Hamas terrorist actions in Israel. Defense and energy stocks are up. WTI is up over $2.5 per barrel. The intermediate and longer term treasury yields are down, not in response to inflation, but in a flight to safety.
ReplyDeleteThe WSJ published an article yesterday that Iran had coordinated the Hamas attacks. The BBC also reported that Hamas representatives had claimed that Iran had given the green light.
The initial concern among investors was that Israel would respond with a retaliatory military strike against Iran, but that is probably unlikely anytime soon. Israel has its hands full dealing with the terrorists within and next to its borders.
It is certainly possible that Iran encouraged the attacks to disrupt the normalization of diplomatic relations between Saudi Arabia and Israel which was making progress to a conclusion. The Iranian thinking is that the attacks would inevitably result in a severe Israel response, and understandably so, that would make it difficult, if not impossible, for SA to normalize relations.
https://www.timesofisrael.com/saudi-israeli-normalization-effort-takes-a-violent-detour-after-hamas-attack/
What is irrelevant in the calculations made by Iran and its proxy Hamas is the lives of innocent Palestinian civilians in Gaza, their welfare and the Gaza economy.
David Leonhardt argues that the world may have fallen into a long period of disarray in part caused by the perception of a weakened U.S., a growing belief that aggressive actions might be worth the cost, and a naive belief that a richer and more economically integrated China and Russia would result in better relations with the West.
https://www.nytimes.com/2023/10/09/briefing/hamas-israel-war.html
Kellogg has completed its split into two separate companies. I have previously criticized that plan as more likely than not to decrease existing shareholders total return compared to continuing the company as is.
ReplyDeleteThe cereal products are now owned by the W.K. Kellogg Company (KLG).
https://www.marketwatch.com/investing/stock/klg?mod=search_symbol
The snack and other products are owned by Kellanova which kept the "K" symbol.
https://www.marketwatch.com/investing/stock/k?mod=search_symbol
The owners of pre-split Kellogg received 1 share of KLG for every 4 shares of Kellogg.
Goldman Sachs started KLG at a sell. I will not be starting a KLG position until the price collapses and I have an opportunity to examine several post split results.
Kelanova may be worth a look down the road. The products include Pringles, Pop-Tarts, MorningStar Farms, RXBAR, Gardenburger, Cheez-It, Nutri-Grain, Kellogg's Rice Krispies Treats and Eggo.
I looked to see where the Kellogg 2.65% SU bond maturing on 12/1/23 ended up and I see a name change to Kellanova.
+++
WTI is now up $3.56 or 4.23%.
The 10 year treasury yield has fallen 11+ basis points and is now trading near a 4.67% yield:
https://www.investing.com/rates-bonds/u.s.-10-year-bond-yield
Even if the major stock indexes finish down today, I will be up due to my heavy weighting in bonds and gains in most stocks that I own that have much higher yields than the S&P 500.
Just to remind myself that I may want to buy Kellanova (K), the snack business of Kellogg, I bought 1 share at $49.63 and will not be discussing that purchase in a post.
ReplyDeleteThe company guided 2024 adjusted E.P.S. to $3.55-$3.65. For a Kellogg shareholder who received the W.K. Kellogg shares, the combined dividend of the two entities is expected to be the same prior to splitting into two companies.
https://investor.kellanova.com/files/doc_events/2023/08/1/Press-Release_Day-K_080823.pdf
I made it to my dad's. Packed and drove and arrived at the current on civilized hour. He stressed out enough that I'll probably be here a month so it took a lot of packing.
ReplyDeleteSo I haven't looked at the market too closely in the process. Yields went down today so the market went up. It doesn't seem to be taking into account that hire gas is going to lead to higher inflation, and all the difficulties going on, like not having a speaker. Potential war with Iran. Though everybody's trying to avoid that.
The starting point with the
Yields going down, doesn't have to connect the dots for me. But when I listen to Bloomberg and CNBC, they Don't seem to connect the dots as much as they used to.
On the Israel assault, there's plenty of thoughts, but Biden expressed a great deal of it very well. Our cousins are in the north so I wasn't worried, but I did get verification today that they're okay.
Land: The S&P 500 is currently about where it was in June 2021.To borrow a phrase from Macbeth, the stock market is "full of sound and fury" going nowhere. The bond like stock sectors have performed poorly in response to rising interest rates but their price declines have been offset by major price spikes in about 10 stocks, most of whom have something to do with AI.
ReplyDeleteIt's back to going nowhere again today. AFter a week of climbing..... the CPI causing rates to increase, is the reason being given.
ReplyDeleteI'm still taking in info but not doing anything.
Land: Interest rates did rise today in response to the CPI report.
DeleteThe inverse correlation between interest rates and the S&P 500 index has recently been about as reliable as a daily correlation can be.
There was a brief period when the S&P 500 was up even though interest rates were higher. That ended around 1:00 E.D.T as the inverse correlation, which is the dominant one now, reasserted itself.
I do not believe that the September CPI report by itself will cause the FED to raise the FF rate rate before year end.
The rise in intermediate and longer term rates during the third quarter and into the 4th will contribute to an economic slowdown without the FED raising the FF again this year.
True, that correlation has turned into a pattern!
DeleteAgreed, the Fed's not raising rates again this year. Besides waiting to see how current raises play out, there's too much uncertainty (speaker, iran-Israel, student loans starting, rates starting to effect home buying, presidental candidate on trial) to raise into.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2023/10/aio-aod-bkh-bmy-bohpra-cnobp-codi-dgro.html