Economy:
Nonfarm payroll growth revised down by 818,000, Labor Department says This was for the 12 month period ending in March 2024. The initial reports had 2.9M new jobs.
CME FedWatch - CME Group (100% probability of at least a 25 basis point cut at the September meeting)
Trump’s Plan to Raise Your Taxes - The Atlantic The tariff hikes proposed by Trump are taxes that are disproportionately paid by low and middle income households. {My videos: Trump Tariff Proposals are Tax Hikes Paid by U S Consumers - YouTube; Trump Trade Proposals - YouTube} Trump falsely claims that the exporter pays the tariff. The importer of products into the U.S. pays the tariff tax and then adds the tax to its prices to U.S. customers. Trump's tariff hike proposals are a silent tax that will fall heavily on his core voters.
At a recent rally in Wilkes-Barre, Pennsylvania, Trump made the following comment: "A tariff is a tax on a foreign country, that’s the way it is whether you like it or not. A lot of people like to say, ‘Oh, it’s a tax on us.’ No, no, no." Trump Mercilessly Mocked Over Frighteningly False Tariffs Claim
See also, Trump is proposing a 10% tariff. Economists say that amounts to a $1,700 tax on Americans. - CBS News; Trump Income Tax and Tariff Proposals: Details & Analysis; US tariffs are an arbitrary and regressive tax | CEPR; Donald Trump's Tariff Proposal Sparks Warning From Economists - Newsweek
My most recent video on Tariffs as being Tax Hikes: Trump continues to make false claims about the negative impacts that flow from increasing tariffs - YouTube
Retail sales July 2024: Consumer spending jumped, better than expected: +1% vs. .3% consensus. Excluding auto sales, retail sales rose .4% better than the consensus .1%. Census Bureau - July Retail Sales.pdf
Walmart says prices are coming down — except in one key area The exceptions are dry groceries and carbonated soft drinks. WMT's earnings report was probably the main impetus for the rally last Tuesday, Walmart (WMT) earnings Q2 2025, as I discussed in a YouTube video. Causes of August Gyrations in the Stock Market - Can the FED engineer a soft landing - YouTube
TJX Companies (TJX) earnings Q2 2025 +5.6% revenue gain.
Target (TGT) Q2 2024 earnings Comparable sales up 2%
++++
Allocation Shifts Discussed in this Post:
Treasury Bills Purchased at Auction: $12,000 in principal amount.
Corporate Bonds: None
Tennessee Municipal Bonds: $10,000 in principal amount
Inflow Individual U.S. Common Stocks: +$56.08
(consisting of $810.39 in purchases minus $754.31 in proceeds)
Inflow Canadian Stock: +C$679
(converted to US$496 for allocation purposes)
Inflow Stock Funds: +$1,003.18
(consisting of $1,120.15 in purchases minus $116.97 in proceeds)
Inflow Stocks/Stock Funds: +$1,555.26
Inflow Leverage Municipal Bond CEF: +$1,199
Outflow Canadian Reset Equity Preferred Stock: -C$957 (profit C$203).
2024 Outflow Stocks/Stock Funds: -$28,617.47
Treasury Yield Curve August 2024:
Resource Center | U.S. Department of the Treasury
Real Yield Curve - August 2024
Resource Center | U.S. Department of the Treasury
10 Year TIP Breakeven Inflation Rate: 2.07%, viewed as the market's prediction of the annual average inflation rate over the next 10 years.
++++
Trump's Orwellian Alternate Reality:
President: general election : 2024 Polls | FiveThirtyEight
2024 General Election: Trump vs. Harris Polls | RealClearPolling
The Trump campaign endorses a racist theory - The Atlantic
Donald Trump Says It Is 'Illegal' to Criticize His Supreme Court Appointees - Newsweek Trump believes that criticism needs to be fined.
Trump’s ‘nuclear explosion’ on Kemp was months in the making. He could pay a price in November. - POLITICO Trump's insanity is revealed in his repeated attacks on the popular republican governor of Georgia Brian Kemp, even going so far as to make disparaging comments about Kemp's wife. Those attacks make it less likely that he will be able to win in Georgia, having narrowly lost the state by 11,779 votes in the 2020 election. Georgia Presidential Election Results (2,473,633 for Biden and 2,461,854 for Trump). Trump is responsible for republican senate candidates losing their races to two democrats. What has happened is that all of the suburban counties adjacent to Fulton County/Atlanta have turned blue in reaction to Trump. Romney carried Georgia in 2012 by 308,460, winning both Cobb and Gwinnett counties by wide margins. Georgia 2012- NYTimes.com (331,027 for Romney or 66,622 more votes than Obama's 264,405). Trump lost those 2 counties in 2020 by 132,005.
Project 2025 co-author Russell Vought talks Trump in secret video | CNN Politics Vought said that Trump's rejection of the Project 2025 proposals was just politics. Trump told him that he was very supportive and had given his blessing to Vought "drafting hundreds of executive orders, regulations, and memos that would lay the groundwork for rapid action on Trump’s plans if he wins"
Fact check: Trump falsely accuses Biden and Harris of lying about $35 insulin Trump floods the zone with false and misleading statements. It is easy to make those statements, but time consuming to prove their falsity using accurate information. For Trump, the bottom line is that nothing he says is worthy of belief. Trump has zero credibility or what I call negative credibility which occurs when a person makes so many false and misleading statements, measured in tens of thousands, that the only rational response is to assume that every statement is false or at best misleading unless you instantly know based on clear and convincing evidence that the statement happens to be true.
Trump is incapable of telling the truth about almost anything. Trump’s false or misleading claims total 30,573 over 4 years - The Washington Post
JD Vance Once Appeared on a Rape Advocate's; "Here’s JD Vance saying in 2021 that the Italians, Irish and Germans brought crime to the United States." / X Vance made this statement: "You had this massive wave of Italian, Irish and German immigration and that had its problems, its consequences. You had higher crime rates, you had these ethnic enclaves, you had inter-ethnic conflict in the country where you really hadn't had that before".
‘Egregiously wrong’: Daniel Dale fact-checks Trump’s claims - YouTube
PolitiFact | Trump: We are losing 300,000 per year to fentanyl coming across U.S. border-Rated at Pants on Fire (see U.S. Overdose Deaths Decrease in 2023, First Time Since 2018)
Trump won't stop making a deceptive bird claim. Experts debunk it. | Mashable
Nancy Mace: People who ask me to pronounce 'Kamala' correctly 'don't respect women' - Raw Story In a decision written by Justice Alito, the 6 Republican Justices sanctioned the republican state legislature in South Carolina moving 30,000 black voters out of Mace's congressional district into one that had already been drawn to include an overwhelming number of black voters. The Supreme Court rules in favor of South Carolina Republicans in voting map case-NPR; Court rules for South Carolina Republicans in dispute over congressional map - SCOTUSblog The lower court had found that the state legislature had bleached black voters from Mace's district.
JD Vance Agrees “the Postmenopausal Female” Exists to Raise Grandchildren | Vanity Fair Trump's party has a strong late 19th century vibe.
My congressman, Andy Ogles (R), similarly embellished his resume and recently had an FBI search warrant served on him. FBI agents execute search warrant on Tennessee Congressman Andy Ogles - YouTube; Andy Ogles Embellished Resumé, Much Like Republican George Santos - Business Insider Ogles represents the 5th Congressional District which used to be Nashville before the republican state legislature carved Nashville into 3 pieces and joining each piece with heavily Trumpified rural areas and small towns. Consequently, Nashville lost its moderate Democrat representative and each piece is now represented by a MAGA republican, none of whom even live in that major U.S. city. (My video: The Tennessee GOP has decided that Nashville will not be allowed to elect a Democrat to Congress - YouTube)
Michelle Obama: Trump DNC speech
++
Putin and His Orwellian State:
Losses ∙ Russia ∙ WarSpotting — documented material losses in Russo-Ukrainian war
Ukraine launches its biggest drone attack on Russian airfields - YouTube
A dual U.S.-Russian citizen, Ksenia Khavana, was sentenced 12 years for committing what Putin views as treason. Her treason was to contribute $51.8 to a Ukrainian non-profit while she resided in the U.S. US-Russian dual national jailed for 12 years on treason charges for $52 donation to Ukraine Charity- ABC News Russian barbarity knows no boundaries. This news need to be widely disseminated in every country where accurate information can be freely transmitted, which excludes the pure Orwellian Russian Federation.
Ukraine strike 'hits Russian vessel & missile launcher' in Crimea near Putin's beloved bridge - YouTube; Crimean Bridge SAM Systems Attacked by Ukraine -- Pantsir Possibly Destroyed - YouTube
Ukraine strikes ferry crossing in occupied Crimea and vessel in Russia - YouTube
Ukraine claims capture of 92 settlements in Russia's Kursk region - YouTube
Putin believed that he could decapitate Ukraine's democratically elected government within 3 days at minimal cost to Russia. Putin's war of choice, nothing more than an imperialistic land grab, has lasted for 2 1/2 years with no end in sight and has cost Russia dearly, both in terms of lives and treasure.
Putin has in effect severed economic ties with Europe and democracies worldwide that benefited Russia and its citizens
And, a significant portion of Russia's new military equipment has been destroyed and will need to be replaced later at great cost.
++++
1. CEFs That Pay Monthly Dividends:
Investment Strategy: Monthly Income Generation
A. Bought 100 NAD at $11.99 - Fidelity Account:
Quote: Nuveen Quality Municipal Income Fund Overview
Cost: $1,199
This is my first purchase of the municipal bond CEF.
Nuveen Quality Municipal Income Fund (SEC filed semiannual report for the period ending 4/30/24; leverage consists of adjustable rate preferred stock and is discussed at page 128)
Effective Leverage at 40.09% as of 7/31/24 according to the sponsor.
Annualized Leverage Cost: 4.1% as of 7/31/24 according to the sponsor
Sponsor's website: NAD - Nuveen Quality Municipal Income Fund
Effective Maturity: 19.26 years
Average Leverage Adjusted Effective Duration: 12.61 years
Credit Quality:
Dividend: Monthly at $.0755 per share ($.906 annually), last raised from $.0502 effective for the July 2024 payment.
Yield at $11.99: 7.556%
Last Ex Dividend: 8/15/24 (I bought on the ex dividend date)
Data Date of 8/15/24 Trade:
Closing Net Asset Value Per Share: $13.07
Closing Market Price: $11.99
Discount: -8.26%
Average 3 Year Discount: -9.99%
Sourced: NAD - CEF Connect
B. Pared AOD - Sold 13+ AOD at $8.84 - Fidelity Account:
Quote: abrdn Total Dynamic Dividend Fund Overview
I sold only shares purchased with dividends where the reinvestment price was at $8 or higher.
Proceeds: $116.97
Sponsor's website: abrdn Total Dynamic Dividend Fund, Inc.
Leveraged: Lightly at 5.69% according to CEF Connect.
SEC Filed Semiannual Report for the period ending 4/30/24 Leverage is discussed at page 30. Borrowings are at a spread to SOFR, so costs will come down when the FED cuts the FF rate.
abrdn Total Dynamic Dividend (AOD) Portfolio | Morningstar (lists top 25 holdings)
Profit Snapshot: $9.2
Last Buy Discussions: Item # 2.C. Bought 10 AOD at $7.81 (4/19/24 Post); Item # 2.A. Bought 5 AOD at $7.95 (2/2/24 Post); Item # 6.D. Added to AOD - Bought 10 at $7.92 (1/20/24 Post); Item # 3.B. Added to AOD - Bought 30 shares at $8.13 (12/30/23 Post); Item # 3.B. Added to AOD - Bought 5 at $7.4 (11/18/23 Post); Item # 3.A. Added to AOD - Bought 10 at $7.33 (10/14/23 Post)
New Average Cost per share this Account: $7.9 (218+ shares)
 |
| Snapshot Intraday on 8/15/24 after pare |
Dividend: Monthly at $.10 per share, last raised from $.0575 effective for the August 2024 payment.
AOD Stock Dividend History & Date
Yield at AC of $7.9: 15.19% (using the monthly rate of $.1)
Last Ex Dividend: 8/23/24
Data Date of 8/15/24 Trade:
Closing Net Asset Value per share: $9.87
Closing Market Price: $8.84
Discount: -10.44%
Average 3 year discount: -12.49%
Sourced: AOD - CEF Connect
C. Restarted ETW - Bought 100 at $8.29 - Fidelity Account:
Quote: Eaton Vance Tax-Managed Global Buy-Write Opportunities Fund Overview
Cost: $828.5
Investment Strategies and Objectives:
Eaton Vance Tax-Managed Global Buy-Write Opportunities Fund - SEC Filed 2023 Annual Report
Last Discussed: Item # 2. Sold 352+ ETW at $11.17 (3/27/13 Post)(profit snapshot = $753)
While I have not studied why this fund has declined in price since I sold these shares back in 2013, the decline is probably related, in part, to paying out more in dividends than the fund earns and the potential negative impacts on net asset value per share resulting from writing call options. Buy-Write Funds' High Yields Obscure Some Risks | etf.com
Dividend: Monthly at $.0664 per share ($.7968 annually), last raised from $.0582 effective for the April 2024 payment.
Yield at $8.29: 9.61%
Ex Dividend: 8/22/24 (owned as of)
Data Date of 8/16/24 Purchase:
Closing Net Asset value per share: $9.32
Closing Market Price: $8.3
Discount: -11.16%
Average 3 Year Discount: -5.89%
Sourced: ETW - CEF Connect
D. Started ETB in Schwab Account - Bought 10 at $14.04:
Quote Eaton Vance Tax-Managed Buy-Write Income Fund Overview
The fund's strategy consists of owning owning a portfolio of common stocks and selling covered S&P 500 call options on a continuous basis. The fund attempts to construct a stock portfolio whose performance exceeds that of the S&P 500 index.
Eaton Vance Tax-Managed Buy-Write Income Fund - SEC Filed Annual Report
SEC Filing - Holdings as of 3/31/24
Sponsor's website: Tax-Managed Buy-Write Income Fund (ETB)
Top 10 Holdings as of 6/30/24:
Dividend: Monthly at $.1058 per share ($1.2696 annually), last raised from $.0932 effective for the April 2024 payment.
Yield at $14.04: 9.04%
Ex Dividend: 8/22/24 (owned as of)
Data Date of 8/16/24 Trade:
Closing Net Asset value per share: $15.11
Closing Market Price: $14.05
Discount: -7.02%
Average 3 Year Discount: .02%
Sourced: ETB - CEF Connect
E. Fidelity Account - Current Positions in CEFs That Make Monthly Dividend Payments:
Learn - CEF Basics | Closed-End Funds
In my Fidelity account, the goal is to generate monthly $200 to $300 in dividends from CEFs that pay monthly dividends ($2,400 to $3,600 annually). I am currently barely over the minimum goal.
Some trading will occur to mitigate risk, broadly defined as selling the highest cost lots profitably, periodic profitable selling of shares purchased with dividends, and buying shares when the price declines below my average cost per share.
The monthly dividend rates shown below may move up or down over time. I am taking the current monthly dividend and annualizing it.
Two Research Sources for CEFs: CEF Connect and Closed-End Fund Association
Most of the funds listed below use leverage which has hurt the bond CEFs in the 2021 through 2023 time frame, as the cost of borrowings went up and the value of the bonds owned by the funds, including those bought with borrowed money, went down significantly in value.
Leverage works when the value of owned assets is increasing and the spread between the cost of borrowings and the yields on investments expands.
Symbol/Monthly Dividends in Dollars
AIO: $8.17
Virtus Artificial Intelligence & Technology Opportunities Fund Overview
AOD: $21.86 (using the last $.10 per share rate)
abrdn Total Dynamic Dividend Fund Overview
AVK: $2.03
Advent Convertible & Income Fund Overview
BHK: $7.1
BlackRock Core Bond Trust Overview
BSTZ: $6.42
BlackRock Science & Technology Term Trust Overview
BWG: $8.54
Brandywine GLOBAL Global Income Opportunities Fund Inc. Overview
DPG: $1.4
Duff & Phelps Utility & Infrastructure Fund Inc. Overview
ERC: $1.85
Allspring Multi-Sector Income Fund Overview
ETW: $6.64 (based on $.0664)
Eaton Vance Tax-Managed Global Buy-Write Opportunities Fund Overview
FAX: $4.23
abrdn Asia-Pacific Income Fund Inc. Overview
FPF: $15.37
First Trust Intermediate Duration Preferred & Income Fund Overview
FSCO: $3.3
FS Credit Opportunities Corp. Overview
GDV: $4.05
Gabelli Dividend & Income Trust Overview
GLQ: $7.46
Clough Global Equity Fund Overview
HFRO: $2.5
Highland Opportunities & Income Fund Overview
IDE: $5.08
Voya Infrastructure, Industrials & Materials Fund Overview
JQC: $5.04
Nuveen Credit Strategies Income Fund Overview
JRI: $4.01
Nuveen Real Asset Income & Growth Fund Overview
LGI: $5.23
Lazard Global Total Return & Income Fund Overview
MEGI: $10.94
MainStay CBRE Global Infrastructure Megatrends Term Fund Overview
MIN: $9.35
MFS Intermediate Income Trust Overview
MMT: $1.69
MFS Multimarket Income Trust Overview
NAD: $7.55
Nuveen Quality Municipal Income Fund Overview
NCZ: $6.38
Virtus Convertible & Income Fund II Overview
PPT: $20.68
Putnam Premier Income Trust Overview
THQ: $5.42
abrdn Healthcare Opportunities Fund Overview
WIW: $20.46
Western Asset Inflation-Linked Opportunities & Income Fund Overview
Total $202.75 per month ($2,433 annually)
I own several of these CEFs in other accounts where my positions may be significantly larger, but the number of CEFs owned are far less.
2. Restarted AX.UN:CA - Bought 100 at C$6.78:
Quote: AX-UN.TO - Canadian REIT
U.S. Pink Sheet Exchange (priced in USDs): Artis Real Estate Investment Trust (ARESF)
Cost: C$679 with C$1 Interactive Brokers commission.
Website: Artis REIT
Property List with JVs as of 6/30/24.pdf
Portfolio Summary as of 6/30/24:
Last Sell Discussion: Item #1 Eliminated AX.UN:CA - Sold 200 Units at C$13.02 (2/24/22 Post)(profit snapshot = C$156.5). I was critical of the new managers who sold industrial properties and bought shares of Canadian REITs that owned office properties. Artis Real Estate Investment Trust Closes the Sale of GTA Industrial Portfolio (7/16/21); Artis REIT Announces Participation in Investor Group to Acquire Cominar REIT in All-Cash Transaction (10/24/21); ARTIS REIT Announces 10% Ownership, Together with its Joint Actors, in Dream Office REIT (2/14/22). I thought this strategy was boneheaded which caused me to eliminate my position in February 2022.
2020 Change in Management: Back in November 2020, the Sandpiper Group managed to replace the existing Board and installed their guy as CEO. The purported expertise of the new leadership would lead to much better share price performance or so it was claimed at the time. Artis shareholders have known only pain after this change in leadership. The share price closed at C$11.36 on 11/29/20. Sandpiper succeeds in ousting Artis REIT CEO, trustees (11/30/20).
Dividend: Monthly at C$.05 per unit
I have some concerns about a dividend cut. The current management may not want to suffer the reputational damage from having to cut the dividend after a multi-year decline in the price.
Yield at C$6.79 total cost per unit: 8.84%, rounded up.
Next Ex Dividend: 8/30/24
Last Earnings Report (Q/E 6/30/24):
Revenues: C$84.729M
FFO per share: C$.27, up from C$.26
AFFO per share: C$.16, up from C$.15
The company claims a net asset value per unit of C$14.11. The current unit price expresses considerable skepticism of that claimed NAV per unit.
Total Debt to Gross Book Value: 49.8%
During the quarter, the company sold 3 office buildings, 6 retail properties, and a land parcel in Canada as well as 2 office properties in the U.S. for an aggregated sales price of C$234.2.
Repurchased 2.212M units at a weighted average cost of C$6.43. Assuming the net asset value per share is C$14.11, this would be a positive.
As previously discussed, Canadian REITs do not use GAAP accounting which results in a different net income to AFFO reconciliation. The main difference is that the Canadian REITs do have a non-cash depreciation expense to add back to net income, but instead add or subtract from net income adjustments for changes in the fair value of owned real estate. Q2-2024 Earnings Report at page 7.pdf
Other Sell Discussions for ARESF and AX:UN:CA:
Item # 3.A. Pared Artis REIT: Sold 200 AX-UN.CA at C$12.94 (3/8/17 Post)(profit snapshot = C$96.5); Item # 1 Sold 300 AX-UN:CA at C$15.71 (9/26/2014 Post)(profit snapshot = C$367); Item # 2. Sold 200 Artis Real Estate at C$14.09 (12/9/2011 Post); Item # 3 Sold 200 AX.UN:CA at C$13.88 (5/11/2011 Post)
Item # 1 Eliminated ARESF - Sold 280 at US$8.51 (12/25/2020 Post)(profit snapshot = US$77.08); Item # 3.C. Sold 100 ARESF at $10.4-Highest Cost Lot (7/19/17 Post)(profit snapshot = US$22.37); Item # 6.A. Sold 100 ARESF at $10.78(10/11/17 Post)(profit snapshot = US$109.48)
I sold 400 AX.UN:CA units in 2011 for a US$281.27 profit. Fidelity converted the CAD profit into USDs, so I am including those 2011 gains with the other ARESF sales below rather than in the AX.UN:CA column below:
 |
| 2011 ARESF 400 Shares +US$281.27 |
I am highlighting some sale prices to make an obvious point. This REIT has never been a buy and hold stock. The question now is whether the incompetent management, IMO, is fully factored into the C$6.78 price.
Realized Gains AX.UN:CA: +C$463.5
Realized Gains ARESF: +US$490.2
Current Preferred Stock Position: 150 shares of AX-PI.TO
 |
| Price as of 8/21/24 Close/Unrealized Gain at C$574 |
This is a reset equity preferred stock. The coupon reset for five years in May 2023 at 6.993% paid on a C$25 par value. My average cost per share is C$16.57 which creates a 10.55% yield. The coupon resets every five years, unless called on the reset date, at the greater of 6% or a 3.93% spread to the five year Canadian government bond.
Item # 1.A. Added 50 AXPRI:CA at C$16.4; 50 at C$15.8 Interactive Brokers Account (11/18/23 Post); Item # 2.A. Bought 50 AXIPRI: CA at C$17.45 (10/7/23 Post)
Prior Round Trip AXIPRI:CA: Item # 2.A. Sold 50 AXIPRI at C$25.13 (3/7/20 Post)(profit snapshot = C$104.5)-Item # 3.A. Bought 50 AXPRI at C$23 (12/16/18 Post)
3. Small Ball Buys:
A. Started SILA - Bought 10 at $22.40; 5 at $22.18:
Quote: Sila Realty Trust Inc. (SILA)
Cost: $334.89
References to SILA include its operating subsidiary.
SILA is a net lease REIT that owns healthcare facilities including Medical Outpatient Buildings, Inpatient Rehabilitation Facilities, and Surgical and Specialty Facilities
As of 6/30/24, SILA owned 137 properties with 5.3M rentable square feet with a weighted average lease term of 8.2 years. 10-Q for the Q/E 6/30/24
This REIT recently went public, but did not offer any newly issued shares. All share classes were converted to one class prior to the public listing.
Instead of offering new shares, the company conducted a Dutch Auction shortly after its public listing and bought 2,212,389 shares at $22.6. Sila Realty Trust, Inc. Announces Final Results of Modified “Dutch Auction” Tender Offer (7/24/24) The shares started to publicly trade on 6/13/24.
Management: Internal
Average Cost per share: $22.33 (15 shares)
Dividend: Monthly at $.1333 ($1.6 annually)
SILA Dividend History | Nasdaq
Yield at AC: 7.16%
Next Ex Dividend: 8/30/24
Last Earnings Report (Q/E 6/30/24):
AFFO: $30.8M
AFFO per share: $.54
Net Income to AFFO Reconciliation:
As noted in that press release, the company had two tenant bankruptcies prior to becoming a public company. The company appears to have dealt with most of the problems resulting from those defaults.
B. Started CVBF in Schwab Account - Duplicate Position: Bought 10 at $16.43:
Quote: CVB Financial Corp. (CVBF)
Cost: $164.27
CVBF Analyst Estimates | MarketWatch
Investment Category: Regional Bank Basket Strategy
Last Discussed: Item # 2.F. Bought 5 CVBF at $16.36 (6/28/24 Post) I discussed the 2024 first quarter report in that post. SEC Filed Earnings Press Release
Last Elimination: Item # 6.D. Eliminated CVBF - Sold 18+ at $19.14 (8/12/23 Post)(Profit Snapshot = $75.39)
Dividend: Quarterly at $.20 per share, last raised from $.19 effective for the 2022 4th quarter payment.
CVBF Dividend History | Nasdaq
Yield at $16.43: 4.87%
Last Ex Dividend: 7/11/24
Last Earnings Report (Q/E 6/30/24):
SEC Filed Earnings Press Release and SEC Filed Earnings Slide Presentation
Comparisons are to the 2023 second quarter.
E.P.S. $.36, down from $.4
Net Interest Margin: 3.05%, down from 3.22%
Efficiency Ratio: 45.1%, up from 40.86%
NPL Ratio: .29%, up from .07%
NPA Ratio: .16%, up from .04%
While the NPA and NPL moved higher compared to the 2023 second quarter, the percentages are still good.
Coverage Ratio: 323.23% (allowance for credit losses to nonperforming loans)
Charge offs: $31,000
Tangible Book Value per share: $9.55, up from $8.74
Total Risk Based Capital Ratio: 16.1%, up from 14.9% (minimum required for capital conservation buffer = 10.5%
Owned Investment Securities:
 |
| Average interest rates |
10-Q at pages 7 and 45 . I have previously given this bank a D+ on interest rate management and see no reason to change that rating. The unrealized loss number for mortgage backed securities will decline provided interest rates continue to decline.
Realized Gains in CVBF to Date: $270.59
Largest Annual Gain: $129.6, Item # 4.A. Eliminated CVBF - Sold 10 at $25.7; 5 at $25.66 (12/27/2022 Post)
C. Started STEW in Schwab Account - Duplicate Position: Bought 10 at $15.13:
Quote: SRH Total Return Fund Inc. (STEW)
The fund formerly traded under the BIF symbol when it was called Boulder Growth and Income.
Cost: $151.25
Sponsor's website: SRH Total Return Fund - Home
SEC Filing - Holdings as of 2/29/24 (note very large position in Berkshire Hathaway)
SEC Filed Annual Report for the period ending 11/30/23
I own 120+ shares in my Vanguard taxable account with a $10.75 average cost per share. Most of the shares owned in that account were acquired in 2020: Item # 2.A Bought 100 BIF in Vanguard Taxable Account at $10.08; 10 at $9.95 (11/7/2020) I previously sold 10 of the shares bought at $10.08. Item # 1.E Pared BIF in Vanguard Account - Sold 10 at $11.08 (1/9/2021 Post)(profit snapshot =$10)
Dividend: Quarterly at $.1375 per share ($.55 annually)
STEW Dividend History | Nasdaq
Next Ex Dividend: 10/24/24
Data Date of 8/14/24 Trade:
Closing Net Asset value per share: $19.65
Closing Market Price: $15.13
Discount: -21.57%
Average 3 year discount: -18.13%
Sourced: STEW-CEF Connect
Last Discussed: Item # 2.B. Added to STEW in Vanguard Taxable Account - Bought 10 at $14.55 (7/12/24 Post) This purchased raised my AC per share in that account to $10.75 from $10.33.
I have nothing to add to this recent discussion. I am simply looking for yield alternatives to treasury bills in this account.
Last Sell Discussion: Item #3.F. Eliminated Duplicate Position in STEW (Fidelity Account) - Sold 20 at $12.64 (2/27/23 Post)(profit snapshot = $72.96)
STEW (and BIF, prior symbol) Realized Gains to Date: $633.23
Realized Gains Over $100 to date:
D. Started CVE in Schwab Account - Bought 10 at $19.7 and 5 at $18.84:
Quotes:
Cost: $196.95
CVE SEC Filings (foreign issuer forms)
CVE Analyst Estimates in USDs - MarketWatch
Last Buy Discussion: Item # 2.K. Bought 10 CVE at $6.93 (3/6/21 Post)
Dividends: Quarterly at C$.18 per share, last raised from C$.14 effective for the 2024 second quarter payment. The company also paid a variable dividend of $.135 per share in the second quarter.
The dividend to owners of the USD priced shares will depend on the CAD/USD exchange rate. When the shares are owned in a U.S. citizens taxable account, Canada will withhold a 15% tax. Currently, Canada does not levy a tax on dividends paid by regular corporations (non-pass through entities) into a U.S. citizens retirement account.
I do not view the current dividend rate as justifying a purchase as a "bond substitute".
Next Ex Dividend: 9/13/24
Last Earnings Report (Q/E 6/30/24): Cenovus announces second quarter 2024 results and SEC Filed Management Discussion
All amounts are in Canadian Dollars:
Net Earnings: $1B
Earnings per share: $.53
Free Funds Flow: $1.206B
Excess Free Funds Flow: $735M
Long and Short Term Debt: $7.275B, down from $8.534B in the 2023 second quarter.
"In the second quarter, the company returned approximately $1.0 billion to common shareholders. This was composed of $440 million through its normal course issuer bid, $334 million through base dividends and $251 million of variable dividends paid."
Analyst Report (available to Schwab Customers: I only have access to 1 analyst report.
S&P (8/13/24): 4 stars with a 12 month price target of US$23. The analyst claims that CVE's Foster Creek and Christina Lake projects have "the lowest break-even costs among oil sands producers".
E. Added 1 OGN at $20.08:
Quote: Organon & Co. (OGN)
Cost: $20.08
Last Discussed: Item # 1.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 (10/7/23 Post)
I continued to buy 1 share lots after that post:
Last Sell Discussion: Item # 5.A. Eliminated OGN in Vanguard Taxable Account - Sold 12 at $30.67 (1/23/23 Post)(profit snapshot = $38.47)
OGN Key Metrics Page at Reuters
OGN is a global pharmaceutical company. Two of the most important products are NEXPLANON®, a birth control implant that can prevent pregnancy for up to 3 years, and the fertility drug FOLLISTIM® AQ. The company also has a number of established generic brands that it inherited as part of its separation from Merck and several biosimilars. I believe that the patent protection for Follistim expired this month. The U.S. patent protection for Nexplanon expires in 2027. Those are both negative factors.
2023 Annual Report (The risk factor summary starts at page 16 and ends at page 33)
I have several concerns about OGN that has kept me extremely cautious:
(1) The company has too much debt
 |
| 10-Q at page 14 |
(2) Until recently, year-over-year revenues were declining;
(3) The uncertainty created by product liability suits, see pages 92-93 of the 2023 Annual Report;
(4) Most of the revenue is generated in foreign countries that exposes OGN to currency and country risks;
(5) Many of the drugs have no patent protection and the most important drug in terms of revenues, Nexplanon, has limited in time U.S. patent protection. Generic Nexplanon Availability - Drugs.com
Revenues by Product:
 |
| 10-Q at page 11 |
The excessive debt burden resulted from the separation of OGN out of Merck. As part of that process, Merck borrowed $9B, kept the money and OGN assumed the debt as part of the spinout process. Page 9, and see page 25 SEC Filing; Merck Announces Completion of Organon & Co. Spinoff (6/3/21).
The positives from my perspective is some dividend support and a low P/E using adjusted E.P.S. Using the current average E.P.S. estimate for 2025, which is $4.59, the P/E at $20.08 is 4.37. That P/E reflects the concerns that I outlined above.
Average cost per share: $21.95 (80+ shares)
Dividend: Quarterly at $.28 per share ($1.12 annually)
Given the debt load and other issues described above, I view it as more likely that the dividend will be cut than raised.
Yield at AC per share: 5.11%
Last Ex Dividend: 8/16/24
Last Earnings Report (Q/E 6/30/24):
Revenues: $1.607B
Diluted E.P.S. = $.75, down from $.95 in the 2023 second quarter.
Adjusted E.P.S. = $1.12, down from $1.31 in the 2023 2nd Q.
Reconciliation of GAAP to Non-GAAP:
4. Treasury Bill Purchases:
A. Bought 5 Treasury Bills at the 8/19/24 Auction:
%2011:21:24.png){kind=small}
91 Day Bills
Mature on 11/21/24
Interest: $63.89
Investment Rate: 5.192%
B. Bought 2 Treasury Bills at the 8/19/24 Auction:
%202:20:25%20.png)
182 Day Bills
Mature on 2/20/25
Interest: $48.23
Investment Rate: 4.956%
C. Bought 5 Treasury Bills at the 8/21/24 Auction:
119 Day Bills
Mature on 12/24/24
Interest: $81.32
Investment Rate: 5.071%
5. Small Ball Sells:
A. Pared SPTN - Sold 5 at $20.84 - Schwab Account:
Quote: SpartanNash Co. (SPTN)
Proceeds: $104.2
I sold my highest cost 5 shares using FIFO accounting.
SPTN owns 147 grocery stores and operates a food wholesale business that includes sales to "independent and chain grocers, national retail brands, e-commerce platforms, and U.S. military commissaries and exchanges."
SPTN Analyst Estimates | MarketWatch
Profit Snapshot: $.60
New Average cost per share: $18.57
 |
| Snapshot Intraday on 8/15/24 after pare |
The AC was reduced from $19 by selling this 5 share lot.
Last Buy Discussions: Item # 2.G. Added to SPLN - Bought 5 at $18.06 (7/5/24 Post); Item # 2.E. Added to SPTN - Bought 5 at $18.46 (6/20/24 Post)
Dividend: Quarterly at $.2175 per share ($.87 annually), last raised from $.215 effective for the 2023 4th quarter payment. In 2014, the quarterly dividend was at $.12.
SPTN Dividend History | Nasdaq
Yield at $18.57: 4.685%
Last Ex Dividend: 6/14/24
Last Earnings Report (F/Q Ending 7/13/24): This was for the second fiscal quarter. Investors responded more favorably to this report that I did.
Comparisons are to the 2023 fiscal quarter ending 7/16/23
"Net sales decreased 3.5% to $2.23 billion, driven by lower volumes in both the Wholesale and Retail segments."
Diluted E.P.S. = $.34, down from $.56
Adjusted E.P.S. = $.59, down from $.65
GAAP to Adjusted Earnings Reconciliation for F/Q 7/13/24:
GAAP to Adjusted Earnings for First Two 2024 Fiscal quarters-Adjusted E.P.S. of $1.12, down from $1.29
Guidance for Fiscal 2024 Adjusted E.P.S. = $1.85 to $2.10, down from the fiscal 2023 actual of $2.18.
Last Elimination: Item # 2.F. Eliminated SPTN - Sold 15 at $29.01 in Fidelity Account; 20 at $31.05 in Vanguard Account; 10 at $30.64 in Schwab Account (3/23/22 Post)(profit snapshot = $421.49)
B. Eliminated Duplicate Position in TRP - Sold 10 at $44.28 (Vanguard Taxable Account):
Quotes:
USDs: TC Energy Corp. (TRP)
CADs: TC Energy Corp. (Canada: Toronto)
Canadian Dollar to US Dollar Exchange Rates Chart | Xe
Proceeds: $442.74
TRP Analyst Estimates | MarketWatch
TRP SEC Filings (foreign company SEC Forms)
Profit Snapshot: $26.29
Last Discussed: Item # 3.A. Added to TRP - Bought 2 at $37.29; 1 at $36.35; 1 at $36.15; 1 at $33.6 (7/29/23 Post)
Dividend: Quarterly at C$.96 per share (C$3.84 annually), last raised from C$.93 effective for the 2024 first quarter.
TC Energy — Dividend Information
Dividend History: Good
Next Ex Dividend: 9/27/24
Last 4 Dividends in USDs (through 2nd Q.): US$2.8 per share
TC Energy Corporation (TRP) Stock Dividend History & Date
Recent News:
TC Energy completes the sale of Portland Natural Gas Transmission System (pre-tax proceeds at US$545M)
TC Energy announces Canada’s largest Indigenous equity ownership agreement (7/30/24)
TC Energy shareholders approve spinoff of South Bow -TRP's Liquid Pipelines (6/4/24)(.2 shares of South Bow for each TRP share), see Southbow Operations website.
Last Earnings Report (Q/E 6/30/24): SEC Filing
TRP remaining taxable account position (Fidelity): 38 with an average cost per share of $41.29. Ten of those shares were bought at $49.78 and will be sold when I can profitably do so. I am in no hurry given the dividend yield. When that lot is sold, my average cost per share will be reduced to $38.26.
TRP Reset Equity Preferred Stocks: I own 250 TRP.PRD:CA and 250 TRP.PRE:CA.
 |
| Prices as of 8/21/24 Close/Unrealized Gain = C$2,423 |
On 4/1/2/4, TRP.PRD reset its coupon for five years at 5.945% paid on a C$25 par value. TC Energy provides conversion right and dividend rate notice for Series 7 and 8 preferred shares My average cost per share is C$15.05. The current yield at that cost is 9.88% .Item # 5.A. Added 50 TRPPRD:CA at C$14.9 (9/30/23 Post); Item # 4.A. Added 100 TRPPRD at C$15.59 (7/1/23 Post); 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)
TRP.PRE resets its coupon for five years in a few weeks at a 2.35% spread to the five year Canadian bond yield. Item #5.A. Bought 100 TRPPRE at C$15 and 50 at C$11.12 (3/20/20 Post); Item # 2 Bought 100 TRPPRE at C$15.6 (9/29/20 Post) The reset date is 30 days prior to the first day of the subsequent five year period which is 10/30/24. Canada 5 Year Government Bond Overview | MarketWatch
Last Sold: Item # 2.A. Sold 100 TRPPRE at C$22.26 (5/23/17 Post)(profit snapshot = C$467.5)
My video: Canadian Reset Equity Preferred Stocks - YouTube
C. Eliminated Duplicate Position in LGND - Sold 2 at $103.69 (Schwab Account):
Quote: Ligand Pharmaceuticals Inc. (LGND)
Proceeds: $207.37
LGND Analyst Estimates | MarketWatch
Website: Ligand Pharmaceuticals - Biopharma's Technology and Capital Partner
Royalty Portfolio - Ligand Pharmaceuticals (contains general information about the royalty rates payable to LGND)
Royalty Portfolio - Ligand Pharmaceuticals One of these products is VK2809, licensed to Viking Therapeutics, which has shown promise so far in clinical trials as a NASH treatment.
Profit Snapshot: $31.19
Last Buy Discussion: Item #1.B. Added to LGND - Bought $30 at $77.22; 1 at $76; 1 at $75; 1 at $73; 1 at $71.8 (3/8/24 Post) This was a detailed discussion. I will not be repeating any of the information discussed therein here.
Recent Developments:
Ligand to Acquire APEIRON Biologics AG for $100 Million (7/8/24);
Ligand and Agenus Enter Into $100 Million Royalty Financing Agreement (5/7/24)
Ligand Announces Launch of Pelthos Therapeutics to Accelerate Commercialization of ZELSUVMI™ (4/3/24)
Dividend: None and none expected.
Last Earnings Report (Q/E 6/30/24):
This was a messy quarter.
GAAP Net Loss of $51.9M or $2.88
"Total revenues and other income for the second quarter of 2024 were $41.5 million, compared with $26.4 million for the same period in 2023 with the increase primarily due to an increase in royalty revenue and milestone payments earned upon the approval of several key programs. Royalties for the second quarter of 2024 were $23.2 million, compared with $20.9 million for the same period in 2023, with the increase primarily attributable to an increase in sales of Travere Therapeutics’ (Nasdaq:TVTX) FILSPARI™ and Amgen's (Nasdaq:AMGN) KYPROLIS®. Captisol® sales were $7.5 million for the second quarter of 2024, compared with $5.2 million for the same period in 2023, with the change due to the timing of customer orders. Contract revenue and other income was $10.9 million for the second quarter of 2024, compared with $0.2 million for the same period in 2023, with the increase driven by the $5.8 million milestone payment earned upon FDA approval of Ohtuvayre, the $2.0 million milestone payment earned upon FDA approval of CAPVAXIVE, and the $2.3 million milestone payment earned upon the conditional marketing approval of FILSPARI by the European Commission."
Part of the GAAP loss, $13.8M, was a decrease in value of Viking Therapeutics (VKTX) still owned by LGND. As of 6/30/24, LGND owned 1M VKTX shares. This investment has generated considerable realized gains for LGND as previously discussed.
There was also a $33.8M decreased in the estimated value of LGND's investment in the private company Primrose Bio. The change in value was due to another firm investing in Primrose at a price less than the carrying value that LGND previously assigned to that investment.
Another GAAP charge was for the royalty investment that LGND had made in the drug soticlestat that failed in a later stage 3 clinical trial. I discussed in a comment the failure of this drug and opined that LGND would lose all or most of its investment in the royalty stream that it purchased. I am not willing to remove this loss from GAAP, viewing it as part of LGND's operations that involve in part purchasing royalty streams owed to third party drug companies (see footnote 4 in the snapshot below).
Overall, a mixed bag of positive and negative developments.
Non-GAAP E.P.S. = $1.4, up from $.66
Reconciliation of GAAP to Non-GAAP:
Remaining LGND Position: 7+ shares in my Fidelity account with an average cost per share at $73.39. I profitably sold a fractional share in that account which slightly reduced my average cost per share.
6. Canadian Reset Equity Preferred Stocks:
A. Eliminated ALAPRA:CA - Sold 50 at C$19.16 (C$1 commission - Interactive Brokers Account):
Quote: ALA-PA.TO
Issuer: AltaGas Ltd. (Canada: Toronto)
Proceeds: C$957 after C$1 Commission.
Investment Category: Canadian Reset Equity Preferred Stock/CAD Income Strategy
Profit Snapshot: +C$203
Last Discussed: Item # 4.A. Bought 50 ALAPRA:CA at $15.06 (11/30/19 Post)
Description: Equity Preferred Stock (senior only to common stock in the capital structure)
Par Value: C$25
Coupon: 2.66% spread over the 5 year Canadian bond, resetting every five years.
Last Reset: September 2020 at 3.06%, which was at a 2.66% spread to the five year Canadian bond yield on 8/31/2020. AltaGas Ltd. Provides Notice of Series A and Series B Preferred Shares Conversion Rights and Dividend Rates | AltaGas
The yield at C$15.06 is currently at 5.08% using the 3.06% coupon.
I am currently anticipating that the 5 year Canadian bond yield reached a peak last September near 4.5% and would not anticipate much, if any, rebound from the 8/16/24 closing yield of 2.98% by the next reset date. Canada 5 Year Government Bond Overview | MarketWatch
The yield would likely remain unattractive at a 2.66% spread when the coupon resets in September 2025, though at a higher coupon than the last reset.
The problem is not so much a reset at 5.5% or so for five years starting in September 2025, when the 5 year Canadian bond yield is at say 3%, but the negative impact on the price after the reset when and if interest rates spike higher shortly after the reset and remain high for most the the 9/2025 to 9/2030 reset period. And that problem would be worse if the 5 year yield continued to decline as it has over the past year.
Another consideration is there is no reason to keep this preferred stock with its low current coupon as opposed to harvesting the profit now. If it was likely that the coupon would reset at higher than 7%, I would probably have kept this preferred stock given the yield at my constant cost basis.
I am more inclined to keep or add to other Canadian resets that have recently reset their coupons when the 5 year Canadian bond yield was higher than now.
7. Tennessee Municipal Bonds -Fidelity Account:
On the day of the two purchases discussed below ($10,000 in principal amount), I received the proceeds from 3 corporate bonds in this account, two of which were were redeemed early by the issuers.
For the time being, I have decided to buy Tennessee municipal bonds maturing in 2028 through 2030, whose coupons are 3% or higher and can be purchased at less than par value.
This kicks the can down the road for about 4 to 6 years, unless the issuer elects to call the bonds early. Maybe I will not have to make another decision about reallocating what is being devoted to these purchases until they mature.
When buying municipal bonds in my Fidelity account at a discount to par value, I will receive this message:
A. Bought 5 West Knox County Utility District 3% Bonds Maturing on 6/1/2028 at a Total Cost of 99.27:
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This is a revenue bond secured by the Utility District's water and sewer revenues.
Emma Page
Credit Rating: AA+ by S&P
YTM at Total Cost: 3.206%
Interest Payments: Federally Tax Free
Optional Call: On or after 6/1/24 at par value + accrued and unpaid interest
B. Bought 5 Sevierville, TN. 3.25% GO Bonds Maturing on 6/1/2030 at a Total Cost of 99.58:
Emma Page
Credit Rating: Aa3 by Moody's
YTM at Total Cost: 3.33%
Interest: Federally Tax Free
Optional Call: On or after 6/1/23 at par value + accrued and unpaid interest.
On an annual basis, the issuers of municipal bonds in Tennessee are required to file an annual disclosure statement.
Sevierville filed its last annual report for the period ending 6/30/23. I will check these documents periodically to see whether the city is generating more revenue than its expenses including debt service payments.
I copied Sevierville's operating statistics from its 2023 F/Y report which shows an operating cash surplus:
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.
Powell says the "time has come" for lower rates. This is hardly a news flash but has been treated as one by the Stock Jocks so far today.
ReplyDeleteAs I noted in this post, interest rates have been moving down for several weeks in anticipation of the Fed starting a rate cutting cycle and to a lowering of future inflation expectations.
The breakeven inflation rate for the 10 year TIP had already fallen before Powell's speech today to a slither above 2% (viewed as the market's prediction of the average annual CPI over the next 10 years).
The 10 year treasury yield closed at a 4.7% yield on 4/25/24 and is now trading near a 3.8% yield.
I have seen over the past several months a significant decline in investment grade corporate bond YTMs.
So a lot of the yield decline has already occurred and consequently repositioning needed to happen for the most part prior to today.
MM fund will adjust down quickly to reflect a lower federal funds rate.
I will be participating in 3, 4 and 6 month treasury bill auctions next week. The $5K allocated to the 6 month T Bill has more to do with moving the tax recognition of interest income into 2025 than what can be expected from the investment rate which is currently down 4 basis points to 4.87%.
https://www.marketwatch.com/investing/bond/tmubmusd06m?countrycode=bx
Seems like I missed the better timing unfortunately. It's been difficult to focus with life distractions, which is one reason that a good advisor can be helpful.... (good being the operative word.)
DeleteStill even the current lower rates will probably be a little better than where rates will settle long term.
Discover bank is offering CDs:
5.10%APY
9-month term
4.60%APY
12-month term
4.25%APY
18-month term
4.00%APY
24-month term
Land: CD rates have come down significantly before the FED has done anything. That has led to some better performance in regional bank stocks starting in mid-June, as investors forecast better net interest margins.
DeleteKRE closed at $45.79 on 6/17/29 and is currently trading near $57.6:
https://finance.yahoo.com/quote/KRE/history/
I will buy only brokered CDs since I do not want to open a new account to secure a slightly higher yield. The rates offered by Discover that you list are close to what Fidelity is now offering in non-callable CDs. The highest rate for a callable 1 year CD is 4.65%, callable monthly starting in February 25. The highest non-callable CD rate is 4.3% offered by Beal Bank.
CD rates are generally lower now than comparable maturity treasuries. The 1 year treasury bill is currently at 4.39%.
https://www.marketwatch.com/investing/bond/tmubmusd01y?countrycode=bx
If the CD interest is taxable by a state, the after tax differential would be greater. The next 52 week T Bill auction is on Tuesday 9/3/24.
I have altered slightly my willingness to accept 5% to 5.25% YTMs on investment grade corporate bonds maturing in 8 to 15 months but have only been able to find 2 that were in that range which I will discuss in my next post. Almost all have YTMs lower than 5%, mostly now in the 4.5% to 4.9% range
Thanks for all the info!
DeleteThe CME FedWatch Tool has the odds of a 75 basis point cut in the FF range on or before the December meeting at 100%.
ReplyDeletehttps://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
For that to occur, there would need to be a continued downtrend in inflation plus more worrisome signs in the labor market (e.g. a continued rise in the unemployment and U-6 rates, slow to negative job growth, an hourly decline in the average work week, no matter how slight).
An August jobs report that is worse than the one from July, which was bad, might cause a 50 basis point cut in September. The odds of that happening is rated at about 25% in the CME FedWatch tool.
Based on what is known now, the forecast for rate cuts embedded in the 6 month treasury yield is somewhat more reasonable than that 75 basis point prediction. I interpret the current 6 month T Bill yield as forecasting a 25 basis point cut on 9/18 and another 25 basis point cut at the FED's mid-December meeting, possibly at the November meeting which occurs shortly after the election, or no more than a 50 basis point cut by year end from the current range of 5.25% to 5.5%.
Looks like my thought that there wouldn't be a rate cut this year wasn't accurate. But I still hold out for conservative, slow sequence of cuts. FED will not want to cut then have to raise again to prevent a recession.
DeleteI meant raise again to prevent a heating up.
DeleteThe 3.19% rise in IWM yesterday indicates that there will be some broadening of breath especially into small caps as rates come down.
ReplyDeleteOf my stocks, about 50% are in small caps. I want to adjust out but first I'll see how far this rally runs.
LMT has gained a lot recently with global war risks. Thinking whether to sell a little to lock in the gains. Currently $557.43.
ReplyDeleteI have evidence that the housing market resale has slowed down.
ReplyDeleteI offered very nice collection of moving boxes on freecycle. In the past they were very popular. This time only 2 responses, and only 1 showed up. There aren't people beating down the door for moving.
Of course there may be different reasons. I was surprised though.
The stock rally today is due to the better than expected 2nd quarter GDP report released before the opening.
ReplyDeleteReal GDP growth was revised to +3% from 2.8% in the first estimate. More importantly, the increase in personal consumption expenditures was revised to +2.9% from +2.3% in the prior estimate.
There is some contradictory evidence about consumer spending. Dollar General, a retailer that caters mostly to lower and middle income households, issued a warning based on "financially constrained" consumers.
Dollar General Corp. (DG)
$86.86 -$37.02 -29.89%
Last Updated: Aug 29, 2024 at 1:36 p.m. EDT
https://www.marketwatch.com/investing/stock/dg?mod=search_symbol
I don't shop at Dollar General, I do shop a lot at Dollar Tree. I find DG unappealing and filled with overpriced stuff I can buy at Target and Walmart. So I wonder if they're troubles are their own? Though a 10% decline in year over year is a whole lot.
DeleteLooking it up, DT is also running into trouble.
https://www.cbsnews.com/news/dollar-tree-store-closings-2024/
Land: I have never been in a Dollar Tree, Family Dollar or Dollar General store.
DeleteThe origins of Dollar Tree's reported GAAP loss for its 4th fiscal quarter ending on 2/3/24 were charges related to its ownership of Family Dollar.
The loss included "a $594.4 Million Charge for Portfolio Optimization Review, a $1.07 Billion Goodwill Impairment Charge, and a $950 Million Trade Name Intangible Asset Impairment Charge."
The "Portfolio Optimization Review Identifies Approximately 600 Family Dollar Stores for Closure in First Half of Fiscal 2024 and Approximately 370 Additional Stores as Their Leases Expire."
https://www.sec.gov/Archives/edgar/data/935703/000093570324000007/ex991q4-23earningspressrel.htm
The closure of so many Family Dollar stores is a positive for Dollar General.
The 32% decline in DG's stock price when it reported disappointing earnings and lowered guidance was sufficient for me to buy 1 share and I may add another today.
I will be discussing my take on its problems in my next post. To briefly summarize, competition from lower priced retailers has been present for a long time.
DG's earnings trend has returned to where it was going before the pandemic, problematic inflation and the three rounds of stimulus payments that disproportionately helped DG's lower income customer base.
E.P.S. went over $10 per year in the fiscal years ending in late January or early February in 2021, 2022, and 2023, up from $5.63, $5.97 and and $6.64 for the fiscal years ending on 2/2/18, 2/1/19, and 1/31/20 respectively.
When the stimulus payments ended and prices for products had already gone up substantially due to problematic inflation, E.P.S. declined to $7.55 for the F/Y ending 2/2/24.
I have published a new post:
ReplyDeletehttps://tennesseeindependent.blogspot.com/2024/08/arc-ben-eprt-fts-glq-htbk-htia-lkq-mdt.html
Dollar tree shopping is fun :).
ReplyDeleteThat's very interesting that pre COVID stimulus and return to it can be identified. I haven't been tempted to buy. But with that much decline, it probably is time. If there's a recession, they'll benefit. If there's not a recession, it won't hurt them.
_____
Today was quite a day. It appears to be mostly the September effect or anxiety over the feds next moves versus recession.
This article describes that 51% of the time, September has been positive in the past. A lot of other statistics in the article.
https://finance.yahoo.com/news/september-worst-month-stocks-sell-185419301.html
Land: The downturn yesterday was partially a valuation reset in stocks like NVDA that dominate the S&P 500 and increased anxiety about the next jobs report that will be released on Friday.
DeleteIf that report is bad, and the FED responds with a 50 basis point cut, that will likely increase the fear of a recession and its negative impact on earnings, resulting in a fairly quick correction.
My gut tells me that there is more room to move on the downside now than the upside. The risks are unfavorably balanced for stocks IMO.
My stock portfolio, weighted near 10% of my total portfolio and mostly in bond like common stocks, was barely impacted by yesterday's decline, and the bond allocation brought me closer to positive territory for the day.
My idea of fun shopping is to spend less than 30 seconds on Amazon finding something I need soon (like paper towels which I bought Monday) and then picking up the package from my front porch the next day.
Yep, if you don't care for walking through a store then Dollar Tree isn't for you. (Also some of them are better maintained than others and it really matters.)
DeleteA recession would be helpful - for me to reposition and get more $ into the market.