tag:blogger.com,1999:blog-2986124651030959736.post6449296946663043886..comments2024-03-28T09:42:38.695-05:00Comments on Stocks, Bonds & Politics: TIP Trading in the Secondary MarketTENNINDEPENDENThttp://www.blogger.com/profile/17444227958539559639noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-2986124651030959736.post-64544650297060842502017-01-26T07:16:40.133-06:002017-01-26T07:16:40.133-06:00Sam: The TPP did not include China. The member sta...Sam: The TPP did not include China. The member states are: Japan - the only country to have already ratified the pact - Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru. The goal was to deepen economic ties among those nations by slashing tariffs to foster trade. The TPP agreement, which was signed in February 2016 and never ratified by the U.S. Senate, was designed to eventually create a single market similar to the EU. <br /><br />The geopolitical justification was to contain China in the region and to increase U.S. influence. The 12 countries currently have a population close to 800 million and generate about 40% of world trade. <br /><br />With the U.S. now out of the game, China can now take the lead in forming a trade alliance and increase its growing influence in the region. <br /><br />Tariffs will increase the cost of imported goods and will consequently increase inflation unless offset by a rise in the USD which is already too strong for U.S. multinationals. <br /><br />If the GOP implements a Border Tax, It is possible that the U.S.D. will rise in value which will hurt multinational GAAP profits. <br /><br />Unless the USD rises to cover the increased cost caused by the tariff, then the increased cost adds to U.S. inflation.<br /><br /><br />The proponents and economists argue that the USD would increase in value enough to offset the increased cost caused by the tariffs, but I regard that as fantasy and there would be serious adverse ramifications for the USD to rise that much in any case. Besides the impact on multinational profits, this article written by economists discuss the adverse impact on the U.S. net foreign assets: <br /><br />https://www.project-syndicate.org/commentary/trump-tax-plan-hurts-competitiveness-by-emmanuel-farhi-et-al-2017-01<br /><br /><br />The border tax proposal is in effect a tax on imported goods. <br /><br />It will negatively impact U.S. corporations that import products (e.g. retail stores, technology companies), while providing an incentive for companies to source production from the U.S. <br /><br /> "How a controversial GOP plan could boost the taxes on a sweater from $1.75 to $17"<br /><br />http://www.cnbc.com/2016/12/20/how-a-controversial-gop-plan-could-boost-the-taxes-on-a-sweater-from-175-to-17.html<br /><br />If the GOP's tariff proposals adds to inflationary pressures that are already building in the U.S. economy, then the potential adverse impacts would increase for investors since neither the bond nor the stock market likes problematic inflation numbers. And, the FED would be forced to raise interest rates faster and higher than the market currently anticipates. TENNINDEPENDENThttps://www.blogger.com/profile/17444227958539559639noreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-16909826996626256172017-01-26T04:26:12.312-06:002017-01-26T04:26:12.312-06:00hi Southgent,
I read with interest your take on t...hi Southgent,<br /><br />I read with interest your take on trade wars that are possible between countries. I wondered if you could explain to me if there are tariffs on imported goods and say the US versus China. Does that impact products that are actually made and sold in foreign countries.<br /><br />Many of these multinational corporations, I believe, like Coca-Cola actually make and sell their products locally. So do multinational corporations have some advantage over importers?<br /><br />Also, I had a question about the United States versus China. I read some articles on China wishing to expand its naval presence even so far as to the Middle East. I wondered what you thought of the quashing of the TPP in terms of the United States being able to deal with China?<br /><br />Thanks, SamAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-28515278617428249812017-01-25T08:11:28.299-06:002017-01-25T08:11:28.299-06:00Y: I viewed the €3 per share dividend paid last ye...Y: I viewed the €3 per share dividend paid last year as consisting of a €2 special dividend per share and the regular €1 per share. Bloomberg, Fidelity and other sites will exclude the special dividend when calculating yield. <br /><br />Vivendi had accumulated a large cash balance and the Board decided to return capital to shareholders through that special dividend and share repurchases. <br /><br />Vivendi had a net cash position of €6.4B as of 12/31/15 and that had been reduced to €2.1B as of 6/30/16. The dividend payments aggregated $2.6B over a 6 month period and another €1.6B was used to repurchase shares. <br /><br />Pages 2 and 3: <br />http://www.vivendi.com/wp-content/uploads/2016/08/20160825_VIV_PR_Vivendi-H1-2016-earnings-.pdf<br /><br />Part of the cash was generated by selling its remaining interest in Activision Blizzard for a €576M profit before taxes in January 2016. <br /><br />Vivendi has a video game business: <br /><br />http://www.vivendi.com/activities/video-games/<br /><br />As to ROC, I do not know. Some foreign countries do not take a dividend paid out of what is called capital surplus. For example, I bought shares in Zurich Financial in early 2012 and its generous dividend has been paid out of capital surplus through 2016. Switzerland did not withhold 15% since the payments were classified as ROC that reduced by cost basis. <br /><br /><br />TENNINDEPENDENThttps://www.blogger.com/profile/17444227958539559639noreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-13381773778107400122017-01-24T23:23:23.330-06:002017-01-24T23:23:23.330-06:00South Gent,
Re. VIVHY I started a small position ...South Gent,<br /><br />Re. VIVHY I started a small position in 2015 and added some more in 2016. I was thinking about adding some more. I am glad that you have provided the link to the company's site on dividend history. It is tricky to calculate its real dividend rate. Yahoo Finance has it as 11.92% while Fidelity has it as 5.85% (as of 1/24). What about Return of Capital (ROC)?<br /><br />"....an ordinary dividend of €3 per share be paid with respect to 2015, representing a total of €4.0 billion distributed to shareholders and comprising a €0.20 distribution related to the Group’s business performance and a €2.80 return to shareholders...."Y2000https://www.blogger.com/profile/07490088548749061927noreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-80276631276529675542017-01-24T09:30:44.688-06:002017-01-24T09:30:44.688-06:00SAM: I would agree that banks have run up too much...SAM: I would agree that banks have run up too much in price over a short period. I would disagree with his assertions about the net impact of rising rates on bank earnings. It is not a one way street for banks when the yield curve rises or declines.<br /><br />An increase in the yield curve will positively impact bank earnings by increasing the net interest margin. That occurs through increased spreads on loans and more income generated by intermediate term investments. The negative impacts are that deposit costs rise and the securities owned by the bank go down in value potentially eliminating capital gains as a source of net income. <br /><br />Bank earnings also depend on loan volume and the decree of loan losses. Ideally, a bank stock investor wants to see NIM and loan volume go up with charge-offs remaining stable or declining. Since charge-offs are already at historical lows in the aggregate, stable loan loss ratios are probably the best alternative for most banks now. <br /><br />TENNINDEPENDENThttps://www.blogger.com/profile/17444227958539559639noreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-71955880469757721762017-01-24T07:56:34.414-06:002017-01-24T07:56:34.414-06:00hello southgent,
I really enjoyed your above expl...hello southgent,<br /><br />I really enjoyed your above explanation of tips, nominal rates, and actually trading tips based on interest rates and expectations.<br /><br />I wondered if you could take a look at this video from CNBC in which a fellow named Richard Bove explains that loan volume is the critical key to bank lending.<br /><br />He says that it's really not just a rise in interest rates, because as interest rates go up financial assets that the bank owns decrease.<br /><br />He also states that with an inverted yield curve and even low rates banks have been able to be profitable.<br /><br />His last point is that Dodd Frank will not be repealed but only modified to increase the ability of smaller banks and credit unions to be more profitable. Nothing will be change for the larger banks i.e. the money center banks.<br /><br />Thanks for your input.<br /><br />Sam<br /><br />http://www.msn.com/en-us/money/careersandeducation/dispelling-urban-myths-about-banks-dick-bove/vi-AAmaLkHAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2986124651030959736.post-45140806467194826812017-01-23T18:09:09.816-06:002017-01-23T18:09:09.816-06:00Both TIPs and non-inflation protected treasuries r...Both TIPs and non-inflation protected treasuries rose in price and declined in yield today (1/23/17). <br /><br />The Dollar Index fell back below 100: <br /><br />U.S. Dollar Index (DXY)<br />99.93 Change -0.70 -0.70%<br />http://www.marketwatch.com/investing/Index/DXY<br /><br />Gold rose in price: <br /><br />SPDR Gold Trust (GLD)<br />$ 115.79 Change +0.74 +0.64%<br /><br />Stocks declined but were off of their worst intra-day levels. The Stock Jocks only see Blue Skies during the Trump Presidency. Other traders are starting to have doubts: <br /><br />http://www.marketwatch.com/story/gold-extends-gain-in-trump-era-as-dollar-wobbles-2017-01-23<br /><br />Trump basically put Mexico on notice today that major changes in the NAFTA agreement will be required by Team Trump. Mexico and Canada are the two largest importers of U.S. goods and services. <br /><br />While the day is not yet over, I have not sent an executive order naming China as a currency manipulator, something that Trump pledged to do on numerous occasions on day one. <br /><br /> http://money.cnn.com/2017/01/23/news/economy/donald-trump-china-currency/<br /><br />China did get a gift today from Trump when the U.S. pulled out of the TPP. China can now take the lead in creating a trading block of Asian economies with China as the centerpiece. <br /><br />I am continually to sell recently bought, potentially long duration exchange traded bonds and preferred stocks into the current bond rally. TENNINDEPENDENThttps://www.blogger.com/profile/17444227958539559639noreply@blogger.com