Economy:
Housing starts drop 9% in February and show little sign of perking up; permits fall - MarketWatch
Housing starts drop 9% in February and show little sign of perking up; permits fall - MarketWatch
Yield curve may be indicating increased chance for rate cut but not a recession, says former Fed Chair Yellen - MarketWatch That possibility is consistent with the yield curve at the short end but is not IMO the most probable explanation when the yield curve inversion is accompanied by widespread economic slowdowns.
++++++
Markets and Market Commentary:
The Stock Jocks are not ready to pay much attention to economic slowdowns and inverted yield curves.
The Stock Jocks are not ready to pay much attention to economic slowdowns and inverted yield curves.
Bond market says a recession is coming, and the Fed will cut rates
The Bond Vigilantes Used to Fear Inflation. Now They Fear a Recession.
The Bond Vigilantes Used to Fear Inflation. Now They Fear a Recession.
Several ten year government bond yields are in nominal negative territory and others are moving closer toward negative yields: World Government Bonds - Daily updated yields
Apple Stock Will Plunge Because There’s Not Much Profit in New Services, Goldman Sachs Says
Apple Stock Will Plunge Because There’s Not Much Profit in New Services, Goldman Sachs Says
+++++++
Trump:
I have faith in Mueller's integrity and competence. I may or may not agree with his conclusions when his full report and all of the facts are released for public scrutiny.
The special counsel's investigation "did not find that the Trump campaign or anyone associated with conspired or coordinated with Russia in its efforts to influence the 2016 U.S. presidential election", according to the summary released by the Attorney General.
Barr added that the "investigation did not establish that members of the Trump Campaign conspired or coordinated with the Russian government in its election interference activities.”
Those sentences resulted in this kind of headline which is understandable given what was disclosed in Barr's letter: Mueller report finds no evidence of collusion, though leaves obstruction question unanswered - MarketWatch The public needs to know whether those headlines go too far.
One question is whether Mueller found some circumstantial evidence of cooperation but not enough evidence to justify a finding of collusion.
The use of the words "find" and "establish" suggest that Mueller was using an evidentiary standard to reach a conclusion and the evidence either fell short of whatever evidentiary standard he was using or there was no credible evidence at all.
Ultimately, these questions and others will be answered, possibly by some some cogent questioning when Barr soon testifies before the House Judiciary Committee or when the full report is released to the public.
For example, a number of questions could be asked that relate to the evidence that Manafort and Gates, while working for the Trump campaign, turned over internal Trump polling data to Konstantin Kilimnik. believed to have ties to Russian intelligence or to be a Russian operative by the CIA and FBI, which would be useful in Russia targeting U.S. voters to influence the outcome. Prior reports claimed that the polling data was contained in 75 pages.
Manafort Accused of Sharing Trump Polling Data With Russian Associate - The New York Times;
Manafort shared polling data on 2016 election with elusive Russian -The Guardian;
Here’s the sort of information that could have been in polling data shared by Paul Manafort - The Washington Post;
Mueller: Manafort Lied About 'Russian Brain' Kilimnik - The Atlantic;
Mueller Report, Paul Manafort, Konstantin Kilimnik: No collusion. But how? (just more questions that need an answer);
Why Would Paul Manafort Share Polling Data with Russia? | The New Yorker
And, Manafort lied according to federal prosecutors about his knowledge on that matter. Why lie when there is an innocent explanation that does not involve cooperation with the Russians using a wink rather than a formal agreement to cooperate. In August 2016, Manafort would meet with Kilimnik in a NYC cigar bar which makes the polling data transfer even more suspicious.
If all of that is true, then someone has some explaining to do.
Even criminal cases can be built on circumstantial evidence.
Mueller may have downgraded that circumstantial evidence, as well as others, for reasons that are not now clear to me now. Maybe he needed to find something like an agreement to cooperate rather than just talking and swapping information on a variety of topics. Or, maybe Mueller could not find enough evidence that the U.S. person knew that the other person was a Russian intelligence officer or asset.
It could be that Gates and Manafort denied that trying to help the Russians influence the election and had some other purpose for example. Why would that be a credible explanation when they knew about Kilimnik's history?
The best reasonable inference is that the data was delivered knowing it would end up in Russian government hands. Yes, but did they know it would be used to interfere in the election or could the government prove that it was used by Russia for that purpose? Is that even relevant? I recall that Kilimnik denied giving the data to the Russian government. That is what you would expect him to say if he gave the data to Russia.
So let's wait for all of the facts to be released before spending to much time guessing. Trump has become more insufferable after the report was released.
Mueller did not exonerate Trump on the obstruction of justice claims. This did not stop Trump from claiming total exoneration when that was obviously not true.
Most of the evidence relating to those claims originate from public statements made by the Duck himself.
Mueller specifically claimed that his investigation did not exonerate Trump of obstruction justice. As described by the AG Barr, Mueller merely set out the facts in his report and left it to the AG to "determine whether the conduct described in the report constitutes a crime".
I would like to hear Mueller's explanation as to why he punted the obstruction case to political appointees whose decision was a foregone conclusion. Avoiding that kind of conflicted decision is why he was appointed in the first place.
Barr and the Deputy AG Rod Rosenstein have already concluded the evidence "is not sufficient to establish that the President committed an obstruction-of-justice offense."
The phrasing of that previously quoted sentence indicates that Barr and Rosenstein were using a likely to convict using a guilt beyond a reasonable doubt standard when making their decision on the obstruction charge. 9-27.200 - Principles Of Federal Prosecution | JM | Department of Justice ("The attorney for the government should commence or recommend federal prosecution if he/she believes that the person's conduct constitutes a federal offense, and that the admissible evidence will probably be sufficient to obtain and sustain a conviction", with certain narrow exceptions)
That is the appropriate standard IMO for bringing criminal charges regardless of whether the person is the President or some low life career criminal caught in the act again.
That conclusion, coming from Trump appointees, is nonetheless suspect. Barr is known as a loyal republican soldier for his entire adult life and Rosenstein previously provided Donald cover for firing Comey. It looks to me that Rosenstein was kept around to provide cover for Barr on this very issue and will leave after a suitable waiting period.
Overall, the Mueller report was a victory for the Duck and put to rest any possibility of impeachment during his remaining term unless strong evidence of some other major criminal act emerges.
I previously argued that it would not be wise or responsible for the Democrats to proceed with impeachment based on obstruction or campaign reporting violations. I can now add Russian collusion to that list.
No republican President would vote to impeach Donald on those grounds, so it would be foolish to even start proceedings in the House Judiciary Committee. I agreed with Nancy Pelosi's position that any impeachment needed to be bipartisan. 3/13/19 Post I regarded the republicans effort to impeach Bill Clinton to be irresponsible and unnecessarily divisive for the same reason. Democrats would not vote for impeaching him based on lies about his sex life. The GOP's irresponsibility on that matter paled into insignificance compared to their almost unanimous decision to invade Iraq.
So was Donald justified in attacking Mueller's integrity and objectivity, frequently in his normal vicious manner, in 100 or so statements? No doubt Teflon Don will apologize for those attacks soon or at least the more vicious ones.
Donald did not collude with the Russians according to Mueller, but that does not make him a good person or leader. He remains a lying, mean spirited, authoritarian leaning Demagogue who is a wretched human being. Those matters do not require a special counsel's investigation. The facts are publicly available and have been for years to establish those traits far beyond any reasonable doubt. And he may be reelected as President for a second term unless there is a recession and rapidly rising unemployment leading up to election day.
72 percent of Republicans think Trump is 'a good role model for children'
Again, just to highlight that I am not a liberal, I voted for Senators Lamar Alexander (R) and Bob Corker (R). I only sound liberal to republicans since most of them are nowhere close to being conservatives.
I have faith in Mueller's integrity and competence. I may or may not agree with his conclusions when his full report and all of the facts are released for public scrutiny.
The special counsel's investigation "did not find that the Trump campaign or anyone associated with conspired or coordinated with Russia in its efforts to influence the 2016 U.S. presidential election", according to the summary released by the Attorney General.
Barr added that the "investigation did not establish that members of the Trump Campaign conspired or coordinated with the Russian government in its election interference activities.”
Those sentences resulted in this kind of headline which is understandable given what was disclosed in Barr's letter: Mueller report finds no evidence of collusion, though leaves obstruction question unanswered - MarketWatch The public needs to know whether those headlines go too far.
One question is whether Mueller found some circumstantial evidence of cooperation but not enough evidence to justify a finding of collusion.
The use of the words "find" and "establish" suggest that Mueller was using an evidentiary standard to reach a conclusion and the evidence either fell short of whatever evidentiary standard he was using or there was no credible evidence at all.
Ultimately, these questions and others will be answered, possibly by some some cogent questioning when Barr soon testifies before the House Judiciary Committee or when the full report is released to the public.
For example, a number of questions could be asked that relate to the evidence that Manafort and Gates, while working for the Trump campaign, turned over internal Trump polling data to Konstantin Kilimnik. believed to have ties to Russian intelligence or to be a Russian operative by the CIA and FBI, which would be useful in Russia targeting U.S. voters to influence the outcome. Prior reports claimed that the polling data was contained in 75 pages.
Manafort Accused of Sharing Trump Polling Data With Russian Associate - The New York Times;
Manafort shared polling data on 2016 election with elusive Russian -The Guardian;
Here’s the sort of information that could have been in polling data shared by Paul Manafort - The Washington Post;
Mueller: Manafort Lied About 'Russian Brain' Kilimnik - The Atlantic;
Mueller Report, Paul Manafort, Konstantin Kilimnik: No collusion. But how? (just more questions that need an answer);
Why Would Paul Manafort Share Polling Data with Russia? | The New Yorker
And, Manafort lied according to federal prosecutors about his knowledge on that matter. Why lie when there is an innocent explanation that does not involve cooperation with the Russians using a wink rather than a formal agreement to cooperate. In August 2016, Manafort would meet with Kilimnik in a NYC cigar bar which makes the polling data transfer even more suspicious.
If all of that is true, then someone has some explaining to do.
Even criminal cases can be built on circumstantial evidence.
Mueller may have downgraded that circumstantial evidence, as well as others, for reasons that are not now clear to me now. Maybe he needed to find something like an agreement to cooperate rather than just talking and swapping information on a variety of topics. Or, maybe Mueller could not find enough evidence that the U.S. person knew that the other person was a Russian intelligence officer or asset.
It could be that Gates and Manafort denied that trying to help the Russians influence the election and had some other purpose for example. Why would that be a credible explanation when they knew about Kilimnik's history?
The best reasonable inference is that the data was delivered knowing it would end up in Russian government hands. Yes, but did they know it would be used to interfere in the election or could the government prove that it was used by Russia for that purpose? Is that even relevant? I recall that Kilimnik denied giving the data to the Russian government. That is what you would expect him to say if he gave the data to Russia.
So let's wait for all of the facts to be released before spending to much time guessing. Trump has become more insufferable after the report was released.
Mueller did not exonerate Trump on the obstruction of justice claims. This did not stop Trump from claiming total exoneration when that was obviously not true.
Most of the evidence relating to those claims originate from public statements made by the Duck himself.
Mueller specifically claimed that his investigation did not exonerate Trump of obstruction justice. As described by the AG Barr, Mueller merely set out the facts in his report and left it to the AG to "determine whether the conduct described in the report constitutes a crime".
I would like to hear Mueller's explanation as to why he punted the obstruction case to political appointees whose decision was a foregone conclusion. Avoiding that kind of conflicted decision is why he was appointed in the first place.
Barr and the Deputy AG Rod Rosenstein have already concluded the evidence "is not sufficient to establish that the President committed an obstruction-of-justice offense."
The phrasing of that previously quoted sentence indicates that Barr and Rosenstein were using a likely to convict using a guilt beyond a reasonable doubt standard when making their decision on the obstruction charge. 9-27.200 - Principles Of Federal Prosecution | JM | Department of Justice ("The attorney for the government should commence or recommend federal prosecution if he/she believes that the person's conduct constitutes a federal offense, and that the admissible evidence will probably be sufficient to obtain and sustain a conviction", with certain narrow exceptions)
That is the appropriate standard IMO for bringing criminal charges regardless of whether the person is the President or some low life career criminal caught in the act again.
That conclusion, coming from Trump appointees, is nonetheless suspect. Barr is known as a loyal republican soldier for his entire adult life and Rosenstein previously provided Donald cover for firing Comey. It looks to me that Rosenstein was kept around to provide cover for Barr on this very issue and will leave after a suitable waiting period.
Overall, the Mueller report was a victory for the Duck and put to rest any possibility of impeachment during his remaining term unless strong evidence of some other major criminal act emerges.
I previously argued that it would not be wise or responsible for the Democrats to proceed with impeachment based on obstruction or campaign reporting violations. I can now add Russian collusion to that list.
No republican President would vote to impeach Donald on those grounds, so it would be foolish to even start proceedings in the House Judiciary Committee. I agreed with Nancy Pelosi's position that any impeachment needed to be bipartisan. 3/13/19 Post I regarded the republicans effort to impeach Bill Clinton to be irresponsible and unnecessarily divisive for the same reason. Democrats would not vote for impeaching him based on lies about his sex life. The GOP's irresponsibility on that matter paled into insignificance compared to their almost unanimous decision to invade Iraq.
So was Donald justified in attacking Mueller's integrity and objectivity, frequently in his normal vicious manner, in 100 or so statements? No doubt Teflon Don will apologize for those attacks soon or at least the more vicious ones.
Donald did not collude with the Russians according to Mueller, but that does not make him a good person or leader. He remains a lying, mean spirited, authoritarian leaning Demagogue who is a wretched human being. Those matters do not require a special counsel's investigation. The facts are publicly available and have been for years to establish those traits far beyond any reasonable doubt. And he may be reelected as President for a second term unless there is a recession and rapidly rising unemployment leading up to election day.
72 percent of Republicans think Trump is 'a good role model for children'
Again, just to highlight that I am not a liberal, I voted for Senators Lamar Alexander (R) and Bob Corker (R). I only sound liberal to republicans since most of them are nowhere close to being conservatives.
Just another example that Trump ignores the process for making decisions and the recommendations of experts, preferring instead to go with his gut and his belief that Kim is really a good guy. Trump surprises his own aides by reversing North Korea sanctions 1 day after his administration rolled them out; Trump botches North Korea sanctions announcement, sparking widespread confusion - The Washington Post
++++
Michael Avenatti, "Esq." (soon to be "unesquired" and "defanged", new words for disbarred):
Donald is not the only person in the world suffering from the narcissistic personality disorder. My previous mention relating to Avenatti was to note that Donald and Avenatti deserved one another-two peas from the same pod; soul brothers from different mothers; birds of a feather flock together. I could go on but you probably catch my drift.
Tough guy Michael Avenatti has gone far singing his own praises which apparently works far better in the U.S. than being modest and allowing others to praise you when deserved. Over-the-top self promotion certainly worked for the Duck.
Avenatti was charged by federal prosecutors in California and New York with a grab bag of felonies.
I have read a factual summary of the indictments as well as the indictments. It looks like he is toast on the charges brought in California. His bombast, tweets and I will bury you approach to everything, are not going to help him in that case. Lawyer Michael Avenatti Arrested on Federal Bank Fraud and Wire Fraud Charges | USAO-CDCA | Department of Justice; Read the extortion and fraud charges against Michael Avenatti - Axios
He may beat the Nike extortion charge in NY. The argument will be that he was just attempting to negotiate a settlement for a client. One problem for him in that case is his threat made to hold a press conference to knock billions off the stock price unless millions were paid pronto. Another is that he allegedly demanded to be paid, along with his co-counsel who is an unindicted co-conspirator and reported to be celebrity lawyer Mark Geragos, between $15 to $25M by Nike to conduct an "internal investigation". So he went beyond demanding a settlement for his client. Mark Geragos, reportedly Michael Avenatti's unindicted coconspirator, built a long career on celebrity clients - The Washington Post
The California matter involves alleged misappropriation of client funds and bank fraud. The statements of fact made in the indictment are most damning IMO.
Lawyers will defend you to your last dime. I would not exactly regard him as a good risk to pay his legal defense fees, at least from funds that legally belong to him.
Avenatti has denied any guilt and proclaimed that the facts will vindicate after he receives due process. The slammer is due process for this guy.
For Michael Avenatti, a luxury lifestyle built on a purported house of cards - Los Angeles Times
Avenatti to give up financial control of law firm after he's accused of hiding millions - Los Angeles Times
++++
Portfolio Management:
I eliminated my positions in three T. Rowe Price stock mutual funds last.
I discuss the first one below and the other two will be summarized in two future posts.
I am simply selling into the strong stock market rally, harvesting some capital gains and reducing risk.
I also wanted to reduce the number of T. Rowe Price down to four core ones. When I finish, and I have one more that needs to be sold, I will be left with the following with the first two being significant positions:
T. Rowe Price Capital Appreciation Fund PRWCX (my largest position and the most conservative fund in this group);
T. Rowe Price Dividend Growth Fund PRDGX
T. Rowe Price Small-Cap Stock Fund OTCFX
T. Rowe Price Health Sciences Fund PRHSX
I can not find any bonds to buy now other than short term treasury bills as an alternative to cash, particularly at Schwab where the money market sweep account pays almost nothing.
I only casually looked around yesterday for corporate bonds and just gave up.
I am doing some light selling into this strong bond rally.
There have been several strong bond rallies over the past several years that fizzled out with interest rates then turning back up, providing better opportunities to buy. I sold during the bond rally in 2017 and then bought back many of the bonds sold at lower prices than previous purchases as the ten year yield moved toward and back over 3%. I would note that the ten year yield was at 3.24% on 11/8/18 and closed yesterday at 2.4%.
Maybe that bungee jumping will happen again. Maybe savers are just doomed to negative or barely positive real returns before taxes. It does not look like any relief will happen this year.
A return of inflation could turn markets on their head, warns Northern Trust - MarketWatch
++++++++
1. Elimination:
A. Sold 955.886 Shares of PRSGX:
Sponsor's Page: Spectrum Growth Fund (PRSGX) Investment Performance - T. Rowe Price
I sold those shares on Monday (3/18) at $22.73.
The closing price on the prior Friday (3/15) was $22.63. At that time I had an unrealized gain of $5,119.97:
Profit Snapshot: $5,439.27
A. Sold 955.886 Shares of PRSGX:
Sponsor's Page: Spectrum Growth Fund (PRSGX) Investment Performance - T. Rowe Price
I sold those shares on Monday (3/18) at $22.73.
The closing price on the prior Friday (3/15) was $22.63. At that time I had an unrealized gain of $5,119.97:
Profit Snapshot: $5,439.27
This is a fund that owns other T. Rowe Price mutual funds. The weighted net expense ratio was .77% as of 12/31/18. That would be from the underlying funds.
Morningstar: PRSGX rated 2 stars
Rationale: This is a fund of fund that has underperformed as reflected in the 2 star rating. One option that I have is to use stock rallies to eliminate underperforming funds.
The average annual total return over the past 10 years through 3/18/19 was 15.1% but the more recent numbers have been subpar for the risk. Shares were bought more than a decade ago. I have not sold any prior to this elimination.
The average annual return over the past five years was 8.3% and was negative YTD through 3/18. In contrast, the dumb S & P 500 ETF had a 11.06% annual average total return of 11.06% over the same five year period and was up 4.71% YTD.
I will move proceeds to another broker when I have enough funds to receive at least 250 free trades or will keep the proceeds in a Price MM fund until there is at least a 20% SPX decline (preferably 30+%) from the current level.
I have been taking dividends in cash for several years. Those dividends are paid annually which I do not like.
2. Short Term Bond/CD Ladder Basket Strategy:
$6K in Adds
I not fill my ladder with treasuries maturing in 12+ months to 2 years by buying at auctions. The treasury auctions only have 1 year bill and a 2 year treasury note.
A. Bought 1 Treasury 2.375% Coupon Maturing on 4/30/20:
YTM = 2.554%
I now own 5 bonds.
B. Bought 2 American Express 2.6% SU Bonds Maturing on 9/14/20:
I rolled the proceeds of 2 American Express SU bonds that matured on 3/18/19.
Finra Page: Bond Detail (prospectus linked)
Issuer: American Express Co. (AXP)
AXP Analyst Estimates
2018 Annual Report
Last Bond Issuance Prior to Trade (2/19): Prospectus
Credit Ratings:
Bought at a TC of 99.677
YTM at TC Then at 2.819%
Current Yield at TC = 2.6084%
B. Bought 2 American Express 2.6% SU Bonds Maturing on 9/14/20:
I rolled the proceeds of 2 American Express SU bonds that matured on 3/18/19.
Finra Page: Bond Detail (prospectus linked)
Issuer: American Express Co. (AXP)
AXP Analyst Estimates
2018 Annual Report
Last Bond Issuance Prior to Trade (2/19): Prospectus
Bought at a TC of 99.677
YTM at TC Then at 2.819%
Current Yield at TC = 2.6084%
C. Bought 1 Treasury 1.5% Coupon Maturing on 4/15/20:
YTM = 2.54%
I now own 2 bonds.
YTM = 2.54%
I now own 2 bonds.
D. Bought 1 Treasury 1.5% Coupon Maturing on 5/15/20:
YTM = 2.538%
YTM = 2.538%
E. Bought 1 Treasury 2.5% Coupon Maturing on 6/30/20:
YTM = 2.514%
I now own 3 bonds.
YTM = 2.514%
3. Intermediate Term Bond/CD Ladder Strategy:
A. Sold 2 Novartis Capital 2.4% SU Maturing on 5/17/22-In a Roth IRA Account:
FINRA Page: Bond Detail
Profit Snapshot: $12.88
Item # 4.B. Bought 2 NVS Capital 2.4% SU Maturing on 5/7/22 at a TC of 97.657 (3/22/18 Post)
Sold at 99.047
YTM at 99.047 = 2.707%
Current Yield at 99.047 = 2.4231%
Proceeds at 98.847 (includes $4 commission)
On the date sold, my Vanguard Prime Money Market fund had a higher current yield than this bond but the yield has already started to tick down some.
I will consider repurchasing this one at less than my last purchase price.
A. Sold 2 Novartis Capital 2.4% SU Maturing on 5/17/22-In a Roth IRA Account:
FINRA Page: Bond Detail
Profit Snapshot: $12.88
Item # 4.B. Bought 2 NVS Capital 2.4% SU Maturing on 5/7/22 at a TC of 97.657 (3/22/18 Post)
Sold at 99.047
YTM at 99.047 = 2.707%
Current Yield at 99.047 = 2.4231%
Proceeds at 98.847 (includes $4 commission)
On the date sold, my Vanguard Prime Money Market fund had a higher current yield than this bond but the yield has already started to tick down some.
I will consider repurchasing this one at less than my last purchase price.
I eliminated my common stock position in my accounts (10/24/18 Post), but kept a position in a family member's Fidelity account. The annual dividend was just paid into that account and more than 30% was withheld by Switzerland to pay the dividend tax. The maximum amount that can be collected under the tax treaty is 15%, but the broker has to assert treaty rights for their customers.
In the past, Fidelity has done so for dividends paid by Swiss companies, so this was a first for that brokerage company.
I am not going to complain since the dividend was invested at what I would consider a high price; and I have found my complaints on excessive foreign tax withholdings to be both frustrating and extremely aggravating for the amount of money at issue. The excessive foreign tax credit may prove to be valuable than the 1 share or so that could have been bought with the excessive tax.
B. Bought 2 Sovran Acquisition L.P. 3.5% SU Maturing on 7/1/26-In A Roth IRA Account:
I now own 4 bonds with the other owned in a taxable account.
FINRA Page: Bond Detail (prospectus linked)
Issuer: Operating Subsidiary of Life Storage Inc. (LSI) (formerly known as Sovran Storage) who guarantees the notes
Life Storage, Inc. Reports Fourth Quarter and Full Year 2018 Results
LSI "is a self-administered and self-managed equity REIT that is in the business of acquiring and managing self storage facilities. Located in Buffalo, New York, the Company operates more than 750 storage facilities in 28 states and Ontario, Canada. The Company serves both residential and commercial storage customers with storage units rented by month. Life Storage consistently provides responsive service to its 400,000-plus customers, making it a leader in the industry."
SEC Filings
2018 Annual Report (debt discussed starting at page 53)
Sovran Self Storage, Inc. Acquires LifeStorage (7/18/16)
Sovran Self Storage, Inc. to Rebrand as Life Storage (7/18/16)
Credit Ratings:
In the past, Fidelity has done so for dividends paid by Swiss companies, so this was a first for that brokerage company.
I am not going to complain since the dividend was invested at what I would consider a high price; and I have found my complaints on excessive foreign tax withholdings to be both frustrating and extremely aggravating for the amount of money at issue. The excessive foreign tax credit may prove to be valuable than the 1 share or so that could have been bought with the excessive tax.
B. Bought 2 Sovran Acquisition L.P. 3.5% SU Maturing on 7/1/26-In A Roth IRA Account:
FINRA Page: Bond Detail (prospectus linked)
Issuer: Operating Subsidiary of Life Storage Inc. (LSI) (formerly known as Sovran Storage) who guarantees the notes
Life Storage, Inc. Reports Fourth Quarter and Full Year 2018 Results
LSI "is a self-administered and self-managed equity REIT that is in the business of acquiring and managing self storage facilities. Located in Buffalo, New York, the Company operates more than 750 storage facilities in 28 states and Ontario, Canada. The Company serves both residential and commercial storage customers with storage units rented by month. Life Storage consistently provides responsive service to its 400,000-plus customers, making it a leader in the industry."
SEC Filings
2018 Annual Report (debt discussed starting at page 53)
Sovran Self Storage, Inc. Acquires LifeStorage (7/18/16)
Sovran Self Storage, Inc. to Rebrand as Life Storage (7/18/16)
Credit Ratings:
Bought at a Total Cost of 95.752 (includes $4 brokerage commission)
YTM at TC Then at 4.184% (tax free in the Roth IRA)
Current Yield at TC = 3.6533%
4. Purchases:
A. Added 50 DX at $6-Used Commission Free Trade:
Dynex Capital Inc.-MarketWatch
Website: Dynex Capital, Inc. - Home
Closing Price Yesterday: DX $5.98 +$0.08 +1.36%
Generally speaking, I do not view mortgage REITs as worth the risk.
This purchase brings me up to 100 shares in my Fidelity account plus shares purchased with dividends.
I decided to buy another 50 shares in response to the FED becoming even more dovish. Yield is going to be hard to find in the next year or two, or possibly much longer.
My objective with any MREIT purchase now is to harvest at some point an 8% average annual total return which means that I am okay losing some money on the shares without the ROC adjustment.
Dividend: CURRENTLY, Monthly at 6 cents per share ($.72 annually)
Dynex Capital, Inc. Declares Monthly Common Stock Dividend of $0.06 for March 2019
I would not label the dividend amount as reliable going forward. MREITs have slashed their payouts over the past several years.
Last Ex Dividend: 3/21/19 (day after purchase)
Average Total Cost Per Share = $6.05
Dividend Yield at Total Cost: 11.9%
The yield curve gyrations have caused recently substantial declines in MREIT net asset values. The flattening of the yield curve is also a major negative.
Tax Characterization:
Most of the 2018 dividend was classified as a return of capital ($.56+ per share out of $.72 total). Dynex Capital, Inc. Announces 2018 Dividend Tax Information
The ROC dividend amount is not taxable for U.S. taxpayers until the shares are sold. The ROC amount reduces the tax cost basis and is in that way a tax deferral. It is captured as income when the shares are sold at profit over the adjusted cost basis reduced by the ROC adjustments.
Since the taxable part of dividends paid by a pass through entities are entirely or close to it non-qualified, the high tax bracket investor may be able to turn the taxable amount into a long term capital gain taxable at a lower marginal rate when the shares are sold or hold the share until death when, under current law, the cost basis is stepped up to the market value then. Step-Up in Basis
Last Earnings Report (QE 12/31/18):
Dynex Capital, Inc. Reports Fourth Quarter and Full Year 2018 Results | Business Wire
YTM at TC Then at 4.184% (tax free in the Roth IRA)
Current Yield at TC = 3.6533%
4. Purchases:
A. Added 50 DX at $6-Used Commission Free Trade:
Dynex Capital Inc.-MarketWatch
Website: Dynex Capital, Inc. - Home
Closing Price Yesterday: DX $5.98 +$0.08 +1.36%
Generally speaking, I do not view mortgage REITs as worth the risk.
This purchase brings me up to 100 shares in my Fidelity account plus shares purchased with dividends.
I decided to buy another 50 shares in response to the FED becoming even more dovish. Yield is going to be hard to find in the next year or two, or possibly much longer.
My objective with any MREIT purchase now is to harvest at some point an 8% average annual total return which means that I am okay losing some money on the shares without the ROC adjustment.
Dividend: CURRENTLY, Monthly at 6 cents per share ($.72 annually)
Dynex Capital, Inc. Declares Monthly Common Stock Dividend of $0.06 for March 2019
I would not label the dividend amount as reliable going forward. MREITs have slashed their payouts over the past several years.
Last Ex Dividend: 3/21/19 (day after purchase)
Average Total Cost Per Share = $6.05
Dividend Yield at Total Cost: 11.9%
The yield curve gyrations have caused recently substantial declines in MREIT net asset values. The flattening of the yield curve is also a major negative.
Tax Characterization:
Most of the 2018 dividend was classified as a return of capital ($.56+ per share out of $.72 total). Dynex Capital, Inc. Announces 2018 Dividend Tax Information
The ROC dividend amount is not taxable for U.S. taxpayers until the shares are sold. The ROC amount reduces the tax cost basis and is in that way a tax deferral. It is captured as income when the shares are sold at profit over the adjusted cost basis reduced by the ROC adjustments.
Since the taxable part of dividends paid by a pass through entities are entirely or close to it non-qualified, the high tax bracket investor may be able to turn the taxable amount into a long term capital gain taxable at a lower marginal rate when the shares are sold or hold the share until death when, under current law, the cost basis is stepped up to the market value then. Step-Up in Basis
Last Earnings Report (QE 12/31/18):
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| Nothing Comforting Here |
CEO Byron Boston on Q4 2018 Results - Earnings Call Transcript | Seeking Alpha
I recently discussed buying a Dynex cumulative equity preferred stock as a trade: Item # 4 Bought 50 DXPRB at $23.77-Used Commission Free Trade (2/2/19 Post); Dynex Capital Inc. 7.625% Cumulative Preferred Series B Stock
B. Bought 10 FSMD at $24.1-Commission Free at Fidelity:
Quote: Fidelity Small-Mid Factor ETF Overview
Sponsor's Webpage: FSMD | ETF Snapshot - Fidelity
Closing Price Yesterday: FSMD $24.45 +$0.28 +1.14%
Last Discussed: Item # 4.A. (3/13/19 Post)
I have nothing to add to that post.
Since I shifted money out of several stock mutual funds, one of three recent elimination was discussed above and the other two will be mentioned in subsequent posts, I will be buying low cost stock ETFs in small lots that can be purchased commission free at one or more of my brokers.
Maximum Position: 100 Shares
Current Position: 20 Shares
Purchase Restriction: Small Ball Rule
I recently discussed buying a Dynex cumulative equity preferred stock as a trade: Item # 4 Bought 50 DXPRB at $23.77-Used Commission Free Trade (2/2/19 Post); Dynex Capital Inc. 7.625% Cumulative Preferred Series B Stock
B. Bought 10 FSMD at $24.1-Commission Free at Fidelity:
Quote: Fidelity Small-Mid Factor ETF Overview
Sponsor's Webpage: FSMD | ETF Snapshot - Fidelity
Closing Price Yesterday: FSMD $24.45 +$0.28 +1.14%
Last Discussed: Item # 4.A. (3/13/19 Post)
I have nothing to add to that post.
Since I shifted money out of several stock mutual funds, one of three recent elimination was discussed above and the other two will be mentioned in subsequent posts, I will be buying low cost stock ETFs in small lots that can be purchased commission free at one or more of my brokers.
Maximum Position: 100 Shares
Current Position: 20 Shares
Purchase Restriction: Small Ball Rule
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 sell 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 family members.
