Economy:
Japan posts fastest economic growth since 2016 in the second quarter
The U.S. budget deficit for August expanded to $211 billion. U.S. budget deficit widens to fifth-highest ever, CBO Monthly Budget Review pdf Spending lots of borrowed money is stimulative to the economy, but also plants the seeds for future problems and disasters.
House GOP is pushing a new round of tax cuts that could cost $2 trillion over 10 years - The Washington Post
There will be a Day of Reckoning for the U.S. government.
The budget deficits will be over $1 trillion per year starting in the F/Y ending 9/30/19 without more tax cuts.
Interest costs on the debt, which is now over $21.460 trillion, is rising rapidly.
I mentioned in a recent comment that the 1 year treasury bill has more than doubled in yield over the past year.
I am predicting that the interest costs on the debt will exceed $1 trillion per year within 5 to 7 years with 10 years being the optimal result. The total debt of the U.S. government was at less than $1 trillion in 1979.
There will be a lot of finger pointing as to who is responsible for the fiscal train wreck that lies ahead. I can save everyone the trouble now. There is no need to split hairs. Just assign 50% to the Democrats and 50% to the Republicans.
The U.S. budget deficit for August expanded to $211 billion. U.S. budget deficit widens to fifth-highest ever, CBO Monthly Budget Review pdf Spending lots of borrowed money is stimulative to the economy, but also plants the seeds for future problems and disasters.
House GOP is pushing a new round of tax cuts that could cost $2 trillion over 10 years - The Washington Post
There will be a Day of Reckoning for the U.S. government.
The budget deficits will be over $1 trillion per year starting in the F/Y ending 9/30/19 without more tax cuts.
Interest costs on the debt, which is now over $21.460 trillion, is rising rapidly.
I mentioned in a recent comment that the 1 year treasury bill has more than doubled in yield over the past year.
I am predicting that the interest costs on the debt will exceed $1 trillion per year within 5 to 7 years with 10 years being the optimal result. The total debt of the U.S. government was at less than $1 trillion in 1979.
There will be a lot of finger pointing as to who is responsible for the fiscal train wreck that lies ahead. I can save everyone the trouble now. There is no need to split hairs. Just assign 50% to the Democrats and 50% to the Republicans.
++++++++
Markets and Market Commentary:
The Bond Ghouls are starting to get the shakes again:
9/11/18: IEF $101.60 -$0.37 -0.36%: iShares 7-10 Year Treasury Bond ETF
The ten year treasury yield has been bouncing mostly between 2.8% to 3% since early February 2018. Yesterday's closing yield was at 2.98%. 2018 Daily Treasury Yield Curve Rates
2-year Treasury yield edges up to decade long high - MarketWatch (9/10/18)
Chart 2 Year Treasury Constant Maturity Rate-St. Louis Fed (June 1976 to present)
3-year Treasury yield highest since 2007 after bonds struggle against supply test - MarketWatch (9/11/18)
Yardeni says Trump winning the trade war with China will trigger ‘the mother of all meltups’-MarketWatch Yardeni is expressing what I would consider the majority opinion.
The Bond Ghouls are starting to get the shakes again:
9/11/18: IEF $101.60 -$0.37 -0.36%: iShares 7-10 Year Treasury Bond ETF
The ten year treasury yield has been bouncing mostly between 2.8% to 3% since early February 2018. Yesterday's closing yield was at 2.98%. 2018 Daily Treasury Yield Curve Rates
2-year Treasury yield edges up to decade long high - MarketWatch (9/10/18)
Chart 2 Year Treasury Constant Maturity Rate-St. Louis Fed (June 1976 to present)
3-year Treasury yield highest since 2007 after bonds struggle against supply test - MarketWatch (9/11/18)
Yardeni says Trump winning the trade war with China will trigger ‘the mother of all meltups’-MarketWatch Yardeni is expressing what I would consider the majority opinion.
Yardeni urges investors to stay the course as U.S. stocks are still in meltup mode - MarketWatch
Cramer is singing the same song. Cramer: Stocks tied to China may be signaling an end to the trade war
If there is a meltup from current levels, I will end up with a zero stock allocation.
The Vix movement remains well within the Stable Vix Pattern, as defined in my Vix Asset Allocation Model. The Stable Vix Pattern indicates an ongoing cyclical bull market.
9/11/15: VIX 13.27 -0.89 -6.29%
Cramer is singing the same song. Cramer: Stocks tied to China may be signaling an end to the trade war
If there is a meltup from current levels, I will end up with a zero stock allocation.
The Vix movement remains well within the Stable Vix Pattern, as defined in my Vix Asset Allocation Model. The Stable Vix Pattern indicates an ongoing cyclical bull market.
9/11/15: VIX 13.27 -0.89 -6.29%
The shrinking of America’s middle class has finally ground to a halt - MarketWatch (about 52% of adults lived in middle class households in 2016, down from 61% in 1971. The percentage has stabilized in the 50% to 55% range since 2001); Middle class keeps its size, loses financial ground to upper-income tier | Pew Research Center
Sinking semiconductors are 'canary in the coal mine,' strategist warns
Marijuana ETF in Canada passes $1 billion in assets; Horizons Marijuana Life Sciences Index ETF Overview
I have been trading this Canadian ETF this year: +$673.5
I do not currently own any shares.
Sinking semiconductors are 'canary in the coal mine,' strategist warns
Marijuana ETF in Canada passes $1 billion in assets; Horizons Marijuana Life Sciences Index ETF Overview
I have been trading this Canadian ETF this year: +$673.5
 |
| 50 Shares HMMJ:CA +C$418.5 |
 |
| 100 Shares HMMJ:CA +C$255 |
The new fear for stock investors is an emerging-market meltdown - MarketWatch (frequently in the past, it is the weakest links that fall first)
++++++
Trump:
Bob Woodward: "People better wake up to what's going on" in the Oval Office - CBS News
I would emphasize that Woodward records all of his conversations with sources.
Mike Pence on "Face the Nation": Anonymous New York Times op-ed "an assault on our democracy" and "un-American"- CBS News And how is this article published in a newspaper an "assault on democracy" an "un-American"? What is un-American is the Vice President of the U.S. calling the article "un-American" and an "assault on democracy". The Trumpsters turn just about everything upside down.
More Fake News from Lying Don:
Donald claims that GDP growth is higher than the unemployment rate for the first time in 100 years.
President makes false claim about GDP and unemployment - MarketWatch The rate of change in GDP was higher than the unemployment rate in 2006, or about 12 years ago rather than the 100 claimed by Lying Don, and on multiple occasions during the Clinton administration.
More Donald Fake News and Reality Creations from 9/10/18:
Ford not moving production from China to U.S., despite Trump’s tweet - MarketWatch
Bob Woodward: "People better wake up to what's going on" in the Oval Office - CBS News
I would emphasize that Woodward records all of his conversations with sources.
Mike Pence on "Face the Nation": Anonymous New York Times op-ed "an assault on our democracy" and "un-American"- CBS News And how is this article published in a newspaper an "assault on democracy" an "un-American"? What is un-American is the Vice President of the U.S. calling the article "un-American" and an "assault on democracy". The Trumpsters turn just about everything upside down.
More Fake News from Lying Don:
Donald claims that GDP growth is higher than the unemployment rate for the first time in 100 years.
President makes false claim about GDP and unemployment - MarketWatch The rate of change in GDP was higher than the unemployment rate in 2006, or about 12 years ago rather than the 100 claimed by Lying Don, and on multiple occasions during the Clinton administration.
More Donald Fake News and Reality Creations from 9/10/18:
Ford not moving production from China to U.S., despite Trump’s tweet - MarketWatch
Trump and the Never Trump Republicans:
Many of the never Trump republicans have thrown up their hands and have become independents.
The polls indicate that Trump enjoys close to a 80% to 90% approval rating among republicans, depending on the poll and when it was taken. A recent PEW poll estimated an 84% approval rating among republicans: Trump's approval ratings so far are unusually stable, deeply partisan | Pew Research Center
About the same percentage of republicans view the Duck as honest.
While there is a meaningful number of republicans who strongly disapprove of him, that number appears to have been relatively stable since the Duck announced his candidacy.
Trump has generated negative reactions among a few well known republicans who are not politicians.
Many of those republicans would be part of what I would call the republican intelligentsia. The Trumpsters welcome their opposition.
An example is George Will who has become so perturbed that he withdrew his republican voting registration, wanting nothing to do with the modern day GOP molded in Trump's mirror image.
Another one of those republicans is Michael Gerson who is advocating that republicans vote for Democrats in the 2018 House races and republicans in the Senate races. His rationale is that there is no institutional check on Donald now anywhere in government and there needs to be which is not a debatable point IMO. His view of Trump is deeply negative, as highlighted in this recent column: We are a superpower run by a simpleton - The Washington Post; U.S. a superpower run by ‘simpleton,’ columnist writes-MarketWatch
William Kristol, the founder of the weekly conservative magazine The Weekly Standard, is another: Bill Kristol Wanders the Wilderness of Trump World | The New Yorker; Bill Kristol (@BillKristol) | Twitter
Steve Schmidt, like George Will, has left the party: Republican Steve Schmidt: This 'Administration is Vile, Corrupt, and Likely Criminal', Trump is Mentally Unfit
Donald ordered doctored photographs to make his inauguration crowd appear larger than it was before the alterations. Revealed: Trump inauguration crowd photos were edited after he intervened
+++++
Koch Brother's and Their Improperly Named PAC "Americans for Prosperity":
The Koch brothers named their PAC "Americans for Prosperity", when the real name should be "Billionaires for their Own Prosperity". The general idea is convince the middle class to vote for people who will promote the billionaire's agenda rather than one that will actually help the middle class.
Their efforts are invariably deceptive and involve the slick packaging of false and misleading attack ads. It is impossible for them to be truthful in an attack ad.
An example is the ad currently running against the centrist Democrat and former Tennessee Governor Phil Bredesen who is running for the senate seat being vacated by Bob Corker (R). The republican running against Bredesen is the Trumpster and Know Nothing Marsha Blackburn who used to be the representative for Tennessee's heavily gerrymandered Seventh Congressional District, where I reside.
The ad accuses Bredesen of raising taxes during his eight year term as governor, yet no taxes were raised. Koch-affiliated group spends $2 million on Bredesen attack ad | Times Free Press
Recently, the republican governor Bill Haslam and the republican controlled state house and senate did pass an increase in the gas tax to fund road construction.
The ad also claims that Bredesen wasted taxpayer funds to refurbish the Governor's mansion, built in 1929, with "gilded bathrooms and kitchen worth two Tennessee homes"
Bredesen never lived in Governor's mansion. He remained in his personal home for his entire 8 year term.
The republican governor Bill Haslam, who came after Bredesen, did live in the mansion for eight years, and the GOP held frequent fundraisers in what the Koch brothers call a "4M party cave". Five million of the renovations came from private donations.
Prior to the renovations, the roof leaked, walls and ceilings were cracked, lead paint was peeling, the building was in non-compliance with handicapped laws, and the house was still heated and cooled with the original radiator system. Tennessee Governor's Mansion - Wikipedia
In short, and as any reasonable and informed person would expect, the GOP and their Koch Brother handlers are engaged in an active campaign to deceive voters with this attack ad. I would be shocked if the Koch brothers ran an honest attack ad.
I voted twice for both Bredesen (D) and Haslam (R) in the governor races. Together, those gentleman have engineered Tennessee's current strong fiscal condition and its enviable AAA credit rating with a large rainy day fund.
Many of the never Trump republicans have thrown up their hands and have become independents.
The polls indicate that Trump enjoys close to a 80% to 90% approval rating among republicans, depending on the poll and when it was taken. A recent PEW poll estimated an 84% approval rating among republicans: Trump's approval ratings so far are unusually stable, deeply partisan | Pew Research Center
About the same percentage of republicans view the Duck as honest.
While there is a meaningful number of republicans who strongly disapprove of him, that number appears to have been relatively stable since the Duck announced his candidacy.
Trump has generated negative reactions among a few well known republicans who are not politicians.
Many of those republicans would be part of what I would call the republican intelligentsia. The Trumpsters welcome their opposition.
An example is George Will who has become so perturbed that he withdrew his republican voting registration, wanting nothing to do with the modern day GOP molded in Trump's mirror image.
Another one of those republicans is Michael Gerson who is advocating that republicans vote for Democrats in the 2018 House races and republicans in the Senate races. His rationale is that there is no institutional check on Donald now anywhere in government and there needs to be which is not a debatable point IMO. His view of Trump is deeply negative, as highlighted in this recent column: We are a superpower run by a simpleton - The Washington Post; U.S. a superpower run by ‘simpleton,’ columnist writes-MarketWatch
William Kristol, the founder of the weekly conservative magazine The Weekly Standard, is another: Bill Kristol Wanders the Wilderness of Trump World | The New Yorker; Bill Kristol (@BillKristol) | Twitter
Steve Schmidt, like George Will, has left the party: Republican Steve Schmidt: This 'Administration is Vile, Corrupt, and Likely Criminal', Trump is Mentally Unfit
Donald ordered doctored photographs to make his inauguration crowd appear larger than it was before the alterations. Revealed: Trump inauguration crowd photos were edited after he intervened
+++++
Koch Brother's and Their Improperly Named PAC "Americans for Prosperity":
The Koch brothers named their PAC "Americans for Prosperity", when the real name should be "Billionaires for their Own Prosperity". The general idea is convince the middle class to vote for people who will promote the billionaire's agenda rather than one that will actually help the middle class.
Their efforts are invariably deceptive and involve the slick packaging of false and misleading attack ads. It is impossible for them to be truthful in an attack ad.
An example is the ad currently running against the centrist Democrat and former Tennessee Governor Phil Bredesen who is running for the senate seat being vacated by Bob Corker (R). The republican running against Bredesen is the Trumpster and Know Nothing Marsha Blackburn who used to be the representative for Tennessee's heavily gerrymandered Seventh Congressional District, where I reside.
The ad accuses Bredesen of raising taxes during his eight year term as governor, yet no taxes were raised. Koch-affiliated group spends $2 million on Bredesen attack ad | Times Free Press
Recently, the republican governor Bill Haslam and the republican controlled state house and senate did pass an increase in the gas tax to fund road construction.
The ad also claims that Bredesen wasted taxpayer funds to refurbish the Governor's mansion, built in 1929, with "gilded bathrooms and kitchen worth two Tennessee homes"
Bredesen never lived in Governor's mansion. He remained in his personal home for his entire 8 year term.
The republican governor Bill Haslam, who came after Bredesen, did live in the mansion for eight years, and the GOP held frequent fundraisers in what the Koch brothers call a "4M party cave". Five million of the renovations came from private donations.
Prior to the renovations, the roof leaked, walls and ceilings were cracked, lead paint was peeling, the building was in non-compliance with handicapped laws, and the house was still heated and cooled with the original radiator system. Tennessee Governor's Mansion - Wikipedia
In short, and as any reasonable and informed person would expect, the GOP and their Koch Brother handlers are engaged in an active campaign to deceive voters with this attack ad. I would be shocked if the Koch brothers ran an honest attack ad.
I voted twice for both Bredesen (D) and Haslam (R) in the governor races. Together, those gentleman have engineered Tennessee's current strong fiscal condition and its enviable AAA credit rating with a large rainy day fund.
++++
Russia's Use of a Chemical Weapon on U.K. Soil:
The Brits have nailed two Russian intelligence operatives for the attempted murder of Sergei V. Skripal and his daughter last March, using the Russian developed nerve agent Novichok. Two U.K. citizens were murdered when they were exposed to Russia's chemical weapon.
The U.K. has cameras everywhere.
The investigation found footage of these two Russian hitman as they arrived and left the U.K. and traveled to the location of the attempted murder in Salisbury.
Trace samples of a nerve agent developed by the Russian military were found in the hotel room where the Russian assassins spent two days. From Mountain of CCTV Footage, Pay Dirt: 2 Russians Are Named in Spy Poisoning - The New York Times; Planes, trains and fake names: the trail left by Skripal suspects | UK news | The Guardian
The fact that this was a Russian hit on a defector was never in any reasonable doubt. Nor was there any doubt that Putin wanted Skripal to suffer greatly before he died from Russia's chemical attack just as Alexander Litvinenko a few years ago. A bullet in the head was not Putin's desired option. The long history of Russian deaths in the UK under mysterious circumstances | The Independent The Litvinenko Russian hit on British soil was with the highly toxic polonium-210.
The only question was the identity of the Russian GRU agents sent to carry out the task.
Their identity is now known, but Russia will not turn them over which goes without saying. No one outside of Russia accepts its vigorous denials
Using a chemical weapon on U.K. soil is an act of war of course. And what did Russia gain other than another rounds of western sanctions.
What will Russia have in 2 or 3 decades when the oil dries up and their military weapons turn into junk? It is not going to pretty for your average Russian.
Putin is admired and respected by the Duck, but history written by non-state controlled historians will not be kind to him.
A Spy Story: Sergei Skripal Was a Little Fish. He Had a Big Enemy. - The New York Times
U.S. officials suspect Russia in mystery 'attacks' on diplomats in Cuba, China
+++
Bret Kavanaugh:
The republicans are going to overlook evidence that Kavanaugh committed perjury in earlier confirmation hearings. Brett Kavanaugh Supreme Court hearing: the perjury controversy, explained - Vox If Kavanaugh was a left to center nominee offered by a Democrat President, they would justify voting no based on that prior perjury issue.
Kavanaugh will soon be sitting on the Supreme Court, giving the Court a 4 reactionary justices (Alito, Thomas, Kavanaugh, Gorsuch) and 1 right-of-center Justice (Roberts).
+++++++
Russia's Use of a Chemical Weapon on U.K. Soil:
The Brits have nailed two Russian intelligence operatives for the attempted murder of Sergei V. Skripal and his daughter last March, using the Russian developed nerve agent Novichok. Two U.K. citizens were murdered when they were exposed to Russia's chemical weapon.
The U.K. has cameras everywhere.
The investigation found footage of these two Russian hitman as they arrived and left the U.K. and traveled to the location of the attempted murder in Salisbury.
Trace samples of a nerve agent developed by the Russian military were found in the hotel room where the Russian assassins spent two days. From Mountain of CCTV Footage, Pay Dirt: 2 Russians Are Named in Spy Poisoning - The New York Times; Planes, trains and fake names: the trail left by Skripal suspects | UK news | The Guardian
The fact that this was a Russian hit on a defector was never in any reasonable doubt. Nor was there any doubt that Putin wanted Skripal to suffer greatly before he died from Russia's chemical attack just as Alexander Litvinenko a few years ago. A bullet in the head was not Putin's desired option. The long history of Russian deaths in the UK under mysterious circumstances | The Independent The Litvinenko Russian hit on British soil was with the highly toxic polonium-210.
The only question was the identity of the Russian GRU agents sent to carry out the task.
Their identity is now known, but Russia will not turn them over which goes without saying. No one outside of Russia accepts its vigorous denials
Using a chemical weapon on U.K. soil is an act of war of course. And what did Russia gain other than another rounds of western sanctions.
What will Russia have in 2 or 3 decades when the oil dries up and their military weapons turn into junk? It is not going to pretty for your average Russian.
Putin is admired and respected by the Duck, but history written by non-state controlled historians will not be kind to him.
A Spy Story: Sergei Skripal Was a Little Fish. He Had a Big Enemy. - The New York Times
U.S. officials suspect Russia in mystery 'attacks' on diplomats in Cuba, China
+++
Bret Kavanaugh:
The republicans are going to overlook evidence that Kavanaugh committed perjury in earlier confirmation hearings. Brett Kavanaugh Supreme Court hearing: the perjury controversy, explained - Vox If Kavanaugh was a left to center nominee offered by a Democrat President, they would justify voting no based on that prior perjury issue.
Kavanaugh will soon be sitting on the Supreme Court, giving the Court a 4 reactionary justices (Alito, Thomas, Kavanaugh, Gorsuch) and 1 right-of-center Justice (Roberts).
+++++++
1. Small Ball- Equity REIT Common and Preferred Stock Basket Strategy:
A. Sold 15 HTA at $28.57-Used Commission Free Trade:
A. Sold 15 HTA at $28.57-Used Commission Free Trade:
Quote: Healthcare Trust of America Inc. (HTA)
Website: Healthcare Trust of America, Inc.
Closing Price Tuesday 9/11/18: HTA $27.64 -$0.12 -0.43%
Profit Snapshot: $46.12
Item # 1.E. Bought 10 HTA at $25.79 and 5 at $24.92-Used Commission Free Trades (3/8/18 Post)
Healthcare Trust of America Inc. Interactive Chart
Dividend: Quarterly at $.31 ($1.24 annually)
Dividends – HTA
Going back in time, HTA did pay at monthly dividend that hit $.1232 per share in 2012 or $.3696 per quarter. The monthly dividend was cut to $.0928 per share effective for the June 2012. The company then went on a quarterly payment schedule with the first payment at $.2875 for the 2012 third quarter.
Over the past six years, the quarterly rate has been raised by $.0225 per share or 7.83%. At that rate, I could own this stock for the remainder of my life and would probably never see the dividend double from its 2012 peak.
The quarterly rate is still dividend is still 16.13% BELOW its 2012 high point.
Dividend Yield at $28.57 = 4.34%
Next Ex Dividend Date: 10/2/18
Normally, I do not buy REITs with dividend yields below 5%, preferring to buy and trade those with greater than 7% yields. With the HTA common stock dividend yield near 4%, and having a very slow rate of growth with a dividend cut in 2012, I would prefer owning its bonds.
Previous Round-Trip: Item # 2 Sold 50 HTA at $26.25 Update For REIT Basket Strategy As Of 10/28/15 - South Gent | Seeking Alpha (profit snapshot = $124.1)-Item # 5 Bought 50 HTA at $23.45 Update For REIT Basket Strategy As Of 9/8/15 - South Gent | Seeking Alpha
Most Recent HTA Bond Purchase: Item # 4.A. Bought 2 HTA 3.375% SU Bonds Maturing on 7/15/21 (7/18/18 Post)
B. Sold 50 of 100 EPRPRC at $28.48-Used Schwab Commission Free Trade:
Profit Snapshot: +$224.22
Item # 1 Bought 50 EPRPRC at $24 and 50 at $23.78 (4/23/18)
I sold the lot bought at $24 and kept the 50 shares bought at $23.78.
Quote: EPR Properties 5.75% Cumulative. Convertibel Preferred Series C
This is a convertible preferred stock issued by EPR Properties. The initial conversion rate was at $71.34, which rate has been adjusted down to $63.97 as of 6/30/18: Terms.PDF The company discloses the adjusted conversion price every quarter, and the most recent number can be found by clicking "Summary of Series C Preferred Shares" here: Preferred Shares Summary of Terms
Due to an increase in the common share price since my two 50 share lot purchases, the value of the conversion right has gone up which has driven the convertible preferred stock price up as well.
Par value is $25. This security pays a quarterly dividend at a 5.75% per annum rate on that $25 par value.
EPRPRC Trading Profits to Date: $384.7
Prior Round Trip: Item # 3 Sold EPRPRC at Update For Equity REIT Basket Strategy As Of 4/6/16 - South Gent | Seeking Alpha (profit snapshot = $160.48)
C. Sold 137+ LXP at $9.08 and 53 LXP at $9.06-Two Roth IRA Accounts:
Closing Price Tuesday 9/11/18: LXP $8.29 -$0.17 -2.01%
Profit Snapshots: +$914.11
The Fidelity profit is juiced through Fidelity assigning a zero cost basis for shares purchased with dividends in a retirement account. The Fidelity profit number of is consequently a total return number.
The Vanguard profit number of is solely a profit on the shares with the dividends adding separately to the total return percentage.
Quote: Lexington Realty Trust (LXP)
LXP SEC Filings
Portfolio Map
I eliminated my LXP positions in two Roth IRA accounts by selling shares at $9.06 and $9.08. I am keeping for now the shares own in two taxable accounts.
LXP announced on 9/4/18 that it was selling 21 office buildings for $726M to a joint venture where it will have a 20% interest. Those properties were 98.6% leased and had a GAAP and cash capitalization rates of 8.6% and 8.1%, respectively. For the 6 months ending 6/30/18, these properties produced $27.9M in AFFO. Lexington Realty Trust Announces Disposition of 21 Office Assets for $726 Million to Joint Venture
I can not judge the adequacy of the price. My gut says the buyer got a good deal; and LXP's managers are still trying to decide what they want to be when they grow up.
The disposition of these office properties will increase the percentage of LXP revenues from industrial properties to 60% from 44%.
However, an investor has to ask why fool with LXP with a soon to be slashed dividend cut when much better managed industrial REITs are raising their dividends. An example is W.P. Carey, which I own. Dividend Information - W. P. Carey Since I still own some LXP shares, I am wondering why I did not eliminate the position after this announcement. I have no good excuse.
Due to the disposition, LXP lowered its AFFO guidance for this year to "$0.92 to $0.94 per diluted common share, which is a decrease from its previous guidance of $0.95 to $0.98 per diluted common share."
The capitalization rates for industrial properties are lower than the the office properties. No guidance was given in the press release for 2019. I would anticipate a meaningfully lower 2019 AFFO number than the revised 2018 number, but the range is somewhat speculative now until more is known about how LXP uses the proceeds.
LXP will be cutting its dividend in 2019, but the amount of the slash in not known with certainty now.
LXP will keep its current quarterly rate for the current quarter and the 2018 4th quarter. The rate will then be reset in the first quarter to an anticipated range between "55% to 65% of 2019 Adjusted Company FFO."
If I used the top of that range (65%) and used the high revised estimate for 2018 ($.94), I arrive at a $.611 annual dividend. If I used the bottom of 55% and assumed a .94 AFFO per share which will likely be too high for 2019, I compute a $.517 annual dividend or about $.13 per quarter. My last assumption is to use 55% and a .88 per share AFFO, and that gives me a $.12 quarterly dividend.
My best guess now is that the quarterly dividend will be reduced to somewhere in the $.12 to $.13 range.
The current quarterly dividend is $.1775 so I am anticipating a dividend cut starting with the 2019 first quarter. Dividends | lxp.com
The magnitude is yet to be determined given the wide range of 55% to 65% of 2019 AFFO and LXP's lack of guidance for 2019 AFFO which I anticipate to be lower than 2018 given the office property dispositions.
Current Position Taxable Accounts: Schwab at 147+ and Fidelity at 104+
I will continue to pursue a "small ball buying program" in my Fidelity taxable account. My last purchase in the chain was at $7.74, so the next purchase would have to be below that number using the small ball purchase restriction. Item # 2.C. Bought 10 LXP at $7.74 (3/25/18 Post)
I will not be buying more shares in my Schwab taxable account other than through dividend reinvestment.
5 Year Chart
Last Substantive Discussion: Item # 3.B. Bought 10 LXP at $8.81-Used Schwab Commission Free Trade (8/19/18 Post)
Trading Profits to Date: +$1,828.22 ($800.94 prior trades, snapshots in
Last Earnings Report: Lexington Realty Trust Reports Second Quarter 2018 Results
Website: Healthcare Trust of America, Inc.
Closing Price Tuesday 9/11/18: HTA $27.64 -$0.12 -0.43%
Profit Snapshot: $46.12
Item # 1.E. Bought 10 HTA at $25.79 and 5 at $24.92-Used Commission Free Trades (3/8/18 Post)
Healthcare Trust of America Inc. Interactive Chart
Dividend: Quarterly at $.31 ($1.24 annually)
Dividends – HTA
Going back in time, HTA did pay at monthly dividend that hit $.1232 per share in 2012 or $.3696 per quarter. The monthly dividend was cut to $.0928 per share effective for the June 2012. The company then went on a quarterly payment schedule with the first payment at $.2875 for the 2012 third quarter.
Over the past six years, the quarterly rate has been raised by $.0225 per share or 7.83%. At that rate, I could own this stock for the remainder of my life and would probably never see the dividend double from its 2012 peak.
The quarterly rate is still dividend is still 16.13% BELOW its 2012 high point.
Dividend Yield at $28.57 = 4.34%
Next Ex Dividend Date: 10/2/18
Normally, I do not buy REITs with dividend yields below 5%, preferring to buy and trade those with greater than 7% yields. With the HTA common stock dividend yield near 4%, and having a very slow rate of growth with a dividend cut in 2012, I would prefer owning its bonds.
Previous Round-Trip: Item # 2 Sold 50 HTA at $26.25 Update For REIT Basket Strategy As Of 10/28/15 - South Gent | Seeking Alpha (profit snapshot = $124.1)-Item # 5 Bought 50 HTA at $23.45 Update For REIT Basket Strategy As Of 9/8/15 - South Gent | Seeking Alpha
Most Recent HTA Bond Purchase: Item # 4.A. Bought 2 HTA 3.375% SU Bonds Maturing on 7/15/21 (7/18/18 Post)
B. Sold 50 of 100 EPRPRC at $28.48-Used Schwab Commission Free Trade:
Profit Snapshot: +$224.22
Item # 1 Bought 50 EPRPRC at $24 and 50 at $23.78 (4/23/18)
I sold the lot bought at $24 and kept the 50 shares bought at $23.78.
Quote: EPR Properties 5.75% Cumulative. Convertibel Preferred Series C
This is a convertible preferred stock issued by EPR Properties. The initial conversion rate was at $71.34, which rate has been adjusted down to $63.97 as of 6/30/18: Terms.PDF The company discloses the adjusted conversion price every quarter, and the most recent number can be found by clicking "Summary of Series C Preferred Shares" here: Preferred Shares Summary of Terms
Due to an increase in the common share price since my two 50 share lot purchases, the value of the conversion right has gone up which has driven the convertible preferred stock price up as well.
Par value is $25. This security pays a quarterly dividend at a 5.75% per annum rate on that $25 par value.
EPRPRC Trading Profits to Date: $384.7
Prior Round Trip: Item # 3 Sold EPRPRC at Update For Equity REIT Basket Strategy As Of 4/6/16 - South Gent | Seeking Alpha (profit snapshot = $160.48)
C. Sold 137+ LXP at $9.08 and 53 LXP at $9.06-Two Roth IRA Accounts:
Profit Snapshots: +$914.11
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| ROTH IRA 53+ Shares +$60.75 |
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| Roth IRA 137+ Shares +$853.36 |
The Vanguard profit number of is solely a profit on the shares with the dividends adding separately to the total return percentage.
Quote: Lexington Realty Trust (LXP)
LXP SEC Filings
Portfolio Map
I eliminated my LXP positions in two Roth IRA accounts by selling shares at $9.06 and $9.08. I am keeping for now the shares own in two taxable accounts.
LXP announced on 9/4/18 that it was selling 21 office buildings for $726M to a joint venture where it will have a 20% interest. Those properties were 98.6% leased and had a GAAP and cash capitalization rates of 8.6% and 8.1%, respectively. For the 6 months ending 6/30/18, these properties produced $27.9M in AFFO. Lexington Realty Trust Announces Disposition of 21 Office Assets for $726 Million to Joint Venture
I can not judge the adequacy of the price. My gut says the buyer got a good deal; and LXP's managers are still trying to decide what they want to be when they grow up.
The disposition of these office properties will increase the percentage of LXP revenues from industrial properties to 60% from 44%.
However, an investor has to ask why fool with LXP with a soon to be slashed dividend cut when much better managed industrial REITs are raising their dividends. An example is W.P. Carey, which I own. Dividend Information - W. P. Carey Since I still own some LXP shares, I am wondering why I did not eliminate the position after this announcement. I have no good excuse.
Due to the disposition, LXP lowered its AFFO guidance for this year to "$0.92 to $0.94 per diluted common share, which is a decrease from its previous guidance of $0.95 to $0.98 per diluted common share."
The capitalization rates for industrial properties are lower than the the office properties. No guidance was given in the press release for 2019. I would anticipate a meaningfully lower 2019 AFFO number than the revised 2018 number, but the range is somewhat speculative now until more is known about how LXP uses the proceeds.
LXP will be cutting its dividend in 2019, but the amount of the slash in not known with certainty now.
LXP will keep its current quarterly rate for the current quarter and the 2018 4th quarter. The rate will then be reset in the first quarter to an anticipated range between "55% to 65% of 2019 Adjusted Company FFO."
If I used the top of that range (65%) and used the high revised estimate for 2018 ($.94), I arrive at a $.611 annual dividend. If I used the bottom of 55% and assumed a .94 AFFO per share which will likely be too high for 2019, I compute a $.517 annual dividend or about $.13 per quarter. My last assumption is to use 55% and a .88 per share AFFO, and that gives me a $.12 quarterly dividend.
My best guess now is that the quarterly dividend will be reduced to somewhere in the $.12 to $.13 range.
The current quarterly dividend is $.1775 so I am anticipating a dividend cut starting with the 2019 first quarter. Dividends | lxp.com
The magnitude is yet to be determined given the wide range of 55% to 65% of 2019 AFFO and LXP's lack of guidance for 2019 AFFO which I anticipate to be lower than 2018 given the office property dispositions.
Current Position Taxable Accounts: Schwab at 147+ and Fidelity at 104+
I will continue to pursue a "small ball buying program" in my Fidelity taxable account. My last purchase in the chain was at $7.74, so the next purchase would have to be below that number using the small ball purchase restriction. Item # 2.C. Bought 10 LXP at $7.74 (3/25/18 Post)
I will not be buying more shares in my Schwab taxable account other than through dividend reinvestment.
5 Year Chart
Last Substantive Discussion: Item # 3.B. Bought 10 LXP at $8.81-Used Schwab Commission Free Trade (8/19/18 Post)
Trading Profits to Date: +$1,828.22 ($800.94 prior trades, snapshots in
Last Earnings Report: Lexington Realty Trust Reports Second Quarter 2018 Results
2. Short Term Bond/CD Ladder Basket Strategy:
A. Bought 2 Arizona Public Service 2.2% SU Bonds Maturing on 1/15/20:
FINRA Page: Bond Detail (prospectus linked)
Issuer: Arizona Public Service, the largest electric utility in Arizona and a wholly owned subsidiary of Pinnacle West Capital Corp. (PNW)
Credit Ratings:
The holding company debt is rated lower at A3/BBB+: PNW 2.25% SU
Bought at a Total Cost of 99.147 (includes $2 commission)
YTM at TC Then at 2.833%
Current Yield at TC = 2.2189%
B. Bought 3 Treasury Bills Maturing on 11/29/18 at Auction:
Investment Rate = 2.12%
B. Bought 3 Treasury Bills Maturing on 11/29/18 at Auction:
Investment Rate = 2.12%
Auction Results 13 Week Treasury Bill.pdf
C. Bought 2 Rockwell Automation 2.05% SU Bonds Maturing on 3/1/20:
Finra Page: Bond Detail (prospectus linked)
Issuer: Rockwell Automation Corp. (ROK)
ROK Analyst Estimates
Rockwell Automation Reports Third Quarter 2018 Results
ROK SEC Filings
Credit Ratings:
Fitch Affirms Rockwell Automation at 'A'; Outlook Stable (6/5/18)
Bought at a Total Cost of 98.587
YTM at TC Then at 3.021%
Current Yield at TC = 2.0794%
3. Sold 108+ Novartis at $83.66 ($7 Vanguard Commission):
Profit Snapshot: +$968.85
Closing Price Tuesday 9/11/18: NVS $83.98 +$1.45 +1.76%
Subsequent to my disposition, Merrill Lynch upgraded NVS to buy from underperform. I do not have access to that report. As with other recent Merrill analyst changes, I have to wonder about the timing of this report. Why didn't the recommendation to buy come out a few weeks ago when the stock was hovering near $72 or about 10% lower than now. NVS Historical Prices Will the ML analyst then wait to downgrade NVS back to underperform when and if the stocks falls back to $70 or less?
As shown in this snapshot, I did not reinvest the annual dividend paid in 2014 and 2015.
I did reinvest the dividends paid in 2016-2018 and realized a $69.34 gain on those shares.
The dividend amounts shown above were after Switzerland's 15% dividend tax and a small fee paid to the ADR custodian each year. I recovered the foreign dividend taxes as credits.
I sold earlier this year a 30 share lot at $93.85: Item 2.A. Sold 30 NVS at $93.85 (2/3/18 Post)
Quote: Novartis AG ADR (NVS)
CHF / USD Currency Chart. Swiss Franc to US Dollar Rates
This was my last common stock owned in this taxable account. I intend to gradually deploy the proceeds into ETFs that can be purchased commission free.
I still own shares in my Fidelity account which are being bought in a "small ball buying program".
Current Position in Fidelity Account: 44+ Shares
Average Cost Per Share Fidelity Account = $79.55
Highest Lot Fidelity Account: 10 shares at $85.
The lowest cost lot in the chain is at $74.76. Item # 1.C. (6/11/18 Post)
Last Substantive Discussion: Item # 1.B. Added 2 NVS at $77.91, 2 at $76.9, and 18 at $77.34-Used Commission Free trades (4/30/18 Post) I still own those shares.
Dividend: Annually
Last Ex Dividend Date: 3/16/18
Last Earnings Report: Financial Results Q2 2018 - Novartis
Sales by Unit and Drug:
Sourced from CONDENSED INTERIM FINANCIAL REPORT
Generics-Sandoz:
Novartis to divest the Sandoz US dermatology business and generic US oral solids portfolio to Aurobindo (9/6/18)
Closing Price Tuesday 9/11/18: NVS $83.98 +$1.45 +1.76%
Subsequent to my disposition, Merrill Lynch upgraded NVS to buy from underperform. I do not have access to that report. As with other recent Merrill analyst changes, I have to wonder about the timing of this report. Why didn't the recommendation to buy come out a few weeks ago when the stock was hovering near $72 or about 10% lower than now. NVS Historical Prices Will the ML analyst then wait to downgrade NVS back to underperform when and if the stocks falls back to $70 or less?
As shown in this snapshot, I did not reinvest the annual dividend paid in 2014 and 2015.
I did reinvest the dividends paid in 2016-2018 and realized a $69.34 gain on those shares.
The dividend amounts shown above were after Switzerland's 15% dividend tax and a small fee paid to the ADR custodian each year. I recovered the foreign dividend taxes as credits.
I sold earlier this year a 30 share lot at $93.85: Item 2.A. Sold 30 NVS at $93.85 (2/3/18 Post)
Quote: Novartis AG ADR (NVS)
CHF / USD Currency Chart. Swiss Franc to US Dollar Rates
This was my last common stock owned in this taxable account. I intend to gradually deploy the proceeds into ETFs that can be purchased commission free.
I still own shares in my Fidelity account which are being bought in a "small ball buying program".
Current Position in Fidelity Account: 44+ Shares
Average Cost Per Share Fidelity Account = $79.55
Highest Lot Fidelity Account: 10 shares at $85.
The lowest cost lot in the chain is at $74.76. Item # 1.C. (6/11/18 Post)
Last Substantive Discussion: Item # 1.B. Added 2 NVS at $77.91, 2 at $76.9, and 18 at $77.34-Used Commission Free trades (4/30/18 Post) I still own those shares.
Dividend: Annually
Last Ex Dividend Date: 3/16/18
Last Earnings Report: Financial Results Q2 2018 - Novartis
Sales by Unit and Drug:
Sourced from CONDENSED INTERIM FINANCIAL REPORT
Generics-Sandoz:
Oncology:
Respiratory:
Ophthalmology:
Cardio:
Neuroscience, Immunology, Hepatology, and Dermatology:
Established Medicines:
Alcon:
Cardio:
Alcon:
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.
