Observations and Sample of Recent Trades: CPB, GE, SIR, VIAB

Economy: 

Goldman Sachs is predicting 4% real worldwide GDP growth in 2018. Goldman Sachs says 2017 was surprisingly good: CNBC 

This one chart sums up what’s happening to America’s ‘good’ jobs - MarketWatch

Goldman Sachs Sees Four 2018 Fed Rate Hikes as U.S. Growth Gains - Bloomberg

I am certainly positioned for four rate hikes in 2018. I doubt that there will be more than two. The Bond Bookies share that skepticism. The FED will increase the FF rate by .25% next month. That will create a new FF target range of 1.25% to 1.5%. 

As of 11/19/17, the following odds exist for hikes on or before 11/8/18.   

Countdown to FOMC: CME FedWatch Tool

As of last Friday, there was only a 83.6% chance of one rate increase next year. The probability of two increases was only 44.9%. 

Currently, I am predicting an 80%+ probability of two rate increases next year, which would take the range to 1.75% to 2% and a 30%-50% probability for 3. The odds of 4 would be less than 10% IMO. 
  
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Market Commentary: 

High-yield bond funds see 3rd largest weekly outflows on record- MarketWatch

Ed Yardeni: Commodities hold the key to where stocks are heading: CNBC

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Joint Committee on Taxation (JCT): Distribution Effects of GOP's Senate Tax Bill: 

The Secretary of the Treasury Mnuchin says the purpose of the tax cuts is to help the middle class. Republicans defend tax plan as a middle-class tax cut -The Washington Post 

Mnuchin and other republicans claim that the tax cuts for low and middle income taxpayers that are front loaded can be restored and enhanced several years from now when the U.S. deficits and debt are far worse than now. Deficits and the spiraling federal government debt only matter to republicans when the Democrats are in power. A House Republican explains why deficits don’t matter anymore-Vox; Republicans Rally Around Raising the Deficit-The Atlantic; Accounting ‘Gimmicks’ in G.O.P.’s Tax Overhaul Mask Higher Cost, Deficit Hawks Say-The New York Times; New Senate Tax Bill Hides Over $500 Billion of Gimmicks | Committee for a Responsible Federal Budget; The GOP’s New Tax Plan Proves Republicans Never Cared About the Federal Deficit 

The lower and middle income Trump supporters will never even contemplate the possibility that Donald is going to raise their taxes over time while initially giving them a token tax cut. The JCT estimates that just the inflation measure change will increase individual taxes by $134B through 2027. That change alone increases individual taxes by $.8B in 2018 but that amount accelerates every year thereafter to $31.5B by 2027. It is one of the stealth means used by republicans to increase individual taxes.    

JCT Estimates: Amended Senate Tax Bill Skewed to Top, Hurts Many Low- and Middle-Income Americans 

Who wins and who loses in the GOP Senate tax plan | PBS NewsHour

G.O.P. Senator Explodes at Colleague Who Says Tax Cuts Help the Rich | Vanity Fair (Senator Hatch lives in his own reality creations, unable to digest factual information inconsistent with the cliches that form his thoughts. This remarkable, angry exchange between senators unmasks the GOP’s tax-cut lies-The Washington Post)  

CBPP’s Analyses of the Senate Tax Plan 

Repealing The Estate Tax Could Allow Heirs Of The Very Wealthy To Avoid Tax On Capital Gains | Tax Policy Center

Distributional Analysis of the Tax Cuts and Jobs Act as Passed by the House Ways and Means Committee | Full Report | Tax Policy Center

The comments made by Senator Collins (R-Maine) over the weekend suggests that she is a no vote unless modifications are made to the Senate's "tax reform" bill. Collins Says Tax Plan Passed by Senate Committee Needs Work-Bloomberg Senator Johnson (R-WIS) has already stated that he is a no vote unless tax reductions for small businesses are increased in the bill. Republican Sen. Ron Johnson comes out against tax bill-CNN 

If the GOP manages to pass a tax bill similar to the ones now being considered in the Senate and passed in the House, then their plan is not going to last for long. The Democrats will repeal key parts of it that apply to wealthy individuals and to corporations when they return to power. 

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Trump: 

The WP has updated its compilation of false statements made by Trump since his inauguration. The number stands at 1,628 as of 11/13/17.  The Fact Checker’s tally of Trump’s false claims since becoming president - Washington Post

If the GOP is a conservative party as republicans claim, which is clearly not the case, then telling the truth and avoiding intentionally misleading statements are no longer conservative values.  

A Panama tower carries Trump's name and ties to organized crime-NBC News

Russian elite invested nearly $100 million in Trump buildings: Reuters

Trump to Lavar Ball: 'I should have left them in jail!'-CNN 

Roy Moore accuser speaks out on TODAY: He ‘seduced me’ at age 14 - TODAY.com

+++++++++++


1. GAVE UP ON GE:

Management and the Board of Directors have run this company into the ground. I do not any faith in their ability to turn the company back to a growth path. The new CEO has a plan, sort of, but then Jeff Immelt had plans too. 

At best, the shares are probably dead money with a current dividend insufficient to support the share price.  In my opinion, the shares are likely to drift lower as more investors abandon the stock after two major dividend slashes since 2008. Even after slashing the dividend by 50%, the payout ratio using free cash flow rather than earnings is high. The 2009 dividend slash was at 68%, going from a quarterly dividend of $.31 per share to $.10. GE Dividend History 

The shares could easily decline sufficiently in the next recession, and those will happen, that my realized profit on this last Fidelity lot would no longer exist if I had continued to hold this 124+ share lot.  

A. Sold Remaining 124+ Shares in Fidelity Account at $18.25-Used Commission Free Trade:

Profit Snapshot: +$774.4

The preceding snapshot includes two earlier transactions this year where I sold at higher prices. Stocks, Bonds & Politics: Item # 3.A. Sold 40 GE at $28.76 (7/12/17 Post); Stocks, Bonds & Politics: Item # 3.A. Sold 80 GE at $29.69 (4/18/17 Post) My instincts to sell GE shares proved to be right while my gut instinct to keep 124+ shares, my lowest cost shares, and to buy 30 more in a Roth IRA was less than optimal. 

The $774.4 number only includes those shares sold on 11/15/17 plus the fractional share liquidated on 11/17. 

I am keeping the 30 shares bought in a ROTH IRA account at $23.9: Stocks, Bonds & Politics: Item # 2 (9/25/17 Post) 

Trading Profits 2007 to Date: +$4,353.8 (see snapshots and links in prior linked post)


2. Sold 50 Viacom at $26.14-Used Commission Free Trade: 

This lot was recently purchased and declined shortly after my purchase by more than 10% before rising again to change a 10+% loss into a small gain. That is not the optimal result for a trade and at least suggests a lower entry point is achievable. 

The intra-day low on 11/16/17 was at $22.13. From that low to the next day's close, the shares appreciated 18.17%.   

I will likely try again with a lower entry point than my last purchase.

Closing Price Day of Trade (11/17/17): VIAB $26.15 +$2.46 10.38% 

Profit Snapshot: $39.52

Stocks, Bonds & Politics: Item # 7.A. Bought 50 VIAB at $25.35 (10/11/17 Post)

The pop last Friday in price was probably due to reports that both Disney and Verizon were interested in Fox's entertainment content assets. Viacom might be a default choice for one or both of those companies. 

However, there is no publicly available report, to my knowledge, indicating that Sumner Redstone is willing to sell Viacom. It may not be prudent to do so, given his poor physical and mental condition which raises competency and other issues, the estate tax rules now in place that includes the stepped up cost basis to the FMV at the DOD, and the possible increases in the exemption amounts starting next year.  

The market reacted negatively to the earnings report released after my purchase. Viacom Sinks 9%: Trouble Even ‘Teen Mom’ Can’t Fix - Barron's (11/16/17 Post, referring to the intra-day price of $22.4)

Viacom Reports Fourth Quarter and Full Year Growth

While adjusted E.P.S. was 9 cents below the consensus estimate of $.86, I was not expecting much and was not disappointed by the results. There were bright spots in the report. I was contemplating buying more shares after the earnings fueled decline on 11/16, but forgot about it. 

Revenues did increase by 3.2% to $3.32B, beating the consensus estimate of $3.23B. Adjusted E.P.S. did increase 12% over the prior year's fiscal 4th quarter. International revenues increased 24% to $593M and 20% on a constant currency basis. 

The problems include cord cutting and giving distributors lower rates in contract negotiations that lead to lower domestic revenues. Domestic advertising revenues were flat. Affiliate revenue decreased by 1%. 

Earnings Report Discussed at 

Viacom's profit and outlook disappoint, and its Paramount Pictures suffers another loss-LA Times

Viacom expects distributor revenue to drop in 2018; shares sink: Reuters

Viacom Sees Declining Fees from Cable Operators, Sinking Shares - TheStreet

Viacom Earnings: Three Reasons to Still Stay Tuned - Bloomberg

A negative development after I bought the 50 share lot was the collapse of a film financing agreement between Paramount and Huahua Media that resulted in  Viacom taking a $43M loss in the quarter. I would call Paramount a struggling film studio that needs significant financing assistance from third parties.

3.  Sold 50+ CPB at $49.73+ Using Commission Free Trade: 

History in this Account: 

Closing Price Day of Trade: CPB $49.72 +$1.40 +2.90% 

Profit Snapshot: +$43.21

I realized a loss on the first lot purchased at $51; and a profit on the 20 share lot purchased at $45.71+ and the fractional share bought in one dividend. 

Stocks, Bonds & Politics: Item # 6.A. Added 20 CPB at $45.72 (10/16/17 Post) 

Item #2: Bought Back 30 CPB at $51

The fractional share lot was purchased with a dividend within thirty days prior to selling. Even though the fractional share (.369) purchased with the dividend was sold profitably, the wash sale rule was nonetheless triggered, but only for that fractional share amount rather than the loss associated with the 30 share buy at $51. The result was to deny only a few cents of the loss connected to that 30 share lot.     

AAII: The American Association of Individual Investors (Wash Sale Rules)

I will probably try again when and if the price falls below my last purchase price which could happen with another poor earnings report. CPB is scheduled to report its fiscal 2018 first quarter results on 11/21/17. While it is certainly possible that CPB will report better than expected results, the odds are more in favor of another disappointing quarter. 

Why Campbell Soup’s Fiscal 1Q18 Earnings Could Fall - Market Realist

CPB is yet another falling knife that I am attempting to trade. 

The next ex dividend date is early in January 2018. Campbell Declares Quarterly Dividend 

On 11/9/17, UBS reduced its price target to $42 from $46 and maintained its sell rating.  

4. Intermediate Term Bond/CD Ladder Basket Strategy:

A. Bought 1 Wells Fargo 2.4% CD (monthly interest) Maturing on 11/22/22 (5 year CD):

B. Bought 1 Capital One 2.15% CD (semi-annual interest) Maturing on 11/22/21 (4 year CD):

5. Short Term Bond/CD Ladder Basket Strategy: 

A. Bought 2 Pacific Premier Bank 1.4% CDs (monthly interest) Maturing on 8/29/18 (9 month CDs): 

Holding Company: Pacific Premier Bancorp Inc. (PPBI)

PPBI Analyst Estimates 

Pacific Premier Bancorp, Inc. Announces Third Quarter 2017 Results (Unaudited) 

B. Bought 1 Treasury 1.5% Coupon Maturing on 12/31/18: YTM at 1.52%

C. Bought 1 Wells Fargo 2% CD (monthly interest) Maturing on 11/23/2020 (3 year CD):

D. Bought 2 Treasury 1.5% Coupon Notes Maturing on 1/31/19: YTM = 1.525%

This bond was originally sold as a five year note back in January 2014. The purchase was made in a Vanguard account. That broker does not charge a commission for U.S. treasury trades.

E. Bought 1 Treasury 1% Coupon Maturing on 9/15/18-a Roth IRA Account: YTM =1.452%

F. Bought 1 Whitney Bank 1.2% CD Maturing on 2/14/18-A Roth IRA Account (3 month CD):

The source of funds for this purchase was my Vanguard settlement account which is the Vanguard Federal Money Market Fund that has a .11% expense ratio.

The SEC yield for that fund was 1.01% as of 11/8/17, slightly lower than the 1.14% rate paid by the Vanguard Prime Money Market Fund.

I will keep more funds available for trading in the later fund, but will infrequently move excess funds from the Federal MM fund to the Vanguard Prime MM fund just to receive an additional .13%.

I also own the Vanguard Tax-Exempt Money Market Fund that had a tax free yield of .82% as of 11/8/17 with a .15% expense ratio. At a 25% tax bracket, the Prime MM fund has a slightly higher after tax yield at a 1.14% taxable yield (.8625%) than the Vanguard Municipal MM fund at .82%.

While I do not pay a Tennessee tax on CD interest payments, I currently have to pay a 5% tax on MM fund distributions and at 4% next year. Interest payments from the treasury are not subject to state taxation, so a 1.5% current yield which is free from the Tennessee state tax would beat the 1.01% Vanguard Federal MM yield by .49% and by .53% on an after a Tennessee state tax adjustment at the 2018 tax rate of 4%.

G. Bought 1 Anheuser 1.9% SU Bond Maturing on 2/1/19- A Roth IRA Account:

I recently had 4 BUD SU bonds redeemed early by the issuer. Those bonds had a 1.25% coupon and a January 2018 maturity date. 

This 2019 BUD SU bond was bought in a Roth IRA.  

While I bought this 2019 BUD bond below par value, my $1 commission took the cost number 19 cents over par value. 

Finra Page: Bond Detail

Issuer:  Anheuser-Busch InBev S.A. ADR (BUD) 
Q3 2017  Earnings Call Transcript-Seeking Alpha
Anheuser-Busch InBev reports Third Quarter and Nine Months 2017 Results_EN.pdf

Credit Ratings: 

YTM at Total Cost of 100.019 = 1.883% (bought at 99.919)
Current yield at Total Cost: 1.9% 

For a bond maturing in about 13 months, a tax free yield of 1.88% is acceptable for me in a Roth IRA account where preservation of capital is the paramount objective.

The issuer may elect to redeem this bond early as well. The make whole provision allows for an optional redemption at par value plus accrued and unpaid interest, within three months of the maturity date.

6.  Equity REIT Common and Preferred Stock Basket Strategy:

A. Sold 50 SIR at $25.48-Used Commission Free Trade:

I received one quarterly dividend.

Profit Snapshot: +$126.48

Stocks, Bonds & Politics: Item # 6.A. Bought 50 SIR at $22.95  (9/11/17 Post)

As I discussed in that post, there are a lot things to dislike about this REIT, so any purchase is at the outset intended to be a trade and a dividend capture. The main attraction is the dividend yield. The current quarterly rate is $.51 per share. Select Income REIT (SIR) Dividend History

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.

Observations and Sample of Recent Trades: ARESF, AZN, BRGPRA, GYC, VEIRX, VIAB /Bond-CD Cluster 11/1/17 through 1/31/18

Portfolio Management: 

While I am continuing to pare my stock allocation on a net basis, I will ponder buying some stocks that fall into my consider to buy range. 

One such stock is Viacom. I discuss buying 50 shares at $25.35 using a commission free trade in Item # 7 below. 

Viacom is not a stock on the radar for dividend growth investors and for good reason. The company slashed its dividend in September 2016 by 50%, going from a quarterly rate of $.4 per share to $20. The company needs the cash to pay down its huge debt load.  

This is one ugly chart that will drive most other investors away or to sell existing positions to harvest a tax loss, which is understandable. 

So Viacom's stock is clearly well within the falling knife category. 

But, I was not an owner of this stock when it made a move from $50 to almost $90, nor have I owned shares during the waterfall decline until I bought 50 shares at $25.35. So the dividend slash and huge price decline were out of the way when I made my nibble. There has been no stock splits over the past five years and the spin-off of CBS occurred long before the five year period pictured above. 

At my total cost per share of $25.35, the P/E on the next year fiscal year E.P.S., currently at $4.01, is about 6.32 and the dividend yield is about 3.16% at the slashed quarterly rate of $.2 per share. Viacom Inc. Cl B Analyst Estimates-MarketWatch

A 50 share buy was worth a small gamble for me, notwithstanding the bad juju. 

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Tax Rates: 

Here are the actual tax rates the biggest companies in America pay - MarketWatch

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Trump and the Modern Republican Party:  

While 79% of republicans view Donald as honest and trustworthy, the WP has now documented 1,318 false statements made by him starting with his inauguration last January through 10/9/17: The Fact Checker’s tally of Trump’s false claims since becoming president - Washington Post 

Trump Plays Down Health Hazard in Justifying Climate Rule Repeal - Bloomberg

The heart and soul of the modern day GOP called Senator Corker (R-TN) a disgrace: Steve Bannon calls GOP Sen. Bob Corker a "disgrace," calls on him to quit - CBS News  

Trump escalates feud with Corker - CNN: 

The NYT noted that Corker asked the reporter to record the conversation at the very start, which is contrary to the lie stated in Trump's tweet: Trump Claims We Tricked Bob Corker. Here’s the Truth. - The New York Times ("Far from being set up, Mr. Corker asked that I tape our conversation. . . And after Mr. Corker got off the phone, his two aides made sure I had recorded the call. Like the senator, they wanted to ensure his extraordinary charges were precisely captured." Corker's aide also taped the conversation which was known to the NYT reporter during the interview) Trump is unable to tell the truth about anything, even trivial matters like whether Corker knew that his conversation was being taped. 

Trump Implosion Watch: Adult Day-Care Center Edition

“I Hate Everyone in the White House!”: Trump Seethes as Advisers Fear the President Is “Unraveling” | Vanity Fair

Trump claims that he has a higher IQ than Tillerson. 

Trump challenges Secretary of State Rex Tillerson to 'compare IQ tests' - ABC News; 

Mensa offers to give IQ test to Trump and Tillerson -CBS News

Trump is also doing whatever he can to antagonize Democrats: 

The Democrats thought they had a deal with Donald on helping the Dreamers. 

Donald has reneged. Only a fool would trust Donald to keep his word.  

Donald will now hold the Dreamers hostage and will do nothing for the them unless the Democrats agree (1) to fund the wall that Mexico was supposed to pay for; (2) to fund the hiring of 10K new border patrol agents; (3) to agree that federal grants can be denied to "sanctuary cities"; (4) to end the policy allowing people to bring their extended families into the U.S. and (5) to toughen the laws for those seeking asylum in the U.S. (e.g. children fleeing violence in central America). White House Makes Hard-Line Demands for Any ‘Dreamers’ Deal - The New York Times Trump administration releases hard-line immigration principles, threatening deal on ‘dreamers’ - The Washington Post ("Trump had said several times over the past month that he did not expect a DACA deal to include funding for a border wall, emphasizing that the money could be included in separate legislation.") 

The Democrats will give something on some of those demands, but others are not negotiable which is what provoked Trump's outburst that Democrats do not care about the safety of the American people (unless they do exactly what Donald wants).   

Trump says that he will do something soon with the stroke of his pen (i.e. an Executive Order) that will bring "great" healthcare to many people: 

While Donald is being vague about how he is going to bring about great healthcare without involving Congress, his idea is reportedly to interpret the Obamacare law to allow certain organizations to offer skinny plans that do not include essential benefits. Trump Executive Order Could Gut Obamacare Markets

See also, Foiled in Congress, Trump Moves on His Own to Undermine Obamacare - The New York Times; Trump to sign order to eliminate ACA insurance rules, undermine marketplaces - The Washington Post

The purpose would be to undermine the Obamacare exchanges by siphoning off healthy people that will raise premiums for those who need or want more broader plans that actually cover potential medical problems. 

The essential services include coverage for pre-existing conditions, maternity and prenatal care, mental health and drug addition, emergency rooms, prescription drugs,  and rehabilitation services. Find out what Marketplace health insurance plans cover | HealthCare.gov In short, rather than bringing great healthcare plans to the people, Donald is just doing whatever he can to undermine Obamacare and to raise premiums for those who are covered under those plans. 

A ‘pressure cooker’: Trump’s frustration and fury rupture alliances, threaten agenda

Trump Wanted Tenfold Increase in Nuclear Arsenal, Surprising Military - NBC News ("President Donald Trump said he wanted what amounted to a nearly tenfold increase in the U.S. nuclear arsenal during a gathering this past summer of the nation’s highest-ranking national security leaders, according to three officials who were in the room.")  

Trump denied that he wanted a ten fold increase: 

Trump needs no help to demean himself. 

According to NBC, this was the meeting where Tillerson reportedly called Trump a "moron". NBC claims to have 3 people as sources who were at the meeting. Trump claims that NBC has no sources and invented the story. Trump suggests challenging NBC's broadcast license - POLITICO  Mattis then issued a statement that Trump did "not call for an increase". NBC did not use the word call but the word "want" and then made it clear that the generals talked him out of it. 

I would classify this Mattis statement as another example of a play on words, or what I call a lawyer's lie, that is a non-denial denial. Mattis denies a claim that was not made, while failing to address specifically the one that was made. And, importantly for the classification as a lawyer's lie, his statement appears at first glance to be a denial of what was written when it is not. Just too clever, like Tillerson's response to the NBC story that he called Trump a "moron after he was specifically asked whether he made the statement.     

The problem with Trump's denials is that he has already been categorized correctly IMO as a pathological liar by close to 50% of the electorate including me. 

Consequently, nothing that he says now, and I mean nothing, can be believed without independent confirmatory evidence that is not subject to reasonable doubt, even if he happens to be telling the truth for a change. I doubt that his denial on this matter is truthful. He may have been flippant when he said it.  So, in other words, he is now guilty until proven innocent and that is a bad place for any President to be when the need arises to unite the country on some national security issue. 

Trump would not leave the matter alone with a denial. He expressed a desire to take away the broadcast licenses of what he calls the Fake News Media: 

Trump threatens NBC, then says it's 'disgusting' press can 'write whatever it wants' - Oct. 11, 2017; Trump suggests challenging NBC's broadcasting license - CBS News

Trump has strong authoritarian tendencies. He is doing whatever he can to undermine institutions necessary to a properly functioning democracy.  

While part of the population is adamantly opposed to these efforts, a large and growing percentage agree with what Trump is doing and actually believe that he is being truthful and everyone who points out his false statements is lying. Truth is False, and False is True. 

If Trump could get away with it, he would shut down the free press. 

As I have been saying for well over a decade now, the biggest threat to our freedoms comes from within and the source of that threat is transparent and obvious.

Trump also claims that the Fake News Media is not covering the rise in stocks, just another lie: 

I wonder whether he will take the blame when the market goes down and unemployment goes up. That is not a question since the answer is obvious.  

‘He threw a fit’: Trump’s anger over Iran deal forced aides to scramble for a compromise - The Washington Post, republished at MSN. 

Trump’s Tough Talk on Nafta Suggests Pact’s Demise Is Imminent - The New York Times

Never before in U.S. history has it been so clear that a person is unfit to be President. 
++++

Roy Moore: The Next GOP Senator From Alabama

Moore claimed that he did not receive a "regular salary" for his "charity" work performed for a small charity that he founded to promote Christian values. 

"He collected more than $1 million as president from 2007 to 2012, compensation that far surpassed what the group disclosed in its public tax filings most of those years. When the charity couldn’t afford the full amount, Moore in 2012 was given a promissory note for back pay eventually worth $540,000 or an equal stake of the charity’s most valuable asset, a historic building in Montgomery, Ala., mortgage records show. He holds that note even now, a charity official said."

Undisclosed deal guaranteed Roy Moore $180,000 a year for part-time work at charity - The Washington Post 

This will not hurt Moore's chances in the general election IMO. 

One of Moore's primary donors over the years is a person who wants the south to secede from the Union and to form a theocratic government. Roy Moore’s Neo-Confederate Sugar Daddy Has Deep Ties To Secessionists – Talking Points Memo  

Moore's disrespect for the rule of law will help rather than hurt him in Alabama since he views his interpretation of God's will as superseding the Constitution.

And, this story published by the WP will be viewed as Fake News by most republicans in Alabama assuming they hear about it and many will deliberately avoid anything resembling responsible journalism. 

Trump won Alabama with 62.9% of the vote.    

+++++++

1. Short Term Bond/CD Ladder Basket Strategy: 

I have increased the cluster of CDs maturing between 11/1/17 through 1/31/18 as I continue to expect a .25% increase in the FF rate on or before the FED's December 2017 meeting. I am anticipating slight upticks in 1 to 12 month CDs assuming the rate is raised then.  

When I last compiled this cluster, the amount of maturing securities stood at $64K. Item # 1.F. Stocks, Bonds & Politics 2/27/17 

Additions to the cluster since then are in italics and underlined.  Many of those purchases were 2 and 3 month CDs that pay interest only at maturity.  

Current Short Term Bond/CD Cluster 11/1/17 through 1/31/18:  

Principal Value $1K per Bond or CD
SU = Senior Unsecured:
MI = Monthly Interest

4  4 Week Treasury Bills Maturing Per Month MI
2 Verizon 1.1% SU 11/1/17
1 Compass Bank .8% CD 11/8/17
1 Statoil 1.25% SU  11/9/17
2 TransCanada 1.25% SU 11/9/17
2 Morgan Stanley 1.2% CDs 11/10/17 
2 Merrick Bank MI 1.2% CDs 11/10/17
2 Bank of China 1.25% CDs 11/15/17
2 Microsoft .875% SU 11/15/17
2 People's United 1.2% CDs 11/16/17
1 Southern California Edison 1.25% SU 11/17/19
2 Bank of China 1.1.% CDs 11/20/17
2 Great Southern .75% CDs 11/22/17
2 Bank of China 1.15% CDs 11/28/17
1 Berkshire Bank 1.1% CD 11/28/17
2 Bank of Baroda 1.1% CDs 11/29.17
2 Trustmark 1.1% CDs 11/29/17
2 Synovus 1.1% CDs 11/30/17
2 Live Oak Banking 1.1% CDs 11/30/17 MI
3 U.S.T. .625% 11/30/17
1 U.S.T. .625% 11/30/17
2 Blue Hill Bank 1.2% 11/30/17
2 Potash 3.25% 12/1/17

2 AT & T 1.4% (YTM at 1.491%) Senior Unsecured Maturing Due 12/1/17

2 Disney 1.1% (1.043% YTM) Senior Unsecured Maturing 12/1/17
2 Southeast BK 1.15% CDs  12/4/17
2 GNB Bank 1.1% 12/5/17 MI
2 Citizens Bank 1.1% CDs 12/6/17
2 Bank of East Asia 1.1% CDs 12/6/17
1 Bank of China 1.2% CD 12/7/17
2 Towne Bank 1.1% CDs 12/7/17

2 Ecolab 1.45% (1.389% YTM) Senior Unsecured Maturing 12/8/17

2 Chevron 1.104% (YTM 1.224%) Senior Unsecured Maturing 12/8/17
2 Legacy Bank of Texas .8% CDs (monthly interest) 12/9/17
1 Bank of Baroda .85% CD 12/11/17
2 ZB Bank 1.1% CDs 12/12/17
2 ConocoPhillips 1.05% (1.203% YTM) Senior Unsecured Maturing 12/15/17

1 Costco 1.125% SU 12/15/17

2 Sherwin Williams  1.35% (YTM 1.294%) Senior Unsecured Maturing 12/15/17
3 Northpointe 1.2% CDs 12/18/17
2 Bank of China 1.1% CDS 12/18/17
2 Bank of China 1.15% CDs 12/20/17
3 First National 1.15% CDs 12/28/17 MI
3 Citizens Bank 1.25% CDs 12/28/17
2 Bank of China 1.25% CDs 12/28/17
2 Whitney Bank 1.25% CDs 12/29/17
2 ZB National 1.2% CDs 12/29/17
1 U.S. Treasury .75% (YTM .95%) Maturing 12/31/17  

1 U.S. Treasury Bill .888% (1 YR. Bought at Auction) Due 1/4/18 (scheduled 1 Yr reinvestment) 
2 Bank of India 1.2% CDs 1/10/18 

2 Everbank CDs 1.05% Due 1/11/18
2 Citizens Bank 1.2% CDs 1/11/18
3 First N.A. Bank 1.15% CDs 1/12/18 MI

4 BBT 1.45% Senior Unsecured Bonds Due 1/12/18 

2 C.R. Bard 1.375% (YTM at 1.363%) Senior Unsecured Bonds Due 1/15/18 

2 Dominion Resources 1.2% (YTM at 1.507%) Senior Unsecured Due 1/15/2018
1 U.S.T .875% 1/15/18
2 CR Bard 1.375% SU 1/15/18
2 Brown Forman 1% (YTM at 1.303%) Senior Unsecured Due 1/15/18

1 Deere 1.35% (YTM at 1.35%) Senior Unsecured Due 1/16/18

1 WFC 1.5% (YTM at 1.499%) Senior Unsecured Due 1/16/18

2 Royal Bank of Canada 1.5% (YTM at 1.457%) Senior Unsecured Due 1/16/18 

3 Anheuser Busch 1.25% (YTM at 1.342%) Senior Unsecured Due 1/17/18

1 Statoil 1.2% (YTM at 1.325%) Senior Unsecured Due 1/17/18
1 Compass Bank 1.25% CD 1/25/18
2 Bank of China 1.4% CDs 1/29/18
3 Enterprise Bank & Trust 1.3% CDs 1/29/18 MI
1 Bank of China 1% CD 1/30/18
2 Conerstone Bank 1.4% 1/30/18 MI
1 Bank of China 1% CD 1/30/18

2 Merck 1.1% (YTM 1.192%) Senior Unsecured Due 1/31/18

1 U.S. Treasury .75% (YTM .946%) Maturing on 1/31/18
1. U.S.T  .875% 1/31/18
1 UST Scheduled for Reinvestment January 2018.

Total Maturities = $138K

One reason for having a constant flow of maturities is that I may want to reallocate the proceeds, even on a daily basis, into stocks or asset categories. At the moment, I am keen on buying either bonds or stocks. 

Most of my CD purchases have been in my Schwab account where idle cash earns 1/10th of 1%. While I have been using recently received proceeds from lower yielding CDs and treasury bills to buy new CDs, I have slowed down that activity to a fraction of the received proceeds rates since CD rates have come down making them even more unappealing.    

A. Bought 2 Citizens Bank 1.2% CDs Maturing on 1/11/18 (3 month CDs): 

Holding Company:  Citizens Financial Group Inc.  (CFG)

B. Bought 2 Bank of India 1.2% CDs Maturing on 1/10/18 (3 month CDs):

C. Bought 2 Lakeside Bank 1.4% CD (Monthly Interest) Maturing on 8/13/18 (10 month CDs): 

This bank has a 5 star rating from Bankrate: LAKESIDE BANK Review

D. Bought 2 Lakeside Bank 1.55% CDs (monthly interest) Maturing on 2/13/19 (16 Month CDs):

E. Bought 2 Bank of China 1.1% CDs Maturing on 12/18/17 (2 month CDs) (2 month CDs):

$10K Inflow into Short Term Bond/CD Ladder Basket

2. Intermediate Bond/CD Ladder Basket: 

A. Sold 1 WFC 2.1% SU Bond Maturing on 7/26/21: 

Profit Snapshot: +$8.04

FINRA Page: Bond Detail

Sold at 99.082 
YTM Then at 2.353%
Current Yield at 2.12%

Bought at a Total Cost of 98.013
Stocks, Bonds & Politics: Item # 1.D. 
YTM THEN at 2.553%
Current Yield at 2.14%

This bond is actively traded and can be bought in 1 bond lots easily. 

B. Sold 1 AvalonBay Communities 2.95% SU Bond Maturing on 5/11/26-Fidelity Account ($1 Commission): 

Profit Snapshot: +$5.73

FINRA Page: Bond  Detail

Issuer: Avalonbay Communities Inc.  (AVB)

Sold at 98.225
YTM Then at 3.187%
Current Yield at 3%

Bought at a Total Cost of 97.511
Stocks, Bonds & Politics: Item # 1.C.
YTM Then at 3.265%
Current Yield at 3.025%

C. Sold 1 AvalonBay Communities 2.95% SU Bond Maturing on 5-11/26-Vanguard Roth IRA Account ($2 Commission):

Profit Snapshot: $4.04

Sold at 98.264
YTM Then at 3.182  
Current Yield at 3%

Bought at 97.322
Stocks, Bonds & Politics: Item # 1.C. 
YTM Then at 3.264%
Current Yield at 3.03%

My consider to repurchase price is less than 93. 

D. Sold 1 Citigroup 3.4% Bond Maturing on 5/1/26-Vanguard Roth IRA Account: 

Profit Snapshot: +$6.40

This bond was recently bought. I am just lowering my exposure to investment grade corporate bonds maturing in 2026 with coupons less than 3.5%. 

FINRA Page: Bond Detail

Issuer: Citigroup Inc.  (C)
C Analyst Estimates

Sold at 100.538
YTM Then at 3.327%
Current Yield at 3.38%

Bought at a Total Cost of 99.698
Stocks, Bonds & Politics:  Item # 1.B. (7/5/17 Post) 
YTM Then at 3.439%
Current Yield at  3.41%

My consider to repurchase price is less than 96. 

E. Sold 1 Boston Properties 2.75% SU Bond Maturing on 10/1/26: 

FINRA Page: Bond Detail

Issuer:  Boston Properties Inc.  (BXP)

Profit Snapshot: $24.32

Sold at 95.095
YTM Then at 3.388%
Current Yield at 2.89%

Bought at a Total Cost of 92.563
Stocks, Bonds & Politics: ITEM # 1.A. 
YTM Then at 3.679%
Current Yield at 2.971%

$5K Outflow from Intermediate Term Bond/CD Ladder Basket Strategy 

3. Sold 30 AZN: 

A. Sold 30 AZN at $34.2-Used Commission Free Trades Round Trip: 

I barely made a profit on this recently purchased position purchased on 5/15/17: 

Stocks, Bonds & Politics: Item $ 1.B. Bought 30 AZN (6/17/17 Post)   

Quote: AstraZeneca PLC ADR (AZN)

I did receive a semi-annual dividend amounting to $13.50 on that 30 share lot. The U.K. does not withhold a dividend tax. 

Shortly after my purchase, AZN released the results of a trial that undermined a primary reason for nibbling. 

This was the news that caused me to nibble: Imfinzi significantly reduces the risk of disease worsening or death in the Phase III PACIFIC trial for Stage III unresectable lung cancer (5/12/17 Press Release)

Then there was this press release from 7/27/17: AstraZeneca reports initial results from the ongoing MYSTIC trial in Stage IV lung cancer ("The combination of Imfinzi and tremelimumab did not meet the primary endpoint of improving PFS compared to SoC in patients whose tumours express PD-L1 on 25% or more of their cancer cells (as determined by the VENTANA PD-L1 (SP263) assay"). This drug may end up working in other indications, but that release was enough to cause me to start looking for an exit point since I lost interest pretty quick. On the day prior to this press release, the stock closed at $33.34 and slid to $28.44 the next day. Historical Quotes 

The stock started to rally based, starting in mid-September based in part on buyout chatter which was noted in a Sanford Bernstein upgrade on 9/22/17. Bernstein Upgrades AstraZeneca (AZN) to Outperform It is possible that Pfizer or some other large company will make a run at AZN. PFE failed in an earlier effort. 

4. Sold 50 of 100 BRGPRA at $26.26: 

Profit Snapshot: +$139.64

Quote: Bluerock Residential Growth REIT Inc. 8.25% Cumulative Preferred Series A Stock

Par Value $25
Dividends: Cumulative and Non-Qualified (pass through structure)
Optional Redemption: At Par Value on or after 10/21/2020
Capital Structure: Junior to All Bonds and bank loans/Senior only to common stock
Prospectus 

I have sold my common position down to just a 50 share lot. 

Over the short and intermediate term, I do not view the management internalization to be a positive because a boatload of stock will be paid to the current external manager to relinquish their management agreement. Bluerock Residential Growth REIT (BRG) Announces Agreement to Internalize Management

Of course, there are no proceeds realized by the company which would be the case for a stock offering sold to the public, and consequently no proceeds can be used to buy more properties. 

As a result of more shares and no cash paid for those shares that could be used to buy properties, the dividend will be reduced in 2018 to an anticipated range of $.65 to $.75. Bluerock Residential Growth REIT (BRG) Announces Potential Range of Anticipated Class A Common Stock Dividend for 2018 I would go with the low end number until proven otherwise. The current annual rate is $1.16 per share paid in monthly installments of  $0.096667 per share .

I discussed reducing that common share position in three posts from 2016: 

South Gent's Comment Blog # 4: Sold Another 100 BRG  

Item # 5. Eliminated BRG in One Taxable Account-Sold 220+ at $13.22: Update For Equity REIT Basket Strategy As Of 8/27/16 - South Gent | Seeking Alpha

Item # 5. Sold 100 BRG at $13.52 Update For Equity REIT Basket Strategy As Of 7/28/16 - South Gent | Seeking Alpha

The remaining 50 common shares were bought at $9.36 in my IB account on 2/16/16: Item # 2 Update For The Equity REIT Basket Strategy As Of 2/22/16 - South Gent | Seeking Alpha

I doubt that individual investors are attuned to the upcoming common share dividend slash.

5. Eliminated GYC: 

A. Sold Remaining 50 shares at $23.55: 

Profit Snapshot: +$130.02

This lot was bought at $20.95 and was discussed here.

2 Year History This Account: 

Quote: Corporate Asset Backed Corp. CABCO Series 2004-102 Trust SBC Communication Inc. Floating Rate Trust Certificates (GYC) 

GYC is a Synthetic Floater in in the Trust Certificate form of legal ownership.

For this security, UBS created a grantor trust, administered by an independent trustee, and sold to that trust senior unsecured SBC Communication bonds (now AT & T). Those bonds are commonly referred to as the underlying security. The AT & T bonds mature on 6/15/2034 and have a 6.45% coupon.

The grantor trust raised the funds to pay UBS through the public sale of trust certificates, each with a $25 par value.

UBS also entered into a swap agreement with the trustee. As a result of that agreement, the trustee delivers to the swap counterparty, originally identified in the GYC prospectus as UBS, the interest paid by AT & T, and the swap counterparty delivers to the trustee the amount owed to the GYC owners.

The owners of the trust certificate bear the credit risk of the underlying bond which is currently rated as follows:

For as long as the swap agreement remains in effect, the owners of GYC are entitled to receive quarterly interest payments at the greater of 3.25% or .65% over the 3 month Libor rate, with a 8% per annum cap, on a $25 par value. GYC Prospectus

Assuming no early termination of the swap agreement and/or the trust, GYC matures at the same time as the underlying bond which is 6/15/34.

Last Two Discussions: 

Stocks, Bonds & Politics: Item 2.A. Sold 50 GYC at $23.39 and Bought 50 GJP at $21.25 (4/26/17 Post) 

Item # 3. PARED GYC: Sold 50 at $24.01-Taxable Account: Update For Exchange Traded Bonds And Preferred Stock Basket Strategy As Of 8/16/16 - South Gent | Seeking Alpha

Both GJP and GYC have $25 par values.

Realized GYC Profits: $1,034.52 (prior tally at $904.5)

Snapshots can be found in Stocks, Bonds & Politics: Trust Certificates: New Gateway Post.

The owners of GYC are entitled to receive quarterly interest payments at the greater of 3.25% or .65% over the 3 month Libor rate, with a 8% per annum cap, on a $25 par value. The underlying bond in the GYC Grantor Trust, which is a 2034 senior AT & T bond, and the trust certificate GYC mature on the same date which is June 15, 2034. If AT & T pays off those bonds then, and there is no mishap with GYC, the owners of GYC would receive their par value as well which is $25 per trust certificate.

Prospectus 

The owners of GYC will receive a coupon increase when the 3 month Libor rate exceeds 2.6% during a quarterly computation date. 

As previously discussed, one problem with this security is that it is unclear what happens when the the 3 month Libor rate is ended. I am done owning this security due to that issue and other issues as previously discussed, including but not limited to the low current yield and YTM, with no prospect of an increase in that coupon likely until 2019, at the earliest IMO.   

GJP, on the other hand, has a float tied to the 3 month treasury bill and my last purchase was at a significant discount to its $25 par value. Interest is also paid monthly. 

Other Trades:  

Item # 2 Bought GYC at $15.5: Synthetic Floating Rate Bond (May 2009 Post); Item # 3 Added 50 GYC at $21.60 in Roth IRA (2/10/11 Post)- Sold 100 GYC at $22.22: Ongoing Reassessment of Synthetic Floaters (7/28/12 Post)(profit snapshot $357.45)

I also had a 40 share flip in the regular IRA: Item # 4 Sold GYC at $22.3 in regular IRA (11/22/2010 Post)-Bought TC GYC at $21

I have flipped more flipped some shares in the Roth IRA:Item # 8 Sold 50 of 100 GYC at $20.8 (10/31/13 Post) and Item # 5 Sold Roth IRA: 50 GYC at $22.3 (12/31/13 Post)(snapshot of profit on 100 shares, two 500 share lot positions=$167.98)-Item # 1 Bought Roth IRA: 50 GYC at $20 (9/7/13 Post)and Added 50 GYC at $18.66 (10/24/13 Post)

6. Stocks, Bonds & Politics: Gateway Post: Equity REIT Common and Preferred Stock Basket Strategy:

A. Sold 100 ARESF at $10.78-Used Commission Free Trade:

Profit Snapshot: +$109.48

The rise in U.S. interest rates has caused IMO a decline in the CAD's value against the USD. The price of ARESF is determined by taking the ordinary price expressed in CADs and converting that number into USDs. With the CAD falling in price, the ordinary shares priced in USDs will underperform the same shares priced in CADs.

Quotes:

Artis Real Estate Investment Trust (ARESF)(USD priced ordinary shares/pink sheet exchange)

Artis Real Estate Investment Trust (Canada: Toronto)(CAD priced ordinary shares)

Last Discussed at Item # 3.C.: Sold 100 of 300 ARESF at $10.4-Highest Cost Lot in my Schwab Account-Stocks, Bonds & Politics: (7/29/17 Post)

Other Discussions include:

Item # 1 SOLD 300 AX-UN:CA at C$15.71 (9/26/14 Post)

Item # 3.A. Pared Artis REIT: Sold 200 AX-UN.CA at C$12.94 (3/8/17 Post) 


7. Deeply Contrarian Value Basket Strategy-Used Commission Free Trade:  

A. Bought 50 Viacom at $25.35: 

Quote: Viacom Inc. Cl B

There is also a class "A" share class traded under the symbol VIA.

The only difference is that the Class A shares can vote and the owners of the "B" class can not.  Viacom Inc. - Frequently Asked Questions I bought the "B" shares. 

I discussed in the introduction section above the rationale for this nibble.  With a forward estimated P/E of below 7 and a dividend yield over 3.1%, maybe institutional investors have become too pessimistic about this owner of cable TV channels and Paramount Studios. 

The cable TV brands include BET, MTV, VHI, CMT, Comedy Central, TV Land and the Nickelodeon Group. Viacom

Last Earnings Report:  

SEC Filed Press Release

"Revenues in the third fiscal quarter increased 8%, or $257 million, to $3.36 billion, reflecting growth across Filmed Entertainment and Media Networks segments. Operating income declined 3% to $746 million, reflecting restructuring and programming charges of $59 million, principally resulting from the execution of strategic initiatives at Paramount. Adjusted operating income rose 5% to $805 million in the quarter. Net earnings from continuing operations attributable to Viacom grew 57%, or $248 million, to $680 million in the quarter, principally due to the gain on the sale of the Company's investment in EPIX. Adjusted net earnings from continuing operations attributable to Viacom grew 12%, or $52 million, to $471 million, driven by the increase in tax-effected adjusted operating income. Diluted earnings per share for the quarter increased $0.60 to $1.69, and adjusted diluted earnings per share increased $0.12 to $1.17."

"Media Networks revenues grew 2% to $2.56 billion in the quarter, with affiliate revenues up 4% to $1.19 billion and advertising revenues up 2% to $1.24 billion. Domestic revenues were substantially flat at $2.04 billion, and international revenues increased 8% to $522 million. Excluding foreign exchange, which had a 5-percentage point unfavorable impact, international revenues increased 13% in the quarter, primarily driven by the acquisition of Telefe."

"Filmed Entertainment revenues grew 36% to $847 million, reflecting continued increases across all revenue streams. Domestic revenues rose 19% to $388 million in the quarter, while international revenues increased 56% to $459 million."

Filmed Entertainment includes theatrical revenues ($263M up 189%), licensing revenues (up 1% to $300M), home entertainment revenues (up 14% to $218 M and ancillary revenues (up 61% to $61M)

There was a burst in profits and revenues from Paramount due primarily to its release of a Transformers picture: 

"Theatrical revenues increased 189% to $263 million, with revenues from current quarter releases up 199% compared to revenues from releases in the third quarter of fiscal 2016. The growth in theatrical revenues was primarily driven by the release of Transformers: The Last Knight. Domestic theatrical revenues rose 85%, while international theatrical revenues increased 296%."

Earnings Summary: 

GAAP to Non-GAAP Numbers: 

Debt and Bonds: 

I own some Viacom senior unsecured debt. 

Long term debt stood at $11.013B as of 6/30/17, down from $11.896B as of 6/30/16. Page 3 10-Q for the Q/E 6/30/17 Cash saved by the dividend slash is being used to reduce the debt load which is necessary IMO and just fine with me. The long debt debt number for the Q/E 9/30/15 was $12.267B. 

The company sold earlier this year $1.3B in junior bonds maturing in 2057, two separate fixed-to-floating rate junior debentures with a conditional deferrable interest right for up to 5 years. 

Prospectus So if the company does run into financial difficulty, it can eliminate the common stock dividend altogether and then defer the interest payments on these two junior bonds. 

The proceeds were used to repay senior debt as noted in the "Use of Proceeds" section at page S-10. 

These two junior bonds have $1K par values and trade in the bond market. They are rated Ba1 and BB: 

Bond Detail for the 5.875%

Bond Detail for the 6.25%

The junior bonds differ on the transition to Libor floaters and the floating rate. Note there is an alternative method for computing the floating rate when there is no Libor quote (Page S-13) As with other fixed to floating rate securities, the issuer has the right to redeem at par value when the security makes the transition from the fixed coupon to the floating rate and at anytime thereafter.

I have no interest in those junior bonds.

Currently Morningstar has a five star rating with a fair value estimate of $47.

In a report dated 9/30/17, S & P has a three star rating and a $45 twelve month price target. It is hard for me at least to fathom how those two numbers fit together.

8. Pared VEIRX by Selling $1K at $75.87: 

Closing Price 10/11/17: VEIRX $75.87 +$0.08 +0.11% : Vanguard Equity Income Fund Admiral Class 

As previously noted, when the value of this holding exceeds $51K, I will sell $1K. Since my last pare, I also received a quarterly cash dividend. 

The last pare was mentioned in Item # 5.A  Stocks, Bonds & Politics (9/14/17 Post) 

This is a very tightly control burn of this position that requires a greater than $1K increase in value before I sell $1K. 

This fund is currently rated 5 stars by Morningstar. Vanguard Equity-Income Admiral Fund (VEIRX)


Sponsor's Website: Vanguard Equity Income Fund Admiral Shares


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.