Economy:
The government reported a .1% seasonally adjusted increase in consumer inflation last month with core CPI rising .3%, the largest increase since January 2017. The non-seasonally adjusted headline number was up 2.1% Y-O-Y with core CPI rising 1.8%:
Consumer Price Index Summary
According to the government, health insurance costs did not increase at all on an unadjusted basis in 2017: Table 2. Consumer Price Index for All Urban Consumers (CPI-U): U. S. city average, by detailed expenditure category
The headline CPI number was held down some by a decline in gasoline prices month-over-month. As shown in the preceding table, gasoline prices rose 10.8% Y-O-Y.
With the recent rise in energy prices, I would expect the January energy price numbers to fuel an increase in headline CPI.
The following table shows daily WTI prices for January through March:
The government reported a .1% seasonally adjusted increase in consumer inflation last month with core CPI rising .3%, the largest increase since January 2017. The non-seasonally adjusted headline number was up 2.1% Y-O-Y with core CPI rising 1.8%:
Consumer Price Index Summary
According to the government, health insurance costs did not increase at all on an unadjusted basis in 2017: Table 2. Consumer Price Index for All Urban Consumers (CPI-U): U. S. city average, by detailed expenditure category
The headline CPI number was held down some by a decline in gasoline prices month-over-month. As shown in the preceding table, gasoline prices rose 10.8% Y-O-Y.
With the recent rise in energy prices, I would expect the January energy price numbers to fuel an increase in headline CPI.
The following table shows daily WTI prices for January through March:
Cushing, OK WTI Spot Price FOB (Dollars per Barrel)
The Heating oil price, calculated a NY Harbor, is moving rapidly highly: New York Harbor No. 2 Heating Oil Spot Price FOB (Dollars per Gallon)
The Heating oil price, calculated a NY Harbor, is moving rapidly highly: New York Harbor No. 2 Heating Oil Spot Price FOB (Dollars per Gallon)
+++++++
Market Commentary and Markets:
Tax reform's 'horrendous' timing may lead to weaker market by mid-2018-Morgan Stanley U.S. Equity Strategist: CNBC
The man who called a new bull market in 2012 says take your profits now -MarketWatch
The Barron's Roundtable panelists were generally upbeat about stocks this year. Bright Outlook for the Economy and Stocks - Barron's (subscription publication)
I would agree with several panelists that an unexpected rise in inflation and interest rates, both in the US. and Europe, would be negative items for stocks given their current valuations.
However, I have a caveat to that opinion.
When blood starts flowing in the streets of Bond Land, which has not happened yet, the initial reaction may be for large investors to rotate out of bonds and into stocks, sending the market higher than forecasters are currently predicting. The problem with the melt up is that the odds of a meltdown go way up as well. Major stock indexes did extremely well in 2013 when intermediate and longer term rates spiked starting in May 2013. The S&P 500 ETF (SPY) had a total return of +32.31% that year.
The more likely threat to emerge this year would be major disruptions in trade relations precipitated by Trump.
I also agree that the economy does not need a tax cut stimulus in 2018. The tax stimulus will pull demand forward into 2018 that would otherwise have occurred in 2019 or thereafter.
Assuming Trump does not initiate a trade war with Canada and Mexico, the economy is likely to be in good shape for the 2018 mid-term elections next November, given the tax stimulus, which will add maybe a 1/2 point to real GDP assuming no major uptick in inflationary pressures and interest rates.
Assuming that no economic downturn is in motion by November 2018, the republicans will have the wind at that back to maintain control over both the House and Senate, with a growing revulsion to Trump being a major wild card for them. The more likely transition to a Democrat controlled government would be after the November 2020 election.
I anticipate the commodity prices will continue to rise in 2018 and that will add to inflationary pressures.
I anticipate that the deficit will soar in 2018 and may go over $1 trillion dollars for the F/Y ending in September 2019. An acceleration in interest rates will simply add to that growing problem.
Government - Interest Expense on the Debt Outstanding
U.S. Goverment Debt to the Penny (Daily History Search Application)
The average interest rate on U.S. government debt has been trending up and I anticipate that trend to continue and to accelerate as the year progresses. Government- Average Interest Rates on U.S. Treasury Securities
If foreign nations reduce their purchases of treasuries, then interest rates could rise faster and further than anyone expects in 2018-2020.
The tax cuts will not have that much of an impact on average hourly earnings for the wage slaves. A $1K one time bonus is not equivalent to a consistent and meaningful rise in wages. Most of the tax cut benefits will accrue to the shareholder class, as public companies use their tax savings to increase dividends, to buy more stock and to buy other companies that will result in job layoffs.
I found it interesting that WMT raise its minimum wage to $11 and will offer employees "up to" a $1K bonus, which are positives for the economy this year, but then announced at the same time that it was closing 63 Sam's Club stores resulting in about 11K job losses. Walmart abruptly closes 63 Sam's Club stores, lays off thousands
The Barron's Roundtable panelists were generally upbeat about stocks this year. Bright Outlook for the Economy and Stocks - Barron's (subscription publication)
I would agree with several panelists that an unexpected rise in inflation and interest rates, both in the US. and Europe, would be negative items for stocks given their current valuations.
However, I have a caveat to that opinion.
When blood starts flowing in the streets of Bond Land, which has not happened yet, the initial reaction may be for large investors to rotate out of bonds and into stocks, sending the market higher than forecasters are currently predicting. The problem with the melt up is that the odds of a meltdown go way up as well. Major stock indexes did extremely well in 2013 when intermediate and longer term rates spiked starting in May 2013. The S&P 500 ETF (SPY) had a total return of +32.31% that year.
The more likely threat to emerge this year would be major disruptions in trade relations precipitated by Trump.
I also agree that the economy does not need a tax cut stimulus in 2018. The tax stimulus will pull demand forward into 2018 that would otherwise have occurred in 2019 or thereafter.
Assuming Trump does not initiate a trade war with Canada and Mexico, the economy is likely to be in good shape for the 2018 mid-term elections next November, given the tax stimulus, which will add maybe a 1/2 point to real GDP assuming no major uptick in inflationary pressures and interest rates.
Assuming that no economic downturn is in motion by November 2018, the republicans will have the wind at that back to maintain control over both the House and Senate, with a growing revulsion to Trump being a major wild card for them. The more likely transition to a Democrat controlled government would be after the November 2020 election.
I anticipate the commodity prices will continue to rise in 2018 and that will add to inflationary pressures.
I anticipate that the deficit will soar in 2018 and may go over $1 trillion dollars for the F/Y ending in September 2019. An acceleration in interest rates will simply add to that growing problem.
Government - Interest Expense on the Debt Outstanding
U.S. Goverment Debt to the Penny (Daily History Search Application)
The average interest rate on U.S. government debt has been trending up and I anticipate that trend to continue and to accelerate as the year progresses. Government- Average Interest Rates on U.S. Treasury Securities
If foreign nations reduce their purchases of treasuries, then interest rates could rise faster and further than anyone expects in 2018-2020.
The tax cuts will not have that much of an impact on average hourly earnings for the wage slaves. A $1K one time bonus is not equivalent to a consistent and meaningful rise in wages. Most of the tax cut benefits will accrue to the shareholder class, as public companies use their tax savings to increase dividends, to buy more stock and to buy other companies that will result in job layoffs.
I found it interesting that WMT raise its minimum wage to $11 and will offer employees "up to" a $1K bonus, which are positives for the economy this year, but then announced at the same time that it was closing 63 Sam's Club stores resulting in about 11K job losses. Walmart abruptly closes 63 Sam's Club stores, lays off thousands
+++++++
Trump and the White Nationalism of the Modern Day GOP:
Trump attacks protections for immigrants from ‘shithole’ countries in Oval Office meeting (Trump wants to stop or slow down brown and black skin people from immigrating to the U.S. and to bring more white people from countries like Norway)
Trump was referring to African nations as shithole countries.
For immigrants from Haiti, he just wanted "take them out" of the U.S. and send them back.
Trump aides predicted that his remarks would resonate with his base. How a bipartisan policy meeting devolved into vulgarity That should not come as a surprise to anyone.
According to his aids interviewed off-the-record by reporters, Donald was pleased with himself and was taking a victory lap in calls to friends Thursday evening.
Donald denies using the language, but then Donald has been proven beyond any reasonable doubt that he is a pathological liar:
Prior to being assaulted daily with Donald's lies, I would have thought that it was impossible for one human to lie so much.
Senator Insists Trump Used ‘Vile and Racist’ Language - The New York Times (Senator Durbin (D-Ill.): “I cannot believe that, in the history of the White House in that Oval Office, any president has ever spoken the words that I personally heard our president speak yesterday”.)
Durbin said that Trump repeatedly referred to "shithole" nations.
Sen. Tim Scott (R-SC): Graham says reports of Trump's 'shithole countries' comment 'basically accurate'-postandcourier.com
Jeff Flake stated that those in attendance relayed the President's comments to him shortly after the meeting broke up and those comments were "abhorrent and repulsive".
Flake, who was not at the meeting, heard about Trump's comments shortly after meeting from participants (plural) and "what I’ve heard reported is consistent about what I heard about the meeting.” Trump, condemned for ‘shithole’ countries remark, denies comment but acknowledges ‘tough’ language - The Washington Post
On Sunday, Flake appeared on "This Week" and stated again that participants in the meeting told him immediately afterward that "those words were used". That would be Senators Graham (R) and Senator Durbin (D).
Senator Perdue (R-GA), who attended the meeting, first stated in writing that he did not recall Trump using that language. One day later, his inability to remember magically turned into a flat out denial that Trump made those comments. That proves IMO that he lying in both statements.
I do not view Mr. Perdue as a credible person. I view Senator Cotton (R-ARK), who also attended the meeting, as a zealot who has the same memory issue that has inflicted Senator Perdue. Cotton IMO would do whatever it takes to advance his hard line immigration views, including lying to protect the President. Cotton is as trustworthy as Trump: Fact-checkers unanimous: Tom Cotton is a liar
In any event, the hard line immigration plan supported by Perdue and Cotton, which has been embraced by Trump, will not pass the Senate. Several republican senators have already expressed opposition and no Democrat will vote for their bill. Trump endorsed an immigration bill that probably won’t pass. It still matters. - Vox; RAISE Act - Wikipedia; Rubio: Trump-backed immigration bill won't pass Senate | TheHill; Slash Immigration, and GDP Is the Victim, Research Finds - NBC News
This is what Ronald Regan said about immigrants in his acceptance speech at the 1980 Republican convention:
Ronald Reagan: Address Accepting the Presidential Nomination at the Republican National Convention in Detroit
If a GOP candidate expressed those Ronald Reagan sentiments today, the candidate would instantly become a pariah and persona non grata in almost every republican primary (House, Senate, President). They would be tarred and feathered, doused with honey and placed in a steaming hot trunk with a beehive.
This is what Trump had to say about the status of the immigration and DACA legislation after he blew up the bipartisan deal to deal with those issues:
So the Democrats do not want to protect the DACA beneficiaries according to Donald. Can anyone name a single Democrat who supports Trump's rescission of DACA. If there is one, I am certainly unaware of it. Judge: Trump's racism may have been key to ending DACA - POLITICO; Trump administration forced to renew DACA permits as furor over the president's immigration slur persists-LA Times; TEXT of District Court Decision
+++++
Trump's Criticism of the Libel Law-Just Another Attack on the Conservative Values Embodied in the First Amendment:
Donald has spent a lifetime threatening to file and filing libel suits. He uses litigation and the threats of litigation to punish those who criticize him. I have discussed several examples from his past. Donald J. Trump Is A Libel Bully But Also A Libel Loser
For example, during the campaign, he repeatedly threatened to sue the women who claimed that he sexually assaulted them. No suits have been filed except by one lady who claims that Donald slandered her by calling her a liar. Donald's response to that lawsuit is to wrap himself in the First Amendment.
An example of a Trump libel lawsuit involved a libel claim against an architectural columnist who criticized one of Donald's buildings as one of the "silliest things anyone could inflict on New York or any other city." That Time Donald Trump Tried to Sue a Tribune Architecture Critic Into Oblivion | Chicago magazine | Politics & City Life August 2015; Paul Gapp, 64, Journalist, Dies-Architecture Critic Won Pulitzer - NYTimes.com
Trump has repeatedly stated that he wants to change the libel laws so that he can win this type of lawsuit and collect lots of money. Trump Again Blasts Libel Laws, Calling Them As 'A Sham'-NPR; Trump-O-Meter: Open up libel laws | PolitiFact; These Stories Have Made Trump Want to Change Libel Laws
That is for lawsuits that he wants to file against critics and not to lawsuits filed against him for libel.
Donald believes that he has the power to change the libel law, and repeatedly says that he is looking into it.
Unfortunately for Donald, who holds the First Amendment's protections for free speech in contempt, the libel law is not based on a statute passed by politicians, but on the Constitutional Right to free speech embodied in the First Amendment as defined by the Supreme Court. New York Times Co. v. Sullivan, (full text): 376 U.S. 254 (1964).
I doubt that many Trump supporters have ever read the Bill of Rights, though they would be familiar with their newly created right to have an arsenal of weapons. So I feel the need to quote the First Amendment:
Note that this Amendment is phrased as a restraint on the federal government, and became binding on the state and local governments through the 14th Amendment to the Constitution.
The framers believed that the rights expressed in this Amendment were inalienable natural rights that all Americans possessed. Consequently, there was no need to create and confer those rights in the First Amendment's language, but only to prevent a government and others from trying to take them away. Natural Rights-Constitutional Rights Foundation
This is one of Donald's weekend tweets:
Senator Flake (R-AZ) to denounce Trump media attacks as Stalinist in Senate speech - NBC News
+++++
Did Trump say "I have a good relationship with Kim Jong Un" or “I’d have a good relationship with Kim Jong Un,” Trump disputes North Korea quote in WSJ interview-MarketWatch (contains WSJ recording of the interview) Personally I hear in the recording "I have". But, the important points are that Trump thinks that he could have a good relationship (or has one now) and his reaction to the WSJ's good faith quote based on its crystal clear recording.
U.S. ambassador to Panama resigns, says cannot serve Trump
Trump Lawyer Arranged $130,000 Payment for Adult-Film Star's Silence; National Enquirer Paid to Kill Story of Playboy Model's Affair with Donald Trump: Report | PEOPLE.com
Porn Star Was Reportedly Paid to Stay Quiet About Trump - The New York Times
Madame Tussauds moves wax Trump to London embassy after he cancels visit | TheHill (Trump has to know that he is the quintessential Ugly American who is held in utter contempt by a majority of the U.K.'s population)
Opinion | Donald Trump’s Racism: The Definitive List - The New York Times
+++++++
Trump attacks protections for immigrants from ‘shithole’ countries in Oval Office meeting (Trump wants to stop or slow down brown and black skin people from immigrating to the U.S. and to bring more white people from countries like Norway)
Trump was referring to African nations as shithole countries.
For immigrants from Haiti, he just wanted "take them out" of the U.S. and send them back.
Trump aides predicted that his remarks would resonate with his base. How a bipartisan policy meeting devolved into vulgarity That should not come as a surprise to anyone.
According to his aids interviewed off-the-record by reporters, Donald was pleased with himself and was taking a victory lap in calls to friends Thursday evening.
Donald denies using the language, but then Donald has been proven beyond any reasonable doubt that he is a pathological liar:
Prior to being assaulted daily with Donald's lies, I would have thought that it was impossible for one human to lie so much.
Senator Insists Trump Used ‘Vile and Racist’ Language - The New York Times (Senator Durbin (D-Ill.): “I cannot believe that, in the history of the White House in that Oval Office, any president has ever spoken the words that I personally heard our president speak yesterday”.)
Durbin said that Trump repeatedly referred to "shithole" nations.
Sen. Tim Scott (R-SC): Graham says reports of Trump's 'shithole countries' comment 'basically accurate'-postandcourier.com
Jeff Flake stated that those in attendance relayed the President's comments to him shortly after the meeting broke up and those comments were "abhorrent and repulsive".
On Sunday, Flake appeared on "This Week" and stated again that participants in the meeting told him immediately afterward that "those words were used". That would be Senators Graham (R) and Senator Durbin (D).
Senator Perdue (R-GA), who attended the meeting, first stated in writing that he did not recall Trump using that language. One day later, his inability to remember magically turned into a flat out denial that Trump made those comments. That proves IMO that he lying in both statements.
I do not view Mr. Perdue as a credible person. I view Senator Cotton (R-ARK), who also attended the meeting, as a zealot who has the same memory issue that has inflicted Senator Perdue. Cotton IMO would do whatever it takes to advance his hard line immigration views, including lying to protect the President. Cotton is as trustworthy as Trump: Fact-checkers unanimous: Tom Cotton is a liar
In any event, the hard line immigration plan supported by Perdue and Cotton, which has been embraced by Trump, will not pass the Senate. Several republican senators have already expressed opposition and no Democrat will vote for their bill. Trump endorsed an immigration bill that probably won’t pass. It still matters. - Vox; RAISE Act - Wikipedia; Rubio: Trump-backed immigration bill won't pass Senate | TheHill; Slash Immigration, and GDP Is the Victim, Research Finds - NBC News
Ronald Reagan: Address Accepting the Presidential Nomination at the Republican National Convention in Detroit
If a GOP candidate expressed those Ronald Reagan sentiments today, the candidate would instantly become a pariah and persona non grata in almost every republican primary (House, Senate, President). They would be tarred and feathered, doused with honey and placed in a steaming hot trunk with a beehive.
This is what Trump had to say about the status of the immigration and DACA legislation after he blew up the bipartisan deal to deal with those issues:
So the Democrats do not want to protect the DACA beneficiaries according to Donald. Can anyone name a single Democrat who supports Trump's rescission of DACA. If there is one, I am certainly unaware of it. Judge: Trump's racism may have been key to ending DACA - POLITICO; Trump administration forced to renew DACA permits as furor over the president's immigration slur persists-LA Times; TEXT of District Court Decision
+++++
Trump's Criticism of the Libel Law-Just Another Attack on the Conservative Values Embodied in the First Amendment:
Donald has spent a lifetime threatening to file and filing libel suits. He uses litigation and the threats of litigation to punish those who criticize him. I have discussed several examples from his past. Donald J. Trump Is A Libel Bully But Also A Libel Loser
For example, during the campaign, he repeatedly threatened to sue the women who claimed that he sexually assaulted them. No suits have been filed except by one lady who claims that Donald slandered her by calling her a liar. Donald's response to that lawsuit is to wrap himself in the First Amendment.
An example of a Trump libel lawsuit involved a libel claim against an architectural columnist who criticized one of Donald's buildings as one of the "silliest things anyone could inflict on New York or any other city." That Time Donald Trump Tried to Sue a Tribune Architecture Critic Into Oblivion | Chicago magazine | Politics & City Life August 2015; Paul Gapp, 64, Journalist, Dies-Architecture Critic Won Pulitzer - NYTimes.com
Trump has repeatedly stated that he wants to change the libel laws so that he can win this type of lawsuit and collect lots of money. Trump Again Blasts Libel Laws, Calling Them As 'A Sham'-NPR; Trump-O-Meter: Open up libel laws | PolitiFact; These Stories Have Made Trump Want to Change Libel Laws
That is for lawsuits that he wants to file against critics and not to lawsuits filed against him for libel.
Donald believes that he has the power to change the libel law, and repeatedly says that he is looking into it.
Unfortunately for Donald, who holds the First Amendment's protections for free speech in contempt, the libel law is not based on a statute passed by politicians, but on the Constitutional Right to free speech embodied in the First Amendment as defined by the Supreme Court. New York Times Co. v. Sullivan, (full text): 376 U.S. 254 (1964).
I doubt that many Trump supporters have ever read the Bill of Rights, though they would be familiar with their newly created right to have an arsenal of weapons. So I feel the need to quote the First Amendment:
Note that this Amendment is phrased as a restraint on the federal government, and became binding on the state and local governments through the 14th Amendment to the Constitution.
The framers believed that the rights expressed in this Amendment were inalienable natural rights that all Americans possessed. Consequently, there was no need to create and confer those rights in the First Amendment's language, but only to prevent a government and others from trying to take them away. Natural Rights-Constitutional Rights Foundation
This is one of Donald's weekend tweets:
Senator Flake (R-AZ) to denounce Trump media attacks as Stalinist in Senate speech - NBC News
+++++
U.S. ambassador to Panama resigns, says cannot serve Trump
Trump Lawyer Arranged $130,000 Payment for Adult-Film Star's Silence; National Enquirer Paid to Kill Story of Playboy Model's Affair with Donald Trump: Report | PEOPLE.com
Porn Star Was Reportedly Paid to Stay Quiet About Trump - The New York Times
Madame Tussauds moves wax Trump to London embassy after he cancels visit | TheHill (Trump has to know that he is the quintessential Ugly American who is held in utter contempt by a majority of the U.K.'s population)
Opinion | Donald Trump’s Racism: The Definitive List - The New York Times
+++++++
Trump the Fox News Parrot:
While watching "Fox News" to learn his policy positions, Donald will tweet whatever is being said, sometimes out of context and incorrectly. He needs to do it quickly before he forgets what his policy position needs to be.
The latest example related to the House vote to reauthorize a key provision in the Foreign Surveillance Act. Judge Andrew Napolitano, a libertarian, stated at 6:46 A.M. that he did not understand why "Donald Trump is in favor of this".
Shortly thereafter, Trump tweeted that he was not in favor the bill that his Administration supported. Donald falsely stated in his tweet that this act, which has the word "Foreign" in it, allowed the Obama administration to "so badly surveil and abuse the Trump campaign".
Paul Ryan and General Kelly had to explain to Trump that this provision in the law had nothing to do with domestic surveillance. John E. McLaughlin, a former CIA Director, stated that Trump does not understand the issue.
Senator Mark Warner of Virginia replied as follows: “This is irresponsible, untrue, and frankly it endangers our national security. FISA is something the President should have known about long before he turned on Fox this morning.” Trump is ignorant and will remain ignorant for as long as he is President.
+++++++
Republican Obstruction of the Russia Investigation:
By taking control, Trump is referring to ending the investigation.
Republican politicians, particularly Devin Nunes, are engaging in a number of acts to obstruct the investigation and to divert attention from it.
Schiff: GOP blocking key witnesses in effort to scuttle House Russia inquiry - CNN
What the GOP really wants to do is to sweep the Russia investigation into some rabbit hole and to cause the Justice Department to indict Hillary and other Clinton associates. That is clear from their actions and statements.
If Hillary had been elected, and she was without question a terrible candidate given her baggage, the GOP House would have already voted for articles of impeachment against her, and a trial would be ongoing now in the Senate that was doomed to fail.
++++++
1. REGIONAL BANK BASKET STRATEGY:
A. Added 100 Arrow Financial at $33.95:
QUOTE: Arrow Financial Corp. (AROW)
Arrow Financial Corporation > Home
Headquartered in Glen Falls, NY (due north of Albany)
Arrow Financial owns two operating banks: Locations for Glens Falls National Bank and Trust Company and Locations for Saratoga Bank and Trust Company
Arrow owns Capital Financial that manages group health and employee benefits. I would sell that business.
Arrow also owns the Upstate Agency Insurance. A number of small banks owns insurance agencies. The justification is probably to enhance touch and feel with small businesses and individuals.
Owned Properties as of 12/3/16:
There is only one analyst estimate. The current forecast is for an E.P.S. of $2.08 last year and $2.43 in 2018. I suspect that the 2018 estimate includes the beneficial impact flowing from the corporate tax rate reduction, but I do not know for sure. The P/E on the 2018 estimate is about 13.48.
Since this bank operates in NY, investors may be questioning now how much the new tax law will impact mortgage originations.
I last discussed Arrow in my 12/12/2017 Post. I was highlighting there how Arrow satisfied several, though not all, financial metrics and characteristics that I view as favorable for a long term investment in this sector.
As noted in that discussion, I own 52 shares in my Interactive Broker's account where my average cost per share is currently at $24.76. I originally bought a 50 share lot at $26.25. Update For Regional Bank Basket Strategy As Of 3/17/16-South Gent | Seeking Alpha Stock dividends paid thereafter reduced my cost basis to $24.76.
Arrow Financial Corporation Declares Stock Dividend (8/30/17 Press Release)
Arrow Financial Corporation Declares Stock Dividend (8/31/16 Press Release)
Arrow is buying back stock. Arrow Approves 2018 Stock Repurchase Program The 2018 authorization allows for the repurchase of up to $5M over a 12 month period. Under the prior repurchase program, the company bought back $2.1M in stock. As of 9/30/17, the total number of diluted shares outstanding was 13.966M. I would like to see Arrow use some of its tax savings to buy more shares than in 2017.
I have nothing substantive to add to my recent December 2017 post discussing this small bank. I discussed at length in that December post the last earnings report and other matters including Arrow's effective tax rates. Arrow Third-Quarter Net Income Up 10.1%; Double-Digit Loan Growth Continues; 10-Q for the Q/E 9/30/17; 10-Q for the Q/E 9/30/17
I would just note that trading is generally light and the bid/ask spread can be significant at times. Relatively small orders can jerk the price up or down 1+%.
Closing Price Last Friday: $34.65 +$.30 +.87%
Market Cap at $34.65= $478+M
2. Canadian Reset Equity Preferred Stocks:
A. Sold 100 CPXPRA:CA at C$16.92:
Quote: Capital Power Corp. Series 1 Preferred Stock (CPX.PR.A:TOR)
Profit Snapshot: +C$670
Item # 3 Bought 100 CPXPRA at C$10.2: Update For Exchange Traded Bonds And Preferred Stocks Basket Strategy As Of 4/14/16 - South Gent | Seeking Alpha
Issuer: Capital Power Corp. Stock Quote (Canada: Toronto)
Capital Power Corporation - Home
In December 2015, this security reset its coupon to a 2.17% spread to the then existing 5 year Canadian government bond. The reset rate was 3.06% and will reset again in December 2020 at the same spread to the then existing five year Canadian government bond unless redeemed at that time at the C$25 par value, as more fully explained in the previously linked post.
I classify the Canadian reset equity preferred stocks in my floating rate equity preferred stock category. Trade snapshots can be found in this post: Stocks, Bonds & Politics: Advantages and Disadvantages of Equity Preferred Floating Rate Securities That post is an old one and does not contain a discussion of the Canadian reset equity preferred stocks. The total realized gain in Canadian reset equity preferred stocks is currently at C$10,643.5 and US$23,395.99 overall in this niche category of floating rate equity preferred stocks.
I estimate the U.S.D. value of the CAD profits realized based on the current exchange rate, which is not the way the profit will be reported to the IRS. The broker will convert the purchase cost and the proceeds amount into USDs at the time of those trades. The difference between those two sums is my profit or loss for U.S. tax reporting purposes. I will not have that number until the brokers provide me with the 1099 for the applicable year.
3. Canadian REITs:
Eliminated Pure Industrial REIT by selling 100 AAR.UN:CA at C$8.08 and 100 PDTRF at US$6.48
Pure Industrial agreed to be acquired by Blackrock for C$8.1 in cash per unit: PURE INDUSTRIAL REAL ESTATE TRUST ENTERS INTO DEFINITIVE AGREEMENT TO BE ACQUIRED BY BLACKSTONE FOR $8.10 IN CASH PER UNIT IN A $3.8 BILLION TRANSACTION
Trades:
Closing Prices Day of Trade (1/9/17):
AAR-UN.TO C$8.09 +C$1.37 +20.39%: Pure Industrial REIT
PDTRF US$ 6.5019 +US$1.0975 +20.31%: Pure Industrial REIT
Profit Snapshots:
 |
| 2018 PDTRF 100 Units +US$112.99 |
 |
| 2018 PDTRF 100 Units +C$144 |
I received a pop on the day of this merger announcement in my 1000 unit position in Dream Industrial: DIR-UN.TO C$9.15 +C$0.27 +3.04%: DREAM INDUSTRIAL REIT
Dream Industrial REIT December 2017 Monthly Distribution (monthly at C$.05833 per unit or $.7 per unit annually).
I last discussed a purchase here: Item 2.A. Added 100 DIR.UN:CA at C$8.75 (11/30/17 Post)
Dream Industrial has a smaller market capitalization than Pure Industrial.
Dream's market cap is about C$828M at a C$9.15 price. Pure Industrial's market cap is about C$2.06B at C$8.08.
All of my Canadian REITs make monthly distributions. I include snapshots of my round-trip Canadian and Australian REIT trades in this post: Stocks, Bonds & Politics: Gateway Post: Equity REIT Common and Preferred Stock Basket Strategy
4. Intermediate Term Bond/CD Ladder Basket Strategy:
A. Sold 2 Valero 3.4% SU Bonds Maturing on 9/15/2026:
Profit Snapshot: +$4.38
FINRA Page: Bond Detail
Issuer: Valero Energy Corp. (VLO)
VLO Analyst Estimates
Valero Energy Reports Third Quarter 2017 Results
Credit Ratings:
Sold at 100.3
YTM Then at 3.359%
Current Yield at 3.39%
Bought at a Total Cost of 99.981
Stocks, Bonds & Politics: ITEM # 2.A.
YTM at TC Then at 3.402%
Current Yield at TC = 3.4%
I will consider buying back when and if the price falls below 96 with no material adverse change in the credit profile.
I have been reducing my intermediate bond allocation over the past several months.
5. Short Term Bond/CD Ladder Basket Strategy:
A. Bought 2 Wells Fargo 1.85% CDs (monthly interest payments) Maturing on 6/24/19 (18 month CDs):
B. Bought 2 First Virginia 1.55% CDs (monthly interest payments) Maturing on 7/27/18 (7 month CDs):
Holding Company: FVCBankcorp Inc. (FVCP)
C. Bought 1 Dow Chemical 2.25% SU Bond Maturing on 3/15/19:
Dow Chemical is now part of DowDuPont Inc..
However, DWDP does not guarantee the debt of Dow and DuPont, its two subsidiaries. Page 35 Note 12 10-Q for the Q/E 9/30/17
Finra Page: Bond Detail (prospectus linked)
Bought at a Total Cost of 99.950
YTM Then at TC = 2.289%
Current Yield at TC = 2.251%
D. Bought 2 CVS 2.25% SU Bonds Maturing on 8/12/2019:
Issuer: CVS Health Corp. (CVS)
CVS Analyst Estimates
CVS Health to Acquire Aetna
Credit Ratings:
FINRA Page: Bond Detail (prospectus linked)
Bought at a Total Cost of 99.982
YTM at TC Then at 2.26%
Current Yield at TC= 2.2504%
Paid 99.882 (YTM at 2.322%)
Issuer: CVS Health Corp. (CVS)
CVS Analyst Estimates
CVS Health to Acquire Aetna
Credit Ratings:
FINRA Page: Bond Detail (prospectus linked)
Bought at a Total Cost of 99.982
YTM at TC Then at 2.26%
Current Yield at TC= 2.2504%
Paid 99.882 (YTM at 2.322%)
E. Bought 2 National Rural Utilities Cooperative Finance 1.65% SU Bonds Maturing on 2/28/19:
Issuer: National Rural Utilities Cooperative Finance Corporation (CFC) - NRUCFC
10-Q For the Q/E 8/31/17
Annual Report for the F/Y ending 5/31/17
SEC Filings
"CFC’s principal purpose is to provide its members with financing to supplement the loan programs of the Rural Utilities Service (“RUS”) of the United States Department of Agriculture (“USDA”). CFC makes loans to its rural electric members so they can acquire, construct and operate electric distribution, generation, transmission and related facilities. CFC also provides its members with credit enhancements in the form of letters of credit and guarantees of debt obligations. As a cooperative, CFC is owned by and exclusively serves its membership, which consists of not-for-profit entities or subsidiaries or affiliates of not-for-profit entities. CFC is exempt from federal income taxes under Section 501(c)(4) of the Internal Revenue Code. owned by and exclusively serves its membership, which consists of not-for-profit entities or subsidiaries or affiliates of not-for-profit entities. CFC is exempt from federal income taxes under Section 501(c)(4) of the Internal Revenue Code."
History - America's Electric Cooperatives
Credit Ratings:
Fitch - CFC Rating Report Sept 2017
National Rural Utilities Cooperative Finance Corporation (CFC) - Ratings & Research
Finra Page: Bond Detail
Bought at a TC of 99.748
YTM Then at 1.871%
Current Yield at 1.654%
Paid 99.648 (YTM then at 1.96%)
F. Bought 2 Exxon 1.708% SU Bonds Maturing on 3/1/19:
FINRA Page: Bond Detail
Credit Ratings:
Issuer: Exxon Mobil Corp. (XOM)
XOM Analyst Estimates
ExxonMobil Earnings Rise 50 Percent to $4 Billion on Solid Business Performance
Bought at a Total Cost of 99.875
YTM Then at 1.812%
Current Yield at 1.71%
G. Bought 2 Disney 1.85% SU Bonds Maturing On 5/30/19:
Finra Page: Bond Detail
Issuer: Walt Disney Co. (DIS)
DIS Analyst Estimates
Credit Ratings:
Fitch Rates Disney's Senior Unsecured Note Offering 'A' ; Outlook Stable
Bought at a Total Cost of 99.855
YTM at TC Then at 1.951%
Current Yield 1.853%
This is what the order book looked like when I placed the trade. The best available offer price allowed for a 2 bond buy. The numbers in parenthesizes are the minimum lots permitted for orders.
H. Added 1 Nextera 1.649% SU Bond Maturing on 9/1/18:
This buy was in a Roth IRA account. I own 5 bonds altogether scattered in three accounts.
FINRA Page: Bond Detail
Issuer: NextEra Energy Inc. (NEE)
NEE Analyst Estimates
NextEra Energy, Inc. Third Quarter 2017 Earnings Release
Credit Ratings:
Fitch Rates Nextera Energy Capital Holdings' Debentures 'A-'; Outlook Stable
Bought at a Total Cost of 99.915
YTM at TC Then at 1.768%
Current Yield at 1.65%
I. Bought 1 Cadence Bank 1.5% CD Maturing on 5/29/18:
Holding Company: Cadence Bancorp (CADE)
CADE Analyst Estimates
Cadence Bancorporation Reports Third Quarter 2017 Results
This bank has a four star rating from Bankrate: Cadence Bank, N.A. Reviews and Ratings - Bankrate.com
J. Bought 1 Metabank 1.4% CD Maturing on 3/1/2018 (2 month CD):
This bank has a five star rating from Bankrate: MetaBank Bank Reviews and Ratings - Bankrate.com
Holding Company: Meta Financial Group Inc. (CASH)
CASH Analyst Estimates
Meta Financial Group, Inc.® Reports Results for 2017 Fiscal Fourth Quarter and Fiscal Year
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.
Issuer: National Rural Utilities Cooperative Finance Corporation (CFC) - NRUCFC
10-Q For the Q/E 8/31/17
Annual Report for the F/Y ending 5/31/17
SEC Filings
"CFC’s principal purpose is to provide its members with financing to supplement the loan programs of the Rural Utilities Service (“RUS”) of the United States Department of Agriculture (“USDA”). CFC makes loans to its rural electric members so they can acquire, construct and operate electric distribution, generation, transmission and related facilities. CFC also provides its members with credit enhancements in the form of letters of credit and guarantees of debt obligations. As a cooperative, CFC is owned by and exclusively serves its membership, which consists of not-for-profit entities or subsidiaries or affiliates of not-for-profit entities. CFC is exempt from federal income taxes under Section 501(c)(4) of the Internal Revenue Code. owned by and exclusively serves its membership, which consists of not-for-profit entities or subsidiaries or affiliates of not-for-profit entities. CFC is exempt from federal income taxes under Section 501(c)(4) of the Internal Revenue Code."
History - America's Electric Cooperatives
Credit Ratings:
Fitch - CFC Rating Report Sept 2017
National Rural Utilities Cooperative Finance Corporation (CFC) - Ratings & Research
Finra Page: Bond Detail
Bought at a TC of 99.748
YTM Then at 1.871%
Current Yield at 1.654%
Paid 99.648 (YTM then at 1.96%)
F. Bought 2 Exxon 1.708% SU Bonds Maturing on 3/1/19:
FINRA Page: Bond Detail
Credit Ratings:
Issuer: Exxon Mobil Corp. (XOM)
XOM Analyst Estimates
ExxonMobil Earnings Rise 50 Percent to $4 Billion on Solid Business Performance
Bought at a Total Cost of 99.875
YTM Then at 1.812%
Current Yield at 1.71%
G. Bought 2 Disney 1.85% SU Bonds Maturing On 5/30/19:
Issuer: Walt Disney Co. (DIS)
DIS Analyst Estimates
Credit Ratings:
Bought at a Total Cost of 99.855
YTM at TC Then at 1.951%
Current Yield 1.853%
This is what the order book looked like when I placed the trade. The best available offer price allowed for a 2 bond buy. The numbers in parenthesizes are the minimum lots permitted for orders.
H. Added 1 Nextera 1.649% SU Bond Maturing on 9/1/18:
This buy was in a Roth IRA account. I own 5 bonds altogether scattered in three accounts.
FINRA Page: Bond Detail
Issuer: NextEra Energy Inc. (NEE)
NEE Analyst Estimates
NextEra Energy, Inc. Third Quarter 2017 Earnings Release
Credit Ratings:
Fitch Rates Nextera Energy Capital Holdings' Debentures 'A-'; Outlook Stable
Bought at a Total Cost of 99.915
YTM at TC Then at 1.768%
Current Yield at 1.65%
I. Bought 1 Cadence Bank 1.5% CD Maturing on 5/29/18:
CADE Analyst Estimates
Cadence Bancorporation Reports Third Quarter 2017 Results
This bank has a four star rating from Bankrate: Cadence Bank, N.A. Reviews and Ratings - Bankrate.com
J. Bought 1 Metabank 1.4% CD Maturing on 3/1/2018 (2 month CD):
This bank has a five star rating from Bankrate: MetaBank Bank Reviews and Ratings - Bankrate.com
Holding Company: Meta Financial Group Inc. (CASH)
CASH Analyst Estimates
Meta Financial Group, Inc.® Reports Results for 2017 Fiscal Fourth Quarter and Fiscal Year
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.
