My last update was published here: Update On Portfolio Management And Positioning As Of 8/18/15 - South Gent | Seeking Alpha
In this post, I will discuss the Trigger Event ("TE') in my Vix Asset Allocation Model, probable and possible reasons for the TE and the likely impact on my portfolio allocations.
This will be my first cursory run through of issues relating to the recently declared Trigger Event.
What The Trigger Event Requires:
One requirement of a TE is that the investor needs to spend a lot of time asking why. What are the external events that crushed the tranquility that existed prior to the TE?
That inquiry would have been a most productive pursuit for those who were bullish in August 2007.
The result of that study and analysis would have pointed a very large finger at the housing bubble, the dramatic increase in subprime loan defaults that had already started to happen, the satanic creations of the Masters of Disaster like CDOs squared and cubed, the fact that investment banks had increased their leverage level tremendously after a 2004 SEC Rule change, etc. and so on. All of that facts were known. The rally in September and early October 2007 may have confirmed to the bulls their investment thesis, but that proved to be short lived.
The need for exhaustive research would probably be the most important thing to do after a TE. It would also be important to put aside whatever you think is important and then search out facts and information that explains what may be an accurate signal of a major problem about to unfold and a more dangerous stock market dead ahead.
Once that research is done, and it needs to be done independently of whatever I do, then the investor needs to assess their existing asset allocations and to plan for possible changes in those allocations taking into account an informed and unbiased assessment of the investor's situational risks and risk tolerances, the relative valuations of asset categories, and other currently known factors. It may be too hard to assess initially the odds of a bear market or worse. It is important in addition to avoid rationalizations or to dismiss evidence that runs counter to existing beliefs.
For example, if there is a recovery period and a new high is reached, then consideration could be given to lightening up on stock exposure, raising cash levels for possible reinvestment at lower prices.
The epicenter of the problem is in EMs, so investments in U.S. centric businesses may make more sense than buying into EM stocks and bonds, though some contrarians may disagree.
Until events unfold further, a higher than normal cash allocation may be appropriate particularly once the investor properly assesses their situational risks and risks tolerances.
So, the first question is what has significantly disturbed the tranquility of the Stock Jocks and sent them into a lather of anxiety and fear crying for their mamas?
TRIGGER EVENT: WHY?
Sometimes, this question is easily answered, which has been the case in the past, but the situation is more nuanced and complex now.
This kind of analysis is always subject to interpretation and debate.
For the August 2007 event, a noted above, the cause was clearly the popping of the housing bubble and related events, including the extremely reckless and even criminal extension of mortgage loans to those who were unable to service them; the large number of jobs directly associated with an unsustainable new home construction boom, a 2004 SEC Rule change that allowed the Masters of Disaster to hang their employers within three years, and the financial "innovations" created by the Masters of Disaster that fostered and ultimately contributed to a near collapse of the world's financial system.
Though, as a consolation prize, those nitwits and sociopaths did make fortunes in the process that they were allowed to keep and were then allowed to become even richer as those who played no role in the creating the financial crisis had to pay for the cleanup. (see, e.g. Behind Insurer's Crisis, Blind Eye to a Web of Risk - NYTimes.com) Sure, that kind of occurrence can be placed in the "life is not fair" drawer and then best forgotten, since you always have to play the hand that is dealt. Right Brain's suggestion was never heeded by the government due to those Due Process and Rule of Law issues which occasionally get in the way of a just punishment. RB recommended that the Masters of Disaster be tattooed with derogatory images of the Prophet and then dropped buck naked deep into the tribal areas of Pakistan to fend for themselves, all of that occurring after the seizure of all property owned by them that would then be distributed to their victims.
The 1997 Trigger Event had Asia has its Epicenter, and history finds a way to repeat itself over and over again, becoming almost boring in its repetition. The potential worldwide problems could end up being worse now than in that prior Asian financial crisis. (see, e.g. 'It's Really Not 1998. It's Worse.'-Barrons.com") A lot more data and time will be needed to make an assessment. There is IMO a clear potential for more serious repercussions in the U.S. economy and stock market than the relatively small declines in stocks during the 1997 Asian Financial crisis. What is left out of the analysis is that the rise in stocks thereafter into 2000 was a direct result of mass insanity and the SPX had fallen well below the levels hit during that 1997 crisis in 2002.
I would share Felix Zulauf's opinion, expressed in last weekend's interview published in Barron's, that the downside will not resemble the 2008 fiasco and the SPX may find its bottom around 1800. Wherever that bottom occurs, the subsequent market action may be a highly volatile up and down motion going nowhere for several years, while the major current problems are worked out, including the repercussions flowing from further devaluations in the Yuan and a hoped for successful transition in China's economy to one more dominated by consumer spending rather than unnecessary construction spending internally and exports.
While I do not often agree with Zulauf's negative slant, and his failure to incorporate major positive trends in his analysis, I do believe that he hit the high points in that interview of the underlying problems.
CHINA and Its Trading Partners:
Over the past 25 years, China has grown from around a 4% share of worldwide GDP to over 16%. Ten years ago, China's share was 9.68%: GDP
Consequently, talking heads who compare a slowdown in China now to the repercussions ten or twenty years ago have lost their common sense.
China's expansion over the past quarter century has created a worldwide dependency on China for trade, which varies among nations and is acute for some of its neighbors.
The analysis by Goldman's David Kostin that are summarized in this Barron's article is inherently flawed and inadequate. According to that summary, Kostin noted "that only 2% of sales generated by companies in the Standard & Poor's 500 index come from China, and less than 1% of U.S. exports go to China"
It is not just the amount of direct trade between the U.S. and Canada, but the trade with all countries that are negatively impacted by China's slowdown including importantly nations whose economies depend significantly on commodity prices.
I view that as a obvious point. The negative blowback to the U.S. will be transmitted gradually and will be transmitted through a variety of mechanisms including the negative impacts resulting from a stronger than normal U.S. Dollar and economic downturns outside of China in part caused by further Yuan devaluations and China's slowdown.
Many have doubts about whether China's GDP numbers have some bearing to reality. Zulauf called them baloney.
China can not fudge imports from other countries that are reported by those other nations. A substantial drop in those import numbers would highlight a slowdown that the top brass will probably not acknowledge anymore than Putin will admit to Russian solders fighting in Ukraine. A "journalist" in either country could be jailed for a long time for reporting facts.
I have been highlighting those reports in comments here in my SA comments for several weeks.
Earlier this week, for example, South Korea reported that its exports plunged 14.7% Y-O-Y in August. WSJ Exports to China, which account for 1/4 of SK's exports, declined 8.8%. The slowdown is occurring throughout Asia, not just in China.
One of the earlier articles that I referenced involved a significant decline in Taiwan's exports: Reuters That article discussed a 13.9% decline in Taiwan's exports in June with exports to China falling 17.1% and exports to Europe falling 9.8% and 11.2% to Japan.
Other earlier articles highlighted the significant decline in Brazil exports: Bloomberg Business That problem is endemic for economies that are commodity exporters and an iron ore price chart will reflect that issue for Brazil. Iron Ore Charts for other metals reveal bear markets as well: Crude Oil Prices: West Texas Intermediate (NYSE:WTI);Copper | 2010-2015; Aluminum | 1989-2015; Brent crude oil | 1970-2015; Coal | 2009-2015.
The crash in crude and other commodities is probably responsible for Canada entering a recession this year. The largest importer of U.S. goods is Canada. Foreign Trade - U.S. Trade with Canada
China had been the major driver of commodity consumption during its construction binge using borrowed money that resulted in ghost cities and unnecessarily infrastructure projects. That has downshifted in a major way that has had negative repercussions on nations who benefited from China's commodity import boom directly or indirectly through high commodity prices.
For many years now, emerging markets have been the source of incremental worldwide growth. China has been the biggest contributor to worldwide GDP growth among those countries.
The export and import numbers from China and other EMs show without question a deceleration. The question now is whether that slowdown is temporary or a more problematic trend that could last for a year or more. I would anticipate that the parabolic rise in middle class consumers throughout the developing world will continue, though the pace of growth may stall or slow for awhile. I am currently expecting EM led worldwide GDP growth to resume therefore, but I can not now predict the turn. That is something that just needs to be monitored by looking at the data.
One SA contributor published an article blithely dismissing concerns about China's growth, What Every Investor Must Know About China | Seeking Alpha He refers to claims by CEOs that China is growing at 7%. One of those is BHP Billion's Ceo: BHP Billiton profit tumbles
9/1/15: BHP: 34.08 -2.75 (-7.47%)
Maybe the market does not agree with him and for good reasons. And, relying on Tim Cook's statement about Iphone activations is a material point for Apple investors only given what drives the Chinese economy.
The other point made by that contributor is why place any reliance on the Markit reports about China. The ISM and Markit data are professionally designed polls and are not compiled by the government. As with any poll, there is a margin for error but it is not likely that the directional change is wrong. The Markit data is just one piece of information' and it is consistent even with government numbers on exports and imports, as well as similar data compiled by the Chinese government.
Why would someone not like that data series? The last report declared that "Chinese manufacturers saw the quickest deterioration in operating conditions for over six years in August". China experienced the "most marked contraction of output since November 2011" and purchasing activity was reduced at "the fastest rate since March 2009". www.markiteconomics.com So go with Tim Cook and the BHP CEO as the best sources for what is happening in China?
The most recent China export and import numbers were consistent with the slowdown found in the Markit data, as is the Yuan devaluation occurring in the same time frame. July Exports Down 8.3%/Imports Down 8.1%
The main problem is not that China may be slowing some for a variety of reasons including the shift away from construction projects financed with an exponential rise in debt. The problem is that China was expected to be an engine of growth for the world, along with Brazil and other EMs, and that underpinning for stock valuations just got taken down a few notches.
Why did China's banks just warn that their bad debts were rising as as the economy slows?
Is this story part of the myth about CHINA's slowdown?
China Construction Bank Posts Zero Profit Growth on Weak Economy - Bloomberg "Construction Bank's nonperforming loans jumped 28 percent in six months to 144.4 billion yuan as of June 30"); UPDATE 1-China's top bank regulator says bad loans surge, profit growth slows in cooling economy
And, non-performing loans are probably significantly understated by China's banks. Chinese Banks Keep Bad Debt Levels Low by Rolling Over Loans - WSJ
The Limits of Government Debt Induced Growth:
China's construction binge was financed in large part by a parabolic increase in debt.
I will link some articles below that discuss this problem, which has been a concern for well over a year now, and has boiled to the surface again.
Bloomberg published an article last July that loans to companies and households stood at a record 207% of GDP as of 6/30/15, up from 125% in 2008.
Much of that debt growth is related to the tsunami in real estate spending post 2007 that created the Ghost Cities and other non-essential projects. While not denying the existence of those cities, some reporters and many investors view the entire ghost city issue as propaganda and a "myth". TIME magazine recently published photos of one of the myths, a city built for 1 million inhabitants with just a few inhabitants. Photos of other myths can be found using a simple google search term: china ghost cities - Google Search Reporters worldwide have been taking pictures for years now.
It is also material that new home prices have been falling Y-O-Y: China Newly Built House Prices YoY Change | 2011-2015 It is possible that the downtrend has stalled based on the numbers for the last 3 months: China
A February 2015 from McKinsey shows that China is not the only debt lover: McKinsey & Company For developed nations and China, total debt increased by $57 trillion since 2007 through the 2014 second quarter.
The most basic problem, as I see it, is the same for the U.S. government. With so much outstanding debt, and the economies being so large, the use of debt to finance growth during an economic downturn becomes far more difficult given the existing debt load as well as the size of the economy that would require substantial amount of new debt just to move the needle.
And, in the event the U.S. sinks into a recession sometime next year, the Federal Reserve is not in a good position to help given the already abnormally low federal funds rate and its bloated balance sheet that hovers now at $4.2+ trillion. System Open Market Account Holdings - Federal Reserve Bank of New York I would seriously doubt that another round of QE would do any good and would probably do more harm. The harm to savers is well documented but the problem is deeper than depriving U.S. households of income on over $10 trillion in savings accounts, money market funds, certificates of deposit, treasury bills and other risk free types of instruments. The amount in savings accounts alone is over $8 trillion. Total Savings Deposits at all Depository Institutions-St. Louis Fed
Why has inflation been so consistently below the Fed's 2% target and low throughout the developed world? Why hasn't QE produced inflation? I will touch on that subject below.
At a minimum, more QE would convince more investors that the FED is monetizing the debt through those purchases. Bernanke denied vehemently in 2012 that was not the case because the money printing and asset purchases were "temporary" and his subjective intent was not to monetize the debt. FRB: Speech--Bernanke, Five Questions about the Federal Reserve and Monetary Policy--October 1, 2012
"Monetizing the debt means using money creation as a permanent source of financing for government spending. In contrast, we are acquiring Treasury securities on the open market and only on a temporary basis, with the goal of supporting the economic recovery through lower interest rates."
Maybe Uncle Ben has a different definition than I do about the meaning of "temporary". And, does the debt monetization point depend on subjective intent claimed by a central banker or on the real world facts?
A resumption of QE would be a clearer signal of debt monetization particularly when China is dumping U.S. treasuries to support the Yuan or other purposes. China Sells U.S. Treasuries to Support Yuan - Bloomberg
There has been a big drawdown in treasuries owned by entities in Belgium, where China is active. Treasury (Belgium at $207.7B as of June 2015, down from $364.1B in June 2014). It is not like the U.S. deficit is ever going down from the current $18.15+ trillion. Debt to the Penny The next stop will be $20T and beyond, and the burden will soar when interest rates normalize. Even with historically low interest rates, the interest expense burden exceeded $430.8+ billion for the F/Y ending in September 2014. Government - Interest Expense on the Debt Outstanding
The options are far more limited now for government intervention than in the past.
China's Government and the Free Market Solution:
Other than spending boatloads of borrowed money on unnecessary construction projects, China's leaders have that deer in the headlight look as to their options now.
I do not see how the market can have much confidence in them engineering a soft landing, though just about anything is conceivable. My training for the next Olympic Decathlon event, which has not yet started, may result in me gaining a spot on the U.S. team. I am going to start my training right now by walking 300 feet to fetch my mail and then I will continue my training by walking back to the house. As I said, anything is possible.
China's government has allowed bad loans to grow without effective remediation. Zombie companies drain resources away from viable sectors. The zombie company problem is hardly news. This is a link to a recent New York Times article, but those types of articles have been commonplace for a few years now:
Keeping those companies afloat simply diverts more and more money from China's banks into failed enterprises. It is bad for the banks, of course, as their bad loans skyrocket but it also deprives funds that could be put to better use elsewhere.
This article from the South China Morning Post highlights the problem of the zombie's debt service ability becomes even more problematic with a slowdown.
Stock Declines and Consumer Spending:
Some pundits argue that China's stock ownership is not widespread so don't worry about the crash in China's stocks.
Most of the household stock ownership in every country is concentrated at the top. People who spend a lot of money tend to own stocks. When they pull in their horns after losing a bundle in the stock market, there will be a negative impact on consumer spending. The only question will be how much. The main transmission mechanism from stocks losses to spending reductions will be psychological for many of those individuals, due to a popping of their "animal spirits" and that Maalox moment otherwise known as an anxiety attack.
Central Banks Increasing Deflationary Pressures Through Long Term QE, ZIRP and Even Negative Short Rate Monetary Policies:
There is a movement called the Neo-Fisherite rebellion that argues, using historical examples and monetary theories, that the FED's monetary policies have created deflationary pressures rather than inflationary ones.
I am not going to discuss this subject in detail here. It may explain why the U.S. and other nations are generating low inflation numbers notwithstanding monetary policies like ZIRP and QE.
One of the most important papers on the subject was recently published and can be accessed in this article: The U.S. Federal Reserve's Quantitative Easing (QE) Was "A Big Mistake" | Global Research - Centre for Research on Globalization
The author of that paper was Steven Williamson who has been the leader in this rebellion among economists to traditional economic theories that are not working to produce inflation, so naturally some skeptics start to think about that important "why" issue.
Technical Damage/Herd Group Think/Selling Begets More Selling
Technicians are falling all of themselves to point out the technical damage in U.S. stocks:
Louis Yamada added her voice on 9/1/15, saying that her indicators led her to conclude that the bull market was DEAD. Louise Yamada
There has been a death cross in the SPX: S & P 500 Interactive Chart
The SPX 200 day SMA line was pierced with gusto as shown in the preceding linked chart.
The market internals have been flashing rot building under the surface for months in indicators like the A/D ratio and new 52 week highs and lows. Some of the few stocks supporting the SPX advance this year started to turn over and break down.
Technician Column Published by Marketwatch: Dead-cat bounce fizzles
And I will quote here a recent comment:
During a stock market downdraft, most boats will sink. That is probably far more likely now than 20 years ago due to the prevalence of ETFs, the increased dollar volumes in a variety of derivative products that allow trades to leverage their bets against the market, and the high volume trades by HFTs. A stock could be cheap at the current price, even with a recession starting within the next year, but be knocked into a down spiral along with the ridiculously valued due to a selling tsunami that does not make that differentiation.
U.S. Stock Valuations:
I am old school when it comes to valuation. I would not own a stock when valuations reach insane valuations as in 1999. I am not going to buy into an argument that some maker of thingamajigs is going to grow into the entire GDP of the U.S. in twenty years based on a three year annual growth rate of 20%. I know from experience the unrealistic future assumptions made to justify stock valuations. One of those assumptions is that recessions no longer have to be considered when valuing a company's future earnings prospects. That valuation technique is common after a long bull run. The tendency is to believe that the next five years will be like the last five, good or bad is projected into infinity.
I have been arguing for awhile that stock valuations were stretched some based on any valuation metric an investor wished to use. I will drag and drop here some of my earlier comments from this week:
"Investors will frequently use whatever valuation technique that fits into their predispositions. The forward P/E estimates based on Operating Earnings rather than GAAP appeal to those who probably love bull markets too much. The Shiller P/E is the millstone placed around the necks of perma bears who wear it with enthusiasm even when it causes them to miss 200% gains in the S & P 500.
I download those estimates from S & P and put them into a folder. What interests me is not the current forward 4 quarter forecast, but how far that forecast has already come down over the past year. I doubt that the analysts are incorporating into their forecasts a recession anywhere in the future since those apparently cease to exist after multi-year bull markets. Based on what I am seeing, I do not believe that one will occur this year but I am raising the odds for one next year, possibly starting as early as the first quarter. In that event, even the current forward "operating earnings" estimates as revised downward are going to be way too high and consequently there will be pressure on the multiple.
Birinyi Associates has the 12 month forward operating earnings P/E for the S & P 500 at 17.52 as of last Friday:
The modern historical average is 13.7:
Figure 1: www.yardeni.com.pdf
A slightly more favorable number for bulls can be computed by the investor after downloading the S & P data using this search phrase: S & P dow jones indices xls. It will be the first entry and will have quarterly data in the title.
S & P claims that it will include companies with negative earnings in its computations:
Here are the numbers as of 8/27/15:
2015 3rd Quarter: 28.85
4th Quarter: 30.81
2016 1st Quarter: 30.4
2nd Quarter: 32.14
S & P 500: 1987.66
Forward P/E at 16.26
The estimate as of 7/24/14 for the current quarter was 34.48 now down to 28.85. And, how reliable is a future forecast when it turns out to be that far off within just one year? The past provides the most objective and reliable evidence to base future projections, but the inherent problem is that stock valuations are more about future earnings than past earnings. Eventually, when future earnings forecasts prove to be too high, then the multiples have to come back down to face reality.
The last 2 2016 quarters are at 33.22 and 35.07. GAAP forecasts are made in the next column in that download and are lower of course.
We shall see how those forward number turn out in reality.
1. I am going to quit spending my dividend and interest payments paid into my brokerage accounts. I was spending about 30% to 40%. I will aggregate that constant cash flow stream to buy more income generating securities, either through open market purchases or through dividend reinvestment. This is a standard practice that requires me to buy no matter what I think may happen. I was buying securities with cash flow in October 2008 when I believed the world's financial system was on the verge of collapse.
I will literally total up my cash flow for a month and then use all of it to buy something. Most of the time, that approach is pure shotgun. Throwing a bunch of names against the wall and to see what works/sticks.
This is an example of that shotgun approach from November 2008: Stocks, Bonds & Politics: LATE DAY TRADES: GCI, CBL, FR, SLG, NYT, NWSA (NWSA at $6.65 (later split into NWSA and FOXA), CBL at $3.7, SLG at $23.35, GCI at $7.75, FR at $6.16)
2. I will focus my attention on U.S. centric businesses. The most likely adds over the coming weeks will be U.S. REITs who share prices are tumbling as much or more than the overall market.
I see no evidence of a U.S. recession-YET. I am anticipating good real GDP growth for the current quarter, continued good job numbers through the balance of 2015, a gradual improvement in new home construction, healthy spending by households, and a positive real GDP number for the 4th quarter. I will be on high alert for information consistent with a slowdown. The U.S. is the best house in the town at the current time.
3. I have a list of preferred stocks that I am willing to purchase at my prices. I will remain disciplined about entry points. So far, my orders have not been filled for several potential recent buys.
4. I will buy muti-nationals only in small lots using my standard average down approach. While many investors view companies like PG as a value trap, I will consider starting a position at lower prices. The recent shellacking in price has at least brought the PG shares within a rational fair value range. I will also be looking at XOM, JNJ, Cisco, CSX and so on. I am mostly referring here to stocks that I have bought in the past and no longer own.
This is what was said about XOM back in 2010:
"4. Sold 102+ Exxon at 70.22 on Monday (see Disclaimer): Headknocker was not pleased with the performance of XOM after a 50 share lot was purchased at 71.5 in early November 2009, requiring an average down purchase of 50 shares in December at 67.81. Then the stock tanked, falling briefly below 60 in August 2010: XOM Historical Prices | Exxon Mobil Corporation, Maybe it bears repeating for all of the knucklehead Head Traders here at HQ, HK purred, but a cardinal rule is to buy stocks that go up rather than down. So, in the future, HK intoned in his most fearsome voice, "do not buy stocks that go down". LB had nothing to say, except it remembered that anonymous call earlier in the week about the HK being past his prime and being ready for the Old Folks Home. HK may even be a formidable foe in a game of checkers with the other residents."
HK: Headknocker "The Boss of Everything" Here at HQ
LB: Left Brain
5. As to sectors and EM stocks that are clearly in a bear market, I will wait to make any serious purchases until I see positive data that at least points to a possible turn. Until that happens, I am out to lunch except for possible 5 and 10 share ETF buys that can be done on a cost effective basis. I am referring to ETFs that can be bought commission free in one of my brokerage accounts.
In short, I will use downturns to buy but at a cautious and measured pace, with orders sliced into small pieces and spaced out over time.
I did not buy anything on 9/1 since I was busy writing this post, responding to comments, performing my usual hunter/gatherer role, and researching material for this post. I had a couple of below market limit orders for preferred stocks that were not filled and I have some REITs on my list for tomorrow. Again, I am not going to chase anything. I will be buying mostly on downdrafts.
The following is another premature buy, but I am comfortable holding UL long term and I had just sold 130 of my 200 shares at a higher price.
1. Bought Back 30 UL in Roth IRA at $40.4: The Unilever group, Unilever PLC and Unilever NV, is a large consumer staples company operating in 190 countries.
Unilever has two sets of common shareholders that originate from its history. Unilever PLC is based in the UK and Unilever NV is from the Netherlands. A concise history can be found at Wikipedia.
Unilever's products are sold in more than 190 countries.
Snapshot of Trade:
ADR for Unilever PLC (NYSE:UL)
ULVR: Ordinary Shares for Unilever PLC Priced in British Pence
100 Pence=1 British Pound
ADR for Unilever NV (NYSE:UN)
UNA: Ordinary Shares of Unilever NV Priced in Euros
Bloomberg Data for Euro Priced UNA
Bloomberg Data for Pound Priced ULVR
The ADR price for UN will reflect the UNA ordinary share price converted from Euros into USDs.
Prior 2015 Trades: I mention selling the prior 30 UL share held in the Roth here: Update On Portfolio Positioning And Management - South Gent | Seeking Alpha
At the same time, I sold 100 shares of the UN shares priced in Euros.
Snapshots of those trades are in the Appendix section below.
I view it as a positive that I sold 130 shares at over $43 and bought back 30 at $40.4. I can now wait to buy the other 100 at a price lower than the previous purchase price.
I will be more picky about that 100 share buy. I will probably develop a buying point near (preferably below) 15 times estimated 2016 earnings.
UN Analyst Estimates ($2.33 x. 15= $34.95)
I may have to pay over that number. It will partly be a question of feel for the trading pattern.
Dividend Taxation: The U.K. does not withhold a tax on the dividend paid by Unilever PLC . Deloitte on U.K. Taxes
The Netherlands does withhold a 15% tax on the dividend paid in Unilever NV , making that stock unsuitable for ownership in a retirement where foreign taxes are not recoverable. Deloitte
I can confirm based on my own ownership history that the U.K. does not withhold a tax on dividend payments made by UL, while the Netherlands will withhold 15%.
There is a unity of shareholder's rights agreement that makes the Unilever PLC and Unilever NV shares equivalent.
Rationale: This stock was purchased pursuant to my dividend growth strategy: Item # 6 Common Stock Dividend Growth vs. Long Term Investment Grade Bonds (3/22/2010 Post)
Closing Prices 9/1/15:
This post is long enough so I am not going to discuss the recent earnings report that can be found here:
I still own UL shares purchased at $18 in March 2009:Added to UL at $18 (3/22/2009 Post)
I have some trading profits in Unilever common shares between 2005-2007 (snapshots in September 2013 post)
2015 Roth IRA: +$104.78
2015 Satellite Taxable: +$497.61