Genesis and Investment
Having been criticized by our sole reader in Hawaii (PS) who “has another faith” because of “too much Jewish narrative”, I want to tell you why I do this. Back in the 1990s when I founded Global Investing, then a print newsletter, my angel and financier was Bill Bonner of Agora Inc. of Baltimore, the publisher of International Living. He encouraged me to write about Jewish customs, starting with sitting Shiva for my father, arguing that “you belong to an exotic sect about which people want to know more.” Bill is a certified WASP.
While I observe my religion in a haphazard fashion, I do not believe that miracle rabbis can help your health or that being blessed at a Reading of the Torah (as I was yesterday) will ensure that your new enterprise will prosper and make money. The Bible reading was the start of Genesis, the story of the creation of light. My new business venture is investing in www.Talkmarkets.com, a website being developed by an ex-Bloomberg ex-SeekingAlpha technical and writing crew. To learn more please visit the website. Eventually we will run a daily note about the hot stories appearing there, but it is still in development.
As for the most observant holy Jews, when they make enough money with a cash advance business they may move to Puerto Rico and chase loose girls and roast a pig. Details on Bloomberg today “Two Guys Lost God and Found $40 Million.”
More news today from Mexico, Britain, Canada, The Netherlands, Belgium, Germany, Switzerland, Mongolia, Israel and Ireland.
Updated Tables Posted
Tomorrow is the last of the autumnal Jewish holiday (for Reform Jews at least) and there will be no blog. I posted the performance tables today on www.global-investing.com where the closed positions table may be viewed by all comers. However our current holdings are only visible to paid subscribers. Join them to get our advice. To view the tables more easily use the "print button" even if you do not intend to print the spreadsheets.
The last day of the Feast of Booths or Succoth is the very final chance you get to persuade God to keep you going in 5776, the current Jewish year. But the sealing of the ruling is tougher than it was on Yom Kippur. First of all, the readings for Succoth Day 1 include Kohelet, or Ecclesiastes, where it is frankly stated that bad things happen to good people and good things to bad. Just because you are righteous does not mean you will live long, prosper, or remain healthy in this life.
Then the Sabbath reading yesterday was the unexpurgated version of Moses' plea to God to spare the Hebrew children after their worship of the Golden Calf while Moses was getting the 10 Commandments. Unlike the version repeated often during the High Holy Days, it does not only focus on the God of Mercy who forgives iniquity, transgression, and sin. The full text also has Moses stating that God punishes the offspring of sinners in the 3rd and 4th generation. No More Nice God. The High Holy Days version was cleaned up by Maimonides.
Among the sins of the Fathers (and Mothers) I want to warn you about is the dog's breakfast being put out by closed-end funds on their net asset value. We were warned about how institutional investors can get better numbers than retail investors by one of our funds last week, which is working on closing the gap. However, the rest of the fund industry doesn't seem to care as much.
More for paid subscribers follows. Join them to share our full package and get our current investment advice.
The US added a mere 142,000 jobs in Sept and unemployment remains at 5.1%. Jobs day was very disappointing as forecasts (according to Bloomberg) averaged 201,000 more US non-farm hires. The shortfall was huge. Moreover, the August figure was restated, downward. This is the last jobs report before the Fed meets in Oct. The low hires would argue for further delayed rate hikes as would the low inflation rate.
In my humble opinion the jobs data will count for less than how the stock market looks when the Fed meets. Meanwhile the price of gold is up to around $1140/oz.. And the price of stocks is down on the news, a first drop in October after disasters in August and September.
Chaos reigns today on Sutton Place where I live. Mother Nature has not helped. Our apartment is on a bluff overlooking the East River about half a mile from the United Nations building where the General Assembly is assembled. With extreme security imposed, traffic has all but been halted. Now the rains of Hurricane Joaquin have begun to fall. The Post Office, Fed Ex and UPS, unable to bring a truck into the area, are refusing pickups of cartons weighing more than a half pound lest they be damaged by the downpour.
To be sure, it would be terrible for American prestige if an assassination of a visiting chief of state or politico were to occur during the conclave. Imagine if Netanyahu or Mahmoud Abbas was the target!
But frankly, it is also bad for the prestige of my country that any lunatic aiming to kill those at a high school, movie theater, community college, university, military base or recruitment center, historic black church or Jewish community center, and even an elementary school is able to fire and kill away.
More today for paid subscribers focused on our fund portfolio for a change with fund news from Mongolia, The Netherlands, Britain, Mexico, Sweden, and Mexico. Followed by company news from Switzerland, Brazil, South Africa, Britain, and Germany.
Press, Trading, and ETF Scandals
There is a certain irony in a British-owned publication going head to head with US authorities over the First Amendment. Under Ben Bernanke, the Federal Reserve initiated an insider-trading investigation into how its bond purchase stimulus plans were published by an outfit called Medley Global Advisors, owned by The Financial Times. Medley may be subject to prosecution in a NY Federal court. The Commodity Futures Trading Commission is investigating whether its institutional clients benefited from illegal (or careless) leaks by Fed staffers on the US central bank's planned monthly purchases of US Treasury bonds.
The Fed started an internal review of how information had gone to Medley (and The Wall Street Journal, which also revealed our CB's supposedly secret staff papers calling for more stimulus by buying T-bonds.)
Medley's lawyers rebuttal is that it is covered by the US Constitution amendment protecting freedom of the press. What makes this ironic is that the FT's homeland, Britain, lacks press freedom laws. Thus it is the venue of choice for international libel suits. These can bankrupt media companies with legal fees and damages.
Here the issue is whether Medley's client hedge funds, institutional investors, and asset managers were told something secret. If it had already been published by the WSJ, the clients buying a “policy research newsletter” paid high fees to learn what the WSJ daily had already exposed.
A new rogue trader was exposed at Nidera, a Rotterdam commodities firm controlled by grain-trader Cofco Corp of China, who ran up losses $200 million by fraudulent trades in green biofuel alternatives to oil. This is the month's second Dutch trade scandal after an options trader was nabbed at ING Bank for booking falsified trades. Because I am read in Europe I am not naming them for fear of libel suits.
Exchange-traded funds are under a cloud because their trading unlinked from the assets they own during the Aug. 24 panic. Now a solution offered by the BATS exchange, which will pay ETF issuers $400,000/yr for listing their products there. Until now, stocks (and ETFs) had to pay for listings. BATS now traded about 45% of listed ETFs and accounts for a bit over a quarter of their daily volume.
In another self-contradiction, Beijing will allow foreign central and commercial banks and sovereign wealth funds to freely trade on the domestic forex market, using spot, forward, and options to trade. This is the same country which intervenes regularly to fix the yuan (renminbi) exchange rate.
More for paid subscribers follows from Israel, Mexico, Canada, Italy, The Netherlands, France, Colombia, India, Australia, Spain, Switzerland, and Pasadena.
The imminent arrival of a new month has focused market attention on the second round of stock price falls. So what good news was available, like 200,000 more Americans in jobs, or the Senate passing a bill to prevent government shutdown, was enough to get the bulls running again.
On the last day of the quarter, today, two beaten-down sectors recovered smartly: raw materials, and biotechs.
I am reminded of what J.P. Morgan (the man, not the investment bank) told someone who asked him what the stock market would do next. Morgan replied: “it will fluctuate”.
Over the last day in order to meet my payroll of exotic-based writers who write for us, I worked to get them paid via paypal before a new more stringent regime comes into action at the now independent firm. Those we pay in the western world get checks by mail or bank transfers. The process has gone completely wild and I had to change my password 4 times and discuss issues on the telephone with harried tech support personnel after being on hold for ages. I think I spent more time working to pay the team than its members had spent writing the articles in the first place.
The motto is: Vorsprung durch Technik. Progress through technology. Paypal didn't invent this slogan, but Volkswagen did (for Audi, one of its nitrous oxide spewing automobile brands.)
More vehicular news and also a bit on bonds, plus oil and utility stocks for paid subscribers follows today. Plus some finance and drug company news as well.
Harvest Moon Eclipse Selloff
Sunday night, after returning from a wedding in Maryland, we watched part of the lunar eclipse from the East River near our house, but gave up before the finale at 3 a.m.
Because of the Jewish holiday I was not watching the stock market yesterday. I scored a decent gain from one share in the commodities sector, Alcoa, which I have owned since a college friend was on its boards (although she has since retired.) This despite the broad Wall Street sell-off which seems to have been triggered by the lunar events. AA gained because it is splitting in two.
But I also booked a serious loss with Williams Cos., supposedly a safe natural gas midstream transfer company immune to the impact of lower gas prices. Having scorned an earlier takeover bid, it wound up settling for less after it could not find an alternative bidder to Enterprise Products Partners.
Similar shocks also hit global markets, where M&A and other developments also impacted shares in our portfolio.
Mark Hulbert wrote yesterday that US bearishness hit an extreme high comparable to levels of 2000 after the tech bubble. He also wrote in Hulbert's Financial Digest yesterday that great bearishness creates “a robust wall of worry for the market to climb.” His Hulbert Nasdaq Newsletter Sentiment Index, created when both of us worked for Bill Bonner of Agora Inc., , is his letter's most sensitive barometer of investor sentiment, although there are some specialists who want to refine it further, among them retired professor David Aronson of Baruch College, the CUNY business school in my fair city. A very low adjusted or unadjusted HNNSI may mean the market tests the August lows before it rallies. Ah contrarians!
Our India correspondent wrote about the big news today: Reserve Bank of India, its CB or central bank, cut its reverse repo rate by double the 25 bp anticipated by all, to a full half a percent point. The money rate is now 6.75%. This is the 4th rate cut in 2015 after local inflation fell to a new all-time low. Only one economist predicted this. Abhimanyu Sisodia writes:
Lower rates mean more money being lent by banks to the public and create liquidity in markets. The CB is being aggressive, to privde a rising market with stimulus. It also indicates that internationally-respected Governor Raghuram Rajan feels that the risk of inflation is low given benign global and Indian demand.
In addition, Indian authorities relaxed rules limiting foreign ownership of Indian debt, giving foreigners access to what has been the best performing bond market on earth this year. India has merged its stock and commodities markets regulators. One result might be the listing of the Mumbai-based Bombay Stock Exchange or its rival, the National Stock Exchange. These bourses would be a fab investment, I think.
Meanwhile Colombia, close to a deal with its 50-yr-old FARC guerilla movement, raised its interest rates 25 bp to 4.75% in a surprise move aimed at limiting inflation to around 3%.
More for paid subscribers from Canada, India (not from Abhimanyu), Italy, Ireland, Britain, Spain, Germany, Hong Kong, Kenya, Brazil, Israel, The Netherlands, Denmark, and Finland, including more bond market news.
It has been a rough year so far for investment newsletters, and not just mine. Readers may want to look at www.stockgumshoe.com whose editor has calculated the return on investments promoted YTD by the marketeers from the big publishers: You can either view the attached spreadsheet or visit the site edited by Travis Johnson which offers a free trial for 10 days to new subscribers.
*NY reader BN sent a note about Volkswagen, not a share we have recommended for two decades:
Do you know the difference between the three different VW common stocks on Bloomberg? Two sponsored ADRs (VLKAY and VLKPY) and one common stock (VLKAF). It appears that VLKAY = .2 shares of VOW GR, and VLKPY = .2 VOW3 GR, while VLKAF = 1 VOW GR.
Response: the ADRs are for the common and preferred shares and the F share is a US way to trade the German common 1:1. More on European carmakers on shares we do recommend for paid subscribers below along with news from Benelux, Israel, Canada, Ireland, Britain, Denmark, Switzerland, India, and Mexico.
A New Stock Pick
Even before the Pope hit NYC, my 7 am newspaper delivery was short The Financial Times. I don't think it was shipped from Japan now that Nikkei owns the pink paper, but “who am I to judge?” On a day when everyone is quoting Yogi Berra, I want to quote Pope Francis.
The handshake between the head of FARC and the president of Colombia Juan Manual Santos (with Raul Castro holding their hands down) marks the conclusion of negotiations over ending the 5-decades-long guerilla war on Colombia's government. This should result in a peace treaty in six months or before. The arrival of Senor Santos marked acceptance of a fudge over punishing the rebels, most of whom will be amnestied and tried by a special tribunal and not jailed. They may have to do public service or suffer house arrest. Only those who committed crimes against humanity or war crimes will not be amnestied and have to help with de-mining, which is dangerous. Victims will get reparations in all cases. But the devil is in the details. We have a stock for this.
The latest whizz in exchange traded funds is ETFs covering global markets overall or the emerging markets or even the BRICS—while excluding China. How much simpler to just buy stocks!
For whatever it is worth, after a 3 day market shutdown, Tokyo re-opened sharply down. More for paid subscribers from Italy, Germany, The Netherlands, Israel, Spain, Canada, Switzerland, Britain, France, Britain, Colombia, and Sweden.