Fraud Abroad, in China, Malaysia, and Switzerland

Tue, 2016/05/03 - 2:06pm | Your editor

 

While we are still having problems with our internet operations, things are easing now that the webmaster is back from holiday. However I am still obliged to focus on the paid subscribers rather than the rest of the world so am again using an older report.

 

Apologies. Your editor sometimes is biased in favor of foreign regulators and systems. After short-sellers like Citron Research and Muddy Waters revealed how crooked Chinese small cap firms got backdoor listings on the US- and Canadian markets, I hired a reporter bilingual in Chinese to write up shares listed on the London junior exchange, the Alternative Investment Market or AIM.

I assumed that since these stocks had a UK domicile or registration in a UK jurisdiction, plus a UK broker backing them (a Nominated Advisor or Nomad), and since they were written up by Reuters and the Investors Chronicle, they were more fraud-proof. Not so.

One of the stocks Ms Ng found for us was a sportswear firm aiming at the teenage market called Naibu Global, NBU-LSE. NBU was also boosted by Simon Thompson of the Investors Chronicle, a stock advisory service of the London Financial Times.

Last year I sold the stock because it could no longer be tracked and traded in my US e-trade account. Lucky for me and my readers.

Its board in Nov. 2015 released a note reading that “it was disappointed to report that they have been unable to obtain any information on operations in China, and therefore they are currently unable to provide shareholders with any update on the Company. Neither Mr Lin Huoyan, the Chairman, nor Mr. Lin Congdeng, executive director, have responded to requires from the non-executive directors to provide such information [and an audit for the year 2014.]. The non-executive directors [in Britain] have appointed KPMG to prepare a report on the Group's financial position...and will decide what steps to take regarding the continuing business of the Group...” Trading was suspended while the UK board sued to gain control of NBU's operating sub and bank accounts. The board also fired Lin Huoyan who owns 53% of the Chinese sub and Lin Congdeng. I fired Ms. Ng.

 

More on fraud elsewhere for paid subscribers below.

 

Australia cut interest rates by 25 basis points to 1.75% and this will have a lot of impact on our shares, discussed below along with nore for paid subscribers about banking and finance, drugs, telcos, oil, cement, chemical producers, auto and airplane parts makers, IT, a REIT, and a fund.

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Reprint of Helicopter Money

Mon, 2016/05/02 - 2:04pm | Your editor

With my i-Phone back, it turns out that my latest gizmo may be what ate my corporate internet account. Until I can get it fixed you will only get hot news. I will reprint older notes for pre-subscribers like the best one I wrote last week, in my opinion.

Now that the Bernie Sanders candidacy has effectively ended, it's time to take on some of the measures he advocated. The main need is for US spending to increase to get the economy out of its funk. The Fed's various quantitative easing and interest rate fiddles have failed to get spending up. Households are still failing to shop till they drop, while the corporate sector is using cheap borrowed money and debt vehicles to fund moves which do not help the overall economy. This includes funding mergers and acquisitions, often piled up on each other to generate what looks like growth for a company but is nothing of the sort. Valeant is one but there are plenty of others in tech, medical devices, eateries, funding cheaply stock buybacks, executive perks, and even dividends

What we need, to quote Ben Bernanke and before him Milton Friedman, is “helicopter money”, a way to increase spending by the hoi polloi. The idea of dropping cash from the sky is, of course, a fantasy, but it is what our central bank should be doing, in the opinion of experts, who by the way are not from the left wing like Bernie. The Fed can intervene even if Congress stupidly blocks deficit spending out of an exaggerated fear of inflation resulting from “money-printing”.

Among the programs Bernie advocated are several that would help get cash into the hands likeliest to spend spend it. Start with student loans. As a relative of a young pediatrician named Rebecca, I know first-hand what kind of debt is incurred to go to medical school. Other courses of study are shorter but in the present era also very costly. Long term they may help the former students and the economy overall, but short-term the ex-students suffer.

Another set of urgent needs involves America's creaky and broken down infrastructure, everything from hospital or schools to bridges and highways, public transport systems and railways, water and sewage works, dams, solar power stations, airports, bigger jails, holding sites and orphanages for illegal immigrants, a wall across the Rio Grande paid for by Uncle Sam, parks, canals, whatever.

If abortion clinics are required to have hospital facilities then the government should pay to upgrade them, particularly given the risk of babies born with diminished cranial capacity after a pregnant woman was stung by a Zika-virus mosquito.

The spending should begin by our government but there is no reason why private sector arrangements cannot cover part of the cost and be recuperated for investors. The helicopter has to land eventually, remember.

I also think Hillary Clinton has a few smart ideas on early childhood education (shares of Head Start!) and enrichment programs for older children. Leave for new mothers (and fathers) could be funded. More help paying for Obamacare would probably improve the nation's welfare.

With the impetus from the money suddenly in hand and the earnings of all those new construction projects, the economy will take off. Remember that the idea doesn't come from Keynesians and lefties but from a Nobel Prize winning economic expert on the Great Depression who was firmly on the far right of the Republican Party.

More for paid subscribers follows with today's news about our companies, some of its delayed by the snafu. We have notes from Hong Kong, Spain, Canada, Britain, Israel, Brazil, Switzerland, The Cayman Islands, The Netherlands, and Australia, and we start off with fund notes for a change.

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Sunday Special

Sun, 2016/05/01 - 2:14pm | Your editor

Today I updated our portfolio tables, after taking off for the 2nd day of Passover last weekend. There is good news and bad. The good is that my cellphone was found by the building super in the elevator shaft apparently undamaged. The backup phone I bought will have to be credited by our local Verizon franchise, run by a Sri Lankan Muslim who may not feel very kindly toward me.

To view the tables, visit www.global-investing.com and click the printer friendly buttons to view the spread-sheets, even if you don't want to print the tables. Pre-subscribers may view our closed positions, which did not change in the past two weeks, while full subscribers can see the whole 9 yards.

Then there is bad news. First my Christian best girlfriend Lydia, having battled three different breast and lung cancers for 5 years, has died. She won the title after her prececessor Heather converted to Judaism.

Lydia lost her husband less than 3 months ago, shortly after they became grandparents for the first time. And, yes, she smoked when younger, proving that she was liberated from her suburban upbringing with unfiltered black tobacco Balkan Sobranie cigarettes.

More bad news. It may be that my i-Phone is blocking my access to Google email linkage to my website. There are hints on the Internet that this is happening systematically. The horrible Hostmonster webhosts for my site have now opened an inquiry after brushing me off for 3 weeks. And our webmaster returns from leave this week.

If an i-Phone de-activates your webmail there is another reason for dumping Apple, AAPL.

Now for my paid subscribers...

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Small Cap Update

Fri, 2016/04/29 - 1:12pm | Your editor

Bo-Peep's iPhone may have fallen into the elevator shaft. The super is checking because both of us would prefer to blame me rather than a pickpocket in the building.

Our griefs over email turn out to be the result of a new charge for linking your Hostmonster webhosting for your website to gmail, imposed without telling the customer by the Salt Lake City-based company, which then cut of our main email account with a huge pile of contacts and archived material. This is what google encourages you to do with your mail.

The charge was $5. I paid it of course, but now there are complexities which Hostmonster says I have to clear with Google. The various toll-free numbers at google require that you input a code which Hostmonster refuses to provide, having taken the $5 however.

The 21st century business model is clearly rotten. Our webmaster returns next week and of course I will change webhosting companies.

More for paid subscribers today from smaller companies in Singapore, Belgium, Australia, Mexico, Israel, Brazil, India, and Canada.

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Helicopter Stimulus

Thu, 2016/04/28 - 12:51pm | Your editor

 

Now that the Bernie Sanders candidacy has effectively ended, it is time to take on some of the measures he advocated. The main need is for US spending to increase to get the economy out of its funk. The Fed's various quantitative easing and interest rate fiddling have failed to get spending up. Households are still failing to shop till they drop, while the corporate sector is using cheap borrowed money and debt vehicles to fund moves which do not help the overall economy. This includese funding mergers and acquisitions, often piled up on each other to generate what looks like growth for a company but is nothing of the sort. Valeant is one but there are plenty of others in tech, medical devices, eateries, , stock buybacks, executive perks, and even dividends

What we need, to quote Ben Bernanke and before him Milton Friedman, is “helicopter money”, a way to increase spending by the hoi polloi. The idea of dropping cash from the sky is, of course, a fantasy, but it is what our central bank should be doing, in the opinion of experts, who by the way are not from the left wing like Bernie. The Fed can intervene even if Congress stupidly blocks deficit spending out of an exaggerated fear of inflation resulting from “money-printing”.

Among the programs Bernie advocated are several that would help get cash into the hands lieliest to spend spend it. Start with student loans. As the relative of a young pediatrician named Rebecca, I know first-hand what kind of debt is incurred to go to medical school. Other courses of study are shorter but in the present era also very costly. Long term they may help the former students and the economy overall, but short-term the ex-students suffer.

Another set of urgent needs involves America's creaky and broken down infrastructure, everything from hospital or school d to bridges and highways, public transport systems and railways, water and sewage works, dams, solar power stations, airports, bigger jails, holding sites and orphanages for illegal immigrants, a wall across the Rio Grande paid for by Uncle Sam, whatever.

If abortion clinics are required to have hospital facilities then the government should pay to upgrade them, particularly given the risk of babies born with diminished cranial capacity after a pregnant woman was stung by a Zika-virus mosquito.

The spending should begin by our government but there is no reason why private sector arrangements cannot cover part of the cost and be recuperated for investors. The helicopter has to land eventually, remember.

I also think Hillary Clinton has a few smart ideas on early childhood education (shares of Head Start!) and enrichment programs for older children. Leave for new mothers (and fathers) could be funded. More help paying for Obamacare would probably improve the nation's welfare.

With the impetus from the money suddenly in hand and the earnings of all those new construction projects, the economy will take off. Remember that the idea doesn't come from Keynesians and lefties but from a Nobel Prize winning economic expert on the Great Depression who was firmly on the far right of the Republican Party.

 

Today by not cutting the yen's negative interest rate further resulted in an unwanted rise of the yen defeating the aim of Abenomics.

 

More for paid subscribers follows starting with no less than 3 quarterly reports on a busy Thursday, plus tidbits from around the world. Our reporters are Brazilian, Canadian, and Irish, and we also have fund news from Britain, Mexico, the Cayman Islands, and Germany.

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The ETF Problem

Wed, 2016/04/27 - 1:09pm | Your editor

A new issue with exchange-traded funds (ETFs) has hit. An ETF follows an index to offer investors a simple way to diversify their holdings. An index will be made up of a number of stocks meeting certain criteria, like covering a specific sector, or a country or group of countries. ETFs occasionally cover commodities, options, derivatives, volatility, gold.

But for most individual investors the index of stocks is the key. ETFs aim to be cheap to beat other stock investing. That means they do not trade a lot. They take a “hands-off” attitude to news events, precisely what my newsletter covers.

ETF lists of holdings are unlikely to change more than once a year to avoid big moves at unfavorable prices (to buy or to sell) as well as trading fees. ETFs also hold a relatively limited number of large cap positions to track an index without owning whole index. Avoiding illiquid small cap shares also helps ETFs avoid unfavorable prices with big volume trades.

Now a “green” ETF managed by a friend (whom I will not name because I want to keep him as a friend) has shown up the downside of ETFs tracking an index. The index covers alternative energy companies, mostly in solar, but also in geothermal, wind, and hydr-electric power. For political reasons, nuclear is a no-no.

So when he sent me a notice Monday that Sunedison had been removed from his green-index ETF, I wondered why SUNE had been kept on it after filing for bankruptcy. It turned out that the rules for his index required that the only thing that would trigger a company being removed was if its capitalization fell so much that it turned into one of those small caps ETFs don't like owning.

Of course the bankruptcy cut the market cap of Sunedison. But to wait for that event to exit the share seems to be singularly mindless. While rules keep index ETFs from trying to pick stocks and scare the horses, rather than being “objective.”

Frankly, I do not think investors in my pal's green fund expected to incur losses over a well-heralded bankruptcy.

More for paid subscribers follows from Britain, Spain, Switzerland, Brazil, Colombia, and Myanmar.

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The ETF Problem

Wed, 2016/04/27 - 1:08pm | Your editor

A new issue with exchange-traded funds (ETFs) has hit. An ETF follows an index to offer investors a simple way to diversify their holdings. An index will be made up of a number of stocks meeting certain criteria, like covering a specific sector, or a country or group of countries. ETFs occasionally cover commodities, options, derivatives, volatility, gold.

But for most individual investors the index of stocks is the key. ETFs aim to be cheap to beat other stock investing. That means they do not trade a lot. They take a “hands-off” attitude to news events, precisely what my newsletter covers.

ETF lists of holdings are unlikely to change more than once a year to avoid big moves at unfavorable prices (to buy or to sell) as well as trading fees. ETFs also hold a relatively limited number of large cap positions to track an index without owning whole index. Avoiding illiquid small cap shares also helps ETFs avoid unfavorable prices with big volume trades.

Now a “green” ETF managed by a friend (whom I will not name because I want to keep him as a friend) has shown up the downside of ETFs tracking an index. The index covers alternative energy companies, mostly in solar, but also in geothermal, wind, and hydr-electric power. For political reasons, nuclear is a no-no.

So when he sent me a notice Monday that Sunedison had been removed from his green-index ETF, I wondered why SUNE had been kept on it after filing for bankruptcy. It turned out that the rules for his index required that the only thing that would trigger a company being removed was if its capitalization fell so much that it turned into one of those small caps ETFs don't like owning.

Of course the bankruptcy cut the market cap of Sunedison. But to wait for that event to exit the share seems to be singularly mindless. While rules keep index ETFs from trying to pick stocks and scare the horses, rather than being “objective.”

Frankly, I do not think investors in my pal's green fund expected to incur losses over a well-heralded bankruptcy.

More for paid subscribers follows from Britain, Spain, Switzerland, Brazil, Colombia, and Myanmar.

Read more »

Poor Bopeep Has Lost Her Cellphone

Tue, 2016/04/26 - 1:16pm | Your editor

Iceland is having more Panama Paper problems. After the Prime Minister was fingered for having an offshore account, its President, Olafur Ragnar Grimsson turns out to also have had an account in a tax haven established by the bent Mossack Fonseca lawyers. Grimsson says the account was set up by his wife and he didn't know about it.

Because of a continuing crisis with my email account either caused by gmail or by our webhosts (each blames the other, how you survive as a technical expert in Manila) and because my work around has gone wrong because I lost my cellphone (aaagh), today's free note is short. We have news from Ireland, Israel, Australia, Switzerland, Mexico, Panama, Britain, the Dutch Antilles, and Finland from sectors ranging from mining to drugs, from IT to banking, from cement to plastics, from oil to weapons. We start with a key quarterly report.

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Second Acts

Mon, 2016/04/25 - 1:06pm | Vivian Lewis

After bringing on a legal expert to its supervisory board to help it deal with cases of misconduct, other Deutsche Bank board members are criticizing Georg Thoma, a lawyer from Shearson & Sterling, for overdoing his cleanup campaign. This is costing money for ever more legal fees, charged Alfred Herling, who sits on the board to represent the bank's workers, in an article in yesterday's Frankfurter Allegemeine Sonntagszeitung. So far provisions for fines and lawsuits at the leading German bank have reached euros 12 bn (about $13.5 bn) which reduce profits and pay rises.

You want to be seen to do the right thing, but not actually pay for misdeeds.

 

Today was Anzus Day in Australia and yesterday a teenager aiming to blow up the festivities marking the dead in both World War I and II and the links with Britain was arrested by the local constabulary. Down Under cops arrested a 16-year-old ISIS supporter in west Sydney who faces charges in a juvenile court. If they stick he may spend the rest of his life in jail, according to New South Wales Police Commissioner Andrew Scipione.

This is the second year in a row that ISIS tried to blow up Anzac Day ceremonies. Last year 5 juveniles supporting ISIS tried to blow up the parade in Melbourne by planting a bomb in the pouch of a kangaroo. They were stopped by the cops before they could mount the outrage of blowing up a 'roo.

 

More today from our companies, with a focus on the starter portfolio for newer and poorer subscribers, on closed end and exchange traded funds. But we also have news from the Scandinavian countries with which we open today's blog plus Britain, Canada, Israel, South Korea, Myanmar, Pakistan, India, and South Africa.

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Boris vs Obama

Fri, 2016/04/22 - 1:26pm | Your editor

 

The other politician with weird blond hair, London Mayor Boris Johnson, who has broken with the Conservative partly leadership in calling for “Brexit”, Britain to leave the European Union, today wrote a newspaper article attacking Pres. Obama. The President is in London to visit the Queen for her 90th birthday. He used the occasion for urging Britain to remain in the EU.

AP reports that Mayor Johnson claimed that Pres. Obama has a hereditary “ancestral dislike of the British Empire” because his father was born in one of its colonies, Kenya. On a visit to the U.K., the Prez urged UK voters to back staying in the 28-nation bloc. The president wrote in the Daily Telegraph newspaper that the EU "enhances Britain's global leadership."

This angered campaigners for a "Brexit" vote in the coming referendum, who accused the president of meddling. Johnson said Obama's advice was "paradoxical, inconsistent, incoherent" as Americans "would never contemplate anything like the EU for themselves."

Writing in The Sun, a more Trump-ish newspaper, Johnson claimed that a bust of former British Prime Minister Winston Churchill was removed from the Oval Office after Obama was elected and returned to the British Embassy. This he wrote "was a symbol of the part-Kenyan president's ancestral dislike of the British Empire, of which Churchill had been such a fervent defender."

Obama's late father was from Kenya, a former British colony that gained independence in the 1960s.

Johnson's comments drew criticism from his political opponents. Former Liberal Democrat leader Menzies Campbell said "this attack constitutes an unacceptable smear." "Many people will find Boris Johnson's loaded attack on President Obama's sincerity deeply offensive," he added.

Stephen Wall, former British permanent representative to the European Union, said: Johnson's comment about the president's Kenyan heritage "is demeaning to the debate," and Labour Party lawmaker Diane Abbott said calling "Obama 'half-Kenyan' reflects the worst Tea Party rhetoric."

The White House has said that the Churchill story is untrue, and the bust is still in a prominent place in the presidential residence.

The Boris Brexit column may actually result in more Britons voting to stay in the European Union on June 23. Johnson, who was born in the US (which doesn't rule him out as a potential Prime Minister) is of part-Turkish heritage, also from his father's side. The British Empire fought against Turkey during the Crimean War.

Our president was not only doing to Boris what Benjamin Netanyahu of Israeli did to him.

The US is directly involved in the defense of the euro (harmed by the prospect of Brexit). Central banks are cooperating in policies to stimulate growth without engaging in 1930s style “beggar my neighbor” tariff hikes. The latest move by the European Central Bank to stimulate the economies of the block using the euro (not including Britain) will allow European subsidiaries of US firms to raise money cheaply with bonds in euros. The bonds are then eligible to be bought by the ECB as part of its quantitative easing policy. That means the US parent will pay less interest than without the ECB standing ready to buy the bonds.

I suspect the same thing will apply to subs of British firms, but I cannot confirm it.

More for paid subscribers from the Dutch Antilles, the Cayman Islands, Denmark, Brazil, Mexico, France, China, Canada, South Africa, Britain, and a few other places. Almost all is about heavy industry today, with only a single drug note and another about a fund we own.

There will be no tables Sunday as it is a Jewish holiday, Passover.

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