Pollyana Day

Wed, 2017/10/04 - 2:06pm | Your editor

I am not going to sing while being crucified like Monty Python, but today we have some Pollyanna notes, seeing the bright side result of bad news.

First off, the mounting list of victims whose data was stolen from Equifax by hackers, may result in the USA abandoning one of its silliest customs: using social security numbers for indentifying people. SS numbers routinely are used for verifying your identity when opening a bank, brokerage, or credit card account, to get medical treatment or hospitalization, to apply to vote or to drive.

That makes identity theft easy, something both the ex-Equifax execs and their congressional inquisitors agreed upon. Social security numbers need to be masked separately with codes created for each purpose: financial, medical, pension, or applying for something from the state or federal governments.

Another Pollyanna idea, unfortunately less likely to see the light of day. Richard Nixon, from the Republican right was able to open US relations with China more easily than his Democratic Party predecessors, who feared being called “soft on Communism.” Being a president best-regarded by voters in the heartland who live in areas where gun control is viewed as an attack on constitutional rights, Donald Trump may be the one who can add more sensible checks on the sale of rifles, handguns, and shooting irons—and particularly the horrific ease with which weapons can be modified to fire automatically to kill scores and wound hundreds. After all, Pres. Trump is a New Yorker and while he has a license to carry a gun he went through one of the country's most nit-picking license processes to get it.

Now that Secretary of State Rex Tillerson has confimred his loyalty to the President, the State Department can use his brownie points (or brown-nose ones) to shift some of the extreme White House positions toward the foreign policy mainstream.

Finally, if the tax-cut brigade can blame the likely deficit to come on natural disasters, as Pres. Trump did yesterday in Puerto Rico, we may not wind up facing and end to our ability to deduct state and local taxes from our federal income statement. Again, as a New York taxpayer, Mr. Trump has experience with this deduction, even if his tax forms are still being kept hidden. Melania Trump and their son Barron were New York City residents for most of the current year and joined by Mr Trump (with considerable costs for cops and great mayhem in our neighborhood) when he came to NYC to visit with the UN chief and host a fund-raiser at Le Cirque, both in the zip code area where he used to reside (and where I still live.)

 

My note yesterday about Russia filling in the gap in internet access for North Korea has been confirmed by the mainstream press. I filed earlier than they did because I got the information from what I consider reliable sources, Frankfurter Algemeine Zeitung and Foreign Affairs magazine websites. The latest news is that Putin-land is also offering other more critical economic and military help to Pyongyang from its Far Eastern border region of Primorsky Krai. This a Kremlin reaction to sanctions over its support of separatists in eastern Ukraine and Yalta.

 

Russia is also making nice to Nicolas Maduro which may wind up troubling the US on a different front. The rumor is that Rosneft of Russia is buying taking the US Citgo gas station chain over from the bankrupt petty dictator of Venezuela, supplier of filled tanks in our heartland, and indeed all over NYC. While we sanction Rosneft, it has taken a Citgo mortage as collateral for loans to the PDVSA sub in payment for crude oil So far Pres. Trump has excluded PDVSA and Citgo from sanctions, which cynics attribute to the Caracas-controlled oil co. having donated a half million bucks to his election campaign and continuing lobbying. However, I expect the blushing President to reverse course now and stop being a pal to Putin who may have got Trump his job.

 

Polyanna positivism also applies in our stock performance today, but I will only share that with paid subscribers. We have news from India, Israel, Argentina, Sweden, Britain, Russia, Brazil, Panama, Costa Rica (a first), Germany, Australia, Hong Kong, and Canada. There will be no blog Thursday and only a quickie on Friday for a Jewish holiday and then the long-awaited installation of our our land-lines.

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Funds of Funds

Tue, 2017/10/03 - 1:41pm | Your editor

If you want to lobby your elected representatives to increase gun control after the horror in Las Vegas visit facebook.com/townhall to find them. And thank you to ShellyPalmer Strategic Advisors for finding this site.As a New Yorker I do not need to contact my Senators and Representatives to vote against the gun lobby, since they already do.

Our president, a rare New Yorker with “a license to carry”, needs to think about what the modern era proliferation of guns and gun deaths means to America. His remarks on the slaughter were, for him, surprisingly presidential, but they omitted the one thing every American needs to address: the absurd interpretation of the second amendment language to allow the proliferation on our streets and colleges, schools and now a hotel, of highly dangerous weapons. This isn't the 18th century any more and the weaponry is no longer just a hunting rifle.

This had nothing to do with “a well-regulated Militia” since regulation is exactly what the gun lobby increasing opposes. “The right of the people to keep and bear arms” does not mean that NY-style regulations and checks have no place in our free system. You cannot drive a car without a license or practice medicine as you wish. You also cannot become part of a militia by getting a gun without signing up.

 

BlackRock has acquired over 10% of the shares out of City of London Investment Group plc which runs a fund of closed-end funds to gain from their discounts from net asset value under savvy Barry Olliff. CoL sells its fund of funds, which is listed in Longon to institutional investors in the US but for regulatory reasons do not sell their funds to US retail investors. It also sells portfolio management to US institutions.Your editor watches their public placements because they often trigger buy-backs to cut the discount. Olliff started on focusing on emerging markets closed-end funds (CEFs) but now has the knowhow to also invest in developed market, notably the US and Canada.

BlackRock Inc (BLK) was recently added to its “Americas Conviction” list by Goldman Sachs and insiders have been buying. Goldman is also creating lower fee variants on exchange traded funds competing with existing ones.

Worldwide, BLK hasd $5.7 trillion under management, from individuals and institutions and has staff in over 30 countries. If offers mutual funds, exchange-traded funds, and other pooled investment vehicles as well as separate accounts for rich people and trusts.

Its presence in the US CEFs area is very lop-sided. It offers a few specialized equity CEFs for sectors (like energy or health science) or high yield via stock or bonds. These are much less profitable for the manager than exchange-traded funds for the same sectors. It also has a bunch of loan participation funds, most of them launched recently.

But its main heritage CEF business is running bond funds including many covering the municipal bond market, with single-state munis (many for New Yorkers) and national ones. So the move on Olliff's outfit may signify that BLK wants to also work on global closed end stock funds and country funds, where it is absent. BLK HQ is in my zip code, as is Trump Tower from which a nut could kill many fund managers, but it plans to move to the more fashionable Hudson Yards by 2022.

One incentive for BLK which is of course a legal fund manager is the rush of so many people to bitcoin and other pseudo-currencies. While it is not interested in money laundering it is seeking to get more foreign equity exposure.

City of London Group stock rose 1700% today, which is of course lovely for Barry Olliff, a long-time friend who founded the firm 40-odd years ago and with whom I chat when in London. I'm afraid I never thought of buying into his fund management group which is a penny stock, in part because I could not buy its open-end UK fund.

 

More for paid subscribers follows from Colombia, Britain, Switzerland, Israel, Thailand, Canada, Panama, Bermuda, Ecuador (a first), China, North Korea, Russia,  Brazil, Puerto Rico, Germany, Sweden, Finland, and Norway. More also on funds for paid subscribers.

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Scary October

Mon, 2017/10/02 - 3:07pm | Your editor

October is supposed to be a month of terror, because of Hallowe'en. More than pumpkins and masks, spiders and witches, broomsticks and black cats are scaring me now. The largest ever death toll from a shooting spree by Americans against other Americans took place at a country music concert in Las Vegas. The number of dead is now  58 and there are hundreds of wounded. The attack was claimed by IS but the shooter was an elderly US gambling addict.

What happens in Las Vegas should not stay in Las Vegas. The city is a tourist Mecca not only for Americans who support laws allowing “carry” for guns. I have gone to Las Vegas for everything from the wedding of a visibly pregnant British first cousin once removed to a book publishing by a German Jewish survivor from my mother's home town, from stock market investing confabs to visits to the Grand Canyon. In case you are wondering, I support the New York City ban on guns

Imagine what mayhem could have hit Catalonia if Catalans could legally own guns. In Europe, there is effective gun control which hampers the loony fringe of terrorists who have to use cars, swords, and knives to kill people. My first business partner, whom I later bought out, Bill Bonner, supports both Catalan independence (because his sister-in-law married a Catalan nationalist) and a supposed constitutional right to bear arms with little limit.

 

Your editor will be testing Norwegian Air Shuttle as a way to fly to London for the Christmas holiday, dragging her very large husband along with her to test the upstart airline which should be gaining from the latest move by Ryanair to diss its customers by canceling lots of flights. Like RYAAY NAS, now listed mainly in Oslo, charges for everything: baggage, seat reservation, meals. The stock is NWARF on the pinks. I will decide if it is worth buying after our trip. An alternative is EZ Jet which only flies in the European air space. The place where airlines make money is across the Atlantic. We are flying from JFK direct to Gatwick, a bit inconvenient but nothing as bad as Heathrow.

 

More today for paid subscribers, from Canada, Ireland, Israel, Spain, Mexico, Britain, Germany, the Dutch Antilles, Brazil, Panama, Australia, Argentia, Chile, South Africa, and Hong Kong. Remember that when the month changes stocks which flipped tend to flop and stocks which flopped tend to flip. Today's blog is very late because a backlog of phonecalls hit me.

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Sunday Tables Posted; Warning: Today's Blog May Offend Some Religious People

Sun, 2017/10/01 - 3:09pm | Your editor

Today's tables were posted later than usual because a lot of data was missing from my Barron's closed-end funds tables--not because of a grey printover error, but because the net asset values for funds which usually provide this were missing. I think it may have been because of the Jewish holiday of Yom Kippur, although it may also be related to hurricanes around the country. If it is because of the Jewish fast, which overlapped with our Sabbath this year, it suggests a way to buy closed-end funds at a greater-than-normal discount from NAV. If there is a major Jewish holiday which begins Friday night and the lock-down starts earlier you may get what is called a Metziah, a bargain. Our building was locked down starting at 3:30 pm, well before nightfall in New York City.

But it may be because of weather conditions in Miami, Florida, base of closed-end fund guru Tom Herzfeld. I've never asked Tom what his religion is and whether he is observant. The NAV of Herzfeld Caribbean Fund, which he manages, was in its usual place. But the other data his firm provides to Barron's was incomplete.

The Jewish Harvest Festival of Succoth begins on Weds. night and is observed on Thursday, both this week and next by reform Jews. The holiday is observed by eating your meals in a booth or shelter in your fields, which is what a Succah is. It also involves a ritual of shaking a palm frond along with three bits of myrtle and two of willow while holding a very sweet-smelling but inedible citrus fruit called an "etrog" in Hebrew. (I have never bought one in any other language because why would I want an inedible citrus fruit?) Orthodox people observe for 9 days, 5 of which are serious, and the kids drive everyone crazy because they usually don't go to school on the intermediate days. Meals are eaten in the booth which can be grim if it rains because the ceiling is made of open reeds, not practical outside the Land of Israel. We don't have a balcony or backyard in NYC but we did build a sukkah when we lived in D.C. and our grandchildren have ones in their suburban homes. Synagogue offer a place where you can observe the rules and dine sort of outdoors but we don't bother except during the important Thursdays.

The timing of waving the palm branch bothers me because of the Christian theory that the Last Supper was a Passover Seder. Passover is not a week after Succoth, but more like 6 months later (it varies depending on whether or not there is an extra month in the Jewish/Babylonian calendar for leap years.) So I suspect that the timing of Palm Sunday is off.

As for the leap month, it is because the Prophet Mohammed decided not to avail his calendar makers of the latest thing (over the prior 1500 years) in Middle Eastern astronomy that the Islamic calendar loses about 5 days per year. So Ramadan is so much tougher on people than Yom Kippur despite the fact that the fast only runs during daylight hours. If Ramadan falls in the summer in the heartland of Islam the day is long and the sun is very hot indeed for people who are not drinking any water.

As you can see I have now offended members of all three monotheistic religions in a matter of a few paragraphs.

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Portfolio Updates

Fri, 2017/09/29 - 2:35pm | Your editor

Portfolio updates are only for paid subscribers. There will be a Sunday update for the month of September for all of our tables posted at www.global-investing.com where you can read the ones allowed: all for current subscribers and closed positions for pre-subscribers.

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Markets in Focus

Fri, 2017/09/29 - 12:22pm | Your editor

Your editor was startled by receiving from BofA-Merrill-Lynch Global Research a “Situation Room” blog entitled “Happy New Year”. It was not in fact a greeting card for the Jewish and Muslim New Years which began last week, from the broker to Main Street America. The authors were Hans Mikkelson, Yuriy Shchukinov, and Yunyi Zhang, only one of the three, the Russian, remotely likely to be Jewish.

The blog was about US corporate bond investors hedging risk with rolling 3-mo forward forex rates—which now run into the year 2018. The dollar funding costs rose because of US corporates using the hedge. The swap market for forward dollars is also used by non-US banks as window-dressing for their year-end capitalization reports because their balance sheets are subject to regulations imposed at the end of the year. They also use the forward currency markets.

As a result single month currency hedges, which run out in 2017, are cheaper—and longer ones against euros or Japanese yen are up by 7 to 9 percentage points, annualized, a huge spike in the dollar exchange rate. This is a technical oddity which is particularly serious this year because of the likelihood of another rate hike by the Federal Reserve by the year end. Foreign investors like those banks will not gain from an expected increase in US interest rates—because they already are paying it.

The over-New Year interest rate spike also affects global investing picks. Our stompling ground is foreign stocks accessible to mostly US readers (and your US-based editor). So when the dollar is costlier against the currency of the respectable foreign markets in Europe and Japan (the ones where most American Depositary Receipts are home to) our shares go down on Wall Street. This technical move as they year comes to a close hurts our performance almost across-the-board with existing positions, and, because it is short-lived, creates a generalized buying opportunity. For the specific ideas for today, you have to become a subscriber.

 

Thank you to all readers who singed the petition calling for free freezes on new card applications from credit rating agencies after Equifax was hacked. Its new CEO told the world it would allow customers to open and shut credit freezes as often as they like without charge for life. The petiition only sought a single free freeze per year. Now the issue is persuading Experian and TransUnion, two other credit raters, to follow Equifax's lead.

 

Hacks go on. Whole Foods Market, a neighborhood purveyor whose lowered prices have lured me in since it was acquired by Amazon.com, suffered a credit card breach but this only affected its sites with full restaurants and “taprooms” (bars) which luckily are not in Midtown Manhattan. We do not dine at Whole Foods and the hack does not affect Amazon or the supermarkets. The store has called in cyber-security specialists and, in some places, the cops. Its last run-in with New York's finest was when its pre-packed fresh food items turned out to be short-weighted, as a result of which it lost a lot of customers. This led to the Amazon bid being accepted, and for the price cuts.

Readers in lower-rent areas of the country who dine or drink at Whole Foods should check their credit card bills carefully and use freezes if needed.

 

The promised repair of our phone lines yesterday did not take place. Verizon now is expected on the 9th ofn October. If you want to help things along please phone (using a land-line not a cellphone) to Verizon repair at 800 567 6789 saying that you need to speak about your subscription. Our number is 212 758 9480 and you can also say that you couldn't reach me on my direct line either. I am not giving that one out however.

 

Today's issue includes a new stock buy and a new stock sell. We have news from Sweden, Israel, Canada, Brazil, Denmark, Australia, Switzerland, Mexico, and Nevada.

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Jones Act and Malta

Thu, 2017/09/28 - 1:58pm | Your editor

The Trump Administration has waived one of the most pernicious pieces of antique protectionist legislation, alas for only 10 days, called the Jones Act of 1920. It requires that shipments within the USA be carried on “American bottoms”, vessels which are owned and operated by Americans. The intention: to control shipping on the Great Lakes, the Mississippi and other river basins, and via US canals.

The law, formally called the Merchant Marine Act, was crafted when the US did not yet include the States of Alaska and Hawaii, and before Puerto Rico's economy and population grew and became more integrated with the Mainland. Responding to the plea of P.R.Gov. RicardoRossello and with the support of Defense Secy Jim Mattis, will speed up help for the US island after Hurricane Maria and also cut the costs of shipping supplies of food and water needed there.

The next step is to repeal this piece of antidelluvian legislation when the 10 days' waiver ends.

 

The US dollar is mixed today which affects prices of any foreign share. This is not because of the Jones Act but because Fed chief Janet Yellen hinted that there will be a further interest rate hike in 2017. And after the Q2 GNP was revised upward the market expects higher rates sooner. Meanwhile the Trump tax reform plans are still under study. More interesting is that the Chinese Yuan or Renminbi is up over 2.4% today at 15.07 US cents.

 

More today from Malta, India, Morocco, Canada, Britain, Mexico, Israel, Britain, Russia, Curacao, Germany, Ireland, Bermuda, Denmark, Spain, Hong Kong, Australia, and Nevada.

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Trading alert

Wed, 2017/09/27 - 2:34pm | Your editor

Trading alerts are only for paid subscribers to www.global-investing.com/

Join them by signing up for a subscription on our site.

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Driving Ladies

Wed, 2017/09/27 - 1:20pm | Your editor

The big winners on the Saudi stock exchange after it was decreed that there is nothing in Islam which prohibits women from driving cars turn out to be auto insurance, car dealers, and car leasing firms listed in the Kingdom like Budget's local arm United International Tranportation, which rose 4% and insurance firms, although the Saudi index fell today.

One of my pals among reporters when I lived in Europe was Hilfra, the Liverpool-born lesbian editor of a petrochemicals newsletter who regularly went to Riyadh as part of her beat. The publisher paid a fortune in taxi bills for her coverage of Saudi moves downstream.

I will toasted Hilfra when I next get to El Vino's in London. She was a pioneer in moving to the East End in London and my husband and I stayed with her and her partner in their converted school-house in Bow. Her influence and that of our nephew got us to buy a flat at Mudchute Manor.

I never had a Saudi woman friend but I did get to know an Egyptian Muslim with chilldren at the French school our daughter went to in Washington. This poor lady was convinced that the Koran said women were intellectually inferior to men.

Today the durable goods orders rose by double the consensus forecast mainly thanks to plane sales, up 1.7%. But pending home sales sank further in August, down 2.6%, vs a forecast of -0.5%, and mortgage applications sank in tandem.

More for paid subscribers follows from Hong Kong, China, Japan, Israel, Ireland, Norway, Sweden, Spain, Bermuda, Denmark, South Africa, Cuba, Canada, and Brazil. We also have a new stock pick.

Thanks to all who signed the petition to get Equifax, Experian, and TransUnion to provide data and freezes for customers whose credit card accounts were hacked without charging for it.

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China Internets Issues

Tue, 2017/09/26 - 1:31pm | Your editor

Facebook faced a bigger crackdown than the Chinese internets we wrote about yesterday. Rather than fines for allowing Chinese to post obscene or politically incorrect commentary on the web, Beijing has simply blocked all messaging using WhatsApp, owned by Facebook. Unlike the Russians who seem to have used to site to spread propaganda or disinformation, China has simply banned WhatsApp entirely.

Lotte has hired Goldman Sachs to find a buyer for its supermarkets in China. The South Korean chain has suffered from a Chinese boycott because of Seoul's acceptance of US anti-missile systems to protect it from the North. China's policy here is ambiuous as its the barriers to Chinese tourist visits to South Korea which has cut the inflow.

More on China's crackdown follows for paid subscribers along with news from Switzerland, Spain, South Korea, South Africa, Poland, Mexico, Japan, Israel, Bermuda, Australia, Argentina, and a few other places.

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