Time for a Change

Fri, 2017/07/28 - 1:59pm | Your editor

It is time for a change.

I think the USA, the GOP, and the Trump Administration's prospects are better now that repeal of Obama care has been forced off the Congressional agenda. Unlike other key policies Pres Trump supported in his successful campaign for office, like infrastructure spending and tax reform, there never really was a popular mandate for ending the keynote policy of the prior Administration.

Infrastructure investment opening up to private-sector partners is a commonplace in foreign countries and there is no serious reason why it cannot be done here. And anyone who has ever filled out W2 forms knows that US taxes are an unholy mess.

Having said that, I am still wary of the White House tendency to adopt wholesale policies inherited from the anti-Mencken parts of the country: hostility to immigrants, trade protectionism, blocking access to family planning and abortion, and above all discrimination against the many gays and lesbians who have left the closet (and transgender people who I think are rather rare as I have never met one.)

In foreign policy of course Mr Trump is unable to make overtures to Russia to reduce world tensions because his own team was infiltrated by Putin and his spies before it won office. But history shows that this is no tragedy. Every president upon taking office has tried to reset relations since Putin came to power: Bush senior, Clinton, George W. Bush, Obama, and of course Trump. It has never worked because the Russian government is a corrupt murderous oligarchy able to manipulate home country opinion to back irridentism, theft, nationalism, social repression, and overreach.

The US economy in Q2 nearly doubled its growth rate to 2.6% so this is a good time for economic reform measures. It is also a good time to talk turkey to Russia and China as the Hermit Kingdom of North Korea has again tested a big missile.


More today from Britain, Denmark, Spain, Bermuda, Canada, Mexico, Brazil, Israel, Nevada, and a few other places. As usual at this time of the quarter we have reports from our companies. Plus a trade for Monday.

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Another Thursday Blog

Thu, 2017/07/27 - 2:49pm | Your editor

Today, I hope, my readers will get two blogs, because the one from Wednesday did not go out normally and had to be re-sent, which I did early this morning. I left the office yesterday before I was sure the e-mail had gone out because of a social engagement. The Wednesday blog is badly formatted but I suspect most of you would rather see it with variable fonts than not see it at all.


After my dawn send, I attended to personal business, namely the vexed matter of using a bank transfer to pay the builder we owe money to in Portugal. The rules of SWIFT appear to have been changed in the middle of the month without there being a process for informing bank clients using the electronic transfer system why they did not work. After spending hours trying to pay our builder I went to the bank and was able to override the client-managed process by letting a bank officer do the deed. In between checking the data points he spent most of his time trying to get my husband's account moved over to the bank he works for, which by the way is unlikely precisely because he was pitching so hard.

Then no less than 2 of the 3 elevators in this building were out of service and my old desktop computer which I use as a back up also went agly. Never rely on systems which used to work. They will suddenly fail.


From my new brokerage's global expert Jeffrey Kleintop, here is a new reason for investing outside the US: thee degree to which the world's stock markets move in sync with each other has fallen to the lowest level in 20 years. He compared correlation between markets of the G20 countries plus Spain and found that they are no longer aligned with each other. Lower correlation increases the benefit of diversification to cut risks. He adds that this is “especially good news right now because stocks may be due for a pullback.” My new brokerage is Charles Schwab.


More for paid subscribers follows from around the globe with another terrible day of multiple company report (including an “ad hoc” one from a German company which didn't even need to provide it) and several scandals.


Fiat Luxe. As we are out of Fiat-Chrysler and its Ferrari sub it worth noting that its former labor relations head in Motown tapped into company funds provided for union worker training along with his late counterpart from the United Auto Workers Union to the tune of at least $1.8 mn. Among the items the exec funded with the stolen cash was a Ferrari 458 Spider, not a Fiat 500.

However Fiat is not one of the carmakers charged with running a cartel in Germany. Note also that the chemical producers there are now under investigation by the European Union for collusion in setting the prices for feedstock. Its market dominance was very reason that IG Farben was split three ways after World War II to create BASF, Bayer, and Hoechst.

Now for the rest of the news. There is a lot of it from the Americas, Europe, and the rest of the world.


*The scandal which will not go away is how drug company detail men persuaded doctors to liberally prescribe potentially addictive pain-killers on behalf of, among others, Teva Pharma of Israel. Sen. Claire McCaskill (D.-Mo.) who is minority leader of the Homeland Security Committee is investigating the way the drug companies pushed their opioids to boost use without warning often uninformed general practitioners of the risks.

*The value of Astra Zeneca fell by $13 bn on the stock market after its lung cancer drug combo of Imfinzi and Tremelimumab failed ther Mystic trials. It also had a bad quarter. So we now know why Pascal Soriot was hoping to hop to Teva. AZN is one of the holdings of Investor A/B, IVSBF, our Swedish holding co.

*Although its shares fell 2.5% today, I disagree with Mehdi Zare who today in www.seekingalpha.com called Teva “walking dead.”

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Resend of Wednesday

Thu, 2017/07/27 - 6:58am | Your editor

Today my new Schwab account arrived and I am pretty busy checking out the transfers (which you need to do) so there will only be a brief blog and a late one. We also have two big ones reporting and a political decision helping one of our companies to tell about. And also a deal gone wrong, reversing part of a whopping gain yesterday, and another reversal as well. The theme might be easy come, easy go.

There is news from the UK, Mexico, Argentina, the Dutch Antilles, Germany, Switzerland, Canada, Ireland, Brazil, Spain, Japan, India, Australia, and Myanmar.

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Acat At Last

Wed, 2017/07/26 - 1:53pm | Your editor

Today my new Schwab account arrived and I am pretty busy checking out the transfers (which you need to do) so there will only be a brief blog and a late one. We also have two big ones reporting and a political decision helping one of our companies to tell about. And also a deal gone wrong, reversing part of a whopping gain yesterday, and another reversal as well. The theme might be easy come, easy go.

There is news from the UK, Mexico, Argentina, the Dutch Antilles, Germany, Switzerland, Canada, Ireland, Brazil, Spain, Japan, India, Australia, and Myanmar.

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No ACAT But Lots of News

Tue, 2017/07/25 - 12:45pm | Your editor

Day 5 of the ACAT transfer dawned with no brokerage account yet. My stocks are still in transit between Fidelity and Schwab. But here is important news about my new brokerage: Schwab, known for lowering fees to compete with low-costs exchange-traded stock substitutes like iShares or Vanguard funds, has seen ETF assets under its custody platform reach $355 bn in June, up 29% year-over-year from an already high level.

The inflows were $9 bn into international equity ETFs and only $6.5 bn into US equity ETFs. So the California based brokerage does attract global investing fans.


More for paid subscribers from Germany, Portugal, Brazil, Britain, Spain, Ireland, Switzerland, Panama, and Chile.

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IMF Outlook

Mon, 2017/07/24 - 12:19pm | Your editor

The International Monetary Fund produced its 2nd half updated forecasts today. The US economy is now predicted to grow 1.7% rather than 2%. Household well-being has deteriorated the most in three years. The IMF also cut its forecast for Britain, now expected also to log in a 1.7% output rise, down from 2% predicted in its April forecast, the first downgrade since the EU referendum late year. After the vote in June 2016, the Fund had to raise its British forecasts to 1.1% for this year (in Oct.) to 1.5% (in Jan.) and 2% (in April).


The Fund's downgrade of the US outlook results from lower expectations for tax reform and infrastructure funding measures from the beleaguered Trump Administration. The IMF, which operates from K Street, in Washington, D.C., always has its forecasts vetted by the countries themselves which means that they tend to be better than the final outcome turns out to be.


My account is now mostly closed at Fidelity but it has not yet landed at Schwab, despite promises from the former. So today's blog is incomplete. But we have news from the US, Mexico, Britain, Israel, Germany, Panama, India, Sweden, Denmark, Japan, and Brazil.

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What A Day!

Fri, 2017/07/21 - 1:01pm | Your editor

Today is the Friday from Hell, with the temperature and humidity in the mid-90s and 8 company reports hitting before today.

Moreover my desktop computer has been infected with a virus called “accelerate” which pretends to be seeking out viruses while really being one itself. I have no idea how I got infected, but of course will not call the toll-free number that it displays to get “help”.

Meanwhile my Avast free antivirus program is displaying “jrog2” which makes me think of the pirate flag, and is offering to protect banking and shopping on a desktop computer if I upgrade. And my wifi is proving intermittent. Moreover jolly roger so far failed to take out PCAccelerate.pro, the virus from 2014, which insists on scanning your computer and demands that you phone (855) 680-4904) to activate your account to stop this. Among its nastier habits is to stop the clock on the computer and keep me from moving to the web

Meanwhile Fidelity, my soon-to-be-ex brokerage, has blocked my access to all US-traded shares and bonds in my account, and is only showing positions held on foreign markets, but not US ones, which is scary with GE reporting today (I own it like any respectable US investor.) Moreover Fido transferred $37,000 from my “core” money market account (cash) to Schwab and is now threatening to bust my two most recent trades because they have not been paid for—because Fido itself transferred the cash.

As I am increasingly learning, the services on the Internet, like search or corporate g-mail are increasingly trying to charge for what used to be free. My mistake. I am just soooo 20th century.


More for paid subscribers from Australia, Panama, Mexico, Britain, the Dutch Antilles, Britain, Spain, Switzerland, Argentina, India, Sweden, Mexico, South Africa, Israel, Colombia, and Canada.

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A Top Forecaster Speaks

Thu, 2017/07/20 - 1:37pm | Your editor

This morning BofA Merrill Lynch's contrarian macro analyst David Woo made some forecasts and suggestions to Washington, using game theory and psychology notably on tax reform, backing a 5% VAT in lieu of a border tax, to finance a corporate tax cut. He also thinks Pres. Trump has less to lose than Republicans in Congress from a government shut-down so he will use this to get his way. Having a rep for being a madman is the way to win games of chicken, to quote his analysis.

During the shut-down, Woo argues, both Wall Street and the dollar would suffer.

The analyst, head of global rates and currencies research was named one of the 12 smartest people on Wall St. and famously predicted a Trump victory last year. Today he also made a forecast for Britain, that sterling will suffer after the German election because a “soft” Brexit would become less likely. Mr Woo famously also forecast the drop in China's renminbi and the Canadian loony before they occurred.


The head of the Frankfurt Stock Exchange, Carsten Kengeter, has been indicted for taking bribes by its regulator, the State of Hessen where both my parents were born.


More for paid subscribers follows from Hong Kong, Mexico, Japan, Denmark, the Dutch Antilles, Nigeria, South Africa, Britain, France, India, Brazil, Canada, Israel, and Switzerland.


There will be no portfolio update this weekend as I cannot get current quoted prices or research for my non-US shares from Fidelity, nastiness by Senior Director of Risk Management Erin McNally denying me access to prices on its international trading desk. He is going beyond the rules to try to hurt me. The earliest the transfer to Schwab can be scheduled is next Wednesday.

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Semper Fi

Wed, 2017/07/19 - 3:12pm | Your editor

Yesterday my office phone was finally re-installed by the phone company. My first incoming call was from my brokerage, Fidelity. I moved in April after my prior broker, E-trade, failed to provide a 1099 for my US taxes before the April 15 deadline a second year in a row, requiring that I file late. On the phone was someone named Erin McNally, whom I thought was a hoax caller, because he was a man (and Erin usually is a woman's name) and because he had a Canadian accent. But he was real enough.

He told me that my account with Fido was being closed by “our firm” because of my having caused trouble over a botched trade 8 years before. .

Back then, your editor owned a French share she had written up on these pages, Stallergenes, for which a takeover bid by a Swiss firm had been made, for cash. I was called by a lawyer from the Salt Lake City-based global trading desk of Fido to tell me that since there was no US prospectus for the offer, I would have to sell my shares rather than accept. This may have been an error, as other US owners among my readers were able to tender. However as a newsletter writer, I need to keep on the right side of the law so I told the lawyer that I would sell my shares and, to make it easier, I would accept 5 eurocents less than the Swiss buyer was offering.

The very next day a reader who worked with the Marquette De Bary brokerage here in NYC called me to say that she was worried because a large trade had gone through 30% below the bid price and it might mean there was a problem with offer.

In fact there was no problem with the offer. It was just that the Utah lawyer had put in my Fido order not in euros, the currency of France, but in US$s. It was partly my fault as I did not ask the caller to bring a member of the global trading desk to take my order.

I then tried to get Fido to make me whole because of the currency mistake, and they refused to eat the loss. So I went to arbitration over the matter and, in case you don't know it, arb is rigged in favor of the brokerages. I lost and then was told never to darken Fidelity's door again.

When the tax mess blew up at E-trade I did not go back to Interactive Brokers, my first haven after Fidelity, because its systems are geared for institutional investors who have other sources of pricing information, like Bloomberg machines, which I cannot afford. I considered Merrill and TD Ameritrade but neither was offering international access which I need, so I went to Fido again after one of my contributors suggested they would have forgiven me in the interval. I don't know if he spoke to anyone at the firm, but I suspect he did.

I was upfront when I did the application explaining that I had gone to arbitration 8 years prior and was repeatedly told this was water under the bridge. So I was surprised at the call from Mr Erin, but checking with those who had welcomed my account earlier, he was the real thing. Since Fidelity is privately held, there is no public information on its officers and they confirmed that he was indeed Senior Director of Risk Management and that I was being ousted.

The irony is that I have reported here on excellent execution by Fido since I opened my new account.

I have now opened an account with Charles Schwab, where I didn't go the last time because they would not provide price info on a bookie share I owned then, but now have sold, Ireland's Paddy Power PLC. As always I tell the signup staffers, in this case one Mr Fox, that I am the editor of a financial newsletter and that I write about stocks but am not a manager of money or employed by a brokerage.

So far they have accepted my account and after work I hope to meet the man at their Park Ave branch who is supposed to look after my account.

Wish me luck!


Forget Winnie the Pooh. The latest Chinese firewall on the internet blocked Whats App messaging from Facebook. This is no longer about a cute bear but amounts to a crackdown on foreign information getting to China's netizens. More on this below for paid subscribers. Offsetting this bad news, China also paused its tightening, according to BofA Merrill Lynch which says it is tactically bullish on the country for growth and containing inflation. Its veteran analyst Michael Hartnett today told investors he has a buy call on China, Korea, and Taiwan with a focus on technology. Why we disagree is spelled out below for paid subscribers.


The equivalent in France of the head of the joint chiefs of staff has resigned over military budget cuts planned by the Macron government, Gen. Pierre de Villiers. This row is the first with the power structure of his country hit by the new-broom president.


More for paid subscribers follows from Germany, Australia, Argentina, Hong Kong, Israel, Canada, Switzerland, Britain, the Dutch Antilles, Norway, Sweden, Finland, and India. We have a half year report today for paid subscribers and a two quarterlies.

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Jane Day

Tue, 2017/07/18 - 1:35pm | Your editor

Today is Jane Austen's Jahrzeit Day, 200 years on. I first read Pride & Prejudice in a children's edition given to me by my father's left-wing intellectual cousin, which shows you that the author's continued sales reflect a subversive bent that was rare in the early 19th century, particularly among women, and particularly among spinsters.


After filing about new Chinese censorship of comparisons of Xin Jiping with Winnie the Pooh, our Japan correspondent sent me an article from the Hong Kong Free Press on another cartoon ban. Official pressures from Beijing were blamed for the withdrawal last month from the Annecy (France) annimation film festival of Liu Jian's Have a Nice Day, a cartoon film about a bag of money stolen by a chauffeur in a Chinese small town.

The censor objected to the gangster movie because the comedy showed the contemporary China is “bleak” and “dreary.” The censorship was first reported by La Croix, a French Catholic daily and only withdrew it from the 57th Annecy program when asked to do so by Liu Jian, lest he be endangered. It had been the first time a Chinese film had been shortlisted at a major international film festival.


Today's blog is late because I had to wait for a phone repairman to reinstall my office line which has been down for over two months. My husband says it reminds him of when we first lived in France and phones were run by the PTT, a government agency. The saying then was “half the population of France is waiting for the telephone installer and the other half is waiting for a dial tone.” That was pre-Macron, of course.


More for paid subscribers follows from Canada, Israel, Ireland, South Africa, Spain, Finland, Brazil, Australia, and Mexico,  mostly rating changes. Nothing from Annecy or Beijing, however.

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