Valentine's Day Misses and Missiles

Tue, 2017/02/14 - 2:23pm | Your editor

The Russians appear to have violated the 1987 Start Treaty by secretly deploying a land-based cruise missile in 2014. The Putin-smoochin' White House, which has just lost its National Security Advisor Michael T. Flynn for undisclosed links with Russian diplomats during the Interregnum, now has to deal with this Cold War-style challenge from the Kremlin. Mr Trump in his telephone conversation with Vladimir Vladimirovich seemed to think the treaty was called “Start-Up” and seemed to be pretty out of it as the Russian sought to get his agreement to extend the deal for 5 more years without stopping his land-based cruise missile program.

The Obama Administration tried to persuade Russia to stop the development of the missile, without success. You can also worry about China and North Korea making aggressive moves against the US and its allies.

Happy Valentine's Day. Coupled with hawkishness from Janet Yellen of the Fed, who said that there could be a rise in US interest rates soon, the Russian violation has taken down US markets after yesterday's bullishness. Foreign markets were mostly closed, except for Americas ones, when the news hit.


Today we have 2 quarterly results from companies using a fiscal year ending in March, one good, and one less so, along with upgrades on our latest buy pick and news from Canada, India, Finland, Germany, Britain, Israel, South Korea, Brazil, Australia, and Bermuda. We also have a couple of ideas which are hard to implement or which are better left to others.

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So-Called Justice

Mon, 2017/02/13 - 1:57pm | Your editor

The Trump “so-called judge” controversy is not new. What the President meant to say was “so-called justice”, a term used by his predecessor in the White House back in 1937 when his New Deal programs were blocked by conservative Supreme Court Justices. FDR sent a bill to Congress to add another six justices to the Supremes. He lost that vote because many Democrats opposed the measure which was locked in committee by Chairman Harry Ashurst who famously said: “No haste, no hurry, no waste, no worry.” It sat in the Senate Judiciary Committee for 165 days.

However, in the end FDR did get his way since one of the Supremes, Associate Justice Owen Roberts, switched his position to support New Deal measures like a minimum wage..The packing of the Court never took place the way Roosevelt intended, but the fact that it was even being considered caused the Supreme Court to take the law of public opinion into greater account, something which has characterized the third arm of US government ever since.

Current Supreme Court Chief Justice and swing voter John Roberts, no relation, studied under Owen Roberts. And Neil Gorsuch, the Trump nominee, studied under John Roberts. The Roosevelt attempt to control the third arm of government was defeated on constitutional grounds. The Congressional blockage of the Obama nominee last autumn was the closest we have come to a packed court since FDR tried it.


More including an important annual report follows for paid subscribers follows from Brazil, China, Spain, Germany, Israel, Canada, Britain, Switzerland, Mexico, Chile, Denmark, Bermuda, India, Australia, Denmark, and Finland. We also have a new pick from our new reporter today.

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Sunday Tables

Sun, 2017/02/12 - 1:21pm | Your editor

Today as usual I posted my tables showing how well we have been doing--which is quite well in our stocks, bonds, and traded funds. Our closed positions are not as lovely because I was taking losses last year on the assumption that a US tax reform measure from the new Administration would make losses less valuable in the future.

Everyone can see the closed-positions table on our website, Use the printer-friendly button to view spreadsheets on your screen.

Today's chore was rendered more difficult by the decision of Barron's to leave out net asset value calculations on US closed-end bond funds invested outside the USA, the very ones we dote upon. Since the weekly's reporters frequently discuss the bargain prices of CEF against their NAV, this switcheroo cost me time and aggravation, as I had to use the more cumbersome Closed-End Fund Association site to do my tables.

Of course CEFs once they are operating do not advertise in Barron's, whereas the operators of exchange-traded and open-end fund do adevertise. However many fund management groups in fact operate in different market vehicles. So the weekly is being penny wise and dollar foolish in how it serves its subscribers.

More for paid subscribers follows.

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NAFTA and Currencies

Fri, 2017/02/10 - 1:48pm | Your editor

While I have many grievances with the new Administration I want to applaud a couple of smart moves. First of all, to get to talk to Xi Zinping, Pres. Trump agreed to recognize the decades-old “one China policy” which labels Taiwan as a breakaway part of China rather than an independent country. After his intermediaries with Beijing (Ivanka Trump and his grandchild, who attended a Chinese New Year party and then talked to Xi's advisers on behalf of the president), the important phone call could take place.

He appears to have walked back from his extreme support of West Bank settlers and to be preparing the ground for a new round of peace talks between Israel and some of its secret supporters among Arab countries, including Saudi Arabia and Egypt. The Middle East thicket is not susceptible to one-liners on Twitter and the new Secretaries of Defense and State have now reined in their boss.

I expect the Two Secretaries will also take in hand the dangerous love-feast between Trump and Putin. While a restart with Russia obviously makes sense (it was attempted by both of the previous US Presidents), it requires expertise which Pres. Trump lacks, despite his having had two wives who speak Russian (Ivana and Melania, both of whom learned Slavic languages as children which gave them a head start when they had to study Russian later.)

Our relationship with English-speaking foreign countries is now marginally less fraught as official talks with Canada and Mexico are taking place at a sherpa level to prepare a summit.

More significantly still, in order to get US infrastructure up to scratch, the Administration is working to create laws to public-private cooperation which build on the venerable tax-free bond issuance for needed finance with more modern variations.

And our rickety tax system will be reformed, which should help investment even if it doesn't do much for Trump voters.

I am a supporter of the fiduciary rule for retirement accounts, to make sure advisers put their customers ahead of the placements which pay off the most for the advisers. But this is an issue in all financial advising, and the 180-day delay may lead to a more general fiduciary rule by the SEC.

There are stock market implications which result from these few smart moves by the new Administration, discussed below. Today's market is mainly reacting to currencies where there are winners and losers.

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The Rich Are Different

Thu, 2017/02/09 - 1:58pm | Your editor

To quote F. Scott Fitzgerald, the rich are really different from you and me, among other things in their friendships. First daughter Ivanka Trump was the legal guardian for the two daughters of Rupert Murdoch and his divorced wife Wendi until she resigned after her father won the White House.

To marry Aristotle Onassis, Jacqueline Kennedy turned down the widower Lord Harlech, the former British Ambassador to Washington and a close friend of JFK.

A personal aside. While Onassis had a troubled daughter who did not appreciate her stepmother, Lord Harlech had one too, Jane Ormsby Gore, whom I got to know in London. Jane was then the shocker of the establishment, attending a hunt ball wearing a gold brooch on her gown in which a large live beetle was imprisoned. She also publicly smoked pot, then illegal.

Jane, whose mother had died in car crash then lost her father in a different car crash. She later married and divorced Michael Rainey, who made clothes for the Beatles (the singers.) Now she is an interior decorate in Wales with a very conventional style.

Wendy Deng's two daughters, now teen-agers, are only getting started. They recently holidayed in St. Barts with their mother, who is nearly 6 ft tall, and her Hungarian male model friend, 21, who presumably was under strict orders not to molest them.


It may be a bad sign. One of the two local supermarkets serving me (and Melania Trump, assuming she buys food for her self and her son) is a Whole Foods and I have been buying more there now that they have stopped their price gauging (after two other local chains, Food Emporium and d'Agostino, shut their stores near here, in the zip code which gave the world the Trump Tower.) Now after another lousy quarter, Whole Paycheck (as it is called) will join up with Dunnhumby, a private consumer data collecting sub of Britain's Tesco supermarket chain (TSCDY, sold). The data will find its best customers and market to them by personalized offers. I have never spotted the First Lady in the supermarket, only at the polls at PS 59 Man. Her son does not attend the public school.


Today's blog is scant and short because my cable internet connection has been slowed down by a blizzard. This may have boosted one of our shares, discussed below.


More for paid subscribers follows from Canada, Japan, Britain, Brazil, Sweden, Australian, Chile, Israel, Mexico and a few other places. We have reports on two of our industrial companies to start with both of which are in good form.

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Hacked by IR

Wed, 2017/02/08 - 1:54pm | Your editor

I got an e-mail message sent to my corporate address from a firm specializing in fund investor relations, called Pristine Advisors. It bore the curious subject line: Fwd: new sign-in from Chrome on Mac. It read:

“Several attempts to login to your account ID with incorrect login details was blocked.

“You are receiving this email as you are subscribed to office 365.

“To keep your account secured, it is important you Validate your ID.

“We may temporarily limit your account if you fail to act.

“Outlook Team

“Office 365”

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The Day After

Tue, 2017/02/07 - 2:20pm | Your editor

Today I am following up on my bulletin published late last night about one of our companies. But before we go global here are my latest remarks about Washington DC.

Good news about the fiduciary rule, which requires that people buying retirement products be given the most suitable ones rather than the ones which pay off best for their advisor. The Trump Administration has quietly dropped the plan to repeal this measure which is due to go into effect in April. It does however want to move the oversight of pension supplement advice away from the Department of Labor and to a part of the government more familiar with investing, which sounds reasonable to me.

There is also bad news about the confirmation of Betsy de Vos on which the Senate is due to vote about right now. After an all-nighter filibuster only two Republican senators voted against her appointment as Secy of Education, despite her ignorance and personal financial intersts in profit-making schools.

Ms de Vos in the hearings appeared to know nothing about programs requiring that children with disabilities be mainstreamed, and she argued that guns should be allowed in schools and their play areas in case of attacks by grizzley bears.

VP Michael Pence got to cast the deciding vote to get her named, the first time in US history this has happened over a cabinet appointee. For whatever it is worth, de Vos and her family are major donors to Republican candidates. And for whatever else it is worth, I am sister-in-law, mother-in-law, aunt, and cousin to a half dozen teachers in the public school system, as well as a graduate of the New York City school system (unlike President Trump who was sent to boarding school for his education.)


*JP Morgan today advised shorting the dollar as its analysts wrote that “confidence is being eroded by erratic policy emissions from the White House.” The bank team noted that the Greenback has retreated 45% from its high right after the election of Donald Trump. It advises buying Swiss francs and yen.

We think it makes more sense to buy stocks and bonds in currencies likely to become a haven as the dollar sells off.

More for paid subscibers follows from a reporting company, and news from Israel, Australia, Bermuda, Finland, India, Britain, Eastern Europe, Brazil, Canada, Germany,  Russia, the Caymans, Australia, Switzerland, Hong Kong, and Mexico.

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Mon, 2017/02/06 - 5:42pm | Your editor

Today a CEO at one of our companies was fired, as I have been preaching for a couple of months. However it is still too soon to crow. More on this for paid subscribers below.

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Consumer Protection

Mon, 2017/02/06 - 2:47pm | Your editor

The gold price rise defies the Casablanca solution: “round up the usual suspects.” Adrian Ash, head of research at writes that in 2016 the price of gold rose despite the following facts: “a 3-decade low in world jewellery demand”; a 7-year low in demand for gold coins and small bars; a 6-year low in central bank demand, which fell by a third from the 2000-2010 level; and industrial and dental demand down 3% to a new world low at under 7.5% of total gold use.

Adrian concludes that “if it's not jewellery, not coins, not small bars, not central banks, not industrial users that just leaves bigger investors, trading in and out with money which would otherwise go into stocks, bond, commercial real estate and the rest.” In fact the big money was going into exchange-traded gold funds in 2016 after big money exited in 2013, 2014, and 2015. That meant the largest mostly Western investors in gold bought net about 643 tonnes for settlement in London, where Adrian hangs out.

This reversal, in my opinion, will continue as people worry about trade and protectionism this year and because big users of gold as a haven—in India and China—will sneak out of yuan or rupees to get their hands on their favorite bolt hole after measures to stop foreign investment and currency recall respecitively.

While Adrian is the expert, my personal view is that political uncertainty in the US is also leading to more gold buying as Pres. Trump flails about trying to impose immigration bans.


Today I got a disappointing news release from Bristol Myers Squibb, a US drug firm whose shares I own. It said that phase 2 trial of Innate Pharma’s lirilumab in elderly patients with acute myeloid leukemia failed its primary endpoint. The BMS-partnered checkpoint inhibitor failed to improve leukemia-free survival by more than placebo. Innate had enrolled 150 oldsters for the trial and randomized them to receive one of two doses of the anti-KIR monoclonal antibody or a placebo. The clinical trial failed to find a statistically significant difference between either treatment arm and the placebo in leukemia-free survival or any other efficacy endpoint. The across-the-board failure is a stumble at the first major clinical efficacy hurdle faced by lirilumab.

Pres. Trump's plan to speed up US Food & Drug Administration approvals of new drugs by testing them only for safety but not for efficacy would eliminate such bad news. But as consumer I would prefer to have the FDA stop drug companies selling drugs which don't work, even if I am a shareholder in the pharma firm, as with BMY.

Regulations exist for a reason. Dismantling the Dodd-Frank Act and stopping the implementation of the US Dept of Labor's fiduciary standard for retirement investment advisors are similarly dangerous, in my view. The 2008 global financial crisis happened because of excessive deregulation. The DoL rule, due to come into force in May, stops financial advisors from putting retirement savings customers into inappropriate holdings which pay the brokers higher commissions.

In finance just as in pharmaceuticals, a free market doesn't work without brakes, because the buyer lacks information on how good the proposed investment will be..

Just trusting the broker or the drug-maker is not the right way to get help, based on past experience. While Pres. Trump also called for lower prices for drugs and more pharma jobs in the US, he thought he was balancing these demands with less regulation popular with the industry.


Today we pick another Trump stock and report on news from Finland, Russia, the Philippines, Israel, Britain, Spain, Mexico, Brazil, China, and a few other places.

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Tables Posted

Sun, 2017/02/05 - 3:14pm | Your editor

I have just posted the Sunday tables for which include our first 2017 trades. Unfortunately my browser is down so you may not get this message on Sunday.