The Yellow Brick Road

Wed, 2012/05/09 - 11:01am | Your editor

After I wrote about Bryan yesterday, two readers forwarded notes about the Wizard of Oz based on research done by Jeffrey Saut of brokers Raymond James. Thanks to Maurice and Jim we now know that the popular movie was really about monetary policy in the late 19th century. Saul wrote:

“L. Frank Baum's book was penned in 1900 following unrest in the agriculture arena due to the debate between gold, silver, and the dollar standard. [It] is supposedly an allegory, making the events easier to understand. Dorothy represents traditional American values. The Scarecrow portrays the American farmer. The Tin Man represents the workders and the Cowardly Lion depicts William Jenning Bryan, the official standard bearer for the 'silver movement' as well as the unsuccessful Democratic candidate of 1896. In the original story, Dorothy's slippers were made of silver, not ruby; silver was the Populist's solution to the nation's economic woes. Meanwhile, the Yellow Brick Road was the gold standard, and Toto (Dorothy's faithful dog) represented Prohibitionists, an important part of the silverite coalition. The Wicked Witch of the West symbolizes Pres. William McKinley,. And the Wizard is Mark Hanna, chairman of the Republican Party [who] made promises he could not keep. Obviously, 'Oz' is an abbreviation for 'ounce'.”

Perhaps some Homeric scribe will sum up the present Euro-zone crisis with another best-seller children's story. I had no idea that the movie I enjoyed as a child had any deeper message.

Other readers took me to task for favoring a two party system à l'americaine, arguing that the only way to get out of the Washington impasse is to get a 3rd party going.

News today as three of our companies reported on the most recent quarterly earnings. There will be no blog tomorrow, Thursday, because I am having a medical procedure.  Sorry about the font changing. No idea why this is happening. We have news today from China, Israel, Finland, Japan, Ireland, Britain, the Antipodes, Spain, The Netherlands, Belgium, and  Canada. Plus another bit of German Jewish boasting, a Yecke kvell.

Read more »

The Greek Bryans

Tue, 2012/05/08 - 10:54am | Your editor


Imagine a late 19th century US state voted against both major parties and chose to follow a third party opposed to the robber barons who were then running the USA. Its party platform was to monetize silver to increase the money supply beyond the official gold standard to stimulate growth. The state's dissident voters were following William Jennings Bryan's rallying cry: “you cannot crucify mankind on a cross of gold.”

As the USA had barely recovered from the discord left by the Civil War, Washington was in a quandary.

That roughly spells out the current impasse between Greece and the European Community after Hellenic elections produced a hung parliament with no respectable party or coalition able to form a majority. Chaos (Greek word, that) faces both Athens and Brussels. Under parliamentary rules there will be another election if no party can form a government, but there are no guarantees that rebellious anti-austerity Greeks will change their votes.

What we are seeing is the split between economic policy framed at the top in response to political pressures from the official pundits and the dominant economy of the European continent, Germany, and people asked to tighten their belts beyond all reasonable limits.

I do not know how it will play out. Syriza, the hard-left anti-austerity grouping of parties now trying to form a government, is opposed to the New Democracy group which negotiated a deal with Brussels, but capable of splitting into factions.

How lucky we are that Bryan and USA rebels remained in the two party complex. But Greeks, despite having invented democracy, have a messier method.

Parliamentary systems allow freedom for cross-party deals, one reason for hope. An example is the agreement between Benjamin (Netanyahu) and Saul (Mofaz) to create a grand coalition in Israel avoiding the general election the former planned earlier. Now Likud will run the Israeli show at least until Q3 2013. I am not sure that the extreme left or right in Greece are as wily or willing.

More for paid subscribers follows from Spain, Mexico, Canada, India, The Netherlands, China, India, Italy, Israel, and Ireland (a politics trifecta!)

Read more »

Trading Alert

Mon, 2012/05/07 - 11:50am | Your editor

   Trading alerts are only for paid subscribers. Join them to make money with our stocks, bonds, and funds.

Read more »

Hollande Takes France

Mon, 2012/05/07 - 11:21am | Your editor

Almost all Frenchmen are named François. But as a former American in Paris I liked the exception, defeated President Nicolas Sarkozy for his informality and pro-American moves. He vacationed in Massachusetts and brought France back into NATO. But now we have François Hollande as future president.

Compare his accession to power to the last time a Socialist won the presidency, François Mitterrand in 1981. There are important reasons why the economic disasters following that win will not be repeated this time round.

First of all, having been a bureaucrat in Mitterrand's team, Hollande will not only recall the euphoria of the leftist victory, but also the reversal after the franc and the economy suffered its consequences. There will be no nationalizations this time, and probably no major giveaways to the unions.

Unlike Mitterrand who only won the Elysées Palace with Communist support, Hollande won without any official help from other parties: he collected votes from the extreme left, the greens, and the center, but did no deals for this. Mitterrand had to impose a bunch of measures he had agreed to in order to get the French Commies to back his candidacy.

Hollande has a free-er hand. The commitments he made to win lefty support were all pretty marginal: lowering the pension age to 61 for a subset of workers who had put in 41 years on the job; hiring 60,000 new teachers; cutting utility bills and payroll taxes.

He also wants to tax the rich, with a 75% taxrate on income over euros 1 mn and halt nuclear power. Taxing the rich will not be enough to fund any social benefits; the rich will simply move abroad. (Unlike the USA France only collects income tax from its citizens living in the country.)

He wants a French version of Glass-Steagall to separate commercial from investment banking which makes some sense. He certainly wants to stimulate growth within the European Community which also makes sense.

However, much of the Hollande platform is self-contradictory. That means he can pick and choose as he goes forward.

Meanwhile, without express obligation, Hollande garnered the support of France's weak centrist party, headed by François Bayrou. This may be reinforced if the center gains in the parliamentary election to come.

The net margin of victory for Holland was not great: only 2.5%, meaning he needs to reach out to the center.

His biggest challenge is to change the obsessive German and EU focus on austerity as a way to resolve the problems of deficit countries, including France. He is attempting to get Germany to accept somewhat higher domestic inflation rather than putting the entire burden of adjustment onto the 'garlic belt' (plus Ireland), a group of big-spender inflationary countries including France.

He wants the European Central Bank to lend directly to governments rather than using a subterfuge to pretend it is not bailing out governments, by lending to banks instead.

The wipe-out of the coalition in a similtaneous election in Greece will give Hollande some ammunition along with the fall of the Dutch government, and already there is some 'give' in the European Commission's public stance. Austerity has caused social upheaval, massive new unemployment, and crippling recessions in Europe. A bas l'austerité; vive Keynes!

In fact, Pres. Hollande has committed to reducing the French budget deficit to 3% of GDP by 2014 and to zero in 2017 (the end of his term.) Perhaps he is a secret supported of Ron Paul.

More for paid subscribers from the frontier emerging markets to Ireland, from Spain to Italy, from Israel to Britain, from Canada to India, from Finland to Mongolia.

Read more »

Tables Updated

Sat, 2012/05/05 - 9:28pm | Your editor

Happy Cinco de Maio. Happy Kentucky Derby Day. Look at that very big moon. And check on our performance which has not been as bad as the market overall, thanks to one category of shares we loaded up on. You can toast in mint juleps or Margharitas.

To read more according to your subscription status, visit and log in using your e-mail and the password you set.

The tables are under the masthead, and called "performance". Tomorrow the French and Greek elections may have an impact and Monday, after Golden Week has ended, we buy another Chris Loew find in Japan.

I think I will be able to input the trade at 8 pm Sunday and advise all other paid subscribers to do the same.

Read more »

Pre-Election Day Musings

Fri, 2012/05/04 - 11:11am | Your editor


Thanks to all the readers who wrote to recommend that I use other credit cards the next time I shop in Lewisham. I deliberately used my TJ Maxx store card as a test, and indeed do have a bank card which avoids foreign exchange fees being imposed.

Sunday's polling in France will be a major watershed in Euroland and we will be watching closely. At this point it looks like Francois Hollande whom The Economist last week called “a somewhat dangerous man” will capture the presidency. But his lead is shrinking. The latest development in the Dominique Strauss-Kahn affaire may hurt the Socialist successor to the disgraced former front runner, now accused of participating in a gang rape of a Belgian prostitute in Washington in 2010, confirmed by a 2nd Belgian prostitute.

And Sarkozy's anti-foreigner creditials got a boost from the verdict today jailing a Franco-Algerian nuclear physicist at the CERN lab in France for plotting with Al Qaeda to attack French targets. A key bloc of right-wing supporters of Marine Le Pen (who got 18% of the vote in the first round of the presidential elections.)

More for paid subscribers from Britain, Spain, Singapore, India, Norway, and Israel follows along with a new stock tip from Chris Loew in Japan.

Read more »

Of TJX and GE

Thu, 2012/05/03 - 9:37am | Your editor

   When we were in London my husband need a new pair of pajamas, so we set out for Lewisham at the end of the Docklands Light Railway to shop for them. This is a rather proletarian area (even if bearing our name) and we were looking for cheap. Imagine my surprise to discover a branch of fashionista-heaven TJ Maxx at the shopping mall, except it was called TK Maxx. But the set-up was the same, low priced leftovers from top brands. We bought the pjs.

   Back in the USA the store card bill arrived with surcharges for foreign exchange over and above the bad exchange rate given, and no points (for discounts against future purchases). So I called the credit card company, a branch of GE, and qvetched. The fellow on the phone had no idea that TJ Maxx or GE operated in England. So I informed him that they did, and the parent of his operation was running huge ads at the key Docklands Jubilee Line about how they were making Britons better, happier and healthier. In the end, they dropped the surcharges and gave me my points, but it took a supervisor to approve.

   We live in an increasingly borderless world but many people have no inkling of the positive side of this, and only the negatives, like Indian techies with singsong voices who help you repair your computers or Filipinos explaining your bank charges. Nobody at the Lewisham store (which had only opened 3 months earlier) knew that it was a US brand, and the credit card man had no idea that TJX has branches or franchies all over England, including on in Royal Windsor, where I suppose Queen Elizabeth goes shopping. Both TJX and GE are missing opportunities for cross-promoting, I think.

   More for paid subscribers follows from Finland, Ireland, Singapore, Britain, Brazil, Canada, Spain, and Israel. Chris Loew has sent us another dispatch from Japan for a stock idea to be published as soon as I have done my side of the research.

Read more »

Why Is This May Different?

Wed, 2012/05/02 - 10:37am | Your editor

Why is this May different from all other Mays?

Should you sell in May this year if you are a global investor? My guess is no but of course the evidence over the past 60 years (and particularly in the past 3 years) supports taking your money out of stocks for the summer months.

Back in the 1950s, when the evidence is strongest for a summer sell, most Americans did not have air-conditioning. The rich headed off for Europe or Saratoga or Newport and maybe consulted the ticker tape at their brokerage house branch once a day. Their minions sent their wives and children to the seashore or the mountains and commuted over the weekend. French investors went to Deauville; British investors to country estates. The global stock markets of summer were under-manned, constrained, and illiquid.

Nowadays nobody suffers in the heat of summer. The NYC subway, rickety though it be, is now air-conditioned, as are homes and offices wherever money changes hands between brokers and their customers.

Moreover, weather patterns are weird, which further undercuts market seasonality. We had no winter in New York, a balmy period when birds built nests and trees bloomed too soon. The same thing happened in London, where spring came in before time, in March. So predicting the climate in July or August may prove to be a high-risk affair.

Another new factor, also weird, is the trend of foreign exchange which has been much more volatile and unpredictable than usual as well. So patterns may not apply.

Furthermore, if you are invested in emerging markets, note that some of them are hellishly hot in the summer but people are used to it. And others are in the southern hemisphere (which encompasses most of South America and investable Africa) where winter is coming.

Finally, note that the US gains are uneven, with the Dow up (barely) and the S&P and Nasdaq down in April. So most investors will not be booking profits to spend on their vacations.

Apologies to Fidelity, my least favorite and former brokerage. After they sent updates of 2011 1099s too late for tax filing, I also got updates from E-trade, where my account is now located, and from my husband's swish brokerage, all of which arrived after April 15 when we were in London. The accountant says these are generated by computers, mindlessly. But of course he will be be amending our returns and presumably charging us for this.

More for paid subscribers follows from the usual haunts, Britain, Ireland, Canada, Finland, Bolivia, China, Australia, Spain, and the USA.

Read more »

Missing On May Day

Tue, 2012/05/01 - 10:32am | Your editor


What you do not see amidst the tumult of banners and massed posters carried by union members on the march is any recognition of the real victims of sclerotic, corrupt, and rent-seeking unions usually centered in the state sector of the May Day parading countries. The victims of the system who do not march are the unemployed shut out from worker ranks and indeed from work, because of their youth, lack of connections or skills, ethnicity or religion, or other handicaps, many of them irrelevant.

Read more »

Performance Tables Updated

Mon, 2012/04/30 - 3:37pm | Your editor

Performance tables are updated weekly. Paid subscribers get to see them all but pre-subscribers only get access to the closed positions data.

To view the tables please log on to using your email address and password. If you have forgotten your passwork you can click to get a reset. Then look for the tables under the site masthead reading Global Investing, on the top of the page by clicking on to performance.

And welcome to the new subscribers since the last tables came out a week ago. If you are not getting your daily fix from please first of all make sure that your spam blocker isn\'t making trouble. If that is not the cause, please go to the site, log on, and send a message to tech support.

The only comments I have on the current stocks we hold were in today\'s blog. Because of problems with emailing from London over the weekend, when the floods took out the BT relay station at the former firehouse on Manchester Road I could not paste them up before we headed west to New York City on Sunday. And I thought it more important to do my morning blog duty before I pasted up the tables.

There were no new sales last week so the closed positions table is unchanged.

Read more »