Bears in the China Shop
There are bears in the China shop.
Addressing the annual meeting of China's rubber-stamp parliament for the last time before he is due to retire, Premier Wen Jiabao delivered a starting forecast for growth in 2012. Instead of a target GDP growth level of 8% which has been standard for years (and usually exceeded), he called for growth of 7.5% to be generated by domestic and military spending.
Meanwhile the revelations about princeling Chongqing Communist Party secretary Bo Xilai continue to emerge, as well as on the corruption of his chief cop, Wang Lijin, who at one point appeared to be seeking political asylum in the US embassy. In today's Financial Times, you learn about how the police in the largest city in the world tried to extract money from an alleged Mafioso, who merely was a successful businessman.
Bo is probably not going to get onto the Central Committee after all but I am truly frightened by the existence of a hard-line Maoist element in the top ranks of China favoring another cultural revolution. This time, to quote the Chongqing slogan, they want China to ''sing red and smash black'', sing old revolutionary songs and cut down those who have become wealthy.
The impact of Wen's National People's Congress speech was immediate on companies shipping raw materials to China in its own time zone, Australia. It then spread to other commodity companies, like Alcoa. And to the emerging markets overall.
The Chinese lowball forecast and scandal has hurt almost all stocks. The market, which has risen steadily for nearly 3 months was looking for an excuse to fall.
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More about our stocks from Ireland, Britain, Canada, Norway, Israel, India, Mexico, and Thailand for paid subscribers.
I have just posted the Global Investing tables on our site. They can be viewed by those qualified to see them: all visitors can look at our closed positions which show our cumulative performance over several years. Only current subscribers get to see current positions and make money from them. Today I have a money-making idea for the paid subscribers.
Philosophers at Loyola Marymount University in LA believe dolphins and whales have human and civil rights. Its philosophy prof Thomas White argues that because of their intelligence, cetaceans (that's these sea creatures) have the right to freedom from slavery under the 13th amendment. A San Diego CA court must rule on a suit brought on behalf of 5 orcas by People for the Ethical Treatment of Animals. PETA are radicals but most religions argue along with the Catholic Church that humans have a duty to protect what God created against climate change and against brutality to other living creatures.
Meanwhile at the University of Eindhoven in the Netherlands, a scientific team is working on generating enough cow cells in a culture to make an artificial chunk of hamburger. The advantage of test-tube burgers is that they are efficient generators of protein from raw materials, whereas cow stomachs are inefficient and create huge of amounts of air polluting methane. Being made from meat means they still are not allowed to be eaten by Orthodox Jews with cheese. With a nephew who became a vegan after giving up most cheese, made with rennet (a product of calf stomachs and therefore not Kosher) I am pretty clued into the debate.
Who will raise beef cattle if the scientists succeed?
I contribute these notes to illuminate the gaps in Rick Santorem's claim that Barack Obama's ''phony theology'' was ''putting the Earth before the needs of humans'' and was not based on the Bible.
Another group of anti-greens have taken on Hollywood's plan to produce a film based on Dr. Seuss. ''I am the Lorax; I speak for the trees.'' Actually the Truffula trees which don't exist any more than the mossy Lorax does.
Britain's Investors Chronicle is predicting a correction on the DJIA based on technical factors. See if they are right. So far it's a red ink day.
More from Ireland, Norway, The Netherlands, Denmark, Germany, France, India, Canada, Brazil, Britain, Israel, and Belgium.
Violating the Law
I am violating the law by publishing the following note about one of our shares. The SEC says I am not allowed to tell you about this news from the company lest it be considered an offer to sell, which by the way is ridiculous. The stock fell for a reason and here it is.
Paid subscribers should read on. If they come and take me away I hope all my readers will join Occupy Wall Street
Fat Fingers Again
There was a US flash crash yesterday, not yet in the stock markets, but in T-bills and gold. Once again the algorithms of high-frequency computerized trading ran amok. First over 100,000 Treasury futures were sold, boosting yields on T-bills to 1.99% from 1.93 in a few seconds.
Mexican Jumping Bean
This is a story about a Mexican Jumping Bean which our paid subscribers used to own.
Sometimes you get lucky. I was worried that Desarralladora Homex had risen too fast, and put a sell on the Mexican homebuilder. We had bought late in December and sold Feb. 21 for a 52% gain. Before yesterday's opening it reported a sharp earnings drop and the share plummeted. Net Q4 income (adjusted by non cash, Foreign Exchange effects) came in at Ps 404.1 mn (US$28.9 mn) compared to Ps 500 mn (US$35.8 mn) in Q4 2010.
The Brokerage Customer from Hell
A public service message:
As a result of going to arbitration last year over a mishandled trade, I had to close my Fidelity brokerage account. I tried moving over to Schwab but they did not let me track some of my shares which they considered immoral or unsuitable.
So I wound up with E-trade. I also had a corporate account for tracking by Covestor clients at Interactive Brokers. A few years ago I had an account with Scottrade. I am the brokerage client from hell. However, I never had an account with TD Ameritrade. So when I got a message marked important today from John Burch, its president sent from firstname.lastname@example.org I knew better than to log on to ''my'' TD Ameritrade account to read what he had to say.
My TD account does not exist. However, someone who does have an account with TD may well log in and give away his or her data to identity thieves thereby.
Beware of spoofs. Be very alert to email blasts at this tax reporting season.
I reported the trick to Google which handles our email account and filed a complaint with the US FTC.
More from Australia, Finland, Switzerland, Norway, Spain, and Finland today.
Oracles and Planets
The anonymous editor of The Investors Chronicle writes today about a UK firm we used to own, but his message is about Berkshire Hathaway and the Oracle of Omaha:
''Almost to the day one year ago, Tesco gained a new chief executive. Sir Terry Leahy, who had transformed the retailer from a £4bn business to one with a value of £32bn, handed over the reins to his successor Philip Clark.
''As we all now know, Tesco has tripped up badly since that handover of power - ground has been lost to rivals, there's been a shock profit warning and slump in the share price - and the new CEO has admitted to making strategy mistakes.
''Even shareholders who don't own a stake in the giant grocer must be watching intently from the sidelines because at the heart of the story lies an issue that affects all big and successful companies: that of succession planning. No matter how brilliant the CEO, he, or she, isn't going to stay forever. And when the time comes to appoint a new boss, shareholders have to decide if they should throw their lot in with the new boss or get out fast before things go wrong.''
We sold TSCDY after waiting too long but we did sell. We have another British share with a new CEO as well.
Market forecasts are mixed right now, among other reasons because of untried corporate managers wielding new brooms who did not necessarily arrive because of careful succession planning or fear they are coming: at Johnson & Johnson, Vale, Apple, IBM, Dow-Jones, Research in Motion, Hewlett Packard, Maersk, Canadian Pacific, Yahoo, Takeda, Sony, Dendrion, New York Times Co., Veolia, Areva, Olympus.
But uncertainty arises also because of the nearly unprecedented rise in stock prices in barely two months. Are we heading for reversion to the mean, or is this the dawn of a new age? Is it different this time? Or are those the most dangerous words in the English language for stocks?
There are some unique factors. We have had the balmiest winter on the US East Coast that I can remember and Britain has been pretty green and pleasant too. It is a leap year and an election year. The economic recovery has not been hit by a gasoline truck this time because home heating and electricity bills have been moderated by the warm weather and much lower prices for natural gas thanks to fracking. Construction hiring has offset some of the relics of the global financial crisis. (The payroll tax cut is not enough to explain consumer confidence or new hiring; while passed only in a panic, it was a renewal of prior year cuts.)
Is there another factor for optimism this year? My gypsy astrology forecaster cites the presence of Mercury, Venus, and Mars in the sunset sky. But that turns out to be frequent in late winter. In 2004 you could see 5 planets including Saturn and Jupiter.
Today Morgan Stanley issued a bearish forecast calling for underweighting most equities over concern over a recession in Euroland caused by fiscal tightening, limited policy options in the USA, spillover to emerging markets, and other reasons for caution.
MS warns that consensus EPS estimates for a 10% growth in equities this year will stall or fall.
More for paid subscribers follows from Israel, Britain, Finland, Canada, Norway, and Brazil.
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I wrote, wrongly, that Citigroup sold its position in HDFC Bank last week for $1.9 bn. In fact, C sold a stake in Household Development & Finance Corp., a leading and much older Indian mortgage lender, which founded HDFC Bank and uses HDB for fund raising and placing its loan book, but only now owns 23.4%. About a third of HDFC mortgages are based on priority sector advances from the related bank but they are separate companies. Citi of course needs to raise money.. Read more »
The Devil Writes
Find Satan Speaks can be read online: http://ourfuture.org/blog-
entry/2012020824/satan-speaks-More for paid subscribers including a trading alert follows: Read more » santorum-and-sarah-palin-too