Trumpian Illusions

Mon, 2017/05/15 - 12:50pm | Your editor

Nomura US commercial mortgage bond dealers used fake prices to boost their earnings at customer expense, according to charges by the US SEC. When they got an order they made up entirely fake exchanges with customers on the opposite side of the deal to push up prices, and earned over $750,000 in profits they pocketed thereby. A total of 8 people face criminal charges in New York and Connecticut over the fiddles. Many of these experienced bond dealers worked later for other firms including Jefferies, Stifel Nicolaus, UBS, and others.

Today we are running a new stock pick from Martin Ferera in Canada, for paid subscribers only. It is a bad day for buying Canada because firmer oil prices have boosted the loony, but if this stock is worth buying the currency factor can be ignored. One reason for stronger C$s and Mexican pesos is the falling credibility of the White House negotiation over new Nafta terms, as Trump supporters in Congress look to option B after his missteps last week.

I am holding back my commentary on Pres. Trump's chat on his economic plans with The Economist because I do not have time to do so before the wash-machine fixer gets here. From my call to get the repair done took 10 days and there were piles of insurance papers to be filed, so I really want to get this job done.

But Trump's claim that he had invented the term “pump-priming”, a bit of hoary Keynesian growth theory, staggers the mind. The man in the White House is not only out of it and ill-informed, but also deluded about what he “invented”. My husband bets he will resign in favor of Pence. He has form in cases of mental illness in presidential candidates having broken the news of Tom  Eagleton's depression and shock therapy history which cost George McGovern any hope of beating Nixon in 1972.


Our letter today ranges from Guinea to California, from Mexico to Brazil, from Israel to Colombia, from Canada to India.

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Happy Mother's Day

Sun, 2017/05/14 - 11:42am | Your editor

Happy Mother's Day to all my readers, who all must have had a mother. We moms are so far still essential to the continuation of the human race. I expect they will figure out a robotic way to replace pregnancy eventually but it hasn't happened yet, except for advances in saving really premature babies.

For those who care about it, Happy Lag b'Omer as well, a break in the daily countdown between Passover and the Jewish Pentecost 49 days later.

The tables have been posted at and can be viewed there by readers who want to know how well we are doing. Closed-position tables are open to the world while current holdings are only viewable by paid subscribers, along with our advice.

I managed to catch a really bad cold, perhaps due to the fact that after February felt like May this year, May came out feeling like February. The buds on the vines of many of the great vineyards in France, having appeared too soon, then froze and fell off. 2017 will not be a great vintage in Bordeaux or Champagne.

I am now going off to eat some hot soup rather than a Mother's Day feast. More for paid subscribers below.

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Delivery Issues

Fri, 2017/05/12 - 12:11pm | Your editor

My Thursday blog went astray to paid subscribers because the webhost decided to block delivery because the paid version was considered to be “spam” according to the webmaster.
Readers are advised to visit the website to read it. I cannot figure out what is going on. He will be leaving at the start of the new academic year in any case so I am looking for a technically savvy person to help me keep the site functioning.

We may just leave it to readers to hit the web to read the daily blog rather than working to send it to them by email. It is becoming increasingly difficult to get the internet to nicely deliver blogs to our subscribers.

Any suggestions on how to proceed would be gratefully received by your technically challenged editor. I would happily offer a free sub to a volunteer with the savvy to help out. What happens is never clear; the blog goes out reasonably quickly for a dozen days and then, mysteriously, it fails to.


More today including company reports from Germany, Brazil, Colombia, and Finland, plus news from Canada, Ireland, India, Yesterday we had 4 results and lots of news from around the world, from Britain, Israel, Russia, Panama, Canada, Hong Kong, Russia, Mexico, Jordan, and Dubai.

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My Family on Trump

Thu, 2017/05/11 - 12:01pm | Your editor

At my shiva visit to my ultra-Orthodox bewigged cousin Jean's house in Brooklyn, the main subject of conversation was not her late husband, whose death had long been anticipated. It was the Donald Trump sacking of James Comey as FBI head. People my age like the mourner and other visitors, all of whom grew up during the Cold War, could not help recalling Nixon's removal of the Special Prosecutor in 1973. One cousin expects that Pres. Trump will be assassinated like JFK or Yitzchak Rabin in Israel, but the consensus is that he will be impeached. Had we talked about religion we would have disagreed a lot more than we did over politics, despite the assumption among Jewish Americans that Trump is more favorable to Israel than Obama was—but at what price?

It is not just US companies offering solar power which go bust. Today Germany's Solarworld AG, whose ADR trades as SRWRY, declared bankruptcy. The stock fell 63.6% but has further to go.

Today we have 4 results and lots of news from around the world, from Britain, Israel, Russia, Panama, Canada, Hong Kong, Russia, Mexico, Jordan, and Dubai, so I will not rattle on about the White House. We are selling a stock.

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Tuesday Night Massacre

Wed, 2017/05/10 - 10:34am | Your editor

The Tuesday night massacre shows that the Trump Administration is not even taking its time exerting excessive power, making it worse than the Nixon one. As I plan to visit a cousin whose husband has just died I am sparing you much commentary today.

But I am worried about how Russian meddling in last year's election is now being trivialized, given the hacking of the Macron En Marche party in France and the suspicion that Putin was also pulling strings to back Brexit in Britain. Political risk is back in focus in the most reckless presidential decision since Nixon resigned.

Western democracies cannot survive if there are doubts about foreign interference undermining the fairness of polls. After a mini-boom in share prices, Wall Street is sagging on the news. Even Republicans are now calling for an independent prosecutor to look into how Michael Flynn managed to hang on to his job as national security adviser despite lying about his dealings with Russia (and his acceptance of Turkish funds.) The White House continues to asset that any charges of collusion with Russia is “a total hoax” or a “taxpayer-funded charade”, to quote @realDonaldTrump/

Apologies for saying that in which my company has invested “aims to ban” fake news in the form of company-funded articles boosting prices of stocks, as has been done by, Benzinga, Forbes,, and other blogs. Its CEO Boaz Berkowitz wrote to clarify that despite “often being the target of such scams, our editorial team lead by Mary Hung is very good at weeding out fake news” and rejects them regularly.

Pre-subscribers who want to see what they are missing with this newsletter can view one on the website to encourage them to subscribe. visit http://www.talkmarket.scom/content/news/there-is-no-free-lunch?post=134474&uid=4662

More for paid subscribers follows from Israel, Ireland, Spain, Canada, Japan, South Korea, Sweden, Denmark, China, Brazil, Britain, and a few other places including two quarterly reports.

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Department Store Woes

Tue, 2017/05/09 - 12:15pm | Your editor

My husband's second cousin once removed John Spedham Lewis must be turning in his grave today. The British retailer of which he turned over ownership to the staff apparently breached British minimum wage rules. The John Lewis Partnership (JLP), which runs the John Lewis department stores and Waitrose supermarkets, is supposed to be an exemplary employer, and its staff own all shares in the company since the spinoff Spedham organized in 1948.

However after the UK boosted its national minimum wage starting last year, the JLP introduced a program to keep monthly paychecks from fluctuating too much during the course of the year because of seasonal factors. As British minimum wages are slated to rise by a total of 13% from 2016 to 2020, this can cause a major nip in the monthly pay packet of employees. This violates the rules.

As JLP looks into “pay averaging” it has set up a reserve of £36 mn for possible breaches of British wage rules to be taken in the 2016-7 fiscal year (to January 28). All is not well at the unlisted UK firm, because its new Chairman Charles Mayfield has also waived his bonus for the FY, which would have been £66,000, because of poor performance by JLP. Staff bonuses were also cut by 6% for H2 of the last FY along with some jobs, particularly in the store cafeterias.

Cutback at the cafes my husband remembers from his childhood probably results from British food getting better. London has the third largest group of top 100 restaurants in the world, at 4. New York has 10 and Paris has 8. The John Lewis cafes are outclassed.

What is hurting JLP stores is the same thing that is hurting malls and stores in the USA: competition from outfits like Amazon. On-line and cellphone comparisons make it easier for shoppers to find the best deals.

Facebook crashed today in Asia, and Australia and Twitter went down in Hong Kong. Tinder, Netflix, Instagram, and lots of e-commerce apps also locked out their users. A possible solution is discussed for paid subscribers below.


Today we have results from one of our companies and news from Senegal, Mauritania, Britain, Germany, Mexico, Canada, Australia, Argentina, Chile, Israel, Ireland, Sweden, Ohio, and Denmark.

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There Is No Free Lunch

Mon, 2017/05/08 - 12:43pm | Your editor

Emmanuel Macron won the French election and as a result the Tokyo stock market gained 2.3%. South Korea, which votes for a new president tomorrow also saw stocks rise. However, the defeat of the right-wing populist Marine Le Pen is viewed as bad news for the US Administration and Wall Street futures are down. Paddy Power Betfair, the Irish bookie firm, is up because it finally managed to set the odds correctly on an election, after losing money with Brexit and Trump. We sold it last year as punters cashed in on votes for Hillary Clinton PDYPF allowed before the actual poll date.

So too are French stocks, off 0.8% because now the untested political newbie will have to figure out how to govern. Particularly afflicted are bank shares. The likelihood that Pres Obama two days after Donald Trump won the election warned his successor against hiring Michael Flynn (as two former national security experts told Tthe New York Times) shows how arrogant The Donald is. I hope the more experienced politician Macron will do better. Read more »

Tables Posted at

Sun, 2017/05/07 - 11:21am | Your editor

The weekly performance tables have been posted at the website where they can be viewed. Pre-subscribers get to see the closed positions; paid subscribers get access to the current positions, which are doing very well. To more easily view the spreadsheets please click the "printer-friendly" button even if you are not printing the tables.

I wanted to take a moment to tell everyone about the usefulness of closed-end funds in income portfolios. Unlike exchange-traded funds which passively invest in an index, a managed bond fund will do better because its investments are not determined by market weighting. There are about 18,000 bonds currently outstanding issued by entities from 70 difference countries in 24 different currencies, according to global bond specialist Robert O. Abad of Western Assets, the manager of one of our bond bonds.

The bond market is huge compared to stock markets and is full of anomolies like mis-valued bonds, unrated bonds, and oddball instruments like convertible bonds (which have some similarities to equity), mortgage backed securities, real estate investment trusts, private debt and syndicated bank loans, and inflation-indexed government bonds. Bonds available offer features like calls, buybacks, changing credit ratings, exchange rate moves, and other market moving differences. Most of these are off-benchmark.

In this melange, there is no way a fund manager can passively track an index without running up huge transaction costs or using proxies for the actual bonds. Passive strategies may work in big liquid stock markets (like the USA) or in parts of our market (like US treasury bonds). But they don't work in the wider bond markets in this country, and even less so abroad. They work worst of all in local currency bond selection or in small or emerging markets.

There the way to buy bonds successfully is research, analysis, and global diversification.

It is not by buying an index weighted by how much debt an entity (government or corporate ) owes. In fact the more market cap weighted a bond fund is, the higher the risk. Entities which borrow more tend to be less safe than ones only rarely tapping the martet. Currencies which have gone up against the dollar are the ones whose bonds may be overpriced now. Changes in credit quality ratings change to negative on the very bonds that an index-tracker would buy the most of. Currency moves are also quite unpredictable. Yet hedging currencies is costly and east up return, the reason to buy fixed income in the first place.

In my opinion there is no sensible way to use index-tracking exchange-traded funds for fixed income investing. And little understood closed-end funds are widely ignored in the financial press because they have no reason to advertise. Exchange-traded funds issue more shares if more people buy into their offering. Closed-end funds have a normal initial public offering and are more likekly to buy back their shares than issue new ones.

Closed-end funds once issued are priced by the market, usually below their net asset value. This is another reason for snatching at CEFs, not because the discount will disappear, but because it means your investment of $1 will put $1.10 or even $1.20 to work for you.

Our fixed income investing advice is to buy a group of closed-end funds using different strategies for investing in foreign markets. Blind benchmarking will get into instruments that are going to blow up or which are merely overpriced. Active management will protect you from more risks that exchange-traded funds in fixed income.

More for paid subscribers follows:

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Jersey, Old & New

Fri, 2017/05/05 - 12:33pm | Your editor

My clothes-washer broke down and I have been trying to organize a repair from the service company in New Jersey, which took hours. Then getting a new card to run the machines in the basement of my building turned out to be impossible so I had to buy an existing card. And then the elevator broke. The other two elevators are full of someone moving in.

So today's blog will be short and late. The slow response of the washing machine repairer is the result of there being no qualified people left to hire, as US unemployment is back to pre-crisis levels of 4.4%.

We have news from Colombia, Britain, Mexico, Canada, Brazil, Spain, and Israel, plus other places. For a change we start with funds.

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Midtown Manhattan

Thu, 2017/05/04 - 12:28pm | Your editor


We moved from Paris to NYC back in 1988 and today is the first time since then that there are metal barriers along both sides of Sutton Place to block sidewalk access to the street, heightened security for the arrival of Pres. Trump who will head for the Hudson side of Manhattan to meet the Australian PM.

Presidents have visited here often, for fundraisers, to visit the Secretary-General of the United Nations who lives on my block, to engage with pundits or pols. But the security never went this far.

New York City voted 80% for Hillary Clinton, and we mostly dislike the NYer currently occupying the White House.

But few want to lob a bomb at the Trump motorcade. To make the Donald into a martyr, I could drop a Molotov cocktail from my bedroom window which the sidewalk barriers could not prevent. However as Trump continues to throw his supporters under a bus I want him to survive and defang the neo-populist right in future elections. Read more »