Update

Tue, 2017/03/21 - 1:49pm | Your editor

I am too much of an optimist. The techies working on my computer cannot get into my corporate email account because the password has been changed by the Bad Guys one of whom continually calls my office claiming to be John David from Microsoft. So I ask for his ID and of course he then changes his line to say "I am working with Microsoft." It is going to be harder than I expected. I do keep the FBI updated on my problems and the telephone calls are being recorded via my cellphone by Time Warner so the game may soon be up. 

But that doesn't mean that my own technical problems will be resolved as quickly as hoped.

Meanwhile there is a terrific article by "Lexington" about how Donald Trump succeeds in winning support, not because his followers are stupid, but because he gets them to align their interests with his. It is in the current Economist and warns that this process will not work over reforming the ACA (Obama-care). It is on page 30.

The winning streak on Wall Street today came to a stomach-churning halt. Commentary below on our portfolio from your harried editor.

More follows for paid subscribers from the great world out there beyond my computer woes.

Read more »

Tables Updated

Mon, 2017/03/20 - 5:11pm | Your editor

I just posted a day and a half late our latest performance tables which can be viewed on www.global-investing.com by paid subscribers in full and by pre-subscribers the positions which have been closed.

Update on my horror story: after filling in the gaps in the way my account was hacked it appears that my contacting my cable company over problems with e-mail led to its tech support staff member putting me into harm's way. They say they record everything so they will be able to spot the miscreant. He gave me a number to call for further help and I stupidly went to it rather than stopping when he told me he could not transfer the call.

The good people at staples expect that they will complete the restoration of my computers by Tuesday evening if all goes well. I will not attempt to blog tomorrow morning because I have to work on the site rather than using a word program. So I will take a morning off and go to a museum. I have had a frantic weekend trying to restore my systems but weekends are sacred. By early Monday we were on track to get thing set to rights.

I cannot get into my email accounts so don't bother writing with your sympathies until I am up and running again. I am saying the misheberach prayer to ask my female ancestors to intercede on behalf of my business. Read more »

Hack Attack

Mon, 2017/03/20 - 10:43am | Your editor

My computer and that of my husband have been hacked and I have reported this to the FBI. I am going to have them debugged at the store where they were bought which will probably take the day. Please be careful of anything looking like an email from my email box rather than from this site which seems to be clean. Please don't download anything seemingly from me.

It was probably targeting me rather than random, which is hardly flattering.

Please bear with me a while longer.

Outage or Outrage Friday Edition

Fri, 2017/03/17 - 9:50am | Your editor

Global-investing.com has been unable to send out its blogs since Monday because of outages and tech issues at the servers at Blue Host of Oren, Utah. Trying to get it right has been frustrating and re-sending the blogs has not succeeded despite the Blue Host tech support people's help. Instead of getting through to people we were put on a spam list for multiple attempts to send to the same subscriber or pre-subscriber, without the supposed victim of spam having done anything.

We now may or may not  switch to a virtual private server with the same firm, a major listed player in web hosting called Endurance International Group of Burlington, Mass., in which some Indians including Ravi Ravichandran own a minority. EIGI-Q. It has horrible music when you are on hold. Which is often.

Will you please visit www.global-investing.com in the interim to view the issues you have missed? I hope to have completed the cleanup and transfer today but I cannot write while I am discussing new technology. And, yes, it will cost more than the current hosting options so if you were planning to subscribe or renew do it now before the big bite hits.

Today's blog will be short because I am migrating, not to the USA but perhaps to a virtual private server to overcome issues with my dysfunctional shared one. This is a new cost for my business and will led to higher subscription charges. Renewing or subscribing now will avoid them.

Today's blog will probably not go out normally as I am still trying to avoid paying nearly $700 for the virtual private server being offered by blue host, a company which has not inspired confidence to date. It is our current web host and of course it would be easier to stick with the devil you know. However, my experience has been that the tech support at this firm, a sub of Endurance International Group, EIGI-Q, of Manchester, Mass. More Thursday news for paid subscribers follows and Friday will go out later if this works:

Read more »

Outage or Outrage Friday Edition

Fri, 2017/03/17 - 9:49am | Your editor

Global-investing.com has been unable to send out its blogs since Monday because of outages and tech issues at the servers at Blue Host of Oren, Utah. Trying to get it right has been frustrating and re-sending the blogs has not succeeded despite the Blue Host tech support people's help. Instead of getting through to people we were put on a spam list for multiple attempts to send to the same subscriber or pre-subscriber, without the supposed victim of spam having done anything.

We now may or may not  switch to a virtual private server with the same firm, a major listed player in web hosting called Endurance International Group of Burlington, Mass., in which some Indians including Ravi Ravichandran own a minority. EIGI-Q. It has horrible music when you are on hold. Which is often.

Will you please visit www.global-investing.com in the interim to view the issues you have missed? I hope to have completed the cleanup and transfer today but I cannot write while I am discussing new technology. And, yes, it will cost more than the current hosting options so if you were planning to subscribe or renew do it now before the big bite hits.

Today's blog will be short because I am migrating, not to the USA but perhaps to a virtual private server to overcome issues with my dysfunctional shared one. This is a new cost for my business and will led to higher subscription charges. Renewing or subscribing now will avoid them.

Today's blog will probably not go out normally as I am still trying to avoid paying nearly $700 for the virtual private server being offered by blue host, a company which has not inspired confidence to date. It is our current web host and of course it would be easier to stick with the devil you know. However, my experience has been that the tech support at this firm, a sub of Endurance International Group, EIGI-Q, of Manchester, Mass. More Thursday news for paid subscribers follows and Friday will go out later if this works:

Read more »

Where's The Rest of Me?

Thu, 2017/03/16 - 11:49am | Your editor

Global-investing.com has been unable to send out its blogs since Monday because of outages and tech issues at the servers at Blue Host of Oren, Utah. Trying to get it right has been frustrating and re-sending the blogs has not succeeded despite the Blue Host tech support people's help. Instead of getting through to people we were put on a spam list for multiple attempts to send to the same subscriber or pre-subscriber, without the supposed victim of spam having done anything.

We now are about to switch to a virtual private server with the same firm, a major listed player in web hosting called Endurance International Group in which some Indians including Ravi Ravichandran own a minority. EIGI-Q. It has horrible music when you are on hold.

Will you please visit www.global-investing.com in the interim to view the issues you have missed? I hope to have completed the cleanup and transfer today but I cannot write while I am discussing new technology. And, yes, it will cost more than the current hosting options so if you were planning to subscriber or renew do it now before the big bite hits.

It's Not the Ides of March

Wed, 2017/03/15 - 12:49pm | Your editor

because our webhost is down I am resending this blog. the webhost is not in snowy New York City but in sensitive Salt Lake City and we pay the company for hosting which it has failed to provide for two days.

Despite what we learned in our Shakespeare class, today is not the Ides of March Julius Caesar was warned about. The Ides is the last full moon before the Vernal Equinox and varies from year to year. But it will be the date when the Fed again raises interest rates, scheduled for 2 p.m.

Today's blog will be mercifully shorter than yesterday's because I caught up on lots of news. Please note that some of us—including me—never go the e-mail edition at all because of internet issues probably related to the blizzard. If you do not get your daily blog in your mailbox, just log on to www.global-investing.com to read it on the site.

 

Russell Jones, an economist with Llewellyn Consulting in London today took on the matter of US corporate tax reform, before the full terms and conditions have been revealed, presumably to stop some of the terms which he writes are “misguided” and “bordering on folly”. Jones, who is British, notes that the US tax system does need reform, although taxes are not actually high compared to those in other developed countries (despite what the US Republicans say.) The total tax revenue (Federal, State, and local) comes to just 26.4% of gross domestic product (GDP), vs an average for the OECD countries of 34.3%. (The OECD is the Organisation for Economic Cooperation and Development, HQ's in Paris, which groups the most developed economies.)

Of course that is not to say that the system makes sense.

As Jones writes, “the US currently has the highest statutory corporate tax rates and the 2nd highest marginal effective corporate tax rate.” Moreover, the US taxes are high on personal income and profits which produce 40% of total tax receipts, while the other OECD countries only take in about 23% of taxes that way.

And then there are the loopy loopholes so the corporate tax systems “leaks like a sieve.” US companies shift profit to low-tax foreign sites and in the end they paid only an average of 2% of GDP while the OECD average “take” was 3%. US multinational corporations hold overseas about $2.6 trillion in profits—equivalent to nearly 14% of US GDP, and they will not repatriate that loot unless they get a tax holiday for doing so.

It is against this background that the US Ryan-Brady plan is proposing a “destination-based” corporate tax which would be easier to administer and reduce taxes and the incentive to stash the cash overseas. It includes a cut in the statutory rate to 20% from 35% but based on cash-flow, meaning revenues minus purchased inputs including capital spending, plus wages. This would offer 100% depreciation for capex. It would also remove the incentive to borrow by ending the deductions for debt interest payments.

Households would pay taxes on dividends at 6%, on interest at 12.5%, and on capital gains at 16.5%. The make-up corporate alternative minimum tax would be repealed.

Profits earned abroad would not incur US corporate taxes. Repatriating foreign cash caches would incur taxes at 8.75% and the companies would be able to stretch out payments over 8 years.

All this can be justified but then the Republican plan tries to figure out how to make up for the missing revenues. Here is where it starts going wrong, at the border. The cash-flow deduction for purchased inputs would not apply to imports and it would be exempted for US corporate exports. What companies pay in tax would depend on the destination of their eventual sales under a border tax adjustment (BTA) system. If they cross the border into the US they would be taxed but if they cross it out of the US they would be exempt. Imports costs would be taxed at the company's tax rate while exports would be subsidized at the same rate.

There are plenty of problems with border tax adjustments, among other things because they are “too complicated”, according to Pres. Trump who does support tax reform. Of course he may tweet something else tomorrow.

But there are also technico-political problems, as pointed out by Jones. Areas he cites include oil refining, a favored industry in the US even if the crude is imported. What of US hotels and restaurants serving foreign tourists? Or universities where foreigners study.

Then the huge blow to retailers would create a political opposition. Moreover importers of parts for assembly—like the auto industry, computer and cellphone manufacturers, or chemical producers—would be heavily taxed, and they are among the most technologically advanced sectors.

Medium- to low-income Americans would suffer the most under BTA because they consume most of their income. Richer people don't.

Then there is the risk that wage income can be transformed by richer Americans into business income.

What will happens to companies which export so much they would have a negative tax liability. Will they be paid by the IRS?

The main point about BTA taxes, of course, is that they violate the World Trade Organization rules which means US exporters would face countervailing duty under WTO rules. Despite what BTA supporters say, the Value-Added Tax systems in foreign countries do not discriminate against imports or domestically-made items, and both pay at the same tax rate. The impact of the Ryan-Brady tax reform plan on business, households, and world trade is almost unpredictable but would certainly cause great upheaval and dislocation—and possibly a world trade war.

 

 

Today we have news from Britain, Canada, Brazil, Finland, Israel, India, Mexico, Germany, and Denmark including an annual report.

Read more »

Snow Day

Tue, 2017/03/14 - 3:35pm | Your editor

Today is Pi day, because at some point during 3/14 we will cross the billion digit level of Π, between bits of a falling snow-flake in the case of New York City which is having a late-season blizzard. It is also a snow day for school children throughout the east coast. Older people have been told to stay home, so market activity is pretty light.

Templeton veteran Mark Mobius was interviewed by George and John Cole Scott who run Closed-End Fund Advisors and the Scott Letter, about the dollar risk to emerging market as rates rise. Mobius said: “Everybody is worried about his interest rate business. The reality is, if you look at the last 10 years, it doesn't make sense because the correlation between interest rates in the past and the movement of emerging markets is just not there.”

He also pointed out that “a number of emerging market currencies have strengthened against the US dollar” and that “the Mexican peso, the Brazilian real, and the Malaysian ringgit have resisted the dollar's strenth.”

He added: “it is important for investors to take a long view and not be swayed by short-term volatility... Regarding [world] stock markets, sometimes they go down together, sometimes they go up together, and sometimes in opposite directions. The correlations are very low.”

He added:: “Pres. Trump is a businessman and a negotiator. He understands that to have a successful negotiation, both sides gain something. Therefore I'm sure bilateral negotiations with the Chinese and Mexico will work out well.”

On Brazil, Mobius said: “People found it difficult to believe the economic situation would turn around in a downtrodden market but we have found that in general, the time of maximum pessimism marks when the bottom is near, the time we want to be investing. Given the dire headlines... corruption scandals. Agency ratings downgrades, and a severe recession,k it may seem surprising that Brazil's stock markets are actually up dramatically. My recent travels there confirmed the investment opportunities we see in Brazil.” More on closed-end funds below for paid subscribers.

So we have a complicated quarterly report to cover today along with some stock trades I opted to do this morning. Today's blog is late because it was so quiet that my husband and I overslept this morning. We are usually awakened by the street and bridge noises.

We have news from Germany, Britain, Finland, Canada, Israel, Mexico, Colombia, Brazil, Japan, Chile, South Korea, and Switzerland. We also have a couple of trades.

Read more »

One I Missed

Mon, 2017/03/13 - 1:49pm | Your editor

I admit it. Despite my ambitious coverage of Israeli tech stocks, I did not take seriously the maker of software for autonomous vehicles, Mobileye, NYSE-MBLY, of Jerusalem. Now it is being bid for by Intel which is offering $15.3 bn to acquire it—and the share is up by nearly a third so far today.

INTC says that cars “are becoming data centers on wheels” and predicts that by 2020 driver-less cars will generate 4000 gigabytes of data daily, which can be mined for information. By buying up MBLY it expects to become a leader in this technology.

This is the largest ever tech acquisition in the history of the Jewish state and the HQ of the new venture will remain in Jerusalem. One reason is that Israel is testing lots of ideas for future driving, with, for example, the pilot “electric road” opened less than a year ago near Tel Aviv. It can charge up the batteries of electric cars and buses as they drive along it, but leaves non-battery vehicles alone.

Of course I am not as badly off as short-seller Citron Research which a couple of months ago called Mobileye “the most outrageously overprices, overhyped semiconductor stock ever.”

While we missed the big one, we did gain a bit from autonomous driving stocks elsewhere, discussed below. Read more »

Hamantaschen and Tables for Sunday

Sun, 2017/03/12 - 4:21pm | Your editor

Well it is too cold to do anything else so I updated my tables after all. And because brokerages are now shooting bullets at each other from 20 paces in a renewed fit of competition, my broker completed its technical shutdown by early Sunday for fear it might lead to the loss of... a customer.

Please visit www.global-investing.com to view the tables, closed positions for all and current holdings and advice for those who paid.

And Hag Purim for those who care.