Semper Fi

Wed, 2017/05/03 - 12:57pm | Your editor

Today my account moved over to Fidelity and I am still learning the ropes there. Hence a truncated blog follows.


I regret that the US 50-year treasury bond is now unlikely to be issued because people are said to be unwilling to buy the thing. And solid growth in private sector employment makes bond investors antsy, as they fear inflation. So you may have to settle for 30-yr bonds for the long haul. Companies report that they could not hire as many qualified workers as they needed in April, although payrolls rose b 177,000 hires. These numbers indicate that job-seekers are becoming scarce. That means another 2 fed rate hikes this year.


It is not enough that Lafarge-Holcim bribed ISIS to keep its cement works open in Syria. The Franco-Swiss cement combo until last year also illegally employed 150 underage workers in Uganda, according to the NZZ website. Where is Dr Schweitzer when we need him?


We have news today from India, Denmark, Britain, Argentina, Brazil, Hong Kong, China, Colombia, Ireland, Canada, Israel, Sweden, Italy, and Australia.

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A Moroccan Bimbo

Tue, 2017/05/02 - 1:06pm | Your editor

“Maduro, Maduro, he tak' my money and ruin Venezuela” is the text of a Belafonte parody I heard yesterday. I wonder how many Venezuelans understand English?

The poor man, like another head of state, is in over his depth, suffering also from sheer bad luck. Had Hugo Chavez not died he would have had problems dealing with a lower oil price too, because even charisma, which Maduro lacks, cannot resolve an economic crisis. But having won power without having to go to the country, he is visibly turning into a totalitarian dictator. Chavez would have been more subtle.

The current quarterly results day is proving less horrendous than yesterday, in part because of delays in reporting and a mistake by me discussed below for paid subscribers along with today's crop.

Today I got into a debate with a fellow contributor to about whether there is any point in reporting on results via video rather than text. In my opinion, it is harder to skim a video to get to the point more quickly than the author wants you to, so they take more time to deal with than text messages.

Moreover they remind me of how newsletters are marketed, holding the reader's attention by constantly delaying the revelation of awaited details. Videos waste time. You should not be viewing videos if you are driving a car but if I was stuck in traffic I might like to listen to text being read rather than having to read. However, as a certified New York City straphanger I do not get stuck in traffic and can read from my smartphone in some parts of the subway system and almost all of buses.


Today we have news from Britain, Ireland, Mexico, Canada, Germany, Hong Kong, India, China, Brazil, Finland, Israel, Bermuda, and Chile. To understand our headline you will have to read on.

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Merger Monday re-send

Mon, 2017/05/01 - 7:01pm | Your editor

France's AXA, an insurance firm, has rolled out a guillotine at AllianceBernstein, the asset manager it owns. The CEO and board chairman were replaced Friday according to a filing with the US SEC. The new chairman is Robert Zoellick, the former president of the World Bank and Seth Bernstein (no relation) is the new Ceo, lured away after 32 years with JP Morgan Asset Mgm. Another 8 board members were also ousted.

AXA wants to switch to payments for performance at mutual funds it runs. They will only charge fees if they have outperformed their benchmarks. So far it has announced two global funds, one for bonds and one for “core” investment, plus an emerging market growth fund, and also US funds for growth, opportunities, and themes. The basic fee will be 5 basis points (0.05%) on the stock funds and 10 basis points for the bond fund. But if the funds do well the fees can hit 105 bps for the US and global stock funds; 145 bps for the emerging markets stock fund; and 70 bps for the international bond fund.

The idea is to compete more effectively against index-tracking passive funds. To gain market share, AXA is taking a new tack: cutting its fees unless managers deserve them.


Instead of the usual seasonal run of quarterly reports we have news today of a takeover bid for one of our companies, plus a pricing scandal revealed about another one over the weekend in the country's press. Yet another company's key tech edge was written up this morning.

So I am cutting short the general comments for subscribers and pre-subscribers today. One reason is that a trial subscriber wrote that the general blog is useless to him and therefore he will not renew—despite what normally follows for the paid contingent.

The Japanese market is continuing its bullish trend, with the index up 0.6% today at the closing. The Bank of Japan remains dovish because its inflation targets are far from being met. Japanese markets will be closed later this week for holidays so this is a good indicator for future markets.

It also means that Japanese bond buyers will go global, and, according to BofA-Merrill currency experts, no longer hedge the currency risk 100%.

Despite slowing US growth, the Fed is still expected to raise rates at its June meeting. This is reflected in the price of inflation-indexed T-bonds, my risk-cutting strategy for overly boisterous US equity markets. This morning the SPDR Bloomberg Barclays 1-10 yr TIPS ETF rose over $20 before falling back.


Nickel is back in the up column among commodities, which also affects our shares. More on all that below with news from Britain, Canada, Denmark, Finland, Hong Kong, Ireland, Israel, Japan, Panama, Russia, Singapore, and Sweden. There is only one quarterly to report today for a change. Read more »

Merger Monday

Mon, 2017/05/01 - 1:29pm | Your editor

France's AXA, an insurance firm, has rolled out a guillotine at AllianceBernstein, the asset manager it owns. The CEO and board chairman were replaced Friday according to a filing with the US SEC. The new chairman is Robert Zoellick, the former president of the World Bank and Seth Bernstein (no relation) is the new Ceo, lured away after 32 years with JP Morgan Asset Mgm. Another 8 board members were also ousted. Read more »

Sell In May?

Sun, 2017/04/30 - 11:37am | Your editor

Tomorrow is the beginning of May, a holiday in such Workers' Paradises as Germany, France, Brazil, Hong Kong, Cuba, and Venezuela. It is also the start of the month when portfolios are supposed to be trimmed to cut down on summertime leisure risks, probably a hangover from before the Internet and cellphones kept everyone on message all the time even on the beach

I have just prepared our tables for the final week in April which are looking good, and also show some anticipatory selling I engaged in, not because I believe in selling in May. It is because my account is moving to a new brokerage, Fidelity, after a bunch of stupid tax reporting disasters at e-trade. Your editor is IRS audit-bait because she runs what sounds like a serious anti-American website, and therefore I am very careful with my tax forms.

More for paid subscribers follows: Read more »

More Results

Fri, 2017/04/28 - 2:30pm | Your editor

A serious shareholder revolt at Swiss Global Assets Mgm tried to lower payments to managers and executives of the fund which was founded by my late friend Gilbert de Botton. He invented a new category of fund for high-net individuals, run with public disclosure of its performance (published in the Financial Times.) He also created variations of each popular fund in different jurisdictions so tax and regulatory compliance was improved, while the actual investment decisions were standardized. Since Gilbert died young, these innovations have led to rebellions by shareholders upset that poor GAM performance was not penalizing the guys running the fund.


France's Tobam plans to market to US investors an anti-benchmark emerging markets fund engaging in stock picking and balance. It will seek maximum diversification by asset classes via stocks which have a low correlation to others it buys, rather than tracking indexes and also expects there will be lower costs and less trading. The manager, Ayaaz Allymun, used to run a fund based on the same concept but it was liquidated in 2014 and it has ranked poorly. Tobam has $8 bn under management and its fund will be launched together with BNY Mellon and FundVantage Trust. For paid subscribers, more on stock picking funds below.


After terrible Thursday it is ferocious Friday, another day with too many quarterly results to deal with. The US economy grew at an annualized 0.7% in Q1, the lowest rate in three years. The supposed “Trump Bump” has proven to be a fantasy pregnancy. We have news from Norway, Sweden, Finland, Denmark (a full house!), Mexico, Canada, Israel, Britain, Switzerland, Germany, Belgium, Bermuda, Argentina, Chile, Brazil, India, Hong Kong, Australia, and a few other places like San Diego.

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Latinas and Others Report

Thu, 2017/04/27 - 1:23pm | Your editor


Pity poor Pres. Trump on his laughable Laffer-ish tax reform proposal. It ain't going anywhere which is just as well for a blue state taxpayer like me. Among its features is an end to deductability from federal taxes for income taxes paid to the state and the city, which will more than offset a lower rate for the meager profits earned by my business of running this newsletter.

Speaking of taxes, after e-trade failed to produce a brokerage 1099 update in time for the IRS filing date for a second year in a row, despite solemnly swearing in 2016 that it would not happen again, I am moving brokerages. Following advice from one of my most global-minded contributors, I am going back to Fidelity. This required some negotiation because a half-dozen years ago I was barred from holding an account with Fido because I went to arbitration over a badly bungled trade they placed in dollars when it was supposed to be in euros, at a time when the common currency was worth $1.30. The ban was a violation of US law which allows people to seek help if their accounts are mismanaged, which is why a now less fierce Fidelity accepted my application last night.

I will let you all know how well it works out.

Today we have a glut of news mostly quarterlies from too many countries to name. It is one of those terrible Thursdays. We start with the Latinas but there are plenty of others from the Americas, Europe, Asia, and the Middle East. We also have a couple of sells.


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China Yields to Trump; Putin Pushes

Wed, 2017/04/26 - 1:14pm | Your editor

While the relief rally in France over Macron's lead continues, there is reason for caution. Leftist candidate Mélanchon is refusing to back the former Rothschild banker against Marine Le Pen, the anti-immigrant right-wing populist.

And once again, according to both Macron's En Marche movement and Japanese counter-espionage trackers, Vladimir Putin's pirates are trying to hack into the e-mail systems of a strong opponent of the Russian leader. The Kremlin's “APT 28” has made a half dozen pfishing attempts against Macron's movement, similar to what hit the Democrats during the US election campaign. Like Donald Trump then, Ms Le Pen has been making noises about the need for better relations with Russia.


To give credit where it is due, it looks like Pres. Trump has won Beijing's leaders over to a tougher stance against North Korean nuclear ambitions. China now says it will not respond if the US makes a surgical military strike on North Korea.

By giving up on his crusade against the RMB's alleged “manipulation” downward, not backed by what the currency is in fact doing, Trump has gotten the Chinese to switch their stance on murderous juvenile dynast Kim Yong-un in North Korea. Now the US is setting up a missile defense system in South Korea which China is tacitly allowing. It is now moving toward the US despite its official alliance with Pyongyang.


Since there are 4 company quarterly reports to deal with today plus other important news, I will cease pontificating and start reporting in alphabetical order. We have lots of news also about our REITs, real estate investment trusts.

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100 Days Mess

Tue, 2017/04/25 - 1:52pm | Your editor


The market is reacting with enthusiasm to vague Administration promises of tax reform, a sign in my view of excessive bullishness. Also boosting Wall Street is talk of a deal delaying the building of the Great Wall of Mexico to keep Democrats on board so the government will not be shut down, another sign of Trumpian confusion. He is also rumored to be planning to allow offshore oil and gas drilling in areas blocked by the Obama Administration, and in a betrayal of the New York State Republican heritage from Theodore Roosevelt, to allow drilling in US national monuments and parks under the 1906 Antiquities Act.

54'40 or Fight. Trump has also unleashed Wilbur Ross, his Commerce Secy, against our NAFTA partner to the north, and preliminary countervailing duty was set at nearly 20% on Canadian softwood lumber heading to the USA. Lumber exports account for about 1% of Canadian GNP so this first shot across the Maple Leaf means there is trouble ahead.

Having campaigned as a mold-breaker, The Donald, short of experts and expertise in Washington, is having trouble defining his positions and programs, be they economic, diplomatic, fiscal, environmental, or trade- or public safety-related. This is not the way to go and ultimately we will be left with a mess.

Interestingly enough in European trading today, the market took its revenge by selling Berkshire Hathaway, blaming Warren Buffett for the White House follies. Buffett is not a Trump supporter but his shares were down 9.12% in German trading heute.

The Canadian central bank is likely to fight back by weakening the C$, which would go some way to offset the penalties at the border from the renegotiation of NAFTA Trump wants to see.


Inflation concerns have led the Argentine central bank to up its reference rate 1.5% to 26.25% despite Sept.'s mid-term elections, a sign that things are not going as well as the Macri Administration hopes. BoA-Merrill Lynch remains upbeat, forecasting that if inflation decelerates during the Argentine summer (which starts in June), the CB will be able to cut rates to around 22%, still up for the year, however.


More for paid subscribers follows from Britain, Israel, Spain, Germany, Canada, Ireland, Kenya, Bahrain, Kuwait, Oman, Qatar, UAE, Saudi Arabia, Libya, Singapore, India, Malaysia, France, Germany, Hong Kong, South Africa, Panama, Switzerland, Denmark, and Mexico. We have really bad news to start with.

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French Meet Expectations

Mon, 2017/04/24 - 12:49pm | Your editor

Mysteriously, polls proved to be more accurate in forecasting the French election outlook yesterday than they had been over last year's votes on Brexit in Britain, and the US presidential election. However, given that Emmanuel Macron, now expected to become the next president, offers policies as ill-defined as those of Theresa May and Donald Trump, today's market euphoria in Europe is overdone. French banks on average gained close to 10% and those of other Euro-zone countries about 8%.

This despite or perhaps because of a shareholder revolt against Crédit Suisse for excessive generosity to its top brass—even after their bonuses had been slashed by 40%.

Also boosting banks was the Chinese regulatory crackdown on some of the country's specialists in shifting funds offshore on behalf of oligarchs and fraudsters seeking protection of their gains.

And simply shocking revelations about how Goldman Sachs allegedly arranged to hide payoffs to Angolan government with the help of US lawyers who said any payments did not violate US rules against bribery.

We have winners in this bank boom, not always ones you might expect.


Bad characters are still hanging around European companies. Today we saw the resignation as CEO of Lafarge-Holcim of Eric Olsen, who apparently paid of ISIS to keep the companies' Syrian plant operating in the run-up to French Lafarge's merger with Swiss Holcim in 2015. We have two winners in this imbroglio. And some US firms where rainmaker Olsen was a board member have also let him go.


A French drug major, Sanofi, said that confusion over US drug price rules made it reluctant to buy American drug start-ups. Again there are surprise winners in our portfolio.


Having backed the Trump candidacy in Asia Times, David Goldman (AKA Spengler) now says the Administration is facing Zugszwang (which this Germanophone misspelled). That is a chess move which gets you out of a hole you have dug for yourself. Any move the US makes over North Korea or the Middle East will lose it the game. It is also what Goldman faces personally. He also thinks Trump backed Le Pen in the French election, which probably is not the case.


More today for paid subscribers from Britain, Spain, Germany, Mexico, Ireland, Australia, Hong Kong, Argentina, Malawi, Kenya, Saudi Arabia, Switzerland, the Dutch Antilles, Panama, Chile, Canada, and Colombia in a busy news day.

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