Medical Agita

Wed, 2017/01/11 - 1:01pm | Your editor

Nancy Zambell writes today in Wall Street's Best:

“The 2016 markets were terrific. The Dow, the S&P 500, and the Nasdaq all made double-digit returns. But our contributors blew the doors off with their 2016 Top Picks! Congratulations to all of our experts, and special kudos to our top five winners:

  • Joseph Cotton, Cotton’s Technically Speaking, whose pick gained 118.5% ;

  • Vivian Lewis, Global Investing, saw her recommendation rise 83.6%;

  • Russ Kaplan, Heartland Adviser, third with a 57.3% return;

  • Alan Lancz, The Lancz Letter, saw his choice soar 52.7%;

  • Roger Conrad, Capitalist Times, chose a stock that gained 38.3%.

“Many thanks to our contributors for helping our subscribers add to their wealth last year!” Read more »

Transatlantic Disparity

Tue, 2017/01/10 - 2:01pm | Your editor

Another day, a lower pound and a higher FTSE for the ninth day in a row, an all time record. Another day and another uncertain run at a Dow-Jones round number of 20,000.

There is an increasing trans-Atlantic disparity between how markets are reacting to foreign exchange movements. The US is suffering spillover into stock trading as the dollar is taken down from its 2017 starting peaks. Meanwhile in other countries, like Britain, on the contrary, the currency's fall is boosting share prices. In both countries, political uncertainty is a factor, as untried leadership is set to deal with major economic changes. This probably means a “hard” Brexit for Britain which will focus on controlling immigration rather than maintaining special access for its financial sector. In the USA, a revival of protectionism coupled with deregulation may mark the end of post-World War II US global leadership of the nominally free world.

In my jaundiced view, both the excessive optimism shown by UK markets and the loss of zing by Wall Street, are based on misconceptions. PM Theresa May will not be able to ignore the demands of the UK's City—the globalized banking, insurance, and related sectors. And future President Trump will not have a free hand disengaging from relationships, commitments, alliances, and treaties, however much he may want to dump them, with Nato and other defense groupings; peace negotiators not just in on Israel-Palestine and Iran, but in other areas; Nafta and other trade overseers; organizations working on cooperation over taxes; market oversight, fighting corruption, counterfeiting, and just plain theft. To continue the cooperation it wants against terrorism, the Trump Administration is going to have to accept a lot of other global links.

It will also have to stop calling for a ban on Muslim immigration and give up plans to use torture on terrorist prisoners—according to Sen. Jeff Sessions, future AG. Similarly it will not be able to craft a border adjustment tax to penalize imports and favor exports under existing treaties, as the future Secy of State will have to tell his confirmation hearings. No Rio Grande wall paid for by Mexico. Neither will get the full reform packages they want out of their legislatures. Mrs May and Mr Trump will both have to compromise to achieve their main growth and nationalistic goals. Neither is likely to enjoy the gritty and boring details.

More for paid subscribers follows from Canada, Sweden, Brazil, Finland, Mexico, India, Trinidad & Tobago, and the USA.

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First New Year New York Letter

Mon, 2017/01/09 - 2:32pm | Your editor

Brown Brothers Harriman currency specialist Marc Chandler titled his article today “Backing into Smoot-Hawley,” raising the parallel between the proposed Trump discriminatory tariff plans and the way the world went into a self-defeating retaliatory tariff wars during the Great Depression. Chandler winds up reminding us that the international liberalization measures and the domestic regulatory ones of the New Deal remain in force. He writes:

We are bullish the dollar but are concerned that border adjustment may spur other countries to do the same thing, inadvertently spurring protectionism and further weakening international trade, which has not yet recouped the decline associated with the Great Financial Crisis. In a similar vein that some of the lessons of the Great Depression, like those embodied in Glass-Steagall, were either repealed, diluted, or unenforced, so too are the lessons of protectionism seemingly lost and now hidden in mental gymnastics based on an automatic adjustment of currency values and an outdated understanding of PPP” [purchasing power parity—which doesn't really function in pricing currencies.]

Our return journey to the US was surprisingly rough as both my husband and I got tummy trouble from the supposed wholesome Icelandic cod served at lunch on our first leg, London to Rejkyavik, admittedly while both suffering bad colds. We were so ill we took a taxi rather than a subway home from snow-covered from JFK.

Then I nearly disinherited my daughter who had stayed in our NYC apartment over the Christmas holiday because the dingbat on the top of the coffee machine which tells it that the pot is in place had gone missing. High and low search failed to turn up the little pot cover with a prong into the filter holder. So I made our necessary daily drug with my smaller office coffee pot. Only when I cleared the breakfast dishes did I find the dingbat in the dishwasher for some reason. She is very keen on sterile but is now my heir again. (My husband was very firm that we have to accept our grown children and half-grown grandchildren as they are rather than setting an excessive Jewish mother standard and I had already resolved to try this in 2017. So now it was justified. The dingbat was found and our daughter is back in my good graces.)

No sooner had we left Britain than Mrs Theresa Maybe opted to tell the world that Britain was more interested in halting immigration that operating a single market with the European Union, aka “a hard brexit”. The result in London this morning was a crashing pound but good performance from UK stocks expected to benefit from more foreign sales as a result. Our leftover pounds don't amount to very much but I'm glad to say my two pairs of British boots and a stockpile of Christmas puddings, among other goods we declared to US customs last night will prove to be a better investment than cash.

Meanwhile the FTSE 100 index ran up its longest winning streak in 33 years! (NB: Of course the FTSE index is calculated in pounds sterling.More for paid subscribers follows from Britain, Ireland, Israel, Mexico, Sweden, Denmark, Finland, China, India, Colombia, and Canada.

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Last London Letter

Fri, 2017/01/06 - 9:59am | Your editor

Your editor has caught a bad cold from Her Majesty the Queen (via at least 6 degrees of separation) also induced by our going out on the coldest night so far this winter to see the Wanamaker Theatre production of All the Angels last night, a period candle-lit play about how The Messiah was first performed. Staying in rather than infecting more relatives over dinner means I can watch British business TV which normally I have no time for.

The big news is surprise good results from a firm called Persimmon, PSN on the London Exchange, a very odd name indeed for a builder. UK analysts are all rushing to recommend it after the fact.

Another fool's game is buying the relics of Banco Espirito Santo which went bust 3 ½ years ago in Portugal. Now called Novo Banco it is being sold off by the govt bailout commission, which seeks to make a gain. US hedge fund Lone Star reportedly will pay up if the price is right. Bank of Cyprus is another recovery play the hedgers are after. Prosaki! Tem cautela!

Our future president is now taking on Toyota (over the Japanese firm making cars in Mexico) and the US intelligence establishment over whether Russia having interfered in the US election. James Clapper's contention that the Kremlin hacked Democrat Party computer files was supported by Sen. John McCain. I tend to follow the former head of the Republican ticket over Julian Assange, whom the PEOTUS seems to think is a reliable source. It reminds me of the nonsense during the campaign about the Clintons' alleged pizza parlor child molestation ring—if you believe Assange I have a big bluefin tunafish to sell you for $640,000!

Meanwhile Theresa “Maybe” (as renamed by The Economist) is losing control of the Foreign Office over who will negotiate British EU exit. Our leaders are no smarter at figuring out what to do in the future than stock analysts.

Today we updated at 8 am NY time on a firm we own. Meanwhile we have news from around the globe including a recent buy which benefits from the Persimmon frenzy. The report today will be the last from London as we fly back Sunday. Today we report first on the update sector and then on funds, insurance, heavy industry, and IT. We have reports from Australia, Bermuda, Canada, China, Denmark, the Dutch Antilles, Finland, Germany,  Hong Kong, India, Ireland, Israel, Mexico, and the UK.

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Revised Forecasts Begin

Thu, 2017/01/05 - 8:30am | Your editor

In defiance of a host of international treaties which the US ratified, Pres.-elect Trump has threatened to impose illegal import tariffs on Ford and Carrier products imported into the US from Mexico. Ford, the only US carmaker which did not get government handouts during the global recession of 2008-9, meekly capitulated to the pressure to satisfy its PR department.

If the new Administration wants to continue such cheap-shot protectionist actions once it has taken office, we will need to pass a new system for taxing corporate profits at the federal level, comparable to how some foreign countries and the European Union run their value-added tax systems. If not the US will be sued for violations of World Trade Organization and North American Free Trade Agreement treaties. A major tax reform to include VAT will be divisive but so also will other proposals being kicked around by the Trump team, ranging from lower taxes on capital gains, another round of allowances for repatriation of money held overseas in low-tax jurisdictions, and changes in the tax code to help the poor and cut back on the benefits to the rich by removing exemptions—and also getting rid of the so-called death tax (on inheritances). But the trade features, according the Larry Summers, amount to “voodoo economics”. Summers is a former (Democrat) Treasury Secretary and a member of the Harvard Economics faculty.

It is relatively easy to threaten major companies with retaliation for manufacturing abroad. But in real day to day business practice once in office, Mr Trump will find it harder to posture and pose as a reformer and friend of blue collar workers. It is comforting that the new Congress dominated by the Republicans will not start its session by allowing corrupt financing practices, but it is terrifying that the Affordable Care Act is now the first thing up for dismantling.

*The dollar yesterday fell the most since Trump triumphed in the election in part because the key London interbank offer rate or LIBOR went over 1% for the first time since the global economic crisis in 2009. Meanwhile a Sino-Trumpian goal—stopping outflows of the renminbi from China which cut the exchange rate against the dollar—is being fostered by the authorities in Hong Kong who have now set the overnight deposit rate to an all-time high of 80%. This boosted the RMB inside the country. Forcing money back into China boosts growth by making more funds available. State sector firms are also being forced to sell the forex holdings, according to Mark Chandler of Brown Bros. Harriman. This Chinese LunarNew Year, for the Year of the Rooster, begins very early, Jan. 28.

More for paid subscribers follows from Britain, Mexico, Canada, Israel, Denmark, Ireland, India, Bermuda, and Germany.

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Working Day

Wed, 2017/01/04 - 6:09am | Your editor

As the Indian fiasco over demonetizing bills worth all of 15 cents each plays out, I am holding back on new stock positions in Modi-Land, because I think he is proving as unpredictable and as inexperienced in monetary policy as other global current and future leaders like Xin Jiping, The Donald, Theresa May, and Francois Holland—to say nothing about the only other money-withdrawing currency, in Nicolas Maduro's Venezuela. It is astonishing that after sacking the well-regarded central bank head, the Indian PM went off on this novel experiment which risks hurting the country's growth and investment at least for some months in the short-term, and perhaps longer. I am a fan of Indian democracy and of its economic potential. But sometimes the two seem to conflict, like now. While I filed on the purchasing managers' indexes yesterday it was too soon to include the excellent US showing which boosted Wall Street and the dollar later. My copy is resisting formatting and italics and bolds, for which apologies.

More today for paid subscribers from India, of course, Ireland, Britain, Israel, Denmark, Finland, France, Brazil, Canada, Colombia, Cyprus, Germany, the Dutch Antilles, Hong Kong, Spain, South Africa, and Ireland. We also have a new stock purchase idea to start the year right.

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Tue, 2017/01/03 - 6:41am | Your editor

Having misremembered the day for the Florence Nightingale museum tour, which will be Weds, and not today, you are getting a brief blog today as UK and European markets return from the mid-winter hiatus. Markets are buoyant which may or may not predict how things will go later in the year.


The purchasing managers' indexes are in today with some shortfalls and some surprise highs. China fell short with below-consensus-forecast order growth of 51.5 (over 50 means the economy is growing). This was the official Caixin index which is less reliable than the one produced by Hang Seng Bank out of Hong Kong. Even worse was Brazil where the level showed further economic contraction, at 45.2.

However Europe starred with a overall level of 54.9, the highest level in nearly 6 years! German PMI came in at 55.6, the highest level in 3 years.


So here is some more prognositication in the absence of much real news.We discusse gold, Spain, Denamrk, Finland, Britain, Hong Kong, and South Africa today. Again on for paid subscribers. Join them and make money in 2017!

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The Forecast Issue

Mon, 2017/01/02 - 8:28am | Your editor

There will be no blog tomorrow as I am getting a private viewing of the Florence Nightingale Museum.

The first article from 2017 follows, with a caution. While the great unpredicted political surprises of 2016, notably Brexit and the election of Donald Trump, are now in my crystal ball and those of all others, the political, diplomatic, stock market and economic surprises to come are still unpredicted and unpredictable. I have a few notions but they have not yet been confirmed in the real world, although I have acted upon them and forecast stock favorites for various publications which garner forecasts at the wending of the year.

The one thing I am sure of is that there will be more shocks in 2017 and they will arise from events we know nothing about now. Events will again prove chaotic and surprising.

We face a period of tax cuts, protectionism and trade barriers, and infrastructure spending, although all the details will still have to be haggled over. And as we all know, the Devil is in the details. Tax cuts involve sharing out the pie between interest groups, sectors, and clumps of taxpayers in different brackets with different sources of income and wealth. Trade policy is not a simple arithmetic matter of cutting imports while boosting exports in a world where the money to pay for US corn exports has to come from the sale of foreign cellphones, where the price of a Boeing airplane is paid for from the profits of oil exports. And just rolling out shovel-ready projects to boost the economy turns out to be much harder than it seems, as was proven during the Bush-Obama transition.

I expect the US to finally get out of its deflationary funk under the new Administration, but it will not be as quick and easy as some (including Donald Trump) expect. There are potential trouble points for the program he presents. While his own party controls Congress, there are plenty of anti-deficit hawks in positions of power. Others support a liberal economy and free trade, part of recent orthodoxy. Moreover Trump's promises to revive American Industrial Revolution sectors like coal, steel, metal-bashing, making things right in the USA, which got him the white blue collar vote, may not succeed.

If the economy turns up as expected we will once again see good old inflation coming back. That will be fed by full employment (which is close already based on how joblessness is counted, if not in the real economy.) Cutting taxes will cut bureaucracy (which everyone wants less of) but it will also boost the government deficit which also is inflationary. Bringing home production from abroad will cost more, because we do not have spare capacity in our Old Economy sectors nor a billion country Chinese fighting for a factory job to move up in the world. Getting rid of Obamacare will cut the work force (because sick people have to stay home) and increase wages some more (because the better system Trump promised will have to be crafted and paid for, with the Obamacare beneficiaries at the fore.)

Then there is foreign policy. No, the US will not exit the United Nations. We will not try to remake Nato into a shopping mall where security is sold to foreign countries for cash. We will not be able to block Chinese Pacific Rim ambitions without a defense policy and budget. We will also need allies who will be looking after their own interests which our policy must align with, or they won't be our allies for long.

Beating up on Mexico and Canada will cost us a lot of exports and efficiency, cutting the supply chain which runs through the three NAFTA territories. Forcing China to revalue the renminbi against the dollar will increase the cost of what we buy there (which is the point) but also will be inflationary. Whatever Trump and his Jewish relatives get up to in the Middle East will require more not less military spending, unlikely to be long offset by the benefits of cozying up to Vladimir Putin. Russo-Iranian interests are ultimately not compatible with the US posture in the region, and also represent an existential threat to Israel.

These are givens which will face the new Trump Administration once it has begun to govern. What this means for investors is discussed below.

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First Footing

Sun, 2017/01/01 - 11:26am | Your editor

The Scots have a tradition of marking the first visitor of twhe new year as a herald of what is to happen later in the year, called first footing. The London afternoon having proven cold and dark and rainy, I opted to update my tables, with some gaps. The main reason is that we couldn't get last minute theater tickets which we had left too late. British box offices are open on Sunday. We had gone already to a magnificent Pantomime called "Mother Goose" at the venerable Wilton's Music Hall in the East End but we couldn't find another appealing bit of theater.

So in London on a holiday afternoon there is not much to do after our walk along the Thames had ended. So to work I went, frustrated by the new computer here which only searches with Google and won't let me use Mozilla. British software packages for cheap laptops are based on the closed-shop principal, very unsporting. The other laptop is in thrall to Microsoft and  also won't let me download only program which I can use to blog.

More for paid subscribers follows: Read more »

Happy New Year

Sat, 2016/12/31 - 7:16pm | Your editor

Here in London it is about the be 2017. So naturally I have posted on the the latest summary of our closed positions to show our performance this past year after a meal of potato pancakes and roast beef and with my champagne poured and ready to go--but not yet midnight.

Have a happy and healthy and prosperous New Year!