Nuclear Winner

Wed, 2017/08/09 - 2:17pm | Your editor

Having lived in France for many years while dependent on power generated in its nuclear plants along the River Loire, I am an authorized atom supporter. France has to spend money to upgrade these venerable plants, but there now seems to be a push to do so even if it means building an atom power plant in western England which will probably have left the European Union before it comes on stream.

The era of no-atom power has come to an end also in the only country run by a physicist, Germany. Its supreme court has ruled that its ban on electricity companies using nuclear energy is unconstitutional and has forced the tax authorities to reimburse fines imposed on the power generating sector. Since Germany has a huge budget surplus this will not hurt its accounts—but it just may help the world become more green. While many people are terrified of atom power given the Chernobyl disaster, in fact far more people die annually because of filthy air from coal-burning plants than have ever died because of atom disasters, not just in Chernobyl in the former Soviet Union, but also at Three Mile Island in the US, and in Japan's Tepco meltdown.

 

PM Merkel in 2011 (despite knowing better) backed a law requiring that operators of nuclear plants pay for shutting them down and dealing with nuclear waste

 

This will have important consequences on our portfolio. And on a new addition to it today. We have news from Canada, Colombia, Germany, Israel, Finland, Iceland, Denmark, Spain, Sweden, India, and Britain.

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Jimmy Carter II

Tue, 2017/08/08 - 1:08pm | Your editor

Russell Jones writes from London:

The dollar has depreciated by some 7% so far this year. The US currency’s weakness coincided with a growing sense of chaos and ineptitude where the Trump Administration is concerned. This has evoked a previous episode of dollar decline that went hand-in-hand with poor policy-making, low Presidential esteem, and fading respect for the US – the late 1970s, during the Carter Administration. How close are similarities between the ‘Carter Dollar’ and the ‘Trump Dollar’?

The macroeconomic circumstances facing Donald Trump today could not be more different to those which confronted Jimmy Carter. Rather than stagflation, the US economy is today in reasonable balance. Growth is running around potential; employment is near-full; inflation is a little below the Fed’s 2% target, but expected to return to it before long; and the external deficit is modest and stable. The Misery Index is historically low.

What is similar, is Trump’s positioning of himself as a disrupter of the Washington conventional wisdom; the President’s increasingly dysfunctional relationship with Congress and his own party; the sense of policy and personnel mismanagement that surrounds the White House; the maladroit manner in which new initiatives are communicated; and the damage that inflicted on the US’s global reputation and leadership by the impulsiveness and controversial tone of US economic and foreign policy. Once again, the talk is of the US losing its way and the demise of the Pax Americana.

For all his failings, Carter had redeeming features that Trump lacks. Carter had a proven track-record as a successful politician, serving as Governor of Georgia from 1971-75. He was a compassionate, hard-working, dedicated, and God-fearing man; qualities that often seem anathema to Trump. Carter was a respecter of the office of President, of the other institutions of government, and of the 4th estate. He was a fiscal conservative, who eschewed large budget deficits, and acted to veto pork-barrel projects favoured by his own party.

Even as the economy collapsed back into recession and his chances of re-election evaporated in 1980, he refused to resort to protectionism, turning down the pleas of the major automakers for restrictions

on the importation of foreign cars, while declining to bail out Chrysler and beginning the process of deregulation since associated with his successor, Ronald Reagan.

Vivian adds: and of course he appointed ultra-hawk Paul Volcker to the Federal Reserve. Jones writes for Llewellyn Consulting, www.llewellyn-consulting.com

More for paid subscribers from Hong Kong, Britain, Australia, South Africa, Britain, Israel, Spain, Ireland, India, Mexico, Brazil, Finland, including a half yearly report.

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Back to Emerging Market Stocks

Mon, 2017/08/07 - 2:45pm | Your editor

We have returned to an old favorite sector today, nudged by the Wall Street Journal, emerging market stocks. Why? There are a host of reasons starting with the declining dollar and the robust global economy.

Third world countries gain from commodity demand and from lower borrowing costs in US$s. However they also gain from their own internally generated growth in consumption, the major trend in the 21st century which is different this time.

Thus despite the macro factors YTD going against them (at least according to theory) the well-managed contingent of emerging market corporates, including (oops) banks, have performed well year to date. Mark Mobius, the emerging market guru of the Templeton Group, used to say that he avoids companies favored either by “bancos or planos” but that was based on 1970s parameters in a different era.

But the main reason for grabbing at emerging market shares—not all of which have to be based in countries designated as being in the grouping—is that they increase our diversification level.

Too many shares in the developed countries of North America, Europe, and Japan are no longer appealingly bargain-priced. You have to look more widely. Today we do so.


We also have news from Japan, Mexico, Israel, Britain, Canada, Brazil, Denmark, South Korea,South Africa, Australia, Argentina, Chile, China, Hong Kong, South Korea, and Japan and a batch of emerging markets.

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Delayed

Sun, 2017/08/06 - 2:17pm | Your editor

Today's portfolio performance tables were delayed by two obstacles soI am still working after lunch. Firstly, Barron's, the weekly I rely upon to get Friday closing quotes decided that it doesn't need to provide prices for preferred stocks any longer and dropped coverage.

Then my website, www.global-investing.com was the subject of a silly hack attack so I didn't risk sending innocent people to log on until I removed the filthy content. It is posted on a female-run website out of misogyny, I expect. The last hack put a picture of a topless blond where mine is supposed to be in outgoing e-mails. Of course it is better here than it might be in Saudi Arabia or Pakistan, for which of course I am grateful. But the trend is not my friend.

As I am between webmasters as Andrew is being hired full-time by the local university for which he now does gigs he will no longer be contracting for me. I am interviewing for new webmasters and I happen to suspect that one of them posted the sex offers on my website and will try to find the culprit lest I hire a male chauvinist pig.

As for the shortcomings of Rupert Murdoch's publishing empire, I suspect he is finding that his pockets are not deep enough to continue Barron's as it used to be, a journal of record for stock markets. The weekly now has added earnings and dividends to its stock tables and had to find something else to remove to avoid printing more pages than its ads will support. As a relative newbie at Schwab I needed help from their support staff in finding all I needed on their site.

More for paid subscribers follows:

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Update on Deals and Funds

Fri, 2017/08/04 - 12:42pm | Your editor

Yesterday the embattled Persian Gulf country of Qatar managed to publicly defy its adversaries like the Emirates and Saudi Arabia. According to AsiaTimes, a website, it did this by writing a very large check. This was to secure the transfer of Neymar, a talented Braziliansoccer player, from Barcelona to Paris-St-Germain, which is owned by Qatar. The fee for moving the “forward” was euros 222 mn, about $265 mn, more than double the previous record for purchase of a soccer player. Of course it is better than starting a war.

More for paid subscribers follows from the Middle East, Britain, Canada, Israel, Ireland, Germany, Canada, and the USA.

*We got what is probably our final half yearly result from Kennedy Wilson Europe, KWER

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A Truly Terrible Thursday

Thu, 2017/08/03 - 12:55pm | Your editor

It's another one of those busy Thursdays with too many companies reporting for comfortable coverage. Before getting into the nitty-gritty, let me comment that I have formally applied for a “global investing” separate account from Schwab and will let you all know how it goes. I also told the firm's meeters and greeters that failing to look over the nature of my holdings before giving me a supposed 500 free trades which weren't free at all is a PR disaster for the firm.

This morning I was called by a man from Schwab assigned to tell me the 500 free trades would not apply to foreign securities which I already knew was the case, and then telling me they would cost $34.95, which I believed was not the case. He had no idea I had applied for a Schwab Global Trading account, and said it had not been turned down when I said I would have to leave Schwab if that was the case. Another PR disaster for the firm.

We have a new buy and a new average down pick today plus news from Mexico, Canada, Ireland, Israel, Colombia, Switzerland, and China.

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More on Schwab Fees

Wed, 2017/08/02 - 12:50pm | Your editor

Your editor is still working out how to trade global shares without bankrupting herself on the Charles Schwab platform. As I noted yesterday, I was hit with a whopping $54.95 fee for my sale of what had been a doubled stock recommended by Martin Ferrera for sale. Martin lives in Canada, and previously lived in Zimbabwe, Australia, and Britain, and is an EU national. We have other reporters around the world who also are multinational with brokerage accounts not accessible to US residents or nationals, like boom.com which sent me a 30 page questionnaire when I followed our former China correspondent's suggestion that I open an account in Hong Kong.

Your editor is a US citizen and resident who essentially has to trade shares and supply a 1099 to Uncle Sam showing her interest and dividends, and capital gains and losses. Recently foreign banks and brokerages are quick shut the door to us because of the costs and risks of having any red-white-and-blue clients on their books. That makes my experiences similar to those of the great majority of our readership, who are also US persons, although of course we have plenty of exotic readers as well

When Schwab told me I was being awarded 500 free trades in the next year when I moved my account they did not spell out that only fully listed US companies were on offer. Pink sheet or grey market stocks, like Renishaw sold via my second trade with my new broker turn out to result in huge fees. I wrote $55 in my note yesterday but Schwab is behaving like a supermarket selling something at $9.99 in the hope that I won't notice the huge bite.

Having the right to “satisfaction” with trades under the house rules I expressed my extreme dissatisfaction to my relationship manager and the trading desk. They may reimburse part or all of the fee this once. But going over my holdings—more or less our model portfolio accounts for about half of them—the brokerage warned that the shares ending in F would incur huge fees if I sold—or bought more.

I then visited the company website and discovered that they have a program run out of Indianapolis which is called Schwab Global Investing specially geared to those who read and follow the blog of the same name which I run. I learned that this offers users the right to trade in Britain; Hong Kong; Sydney; Tokyo; Norway; and European Union markets in Belgium, Finland, France, Germany, and Italy. The brokerage bite is reduced to about $20 per transaction (the amounts are fixed as £9; HK$200; A$32; ¥2000; NOK 160; and Euros 19). In addition, Schwab charges 0.15% of the total value of the trade as a commission, a mark-up or mark-down.

So I told the guy in Indianapolis to sign me up. He is supposed to send me a form via emai. or  I go to their local office after work today and ask them.

 

More today from Hong Kong, Israel, Finland, Britain, Switzerland, India, and Japan, starting with a half year report from a company we like.

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Artificial Intelligence and Stocks

Tue, 2017/08/01 - 12:05pm | Your editor

JP Morgan, the bank where my company has its account, today revealed it has developed a robot which can carry out global equity trades on behalf of its client quickly and at the best price, using artificial intelligence.

According to the Financial Times, the system, called LOXM, was first used in the bank's European equities algorithms business in Q1, and will next be launched in Asian markets.

LOXM will hit the US in Q4, according to Daniel Ciment, JPM head of global equities electronics trading. LOXM builds its prowess by using lessons it has learned from billions of past trades, both real and simulated, and knows how to best sell of large stakes in listed companies without causing prices to move against it. Mr Ciment told the pink newspaper that in European trials so far LOXM got “significantly better” pricing than human beings. Moreover LOXM is cheaper nad more focused than humans who are easily bored by the details of finding the best execution.

LOXM however does not have the ability to make trading decisions on its own. It still needs human beings (or maybe human bagels) to tell it to buy or sell.

The eventual goal is to teach LOXM to learn the way individual clients react before it begins trading on their behalf, but the bank points out that customers will have the option of agreeing to this evolution on their behalf—or not.

 

More today from the world of human stock trading with two companies reporting and lots of tidbits of news from around the world, from London to Tel Aviv, from Hong Kong to Helsinki, from Toronto to São Paulo. We start of with a robot-written quarterly and then fill in the gaps...

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Alternative Investments

Mon, 2017/07/31 - 2:42pm | Your editor

Today we present a major report to our paid subscribers about how to invest in global bonds and alternative sectors like global infrastructure and real estate. My interest was piqued because Mohammed El-Arian, the former CEO of Pimco and the former investment chief of the Harvard Endowment is joining specialist alternative investment shop Investcorp's advisory board. Investcorp helps global fatcats and their fund managers, mostly from the Middle East, invest worldwide. El-Arian, an American, will help CEO Mohammed Alardhi, who is from Oman, find alternative investments suitable for the wealth funds, sheikhs, and royals of the region as well as other high-net individuals.

We can do it too, without the same level of fees and, so far, no man named Mohammed in my team.

 

But before discussing this technical report, here is news about my favorite central bank, that of Switzerland, which is quoted on the Zurich exchange. Every now and then a newsletter writes up the bank and tells its benighted readers to invest in it. But this is not a good tactic, because the Swiss version of the Fed invests to protect the interests of Switzerland, not its own shareholders. In the June quarter, the Eidgenossische Fed lost 6.7 mn francs, about $5.4 mn, because it buys dollars to support Swiss exports of cheese, watches, pharmaceuticals, and other goods. Buying dollars helps keep the franc from rising and hurting business outside the country.

It then rather mindlessly invests these dollars in a home-grown index of US securities, mostly stocks. As we have pointed out already based on reports on instutitional shareholders, the Swiss CB just tries to buy the entire US market, rather than selecting individual shares by any criterion used by analysts. And they often wind up owning non-US stocks (notably Israeli ones, but also ones from Euroland) because they are quoted on the NYSE. So the impact on the franc is being undermined by the CB.

In Q2 despite the official level of Wall Street having risen across the board, the Swiss managed to lose money because they bought the market rather than trying to buy winners, like the US tech stocks.

They also lost because they loaded up on Israel's leading blue chip,

 

So, nein, non, no, you don't want to be a shareholder in the Swissie CB. More about what this means for our own portfolio follows for paid subscribers along with news from Israel to Germany to Pakistan, Hong Kong to Mexico, Spain to Italy, and a couple of reports and one trading alert.

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Sunday Tables Filed

Sun, 2017/07/30 - 2:09pm | Your editor

I just posted the performance tables at www.global-investing.com, with difficulty, as my new brokerage account doesn't display things the same way as my old one did. Paid subscribers should see the normal three tables, covering stocks and bonds; exchange-traded and closed-end funds; and gains and losses.

Pre-subscribers only get to see the last one. Sometimes I get lucky. I sold our Pakistan Fund, PAK, early this year because of changes in my contacts in the country and because my favorite London seller of Pakistani clothing went out of business. I sold because I feared I would not be informed of things on a timely basis but I had no idea that the president had looted the country to buy posh flats in Mayfair and would be removed from office by the country's Supreme Court.

I also got lucky with another stock sold earlier, Imperial Brands, a UK tobacco peddler, because I came to realize that its vape business was very marginal and its profits are generated by selling tobacco cigarettes which kill smoking-addicts.

I try to be an ethical investor as well as an ethical person, which is why I also sold out of my former Alcoa stake when the successor company pretended it had had no role in the mis-selling of cladding to the operators of the council tower blocks (project high-rise buildings) in Chelsea & Westminister, London. They had plastic between the layers of aluminum which caught fire and killed at least 80 tenants. I sold as soon as I got back control of my account when it transferred to Schwab from Fidelity last week. While I am no puritan I do feel that some companies behave so badly that I do not want to own their stocks.

More for paid subscribers follows: Read more »