The good news today is that Ms de Vos, partisan of for-profit schools and demagogue against public ones, is the likeliest Trump cabinet nominee to face a negative vote over her becoming Secretary of Education. She is the worst billionaire among a bad lot.
Today we will not get into US politics any further because there is much news to report and several stock picks and pans to write about. It is one of those busy Thursdays.
The world is moving closer to a nuclear disaster according to the Doomsday clock, which moved a half minute closer to midnight last month, to 2 ½ minutes before disaster. That is partly the result of the new White House denial of global warming and the free and easy way the Potus talks about using and adding to our nuclear arsenal.
Naming Texas Gov. Rick Perry to head the Energy Dept. which overseas the US bomg program. Putin is also rattling on about more strategic nuclear weapons.
The Bulletin of the Atomic Scientists began tallying the danger of nuclear war in 1947 and it hasn't been this close to doom since the peak of the Cold War in 1953
Making matters worse is that a rogue state, North Korea, is testing ICBM weapons which can carry a nuclear warhead—so far unsuccessfully. Another rogue state with nuclear ambition, Iran, tested a ballistic missile Sunday which it claims doesn't fall under the 5-power treaty which Pres. Trump wants to renegotiate or tear up. While Iran has stopped producing weapons-grade plutonium under the treaty, it may nonethless have violated its terms against “destabilizing regional activities. During his campaign, Pres. Trump supported Israeli PM Benjamin Netanyahu's call for renewed sanctions against Iran.
When your editor was in elementary school in Manhattan, we children used to have atom bomb drills. We would put our heads on our desks and wrap our arms abound them. Cellars in my neighborhood had yellow and black signs showing where fallout shelters were to be found. Is this stuff coming back? More on nuclear below.
It appears that at least some of the problems of my newsletter's distribution were the result not only of problems with my webhost but also of problems with my cable company, which changed the settings on my account when it changed from being Time-Warner to becoing Spectrum. My conviction that nuclear technology is not being controlled is enhanced by these snafus.
More for paid subscribers follows from around the world.
Week 2 of the Trump Administration saw a generalized stock market sell-off, globally, as the world realized that the White House is in over its over-combed head. My Monday blog did not go out because of alleged technical difficulties at our web hosts in Salt Lake City. Was there censorship at work? The Webmaster advises not doing anything unless it happens again. So here is a twofer.
How Trump can be trumped, via my proposed Constitutional mechanism, may not succeed without moderate Republicans. Congress should take the initialtive in legistlating for the USA, with members from both sides of the aisle calling hearings and listening to experts from the executive arm to generate new laws in areas which need reform: taxation, tariffs, immigration, energy regulation, foreign relations, healthcare, Guantanamo, torture, retirement, the Supremes and the judiciary, intelligence, and other areas where the White House should not be making policy without knowing how.
The main reason the Republicans in Congress aren't doing this is fear of Tea Party and Trumpist primary opponents next year because they are from districts which back Republicans and voted for Pres. Trump.
Information on how Russia is intervening against Angela Merkel on behalf of AfD is enlightening. The Kremlin spymasters played up a Bavarian teenager, Lisa, who claimed she had been abducted and raped by “southern” refugees. The girl, Lisa, was an ethnic German born in Russia whose family had been admitted to Germany, one of about 3 million Russian-speakers admitted during the Cold War. Meanwhile German police discovered that the child had invented the rape because of a bad notice from her school. She had hidden in a friend's house. This didn't stop the Putin machine from exploiting l'affaire Lisa to attack Merkel's support for refugee asylum, and her support for sanctions against Russian soldiers fighting for Ukrainian breakup and Putin snatching Yalta. Russian cyber spies also allegedly hacked the Bundestag (Congressional) website removing sensitive data.
Calling it the Year of the Rooster appears to be a misnomer. In fact it is the Year of the Chicken—which doesn't sound as good for stock markets—according to my Ob-Gyn (of Chinese heritage). My favorite “chicken” play is discussed below along with news from Australia, Germany, Britain, India, Ireland, Israel, Spain, Brazil, Japan, Mexico, Denmark, Switzerland, the Dutch Antilles, Canada, Ireland, Panama, Bermuda, the Cayman Islands, Japan, and a few other places. This issue is a twofer.
The Nightmare Continues
The Trump continues with another wild move in Washington Friday evening, an attack on freedom of religion despite the First Amendment to our constitution and the ancient British common law right of habeas corpus, also incorporated into US law. An executive order was created to delay the granting of visas to Muslims from seven selected countries. It was then applied to persons travelling here with valid visas and/or green cards allowing them to legally enter the USA. Actually arresting these people has been turned back by a NY judge but there seems to be no recognition yet by the White House of the astonishing mistake this executive order represents.
It is always hard to get Pres. Trompe l'oeil to admit he goofed. Read more »
I am suffering from a nightmare after two surprise wild moves by in Washington yesterday, an attack on the press by Bannon who called The New York Times part of the “opposition” and the Trump tweet that he will impose a 20% tax on Mexican imports to the USA to pay for the wall. My issue yesterday closed before we know of these rumblings from the new administration, which is driven by PR rather than by any government experience.
I am particularly worried about how the Trumpians are ignoring the lessons of from the past, starting with the 1930s but extending into later years.
With the Trump Mexico tax, we risk unrolling the whole global free trade consensus which fostered global markets and economic integration after World War II. Will it be back to Smoot-Hawley and the foreign reprisals which extended the Great Depression?
By attacking and blocking the American press our country risks slipping into government by Twitter without critical commentary. That leads to dictatorship, of the left or the right, as was also seen in the 1930s and to the McCarthyist Big Lies of the 1950s. We can live through 1984 all over again, complete with torture of dissidents.
Removing the safety nets of welfare, public education, public housing, and medical insurance from the poor will fill out country with poor, sick, homeless, addicted, and illiterate neo-Okies. There will be many more illegitimate babies because of restrictions on abortion and they will compose a criminal underclass such as terrorized our cities in the 1970s.
Deporting “wetbacks” and blocking legal fund transfers to Mexico will create illegal fund transfers, money laundering, and criminality among those denied a normal life here. We have seen this before.
Immigration rules targeting Muslims will trigger more not less Islamist terrorism. I am reminded of nothing so much as the Kafka-esque measures which made it so hard for my parents and one set of grandparents to emigrate here from Germany. (My other grandparents died in a concentration camp because they couldn't get an “affidavit of support”.)
Denying the risks of climate change will bring back the Silent Spring Rachel Carson wrote about.
More bad science on the causes of autism can lead to uncontrollable outbreaks of childhood diseases like measles, mumps, and whooping cough.
Rebuilding highways and airports, like making the Italian trains run on time, will not resolve real economic problems, to the extent that Washington even knows about them. But government spending does risk triggering inflation.
Fighting Mexico will lead to a new Pancho Villa. It will be Andres Manuel Lopez Obrador.
If relations with China deteriorate further, its military and nuclear capacity will be used against us. We may have to remove another Gen. Douglas MacArthur threatening nuclear war. Wrapping itself in an appealing ideology China can gain great influence among those who want clean air and global trade. Buddying up to Putin will not help any more than the Hitler-Stalin pact helped Europe in the 1930s.
Of course this is a nightmare scenario and none of these events necessarily will happen. It is likely that the 20% border tax on Mexican exports will be blocked by wiser heads (like companies whose supply chains run across the Rio Grande). Our future Secretary of State, once he had been briefed, will point out that the President's tax idea is a violation not only of NAFTA but also of the World Trade Organization and other existing treaties.
The attacks on the press and the support of torture are sufficient unAmerican that even a Republican Congress will push back against these proposals.
But I am still scared.
Affected companies are up, down, and sideways today. More for paid subscribers follows from Mexico, Canada, Panama,Switzerland, Brazil, Britain, Denmark, India, Ireland, Israel, and Finland.
Trumping Trump's Ego
In today's Financial Times, Joachim Fest, an economic advisor at Pimco (a stock we indirectly own) wrote:
“In any large economy is in need of being made great again, it is Europe's. Following a decent economic performance between the creation of the single currency and the global financial crisis, Europe has been stumbling through a lost decade.
“Economic growth in the EU has stagnated since 2008 and the unemployment rate remains twice as high as in the US. As a consequence of the euro crisis, the banking secotr is Balkanized and the financial market sare fragmented. The move towards 'ever deeper union' has stalled; separtism and a new nationalism are on the rise. Brexit appears to be a teste of things to come...
“Ironically, Mr Trump's promise to put American first might help make Europe great again. While the new US administration aims to discourage imports and boost domestic production, European exportersshould still be able to increase their market share in the US for some time.
“One reason is that the dollar has strengthened and the euro weakened since the election... Greater consumer and business confidence and higher stock prices could boost US demand for goods produced domestically or abrod.
“The prospect of a more protectionist US administration—together with existing local pressures from populist movements—will probably provoke policy responses in Europe aimed at simulating doemstic demand and potential growth.
The chances are than in four or eight years' time more Europeans than Americans will have reasons to say 'Thank you, Mr President.' ”
Today your editor is trumping Trump's egotism. I got noticed by two investment publications, that same FT of London and the Jan. 27. issue of Investor's Digest of Canada. The FT printed on its editorial page a letter I wrote:
“Sir, Your book review of Nancy Weiss Malkiel's “Keep the Damned Women Out:”: The Struggle for Coeducation (January 23) descirbes her as an emiritus professor at Princeton. Surely she is better described as an emerita professo, since she is a woman who rose to that rank despite the antagonism towards women in US (and to a lesser extent British) universities until recently. To have overcome the prejudice she had to have more merit than a mere male doing a random walk in the Ivy League.
“New York NY, US..”
The Canadians quoted a note about a stock pick made by me a year earlier:
“Wall Street's Best Daily newsletter (from the publishers of one of our featured advisories, Cabot Benjamin Graham Value Investor) recently celebrated that '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!”
“Among the top five winning contributors was none other than Global Investing's Vivian Lewis, whose recommendation of Canadian energy infrastructure firm Veresen Inc.(VSN-TSX, C$12.89) gained 83.6%.
“Veresen's successful 2016 is all the more remarkable, says Ms. Lewis, as it occurred in the same year as the U.S. Federal Energy Regulatory Commission denied permits for VSN's gas liquefaction plant a Jordan Cove, Oregon—a planned facility for shipping gas to South American and Asian Pacific buyers.”
We own Pimco, a San Diego fund manager specializing in bonds, through its German parent, Allianz Versicherung. Today we publish an update on Veresen under the new US Administration. It trades in US$s as FCGYF. We also have news from Britain, Israel, Mexico, Canada, Chile, Argentina, Brazil, Ireland, and the Nordic countries, Sweden, Finland, Denmark, and Norway, plus a half-yearly report and three (3!) new buys.
As January Goes, the Year Doesn't
At last the stock market stopped teasing about the Dow-Jones Industrial Average going over 20,000. But if you remember what happened in 2016 you will realize that January doesn't set a trend for the whole year—either downward as then, or upward as now.
With the new Adminstration just beginning to get its act together, and Pres. Trump still worrying about how popular he really is, there are grounds for worry.
China remains a key concern both economically and militarily as the country more or less shuts down for the New Year of the Rooster.
Russia is its enigmatic self and Washington is deeply split on how to handle Putin.
Britain will be first up for coordination but unfortunately its political progess toward exiting the European Union is uncertain.
Then there is Mexico against which candidate Trump promised Armageddon to allegedly save American jobs. For me, how the talks with Peña Neto go will be a major determinant of just what Trump's reign will involve. I have my fingers crossed that there will be sensible changes to the NAFTA treaty rather than a trade war. That treaty accounts for about a third of US trade, double what we do with China.
However, until the White House stops the tweeting and misstatements, I worry about exactly how we will be governed. Given the displomatic unknowns—not even mentioning the Supreme Court or Obamacare or global warming—it is far too soon to write that as January goes so goes the year.
A big accounting scandal and a couple of little ones hit European stocks today, one reason the DJIA rose. BT, formerly British Telecom, issued a serious profits warning because of fiddling with the books at its Italian unit. Swiss Novartis was accused by the US Securities and Exchange Commission of using bribery to sell its drugs in Greece, the second DJ-listed drug major in trouble with how it garnered sales.
A US-listing is popular with global companies, but it opens the door to enforcement of accounting rules. Ultimately, this is good for markets because stockholders need to be able to believe corporate reports are complete and honest
More for paid subscribers from Russia, Spain, India, Mexico, Argentina, Australia, Germany, Italy, Canada, Britain, Ireland, Pakistan, Israel, Cuba, Chile, and the Dutch Antilles.
Russia vs Merkel, US vs Canada and Mexico
DPA, a German press agency, reports today that a Brussels European Union Working Group concluded that the leading Kremlin disinformation target is German Chancellor Angela Merkel. This is because she is holding out for sanctions against Russia over the eastern Ukraine and Yalta snatch. She is the European leader about whom the most false news is promoted in Russian media, claiming she was complicit in the murderous Islamist attacks on Berlin, Brussels, and Paris.
This anti-Merkel “Big Lie” was promoted in 2500 misinformation notes traced to Russian sources since Sept. 2015.
Our new US president's persistent false-news statements, like his nonsensical claim that 3 to 5 million illegal non-American voters accounted for Hillary Clinton's popular vote majority, is of a piece with the Putin attacks on the legitimacy of the Berlin government. Raising questions about the US or German electoral process helps Russia support its government of corrupt and murderous KGB agents.
As a journalist, I urge writers both on-line and in print to fight US misinformation by exposing liars who form the worst Washington swamp of all. Pres. Trump needs to listen to our CIA and realize that Putin is not our potential pal.Islamist and Russian violence is a legitimate reason for working with Germany and Nato countries. He must be held to the standards of truth of a free press, and not allowed to tweet or state falsehoods.
We have news today from Canada, Mexico, Pakistan, Britain, Germany, Finland, Israel, Australia, Brazil, Colombia, Hong Kong, and South Africa. We also have some buys and sells.
First Market Day for Trump Administration
Beware of Greeks bearing gifts. Gorgeous George is in trouble with the Securities & Exchange Commission. According to CNAFinance.com, the CEO of Dryships, George Economou, lied to the SEC in multiple 6-k filings. It is alleged he did so using a Panama Papers proxy he owned and via corrupt Canadian officials. There also seems to have been a British Virgin Islands entity callled Kalani which refinanced the firm. Then it used the money to buy 4 Very Large Gas Carriers from Economou. There is an ongoing SEC investigation.
We bought the DRYS shares after the successful ipo in 2005 by Cantor Fitzgerald and sold when the price of iron ore started to fall. We bought despite Economou, an MIT graduate, already having filed for chapter 11 in 1999-- after all our future President also claimed bankruptcy at the time.
This is one where your editor intelligently opted to fold rather than hold. Back in Nov. when there was a short squeeze I warned you all publicly not to buy the soaring shares which went to triple digits. The shipping company run by a Greek but incorporated in the Marshall Islands, runs dry bulk carriers, of which the world has a surplus.
Trump's restrictions on trade will further hurt this sector.
The market is still trying to figure out what our new president, with the short hands and the short attention span, will mean for the dollar, stocks and bonds, and the US economy. Being of the same generation I know how hard it is to teach an old dog new tricks beyond tweeting that is.
Today is the first full market day of the Trump presidency and things do not look particularly good. He held a chat with business leaders and promised to remove 75% of regulations—which many of them probably have learned to live with. I think it would help if Mr. Trump were required to write a blog with real rather than alternative news.
More for paid subscribers follows including another Trump Administration stock pick. We have news from Britain, Germany, Italy, Dutch Antilles, Mexico, Brazil, Colombia, Panama, Chile, Argentina, Australia, Hong Kong, South Africa, and Israel.
I have just posted my tables for subscribers and pre-subscribers showing our latest positions and trades. To view the ones you are allowed to see please visit www.global-investing.com and sign in using your password. If you have forgotten your password in theory you can get a new one by asking for a reset to be sent to your email address of record, but this doesn't always work. Andrew the webmaster is working on this on behalf of Prof CP who has had a series of log in problems.
Viewing tables is easiest if you use the print button, particularly if you are on a smartphone or small laptop, even if you don't want to print. More for paid subscribers follows:
Your editor has been a faithful weekend reader of Barron's since before she started her newsletter, and while the "Roundtable" is always a good read she tends to discount its investment advice. But in the Trump Era I have noticed something new in the contribution from the seven knights (and two dames, Meryl Widmer and Abby Joseph Cohen). Trying to predict what's ahead for the markets the pundits have gone more global than is their wont this year. Read more »