Back In Iceland Again

Fri, 2016/12/16 - 11:39am | Your editor


After a half century of not flying to Europe via Reykjavik we went to Iceland again yesterday to avoid painful holiday season prices on flights to London, mainly because BA would not accept our miles in payment. In the runup to Yule in the Old Norse-speaking island of Iceland, the days have barely any daylight and people revert to their ancient Viking supestitions. Gryla, a witch or ogressnwho eats children and her evil Yule cat Jilakotturinn settle down in the towns and villages along with her 13 mischief-making sons with names like Kertasnikir (Candle Nicker) or Askasleikir (Bowl Licker), Prousleikir (Spoon Licker) or Bjugnakraekir (Sausage Thief). The cat bites anyone not wearning at least on new garment on Christmas Day.

It is all much more fun that benevolent Santa Claus although the mischievous lads also leave presents for children who have been well-behaved. Iceland has one of the most flexible economies I can think of. After fishing became over-competitive the country switched to high-yield banking. After that went bust (taking out government ministers who had been behind the push), it started refocusing on population health databases (easy in a small well-tracked population) and winter tourism. Hundreds of Britons among those who did not lose their money in the Icelandic banking disaster of 2007 are now willingly flying to Iceland to visit hot springs and glaciers and volcanos, and to view the local wildlife, very long-haired horses the size of ponies and reindeer, a word from Old Norse which we all can understand.


Mexico's Banxico (central bank) raised interest rates by 50 basis points to 5.75% which shows the risks of a strong dollar to emerging markets. Bank regulators in the US raised the amount of capital required for too-big-to-fail banks while the European Union cut the capital it requires for its banking sector, in the hope of boosting animal spirits and loans. US small caps are showing great expansion even before the new Administration feeds the frenzy while unemployment continues to fall. There is a disconnect between our country and the rest of the world—not just China but also Japan, where stocks are soaring as the yet loses traction

More for paid subscribers today with a double-sized close-of-week report from London with news from India, Africa, Mexico, Brazil, Colombia, Hong Kong, and Argentina among developing countries, and Israel, Spain, Australia, Canada, Hong Kong, Britain, Japan, Switzerland, Finland, Sweden, Iceland, and Ireland. For a change we start with fund news.



*Valeant, the Canadian drugmaker in trouble with regulators and stock pickers for its private pharma fulfillment firm, now sold, and its price hikes, lost 3 top execs with effect early in 2017. They are jumping ship the moment their multimillion dollar retention bonuses run out Dec. 31. It does tell you something about the former management which lured in all those institutions, as well as what the future holds for our big player in VRX, Pershing Square Holdings, PSHQF, a UK closed-end fund run by Bill Ackman. He is also in deep do over other picks. The 3 departing managers collected $6.8 mn in retention bonuses before they hit Go. We bought PSHQF (PSH in London) to learn from Ackman about 2 years ago. 


*To buy we sold Africa Opportunity Fund or AOF, listed in London, at a loss. However an insider last week bought 434,000 pounds sterling worht of AOF stock at about 41 US cents/sh.


*FibraUno, the Mexican REIT which trades in the US as FBASF, put out a report to show that its risks from the Bank of Mexico rate rise is minimal. Its debt is 83% for over 6 years and no repayment is due on this until 2014. It has unused revolving credit facilities totalling NMP 7.1 bn and US $ 410 mnb. FBASF debt leverage against capital is only 34%.Its debt is 76% at fixed rate and 93% secured against assets. Its debt is 51% in pesos which are costing more in interest and 49% in US$s which at the moment are cheaper. These revelations are a reaction to the REIT shares falling 2.7% in the wake of the Banxico doubling its interest rate rise against that of our Fed.


*Saba Capital, an insider, reported to the SEC that it had bought another $1.28 mn worth of shares of Advent Claymore Global Convertible, a closed-end fund. AGC is in our model portfolios because at a time of rising interest rates, convertible shares and bonds make investment sense. However Saba is buying to try to get at the cash in a battle with the existing management group. Saba is officially offshore from the Cayman Islands but is really Canadian. 

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Nattering Nabobs of Negativism

Wed, 2016/12/14 - 12:51pm | Your editor

After my nostalgia trip to the 1960s over the Manchurian candidate in Trump Tower, I was reminded of a bit of wit during the Nixon Administration. Before he resigned over corruption charges, Vice-President Spiro Agnew was the house wordsmith. He coined the phrase “nattering nabobs of negativism”.

The planned US cabinet could meet that definition, but here is another: “the tweeting Trumpian total tear-down tycoon team”. The nominations in the energy, environmental, healthcare, education, and trade posts all publicly hate the part of governmnet they are supposed to head.

More for paid subscribers follows in this last US-based blog for 2016. I fly away tonight to Brexit-land. We have news from Britain, Australia, Israel, Denmark, Finland, and Ireland.

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Foggy Bottom and TIFs

Tue, 2016/12/13 - 2:21pm | Your editor

When we lived in Washington, your editor was the senior economic advisor to the Minority (Republican) leader of the Senate Foreign Relations Committee, my only foray into the striped pants world, at a time when Richard Nixon was the president and took major steps to change US relations with the rest of the world, starting with China. My boss, Sen. Clifford P. Case, a liberal Republican, despised the POTUS but supported many of these moves as well as the messy extraction of our troops from Vietnam and environs.

There's a reason why the center of US diplomacy is called “Foggy Bottom”, the nickname for the Dept of State. Diplomacy is not a matter of one winner offseting a loser. It is more a matter of hidden influences balancing out to craft national policy and avoid bad outcomes like war, boycotts, and bans, or relationships breaking down. Tearing up treaties, threatening to exit alliances, is not diplomatic, and is dangerous.

Business negotiations are a lot less fraught than diplomatic ones because the companies have an easy way to figure out their interest, aka the bottom line. There is no clear bottom line in statesmanship and in fact taking a long view often imposes costs. Think of the Marshall Plan. Consider Michael Gorbachev's thesis that the western countries gloated about their victory and failed to do enough to help the former Soviet Union get back on its feet. Ponder how the great powers in 1914 stumbled into a dreadful war which wiped out most of their leaders.

To look at hidden influences to come, consider the future president's view of daily briefings from the intelligence service: “You know, I'm like a smart person. I don't have to be told the same thing in the same workds every single day for the next eight years. Could be 8 years. I don't need that. But I do say 'if something should change, let us know.'”

Mr Trump comes to the White House with less familiarity with government operations than any president since Herbert Hoover, and he is naming a cabinet full of similar folks. About the only single thing that unites these nominees is that they are often opponents of the way things were done until now by the agencies they will command.

In diplomacy, there is a particularly hole which worries me greatly. The future head of the DoS, Rex Tillerson is a known buddy of Vladimir Putin who the CIA says worked to influence the outcome of the November election in favor of Trump. This is a credible suspicion given the hacking of the Democratic National Committee and Hillary Clinton's emails by persons unknown who had the time and electronic means to do this.

An ex-KGB officer running the Kremlin is a credible suspect. Russia provides financial support to the extreme rightist Marine LePen in France and is said to be helping the Alternatif fuer Deutschland extremists opposition ot the re-election of Chancellor Angela Merkel in Germany. Both countries have imposed economic sanctions against Russia for the invasion of Ukraine and seizure of Yalta as did the US.

Sen. Harry Reid, the Minority (Democrat) leader, called in late October, well before the election, that “explosive information” linking Mr Trump with the Russian government should be made public. Exactly what Reid was privy to I do not know, but his position gave him access to some of the briefings Mr Trump says he doesn't need.

At the peak of the Cold War in 1962 a movie called “The Manchurian Candidate” told how a brainwashed scion of a US political family ran for the presidency on behalf of the Communists running China and the Soviet Union. It was Vanity Fair, not exactly a major media group, which called Donald Trump the Manchurian Candidate before the election. Naming Tillerson to head the State Department and refusing to read CIA daily briefings makes me fear they were right.


The inventor of TIFs traded index funds—but not of exchange-traded versions of index funds—Jack Bogle of Vanguard, wrote a scathing condemnation of ETFs in today's Financial Times. Bogle cites among other defects of the ETF variant the hefty daily trading volume which he likens to speculation. He notes that investors in Vanguard TIFs with the identical mandate to ETFs wind up with more money and fewer losses. Even the basis charges are higher for ETFs than Vanguard funds of the same catergory. He also reveals that the big users of ETFs are not retail investors but institutions, and that rather than following the overall market, ETFs are increasingly focused on strategic beta (2x the level at TIFs) or speculative strategies (6x TIFs) which account for 31% and 25% of the total assets of ETFs, well over half.


More for paid subscribers follows from China, Britain, Finland, Denmark, Israel, Canada, Brazil, Colombia, the Dutch Antilles, Panama,and India today.


*My note about fat fingers having caused the huge drop in the Chinese currency overnight Dec. 6-7 was finally posted on the site which published a note claiming that China was defying future president Trump by devaluing the renminbi. This is the kind of information which amateur diplomats might act on, leading to major upheaval in the world. Read more »

Pre-Yule Depression

Mon, 2016/12/12 - 2:50pm | Your editor

Donald Trump's security is the grinch which stole Christmas. We went to visit the great tree in Rockefeller Center yesterday and many streets were closed to pedestrians and bus stops inactivated because of security.


They found a new Michelangelo drawing of Saint Sebastian in rural France. That is the only good news I can find to cheer me up during my last week in 2016 to be spent in NYC before I head for London and Devonshire for Chanu-Mas which totally overlaps with the Xmas-New Year festivities this year. After overlapping with Thanksgiving 3 years ago, Chanukah thanks to the Babylonian calendar's “leap months” is back in the winter.


The rest of the news is depressing, ranging from attacks on Christians in Cairo to a murderous back and forth between ISIS and its enemies in Palmyra. Plus Mr Trump announcing that the CIA's information about Russian interference to get him elected is “ridiculous”. While I am a proponent of a reset on US relations with Putin, we need to be aware of what his regime is capable of.


I also find upsetting the impact of the Trump win on life-begins-at conception advocates in Ohio, Texas,and Louisiana. I also find upsetting the boost he has given to climate change deniers and racists.


Let us quote a general who is not going to be a member of the Trump cabinet, Joe Shaffer, USAF-RET. Joe thinks the time has come to invest in small and mid-cap firms which do not need “to cozy up to Chinese dictators in a secret censorship agreement” (like Facebook) or “to spend countless man-hours trying to satisfy petty Brussels bureaucrats” (like Apple and Google). Joe argues for small-caps focused on US domestic markets. But I think small- and mid-caps outside the US are also in sweet spot for future growth. Like me, Joe prefers active to passive management, which applies particularly to smaller firms. Joe edits The Investors Edge and manages Sanford Wealth in Nevada.


Going all Lilliputean I want to catch up with a big oil company as part of our coverage today of The Oilpatch. Out of fairness to our paid subscribers I will not give the name of the company I start with because it is small but I will writ more aobut my favorite large cap oil major.


*The shock decision by the Federal Energy Regulatory Commission (FERC) to deny a new hearing on a long-delayed license build a plant by one of our stocks, delays in the Keystone XL project, and the re-routing of the North Dakota Access share pipeline are all part of a last-minute crackdown on energy projects by the Obama administration. Today he clinched his green credentials with a ban on drilling in 40,000 square miles of the Bering Sea off Alaska.


Your editor thinks new Pres. Trump will reverse these bans quickly. Martn Ferera expects that the Trumpian infrastructure programs will be able to boast of several thousand blue collar construction jobs over the next few years to help him fill his campaign promises to create jobs and increase economic activity. Ending the bans will create low-hanging fruit for the future Trump White House.


Martin also argues in hindsight that had Clinton backed the blocked projects she might have lost some surplus east coast green votes but carried Michigan. She would have received Obama's endorsement despite this, befause after all, what alternative did he have?


Another last-minute decision will be the sale of $375 mn of oil from the US Strategic Petroleum Reserve which will push the price of oil products like heating oil and gasoline down. Meanwhile the boom in new projects for shale oil and tight gas will also push prices down.


Despite this, oil prices have risen 5% more today to $54.07 (for West Texas Intermediate, a US benchmark) on news that Russia and other non-Opec countries will be cutting back their output in cooperation with the oil cartel, by 558,000 barrels/day so far, close to the 600,000 bbl cutback assigned them by the deal worked out between Putin and the Saudis. Saudi oil minister Al-Falhi now says the kingdom may cut output even more than what it agreed on with Opec and some specialist analysts are now predicting that the oil price will hit $60 before the year ends and as much as $70 by midsummer 2017.


While predicting about the Trump positions is fraught because they keep changing, I expect that the banned projects will get the green light from the Trump Administration. The finance will come mostly from the corporate sector not the government, which makes it quicker. I am not however a believer in ever higher oil prices, for several reasons, notably the impact of new supply coming on, and the instability of Opec cartel cutbacks.


I wrote about how this helps BP plc last week. Here is more on my oilpatch favorite: After the Deepwater Horizon US Gulf of Mexico disaster in 2010, BP learned to cut costs to pay the hefty fines and damages imposed. That explains its cost-consciousness which led it to underbid for Mexican offshore Trion blocks auctioned earlier this month and also to avoid new exploration in areas where oil finds will hit $100 or more/barrel ranging from Iran to Australia to Brazil.


An example of BP caution is cited in this week's Economist magazine. On Dec. 1, BP approved a new drilling plantrom alongside the site where the Deepwater Horizon sank, called Mad Dog, first found in 1998. It started up the fatal Deepwater Horizon field in 2004. A total of another 4 bn bbls of oil and oil equivalent gas is expected to be brought out of Mad Dog, and at first the cost of doing so was estimated at $20 bn by the UK oil major. BP then was selling oil at over $100/bbl. The project was shelved in 2013 because of BP's need to save money to pay fines.


Now BP expects to develop Mad Dog by spending only $9 bn, a 60% cut in capex. The main reason is that it will not in the end build a “Savile Row suit floating drilling platform but instead will buy a standard 'off-the-peg' platform which incidentally will also be safer because of course there are a lot more such platforms in use globally. BP is aiming to cut costs by as much as 75% because of the need for adjustment as future oil prices may fall again.


More on this sector follows for paid subscribers on smaller cap firms we do not discuss in public. As well as oilpatch news, we report on IT, pharma firms, listed funds, heavy industry, and financial companies, all from outside the USA. Read more »

Sunday Tables Posted

Sun, 2016/12/11 - 12:51pm | Your editor

Because of the holiday schedule and my planned family junket to Britain, the performance tables posted today at are the last regular ones for 2016. I will do a year end summary for paid subscribers for the calendar year on New Year's Day. The closed-positions tables may be viewed by pre-subscribers but only the fully paid members get to see our current positions and advice.

More to paid subscribers follows:

It was a good week for globalists as foreign markets played catch-up with the Trumpland bullishness. So a lot of our laggard stocks are now in the black again.

Not all news was good. Our portfolio was zapped by the US Federal Energy Regulatory Commish opting to ban the construction of Jordan Cove, a gas consolidation and liquefaction plant planned for Oregon by Veresen of Canada, FCGYF here and VSN up north. This is astonishing and the company will reapply and may do better under a driller-friendly Republican Administration. However there are costs associated with the delay. Read more »

Korea and France Hard on Ladies

Fri, 2016/12/09 - 1:12pm | Your editor

According to the BBC, there turns out to have been a man in the South Korean scandal, Ko Young-tae, 40, a handsome fencing champion and fashion designer. Ko became buddies with the president's guru and bagwoman, Choi Soon-sil, 60 who helped promote his Villomillo brand posh handbags by giving them to the president. Then the couple broke up in a dispute over the corrupt confidant's daughter's puppy which Ko left alone in his apartment while he went to play golf. After she berated him he decided to go public with the press over Choi's hold on President Park Geun-hye, who was impeached today.

If this is maintained by the Korean Supremes in the next 180 days, she will have to leave office and be replaced by Prime Minister Hwang Kyo-ahn, another toy boy, until elections can be held.

Pres. Park is not the only powerful lady under pressure today. International Monetary Fund managing director Christine Lagarde is due to face trial by a special French court over her role in arranging for payment to Bernard Tapie—a sort of French Trump who also combined TV and politics. Tapie sued the government over the nationalized Crédit Lyonnais under-valuing his stake in sneaker-maker Addidas which the bank then resold for much more than it paid him. Mme Lagarde authorized a payment of euros 400 mn to Tapie when whe was French Finance Minister under Nicolas Sarkozy, before she was parachuted to the IMF to replace a notorious French sex fiend and groper, Dominique Strauss-Kahn, with a safe female pair of hands which are still French.


More for stocks from north and south (Canada and Mexico), east (Denmark, The Netherlands, Sweden, Britain, and Ireland) and west (Japan and India. Note that the Trump boomlet has now spread to foreign markets. Most of the news is American, however, which goes to show that we live in an integrated global market.

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An Exclusive Offer

Thu, 2016/12/08 - 2:19pm | Your editor

The overnight 8.8% drop in the dollar exchange rate of the renminbi Dec.6-7 was not a declaration of war against the US but an example of fat finger currency mistakes. During the night when currency markets are closed and there is not much liquidity things can go wrong, as also happened with sterling in Sept.

I wrote about the renminbi currency movement yesterday. There is no there there despite rumors that Beijing engineered the drop. It did not. In fact it is trying to maintain China's currency against risks of higher interest rates and illegal capital flight outflows by corporations and fatcats using foreign investment, Hong Kong insurance, real estate, and other ploys to get their money out of China. Both Donald Trump and Xi Jinping are trying to keep the renminbi up.


Today's blog is being published by where presubscribers and newbies can get a taste of how we pick shares at Their site will show what follows below for paid subscribers only as a promotion to help both our blog and their website in which I have invested.

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Merrill's 2017 Global Outlook

Wed, 2016/12/07 - 3:06pm | Your editor

Here is the word from my breakfast with Bank of America-Merrill Lynch on the outlook for 2017. Global equities head Ethan Harris summarized the positives and risks of the new US government “good Trump, bad Trump” which contained no surprises although he certainly was right to call the election “a game changer.

He then moved on to a global tour which featured better ideas that Wall Street, notably Japan which of course has been the loser for decades. Now, citing house exert Louis Duvalier, Harris said “the stars are aligned” for growth: thanks “easing monetary policy” and “job market tightness”. He said in Japan it is now “all systems go”. Mr Harris also predicted that US wages will rise as pay goes into catch-up mode in the coming mature stage of the business cycle. Whatever Trump does, there will be higher inflation and higher interest rates in the US which will make financial assets less desirable than real assets next year..

US equities, they argue, have gotten ahead of themselves since the global financial crisis, having produced a12000 percent return since 1950, 65% of it since 2008 whereas non-US equities gained only 700% from 1950 and only booked half of this since the GFC. Chief economist Michael Hartnett then explained that “only if productivity picks up can you have your cake and eat it” getting growth without interest rates going up enough to nip it in the bud.

For the global economy, Mr Harnett predicted that there would be positive total return on markets next year but that “under the surface there will be tremendous volatility” as a result of exchange rate changes. He forecast that the yen will fall to 120 to the dollar and that the euro will fall to $1.05—but with lots of feints and reversals.

Mr Hartnett cited the biggest event (from his perspective) in 2016 was the day in July when the US 30-yr bond yielded 2.88% while the Swiss could borrow for 50 years paying a negative yield. “Everyone was positioned for that to continue” but of course it didn't after the Bank of Japan changed its policy from tight to easy fiscal policy rather than monetary stimulus, and these huge interest rate gaps disappeared.

As a classic economist, Mr Hartnett thinks the interplay of interest rates and inflation will determine growth and corporate profits and the house Merrill line appears to be that the US will not be the big winner in 2017. Instead, apart from Japan, there is more upside in EU which he called his “contrarian play”. He cited the fact that the capitalization of Apple and Google together exceeded that of all European equities as a reason for there to be more European profit and stock rises.

But he also warned about “massive dispersion” in results over countries and over time creating “rotation and volatility”.

Apart from Europe and Japan, the BoA-Merrill insights included a taste for oil company investment, and a focus on value stocks and small caps vs growth stocks and big stocks. This allowed the team to mention that that the next year will be one where active management would prove more lucrative than passive—a word from our sponsors.

Among emerging markets, Merrill thinks China will slow down from 11% growth in GDP in 2008 to 6% nest year. India will do better, with 7.2% growth next year (l6.67% from its stock gains, and eaving out the impact of the currency withdrawal which came after the forecasts were made). Merrill also expects cyclical recovery in Latin Americato produce real returns, with Brazil achieving double-digit ones along with Turkey, Russia, and South Africa. The Thundering herd also expects decent but lower positive returns in Mexico and Colombia, Poland, Czech Republic and Hungary, and anachronistically, in Israel, which it insists on calling an emerging market..

The elephant in the room is China which is expected to continue to cheapen its currency against others—notably the US$. Merrill currency expert David Woo predicts that under Trump, “the US and China [will be] on a collision course in 2017”. While nowhere as bearish about the RMB than CLSA (which expects a 19% fall to 8 to the dollar) or Rabobank (which expects a 12% drop to 7.6 to the dollar), BofA calls for 7 RMB to the greenback, a drop of 4%, by the start of the new year, a level not seen since 2008. The consensus is that mounting debt and slower growth will zap the currency.

Overnight there was a scary episode which showed what this might mean when the Chinese renminbi fell sharply. It seemed like a deliberate devaluation to show Pres.-elect Trump who controls China's exchange rate policy. But in the end, it turned out to be a fat fingers goof perpetrated Monday night by a UK money brokerage, ICAP plc. Here again we dodged a bullet, as for some years we owned the ADR, IAPLY. But in fact the bullet dodged was by the whole world, because a deep renminbi devaluation could have caused a major international incident with the future US Administration, and a test of Trump's temper. Luckily it was just an error by markets.

I also may have given too much credit to the PEOTHUS over his telephone conversation with the Taiwanese president, in violation of taboos which date back to the Nixon-in-China deal. My assumption was that It turns out that a lobbyist for Taipei, former Senator Bob Dole, arranged the chit-chat over the course of 6 months for $150,000 in fees.


More about our stocks from Israel, Brazil, India, Colombia, Britain, Canada, Brazil, Colombia, Finland, Spain, Singapore, Sweden, Mexico, and Ireland.

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Dodged Bullets

Tue, 2016/12/06 - 1:56pm | Your editor

We dodged a few bullets without realizing it.

A major accounting fiddle in 2010 of the books at Brazilian airline Gol will cost the local arm of Deloitte the largest fine ever imposed by US regulators, $8 mn, and a ban on 11 partners of the firm from practicing their profession. Further fines were imposed by the Brazilian securities regulator. Moreover, in a break from tradition, Deloitte admitted that it had knowingly produced “materially false” audit reports, and then spent years trying to cover up the problem, by providing false testimony under oath.

Our portfolio used to include the ADRs of Gol, a fast-growing airline with global ambitions. Our Latin America reporter, Frida Ghitis, persuaded me to sell the share because of what she called “operational risks”. I assumed she meant possible airplane crashes. But looking back, given the revelations by Bloomberg yesterday, Frida probably picked up hints about accounts being falsified.

We also exited a Brazil exchange-traded fund at her urging at the same time. An ETF tracking a country, in this case Brazil, is forced by its rules to buy more of a stock that is taking off, as this airline was doing. Levitation leads to more levitation even the airplane share is due to crash. And it did take 6 years.

Another lucky exit was from Irish bookie Paddy Power plc, a strong player in betting shops in Britain, where its shares have their primary listing. In addition to suffering from poorly set odds on the Brexit election and then the Trump one, PDYPF is also confronting a British crack-down on its most profitable business, “contracting for difference” (CFD) or “spread betting” on stock markets. This highly leveraged bet lets UK punters predict stock markets' direction without owning stocks.

Now Britain's Financial Conduct Authority is setting new rules to control these products, which are already banned in the USA (where they were actually invented in the first place.) The British regulators think too many British retail investors are buying these product without understanding the risks. Some 82% of British CFD accounts lose money.

The main reason we sold Paddy was that US brokerages and market-makers shut its ADR out from trading because CFDs were considered a form of unfair competition. I got fed up with owning a share without a US price and that is why I sold. It fell another 2.6% today.


More today from Mexico, Israel, Denmark, Finland, Sweden, Brazil, Japan, Spain, Jamaica, Britain, Panama, Pakistan, and Canada. Tomorrow's blog will be late as I am attending a BofA-Merrill Lynch 2017 Forecast session.

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My Advice for PEOTUS

Mon, 2016/12/05 - 12:19pm | Your editor

Here is my advice for the President-Elect of the US, PEOTUS.

In October, 1962, Pres. John F. Kennedy publicly lambasted a group of US steel companies for raising their prices, giving his Republican opponents a chance to call his administration “anti-business”. Since then the US president has failed to use his “bully pulpit” (a term invented by a Republican president, Theodore Roosevelt) for making US corporations conform to government policy by limiting their moves to maximize profits by acting against the national interest.

Pres-elect Trump has now adopted a Kennedy-esque attitude toward large corporations re-siting factories in cheap-labor countries at a cost to US jobs, starting with Carrier air-conditioning and now also calling out Rexnord, maker of parts for autos, and energy and water systems.

Protectionism as policy risks encouraging counter-measures from America's trading partners, notably increasingly protectionist Europe and China. Meanwhile picking on individual companies is less likely to result in nasty reactions. Both US firms were planning to move production from Indiana to Monterrey, Mexico, showing that VP-to-be Pence, a regular Republican, is behind these Trump initiatives. Mexico is being made the scapegoat because it has little ability to react to US bullying.

But now that he has inaugurated his bully pulpit and his plan to impose high tariffs on companies moving factories and jobs offshore, I expect the Trump Administration will take on businesses from other states and other sectors.

I have a few suggestions. One of the post-election best-performing Dow stocks has been Goldman Sachs, the vampire squid which always seems to find a way to gain entree into US cabinet posts in recent administrations from both parties. Having won election by opposing Wall Street, Mr Trump can score some political points easily by turning on its least loved operator.

Hospitals and insurance plans are other huge gainers which need to get a warning. The same with US drug-maker majors, in a relief rally because Clinton did not win, but still susceptible to a political backlash over soaring drug prices. These businesses are more easily attacked than Obamacare which provides some benefits to those with existing conditions and to young adults keeping their family coverage which Mr. Trump wants to retain. While he extricates himself from these mixed medical messages, the price gougers present a tempting target.


More for paid subscribers follows from Canada, Israel, Denmark, Switzerland, Finland, Brazil, Colombia, Mexico, Trinidad and Tobago (a first), and Ireland.

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