The King of France

Fri, 2014/10/10 - 1:36pm | Your editor

Black box warning: The latest exchange-traded fund from Renaissance Capital aims to double up its initial public offering focus. Its US IPO ETF (IPO) lured in $30 mn in assets, and now it has a sister fund for the rest of the world, International IPO ETF, IPOS. Most IPOs sink after they come out and with shlocky quality recent euro-land issues and fear of deflation, this will be even more true for global new issues.

 

The King of France, with 30,000 men, He went up the hill, and then went down again.

The main reason for the sell-off appears to be disappointment with European and Japanese growth. But even in countries where output is back to pre-crisis levels, like the USA or Britain, investment has not picked up and wages are not back to where they were.

Between two holidays, we are going to be running a fat blog today, so my kiddy mini-comment on the market's behavior over the past two days is going to be all you get before I write up stock information for the paid subscribers. Monday is a half-holiday in the USA, with bond markets closed, but stock markets open in celebation of Christopher Columbus. Yesterday was the Feast of Booths, a Jewish holiday.

We have a new stock recommendation from our Japanese expert Chris Loew, an important quarterly report, luckily a good one, and other information from Mexico, Colombia, Ethiopia, India, and a few more established markets as well. We start with Chris:

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Re-Shifting Gears

Wed, 2014/10/08 - 3:41pm | Your editor

Because some readers couldn't access our website (they get RSS feeds) I am simply resending today's full blog. The limits of technology are apparent.

Nomura analysts in Hong Kong shifted gears on ASEAN Asian markets this morning.

“Our recommendation takes on a more defensive characteristic. We note the improving earnings revision trend in Thailand and the weakening credit creation trend [ed: and political risk] in Indonesia. We recommend being Overweight Singapore and Malaysia (upgraded from Neutral), while being Underweight Philippines and Indonesia (downgraded from Overweight) and Neutral Thailand (upgraded from Underweight). “

 

China gold dealers re-opened after “Golden Week” but the price in renminbi did not vary. It may be that the orders from regional centers where people vacationed have not yet filtered in. It may be that the price level was not adjusted because of government pressure. It is still at a $4 per ounce premium over levels in the rest of the world, which rose during the Chinese holiday and the Hong Kong demonstrations. Gold in the free world is now at $1223/oz vs $1227 in China. All of which merely goes to show that Chinese demand is

Thank you to all the readers who shared their credit card account hacking horror stories. Given that ours is a small and elite newsletter, the numbers are indicative of a major security problem. No fewer than 4 readers had problems with HSBC around the USA outside the Big Apple which I always imagined was its main banking center.

Now the gravity of the break-in has been made public. It's not just me! It turns out that many accounts at “the world's local bank” were breached.

Here is the notice:
​”HSBC has been notified of the theft of card payment data due to a computer system breach at a major home improvement retailer. As a result of this security breach, your card number MAY have been compromised. We have issued you a new card with a new card number to safeguard your account from fraudulent activity.”

The home improvement retailer was Home Depot where I shop, but the bank is too polite to say it.

 

More for paid subscribers from Portugal, Brazil, Switzerland, Britain, India, Spain, Germany, Hong Kong, Canada, Australia, and Ireland.

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Alert

Wed, 2014/10/08 - 1:43pm | Your editor

Paid subscribers should visit our website, www.global-investing.com to view the full Wednesday edition of their blog, as it didn't go out properly. There will be no blog Thursday which is another Jewish holiday. They come thick and fast at this time of year.

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Shifting Gears in Asia and Spain

Wed, 2014/10/08 - 1:34pm | Your editor

Nomura analysts in Hong Kong shifted gears on ASEAN Asian markets this morning.

“Our recommendation takes on a more defensive characteristic. We note the improving earnings revision trend in Thailand and the weakening credit creation trend [ed: and political risk] in Indonesia. We recommend being Overweight Singapore and Malaysia (upgraded from Neutral), while being Underweight Philippines and Indonesia (downgraded from Overweight) and Neutral Thailand (upgraded from Underweight). “ Its Spanish shift is reported below for paid subscribers only.

China gold dealers re-opened after “Golden Week” but the price in renminbi did not vary. It may be that the orders from regional centers where people vacationed have not yet filtered in. It may be that the price level was not adjusted because of government pressure. It is still at a $4 per ounce premium over levels in the rest of the world, which rose during the Chinese holiday and the Hong Kong demonstrations. Gold in the free world is now at $1223/oz vs $1227 in China. All of which merely goes to show that Chinese demand is

Thank you to all the readers who shared their credit card account hacking horror stories. Given that ours is a small and elite newsletter, the numbers are indicative of a major security problem. No fewer than 4 readers had problems with HSBC around the USA outside the Big Apple which I always imagined was its main banking center.

Now the gravity of the break-in has been made public. It's not just me! It turns out that many accounts at “the world's local bank” were breached.

Here is the notice:
​”HSBC has been notified of the theft of card payment data due to a computer system breach at a major home improvement retailer. As a result of this security breach, your card number MAY have been compromised. We have issued you a new card with a new card number to safeguard your account from fraudulent activity.”

The home improvement retailer was Home Depot where I shop, but the bank is too polite to say it.

There will be no blog tomorrow as it is a Jewish holiday.

More for paid subscribers from Portugal, Brazil, Switzerland, Britain, India, Spain, Germany, Hong Kong, Canada, Australia, and Ireland.

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Cousin Spedham Would Be Appalled

Tue, 2014/10/07 - 1:49pm | Your editor

Over the past couple of days I have carefully avoided commenting on a deep embarrassment with my husband's family firm, the John Lewis Partnership, operator of department stores and supermarkets mainly in Britain.

Cousin Spedham

A cousin once removed of my father-in-law, the late John Spedham Lewis, son of the founder, gave the store to its employees shortly after the end of World War II. The store since then has been run as a partnership, a model for management to allign its interests with the workers (and in case you were wondering, not with relatives of the founder.) His motives are hard to figure out. But he would be appalled at the latest news.

That does not make the Partnership any less pro-business or anti-Socialist. Its managing director, corresponding to the CEO, a Briton named Andrew Street, last week announced publicly that in his opinion France “is finished.” Just to make sure that his reasons were clear, he added that France under its Socialist Party government is “scelerotic, hopeless, and downbeat.”

He went on:“I have never been to a country more ill at ease. Nothing works and worse, nobody cares about it.”

He then spoke of the Eurostar train between Paris and London. “You get on Eurostar from the squalor pit of Europe, [the] Gare du Nord, and you get off at a modern, forward-looking station” [St. Pancras].

Mr Street believes that the French economy is stalled, with unemployment high, and growth hampered by excessive government intervention and redistribution. Too little work is being done thanks to the 35-hour week and the month of annual vacation workers get as a matter of course. Meanwhile the French government has only just decided that next year it will no longer apply a 75% income tax on those earning salaries of more than euros 1 million .

Mr. Street's public comments, written up by The (London) Times drew a furore in response. For whatever it is worth, my husband's relative, Spedham Lewis, would never in a million years have engaged in political commentary. But his reasons for giving the workers in the stores ownership of it were colored by the fear of socialism, both of the right (fascism) or the left (the Labour Government running Britain when the company shares were given to employees.)

 

Scelerotic Partnership

Initially, by the way, the Partnership was also sclerotic and nobody cared about it. Until about 18 years ago, shoppers at John Lewis, Peter Jones, and Waitrose, the three main brands of the John Lewis firm, were not able to pay with credit cards. The reason appears to have been that this reduced profits that were to be shared out, if marginally, and because they were not used in 1948 when the outfit started.

More recently, the Partnership pension plan which had funded an on-line grocery delivery chain called Ocado, rather than building on this potential new business, panicked. Ocado was spun off prematurely and required to stand on its own infant feet way to early.

So I think Mr Street may have blamed the government for a natural tendency by human beings, be they French officials running a railroad station to British executives fulfilling a generous mandate from a half century earlier, to fear the unknown.

Of course as members however distant of the clan, we are embarrassed indeed by the uproar, as we lived in Paris for over 15 years and put up with some of the silliness there just as we put up with paying cash when we shopped in the family stores.

More for paid subscribers follows from Portugal, Canada, Brazil, Germany, India, Finland, Ireland, Singapore, Britain, Mongolia, China, Mexico, and Norway. Plus a new stock pick.

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Hacked part II

Mon, 2014/10/06 - 2:14pm | Your editor

 

The capitulation of gold bugs continues. ASA Gold and Precious Metals, a closed-end fund we used to own, continues to send me updates 4 years on. Today they reported that insiders own 1.25 mn of its shares, acout 16.5% of the total out. That is down from 1.4 mn in the previous quarter.

In London trading this morning, Galantas Gold, a UK share, rose over 46%. That may the bell they ring at the bottom, or not.

Capitulation in Gold?

Today in London, gold hit last year's double low at $1180 per oz. One reason may be that Chinese markets are closed for a week-long holiday. But Adrian Ash of bullionvault.com warns:

“We're not there yet.

“In gold, betting on US futures and options is quieter. Open interest fell last month to 5-years lows. While the big hot-money traders are holding near-record fistfuls of bearish bets, their net position, as a group, remains positive to the tune of 200 ton-worth of NY contracts. Read more »

Model Portfolios Posted

Sun, 2014/10/05 - 12:33pm | Your editor

The market panics over everything from the Hong Kong democracy demonstrations to the Brazil election, from the safety of our president to the hacking of our banks, from the resumption of the Cold War to the threat of Ebola, from the Bill Gross exit bond market fallout to worries about the euro, from the illness of the Iranian and North Korean Supreme Liders to to the demise of Baby Doc, have hurt foreign markets more than USA ones and foreign small caps even more. So today's tables are a bummer.

One consolation is that most foreign markets closed before Wall Street could rally on Friday.

Paid subscribers get to see the gory details. Pre-subscribers get to see our closed positions only. And I added  my comments for those with full access.

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Hacked, Hacked, Hacked!

Fri, 2014/10/03 - 11:47am | Your editor

On a day when one-third of America's households (76 million of them) were revealed to have had their accounts hacked at JP Morgan Chase. Another 7 mn businesses were hacked, among them possibly Global Investing, for which Chase maintains a business checking account and authorizes credit card payments from our customers.

 

But your editor faced another crisis with a different bank.

I got an email from HSBC, where I have my personal account, telling me that there was a problem with my Premier World MasterCard Credit Card. I called the number to wind up speaking to an Indian with extremely poor English, just the thing to reassure a panicked customer.

 

Targeted

It turns out that "my" card was used at a Target store in an outer borough to spend over $500. I have never shopped at Target in my life, but I did use that card at another business that has been hacked, Home Depot. He assured me he was “bonded” but I wonder why HSBC didn't hire someone who can speak English. I believe there are a bunch of supposedly vetted US Secret Service agents looking for a new job.

 

Anyway both my check account and my credit card have been compromised but, I have been told, my brokerage account at HSBC is "safe". I will watch it closely, but unfortunately I am far too ham-fisted to install the security system dingbat I was sent about a month ago supposed to protect my account.

I am trying to get them to turn it off.

Maybe I can hire a bonded Indian techie of of my own to deal with the technology which requires that a code be generated and input in six seconds, way too fast for my fingers, eyes, and brain to note and input. I am not sure if it is me or the device.

 

What a great start to a day which will end with the powerful music and meaningless text of Kol Nidray and the fast of Yom Kippur, the Day of Atonement!

 

More for paid subscribers below but not much of it with news from Canada, Bermuda, China, Dubai, Switzerland, Jordan, Portugal, Britain, and Brazil, No new stock picks but paid subscribers have a contest offering them a way to give a year's sub to someone they know or love by guessing our Irish Stock Pick, as reported yesterday. Only paid subscribers are eligible.

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An Irish Contest

Thu, 2014/10/02 - 3:15pm | Your editor

 

Today you can read about how I beat Warren Buffett. The billionaire Oracle of Omaha told CNBC that his investment in Tesco pl c (TSCDY) was a “huge mistake,” as the U.K. supermarket leader’s share
price remains close to an 11-year low amid declining sales and an accounting probe. “I made a mistake on that one,” Buffett, 84, said in an interview. “That was a huge mistake by me.”
There are a couple of reasons why I beat Buffett, and it is not because I am smarter than he is or a more successful stock picker.. He is the winner with Berkshire Hathaway, one of the most successful investment vehicles the world has ever seen. My edge is because I am younger than Buffett, a woman who buys groceries, and a global traveller. Read more »

Update Portfolio Files

Wed, 2014/10/01 - 4:29pm | Your editor

I have updated the portfolio and closed positions files today, to avoid having to do so over the heavy weekend ahead, and because of untradeable positions which I only learned about overnight. I also corrected a closed position sale which I failed to input when I was in London, by error and input two other trades done this week. NB: the current prices of the portfolio have not been updated.

Despite what e-trade told me, the exchange-traded fund positions in my global trading account, for now, appear to be trackable and priced properly so I will not remove them from the model portfolios. However the individual Chinese shares I bought in London's Alternative Investment Market which I now have been told I did not have a right to buy as a US retail client at the prices where they were exercised have been removed. Read more »