Right of Reply in Missouri

Tue, 2014/08/19 - 12:31pm | Your editor

WS, a long time Missourian reader exercised his right of response to my note on Ferguson yesterday:

“I object to the phrase 'schoolboy error.' We in Missouri are closer to the situation than you. Some graduates of my high school, Normandy, the worst high school in the state, with just 8% of students competent in math, still have parents living fairly close to the W. Florissant area; we shopped and played on these same streets before the dysfunctional Missouri tax system rewarded wealthy taxpayers for putting up these massive Cabrini-Green type complexes that breed crime.

“I agree with you, this is not a simple error by the police; it involves tragically excessive force. But let's talk about your wording 'schoolboy error.' Did you see the police video or frames from the video? Is this just a schoolboy error, grabbing the storekeeper's shirt and practically lifting him off the ground?

“This was not just shoplifting.And you are right about the immigrants being amazed. St. Louis immigrants from Korea, Bosnia, and elsewhere have been amazed to discover the risks from working in American convenience stores. They had to bury relatives whose only crime was to work the late shift and were shot by thieves in the convenience store, who like Brown were using force.

“Just to be sure, you wouldn't call those armed robberies that turned fatal schoolboy errors, would you?

“He can vote, he's not a kid. If your kid dropped out of college, hung out at night on the street, was arrested multiple times, and was bullying storekeepers, would you sum this up by saying, 'he's not perfect?' This is a different culture than we had before. But still, I grieve right along with the mom.”

Your editor thinks the Missourian is wrong about the late Michael Brown dropping out of college or having an arrest record as I have not seen this reported. Hedy Epstein of St. Louis, a 90-year-old Holocaust survivor, was arrested yesterday for blocking the entrance to Gov. Jay Nixon's office yesterday. She was protesting the shooting by police of Michael Brown.

 

We don't currently recommend BHP (dual-listed in the UK and Australia with ADRs on both, BBL and BHP respectively). A strong sell-off followed the announcement that it would spin off assets into a new global mining and metals company, but the Oz version sold off more sharply than the British. Broken Hill Proprietary that was combined with Britain's Billiton in the days when big was big; now they are undoing the merger.

 

To add your voice against massive addition of antibiotics to animal feed which helps keep down meat prices while adding greatly to the risks that drug-resistant germs will infect human beings, please visit the Consumer Union website, https://secure.consumersunion.org/site/advocacy;js

 

A note called “The Mitzvah Factory” was posted by the Southern Investigative Reporting Foundation on the www.talkmarkets.com website to which I also contribute. By Roddy Boyd, it's about a US insurance group and its foundations to help Belzer Chassidic causes. It is outside my remit. News today from Portugal, Australia, Canada, Mexico, Singapore, Brazil, South Korea, and Pakistan.

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Ferguson On My Mind

Mon, 2014/08/18 - 12:36pm | Your editor

My father's younger brother, born about 1917, was arrested during the 1933 transition between normal government and Naziism in Germany for stealing fruit. I am not sure if my teen-aged uncle stole fruit from a shop or a neighbor's tree. But as a result, Uncle Rudi could not get a US visa and come to America with his siblings and his parents. He emigrated to Israel in 1937 instead.

I recall this family history as I read about the tragedy of Michael Brown in Ferguson, Missouri. Rudi was a silly teenager who was a target because of his race and because he committed a minor infraction of the law. And like Michael Brown, his life was put in danger because of this (if only years later). The difference is that even in the early days of Nazi Germany you were not shot for a minor theft. Can it be that a black American youth is at greater risk over a schoolboy error from the local cops than a Jewish boy in Nazi Germany?

When German Jewish refugees arrived in the US they were astonished at the level of oppression suffered by African-Americans, but also relieved that it meant they were not the prime targets.

 

Where is economic growth going to come from? I think it will spread from the USA and Britain to the European Union in the rest of 2014 going into 2015. The slack in global economic outlook appears to be general in most of the world, with poor performance in Japan, China, Australia, combined with falling output in Germany, the locomotive of Europe. France has opted to boost its deficit in order to offer stimulus to the economy, mainly to business. Italy is again formally in recession, having had two down quarters.

Deflation again is a risk. I think the economics fraternity are aware of the dangers and will act. In fact they have begun in Europe today, as I report.

 

More for paid subscribers follows:

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Tables Posted

Sun, 2014/08/17 - 12:39pm | Your editor

The latest www.global-investing.com stock tables have been posted on our website. Please visit to view our performance. The closed-positions table is visible to all; the current holdings in stocks, bonds, closed-end and exchange-traded funds may only be viewed by current subscribers. It is a tale of stock picks from two men named Julius and one named Jerome.

Your editor gets Barron's on Saturday, before it is published on Mondays, among other things to prepare the tables. Its current issue features one of my very long-time Global-Investing favorites. It also features two other USA stocks that were in the news last week.

One is Kinder Morgan Energy Partners, which I sold to avoid tax complications as it converts from an LP into an operating company. My involement with what turned into KMI goes back to my childhood when my father, Julius Oppenheim, invested in natural gas when it was first pipelined to NYC. He bought El Paso Corp of Texas which brought to us natural gas that had previously been flared and wasted.

We had to have our stove converted from coal gas made by Con Edison in a filthy process which blew out soot and ruined air quality near its plants. Back then nobody knew about environmentalism but I think that was what motivated Dad.

Another older generation favorite is a cover story in Barron's, BB&T, a regional bank which my daughter-in-law's grandfather loaded up on. Julius Seligson, a NYC lad, attended Lehigh University on a tennis scholarship and travelled around the south then and later as an amateur tennis champ wallopping tennis balls (and selling insurance).

The other Julius watched BB&T, formerly only in the Carolinas, build out its banking presence in growth areas like Florida and the DC and Atlanta suburbs. 

Barron's says BBT is trading at 12x earnings, a 14% discount to its historic level. It was rated outperform by Wells Fargo analysts.

The third hot idea is for paid subscribers only.

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Playing Putin

Fri, 2014/08/15 - 12:25pm | Your editor

The social forces inciting investor euphoria and then suddenly flip them into mass panic are like those which cause disasters as crowds head for the exit. A mass panic among Muslim pilgrims to Mecca in 1990 killed thousands.

Herd panic is triggered by darkness, noise and yelling, lack of information, ignorance, fear. People assume that they are trapped and stampede toward the doors, not realizing that this increases the danger to themselves and others.

In financial panics the same destruction occurs, and also partly results from ignorance. But financial panics also are fed by resentment. Market participants assume that some villains are profiting from knowing more than they do. Some alleged market panic-sowing villains are the product of rubbishy urban myths: Putin's Russian oligarchs or Communists; the giant squid (AKA Goldman Sachs); the Fed's supposed gold suppression scheme; the Bilderberg Foundation; the Rockefellers or the Rothschilds; secret Masonic or Zion or Vatican kingmakers, other conspirators. Read more »

Socialists and Super Stars

Thu, 2014/08/14 - 12:49pm | Your editor

Three bits of commentary I did not reply to for general consumption. PF asks, “Is Putin pure evil or am I imaging it? :)”

“In Latin America, becoming rich by fraud or looting is easier than by capitalism” notes Mexican capitalist reader, Eduardo Garcia (who writes www.sentidocomun.co.mex.) He notes that Mexican mining union boss Gomez Urrutia has taken up Canadian citizenship to hide his ill-got loot.

He also quotes Bloomberg Markets, about Venezuelan amigo-of-Chavez and officially “Socialist” Capt. William Biancucci who bought a private plane to hop over the Brazilian border to manage his cattle ranch. It was created with government subsidies to provide beef to Venezuela but the Venezuelan slaughterhouses are not getting the cattle. Where's the beef?

Biancucci told Bloomberg that “socialism is the solution to poverty” while admitting that “Chavez’s socialism has made him rich.” I’m a socialist, but I love having cash in my hands,” he said. “Socialism is wealth.”

Biancucci is part of a Chavez-backing Venezuelan coterie who became exceedingly wealthy during ugo Chavez's 14 years in power. These supposedly Leftist supporters received billions of dollars from the government after Chavez took office in 1999, for ventures in food distribution, banking, and other activities. Bloomberg says the fund flow is shown in Venezuelan government records.

Yet perhaps there is hope for talent after all. Ben Combes in research@llewellyn-consulting.com, run by macroeconomist John Llewellyn from London, writes about the potential for wealth as new stars rise in the global on-line market for education and health.

Combes writes:

Both sectors lend themselves to global markets; and both currently take up a large and growing proportion of personal and national income.
“In education, Massive Open Online Courses (MOOCs) are transforming the reach of tertiary education in scale and geography alike. Millions of students can now access pre-recorded material from ‘star’ academics.
“In healthcare, digitalisation is enabling doctors, nurses, and technicians to undertake routine tasks and transmit the information instantly, anywhere in the world. Top specialist consultants will reach patients’ bed-sides with accurate and up-to-date information. Camera technology created the potential to have a ‘Skype’ catch-up so ‘star’ consultants reach many more patients.”
Combs thinks some doctors could become ‘superstars’ like Michael Jordan or David Beckham. He anticipates:

Beyond education and healthcare, other service sectors, (legal and finance), are likely to be subject to similar forces. Broad developments of particular significance:
 Truly exceptional performers, be they surgeons or diagnosticians, lecturers or researchers,
increasingly being able to draw a clientele from the world as a whole; and
 The salary of such emerging ‘superstars’ rising towards film-star levels.”

 

More for paid subscribers follows from Australia, Ireland, Israel, South Korea and Africa, Canada, Colombia, Brazil, and Hong Kong, including two quarterly reports.

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The Seven Horsemen

Wed, 2014/08/13 - 12:48pm | Your editor

Food for thought for investors. A young MBA student of my acquaintance summer-interning at Morgan Stanley has written about the “Seven Horsemen of the Apocalypse”. Being Jewish, she got the number of horsemen in the Book of Revelations wrong. Officially there are only four horsemen.

But her list reverberates and was recently quoted by Bloomberg:

  1. Climate change;

  2. Scarce water;

  3. Disposal of vast amounts of urban waste;

  4. Insecure food supplies;

  5. Public health burdens;

  6. Economic inequality; and

  7. The demographic and pension cliff.

 

 

Her list of negatives can be used to try to find companies able to forestall these potential apocalyptic crises. Morgan Stanley listed ten large-cap US equities to buy, promising that they would offer “a positive return over a shorter time horizon”, like 12 to 18 months. Large cap means with a market cap of over $2 bn. And the positive return the brokerage is aiming for is 10% in the next 1-1.5 years.

I think that these issues will not be resolved fast, and that the 12 to 18 month investment horizon is way too short. If you invest to solve these problems, take a longer view.

Moreover, these problems are global in scale, rather than confined to the US, and require global investment. Only looking at US companies in these crisis areas is absurd: the list is of global problems.

Nor do I think there is any inherent advantage for large-cap players.

Bloomberg noted that the problems she cites are notorious, fuzzy, amorphous risks that belong to everyone and therefore no one, why unabashed leadership in the fight against them is so hard to come by in the civic sphere or private sector.”

“There problems seem infinite, and, what's worse, can be addressed only by infinitesimal measures. Why even bother?” The main reason is that the survival of everyone's economy and lifestyle depends on defeating the 7 horsemen.

 

The latest replacement for Siri (Apple's voice to answer questions) created by of artificial intelligence experts who set up on their own is called Viv. This according to Wired magazine. No relation!

 

More for paid subscribers including four quarterly reports (stunning or flat or confusing, why today's blog is late) and other news from around the world follows:

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Apologies for Teasing

Tue, 2014/08/12 - 11:58am | Your editor

I got some flack from pre-subscribers yesterday for teasing them with a foodie note they couldn't read. Pre-subscribers have signed up for the non-stock part of my blog, without the advice. Anyway, to comfort them for not making the gains the paid contingent get, here is what I was teasing about:

What I would really like to do is go to a Moscow magzhin and buy imported groceries, frozen turkeys, and produce and keep them for until the Russian import ban empties the shelves. Then I would sell them very dearly to Putinist Russians bored by their native cuisine, making a huge profit. Russians will not happily go back to their Soviet-era diet. Price-controls on Russia's markets and stores are unlikely to work.

Instead I am stocking up on Russian groceries at the Washington Heights neighborhood where I grew up. This before Russian prices rises for good bread, kvass, and herrings cross the ocean. Moscow on Hudson is at 801 West 181st St. about 4-5 blocks from where my parents lived in Upper Manhattan.

 

Another tease for paid subscribers is being canceled after I tested it on contributors who were stumped. Making quizzes hard to research on google is a mounting challenge. The result is that the puzzle cannot be solved at all.

More about what this means is explained for paid subscribers below. The question was what do our new stock picks have in common. The answer is offered to the paying subscribers along with news from around the globe plus a mixed quarterly result from one of our companies.

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A Foodie Note and an Industrial Stock

Mon, 2014/08/11 - 1:58pm | Your editor

 

While I am not sure what an industrial stock might be, Barron's today quotes William Blair analyst Nick Heymann as favoring this sector. Only one of his selections is outside the USA and a smallish cap. He tips BBD/B in Canada at C$3.80/sh. Curiously enough, this is a stock I was recently credited with recommending the same stock in Investor's Digest of Canada, the Canadian Barron's. Naturally I am particularly proud of being treated as an expert on Canadian shares by this magazine published in Toronto. The article quoting me came out on August 1 while the Barron's one appeared August 11.

Today I got extremely positive news for my Kinder Morgan Partners stock, a purely USA holding which soared 17.87% so far today on news that the Kinder Morgan group will abandon the Master Limited Partnership structure and merge it into its parent. The Kinder Morgan outfit was not mentioned by the Barron's MLP panelists whose ideas were also published today.

 

At least one piece of good news from India as it moves toward privatization and liberalization is notable. It is not the ipo of Steel Authority of India Ltd, but the launch of Indian real estate investment trusts, of which more below for paid subscribers.

More on this good news and other developments follows from our stocks, along with more details on the Toronto share for paid subscribers and other news from India, Ireland, Israel, Britain, Canada, Brazil, Australia, Portugal, and Singapore, plus a company quarterly of exceptional juiciness and a recommendation for foodies.

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Portfolios Updated

Sun, 2014/08/10 - 6:53pm | Your editor

England was hit by a hurricane but we had already left on one of the worst flights I ever was on. FIrst they delayed loading us for 2 1/2 hours while the mechanics fixed one of the engines which had gone wrong. Then we arrived at JFK and there was no landing slot so we hung around another 45 minutes, at least in comfortable seats. Then one of our bags was not on the carousel and it turned out it was left in London. It was my husband's stuff, not mine, but among other things it means he doesn't  have his keys or his checkbook. Since he had already confronted a stolen passport, his holiday was not exactly a success; I had business in London and Paris and he came along for the (ha ha) ride, and to visit his London family and some friends.

So to make up for my month of travel I prepared tables today for the paid and pre subscribers. You can view the spreadsheets you are entitiled to see at www.global-investing.com. Now that I did the closed positions for the readers, I also have to do them for taxes, but that will be tomorrow, probably after BA gets my husband his keys and shoes and summer jacket, and all the dirty laundry for me. Visit www.global-investing.com to view the tables. You should click printer-friendly format if the spreadsheet is too wide for your screen.

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New Mexican Revolution

Fri, 2014/08/08 - 6:28am | Your editor

Mexico's Senate now has passed the historic reform of its energy and power sectors which will be open to private and foreign investment for the first time in nearly 80 years. The President is expected to imminently sign it into law. Much now depends on the implementation and regulations which will be politically fraught with pressures from Pemex and its powerful unions favoring the status quo. But symbolically, Mexico is now part of the world oil business. This is a new Mexican revolution. We own 3 stocks to benefit.

For all my readers who have been following the problems of my husband's passport, he now has a replacement which cost the earth but will enable us to return to the US this coming weekend. And for fans of our East End Pakistani computer repair wizard and his son the lawyer-to-be, a further visit has established that Dave is his English nickname but Daoud is his “real” name. We seem to have become customers of the family head because besides being an early IT expert, he was also a member of the UK press corps, a correspondent for a Pakistani newspaper. I only recalled that when I met him again to get a laptop de-virused yesterday. He still works as a journalist. The boy wants to be a specialist in intellectual property and has no interest in helping the downtrodden refugees and stateless persons.

 

More for paid subscribers from Ireland, Switzerland, France, Canada,, Britain, Jordan, Russia, Israel, Mexico, and Norway today. Two new stock picks and two company reports as well.

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